[Congressional Record Volume 141, Number 163 (Friday, October 20, 1995)]
[Senate]
[Pages S15409-S15411]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         BUDGET RECONCILIATION

  Mr. CONRAD. Mr. President, we have just had a rather extraordinary 
experience in the Senate Budget Committee with the chairman putting 
that committee into adjournment after a very short discussion of the 
reconciliation measure that was before the Committee.
  We had hoped that there would be an opportunity to discuss this 
afternoon and Monday what is in this budget reconciliation package that 
has been put forward by our colleagues on the other side of the aisle. 
We believe that the American people deserve a chance to hear precisely 
what this package will mean. We believe it has severe consequences for 
the people in this country. We believe there are very sharp cuts in 
Medicare and Medicaid that are going to mean increased burdens for our 
senior citizens, are going to mean hospital closures all across 
America, and especially in rural America, that there are going to be 
many people who are elderly, who are ill, who are not going to have the 
kind of care that they deserve.
  Much of that is being done in order to provide a tax reduction that 
will go disproportionately to the wealthiest among us. Many on our side 
of the aisle, I believe everyone on our side of the aisle, believes 
that is an inappropriate set of priorities.
  One thing our colleagues on the other side of the aisle have said, 
and said repeatedly, is that they are balancing the budget by the year 
2002. Mr. President, that is not accurate. Senator Dorgan and I, 2 days 
ago asked the head of the Congressional Budget Office for an analysis, 
if the law of the United States is followed, will the reconciliation 
plan put forward by the Republicans balance the budget in the year 2002 
or not?
  The head of the Congressional Budget Office reported to us in a 
letter yesterday, with a revised letter today, that if the law of the 
United States is followed--that is, if Social Security surpluses are 
not included in the calculation, which under our law is specifically 
excluded; that is, we are not to count Social Security surpluses in 
determining whether or not the budget of the United States is in 
balance--when that calculation is made, the head of the budget office 
told us in a letter dated today, ``excluding an estimated off-budget 
surplus of $115 billion in 2002.''
  Again, let me read that phrase, ``excluding an estimated off-budget 
surplus of $115 billion in 2002,'' that is primarily Social Security 
surpluses, if those are excluded ``from the calculation, CBO would 
project an on-budget deficit of $105 billion in the year 2002.'' Not a 
surplus, not a balanced budget, a $105 billion deficit in 2002.
  Let me just say, I think anybody who knows anything about accounting 
would understand you do not count Social Security surpluses in 
calculating whether you have balanced the budget or not. Why is that? 
That is because the Social Security trust fund has been set up to run 
surpluses in preparation for the time the baby boom generation retires.
  Unfortunately, all those surpluses are being spent, and what is 
happening is we are using that money today instead of saving it or 
paying down the existing debt to better prepare ourselves to meet that 
demographic time bomb. That is a profound mistake.
  Let me just make clear, if any company in the United States tried to 
take the retirement funds of its employees and put them into the pot to 
balance the budget, they would be in violation of Federal law. Indeed, 
that is precisely what has been happening in the United States. It has 
been going on since 1983. It should not be permitted to continue. We 
have already run up almost $500 billion of IOU's, but that is going to 
grow geometrically over the next 18 years.
  We have a chance to get our house in order. We have a narrow window 
of opportunity, and we ought to take advantage of it. We should not be 
looting and raiding the Social Security trust funds in order to assert 
that we are balancing the budget. That is not truthful. And I am 
pleased to say the Congressional Budget Office has now acknowledged 
that the budget will not be in balance by 2002 but, in fact, will have 
a $105 billion deficit in that year.
  I think there are other reasons the Republicans in the Budget 
Committee at least were not eager to have a further discussion of the 
reconciliation bill. I think there are a lot of things they would 
prefer the American people not hear before votes are held and cast on 
that measure.
  One of the things they may not be eager for the American people to 
hear is that there is going to be a $1.3 trillion increase in the 
national debt under the Republican plan. That is the cumulative 
increase in the debt that is being added to the $4.9 trillion in debt 
we already have in this country. They are going to add, under their 
plan, another $1.3 trillion of debt. Yet, they insist on a tax 
reduction, a tax cut, primarily going to the wealthiest among us, which 
will add to this debt.
  What sense does that make? I can say to my colleagues that when I 
queried the people of my State, they made it clear to me to balance the 
budget first before there is any tax cut. We can have tax cuts after we 
balance the budget. We are not balancing the budget, No. 1; No. 2, we 
are adding $1.3 trillion to the national debt, and $245 billion of that 
is tax cuts which, again, primarily go to the wealthiest among us.
  Let me just go a little further so that people have a chance to hear 
what is in this tax package that has just passed, because we have heard 
on the other side of the aisle the assertion that this is a significant 
tax cut that would go to American families. I wish that were true. I 
wish it were true that it was really directed at the middle class, 
because while I believe it is not the time for tax cuts, when you are 
adding $1.3 trillion to the national debt and you have not really 
balanced the budget in 7 years, and even with that I think we could 
look more kindly upon a tax cut if it were really directed at the 
middle class. That is not where this tax cut is directed.
  In fact, what we learned yesterday is that the Senate Republican plan 
would mean tax increases for everyone earning under $30,000 a year. 
Those earning under $30,000 a year, which are 51 percent of the 
American people, get a tax hike. They get their taxes increased. I will 
demonstrate that point by asking unanimous consent that the tables be 
printed in the Record.
  There being no objection, the tables were ordered to be printed in 
the Record, as follows:

                                                                                                                                                        

[[Page S15410]]
      TAX PROVISIONS IN THE SENATE FINANCE COMMITTEE, CHAIRMAN'S MARK FOR REVENUE RECONCILIATION AND THE EITC PROVISIONS PREVIOUSLY ADOPTED BY THE      
                                                                      COMMITTEE\1\                                                                      
                                                                  [1996 INCOME LEVELS]                                                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Federal taxes under current law\2\      Change in Federal taxes\3\       Total Federal taxes after change 
                                             -----------------------------------------------------------------------------------------------------------
                                                             As a        As a                    As a        As a                    As a        As a   
 Family economic income class\4\ (thousands)    Amount    percent of  percent of    Amount    percent of  percent of    Amount    percent of  percent of
                                               (billion)    pre-tax    after-tax   (billion)    pre-tax    aFter-tax   (billion)    pre-tax    after-tax
                                                            income      income                  income      income                  income      income  
--------------------------------------------------------------------------------------------------------------------------------------------------------
0 to 10.....................................        $5.7         8.0         8.7        $0.2        0.3         0.4         $5.9         8.4         9.1
10 to 20....................................        21.5         8.8         9.7         0.8        0.3         0.3         22.2         9.1        10.0
20 to 30....................................        50.1        13.3        15.4         1.3        0.4         0.4         51.4        13.7        15.8
30 to 50....................................       156.3        17.5        21.2        -5.7       (0.6)       (0.8)       150.6        16.8        20.4
50 to 75....................................       224.0        19.9        24.8       -10.4       (0.9)       (1.1)       213.6        19.0        23.7
75 to 100...................................       196.1        21.1        26.7       -10.0       (1.1)       (1.4)       186.1        20.0        25.3
100 to 200..................................       303.0        22.0        28.1       -12.5       (0.9)       (1.2)       290.5        21.1        27.0
200 and over................................       316.6        23.7        31.1        -9.5       (0.7)       (0.9)       307.1        23.0        30.1
                                             -----------------------------------------------------------------------------------------------------------
    Total\5\................................     1.275.1        20.1        25.2       -45.8       (0.7)       (0.9)     1,229.3        19.4        24.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Department of the Treasury Office of Tax Analysis, October 18, 1995.                                                                            
\1\This table distributes the estimated change in tax burdens due to the tax provisions in the Senate Finance Committee Chairman's Mark (JCX-44-95,     
  September 16 1995); and the EITC provisions adopted by the Committee on September 30, 1995.                                                           
\2\The taxes included are individual and corporate income, payroll (Social Security and unemployment) and excises. Estate and gift taxes and customs    
  duties are excluded. The individual income tax is assumed to be borne by payors, the corporate income tax by capital income generally, payroll taxes  
  (employer and employee shares) by labor (wages and self-employment income) excises on purchases by individuals by the purchaser, and excises on       
  purchases by business in proportion to total consumption expenditures. Taxes due to provisions that expire prior to the end of the Budget period are  
  excluded.                                                                                                                                             
\3\The change in Federal taxes is estimated at 1996 income levels but assuming fully phased in law and long-run behavior. The effect of the IRA proposal
  is measured as the present value of tax savings on one year's contributions. The effect on tax burdens of the proposed capital gains exclusion is     
  based on the level of capital gains realizations under current law. Provisions which expire before the end of the budget period and provisions which  
  affect the timing of tax payments but not liabilities are not distributed. The incidence assumptions for tax changes the same as for current law taxes
  (see footnote 2).                                                                                                                                     
\4\Family Economic Income (FEI) is a broad-based income concept. FEI's constructed by adding to AGI unreported and underreported income. IRA and Keogh  
  deductions; nontaxable transfer payments, such as Social Security and AFDC empower-provided fringe benefits, inside build-up on pensions, IRAs,       
  Keoghs, and life insurance tax-exempt interest, and imputed rent on owner occupied housing. Capital gains are computed on an accrual basis, adjusted  
  for inflation to the extent reliable data allow, inflationary losses of lenders are subtracted and of borrowers are added. There is also an adjustment
  for accelerated depreciation of noncorporate businesses. FEI is spent on a family rather than on a tax return basis. The economic incomes of all      
  members of a family unit are added to arrive at the family's economic income used in the distribution.                                                
\5\Families with negative incomes are included in the total line but not shown separately.                                                              
                                                                                                                                                        



DISTRIBUTIONAL EFFECTS OF REVENUE RECONCILIATION PROVISIONS OF THE CHAIRMAN'S MARK SCHEDULED FOR MARKUP IN THE FINANCE COMMITTEE ON OCTOBER 18, 1995 AND
                                                        PREVIOUSLY ADOPTED CHANGES IN THE EITC\1\                                                       
                                                                  [Calendar year 2000]                                                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Change in Federal      Federal taxes\3\ under    Federal taxes\3\ under     Effective tax rate\4\ 
                                                          taxes\3\                 present law                proposal         -------------------------
               Income category\2\                ------------------------------------------------------------------------------ Present law    Proposal 
                                                    Millions     Percent      Billions     Percent      Billions     Percent     (percent)    (percent) 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Less than $10,000...............................         $879          9.6           $9          0.7          $10          0.7          8.6          9.4
$10,000 to $20,000..............................          922          2.2           42          3.0           43          3.1          9.0          9.2
$20,000 to $30,000..............................          417          0.5           86          6.1           87          6.3         13.6         13.6
$30,000 to $40,000..............................       -4,221         -3.4          125          8.9          121          8.8         16.7         16.2
$40,000 to $50,000..............................       -5,347         -4.0          132          9.4          127          9.2         18.4         17.6
$50,000 to $75,000..............................      -11,740         -4.2          280         19.9          269         19.5         20.5         19.5
$75,000 to $100,000.............................       -5,814         -2.8          209         14.8          203         14.8         22.9         22.1
$100,000 to $200,000............................       -3,850         -1.6          246         17.5          242         17.6         24.1         23.4
$200,000 and over...............................       -2,792         -1.0          277         19.7          274         19.9         29.8         28.8
    Total, all taxpayers........................      -31,546         -2.2        1,407        100.0        1,375        100.0         20.4         19.7
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\1\Includes the tax credit for children under age 18, student loan interest credit, marriage penalty relief, IRA changes, long term care, capital gains 
  deduction, treatment of adoption expense, aviation fuel exemption, and repeal of the wine and flavors credit as well as EITC changes previously       
  adopted by the Senate Finance Committee.                                                                                                              
\2\The income concept used to place tax returns into income categories is adjusted gross income (AGI) plus: [1] tax-exempt interest, [2] employer       
  contributions for health plans and life insurance, [3] employer share of FICA tax, [4] worker's compensation, [5] nontaxable social security benefits,
  [6] insurance value of Medicare benefits, [7] alternative minimum tax preference items, and [8] excluded income of U.S. citizens living abroad.       
  Categories are measured at 1995 levels.                                                                                                               
\3\Federal taxes are equal to individual income tax (including the outlay portion of the EITC), employment tax (attributed to employees), and excise    
  taxes (attributed to consumers). Corporate income tax is not included due to uncertainty concerning the incidence of the tax. Individuals who are     
  dependents of other taxpayers and taxpayers with negative income are excluded from the analysis.                                                      
\4\The effective tax rate is equal to Federal taxes described in footnote (3) divided by: income described in footnote (2) plus additional income       
  attributable to the proposal.                                                                                                                         
                                                                                                                                                        
 Source: Joint Committee on Taxation. Detail may not add to total due to rounding.                                                                      

  Mr. CONRAD. Mr. President, when we look at where the breaks go, 
because there are $245 billion of tax cuts in this package. Where do 
they go? They go, disproportionately, to the wealthiest among of us; 48 
percent goes to people earning over $100,000 a year. We can see on this 
chart that the top 5 percent of the people, 2.8 million families making 
over $200,000, get, on average, a $3,400 tax break. People earning over 
$200,000 a year get a $3,400 tax break. The richest 1 million families 
in America, those making over $350,000, get a $5,600 tax break.
  Mr. President, I say to you, I do not think that is fair. I do not 
think it is fair to increase the taxes of those earning less than 
$30,000 a year in order to concentrate tax breaks on those who are the 
wealthiest among us, to give a $3,400 tax break to the top 5 percent, 
those earning over $200,000, and a $5,600 tax break to the top 1 
percent, those earning over $350,000 a year.
  Mr. President, this is the chart that was provided for us yesterday 
that shows the distributional effect of tax provisions in the Senate 
Finance Committee chairman's mark for revenue reconciliation and the 
earned income tax provisions previously adopted by the committee. When 
you take into consideration previous changes in the earned income tax 
credit and the changes in this package, one finds that people earning 
up to $30,000 all experience a slight tax increase under this plan. But 
those who are earning above that amount experience a tax reduction. But 
let us see who gets what. Those earning from $30,000 to $50,000 a year 
get less than $250 of tax reduction a year, while those earning over 
$200,000 a year, get $3,400 in tax reduction. That does not strike me 
as fair. It does not strike me as balanced. It does not strike me as 
the kind of targeted tax relief that is seriously intended to help 
hard-pressed middle income families in this country.
  Mr. President, this redistributional effect, taking from those who 
are of more modest income, those earning up to $30,000 a year, and 
giving them a tax increase and reducing taxes for the wealthiest among 
us, giving 48 percent of the benefit to those who are earning over 
$100,000 a year, continues a trend that I think ought to concern us 
all, and that is the concentration of wealth in this country in the 
hands of fewer and fewer people.
  This chart shows the share of wealth of the top 1 percent of the 
households in America. In 1969, 20 percent of the wealth in this 
country was in the hands of the top 1 percent. By 1979, 30 percent of 
the wealth of this country was controlled by the top 1 percent. But by 
1989, 39 percent of the wealth of America was held in the top 1 percent 
of this country.
  Mr. President, anybody who has studied history knows what this trend 
means. When wealth is increasingly concentrated in the hands of a few, 
it leads to political instability, it leads to, I think, a threat to 
all of our institutions. It is no wonder that people are angry across 
America, as they see the wealth of the Nation concentrated in fewer and 
fewer hands. Our colleagues on the other side of the aisle have been 
quick to accuse the Democrats of being for redistribution of income. 
Let me say that our friends on the other side of the aisle have been 
the champions of income and wealth redistribution.
  Over and over and over, in committee after committee, our friends on 
the other side of the aisle have pursued 

[[Page S15411]]
policies that concentrate wealth in the hands of those who are already 
the wealthiest among us. I ask the simple question, how much wealth do 
the top 1 percent want to have in their hands? They have nearly 40 
percent now. Do they want 60 percent of the wealth of America in the 
hands of just 1 percent of the people? Do they insist on 80 percent of 
the wealth in the hands of just 1 percent of the people? I do not think 
this is good social policy. I do not think it is good economic policy. 
I think it threatens the future of the country.
  Mr. President, 73 percent of the American people pay more taxes in 
payroll taxes than they pay in income taxes. Yet, what is happening 
under the Republican plan is to take payroll taxes--the only way to 
justify payroll taxes at their current levels is if you are building 
surpluses to prepare for the day when the baby boom generation retires. 
But all of those moneys are being spent, not saved. They are being 
taken and spent in other areas of the budget. And so what is really 
happening is an enormous redistribution of wealth. Make no mistake 
about it. We are taking payroll tax money, generating surpluses and not 
saving them, but spending them. And we are spending part of them to 
give a big tax reduction to the wealthiest among us, so we are taking 
payroll taxes that are regressive. That simply means lower income 
people pay a higher percentage of their income in payroll taxes, taking 
money from them and flushing it back out in a tax cut to the wealthiest 
among us. Forty-eight percent of the benefit goes to the top 1 percent.
  That is what is going on here. It is an enormous redistribution of 
wealth, going from middle-income people, because under the Republican 
plan, 51 percent of the people, those earning less than $30,000 a year, 
are going to experience a tax increase. The money is being taken from 
them in payroll taxes and other taxes, and part of it is then being 
used to give a big tax cut to the wealthiest among us. I do not think 
that is fair or right. I do not think it represents American values.
  Mr. President, I think that is the reason the chairman of the Budget 
Committee was so swift to gavel the Budget Committee into adjournment, 
because they did not want to see and hear these facts being provided to 
the American people.
  They want to pass this in the dead of night without a chance for the 
American people to see and hear what these plans will mean for the 
people of this country.
  I yield the floor.
  Mrs. BOXER. Thank you, Mr. President.
  Mr. CRAIG. Would the Senator from California yield to me for a few 
moments to put the final words in the Record?
  Mrs. BOXER. Of course, as long as I do not lose my right to 15 
minutes.
  The PRESIDING OFFICER (Mr. Helms). The Senator's rights will be 
preserved.
  Mrs. BOXER. Reserving the right to object, I want to make sure 
Senator Murray has 15 minutes.
  The PRESIDING OFFICER. The Senator's rights will be preserved.

                          ____________________