[Congressional Record Volume 141, Number 166 (Wednesday, October 25, 1995)]
[Senate]
[Pages S15606-S15611]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            A MOMENTOUS TIME

  Mr. ROTH. Mr. President, this is certainly a momentous time. Change 
is the order of the day. And it is a time to renounce old and 
unworkable programs and philosophies and adopt those that will move 
America forward, those that will offer prosperity, security, 
opportunity, and growth to our families and to our communities.
  As Henry George once said, ``The sailor who raises the same sail 
regardless of changes in the direction of the wind will never reach his 
port.''
  In this Congress, we have not only trimmed the sails but we have set 
a 

[[Page S15607]]

bold new course for the future. For the first time in more than a 
decade, we are serious about balancing the budget, and we have a plan 
to do it. For the first time in 50 years, we have changed the dynamics 
of the welfare State, creating incentives that encourage work and 
strong families, incentives that balance rights with responsibilities.
  At last, we have changed the questions concerning Government. No 
longer do we ask: ``How big can we make it?'' No longer do we ask: 
``How can we control the States? How can we concentrate more power in 
Washington?''
  These are not the questions anymore.
  Rather, the new questions are: ``What is Government's proper role? 
How can we make it more cost-effective and efficient? And what do we 
need to do to create an environment of security for those who 
legitimately need Government assistance but an environment for economic 
growth and opportunity for the valiant taxpayers who provide that 
assistance?'' And for the first time in my memory, we are returning 
power back to where it belongs, back to the States.
  This is what we were sent here to do. It is the message we heard last 
November. And the job is getting done. At home we have energetic 
Governors with innovative plans, many with success stories. We have 
friends, neighbors, and constituents who want, once again, to feel like 
they have a powerful voice in the system. These are men and women who 
over the years have come to build this franchise as their Government 
has moved further and further away.
  We are in the process of putting the power back where it belongs, in 
the States, where our friends, our neighbors, our constituents have a 
stronger voice and are more active.
  As I watched this 104th Congress move forward, I have thought on many 
occasions that I can think of no other Congress in which I have been 
more honored to call myself a Member than this one. And I am grateful 
for my colleagues, colleagues on both sides of the aisle, who have come 
to agree that the old way just is not good enough, not for America, not 
for Americans.
  In many ways there has been an immeasurable amount of cooperation in 
this Congress, and it should not be overlooked. In other areas I would 
like to see more. But I believe a part of the cooperation that is 
apparent, of course, is borne by the fact that we all know what needs 
to be done. Republican and Democrat, we all realize the challenges that 
must be addressed.
  Even President Clinton, from time to time, has indicated his insight 
and understanding, saying that his record-setting tax increase was a 
mistake and finally agreeing with House and Senate Republicans that the 
budget could be balanced in 7 years.
  With the reconciliation bill we bring to the floor today, we again 
need this cooperation, perhaps more than ever, as we turn our attention 
to saving and strengthening the Medicare system, toward curbing runaway 
spending and toward giving Americans what they most need now after a 
decade of tax increases: a real, workable, economy-expanding tax cut.
  Frankly, Mr. President, there should be cooperation. President 
Clinton himself has been a most certain voice in expressing the 
importance of making real and lasting changes. As I said, he has 
admitted his tax increases were too high. He knows spending is out of 
control. He has proposed his own child credit, a credit of up to $800 
per child. He has stated that it is possible to balance the budget in 7 
years. And almost 2 years ago, he took a firm stand on Medicare, saying 
that--and I quote --``Today * * * Medicare [is] going up three times 
the rate of inflation. We propose to let it go up at two times the rate 
of inflation. This is not a Medicare * * * cut.'' End of the 
President's quote.
  President Clinton understands what needs to be done. After all, he 
was the one who ran on the platform of bringing change to Washington. 
Now, he cannot have it both ways. We either change the old and failed 
ways of doing business, or we keep business as usual.
  Well, Mr. President, I vote for change. I encourage my colleagues on 
the other side of the aisle to join us in making change possible, 
rather than retreating into gridlock and defending 30-year-old policies 
that have spent some $3 trillion to have more children living below the 
poverty line today than when those programs began. This is not 
progress.
  According to economist Walter Williams, the taxpayers' money that 
Washington has spent on these programs to cure social ills over the 
last three decades could have bought the entire assets of the Fortune 
500 companies and virtually all the U.S. farmland. But today the 
problems not only remain, they are even worse. The fact is, we cannot 
afford business as usual. Americans do not deserve business as usual, 
especially those Americans who in the last 30 years have fallen prey to 
the pathologies that attend poverty: dependency, crime, unwed mothers, 
broken families, decaying neighborhoods.
  Certainly we must keep a safety net. None here argues that we should 
not. But we must change the system.
  I believe that except for politics, President Clinton and many of his 
allies in Congress would be with us on most of the proposals we have 
included in the reconciliation package, even on our historic efforts to 
save and to strengthen Medicare.
  Remember, it was the President's own Medicare trustee report that so 
vividly outlined the problems we are attacking today. According to that 
report:

       . . . the Hospital Insurance Trust Fund (Part A) continues 
     to be severely out of financial balance and is projected to 
     be exhausted in about seven years. The SMI Trust Fund (Part 
     B), while in balance on an annual basis, shows a rate of 
     growth of costs which is clearly unsustainable. Moreover, 
     this fund is projected to be 75 percent or more financed by 
     general revenues, so that given the general budget deficit 
     problem, it is a major contributor to the larger fiscal 
     problems of the Nation. The Medicare program is clearly 
     unsustainable in its present form.

  Mr. President, as I said, this is from the administration's own 
trustees.
  There has been no question about the absolute need to restore the 
integrity of the Medicare Program, to save, to strengthen it, so that 
Government can meet its contract with the American people. Similarly, 
there has been no question concerning the need to control runaway 
Government spending. Government has grown accustomed to living beyond 
its means.
  This must change, and reform efforts must be real. They must maintain 
the agreements Washington has made with the American people. They must 
see that the needy are cared for. They must keep the contract that 
exists between the Government and our retired constituents concerning 
Medicare. They must ensure the integrity of the program for a 
sufficient period of time to allow us to chart the distant future of 
that program so it can absorb the baby-boom generation.
  And in doing all this, our efforts at reform must also create 
conditions, an environment, if you will, where our economy can expand 
and the harvest for coming generations can be planted. The 
reconciliation package we present today accomplishes just that. It 
keeps our promise to the American people.
  Our proposal does not engender dependency on Government like the 
failed policies of the past. It does not perpetuate the negative 
incentive that feed the welfare bureaucracy and those who maintain 
their political power base by pandering to that bureaucracy.
  Of course, our policies address the needs of citizens who cannot care 
for themselves, but, more importantly, they create conditions for 
upward mobility, conditions for economic opportunity, incentives for 
self-reliance. And I cannot express how important it is that we create 
these kinds of conditions.
  At the moment our economy is not growing as strongly as it should be 
growing, and perhaps this is why President Clinton now believes his 
record-setting tax increases were a mistake. At the moment, there is 
little incentive for Americans to save and invest. Perhaps this is why 
today the average 50-year-old is so ill-prepared for retirement and 
why, among the industrial nations of the world, we lag behind even our 
competitors in our rate of personal savings. Incidentally, this, 
according to Federal Chairman Alan Greenspan, is one of the most 
pressing problems confronting our Nation economically.
  At the moment, the Medicare Program stares into the abyss of 
bankruptcy, and this is why many of our 

[[Page S15608]]

seniors are living with fear and uncertainty. But not just our seniors; 
fear and uncertainty grip their children and grandchildren because they 
know that, left unchecked, entitlement spending is growing so fast 
that, along with interest on the national debt, it will consume almost 
all Federal revenues in the year 2010, just 15 short years from now. 
Left unchecked, by 2030, Federal revenues will not even cover 
entitlement spending alone.
  Though we live in a Nation of infinite possibilities, we are, of 
course, a land of finite resources. At the moment, the Federal debt is 
approaching $4.9 trillion, deficit spending is well over $150 billion a 
year, and the fact is, Medicare, Medicaid, and earned income tax credit 
are some of the fastest growing entitlement programs on the books. 
Strengthening and restoring the integrity of these programs will not 
only benefit those who should appropriately receive them, but it will 
also help us balance the budget, and this, Mr. President, is what the 
vast majority of Americans not only want but demand.
  A balanced budget is necessary for economic security. A balanced 
budget would increase job opportunity. Some forecast that over 6 
million jobs would be created if the budget were balanced. Interest 
rates would be lower. They would fall by almost 2 percent, some say 
even higher. And Americans everywhere would enjoy a higher standard of 
living. There would be a reduced burden of debt on our children and our 
grandchildren, and people would be able to keep more of their hard-
earned money rather than sending it to Washington.
  To balance the budget, we must control the growth of entitlements. I 
am not suggesting these programs be abolished or even cut. We simply 
need to get them back within our budget, within our ability to pay for 
them. It is easy to see how they got out of control.
  Simply put, these programs escape the discipline of the annual budget 
process. Increased entitlement spending occurs automatically, covering 
any individual who meets eligibility criteria. These increases are 
heavily influenced by the rapid rise in health care costs, the growing 
number of beneficiaries and real benefit expansion.
  Of course, today America is aging. Our population is getting older as 
people are living longer. This is a good thing. It is indicative of 
progress. These changing demographics, however, must be accompanied by 
changing policies and programs. Programs that were created in 1965 when 
the average American lived to be 61 and when our Nation had five 
workers to support every one retiree must be modified to reflect 
current reality. Today, the average American lives more than 76 years, 
and there are less than four workers to support each retiree.
  In 1965, when Medicare was enacted, the average American who reached 
retirement age could expect to collect benefits for 15 years. Today, 
the average 65-year-old will receive benefits for 18 years.
  This is where we are now, Mr. President. Looking into the future 
gives us even greater reason to make the necessary changes we are 
proposing. The chart, which we will bring out a little later, 
demonstrates just how important it is that we begin now to make 
necessary changes in entitlement programs.
  Today, there are less than 40 million Americans who qualify to 
receive Medicare. By the year 2010, the number will be approaching 50 
million. By 2020, it will be over 60 million. While these numbers are 
increasing, there will be fewer workers to support each retiree, and 
while we have almost four workers per retiree today, we will have about 
two workers per retiree by the year 2030.
  So, Mr. President, we must change the program. We cannot move into 
the future with blueprints that were designed for the past. Medicare 
and Medicaid have been the most significant contributors to entitlement 
growth in recent years. It is projected that these programs will 
cripple as a share of the economy within the next 35 years. Thus, they 
are unsustainable.
  In 1994, Medicare spending was $160 billion. Over the past decade, 
Medicare grew by about 10 percent per year, and CBO projects similar 
growth over the next decade. Because of this rapid growth, the Medicare 
Hospital Insurance Trust Fund, part A, is projected to go bankrupt in 
2002.
  As the baby-boom generation retires, Medicare costs will continue to 
soar. The Medicare trustees project that between 1995 and 2020, 
Medicare will grow from 2.6 percent of the economy to 6 percent, an 
increase of over 200 percent. Likewise, Medicaid is out of control. 
This program alone is scheduled to grow at an annual rate of 10.4 
percent between fiscal year 1995 and 2002, devouring both Federal and 
State budgets. Already, Medicaid consumes about 20 percent of State 
budgets, exploding from $15 billion in 1980 to a projected $180 billion 
in 2002.
  These are serious concerns, and keeping in mind the demographics that 
I cited earlier, it is easy to see that without real change in policies 
and programs, there is no way the Federal Government will meet its 
obligation. There is no way that we can offer assurance to even the 
next generation of retirees that they will have coverage under Medicare 
and Medicaid.
  The year 2002 is only 74 months away. However, as I have said on many 
occasions, I am an optimist. I am an optimist because we know what 
works. We know the right kinds of policy and program changes that need 
to be made, changes that will allow Medicare and Medicaid to meet their 
current obligations while at the same time saving these programs for 
future beneficiaries.
  We know how to restore sound financial practices to the Federal 
Government, practices that can strengthen the economy, create an 
environment for employment growth and an environment where Americans 
are encouraged to work, save and invest. And achieving these conditions 
should be our primary responsibility.
  Towards this end, we must see our proposal in this budget 
reconciliation process in its entirety, for its overall balance and how 
all components work together to benefit Americans at all ages and in 
all income groups. To single out one reform in our proposal, without 
looking at the others, is to do a great disservice to what this 
reconciliation package offers.
  It is balanced, it is workable, and it is long, long overdue. It 
changes business as usual in Washington. It answers the clarion call 
from our constituents to make the kind of changes that so obviously 
need to be made.
  I remember that an astute political adviser once warned his boss that 
there is nothing more difficult to take in hand, more perilous to 
conduct or more uncertain than to take the lead in the introduction of 
a new order of thing. I believe, with some of the inflammatory rhetoric 
we have heard surrounding this important debate, there is good reason 
to say that this adviser knew what he was talking about.
  Change is difficult, but change is more necessary now than ever 
before. Where some may feel they lose in one aspect while single-
mindedly absorbing one component of these changes, they are sure to 
gain in others. What we seek to achieve here is balance, balance that 
improves conditions and opportunities for all. It is not the voices of 
individual special interest groups that govern our actions, but the 
collective voice of America. And we understand one fundamental truth 
about reform--a truth stated eloquently by Vaclav Havel:

       The more half-measures we take, and the longer they drag 
     on, the greater the sacrifices will be, the longer they will 
     have to be made, and the more pointless sacrifices will have 
     to be piled on top of those that are unavoidable.

  We must be resolved; we must have confidence in the balance that our 
program offers. I have that confidence--as do other Members who join me 
today in introducing this reconciliation package.
  Quite simply, there are four components to our program--promises we 
made to the American people--promises we are now keeping:
  First, we provide for a balanced budget;
  Second, we strengthen and preserve Medicare and Medicaid, thus 
allowing these two important programs to continue to protect Americans 
into the future;
  Third, we reform welfare; and finally, once we show that the budget 
is balanced;
  We create an environment for economic expansion through tax cuts that 


[[Page S15609]]

offer relief to our families and encourage Americans to work, to save, 
and to invest.
  To give a little history, the EITC was a bipartisan program, created 
to offset the sting of payroll taxes on working families with children. 
The fact is, each dollar Government taxes creates a disincentive to 
work, while each dollar that people keep for themselves is an incentive 
to work. History has proven this point. The economies of nations that 
have cut taxes have thrived, while those nations who have increased 
taxes--even to the point of taking everything the people earn--have 
fallen into ruin.
  The EITC was to create incentives for low-income parents to work. It 
was that simple. But as they say about too much of a good thing 
becoming dangerous, such is what happened to this once-well-intended 
program. Over the years, the EITC has been expanded by a welfare-
oriented Congress into another Federal handout. And today, some 85 
percent of the EITC is a Federal outlay paid directly to individuals. 
No longer do individuals need to have families or children to qualify; 
no longer does the EITC encourage work, as it once did; no longer is 
the program fair and cost-effective. Much of the EITC cannot even be 
considered tax relief because those who receive a direct payment from 
the Government pay no income taxes at all. Make no mistake about it, 
most of the EITC is a welfare check.
  Beyond this, the EITC is plagued by fraud and abuse. It sports a 
fraud and error rate between 24 and 40 percent, making it the most 
fraudulent welfare program on the books. Though the administration has 
worked to reduce these high rates, there is no evidence that current 
rates are below double digits. Many of those who commit fraud are not 
even legally able to work in the United States. And the fact is, since 
the program's inception, American taxpayers have lost $25 billion to 
fraud, waste, and abuse in the program. The GAO estimates that if this 
kind of fraud continues over the next 5 years, the EITC could waste 
another $37 billion. We can't afford this.

  We need to get the program back to its original purpose: to help 
families with children offset the sting of payroll taxes. And that is 
exactly what we do with our proposal. We focus the program on the 
population for whom it was originally intended. We return it from being 
just another welfare program to where it belongs as a legitimate tax 
break for lower income working Americans with children.
  Our reforms will place an important degree of control on this 
program. They successfully address the problems of rampant growth, 
fraud, and abuse. The key phrase here is ``controlling growth.'' 
Remember, EITC will continue to grow. It will continue to meet the 
needs of those most vulnerable among us.
  According to the Joint Committee on Taxation, families with children, 
who now receive the maximum earned income tax credit, will continue to 
receive a larger earned income credit in the future. When combined with 
the $500 child credit and marriage penalty relief--issues that I will 
speak about in a minute--low-income working families will be better off 
under our bill than they are today. Finally, we will continue to spend 
in excess of $20 billion on the EITC, keeping it as a significant 
program for the working poor.


                                medicare

  Our second major objective with the proposal we are introducing is to 
strengthen, preserve, and protect the Medicare system--not only for 
those who depend on the system today, but for those who will need 
Medicare tomorrow. We accomplish this by allowing the program to grow 
at about twice the rate of inflation, and by introducing choice in the 
system. In this way, seniors are guaranteed continued coverage as well 
as the ability to choose those plans and health care providers that 
best meet their needs.

  In our proposal, Medicare spending increases form $178 billion in 
1995 to $286 billion in 2002. Average spending per beneficiary grows 
from $4,800 to $7,000.
  Our proposal controls runaway costs by introducing choice into the 
system, giving our seniors the ability to remain in the current fee-
for-service plan, if that is what they want. On the other hand, we also 
offer them an unlimited number of health care plan options that they 
may choose to better meet their needs. We call this Medicare choice, 
and it includes, beyond the current fee-for-service plan, the 
opportunity for our seniors to join plans sponsored by local hospital 
and physician groups, health maintenance organizations, point-of-
service plans, or preferred provider organizations. It also allows for 
seniors to join high deductible medical savings account plans, union or 
association plans, and, in fact, any other kind of health plan that 
meets the standards we set to protect the beneficiaries. Beneficiaries 
will be protected under our proposal. Despite the plan they choose, all 
seniors will receive coverage for the same services and items that are 
currently covered by the traditional Medicare Program. The good news is 
that as these new plans compete with each other for business, it's 
likely that they will offer even more benefits and improved services.

  The private sector, which has done much better in keeping costs down 
than the Government, has proven that choice creates competition, and 
competition is good for the consumer. And the fact is, in our proposal 
we are offering seniors even more efficient and effective health care 
plan options than are available to most working Americans through their 
employers.
  By introducing private market incentives into the Medicare Program--
by giving consumers options and encouraging providers to compete for 
business--we could control program growth sufficiently enough to save 
it in the longterm. It is no surprise that the private sector has been 
much more successful at controlling health care costs, with innovative 
programs based on market principles, than the Government, which has 
depended largely on price controls. To survive, the Medicare system 
must allow patients and providers to use health resources efficiently 
through a choice of plans.
  This is not a new idea; it is an approach that's been tested and 
proven.
  Offering choice in Medicare is based on the highly successful Federal 
employees health benefit plan. Largely because of choice, this year the 
average FEHBP premium was reduced by 3.3 percent. Next year, the 
average increase will only be 0.4 percent, proving that choice brings 
competition and savings. In fact, choice could work so well that our 
current projctions--projections that keep Medicare solvent through 
2020--could be understated.
  Beyond using choice to strengthen the program, beneficiaries will 
continue to pay 31.5 percent of the premium for part B. In 1997 we will 
phase out the taxpayer subsidy of the affluent for part B; we will 
increase the deductibles from $100 to $150, and then increase it $10 
every year, thereafter. Savings will also be made on the part of 
Medicare providers, predominantly through reductions in scheduled 
payment increases. Despite these restraints, providers will continue to 
enjoy annual growth rates of between 4 and 10 percent over the next 7 
years.
  Our proposal also aggressively attacks fraud and abuse in the 
Medicare Program. The GAO estimates that the loss to Medicare from 
fraud and abuse equals some 10 percent of the program's total spending, 
and law enforcement officials claim that the majority of Medicare fraud 
goes undetected. What we propose is to earmark a portion of trust fund 
money, starting in its first year with $200 million, to use for 
investigation and prosecution of health care fraud. We also offer a 
number of new tools to assist investigators and prosecutors in 
attacking this problem. The CBO has estimates that our provisions in 
this area will save the program more than $4 billion over 7 years.
  Under our program, reforms would extend the solvency of Medicare for 
about 18 years. According to the CBO estimates, under our proposal, the 
Medicare HI trust fund balance will total $300 billion in the year 
2005. The CBO states, ``the HI trust fund would meet the Trustees' test 
of short-range financial adequacy.'' In other words, for the next 10 
years, the HI trust fund balance, at the end of every year, will be 
more than enough to pay Medicare benefits for the following year.
  More importantly, using the CBO's estimates through 2005, our Finance 
Committee staff, in consultation with the Office of the Actuary within 
the Department of Health and Human 

[[Page S15610]]

Services, estimates that the Medicare Hi trust fund will be solvent 
through about the year 2020. That's 10 years--10 years--after the baby-
boom generation begins to retire, a quarter of a century from today.
  Concerning Medicaid, our objective is, again, quite simple, to 
control the unsustainable growth rate of this program--a rate which 
reached as high as 30 percent in 1993. Even at its current 10.4 
percent, the growth rate is too high. We bring it down to a manageable 
and more realistic 5 percent. We can accomplish this by moving the 
program back to where it belongs--back to the States. In fact, 
Governors have said that they can manage the program with the more 
moderate spending increases if the Federal Government will simply get 
out of their way.
  Medicaid is best addressed by giving States adequate funds and the 
authority necessary to meet the needs of their most vulnerable 
citizens, without interference and excessive regulation from 
Washington. Governors have been asking for this authority since 1989, 
when Bill Clinton, then Arkansas' chief executive, signed a resolution 
calling for a freeze on the enactment of further Medicaid mandates. By 
extending States' authority, allowing Governors the opportunity to find 
innovative ways to provide for the unique needs of their respective 
States, we can keep the program at a manageable 40 percent growth rate 
by 2002, rather than the 100-percent increase in spending now projected 
by CBO.

  Certainly, under this new structure, the States will have certain 
requirements that must be met. For example, they will be accountable 
for how Federal dollars are spent. States will spend 85 percent of what 
they are now spending on mandatory benefits for the three of the most 
vulnerable populations: low-income pregnant women and children, the 
disabled, and the elderly. There will also be protection from nursing 
home costs against impoverishing spouses living at home. Likewise, 
States will be allowed to use Medicaid funds to see that children are 
immunized.
  We must remember that Medicaid was designed to be an equal 
partnership between the Federal Government and the States. However, the 
Federal Government in recent years has effected what can only be seen 
as a take-over. Toward this end, all three branches of the Federal 
Government have played critical roles. Congress and the courts have 
expanded eligibility while the bureaucracy has paralyzed the States 
with regulations. The time has come to release the choke hold.
  Medicaid now consumes 20 percent of State budgets--20 percent. That 
means fewer dollars for education, for fighting crime, and rebuilding 
infrastructure.
  Since 1990, the number of Medicaid recipients have increased by 
nearly one-third, as the current law has created over 70 different ways 
for people to become eligible for benefits. Promising more benefits for 
more people plus using the political system to negotiate supply and 
demand is a prescription for failure. The price for this now includes 
annual deficits of up to $200 billion and a second mortgage on the 
future which our children and grandchildren will be forced to pay.
  Today we change these dynamics. Today business as usual is over.
  The reconciliation package we offer allows us to meet the needs of 
low-income individuals, while at the same time controlling costs, 
improving the program, and working toward a balanced budget. Under our 
proposal, Medicaid spending continues to grow, but at a slower, more 
predictable rate. The money is given to the States with the flexibility 
to design effective and innovative programs--programs to meet the 
individual needs of their low-income citizens.
  States can cover individuals and families with income below 250 
percent of the Federal poverty level--that's $31,475 for a family of 
three.
  What we get away from are the thousands of pages of Federal mandates 
that stifle creativity and our States' ability to develop programs that 
are both efficient and effective. Under our proposal, we repeal all 
mandates. We allow States to standards and provider payment rates. And 
we no longer require Federal waivers to implement many of the 
innovative delivery systems that have proven to be so successful in the 
private sector. In fact, we encourage States to combine programs and 
experiment. However, as a safeguard, we ask States to develop a State 
plan and to submit annual reports and independent evaluations as well 
as provisions for fighting fraud and abuse.
  As under current law, the Federal Government will match State 
funding, up to an aggregate cap. Under this proposal, total Federal 
Medicaid spending will continue to increase over the period 1996-2002. 
In this period, the Federal Government will provide $776 billion to the 
States to meet the needs of poor children, the elderly, and people who 
are disabled. This is the equivalent of half of the total of today's 
Federal budget.
  Between 1995 and 2002, total Federal spending on Medicaid will still 
grow by over 40 percent.
  Mr. President, the States will make these reforms work. Federal 
funding will continue to increase while we provide the States with 
control over how these funds will be spent. After 30 years of Federal 
control, it is time to put the State in charge. Capping Federal 
spending will allow the States to enforce fiscal discipline. They will 
clearly know that the deep pockets of the Federal Government are not 
bottomless.
  With firm control over these funds, we will unleash the creativity of 
the States in meeting the needs of the low-income citizens. The States 
will be able to expand managed care without asking permission of the 
Washington bureaucracy. Coupled with the welfare reform package just 
passed, the States will be able to experiment with ways to move 
families off welfare and into work. The States will be able to design 
health insurance coverage so that the loss of Medicaid will no longer 
be a barrier to leaving welfare.
  The States will plan, design, and implement Medicaid reform which 
will meet their own unique needs in ways Washington has not even 
started to think about. Taxpayers and beneficiaries alike will benefit 
from Medicaid reform and from achieving a balanced budget.


                               tax reform

  These are important reforms. Without them, the Medicare trust fund 
will become insolvent within a few years, and Medicaid will eat away at 
our children's future, forcing Federal and State governments to borrow 
money for generations yet unborn. According to University of California 
economist Alan Auerbach, if current spending trends and benefit 
formulas continue, ``the tax burden would be very close to absorbing 
all the lifetime income of future workers.''
  To escape from this, we must prepare to move quickly and successfully 
beyond our first objective of passing the budget resolution to embrace 
what should be our second, adopting initiatives that create an 
environment for economic growth. The only way to break out of deficit 
spending, without cutting off essential services and forfeiting on the 
contracts the Federal Government has made with our senior citizens, is 
to renew healthy economic growth--growth which is above the 2.3- or 
2.5-percent range currently projected by official forecasting agencies.
  This environment will be created only as Government adopts real tax 
reform--reform that shifts the bias against savings and investment in 
the current Tax Code to a system that encourages saving and investment 
over consumption. Among the means to tap into the consumption base are: 
The flat tax, a national sales tax, or an expanded IRA.
  While some have emphasized the differences between these three plans, 
they are grounded in the same economic concept of taxation, and I am 
pleased to see their growing acceptance among Americans. Ultimately 
some kind of compromise, possibly including elements from all of them, 
should be possible.

  The current income tax system has not only undermined economic 
growth, it has also undermined the economic position of American 
families. We must act to provide tax relief for families that are 
already facing intense pressures on other fronts. It is my desire to 
provide tax relief in the context of the current reconciliation 
package, but I also believe we must not overlook the opportunity to 
provide the additional tax relief in future tax reform, financed by 
continued restraint in Federal spending growth.

[[Page S15611]]

  The tax relief offered in this reconciliation package is very much in 
the realm of current possibilities. We offer a $245 billion tax cut 
which goes into effect only when the CBO has certified that deficit 
reduction is being achieved. Despite what some may say for political 
reasons, this tax relief does not come at the expense of Medicare. As 
the generally more liberal Washington Post admitted, ``The Democrats 
have fabricated the Medicare-tax cut connection because it is useful 
politically.'' In an earlier editorial, the Post opined that,

       The Democrats are engaged in demagoguery, big time. And 
     it's wrong. . . . [The Republicans] have a plan. Enough is 
     known about it to say it's credible; it's gutsy and in some 
     respects inventive--and it addresses a genuine problem that 
     is only going to get worse. What Democrats have [on the other 
     hand] is a lot of expostulation, TV ads and scare talk.

  That is the end of the quote from the Washington Post.
  Under the bill we propose today, using Medicare savings for tax cuts 
is illegal. The law requires that money saved on the Medicare Program 
will stay in the Medicare Program. These are trust funds, the assets of 
which may not be used for any other purpose. And to say otherwise, as 
the Post points out, is little more than politically motivated scare 
tactics.
  The fact is, our efforts preserve and strengthen the Medicare trust 
fund. This is a promise made and a promise kept. Likewise our efforts 
bring the Federal budget into balance and provide substantial tax 
relief for middle-income Americans. Again, promises made and kept. I 
can only guess that these scare tactics are being used by some because 
for so long these individuals have gotten by politically by making 
promises without keeping them. Well, you cannot have it both ways. You 
are either working for the kinds of changes the American people want, 
or you are locked into business as usual. You are either working for 
reform, or you are an agent of big Government, runaway spending, and 
political gridlock.

  Let this reconciliation package show Americans who stands where on 
these important issues.
  Our plan offers a $500-a-child tax credit, encourages savings and 
investment, and offers other incentives for economic growth. Our 
proposal to cut taxes by $245 billion, offers relief for our middle 
class--with over 70 percent of the $245 billion going to families 
making less than $75,000 a year. These provisions mean more security 
for our families, more jobs for Americans, and greater stability in our 
communities.
  Of the $245 billion Senate relief package, a full $223 billion will 
go to families. The remaining $22 billion will strengthen businesses 
and lead to increased employment opportunity. It will also improve 
America's ability to compete in the global community, with other 
nations that provide their businesses with strong incentives to compete 
with us.
  The four pillars of our proposal are: First, a $500 child tax credit; 
second, restoration and strengthening of individual retirement 
accounts; third, relief from overbearing estate taxes on families and 
businesses; and, fourth, reduction of the top rate of capital gains on 
individuals and corporations.
  These measures meet our promise to the American people. They 
represent a bold beginning in our effort to break with the failed 
policies of the past. The current tax system double-taxes savings, 
thwarts investment, hinders productivity, increases prices, stifles 
wages, and hurts exports. It is complex, controlled by special interest 
groups, and places disincentives on work.
  We move to correct these deficiencies, and because we have cut 
spending, our bill balances the budget while making room for tax 
relief. Americans need relief. Our economy needs a shot in the arm. 
Even Bill Clinton has admitted as much. I call on him to join us in our 
efforts to unleash the potential our economy has to move us into a bold 
and exciting future.
  The PRESIDING OFFICER. The time of the Senator from Delaware has 
expired.
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. ROTH. Mr. President, will the distinguished Senator from New York 
yield? I have about three more pages. May I finish?
  Mr. MOYNIHAN. Of course. Could we then extend morning business until 
1:30?
  Mr. KENNEDY. Reserving the right to object--and I do not intend to 
object--if we can have the morning business time, whatever morning 
business there was, divided equally between the two sides, whatever 
amount of time, since we are off the bill. If we could have whatever 
amount of time to be divided equally, then I would not object. If we 
are not going to have that allocation of time, then I feel compelled to 
object.
  Mr. MOYNIHAN. Mr. President, may I make the suggestion that morning 
business be continued to 1:30 and that the time be equally divided?
  Mr. KENNEDY. Reserving the right to object, that does not include the 
last 10 minutes--just from the time we go to morning business, divided 
equally.
  Mr. GRASSLEY. Mr. President, I have to object momentarily for the 
leader. We want to find out if Senator Dole wants this time extended.
  The PRESIDING OFFICER. Objection is heard. The Senator from New York 
has the floor.
  Mr. MOYNIHAN. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the period 
of morning business be extended until 1:30 and that the time be equally 
divided. I believe it is the desire of the majority that the speakers 
alternate, if that is convenient.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. ROTH. Reserving the right to object, may I finish?
  Mr. MOYNIHAN. Yes.
  The PRESIDING OFFICER. Hearing no objection, without objection it is 
so ordered.
  The Senator from Delaware.
  Mr. ROTH. Mr. President, as I was stating, that is what this 
reconciliation package is all about--the future.
  As Lincoln said, ``The struggle of today is not altogether for 
today--it is for a vast future, also''--a future that I believe will be 
very bright if we succeed in our endeavors here today.
  Our objective is to strengthen the American Dream--in our homes, in 
our schools, in our communities, in our States, and all across the 
land. Some have said that the dream is dead, that our children cannot 
expect to lead a better life than that led by their parents. I strongly 
disagree. However, I do believe that in order to meet the domestic 
challenges before us--as we look to put our house in order here at 
home--as we seek to maintain influence and leadership abroad, that we 
must reinvent America to reflect the profound changes that are taking 
place throughout the world as well as here in the United States.
  We must build on principles that are tried and proven and good. We 
know what works. We know what's failed. And we cannot march boldly into 
the future with blueprints prepared for the past. This reinventing of 
America must be thorough, it must create a nation that is 
compassionate, responsible, and economically viable from the houses in 
our neighborhoods to the Houses of Congress. It must encourage self-
reliance, risk-taking, and the confidence that diligent labor will be 
rewarded with security and even greater opportunity for reward.
  These are the principles that built America, and they are the 
principles that will see us into a bright and expansive new millennium.
  Mr. President, I yield the floor.
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. I wish to congratulate the chairman of the Finance 
Committee on a very thoughtful and deeply felt exposition of his views. 
They are not entirely shared on this side, but they are, nonetheless, 
admired for the grace in which he has presented them.

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