[Congressional Record Volume 141, Number 167 (Thursday, October 26, 1995)]
[Senate]
[Pages S15747-S15767]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             THE BALANCED BUDGET RECONCILIATION ACT OF 1995

  The Senate continued with the consideration of the bill.
  The PRESIDING OFFICER. Who yields time?
  Mr. KENNEDY. I yield 3 minutes to the Senator from Minnesota.
  Mr. WELLSTONE. When I heard what my colleague from Idaho said, I 
could not be in more profound disagreement. The debate is not on a 
balanced budget, deficit reduction; it is on a Minnesota standard of 
fairness. This agenda here is not connected to the reality of the lives 
of people that we represent back in our States: ``Senator, I am a 
student at Moorhead State, I work three minimum-wage jobs. The college 
years are not the best years of my life.''
  ``Senator, I am a nontraditional student. I am older than you and I 
lost my job; I am going back to school, and I do not have much money. 
If you cut my financial aid, I will not be able to get back on my own 
two feet.''
  ``Senator, I am a single mother, and I am going back to school, and I 
have two small children. If you cut my financial aid, I will not be 
able to move from welfare to workfare.''
  I hear it in community colleges; I hear it in public universities; I 
hear it in private schools. I asked my colleagues, I say to my 
colleague from Massachusetts, during markup, ``Have you held town 
meetings in the campuses? Do you know what the consequences of what you 
are doing here in the Senate will be for students in this country?''
  Mr. President, this is outrageous.
  I ask unanimous consent to have printed in the Record the text of a 
petition from 515 students at Inver Hills Community College and 
Lakewood Community College.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              Petition for Saving Our Student Loan Program

       Students are concerned about federal financial aid cuts 
     Congress proposes to higher education. If these cuts are 
     made, they will affect my ability to go to college and find a 
     living wage job. Please help me continue to have an education 
     that is affordable and accessible. The economic security of 
     our nation depends upon a well-educated work force. America's 
     future rests in your hands.
  Mr. WELLSTONE. Mr. President, I simply say it loud and clear, and I 
will shout it from the mountaintop. I only 

[[Page S15748]]

have probably 30 seconds left. If you want to do deficit reduction, cut 
the subsidies for the pharmaceutical companies, cut the subsidies for 
the oil companies, cut the subsidies for the insurance companies, cut 
the subsidies for the tobacco companies; do not spend more money on 
stealth bombers and Trident and all of the rest, and do not have tax 
cuts that disproportionately go to the wealthiest people.
  Do not do deficit reduction by denying all too many young people--and 
not-so-young people because many of our students are older--their 
opportunity for a higher education. I am proud to be an original 
cosponsor of the Kennedy amendment. It speaks to basic economic 
justice. I hope 100 Senators vote for it.
  Mr. KENNEDY. Mr. President, how much time remains?
  The PRESIDING OFFICER. The Senator from Massachusetts has 5 minutes 
12 seconds.
  Mr. KENNEDY. I yield myself 4 minutes, Mr. President.
  Mr. President, I want to repeat what I mentioned at the outset, that 
our amendment is budget neutral. We have been asked about that.
  Mr. President, in the final few moments, I have been amazed by the 
silence of our Republican friends in defending an indefensible policy. 
Silence in defending a policy that will put a stranglehold on the sons 
and daughters of working families trying to achieve a better education. 
The most that was said in defense of this indefensible policy, Mr. 
President, by one Member of the Republicans, is that this proposal is 
``changing the parameters of the obligation.'' Let me tell every 
working family in my State and across the country the truth. This 
Republican proposal is going to mean more dollars out of your pocket 
and more obligations on the students of this country.
  In the final breath, Mr. President, there is an extraordinary 
reliance by our Republican friends on raising the revenues. In their 
proposal, they put a tax--described by the majority of the Republicans 
as a ``fee''--on every educational institution in this country. They 
would mandate a tax on every educational institution. The cruelest part 
of all is that the amount of that tax increases as they provide more 
and more assistance to the neediest students that go to those schools. 
The institutional tax goes in the opposite direction of every 
educational policy that we have made in the last 30 years. It requires 
more and more payment by the sons and daughters of working families and 
the neediest families. That is just an extraordinary admission, Mr. 
President, of a bankrupt effort by our Republican friends by taxing 
these working families.
  In the Republican proposal, working families are going to have to pay 
more out of their hard-earned income because of the tax increase in the 
EITC. Then, the same working families are going to pay more out of 
scarce resources for the copays and the deductibles we will have to 
have.
  Because of reductions in Medicaid, these working families are going 
to pay even more to provide health care coverage for their children.
  For what reason? To give a tax break for the wealthiest individuals 
and the wealthiest corporations. That is what this is all about. They 
are taking the money out of the pockets of the neediest families in 
this country and transferring it to the wealthiest individuals. That is 
the parameter of the obligation that our Republican friends refer to 
when they try to justify their position.
  Mr. President, this bill and these cuts are too harsh and too 
extreme. But, in addition to their cold heart, Republicans are now 
getting cold feet. The verdict of the American people is coming in.
  Republicans are being found guilty beyond a reasonable doubt of 
hurting senior citizens on Medicare; guilty of hurting helpless elderly 
patients in nursing homes; guilty of punishing innocent children on 
welfare; guilty of closing college doors to the sons and daughters of 
working families; guilty of pandering to polluters and endangering the 
environment; guilty of massive giveaways to powerful special interest 
groups; guilty of taxing low-income workers; guilty of taxing hard-
pressed college students to give tax breaks to millionaires.
  Whatever became of the anti tax Republicans? I say shame, shame on 
the Republican Party for using their majority power to hurt the vast 
majority of Americans. This bill will be dead on arrival at the White 
House, and we ought to bury it right here in the U.S. Senate.
  The PRESIDING OFFICER. The time of the Senator from Massachusetts has 
expired.
  Mr. KENNEDY. I hope we have an opportunity to vote on this amendment 
soon.
  What is the Chair's understanding about when we will be able to have 
a disposition of this amendment?
  Mr. EXON. Mr. President, if I could answer briefly the Senator's 
question. It is a good one.
  We have been trying to work on this since yesterday afternoon. It 
appears we are very close to agreement that allows us to start voting 
up or down on these amendments sometime early this afternoon and very 
late into the evening.
  Mr. KENNEDY. Would the Senator yield half a minute on the bill?
  Mr. EXON. I yield.
  Mr. KENNEDY. Mr. President, I have heard that my Republican 
colleagues are trying to doctor up some different proposal on student 
loan cuts. We have had months to change the proposal. I hope we will 
support this amendment that represents the best judgment of parents, 
educators, and working families.
  Mr. EXON. Mr. President, I thank the Senator from Massachusetts for 
his excellent presentation, and I agree with his remarks. I agree with 
his conclusion. I hope we can move in an expeditious fashion.
  I yield 8 minutes off the bill to my colleague from North Dakota.
  Mr. DORGAN. Mr. President, I have been puzzled here for nearly a day 
and a half because we have some very important decisions to make in the 
U.S. Senate, one of which deals with Medicare, and we are not voting on 
them.
  Reconciliation is a process that provides us 20 hours. We offered an 
amendment that does not take great skill to read. It does not take many 
staff people to read it. It is very simple.
  It says, ``Let's reduce this tax cut for the wealthy and use the 
savings to reduce the cut on Medicare for the elderly.'' That is a very 
simple proposition.
  It has been almost 30 hours since it was offered yesterday on the 
floor of the Senate, and no vote. Why no vote? Is it hard to 
understand? Are people still reviewing this? No, that is not why. What 
we have is a stall.
  I understand we may be getting close to an agreement, and I hope we 
are, because if we are not, we are going to start reading this 
legislation--maybe two or three times. It is 1,949 pages, given us 
Tuesday night to come to the floor Wednesday morning.
  Most people here do not have the foggiest notion of what is in it. 
Most of us have some suspicion about what is in it. Most of us believe 
that this, handed to the wealthier families in America, will provoke 
significant smiles because they will find some awfully good news in 
here for their families. Drive a Mercedes Benz, make half a million a 
year, there is awfully good news in here for you.
  If you are an elderly person, dependent on Medicare or a poor person 
on Medicaid or a middle-income family trying to send your kids to 
school, or a poor mother who has a child in Head Start, the news here 
is pretty grim. It says we cannot afford you. It says you better 
tighten your belt because this is coming your way, and this is not good 
news for you at all.
  I think some of the pieces of the puzzle are starting to come into 
focus about who is fighting for whom. Whose side are you on?
  Here are a couple pieces of that puzzle. This was in the paper 
yesterday. One of the new Republicans over in the House of 
Representatives says ``the Democrats once again have it all wrong when 
they claim the GOP's proposed $500 tax credit for families earning up 
to $200,000 is a tax cut for the rich.'' He says those folks are lower 
middle class.

       Heineman, former Raleigh Police Chief, told the Raleigh 
     News and Observer that his salary of $133,000 plus $50,000 a 
     year in police pensions ``does not make me rich. It does not 
     make me middle class. In my opinion that makes me lower 
     middle class.''

  This new Republican, this fellow that has new ideas and came with a 
notion of change says, ``When I see someone who is making anywhere from 
$300,000 

[[Page S15749]]

to $750,000 a year, that's middle class.'' He said, ``When I see anyone 
above that, that's upper middle class.'' Oh, really? These are the new 
ideas? Middle class at $750,000 a year? Now I can understand why they 
tell us their tax cut is aimed at the middle class. Now it is clear to 
me. I understand how these pieces to the puzzle start to fit.
  Another big piece--in fact, it is the centerpiece for this puzzle in 
this morning's newspaper--the Speaker of the House, speaking candidly 
to Blue Cross Blue Shield, an insurance company, says this in talking 
about Medicare:

       Now let me talk about Medicare . . . we don't get rid of it 
     in round one because we don't think that would be politically 
     smart.

  Let me say that again. The Speaker of the House says, and these are 
people who say, ``We love Medicare; we want to save Medicare.''

       We don't get rid of it in round one because we don't think 
     that would be politically smart and we don't think that's the 
     right way to go through a transition. But we believe it's 
     going to wither on the vine because we think people are going 
     to voluntarily leave it.

  Now, put these pieces into the puzzle and see if you do not start 
getting the message. These are people who are going to save Medicare? 
No, I do not think so.
  Round one. They do not get rid of it in round one. But guess what? 
This is a 10 rounder, and by the end of this match they plan on getting 
rid of Medicare. This is all about the middle class--yes, their middle 
class--somebody making $750,000 a year.
  I said, good news and bad news around here. I was watching Star Wars 
the other night with my children. I have not seen that for a long time. 
Does anyone remember the characters in Star Wars, R2-D2 and C3-PO? I 
was thinking, if children in this society had names with numbers maybe 
they would do better; right?
  Let me give some numbers that do well. I said that a lot of folks do 
not do well in this. A lot of kids do not do well. Fifty-five thousand 
kids, all of whom have names, will no longer be in Head Start because 
the majority cannot afford them in the Head Start program. A kid by the 
name of Tim or Martha or Tom, they get bad news, no Head Start program.
  But if you had an initial like a B-2 or an F-15 or a UH-60 
Blackhawk--go down this list. I do not have time. But this is a list, 
all of which represent spending add-ons; in other words, money that the 
Defense Department did not ask for, for helicopters, amphibious ships, 
fighters, bombers, star wars, and on and on and on that the Defense 
Department said they did not want, they did not need, and they did not 
order.
  Guess what? The conservatives say, ``We insist you buy it because we 
got the money to pay for it.'' And then they bring 2,000 pages out here 
to the floor and say, ``We are sorry. We are broke. You are poor? You 
are young? Out of luck.''
  So we say to them on Medicare, on our first amendment, offered nearly 
30 hours ago, how about establishing priorities here? How about at 
least forgetting the tax cut notion you got for the wealthiest 
Americans and using some of that money to provide Medicare for the 
elderly? Do you know what, 30 hours later we cannot get a vote. Why can 
we not get a vote? Is it because they cannot understand the amendment? 
No. It is because they are stalling. They do not want to vote on the 
amendment.

  One way or another, somehow we are going to vote on this amendment. 
We might stand here for 6 days, but we are going to vote on this 
amendment, and we are going to vote on the education amendment, and we 
are going to vote on the next amendment which is fiscal responsibility, 
which says do not give a tax cut until we have a balanced budget.
  I am a little disappointed about what has been going on the last 30 
hours. I can understand a shuffle when I see it. I can understand a 
stall when I see it. But nobody ought to claim to us they do not 
understand this issue. After 30 hours you would think everybody 
understands it well enough to have a vote.
  So, it is 10 minutes to 1. How about a vote at 1 o'clock? Why do you 
not give the elderly in this country an opportunity? Express yourselves 
and give us an opportunity to express ourselves about tax cuts for the 
rich and Medicare cuts for the rest? Let us decide if we are going to 
have a vote soon.
  If we are near an agreement, I say fine. I want us to have an 
agreement and get through this. But I say, at the end stage of this 
process, that I happen to know and all of you in this room know what is 
really at work. We have a Medicare amendment on the floor. The Speaker 
of the House gives a speech to Blue Cross/Blue Shield. He says he wants 
to save Medicare. And here is what he says in his speech. ``We don't 
get rid of it in round one because we don't think that would be 
politically smart.''
  We understand what that means about round two. That is why this is 
important. That is why there is some passion in this debate, about a 
lot of folks who have reached their senior status in life and fear they 
are going to get sick and they are not going to have the money to deal 
with that illness. This is important.
  Mr. President, I ask for 1 additional minute.
  Mr. EXON. I am sorry. Another 30 seconds. I am trying to conserve 
time on this side.
  Mr. DORGAN. I yield the floor to the Senator from Nebraska.
  Mr. EXON. I will yield 30 seconds to the Senator from Maryland.
  Mr. SARBANES. Mr. President, I listened very carefully to the very 
distinguished Senator from North Dakota. What is the date of that 
speech the Speaker made when he said that this is only round one to get 
rid of Medicare?
  Mr. DORGAN. The speech apparently was given the other night, October 
24.
  Mr. SARBANES. On the same day, October 24, Senator Dole made a 
speech. Listen to this. ``I was there, fighting the fight, voting 
against Medicare--1 of 12--because we knew it wouldn't work in 1965.''
  So you have the Republican leader in the Senate and the Republican 
leader in the House, both of whom have been trying to portray 
themselves as helping Medicare, now bragging about the fact that they 
are against Medicare or that this is only the first round in getting 
rid of it.
  The PRESIDING OFFICER. The Chair will advise the Senator 30 seconds 
has expired.
  The Senator from Nebraska.
  Mr. EXON. Mr. President, as I understand it we are now prepared to go 
to the next item that will be offered by the Senator from Arkansas with 
30 minutes equally divided; is that correct?
  Mr. ABRAHAM. Yes. We are prepared to do that.
  Mr. EXON. So I hope the Chair could recognize the Senator from 
Arkansas, following 1\1/2\ minutes that I would like to yield at this 
time to the Senator from Vermont.
  The PRESIDING OFFICER (Mr. DeWine). The Senator from Vermont.
  Mr. LEAHY. Mr. President, I have repeatedly said on the Senate floor 
that balancing the Federal budget is so important we need to set our 
partisan differences aside.
  Unfortunately, balancing the budget was the most serious problem 
facing our country--until today.
  The American people are fed up with Washington--and how can you blame 
them.
  The single working mother who is holding two jobs to take care of her 
children should expect nothing less than having the Federal Government 
pay its own bills.
  Vermonters must balance their checkbooks each month, why should the 
Government that they send their taxes to not be held to the same 
accountability.
  Mr. President, Republicans laud this budget reconciliation bill that 
we are debating today as the solution to the deficit problem.
  Well, this bill may balance the budget but the wake it leaves behind 
threatens to irreparably divide our country. This bill is a cruel prank 
on hard working Americans who have asked Congress to get our budget in 
order.
  The Republican leadership has answered the call to balance the budget 
with a plan that radically redistributes the wealth of our country.
  Playing on the desires of hard working Americans, the Republican 
leadership has seized the opportunity to protect the wealthiest in our 
country.

[[Page S15750]]

  This plan balances the budget on the backs of the people who are 
working the longest hours, in the lowest paying jobs.
  Ironically, as these Americans have shouted out the loudest about 
getting our fiscal books in order, they will be the ones who feel the 
pain the most.
  Under the guise of saving Americans from the burden of debt, the 
Republican leadership has devastated programs that help hard working 
men and women realize the American dream of economic opportunity.
  We are told that in order to save programs, we must first kill them 
so that 7 years from now they will emerge solvent and robust.
  It is a leap of faith that I cannot make, much to my embarrassment, 
because my distinguished colleagues in the majority have been telling 
us what a bold and courageous moment in time that they are seizing.
  They are the self appointed saviors out to rescue us from the 
trillions of dollars of debt accrued during the Reagan-Bush 
administrations. They never mention that latter part--no doubt an 
oversight--and in the press of time, it is perfectly understandable why 
the subject never arises.
  A case in point is education. This bill makes short-sighted cuts in 
education. It cuts student loan programs by $10 billion over the next 7 
years.
  Students will be hit with 70 percent of these cuts--increasing the 
costs to the 20,000 Vermonters receiving higher education and their 
families by at least $5,800 over the life of a student loan.
  Congress should be working to make education more affordable--not 
less.
  These additional financial burdens will discourage many students from 
continuing their education after high school.
  The Contract With America has sealed the fate of the next generation 
of Americans. They may never have the chance of post high school 
training or a college education--the key to a better paying job.
  Mr. President, the list of programs that the Republican leadership 
are slashing under the thin guise of reform is long.
  This bill is a back door version of the New Federalism, the short-
lived brainchild that was the predecessor of the Contract With America. 
Congress piles up the rhetoric while dumping the tough decisions on the 
States.
  Governors are increasingly wary of this, because the cost for 
maintaining any of these programs will rest squarely on the local 
taxpayers.
  We know that Medicaid is a life-line to provide essential health care 
to low-income pregnant women, children, the disabled, and the elderly.
  It is also the safety net that rescues middle-class families when a 
factory closes down and the jobs that are available do not provide 
health insurance.
  It spares middle-class families from choosing between nursing home 
care for a parent or financing the college education of a son or 
daughter.
  I think we all agree that the Medicaid reform proposal before us 
turns the program over to the States, at greatly reduced funding 
levels.
  Despite all the disclaimers from its supporters, I remain unconvinced 
that it is anything more than a recurrence of policies that once made 
poor farms and orphanages the sanctuaries for low-income children and 
families in America.
  I agree that States should have more flexibility, but not at the cost 
of our national responsibility. Our States will find themselves 
hundreds of millions of dollars short of funds to provide necessary 
health care over the next 7 years.
  Vermont already has flexibility through the Federal waiver process.
  Vermont's plan continues the Federal/State partnership nature of 
Medicaid and enables Vermont to cover 15,000 more of the State's 
growing number of uninsured.
  This bill will nullify Vermont's initiatives to administer the 
program more economically.
  The budgetary pressure on States to make cuts in eligibility and 
benefits will be very strong. On average, States will lose 30 percent 
of their Federal Medicaid payments by the year 2002.
  There is no provision in this bill that would provide Vermont, or any 
State, with additional resources in times of economic downturn or 
recession when the Medicaid rolls have historically increased.
  Vermont will lose 10 percent on average over the next 7 years and 
cuts are backloaded so that Vermont will lose 27 percent in the year 
2002.
  This cut is estimated to reduce Federal Medicaid payments to Vermont 
by $205 million over the next 7 years.
  If the sharp reductions in Federal Medicaid funding cannot be offset 
by managed care savings or cuts in payments to providers, States will 
have to cut benefits or severely limit the number of people eligible 
unless they are willing to pay a much larger share of the cost of the 
program with State funds.
  Competition among States may contribute to the pressure to restrict 
eligibility.
  Without Federal standards, many predict a race to the bottom where no 
State wants to be seen as providing broader coverage or more generous 
benefits than its neighbors.
  While there was much talk about this bill partially retaining an 
entitlement for low-income pregnant women, children, and the disabled, 
the truth is that the bill fully follows through on the Contract With 
America proposal to provide no assurance to any low-income American 
that they will get the health care they need.
  This fact was certified by the Congressional Budget Office earlier 
this week.
  The plan also repeals requirements that now protect nursing home 
residents from being restrained, drugged, or forced to live with 
substandard care in disreputable homes.
  It replaces these safeguards with 50 separate State regulations with 
no standard minimum requirements.
  I have been pleading for Congress and the President to join in 
bipartisan negotiations on balancing the budget without jeopardizing 
the success of our health programs.
  The PRESIDING OFFICER. The Senator from Arkansas.


                            Motion To Commit

  Mr. BUMPERS. Mr. President, I send a motion to the desk and ask for 
its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Arkansas [Mr. Bumpers] moves to commit the 
     bill S. 1357 to the Committee on Finance.

  Mr. BUMPERS. Mr. President, I ask unanimous consent that reading be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The motion is as follows:


                   motion to commit with instructions

       Mr. President, I move to commit the bill S. 1357 to the 
     Committee on Finance with instructions to report the bill 
     back to the Senate within 3 days (not to include any day the 
     Senate is not in session) making changes in legislation 
     within that Committee's jurisdiction to delay the 
     effectiveness of any revenue reductions until the first 
     fiscal year in which outlays no longer exceed revenues.

  Mr. BUMPERS. Mr. President, this is very simple and straightforward. 
The Members of this body should vote for this on a purely intellectual 
basis, without regard for partisanship. That is hard for me to say, and 
I know it is hard for people around here to respond to that kind of 
request. But it simply says: Do not cut taxes until you balance the 
budget.
  I can remember not too many months ago when that idea had great 
credence in this body, on both sides of the aisle. I had even hoped at 
one time that the chairman of the Budget Committee who crafted this 
whole thing, Senator Domenici, would join me, today, with this 
amendment saying we are not going to cut taxes until we balance the 
budget. Here is what Senator Domenici said on May 29, this year, just a 
few months ago.
  ``We are working through some very, very tough terrain,'' he said, 
acknowledging that most battles lie ahead. ``But I am convinced that 
most people share our view that we must balance the budget first before 
we cut taxes.''
  Here is a chart for anybody who chooses to look at this thing 
economically and sensibly. Here it is. You cut taxes in accordance with 
$245 billion, the figure that is bandied about here, and if you cut 
taxes by $245 billion over the next 7 years you add $293 billion to the 
national debt and our children and grandchildren will pay interest on 
that $293 billion as far as you can see.
  I do not want to mix Social Security in this, but when you add this 
$300 billion, also bear in mind there are about 

[[Page S15751]]

$656 or $660 billion in Social Security surpluses that are going to be 
used. To say we are going to have a balanced budget when we are using 
Social Security surpluses, when we are $78 billion short even by the 
Republicans' own numbers, it is a scam to lead the American people to 
believe that we are going to have a balanced budget. If we never have 
another deficit after 2002, our grandchildren and great-grandchildren 
are going to pay interest on this tax cut.
  You know, the reconciliation bill provides $5,600 per year--listen to 
this--$5,600 per year in tax cuts for the wealthiest 1 percent of the 
people in this country, and the bottom 50 percent wind up with less 
money than they had before this reconciliation bill passes.
  What does that say about the values of the U.S. Congress, about their 
attitude--not toward people with stocks who get dividends and interest, 
but about working people who sweat and toil every day to keep this 
Nation going, who get nothing out of this except increases, lowered 
standard of living?
  Do you know something else? This bill stands squarely on the 
shoulders of 50 brave Democrats who, in August 1993, passed a 
reconciliation bill. I want you to think about this. If it were not for 
50 brave Senators who stood on their hind feet and voted to raise taxes 
on the wealthy and to cut spending accordingly, the Republicans would 
be faced with raising another $1.081 trillion to balance the budget.
  The senior Senator from Texas, a candidate for the Presidency, said 
we want all of those people in the back of the wagon to get out and 
help the rest of us pull. They were. Every single Republican in the 
Senate was in the back of the wagon that day when a lot of people lost 
their jobs a year and a half later for doing something so sensible. And 
here they are still in the back of the wagon taking advantage of $1.8 
trillion that the Democrats provided, the most courageous, sensible 
thing that the President of the United States has proposed since he has 
been President.
  Mr. EXON. Will the Senator yield for a second for a unanimous-consent 
request?
  Mr. BUMPERS. I am happy to yield.
  Mr. EXON. I ask unanimous consent that the unanimous-consent request 
not be charged to either side. In order to try to accommodate as many 
people as possible we are trying to shrink down this time.
  I ask unanimous consent that, rather than one-half hour of time on 
this amendment, it be reduced by 5 minutes each to 25 minutes per side.
  The PRESIDING OFFICER (Mr. Inhofe). Without objection, it is so 
ordered.
  Mr. EXON. I thank my friend and say, to accommodate a lot of people, 
we have subtracted 5 minutes.
  Mr. BUMPERS. Mr. President, our friends on the other side of the 
aisle have the best of both worlds. They can criticize and carp about 
that bill in 1993, and yet they have never tried to undo one penny of 
it; did not undo the gas tax, did not undo the 36-percent tax rate 
increase, have not done anything about the surcharge, and they get the 
benefit of over $1 trillion in balancing the budget because 50 Senators 
stood up--and 2 of them are not with us today because they did; and 
about 17 Members of the House are not with us today because they did.
  This tax cut is the height of fiscal irresponsibility. That is the 
reason we call it the fiscal responsibility amendment, to do away with 
the tax cut until we balance the budget. We have the rest of our lives 
to cut taxes. Our first chore is to keep faith with the people of this 
country.
  If you eliminate the tax cut, you do not balance the budget in the 
year 2002 even by the Republican figures. You can do it in 2001. That 
would be shocking.
  But the most important thing I want to say, Mr. President, is do not 
cut taxes when we are running this kind of a deficit. Balance the 
budget, and then talk about taxes. When you are talking about tax cuts, 
talk for a change about working people and real middle-class Americans.
  Mr. President, I yield the floor. Does anyone wish time?
  I yield to the distinguished Senator from Michigan 5 minutes.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. LEVIN. Mr. President, I thank my friend from Arkansas.
  This tax package which is contained in the massive budget 
reconciliation bill is ill timed. It is inequitable. It provides the 
$224 billion tax break which, when fully phased in, would go 
disproportionally to the wealthiest among us. Indeed, more than half of 
those tax breaks would go to the wealthiest 14 percent of Americans, 
and we are talking about the fully phased in tax package. In that tax 
package, while the upper 14 percent get over 50 percent of the tax 
reductions, 14 million Americans of modest means would actually get a 
tax increase.
  This maldistribution is reason enough to reject this tax package. But 
it becomes all the more unacceptable when one considers the extreme 
lengths to which the majority has gone to pay for these large tax 
breaks. Senior citizens are hit hard, students are hit hard, and 
working people are hit hard. But, above and beyond those flaws, there 
is the simple fact that we in this tax package would be providing tax 
cuts before assuring the reality of the deficit reduction that is 
projected. In other words, under this bill we would be spending the 
money before it is in the bank.
  We have seen this before. In 1981, President Reagan introduced the 
Economic Recovery Tax Act which had large tax cuts, and also had 
projections, aspirations, hopes, and plans that the budget would be 
balanced by 1984. The tax cuts were not made dependent upon those 
projections taking place. If they had been, we would have been a 
trillion dollars better off in those years. But it seems to me that 
history is so recent that we ought to take its lessons and say to 
ourselves that we have to get deficit reduction under our belts before 
we enact tax cuts. This time let us make sure that projections of 
deficit reductions turn out to be true before we do the easier part.
  On October 18, the Congressional Budget Office Director, June 
O'Neill, wrote the chairman of the Senate Budget Committee to provide 
the critical certification which the budget resolution calls for. The 
claims of a balanced budget are based on that certification, and the 
tax cut is based on an argument that we are reaching a balanced budget 
by 2002, which in turn is based on that certification. But when you 
read the certification, it is a bunch of hedges.
  The Congressional Budget Office letter says, ``Based on estimates 
using economic and technical assumptions underlying the budget 
resolution, assuming the level of discretionary spending specified in 
that resolution, the Congressional Budget Office projects . . .''--and 
later on the letter says--``the Congressional Budget Office projects 
that the resulting reductions in interest payments will be $50 billion 
in the year 2002 and $170 billion over the 1996-2002 period.'' Then the 
Congressional Budget Office says, ``Those projections were based on a 
hypothetical deficit reduction path.'' It is based on those 
hypothetical estimates, projections, that the balanced budget claim is 
made for the year 2002. But even more significant, for the purpose of 
this amendment which is pending, it is based on those hypothetical 
paths, projections, and estimates that the tax cut is being defended.
  This letter does not certify much except that the Congressional 
Budget Office has a long list of wiggle words which are available to 
us. And it is the foundation; it is that certification again which is 
the foundation for the assertion that the budget is going to be in 
balance in the year 2002. And you cannot help that because you have to 
have projections and estimates. But what we can avoid doing is 
providing a tax cut before we know in fact that the budget is going to 
be balanced.
  So what this amendment says is hold off the tax cuts until we balance 
the budget. In fact, let us put the money in the bank before we spend 
it.
  And, let's not be fooled by the happy talk about reaching a balanced 
budget. It is not balanced by any commonsense or legal definition. We 
know already, as Congressional Budge Office Director June O'Neill's 
letter to Senator Conrad acknowledges, this plan falls short of 
balancing the budget by $105 billion in the year 2002. This is because 
the Republican majority's budget uses 

[[Page S15752]]

the surplus in the Social Security Trust Fund to mask the real Federal 
deficit.
  The law, section 13301 of the Congressional Budget Act, states:

       [T]he receipts and disbursements of the Federal Old-Age and 
     Survivors Insurance Trust Fund and the Federal Disability 
     Insurance Trust Fund shall not be counted as new budget 
     authority, outlays, receipts, or deficit or surplus for 
     purposes of:
       (1) the budget of the United States Government as submitted 
     by the President,
       (2) the congressional budget, or
       (3) the Balanced Budget and Emergency Deficit Control Act 
     of 1985.

  And, the law further states:

       The concurrent resolution shall not include the outlay and 
     revenue totals of the old age, survivors, and disability 
     insurance program established under Title II of the Social 
     Security Act or the related provisions of the Internal 
     Revenue Code of 1986 in the surplus or deficit totals 
     required by this subsection or in any other surplus or 
     deficit totals required by this title.

  We're not only spending the dollars before they are in the bank, we 
are spending them earlier and faster than we are even projected to have 
them to spend.
  Nearly half of the savings in this budget are projected to come in 
2001 and 2002, while the tax breaks are set in law now. In fact, the 
budget resolution assumes $440 billion in discretionary spending cuts 
over 7 years. Only $18 billion of that would be cut next year, less 
than 5 percent. We know from past history what happens when tax cuts 
are put in law now while most of the actual cuts are to take place 
later.
  Some of our Republican colleagues have appeared, in public 
statements, to agree that a tax cut should be put off until we are sure 
deficits will drop as predicted. Let's join together on a bipartisan 
basis and do just that.
  I yield the floor.
  Mr. BUMPERS. Mr. President, I yield the Senator from Wisconsin 5 
minutes.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. FEINGOLD. I thank the Chair.
  Mr. President, this amendment is simple and straightforward. It 
eliminates the fiscally irresponsible and reckless tax cut that is the 
core of this fatally flawed reconciliation package.
  All the other provisions of the reconciliation bill, in my view, flow 
from this singular act of fiscal irresponsibility. Cuts to Medicare and 
Medicaid, student loans and the earned income tax credit, as well as 
the other provisions in this measure, all driven by the need to fund a 
quarter of a trillion dollar tax cut, are so out of proportion to any 
consensus the public would support that I think they doom any hope 
their supporters might have of really balancing the budget.
  Mr. President, just as we are beginning to climb out of the hole that 
was dug 14 years ago, somebody wants to shove us back in.
  Mr. President, we have made remarkable progress in lowering the 
Federal budget deficit during the 103d Congress. The President's 
deficit reduction package produced $600 billion in lower deficits and 
got us about half the way there--almost half the way there to a 
balanced budget, from over $300 billion to about $160 billion. In fact, 
Mr. President, but for the debts rung up during the 1980's, we would be 
in balance today.
  But we still do not have a balanced budget, and we cannot afford any 
tax cut--not the President, not the House, not the Senate tax cut. We 
need to balance the budget. That should be our first priority.
  Actually, Mr. President, this bill is really an alchemist's dream. 
Those who have crafted this measure have finally invented a machine 
that makes gold. The reconciliation bill really amounts to just that. 
It is a machine that makes gold. All you do is feed health care 
services for the most vulnerable among us in our Nation, and out comes 
gold.
  Of course, Mr. President, not everyone shares equally in that bounty. 
The gold from this machine largely benefits the best off in our Nation. 
The better off you are, the more you get. The less well off you are, 
the less you get.
  I am not going to dwell any further on the distribution issues 
relating to the tax cut. As I have noted many times on this floor, this 
issue comes to me as an issue of pure fiscal responsibility. Even if 
the benefits of tax cuts were more fairly distributed, I would oppose 
it. We cannot afford to cut taxes while we still face a Federal budget 
deficit of $160 billion. Nobody out there believes that makes fiscal 
sense. It is the opposite of sense. And you cannot spend $1 three 
times. You cannot say you are spending the dollar to save Medicare and 
then you are going to use the same dollar to eliminate the deficit and 
then you are going to use the dollar for tax cuts. You can only spend 
it once. This budget uses it not to save Medicare, not to reduce the 
deficit, but to fund tax cuts. For that reason, I regard this as the 
most important amendment in this process, and I urge my colleagues to 
support it.
  I thank the Chair.
  Mr. BUMPERS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arkansas.
  Mr. BUMPERS. I wonder if the minority leader has a speaker here he 
wishes to recognize at this point?
  Mr. ABRAHAM. Is the Senator referring to me?
  Mr. BUMPERS. Yes.
  Mr. ABRAHAM. He mentioned the minority leader.
  Mr. BUMPERS. Majority leader. I am sorry; I have a hard time breaking 
the habit.
  Mr. ABRAHAM. I will have somebody here shortly. If the Senator has a 
short speech, we would be ready to go after that.
  Mr. BUMPERS. Mr. President, I yield 5 minutes to the Senator from 
North Dakota.
  Mr. DORGAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Like the previous amendments, this one is also painfully 
simple. It is an amendment that will not take a dozen staff to explain, 
an amendment that will not take a great deal of research, an amendment 
that probably should not take a great deal of thought. No one can 
misunderstand what this is. This amendment says we ought not do a tax 
cut until the budget is balanced. Do not serve dessert before the main 
course.
  It is a pretty simple proposition. My expectation is they will not 
want to vote on that either. We have been here 30 hours. They do not 
want to give a vote on Medicare so we will not get a vote on this. One 
of these days we will, I guess.
  Let me talk about the proposed tax cut. This is the center pole in 
the tent called Contract With America. This is the center pole of the 
tent, the tax cut. And I understand why. It is enormously popular. Go 
take a poll and ask people: Would you like a tax cut? Heck, yes, I 
would like a tax cut; the bigger the better.
  So I understand why it is there. This is about polls and focus groups 
and finding out what is popular--let us give a tax cut. I wonder how 
the American people would feel if they were told that every dollar of 
this tax cut will be borrowed in order to give it. In other words, we 
are going to increase the Federal debt during these 7 years with this 
plan by $660 billion roughly--this plan, a $660 billion increase in the 
debt and then a $245 billion tax cut. In other words, every single 
dollar plus much more will be borrowed. We will borrow money, float 
bonds to give a tax cut, a substantial portion of which will go to 
upper income Americans.
  I think most people would say, well, that does not make much sense. 
But that is not what this debate is about--sense. If it were about 
sense, we would not even have to offer this amendment. We would have 
people say let us do the honest work and the tough work, the heavy 
lifting to balance the Federal budget. Let us do that. When we are done 
with that, then let us talk about the Tax Code, what is wrong with it, 
how do we fix it, who gets a tax cut.
  That is not what we are doing. What we are doing is pretending to 
balance the budget and saying now that we pretend to balance the 
budget, we will offer up a tax cut. Unfortunately, we have a letter 
dated October 20 from the Director of the Congressional Budget Office. 
I asked, is the budget in balance in the year 2002? The answer is no--
$105 billion deficit in 2002. That is, of course, if you take the 
Social Security trust funds and put them in the Social Security trust 
funds where they should be. If you take them out and use them as 
operating revenue, then you balance the budget.
  I guess those who took remedial accounting and believe that double 
entry 

[[Page S15753]]

bookkeeping means you can use money twice in two different places at 
the same time, I guess they are comfortable and they can sleep with 
this. But, of course, if you were in private business and said, let me 
take the money out of my employees' pension funds and use it on my 
operating statement, you would be doing years at hard tennis at some 
minimum security prison. Instead, it is ``budget technique'' to say, 
let us misuse Social Security trust funds, show a balanced budget in 
the year 2002 by misusing that money, and then claim we have a balanced 
budget so we are going to give a tax cut. Every single dollar of this 
tax cut will be borrowed in the next 7 years and every Member of this 
Senate knows it. They can pretend they did not hear or they did not 
know; it escaped their attention. But they know it. This amendment is 
very simple. It is called a ``fiscal responsibility amendment.'' It 
says, let us do the tough, honest work first, get the budget balanced, 
really balanced, and then let us decide how to fix our tax system.
  Having said all of that, I hope one of these hours we will get a vote 
first on Medicare and then on the sequential amendments because these 
are not difficult for anybody to understand.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. ABRAHAM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. ABRAHAM. Mr. President, I yield myself such time as I need. I 
will be very brief, and then I will yield further time on our side.
  Mr. President, the fact is it is not surprising that the minority is 
arguing against tax cuts. They are the party that raised taxes in this 
country in the last Congress by a record-setting $270 billion. In my 
State and across America, everywhere I go, the people I talk to say we 
need a tax cut to make ends meet. The middle-class squeeze we talk 
about on the floor all the time is in no small measure the result of 
the fact that today in America average families send $1 to Washington 
for every $4 they earn versus $1 for every $50 they earned back in the 
1950's and the 1960's. Those are the families who are paying the bills 
and paying the taxes.
  As we go through the belt-tightening process here in Washington to 
bring down the deficit, we believe it is only fair to let those hard-
working families keep more of what they earn. What we have been 
presented with today is an amendment that says to all of those 
families: Wait. Wait, American families, hard-working families, for 
your $500 tax credit. Wait, spouses who work in the home, before you 
get your IRA. Wait, to people who want to adopt and need a little help 
making an adoption feasible. Wait, to jobseekers who need the 
opportunities created by progrowth tax cuts.
  We believe the waiting should be over. We say this: If America's 
taxpayers want to wait for the Democrats and President Clinton to 
produce a tax cut, fine. But we have already gone through a lot of 
waiting for the tax cut that was promised in the 1992 campaign by the 
President. It has never been delivered. The waiting that this amendment 
suggests will have to continue will also be undelivered. We are 
prepared to allow hard-working families to realize tax savings now.
  At this time I yield 6 minutes to the Senator from Alabama.
  The PRESIDING OFFICER. The Senator from Alabama.
  Mr. SHELBY. Mr. President, we have entered a new age in American 
politics. All of us know that. The days are long gone when elected 
officials can get elected, duck controversy, avoid hard choices, and, 
yes, hide from the judgment of the people. Governing in 1995 requires 
hard choices, adherence to principle and accountability. As party 
defections increase, as State legislatures and governorships change 
hands, my former colleagues on the other side of the aisle scratch 
their heads and ask why. The answer is simple, Mr. President. On the 
other side of the aisle there is no accountability and no willingness 
to make hard choices.
  Instead, I believe they remain wedded to the status quo politics and 
policies that have led this country to the verge of bankruptcy.
  For 60 years the other side has steadily created a Federal monster 
that now handles $1 out of every $4 in our economy. While the growth of 
the Government that past half century is stunning, it should come as no 
surprise to all of us. The politics of the status quo promoted on the 
other side of the aisle operates on the simple premise that the 
American people will always trade their freedom and their hard-won 
dollars for the promise of Government security.
  ``Tax and spend.'' Yes, Mr. President, ``tax and spend, and the 
docile American people will never resist. Tax and spend, tax and spend, 
and the American people will never support the reform or repeal of a 
Government program. Make the American people dependent on the Federal 
Government for everything from income and health care to business 
subsidies, and they will never resist or even reject us.''
  These, Mr. President, I believe, are the maxims by which the agents 
of the status quo operate. But, Mr. President, the agents opposed to 
change have vastly underestimated the American people. The reason, Mr. 
President: The price of a balanced budget is so high that the American 
people will reject any politician who attempts to do the right thing 
and bring the budget into balance. They are dead wrong. We are allowing 
families to keep more of their hard-earned dollars, and we are ending 
welfare as we know it, and, above all, we are balancing the budget. The 
agents of change have a solemn obligation to do the unheard of, keep 
their promises. And I believe we will.
  Mr. President, I would just like to show two charts in the short time 
I have of what parents can purchase with a $500-per-child tax credit in 
America.
  For example, with a $500 tax credit, items parents can purchase: a 
winter jacket, $30; winter boots, $30; athletic socks, $6.50, six pairs 
of those; a sweat shirt, $12; books, $100; a tutor for their child, 
$230, 32 hours. That is $498.50. We checked it out.
  We also have another chart for the $500 tax credit. Parents can 
purchase 847 jars of baby food or, Mr. President, 2,370 disposable 
diapers or approximately 6 months of electric bills.
  The $500 tax credit for working families in America is real, and they 
need it.
  Ms. MIKULSKI. Mr. President, I rise in strong support of the fiscal 
responsibility amendment. Mr. President, we should not cut taxes until 
we balance the budget. This reconciliation legislation cuts taxes 
before the budget is balanced. This is like eating dessert before 
dinner.
  I support a balanced Federal budget and I have voted for significant 
deficit reduction over the past 2 years. But reducing the deficit 
cannot be accomplished if we are simultaneously cutting taxes for the 
wealthiest of Americans.
  This is fiscally irresponsible. This highlights the Republican's real 
priority in this reconciliation bill--cutting taxes for the wealthiest 
Americans.
  Balancing the budget must be based on principles that uphold basic 
values. Protecting our seniors, providing opportunities for our young 
people, and protecting the ladders of opportunity for working families 
are my guiding principles. This reconciliation legislation violates 
those principles by gutting Medicare and Medicaid, cutting student 
loans and repealing the earned income tax credit [EITC].
  The fact is Mr. President, the Republican tax cut would add nearly 
$300 billion to the national debt by 2002. All but the last few billion 
of the tax cut is borrowed money, under the Republicans own deficit 
reduction timetable.
  This reconciliation bill is fiscally irresponsible--and don't think 
otherwise. Requiring the budget to be balanced before we cut taxes is 
the responsible, fair and principled action to take. That's what this 
amendment ensures. This amendment also ensures that future tax cuts 
will be targeted to low and moderate-income working American families, 
not the wealthiest Americans. That is why I support this amendment and 
urge my colleagues to support it.
  Mr. President, the tax cuts proposed by the Republicans are fiscally 
disastrous. I urge my colleagues to vote for fairness and common sense 
and vote for this amendment.
  Mr. ROBB. Mr. President, I have long believed that it would take 
courage and wisdom to develop and implement a plan that would lead to a 
balanced budget. Without the courage to make tough choices and the 
wisdom to place budget policy above partisan politics, 

[[Page S15754]]

our ability to develop an equitable plan that can stand the test of 
time and public opinion is severely limited.
  While I give our Republican friends credit for bringing this package 
to the floor, I must say that a certain element of this plan does not 
reflect courage, wisdom or equity. A particular concern to me is the 
tax breaks which have been included in the bill.
  Mr. President, it does not take courage to cut taxes. That is one of 
the easiest votes a legislator can cast. What takes courage is to 
revisit politically popular tax cuts at a time we have a nearly $5 
trillion debt, and even a unified balanced budget is at least 7 years 
away if we get there at all. And for all the talk about fiscal 
responsibility recently, how can we endorse a $245 billion tax cut that 
makes balancing the budget much more difficult and adds to the debt 
over the next 7 years?
  Mr. President, I was one of three Democrats who supported the 
original Senate budget resolution this year because I strongly believe 
that we have a responsibility to make tough choices that are necessary 
to balance the budget.
  Unfortunately, during the budget resolution conference between the 
House and the Senate, fiscal responsibility gave way to political 
expediency as tax breaks were added up front and the deep spending 
reductions moved into the next century. Were these particular changes 
wise? In my judgment, absolutely not.
  I think most in this Chamber would agree we should not be cutting 
taxes until we prove capable of carrying out these spending reductions 
and actually balance the budget.
  If we get further down the road and decide spending reductions, 
particularly Medicare and Medicaid, in this plan are politically 
unsustainable, I fear, Mr. President, that we will abandon the spending 
cuts and leave the tax cuts in place at a time when their cost will 
begin to explode. And as we have seen before, the end result will be we 
will simply be further away from a balanced budget.
  The last point I would like to address is equity. Including the tax 
cut in this plan is not equitable. At a time when we are asking the 
American public to sacrifice by restraining the growth of programs 
which benefit low- and-moderate-income individuals, how can we, in good 
conscience, adopt a tax cut which, according to the Treasury Department 
estimates, will disproportionately benefit upper-income Americans? I 
simply cannot agree.
  Including $245 billion in tax cuts in this budget package is not 
courageous, it is not wise, and it not equitable. I would implore my 
colleagues to reject the proposition that we should have tax cuts 
before we have a balanced budget.
  With that, Mr. President, I yield the floor, and I thank the Chair.


        your're right mr. president, you raised taxes too much!

  Mr. ROTH. Mr. President, why after shackling American middle-class 
families with the largest tax increase in history, has Bill Clinton 
finally admitted that he made a mistake? Why does his confession come 
just days before Congressional Republicans are scheduled to meet in 
conference to finish one of the largest tax cut proposals since the 
Kemp-Roth income tax rate reductions brought our economy roaring back 
in the 1980's?
  Because Bill Clinton knows his taxes did not deliver on his promise 
to improve the economy, bring down interest rates, and thereby reduce 
the deficit.
  Tax increases never do.
  History proves that increases actually poison economic growth while 
tax cuts unlock capital, encourage savings, improve investment, and 
create jobs, opportunity, and growth.
  Kemp-Roth led to the longest peacetime economic expansion in history. 
Eighteen million jobs were created, along with four million new 
businesses. Family income rose and home ownership boomed as interest 
rates and inflation fell. At the same time, Treasury revenues doubled, 
not because Americans were paying a higher percentage of their income 
to taxes, but because Americans had higher incomes.
  We must unlock this kind of growth again. Only by creating an 
environment where our economy can expand can we simultaneously cut the 
deficit and meet necessary Government obligations.
  Last spring the House passed a 7-year $354-billion tax reduction 
package, 76 percent of which, would go to family relief, and 24 percent 
to job creation. The plan offers a $500-a-child tax credit, encourages 
savings and investment, and offers other incentives for economic 
growth.
  The proposal recently passed by the Senate Finance Committee cuts 
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--and, like its House counterpart, contains incentives that will 
encourage savings, investment, capital formation, and business growth. 
These provisions mean more jobs for Americans, greater economic 
security for our families, and 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 both proposals 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 that in 
Washington we will change business as usual. The current 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.
  Our proposals represent a major step toward correcting these 
deficiencies, and because we have cut spending, our bill balances the 
budget while making room for tax relief. The House has acted. Now, the 
full Senate must pass the Finance Committee's proposal. Following a 
House-Senate conference to iron out any differences between the bills, 
both Chambers must pass this historic reform, and the President must 
sign it into law.
  Americans need relief. Our economy needs a shot in the arm. Even Bill 
Clinton has admitted as much. We 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.
  He admits he made a mistake. Working together, we can fix it.
  Martin Feldstein, former Chairman of the President's Council of 
Economic Advisers and professor of economics at Harvard University 
spells out in a very livid fashion what the 1993 tax increases really 
did in an article in The Wall Street Journal. I request that article be 
included in the Record in its entirety.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

                     [From The Wall Street Journal]

                 What the '93 Tax Increases Really Did

                         (By Martin Feldstein)

       President Clinton was right when he recently told business 
     groups in Virginia and Texas that he had raised taxes too 
     much in 1993, perhaps more so than he realizes. We now have 
     the first hard evidence on the effect of the Clinton tax rate 
     increases. The new data, published by the Internal Revenue 
     Service, show that the sharp jump in tax rates raised only 
     one-third as much revenue as the Clinton administration had 
     predicted.
       Because taxpayers responded to the sharply higher marginal 
     tax rates by reducing their taxable incomes, the Treasury 
     lost two-thirds of the extra revenue that would have been 
     collected if taxpayers had not changed their behavior. 
     Moreover, while the Treasury gained less than $6 billion in 
     additional personal income tax revenue, the distortions to 
     taxpayers' behavior depressed their real incomes by nearly 
     $25 billion.


                             how it happens

       To understand how taxpayer behavior could produce such a 
     large revenue shortfall, recall that the Clinton plan raised 
     the marginal personal income tax rate to 36% from 31% on 
     incomes between $140,000 ($115,000 for single taxpayers) and 
     $250,000, and to 39.6% on all incomes over $250,000. 
     Relatively small reductions in taxable income in response to 
     these sharply higher rates can eliminate most or all of the 
     additional tax revenue that would result with no behavioral 
     response.
       If a couple with $200,000 of taxable income reduces its 
     income by just 5% in response to 
     
[[Page S15755]]

     the higher tax rate, the Treasury loses more from the $10,000 
     decline in income ($3,100 less revenue at 31%) than it gains 
     from the higher tax rate on the remaining $50,000 of income 
     above the $140,000 floor ($2,600 more revenue at 5%); the net 
     effect is that the Treasury collects $600 less than it would 
     have if there had been no tax rate increase.
       Similarly, a couple with $400,000 of taxable income would 
     pay $18,400 in extra taxes if its taxable income remained 
     unchanged. But if that couple responds to the nearly 30% 
     marginal tax rate increase by cutting its taxable income by 
     as little as 8%, the Treasury's revenue gain would fall 67% 
     to less than $6,000.
       How can taxpayers reduce their taxable incomes in this way? 
     Self-employed taxpayers, two-earner couples, and senior 
     executives can reduce their taxable earnings by a combination 
     of working fewer hours, taking more vacations, and shifting 
     compensation from taxable cash to untaxed fringe benefits. 
     Investors can shift from taxable bonds and high yield stocks 
     to tax exempt bonds and to stocks with lower dividends. 
     Individuals can increase tax deductible mortgage borrowing 
     and raise charitable contributions. (I ignore reduced 
     realizations of capital gains because the 1993 tax rate 
     changes did not raise the top capital gains rate above its 
     previous 28% level.)
       To evaluate the magnitude of the taxpayers' actual 
     responses, Daniel Feenberg at the National Bureau of Economic 
     Research (NBER) and I studied the published IRS estimates of 
     the 1992 and 1993 taxable incomes of high income taxpayers 
     (i.e., taxpayers with adjusted gross incomes over $200,000, 
     corresponding to about $140,000 of taxable income). We 
     compared the growth of such incomes with the corresponding 
     rise in taxable incomes for taxpayers with adjusted gross 
     incomes between $50,000 and $200,000. Since the latter group 
     did not experience a 1993 tax rate change, the increase of 
     their taxable incomes provides a basis for predicting how 
     taxable incomes would have increased in the high income group 
     if its members had not changed their behavior in response to 
     the higher post-1992 tax rates. We calculated this with the 
     help of the NBER's TAXSIM model, a computer analysis of more 
     than 100,000 random, anonymous tax returns provided by the 
     IRS.
       We concluded that the high income taxpayers reported 8.5% 
     less taxable income in 1993 than they would have if their tax 
     rates had not increased. This in turn reduced the additional 
     tax liabilities of the high income group to less than one-
     third of what they would have been if they had not changed 
     their behavior in response to the higher tax rates.
       This sensitivity of taxable income to marginal tax rates is 
     quantitatively similar to the magnitude of the response that 
     I found when I studied taxpayers' responses to the tax rate 
     cuts of 1986. It is noteworthy also that such a strong 
     response to the 1993 tax increases occurred within the first 
     year. It would not be surprising if the taxpayer responses 
     get larger as taxpayers have more time to adjust to the 
     higher tax rates by retiring earlier, by choosing less 
     demanding and less remunerative occupations, by buying larger 
     homes and second homes with new mortgage deductions, etc.
       The 1993 tax law also eliminated the $135,000 ceiling on 
     the wage and salary income subject to the 2.9% payroll tax 
     for Medicare. When this took effect in January 1994, it 
     raised the tax rate on earnings to 38.9% for taxpayers with 
     incomes between $140,000 and $250,000 and to 42.5% on incomes 
     above 250,000. Although we will have to wait until data are 
     available for 1994 to see the effect of that extra tax rate 
     rise, the evidence for 1993 suggests that taxpayers' 
     responses to the higher marginal tax rates would cut personal 
     income tax revenue by so much that the net additional revenue 
     for eliminating the ceiling on the payroll tax base would be 
     less than $1 billion.
       All of this stands in sharp contrast to the official 
     revenue estimates produced by the staffs of the Treasury and 
     of the Congressional Joint Committee on Taxation before the 
     1993 tax legislation was passed. Their estimates were based 
     on the self-imposed ``convention'' of ignoring the effects of 
     tax rate changes on the amount that people work and invest. 
     The combination of that obviously false assumption and a 
     gross underestimate of the other ways in which taxpayer 
     behavior reduces taxable income caused the revenue estimators 
     at the Treasury to conclude that taxpayer behavior would 
     reduce the additional tax revenue raised by the higher rates 
     by only 7%. In contrast, the actual experience shows a 
     revenue reduction that is nearly 10 times as large as the 
     Treasury staff assumed.
       This experience is directly relevant to the debate about 
     whether Congress should use ``dynamic'' revenue estimates 
     that take into account the effect of taxpayer behavior on tax 
     revenue. The 1993 experience shows that unless such behavior 
     is taken into account, the revenue estimates presented to 
     Congress can grossly overstate the revenue gains from higher 
     tax rates (and the revenue costs of lower tax rates). 
     Although the official revenue estimating staffs claim that 
     their estimates are dynamic because they take into account 
     some taxpayer behavior, the 1993 experience shows that as a 
     practical matter, the official estimates are close to being 
     ``static'' no-behavioral-response estimates because they 
     explicitly ignore the effect taxes on work effort and grossly 
     under estimate the magnitude of other taxpayer responses.


                           current proposals

       In Congress had known in 1993 that raising top marginal tax 
     rates from 31% to more than 42% would less than $7 billion a 
     year, including the payroll tax revenue as well as the 
     personal income tax revenue, it might not have been possible 
     for President Clinton to get the votes to pass his tax 
     increase.
       Which brings us back to President Clinton's own statement 
     (half-recanted the next day) that he raised taxes too much in 
     1993. Congress and the president will soon be negotiating 
     about the final shape of the 1995 tax package. The current 
     congressional tax proposals do nothing to repeal the very 
     harmful rate increases of 1990. Rolling back both the 
     personal tax rates and the Medicare payroll tax base to where 
     they were before 1993 would cost less than $7 billion a year 
     in revenue and would raise real national income by more than 
     $25 billion. Now that the evidence is in, Congress and the 
     president should agree to undo a bad mistake. 
  Mr. BUMPERS. I yield the Senator from Florida 2 minutes.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. GRAHAM. Mr. President, we have just heard a speech about change 
versus the status quo. This is one place in which we are all together. 
This is the status quo. This is deja vu all over again. We started this 
process of saying that we were going to meet deficit reduction targets 
and committed to the American people our frugality and our dedication 
to their attainment.
  We did it under what was called Gramm-Rudman. And in the years from 
1986 to 1990, those 5 years, we had deficit-reduction targets for 
Gramm-Rudman that were supposed to bring us to a balanced budget early 
in this decade.
  What did it, in fact, bring us? More enormous deficits. And every 
year of Gramm-Rudman, from 1986 to 1990, we failed to meet the deficit 
reduction target. In fact, the total amount of our excess deficits, 
deficits beyond the target, was $201 billion over those 5 years.
  Did we change that pattern after President Bush went to Andrews Air 
Force Base and negotiated a new deficit-reduction plan? We did not--in 
1991, 1992, 1993, again, failure to meet the deficit reduction targets 
in excess of $150 billion in just those 3 years.
  Mr. President, we delude ourselves, we repeat the status quo, not 
engage in change if we are saying that we are going to give ourselves 
this tax benefit before we demonstrate, first, that we have a serious, 
credible plan for balancing the Federal budget that is not just smoke, 
mirrors and ideas in the minds of a few people, but rather concrete law 
that has been passed, signed by the President and is a firm national 
contract and commitment to its attainment, and, second, a period of 
demonstrated fidelity to that plan and performance under that plan.
  I am the grandfather of eight young boys and girls. I know one thing 
about children: They like to eat their dessert before they will eat 
their spinach. That is what we are being asked here to do, is eat the 
cake and ice cream before we have the carrots and peas. I think we 
should not go down that path one more time.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. BUMPERS. Mr. President, I yield 2 minutes to the Senator from 
Nebraska.
  Mr. KERREY. The Senator from Alabama's speech was earlier. It was 
helpful. I have to pick up some groceries on the way home. But I did 
not find it to be terribly helpful in this debate, saying that 
Democrats have no accountability, that Democrats are not willing to 
make hard choices, that we are for the politics of the status quo. That 
is just bunk.
  I just stood out on the Capitol steps a little while ago endorsing a 
Democratic proposal that balanced the budget in 7 years, making very 
tough choices but without this tax cut. And one of the hard truths that 
we have to face right now is, the truth of the matter is Republicans in 
America, Mr. President, not Republicans in this Congress, by the New 
York Times poll this morning, Republicans in America oppose the tax 
cut. Indeed, more Democrats in America support the tax cut. And the 
most revealing thing of all is that the lower the income goes of 
working people, the more they favor a tax cut. Unfortunately, they do 
not benefit from this tax cut.
  Indeed, as a consequence of change in the earned income tax credit, 
and according to the Republican Joint Tax Committee, every family under 
$30,000 will have a tax increase.

[[Page S15756]]

  It is remarkable, Mr. President, in addition to not needing to cut 
taxes, we have got plenty of tough choices to make, and I hope we are 
able to vote in a bipartisan fashion for tough choices, that break the 
status quo of deficit financing and move us to a balanced budget.
  But those are not the only goals that we need to move toward. That is 
not the only status quo that we need to make. We had another million 
Americans that moved into the ranks of the uninsured in 1994. We have 
another 1.5 million that will move to be uninsured in health care as a 
consequence of what is happening in the health care industry.
  Almost 50 percent of the babies born in the State of Texas are paid 
for by Medicaid, working people, Mr. President, as a consequence of the 
status quo. There are lots of changes that need to be made. I am 
willing to make tough votes to change the status quo and move to a 
balanced budget, but not with a $245 billion tax cut that does not 
benefit the Americans that need to be benefited.
  Mr. BUMPERS. How much time remains?
  The PRESIDING OFFICER. Three and a half minutes.
  Mr. BUMPERS. I yield 2 minutes to the Senator from Connecticut.
  Mr. DODD. Mr. President, I thank my colleague for yielding.
  Mr. President, really what we are suggesting with this amendment is 
two concepts here: It is fiscal responsibility and equity. I know that 
there are those who believe that these tax breaks are critical. Some, I 
believe, honestly believe, I think, this is going to create some sort 
of a massive new growth, although there are no studies that I know of 
that indicates that is the case at all. But the cruel, hard facts here, 
Mr. President, are that what we are talking about is a deficit that 
will increase.
  According to the hand-selected head of the Congressional Budget 
Office by our friends on the other side, they have said this produces a 
deficit, this proposal, in excess of $93 billion. So for those who are 
seeking fiscal responsibility, the inclusion of $245 billion in tax 
breaks does not get us there.
  So, Mr. President, on the question of fiscal responsibility, this is 
irresponsible. On the issue of equity, what we are doing here with this 
proposal is we are taking significant cuts, far beyond what is needed 
to restore the integrity of Medicare or Medicaid, in order to pay for 
tax breaks, the bulk of which go to people at an upper-income category 
and simultaneously increasing the tax obligation of those people at the 
working class category.
  If you make $30,000 or less, you have got a $352 tax increase. That 
is what is in this bill. It is in black and white, a $352 tax increase.
  If you are the top 1 percent of income earners, your tax break is 
almost $6,000. That is not equitable, Mr. President. It is not fiscally 
responsible, and it is not equitable. And for that reason, we urge our 
colleagues to support this amendment.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. BUMPERS. Mr. President, let me just close by saying that I can 
remember when there were about 10 Republicans last summer who were 
strongly opposed to a tax cut until we balanced the budget. I do not 
think the majority leader was very keen for it. And the Senator from 
New Mexico, chairman of the Budget Committee, was devoutly opposed to 
it.
  So what happened along the way? I can only conclude that Newt 
Gingrich said, ``This is the major part of the contract. You do not 
have any choice. You have got to abandon all economic reason and sanity 
and vote for this tax cut.''
  It is the height of fiscal irresponsibility to do it. But even more 
importantly, it is a social disaster. It makes the working people of 
this country second-class citizens. They are in the second tier. I do 
not want to say the idle rich, but the rich who do not work, who get 
their income from the sweat of somebody else's brow, they are in the 
first-class tier.
  Mr. President, the real tragedy is the American people are not asking 
for this. If you look at the New York Times poll this morning, the 
American people are strongly opposed to a tax cut until we balance the 
budget.
  Here is a USA poll taken in December of 1994. Seventy percent of the 
people in this country said, ``We want the budget balanced before you 
cut taxes.''
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. BUMPERS. Mr. President, what is the parliamentary situation?
  The PRESIDING OFFICER. The Senator from Michigan controls 19 minutes. 
The time has expired on your side.
  Mr. ABRAHAM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. ABRAHAM. Mr. President, at this time, we are prepared to yield 
back the remainder of our time. I inquire before I do as to whether the 
Senator from Nebraska is prepared to proceed with their next amendment? 
If not, until they are ready I will probably be putting in a quorum 
call request without the time running against either side.
  Mr. President, I yield back the remainder of my time. I suggest the 
absence of a quorum, and I ask unanimous consent that the time not run 
against either side.
  The PRESIDING OFFICER. Without objection, it is so ordered. The clerk 
will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. ABRAHAM. 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. ABRAHAM. Mr. President, at this time, I yield 5 minutes to the 
Senator from Texas, to be taken off our time on the bill.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. GRAMM. Mr. President, if you are looking at our budget which is 
now before the Senate, it addresses two basic facts that I believe 
alarm all working Americans.
  The first fact is that the average family in America with two little 
children, which in 1950 was sending $1 out of every $50 it earned to 
Washington, DC, is today sending $1 out of every $4 it earns to 
Washington, DC. And if over the next 20 year, we do not start a new 
spending program nor eliminate an existing one, to pay for the 
Government we have already committed to will mean that in 20 years the 
average working family in America with two children will be sending $1 
out of every $3 they earn to Washington, DC.
  Bill Clinton looks at that trend and says, ``Great, let's 
accelerate.'' We look at it and say, ``It has to be stopped and it has 
to be reversed.'' And that is exactly what we do in our budget.
  The second figure is a very simple fact and it is an alarming fact. A 
baby born in America today, if the current trend of Government spending 
continues unabated, will pay $187,000 of taxes in their working 
lifetime just to pay interest on the public debt. That is not just 
economic suicide, that is immoral, and we are determined to stop it.
  Here is basically where we are. We have written a budget that over 7 
years comes into balance. President Clinton has trumpeted the fact that 
the deficit today is down, but he does not show us that his own budget 
office shows that under his budget, and the Congressional Budget Office 
shows convincingly, that the deficit now skyrockets under the Clinton 
budget. He has sent us not one but two budgets, and under both of those 
budgets, the deficit explodes.
  We have proposed a budget that achieves balance in 7 years, and now 
the President is saying to us that unless we increase spending on 
programs that we do not need and we cannot afford that the President is 
going to veto our budget.
  Well, Mr. President, let me say as one Member of the Senate, there is 
no circumstance under which I am going to go back and rewrite our 
budget. There is no circumstance under which I am going to agree to 
increase spending, to continue the deficit spree that threatens the 
future of our country and that threatens the future of our children.
  We have proposed a budget that cuts taxes. It gives a $500 tax credit 
per child for every working family in America. What it means is that if 
we are successful next year, every working family in America that pays 
taxes that has two children will get to keep $1,000 more of what they 
earn to invest in their own children, to invest in their 

[[Page S15757]]

own family, to invest in their own future.
  Now Bill Clinton says the Government can spend the money better than 
that family can spend the money. We reject that. We think history 
proves that notion is wrong and we are confident that the people who do 
the work and pay the taxes and pull the wagon in America agree with us.
  Our $500 tax credit per child, our elimination of the marriage 
penalty will mean that the average working family in my State will get 
to keep $1,100 more of their hard-earned income to invest in their own 
future, to invest in their own children, and we want that to happen.
  We talk so much about balancing the budget, but it has been so long 
since we have done it that people forget what the benefits of a 
balanced budget are. First of all, since we are balancing the budget 
and cutting taxes, the first benefit for a working family with two 
children is they get to keep $1,000 more of what they earn.
  But a balanced Federal budget would mean on an average mortgage of 
the average working family, that their mortgage payments per year over 
the next 20 years would be $1,664 less per year. In buying a new car 
every 4 years and financing it, as most working Americans have to do, 
they would pay $180 less in interest costs for buying that car every 
year because we balanced the budget.
  Because we will have more growth when income is going into expanding 
the economy, that is $1,385 of income for every working family.
  You add it all up and the average family in America gains, I repeat, 
gains $4,229 a year directly from a balanced budget. It means over 1.75 
million more jobs annually and reducing the national debt mortgage on 
our grandchildren by $66,000.
  This budget is a choice: Do you want more income, lower interest 
rates, higher growth, more jobs, less debt on your grandchildren and to 
keep more of what you earn?
  We say, ``Yes.'' The Democrats say, ``No, Government can do it 
better.''


                            Motion to Commit

  Mr. BAUCUS. Mr. President, I send a motion to the desk.
  The PRESIDING OFFICER. The clerk will report the motion.
  The assistant legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus] moves to commit the 
     bill S. 1357 to the Committee on Finance with instructions to 
     report the bill back to the Senate within 3 days (not to 
     include any day the Senate is not in session) making 
     changes in legislation within that Committee's 
     jurisdiction to reduce revenue reductions attributable to 
     tax breaks benefiting upper-income taxpayers over the next 
     seven years in an amount necessary to avoid unfair cuts in 
     Medicare payments to rural hospitals and other rural 
     health care providers, to maintain federal support at the 
     levels recommended by the President of the United States 
     for federal agriculture and nutrition programs, and to 
     maintain levels of federal support for education and child 
     care in rural America.

  Mr. BAUCUS. Mr. President, I ask unanimous consent that the time 
allotted be reduced to 15 minutes, equally divided.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ABRAHAM. Mr. President, on behalf of our side, we will agree to 
that.
  Mr. BAUCUS. Mr. President, the whole country knows about the Medicare 
cuts in this budget, and the threats they present to rural hospitals 
and to health care for seniors.
  A lot of people know that a few days ago, the House Speaker Newt 
Gingrich called this bill the round one in a long-term plan to kill 
Medicare.
  Many people know how deeply it will cut student loans and assistance 
for elementary and secondary education.


                           the 1995 farm bill

  But very few people know that this year, the budget is also the farm 
bill. It will reauthorize all the commodity programs and the 
Conservation Reserve Program. It will eliminate several more. 
Altogether, for the next 7 years, it sets our national agriculture 
policy.
  It is supposed to keep rural economies stable. And it should 
guarantee consumers a safe and dependable food supply at a reasonable 
price. But on the Senate floor today, we have something entirely 
different.
  I am sorry to say it, but laying everything about Medicare, tax 
increases on people making less than $30,000 a year, education and the 
rest aside, this is a terrible farm bill.


                           written in secret

  First, it is partisan. It is a hard-line, ideological approach to 
agricultural policy, not an effort to bring people together and take 
the best from everyone.
  Second, it is secretive. It was written behind closed doors. And 
very, very few Americans even know it is up on the floor today.
  At an absolute maximum, the agricultural part of this budget will get 
a grand total of 50 minutes for debate. It is a scandal, but it is not 
a surprise. Because if this were my bill, I would not want to say much 
about it either.
  But in any case, I want to welcome all my colleagues to the debate on 
the 1995 farm bill. I imagine the other side will be awfully quiet. But 
we're here to make up for it.

  We are going to use these 45 minutes to tell the truth about the big, 
gobbling, turkey out here on the Senate floor. And then we'll give the 
other folks a second chance.
  Our motion to recommit will restore the traditional, bipartisan 
approach to agricultural policy. We can work together, restore some 
fairness and moderation. And if we adopt this motion, our friends on 
the other side of the aisle can have something to be proud of when they 
go home and talk to their farmers.


                        seven lean years to come

  If you have read Genesis, chapter 41, you know the story of Joseph's 
dream. He compared the 7 years to come with:

       seven kine . . . poor and very ill favoured and lean-
     fleshed, such as I never saw in all the land of Egypt for 
     badness.

  These seven ill-favored cattle ate up the good cattle, just as seven 
ears of corn, ``withered, thin and blasted with the east wind'' ate up 
seven good ears of corn. So Joseph could tell that the future would 
bring 7 years of trouble--7 lean years, in which ``all the plenty shall 
be forgotten in the land of Egypt.''
  Well, we may not be as wise as Joseph. And the days of inspired 
prophecy may be gone. But on the other hand, we have a lot more than a 
dream to go on. We have hard facts and numbers. And these facts and 
numbers tell us that our farmers have 7 pretty lean years ahead.
  This bill makes dramatic cuts in farm supports, which have already 
been cut 60 percent in the past decade. If this turkey survives 
Thanksgiving of 1995, the year 2002 will see us fund just half of 
today's Conservation Reserve Program. Bad for farmers, bad for hunters, 
bad for recreation.
  The Emergency Livestock Feed Assistance Program will end. Our 
deficiency payments--the safety net our producers need in tough times--
will be capped. In the very worst years, when our producers need help 
most, it won't be there.
  Then look at nutrition. School lunch, daycare meals, and meals for 
senior citizens are all cut. And these are not surgical strikes--these 
are repeated blows with a meat axe.
  These cuts affect more than farmers. They affect all of rural 
America. Schools, grocers, bankers, fuel dealers, equipment and 
automobile dealerships, and even our local and county governments will 
all feel the pinch.
  And we are doing all this at a time when our competitors in Europe 
are not giving up a thing. They already give their farmers over 10 
times the export subsidies we provide.
  This budget cuts the Export Enhancement Program by 20 percent, and 
market promotion by 30 percent. We will end up exporting less, and that 
means lower incomes for farmers.


                   keeping young people off the land

  Finally, maybe the most painful item of all. That is the apparent 
exclusion of beginning farmers from all these services. This spring I 
went to a lot of high school graduations in rural Montana. Places like 
Geyser, Hobson, Stanford, Opheim, Harlem and Dodson.
  We have some great kids in these communities. They are looking 
forward to a career in agriculture like their parents. They want to 
work and provide for their families on their own land.
  This bill shuts them out and puts them at a competitive disadvantage. 
Combine that with the trouble young farmers have in obtaining credit, 
and 

[[Page S15758]]

the message they get from this budget is clear. There is no place for 
you in production agriculture. There is no place for the small family 
farm in America.


                     our amendment: a second chance

  Well, we can do better. And with our amendment, we will do better.
  Our amendment is very simple. It says, go back to the drawing board. 
Take it back to the Finance Committee. Restore some sense and 
moderation to agricultural policy, nutrition and our rural economic 
approach as a whole. The amendment doesn't dictate how we should do it, 
but it gives us a chance to take a second look and get it right.
  Let us remember the story of Joseph. He saw the 7 lean years coming. 
He told Paraoh about his dream. And Paraoh listened to Joseph. He 
changed his agriculture policy, promoted production, and stockpiled 
corn. And therefore Egypt got through the 7 lean years.
  We can do the same. if the folks on the other side will listen, we 
can take advantage of this second chance. We can vote for the motion to 
recommit, and come back with a moderate, nonpartisan farm policy that 
is good for everyone. I hope it will get the Senate's support.
  Thank you, Mr. President, and I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. BAUCUS. I yield 4 minutes to the Senator from Illinois.
  Ms. MOSELEY-BRAUN. Mr. President, there is kind of a joke in Illinois 
that goes: ``Just outside of Chicago, there's a place called 
Illinois.''
  That joke, or that phrase, used in the tourism industry, is based 
upon a notion that when people think of Illinois, they often first 
think of Chicago, and the rest of the State is overlooked. And that 
part of the State, the part ``just outside of Chicago,'' is rural. That 
part of the State has vital agricultural industry. That part of the 
State is where you will discover more rural communities than any other 
State in the Nation except Texas.
  In fact, when you discover that fully half of the 11.5 million people 
of Illinois live in the places outside of Chicago, that, I think, 
paints a more accurate picture of what Illinois is about than what our 
popular mythology would lead you to believe.
  The reason I mention that, Mr. President, is that what happens in 
this bill, in this Reconciliation Act, with regard to rural programs 
is, therefore, vitally important to the State that I was elected to 
represent.
  I hope always to represent all of that State and speak to the 
interests of rural Illinois--speak to the interests of what we call 
downstate as much as any other part of my State. That part of Illinois, 
just outside of Chicago, is a part of Illinois that I am determined to 
see is not overlooked. But being overlooked, I think, captures the 
general feelings shared by many rural Americans this year when it comes 
to Federal dollars and Federal attention this part of the country needs 
and deserves.
  Mr. President, rural Illinoisans understand the meaning of shared 
sacrifice. No group of Americans should be asked to share a 
disproportionate burden of cuts any more than any other group. Rural 
Illinoisans have told me, and I have been around my State in town 
meetings, the deficit reduction should be a priority for this Congress. 
They understand that no Federal program should be off limits, that 
nothing should be excluded from review, and that everything should be 
on the table.
  However, they also understand that shared sacrifice is something that 
means everybody. Shared sacrifice is exactly what this reconciliation 
bill fails to accomplish.
  Some Americans will see huge and significant tax cuts from this bill. 
But more than half of all Americans, including most rural Americans, 
will see no tax cut at all. What is more, the net effect of the overall 
bill is to tighten the economic vise on rural America.
  The $13 billion in farm program cuts proposed by this bill means that 
Illinois farmers will lose over three-quarters of a billion dollars in 
economic protection. With $113 million in title I education cuts, rural 
Illinois loses $3 million at a time when many rural school districts 
face a funding crisis. The cuts proposed for grants and loans for water 
and waste disposal programs mean thousands of rural Americans will not 
have access to safe drinking water.
  I understand my time is concluded. I would like a further minute to 
finish up.
  Mr. BAUCUS. I yield 30 seconds to the Senator from Illinois.
  Ms. MOSELEY-BRAUN. In closing, Mr. President, for rural America, this 
bill, in fact, is ``Robin Hood in reverse.'' The cuts on the rural 
programs are needlessly excessive, and given the fact that the tax 
breaks called for in this bill are absolutely inconsistent with our 
objective of deficit reduction, I believe we should recommit this bill 
back to the Finance Committee.
  Mr. President, just outside of Washington is a place called rural 
America, a place populated by hard-working Americans who are willing to 
do their share--and then some--to achieve real deficit reduction, but 
who cannot afford the loss of economic opportunities this bill entails.
  Surely we can do better than this bill.
  Mr. BAUCUS. I yield 2 minutes to the Senator from Alabama.
  Mr. HEFLIN. Mr. President, I want to talk about safety nets. The 
policy relative to agriculture is designed around a safety net. They 
have target price tied to some degree to the cost of production. This 
is a policy that has been established where there is no payment in good 
years. When you have a bad year, you need a safety net.
  The proposal in the House eliminates the safety net. The proposal in 
the Senate puts gaping holes in the safety net for farmers. The idea of 
doing away with farm programs over a period of time, in my judgment, 
fails to realize the calamities, the disasters, that farmers face. They 
are subject to weather, they are subject to foreign competition, to 
price changes, all sorts of disastrous effects that can occur to the 
market.
  I think we are making a serious mistake. We have cut agriculture 
programs from $30 million in 1986 down to $9 million last year. Here we 
come along with a $13.7 billion further cut in agriculture over 7 
years. I think it is too much. We are not doing right by the farmer. We 
are doing away with the policy of safety net.
  Mr. WELLSTONE. I yield a minute of my time to the Senator from 
Alabama.
  Mr. BAUCUS. I yield 1 minute to the Senator.
  Mr. HEFLIN. I want to mention, also, the safety net in regard to 
rural hospitals and the people.
  In effect, what we are doing under the Medicaid and Medicare 
situation, we are eliminating a safety net for hospitals for rural 
America. In my judgment that is a mistake.
  Safety nets go across the board. In my judgment, this bill is wrong 
in regard to what it does to rural America.
  Mr. BAUCUS. I yield 2 minutes to the Senator from Minnesota.
  Mr. WELLSTONE. Mr. President, 2 minutes is hardly any time at all.
  Let me just put it to you this way. This is thoughtless. This is not 
a farm bill. It is not agricultural policy. It is slash and burn. It is 
$48 billion over the next 7 years. It plays off children and nutrition 
programs against family farmers, against the environment. It is a 50-
percent cut in the Conservation Reserve Program, which in my State of 
Minnesota and I bet every State, has brought together those that love 
outdoor recreation and the environmentalists and the farmers.
  This is really, Mr. President, the opposite of a careful policy--the 
very opposite of a careful policy. What we have here is the worst of 
all worlds--keep the farm prices low, then have some subsidy. Have the 
subsidy in inverse relationship to need, with taxpayers having to pick 
up the cost.
  Mr. President, why do we not understand that rural people are not 
going to stay out of sight and out of mind? Why are we picking on the 
people that we think do not have the voice, picking on the people we 
think do not have the power, picking on people who are not the heavy 
hitters, not the players, are not the big contributors.
  That is what this is about. We should not have these tax cuts that go 
to wealthy people. We should not have a Pentagon budget that is $7 
billion over what the Pentagon wanted, and we should not lavish 
subsidies on most of the major large corporations and financial 
institutions in the country.

[[Page S15759]]

  Rural people in Minnesota, the people of greater Minnesota, ask for 
one thing and one thing only: A fair shake. There is no fair shake and 
there is no fairness to this plan.
  That is why I am proud to be an original cosponsor of this amendment.
  Mrs. MURRAY. Mr. President, I rise to support this motion to 
recommit. I am deeply concerned about the Republican budget proposal 
and its all-out assault on rural America. I understand the need to 
balance the Federal budget. In fact, I've supported balanced budgets. 
But, I do not think we should do it on the backs of our working 
families and farming communities. They deserve better treatment than 
that. Just because the voice of rural Americans is not heard as loudly 
on Capitol Hill as others does not mean they can be ignored.
  This Republican budget attacks rural communities in my State of 
Washington on a number of fronts. Republican cuts to Medicare will 
force 157,700 older and disabled rural Washingtonians to pay higher 
premiums and higher deductibles for a weakened second class Medicare 
Program. The cuts will increase the severe financial pressure on rural 
hospitals in Washington. The average rural hospital will lose $5 
million in Medicare funding over 7 years, forcing some to close their 
doors. In addition, the American Medical Association has stated that 
the Medicare cuts ``will unquestionably cause some physicians to leave 
Medicare''. Rural America is already suffering from a shortage of 
doctors when compared to the Nation as a whole and it will only become 
worse under this budget. Rural Americans will be paying more for less, 
and that is unacceptable.
  In addition, Medicaid cuts will eliminate coverage for children, 
nursing home residents, and people in need of long-term care. As many 
as 2.2 million rural Americans, including 1 million children will be 
denied medical coverage in 2002 if the Republican plan is adopted. 
Gordon Lederer, a farmer in Latah, WA, sits on the board of directors 
of the Tekoa Care Center. Patients pay $90/day at Tekoa, and Mr. 
Lederer said that the board does not know how the Care Center will 
continue to provide service to the community if the cuts to Medicaid 
are enacted.
  Mr. President, cuts to the earned income tax credit will cripple 
working families and their ability to provide for their children in 
rural Washington. The Republican cuts to EITC raise taxes on 49,945 
working families in rural Washington by an average of $388 in 2002, 
imposing a $1.4 billion tax increase on rural Americans overall. And 
there's more.
  The 25 percent cut to farm programs will reduce farm spending in my 
State of Washington by $290 million, drastically reducing support for 
commodity programs. I am particularly concerned about the reductions in 
the loan rate for wheat. These reductions could threaten the viability 
of farms in my State. In fact, I just heard from Mack and June Crow, 
wheat farmers from Oaksdale, WA. Their son now runs the family farm and 
they are deeply concerned about the impacts of the farm program cuts on 
their farm's income and hence, their ability to survive. Farms are a 
symbol of American bounty recognized worldwide. They are a major part 
of Washington State's export-based economy. Most importantly, they are 
a way of life that roots us and grounds us in our history and our land. 
To balance the budget on the backs of family farmers is not only 
unfair, it is un-American.
  Republican cuts to education programs will deny basic and advanced 
skills education to 937 children in rural Washington. Small town 
schools in Washington are already having difficulty making ends meet. A 
17 percent cut in title I funds will deny these schools crucial 
assistance as they struggle to adequately prepare our children for the 
future.

  In addition, cuts to rural nutrition, housing, and transportation 
programs as well as cuts to programs designed to protect the 
environment and public health add insult to injury, and will further 
undermine our rural Americans attempts to secure a solid future for 
themselves and their children.
  Mr. President, this Republican plan to balance the budget unfairly 
targets rural Americans. It burdens them with far more than their fair 
share of cuts. I therefore encourage my colleagues on both sides of the 
aisle who care about rural America to support this motion to recommit.
  Mr. DASCHLE. Mr. President, today my colleagues and I offer an 
amendment to the budget reconciliation bill that reaffirms our 
commitment to rural America. This budget before the Senate today will 
devastate the hard-working farmers and ranchers that provide our 
Nation's food supply. It will also decimate the main street businesses, 
schools and hospitals that make up our rural communities. The 
agricultural cuts in this budget are too extreme, are unfair to rural 
America and should be restored. Our amendment proposes to do just that.
  No one should be fooled. The agricultural provisions in this bill 
represent the bulk of the farm bill. Buried in this 2,000-page document 
is the heart and soul of agricultural policy for the next 7 years. 
There were no hearings during the development of this bill and no 
opportunity for Democratic input. Now we do not even get a vote on farm 
policy. It is all rolled up in this enormous budget bill. Everyone 
knows this is not the way farm bills have been developed in the past.
  This farm bill rips the safety net out from under our hard-working 
producers by cutting $13.4 billion from farm programs over the next 7 
years. In South Dakota that translates into a loss of $460 million for 
our producers. Nationwide net farm income is projected to decrease over 
$9 billion over the next 7 years. Clearly family farmers who are 
already disappearing at the rate of 600 per week cannot tolerate this 
level of income reduction.
  The pain of this budget does not stop at the farm gate. It bleeds 
into our rural hospitals. Ten to fifteen rural hospitals are projected 
to close in South Dakota if the proposed Medicaid/Medicare cuts are 
enacted. Some people already have to drive over 50 miles to reach a 
hospital or doctor. After this budget goes into effect they will have 
to drive even farther. Add to that the fact that over 2 million rural 
residents nationwide will be denied Medicaid, and anyone can see that 
this budget is a recipe for a health care disaster in rural America.
  The sad truth of this situation is that it does not have to be this 
way. This severe level of cuts was required only to finance the lavish 
tax breaks for the wealthiest of Americans who do not need them. This 
amendment my colleagues and I are offering provides the opportunity to 
send the agricultural provisions back to the drawing board and to do it 
right.
  Rural Americans deserve better than what they are getting under this 
budget. Farmers and ranchers are committed to balancing the budget as 
long as it is done fairly. Reducing farm income to pay for tax breaks 
is not remotely fair. No one is asking for a handout--only as fair 
shake. This budget gives rural America, the very heartland of the 
Nation, little more than a cold shoulder. We can and should do better 
than that.
  Mr. BAUCUS. Mr. President, I yield 2 minutes to the Senator from 
North Dakota.
  Mr. DORGAN. Mr. President, as I have said previously, this bill is 
about choices: 2,000 pages of making choices.
  All across this country people got up this morning and ate breakfast 
food. Some ate rice that was crisped, called rice krispies. Some ate 
flaked corn, called corn flakes; wheat that was puffed, puffed wheat.
  It is interesting. We have folks that raise these crops. They plow 
and raise wheat and corn. Down South they raise rice. Then we have a 
lot of folks that process it--the ones that put the crisp in it, put 
the flake in it, put the puff in it.
  The big agrifactories have plenty of reason to smile at this. This 
bill is a really nice deal for them: tax cuts, major advantages.
  But, the folks who get up in the morning and plow, they do not have 
much reason to smile. They get big cuts.
  The President said $4.2 billion in cuts. We agreed to that.
  But the Republican majority came along and more than tripled it. You 
cannot write a decent farm program that way. They painted themselves in 
the corner.
  So instead of bringing a farm bill to the floor, which we have always 
done before, for the first time in history 

[[Page S15760]]

they threw it into a reconciliation bill and hoped nobody would notice.
  Their approach is to say to farmers, do not worry. If you are a 
family farmer in trouble, move to downtown. That is their answer.
  It is not an answer for North Dakota, in my judgment. A lot of farm 
families rely on us writing a decent family farm program. These people 
work hard, and all they are asking for is a fair shake.
  We ought not to ask them to bear the entire burden of all the budget 
cuts. They have had a 60 percent cut in support prices alone in recent 
years. Now we are told to take a much higher proportion of cuts than 
virtually any other area of the Federal budget.
  Frankly, it is not fair and it is not right. It ought not be done.
  Mr. BAUCUS. I yield 3 minutes to the Senator from Vermont.
  Mr. LEAHY. Mr. President, 2 weeks ago I spent a crisp Monday morning 
at Claude Bourbeau's farm in St. Albans, VT, with Secretary Dan 
Glickman and a number of Vermont dairy farmers. I wanted to give him a 
chance to visit with some hard-working honest folks who will be 
severely affected by this budget bill.

  Many of those farmers are concerned about this budget. I am too. I 
told the farmers that they lose thousands of dollars a year in revenue 
under the Senate Republican plan.
  I asked the farmers, ``Which of you could afford a cut like that?'' 
Not a single hand went up.
  It turns out that I was underestimating the impact when I was in 
Vermont. Just this morning, the Food and Agricultural Policy Research 
Institute and Texas A&M University released a new study.
  This new, independent study says that under the Senate Republican 
plan, a typical 70-cow dairy farmer in Vermont would see net cash 
income fall by $9,050--from $31,120 to $22,070--in the next year. The 
House Republican plan is even worse--it would cost a typical farmer 
$17,850. Farm income would decline from $31,120 in 1995 to $13,270 in 
1996. Under these plans, typical dairy farmers will lose 30 to 60 
percent of their annual incomes. These farmers are already working dawn 
to dusk just to get by.
  These numbers are consistent with a new analysis that USDA released a 
couple of days ago.
  When those farmers in St. Albans hear how bad these cuts are, they 
will be stunned.
  This budget is a war on rural America in many ways.
  Over 27,000 working families in Vermont alone will see their taxes 
increase because the Republicans are scaling back the earned income tax 
credit.
  The typical rural hospital will lose $5 million a year or more in 
Medicare. In rural Vermont, doctors and hospitals will lose $290 
million in Medicare funds. I am afraid that doctors will simply abandon 
the small towns.
  Schools in rural Vermont will lose $1.2 million in education funding. 
Our schools cannot afford that kind of hit.
  Republicans want to create giant tax breaks for rich people and big 
corporations. The average rural family is not wealthy enough to benefit 
from the Republican budget. In Vermont, 63 percent of taxpayers earn 
less than $30,000--those are the people who will see their taxes 
increase.
  According to Congressional Research Service, over half of all heads 
of households working in the agricultural sector qualify for the earned 
income tax credit, which Republicans cut.
  In 1994, 328,000 farm families qualified for the EITC. Many of these 
were farm laborers, but 100,000 were farm operators and managers. Over 
one-third of all farm operators and managers nationwide will see their 
taxes increase under this Republican budget.
  This Nation's farmers are struggling, and this budget says to them, 
``Tough luck.''
  The Finance Committee cut the EITC but it passed over $200 billion in 
tax breaks. Most of those tax breaks will benefit families earning over 
$100,000 a year. Only 3 percent of rural households earn that kind of 
money.
  Several Senators addressed the Chair.
  Mr. BAUCUS. Mr. President, how much time remains?
  The PRESIDING OFFICER. Four minutes.
  Mr. BAUCUS. I yield to the Senator from North Dakota.
  Mr. CONRAD. Mr. President, this plan for rural America is the 
equivalent of dropping a neutron bomb in the middle of rural America. 
Remember the neutron bomb? That is where the buildings remain standing 
but the people are gone. That is what will happen in much of rural 
America if this farm plan and this plan for rural America ever becomes 
law.
  The Republican plan would force farmers off the land. In a low-price 
year, it would mean a 60 percent reduction in net returns to farmers in 
my State. It would close hospitals in rural areas. The hospital 
association in my State has just done a survey and they say 26 of the 
30 rural hospitals in North Dakota would go to negative returns on 
their Medicare patients. It would shutter nursing homes and represents 
unilateral disarmament in the world trade battle over agricultural 
trade.
  We would pull the rug out from our producers at the very time our 
competitors are already supporting their farmers at a level three times 
ours. That would be a profound mistake, not only for the rural parts of 
this country but for the trade balance of the United States.
  Agriculture is one of the two areas in which we still enjoy a 
substantial trade surplus. We ought not to wave the white flag of 
surrender in this trade fight. We would never do it in a military 
confrontation. We should not do it in a trade battle.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. ABRAHAM. Mr. President, at this time I yield 5 minutes to the 
Senator from Iowa.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, obviously I rise to oppose the motion 
that is before us. It may be well intended, but let me tell you, the 
simple truth is that this amendment will hurt the very people, the very 
rural America, and the very family farms that, according to their 
statements, it is intended to help.
  People on the other side of the aisle probably do not intend it this 
way, but the fact of the matter is, with their tax policy, they do not 
believe in taxation, they believe in confiscation. Because, when you 
leave high estate taxes, when you leave high capital gains taxes and 
the impact of inflation on each, you are in a situation where, when you 
tax inflation, it is confiscation and not taxation.
  The estate tax laws, the way they are--and they have not been changed 
for 15 years; the capital gains tax laws, and they have not been 
changed since 1986--are tying up a lot of property in rural America 
that will not move because people are not going to pay confiscatory, 
high rates of taxation. One sure thing, if you do not need the income 
and you do not have to sell, you are not going to sell and give it all 
to the Federal Treasury, because in most of the farms of America, the 
lifetime of savings is tied up just to create an income and a job for 
one family.
  So, if you want to help rural America, we have to transfer the 
property from one generation to another, and I do not know how you are 
going to do that if you do not do it by increasing the exemption and 
encouraging people to sell their property.
  People suggest what we are doing in this reconciliation bill on farm 
policy is wrong.
  The fact is that the President's budget is not good for agriculture 
because it does not achieve balance in the next 7 years.
  The Food and Agriculture Policy Research Institute ran some numbers 
on the impact of a balanced budget on farm income. They estimate that 
by the year 2002, under a balanced budget scenario, farmers will save 
$2.3 billion per year due to expected reductions in interest rates. It 
is important to note that farming is a very capital-intensive industry 
and benefits greatly from low interest rates.
  Furthermore, FAPRI's preliminary numbers indicate that farmers' cash 
flow will increase $300 million per year due to the increased economic 
activity resulting from the balanced budget.
  So the net positive impact on farm income from a balanced budget will 
be $2.6 billion per year. This gain will be lost if we adopt the 
President's budget numbers.
  Mr. President, another vital point that my Democratic colleagues fail 
to 

[[Page S15761]]

mention is that their doomsday numbers on agriculture assume that the 
cuts will be made to the program as it is currently structured. They 
would want you to believe that the Republicans are taking $13.4 billion 
out of farmer's pockets.
  This assumption reveals a lack of understanding about how farm 
programs work and a failure to recognize the important reforms 
contained in this bill. The next farm bill will significantly reduce 
the regulatory burden on farmers, allow farmers to plant for the 
marketplace, and continue to aggressively promote new markets and new 
uses for agriculture commodities.
  Specifically, farmers will no longer be required to idle productive 
land because of a mandate from Washington. Furthermore, farmers will 
have the flexibility to produce whatever commodity they chose in 
response to market signals. These reform measures, along with reducing 
the regulatory burden and finding new markets for our products, will 
lead to an increase in farm income in the future.
  It is true that Government payments to farmers will be reduced. But 
the future of U.S. agriculture must rest on the ability of farmers to 
earn income from the marketplace. The reforms to the farm programs 
contained in this budget reconciliation package achieve this goal and 
will allow our farmers to flourish.
  So I urge you to vote against this motion. I yield the floor and 
yield the remainder of my time.
  The PRESIDING OFFICER (Mr. Craig). Who yields time?
  Mr. COVERDELL. Mr. President, I yield 5 minutes to the Senator from 
Wyoming.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. THOMAS. Mr. President, we have moved away again a little bit and 
have gone into posturing this afternoon, I guess not unusually. There 
has been a good deal of misinformation floating around this budget and 
its effect on rural areas with respect to health care. Contrary to what 
we have heard, there are several provisions designed to recruit 
providers and to ensure that 24-hour emergency care is available, which 
we have not had in my State, even though the Senator from Montana has 
had some in his.
  It is interesting, also, that several of the provisions talked about 
here my friends on the other side of the aisle supported last year when 
they were in the Clinton health care plan--reducing the updates for 
inpatient hospital services, section 4101. The Republican plan does not 
apply 2 percent reductions to all hospitals like the Clinton health 
care plan did. Rather, it receives the 1 percent reduction.
  The copayment for health care services--this is a fee we have heard a 
great deal about--somehow it was not as devastating last year when it 
was in Clinton health care plan, section 4134.
  But, happily, there are a number of provisions that are most helpful. 
One is the limited services hospitals. Frankly, there are going to be a 
continuing number of these in rural areas. With hospitals that are 
built relatively close together, you simply cannot support the hospital 
as a coservice hospital because there is not enough utilization. And we 
have had some experience with this. Under this bill, they can be 
reorganized and downsized into emergency rooms, or stabilizing 
facilities, and be reimbursed by HCFA--that is a very important 
change--so that you will have the facility in the town that cannot 
afford to have a full-blown hospital.
  Medicare-dependent hospitals. The Clinton 1993 budget let this 
program expire, but the Republican plan reinstates it. The purpose is 
to assist high Medicare patient loads in Iowa, Wisconsin, Kansas, and 
other Midwest States. But it also has the extension of the sole 
community hospital. The Republican plan plans to extend these special 
payments to hospitals that have 50 beds or less and are 35 miles or 
more away from the nearest hospital. Wyoming, Montana, Idaho, and other 
Rocky Mountain States receive the most money.
  Medicare HMO payments. It intends to put these on an equal footing 
and to put some parity in these payments. These HMO payments in 
Medicare were based on the fee-for-service history. In one instance, in 
Bronx County in New York, the payment was $678 a month as opposed to 
South Dakota where it was $177. We need to find some equity in that. 
This program does that.
  Medicare bonus payments, payments to primary care physicians to help 
hold primary care providers in rural areas, a 10- to 20-percent 
increase there if they practice in health care professional shortage 
areas.
  These are the things that are in this bill to help rural health 
areas. Specifically, we have been working on it for several years with 
our rural health caucus, both in the House and in the Senate.
  Telemedicine grants. We are going to find that we can save a great 
deal of money and provide better services by using telemedicine. There 
are some grants here that allow for that to be developed as well as to 
develop systems within rural States to deliver services.
  So, Mr. President, contrary to what we have been hearing for the last 
few minutes, there are some substantial rural health additions to 
assist in delivering rural health services.
  I urge the defeat of this amendment.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. BAUCUS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I yield now to our distinguished leader in 
agriculture, a strong spokesman in our country for agriculture. I yield 
2\1/2\ minutes and to the Senator from Iowa.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. BAUCUS. I yield the remaining time.
  Mr. HARKIN. Mr. President, I thank the Senator for yielding.
  Mr. President, in times past, when rural America was hit with 
droughts or floods, we brought disaster bills to the floor of the 
Congress. These bills were to ease the suffering of rural communities 
in hard times and to help stop disasters.
  Yesterday morning we were handed this, a brand new 2,000-page 
disaster bill. But this bill does not cure a disaster in rural America; 
it provokes one. This is a disaster bill for agriculture. We were 
supposed to have a farm bill this year with a full debate on a sound 
food and agriculture policy for the Nation. Instead, agriculture has 
now been slipped into these 2,000 pages--I bet no one has really read 
the darned thing--and we have had no opportunity for real debate or 
amendments.
  Once again, agriculture is being forced to take unfair and 
unreasonable cuts amounting to 25 percent over the next 7 years --even 
though agriculture has already been reduced significantly and commodity 
programs amount to about one-half of 1 percent of the budget. One-half 
of 1 percent, but commodity programs take a 25 percent cut over the 
next 7 years. Tell me if that is fair.
  This is a disaster bill for rural health care. We all know that 
access to quality, affordable health care in rural communities has been 
a serious problem for years--especially for seniors. This disaster 
bill, with its drastic Medicare cuts, makes it even worse in rural 
America.
  This is a disaster bill for America's farm families, who are already 
having a tough time making ends meet. Net farm income in real dollar 
terms will be at its lowest level this year since 1986, in the depths 
of the farm crisis. This disaster bill makes it worse by lowering farm 
income another $9 billion, according to USDA estimates.
  The PRESIDING OFFICER. The Senator's time has expired.
  The majority controls 15 minutes 30 seconds.
  Who yields time?
  Mr. DOMENICI addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, I think we are in the process of trying 
to work out a unanimous-consent agreement that will start us voting. So 
I am going to suggest the absence of a quorum.
  Mr. HARKIN. May I finish my statement? May I have enough time to 
finish my statement?
  Mr. DOMENICI. How long does the Senator wish to speak?
  Mr. HARKIN. For a minute and a half. I was on a roll, and I did not 
want to stop.
  Mr. DOMENICI. Of course; 2 minutes. Can the Senator pick up the roll?
  Mr. HARKIN. I will pick up the roll.
  The PRESIDING OFFICER. The Senator from Iowa is yielded 2 minutes.
  
[[Page S15762]]

  Mr. HARKIN. I thank the chairman for yielding me an additional amount 
of time because I did want to make another point--that this 2,000-page 
bill really destroys our basic commodity programs that we have had to 
put a safety net under our farm families. It puts a hard cap on 
deficiency payment rates, doubles the percentage of unpaid base acreage 
and decimates USDA's ability to respond to price-depressing surpluses.
  What if commodity prices and farm income fall as they did in the 
1980s? Under this disaster bill, if corn prices fall to $2 a bushel an 
Iowa farmer with a 350-acre corn base--which is a modest size--would 
lose over $10,000 of income protection compared to the current farm 
bill. And, if corn prices fell to $1.80 a bushel, which is not out of 
the question, that farmer would lose over $17,000 in income protection 
compared to what we have now in the law.
  Also, this is a disaster bill for hungry kids. The nutrition cuts in 
this bill are excessive and unsupportable. It is unconscionable that 
this bill is cutting our commitment to school lunches, school 
breakfasts, summer meals, and the special milk program.
  Mr. President, these drastic cuts to rural America are driven by 
ideology and not by common sense. They are unfair, unreasonable, and 
unconscionable.
  Enough is enough. Rural America is already paying its fair share for 
deficit reduction. So this amendment offered by the Senator from 
Montana is to send this disaster bill back to the Finance Committee 
with instructions to pare back the upper income tax windfalls, and to 
reduce the assault on rural America.
  It is time, Mr. President, to put common sense ahead of ideology and 
to put the interests of rural communities over the interests of a 
privileged few.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. COVERDELL. Mr. President, our side yields back its time, and I 
suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DOLE. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                      Unanimous-Consent Agreement

  Mr. DOLE. I have been informed by Senator Daschle, the Democratic 
leader, that they will limit their amendments that they will offer 
after all time has expired, and with that commitment I now ask 
unanimous consent that all first-degree amendments pending to motions 
to recommit and all pending second-degree amendments be withdrawn.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. DOLE. This will leave the following issues that need to be 
disposed of by rollcall votes that have been debated yesterday and up 
to this point today: The Rockefeller motion concerning Medicare, 
followed by the Abraham amendment concerning Medicare fraud, and the 
Bradley motion concerning EITC; the Graham, of Florida, motion 
concerning Medicaid; Kennedy amendment concerning education; Bumpers 
motion concerning deficit reduction; Baucus motion concerning rural 
restoration.
  Therefore, I ask unanimous consent that all votes in this sequence 
after the first vote be limited to 10 minutes in length, with 2 minutes 
for explanation between each vote to be equally divided in the usual 
form.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. DOLE. I further ask that Senator Kassebaum or her designee now be 
recognized to offer a first-degree amendment concerning education and 
the time be limited to 10 minutes equally divided in the usual form, 
with no amendments in order to the amendment, and the vote occur 
immediately following the vote on or in relation to the Kennedy 
amendment in the voting sequence.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. DOLE. I further ask unanimous consent that the next 10 Republican 
amendments and the next 10 Democratic amendments be limited to 10 
minutes equally divided in the usual form, with no amendments in order 
to any of the next 20 amendments offered.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Mr. DOLE. Let me explain to our colleague where we go after the 
voting sequence that will occur after 10 minutes of debate by Senator 
Kassebaum or her designee. Republicans will be entitled to offer the 
next three amendments in a row as a result of a previous agreement. 
Then each side will alternate until the remaining amendments, limited 
to 10 minutes each, have been debated.
  The Senate will then begin voting on those debated amendments, and 
then begin voting on all amendments Members are going to offer which 
would have no debate time. We would just offer it. There will be a 
little explanation. It will be the majority leader's intention to keep 
the Senate in until approximately midnight tonight and resume the 
voting sequence until concluded on Friday.
  We could vary a little bit either way this evening depending on how 
much progress we make. And I have discussed this with the Democratic 
leader. It is our hope that we could finish voting and have final 
passage by midafternoon tomorrow. That will depend, of course, on 
whether Members on the other side feel compelled to continue to offer 
amendment after amendment after amendment when all time has expired. 
But that will be determined later. And I thank the Democratic leader 
for his cooperation.
  I will be happy to yield to the Senator from South Dakota.
  The PRESIDING OFFICER. The minority leader.
  Mr. DASCHLE. I thank the majority leader for that explanation, and 
that is in keeping with our agreement. We have three tiers of 
amendments. We have just completed our work on the first tier, for 
which now there will be votes, without second-degree amendments.
  Once those votes have been completed, we will go to the second tier, 
for which there will be debate of up to 10 minutes on either side. I 
should say 10 minutes total for 10 amendments on the Democratic side 
and 10 amendments on the Republican side.
  That will then expire all of the time. We will then go to the third 
tier of amendments for which there will be no time, and we will 
encourage Senators to write the purpose of their amendments clearly 
enough to allow the clerk to read the purpose and give us the 
opportunity then to vote.
  We would also expect that on occasion the managers might find the 
need to explain a particular amendment. But there would be no time for 
discussion of that third tier set of amendments.
  I think this is a very good agreement. It is what we had hoped to 
achieve now for some time. I appreciate the cooperation of all of our 
colleagues on both sides of the aisle. I think this will allow us to 
accommodate our work and accommodate many of the priorities we have 
been talking about now for several hours.
  Mr. DOLE. Mr. President, I just say to my colleagues this would not 
be a good day to be absent. Neither will tomorrow be a good day to be 
absent. I assume there will be anywhere from 40 to 60 votes between now 
and tomorrow afternoon.
  Mr. BAUCUS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. May I inquire of the majority leader when the vote on the 
Bumpers deficit reduction amendment and Baucus rural restoration 
amendments will occur. I was a little bit confused as I listened to the 
leader read the list and then say the Kassebaum amendment would come up 
after the Kennedy amendment. There was an ambiguous point as to when 
the vote on the Bumpers amendment and vote on the Baucus amendment 
would occur.
  Mr. DOLE. They will occur after the Kassebaum amendment or her 
designee. So it will be Kassebaum or her designee, then Bumpers, then 
Baucus.
  Mr. BAUCUS. And then the other second-tier amendments?
  Mr. DOLE. Then second-tier amendments. And then third-tier 
amendments, which we hope will find a way to the wastebasket.

[[Page S15763]]

  Mr. DASCHLE. Mr. President, just one clarification, I ask the 
majority leader. I would expect that we will vote en bloc on the second 
tier. I wonder if it would not be appropriate to have a minute, 30 
seconds on a side, just to remind everybody what that series of second-
tier votes are prior to the time we vote. We may have done that. I do 
not have the agreement in front of me. We are going to do that on the 
first tier with 2 minutes on a side. We vote on the second tier and 
have 30 seconds on a side just to be sure people understand.
  Mr. DOLE. I so amend my request.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DOLE. One minute equally divided.
  The PRESIDING OFFICER. One minute equally divided.
  Mr. DOLE. Divided very quickly.
  Mr. DASCHLE. That is right.
  Mr. DOMENICI. Could I ask a question?
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. We have agreed to this, have we not?
  The PRESIDING OFFICER. Yes.
  Mr. DOMENICI. Could I ask, yesterday, when the Abraham amendment was 
being discussed on fraud and abuse, we heard a comment from your side 
that it would be accepted. If that is still the case, we can just save 
a little bit of time. We are up against time constraints. I wonder if 
that is still the case.
  Mr. DASCHLE. I would want to consult with our ranking member. It is 
my understanding we would be able to accept it, but let me confirm that 
after consultation.
  Mr. DOMENICI. In any event, we are not precluding that and if the 
Senator could find that out, we would save a little bit of time.
  Mr. President, I am informed that the other side ought not work too 
hard on that request. It may be that we do not want you to say yes to 
our request.
  Mr. DASCHLE. Mr. President, I would ask that the quorum call not be 
taken from either side as it relates to the time available on the bill, 
and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The quorum call at this time will not be 
charged.
  Mr. DOMENICI. It would not be because a vote is pending in any event. 
We are just following the rules?
  The PRESIDING OFFICER. The Senator from New Mexico is correct.
  The absence of a quorum has been noted. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DASCHLE. Mr. President, I ask unanimous consent that the quorum 
call be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DASCHLE. I yield 3 minutes to the distinguished Senator from 
Hawaii off the bill.
  The PRESIDING OFFICER. The Senator from Hawaii has been yielded 3 
minutes.
  Mr. AKAKA. Mr. President, I rise to express my deep concern about the 
provisions in the reconciliation bill relating to Medicare and 
Medicaid. In my judgment, the proposals are a danger to the health of 
millions of Americans. House and Senate Republicans have called for a 
reduction of roughly $450 billion in health care expenditures over the 
next 7 years.
  They argue that they are merely reducing program growth, not cutting 
Medicare. But the facts tell us a different story. We have very good 
estimates of what it will cost to fund the Medicare program over the 
next 7 years. The fact is that more people will become eligible and we 
will continue to have health care inflation.
  The Republican proposal would cut Medicare below both the medical 
inflation rate and the private sector rate by cutting $270 billion, for 
tax breaks, from what is needed to fund the Medicare program. We are 
not just scaling back Medicare, we are eroding its foundation.
  Medicare experts estimate that keeping part A solvent through the 
year 2006 requires $89 billion in cuts, not the $270 billion called for 
under the GOP proposal. Those who want to cut Medicare argue that cuts 
are necessary to get us to a balanced budget in 7 years. That puzzles 
me.
  If the objective of this bill is to balance the budget, why are we 
simultaneously considering a plan to cut taxes by $245 billion over the 
same period? Clearly, the vast majority of the cuts are not needed to 
keep Medicare solvent, but are needed to pay for new tax breaks.
  I am deeply concerned about the size of the Medicare and Medicaid 
cuts, and the fact that the savings will be diverted to provide tax 
breaks for the wealthy. But my foremost concern is the impact these 
proposals will have on the poor, elderly, and the disabled who will be 
drastically hurt.
  Under the Republican proposal, Medicare premiums and deductibles will 
increase, and the quality and availability of care will be seriously 
compromised. Seventy-five and eighty-five percent of Medicare 
beneficiaries have incomes under $25,000, and the increase in out-of-
pocket costs could make Medicare coverage unaffordable for many. 
Furthermore, the portion of cuts that do not fall on beneficiaries 
directly will be borne by the providers who deliver Medicare services. 
These cuts will be shifted to the rest of the population in the form of 
higher medical bills and higher health insurance costs.
  I would also like to discuss briefly the provisions of the bill 
pertaining to the Medicaid Program. In addition to cutting $182 billion 
in Medicaid over 7 years, the proposal before us replaces the current 
Medicaid Program with a block grant capped at fixed dollar amounts each 
year. The bill would offer only minimal coverage and benefits, 
eliminate all Federal Standards for providers and delivery systems, and 
abolish the Federal standards set for nursing homes and institutions 
caring for the mentally retarded.
  In 1987, national standards for nursing home care were established 
with broad bipartisan support. These standards were designed to protect 
nursing home patients because of the horrendous treatment many were 
receiving and because State regulations were inadequate. Yet the 
Republican plan to cut Medicaid by $182 billion contains a provision 
repealing the national standards for nursing homes, even though these 
standards have improved care substantially.
  Mr. President, we all agree that we must balance the Federal budget. 
However, we must do it the right way. We must ensure a basic safety net 
and make adequate investments for the future. I question the priorities 
set forth in this legislation. This bill does not safeguard health care 
for our Nation's elderly, poor, or disabled; it does not ensure proper 
care of vulnerable people in nursing homes; and it certainly does not 
make adequate investments in our future.
  Mr. President, I sincerely hope that we recognize the tremendous 
benefits these programs have made in our society and urge that we 
continue the fight for dignity and security for our Nation's most 
vulnerable as we work to balance the Federal budget.
  I yield the floor.
  Mr. LEAHY. Mr. President, this budget bill is a raw deal for Vermont. 
It makes deep and unnecessary cuts in Medicaid, Medicare, student 
loans, and dairy programs that will devastate our economy for years to 
come. And it will raises taxes on 63 percent of working Vermont 
families. This is the wrong way to try to balance the budget.
  This bill cuts Medicaid by $182 billion over the next 7 years and 
turns this vital program into a block grant to the States. Over the 
next 7 years, these cuts will reduce Federal Medicaid payments to 
Vermont by $205 million. This plan defaults on our guarantee that 
seniors would receive health care assistance when they need it the 
most.
  Vermont's acceptance of this enormous responsibility would leave the 
State hundreds of millions of dollars short of funds to provide 
necessary health care over the next 7 years.
  The plan also eliminates requirements for nursing homes to provide 
proper health standards, a loophole that will be seized by some to 
lower the quality of care and life in these institutions.
  It is not an easy decision to place a parent or a spouse in a nursing 
home, but often it is the only alternative to ensure that they get 
proper care. And it will be even more difficult if the Republican plan 
prevails.
  The bill cuts Medicare by $270 billion over the next 7 years. It will 
cut payment rates to providers and hospitals, 

[[Page S15764]]

make seniors pay higher premiums and increase deductibles. Vermont will 
lose $356 million in Medicare payments over the next 7 years, losing 
$88 million in 2002 alone.
  In Vermont, 73 percent of our elderly population have incomes of less 
than $15,000. And 1 dollar of every 5 dollars of that fixed income is 
spent on health care. Yet Republicans are cutting Medicare and Medicaid 
to finance tax cuts that will mostly benefit Americans making over 
$100,000 a year--less than 3 percent of Vermonters make that kind of 
money.
  Republicans have the gall to tell us that these massive cuts are 
supposed to ``preserve, protect and strengthen Medicare.'' I think 
William Wells of Rutland, Vermont, who recently wrote to me, had the 
right response to this claim.
  With true Vermont common sense, Mr. Wells wrote: I have heard 
politicians say ``they want to save Medicare.'' Their way of saving 
Medicare is like a hunter `saving' a moose by shooting it and having it 
mounted by a taxidermist. It is still there but no longer functional.
  Let us be honest with the American people. Congress can balance the 
Medicare budget and keep the system solvent--but the cuts must be 
gradual and spread over a longer period of time.
  For 30 years, Medicare and Medicaid have contributed greatly to the 
decline in poverty and improved the health of seniors in America. We 
are now asked to turn our backs on the elderly and distribute the 
``savings'' among our wealthiest citizens.
  Mr. President, I will oppose any plan that attempts to dismantle the 
health care delivery system that has served our Nation's seniors so 
well.
  This bill also makes short-sighted cuts in education. It cuts student 
loan programs by $10 billion over the next 7 years. Students will be 
hit with 70 percent of these cuts--increasing the costs to the 20,000 
Vermonters receiving higher education and their families by at least 
$5,800 over the life of a student loan. Because of rising tuition 
costs, Congress should be working to make education more affordable--
not less.
  These additional financial burdens will discourage many students to 
continue their education after high school. The Contract With America 
has sealed the fate of the next generation of Americans. They may never 
have the chance of post-high-school training or a college education--
the key to a better paying job.
  This bill also makes deep cuts in our dairy program. The Senate plan 
scraps the price support system for butter and nonfat milk and sharply 
limits the price supports for cheese. Under the bill, the average 
Vermont dairy farm will lose more than $7,000 a year in revenue. These 
dairy cuts will deal another blow to Vermont's dwindling family farms.
  At a time when many working Vermonters are struggling to make ends 
meet, the Senate Republican budget would hike Federal taxes on low- and 
moderate-income families by cutting $43 billion from the earned income 
tax credit--a program that rewards work and compensates for low-wages.
  This Federal tax increase will also raise State taxes in seven 
states, including Vermont, that have a State earned income tax credit 
tied to the federal credit. As a result, 27,000 Vermont working 
families earning less than $30,000 a year--about 63 percent of Vermont 
taxpayers--will be forced to pay higher taxes. This is a double whammy 
on working families.
  Mr. President, this budget bill is a raw deal for Vermont. It will 
leave my home State in an economy crisis for years to come. And I will 
urge the President to veto it.
  Mr. HATFIELD. Mr. President, the Balanced Budget Reconciliation Act 
of 1995 is proof that this Congress is willing to make the difficult 
decisions that are needed to balance our Federal budget. That there is 
agreement between Congress and the executive branch, between 
Republicans and Democrats, and between the House of Representatives and 
the Senate, of the need to balance the budget at a date certain is a 
victory in and of itself. While we may not all agree on how to 
accomplish that feat, we are at least all proceeding toward a common 
goal.
  This legislation continues the effort that is already underway in the 
Appropriations Committee to balance the budget. To date the 
Appropriations Committee has reduced Federal spending by $24 billion. 
My colleagues who have worked to put this legislation together know 
full well that reducing spending is not an easy task. However, given 
the size of the national debt, all members know that we must act now 
and make those tough choices.
  The prime example that we are ready to make tough choices is proven 
in this bill's attempt to reign in the exponential growth in 
entitlement spending. Earlier this year I stated on this floor that I 
was sobered by the demise of the Bipartisan Commission on Entitlements 
and Tax Reform. The Commission was unable to agree on a specific set of 
recommendations on how to address the issue of continued entitlement 
growth. I am very happy that the taboo of reforming entitlements may 
finally be gone. Entitlement spending will continue to grow from 49 
percent of the Federal budget in 1995 to 59 percent of the total budget 
in 2002. Based on these numbers it is clear the entitlement beast has 
not been slain, but at least the Balanced Budget Reconciliation Act of 
1995 takes us in the right direction on the entitlement issue.
  Like many Members in this chamber, I have some disagreements with the 
spending decisions in this legislation ad drafted. One of those areas 
of disagreement relates to the $11 billion reduction in education 
spending over 7 years. Some members have argued that this cut is small 
in comparison to total spending in this area, or that the impact is 
painless on a per person basis. What these arguments fail to consider 
is the critical role education plays in the success of the Nation's 
children, the success of this Nation's industries, and the success of 
this Nation's standing in the world community. Education is an 
investment in the future. The Senate would be shortsighted to cut this 
investment short. I plan to work with my colleagues to ensure that this 
provision can be fixed before the Senate finishes its work on this 
legislation.
  I am also concerned that this legislation deals a blow to States that 
have been innovative in addressing the rise in health care costs. The 
State of Oregon began an experiment in 1994 to expand health care 
coverage to more Oregonians. The Oregon Health Plan, as it is known, 
has increased access to basic health care to more than 120,000 low-
income Oregonians. This has been accomplished by making rational 
choices about the effectiveness of health care services and making the 
delivery system more efficient. Already Oregon has seen significant 
results. Our costs per beneficiary are 10 percent less than the 
national average; hospital charity care has decreased by 30 percent; 
emergency room visits are down by over 5 percent; and our welfare 
caseloads have decreased by 8 percent in the past year. Unfortunately 
the legislation before the Senate would inadvertently penalize Oregon 
for being innovative in its delivery of medical services. I am working 
with the leadership to ensure that this type of creativity and 
effective governing is not penalized.
  There are a number of tough choices in this legislation and the 
authors should be commended for their work. However, given the fact 
that 15 percent of the current budget is spent to pay interest on the 
debt, these tough choices need to be made. We have before us a proposal 
that will do the job. While I would like to see some reordering of 
priorities in the legislation, I am looking forward to working with my 
colleagues to assure that a balanced budget becomes a reality.


                           Pension Reversions

  Mr. BINGAMAN. Mr. President, I rise today in opposition to a 
provision in the budget reconciliation legislation before us that could 
put at risk the pensions of hard-working Americans. Specifically, I 
refer to the provision allowing corporations to take money out of funds 
deemed overfunded by the IRS for deductibility purposes, and use that 
money for other employee benefits, without paying an excise tax. Of 
course, because money transferred in this manner is fungible, the money 
could actually be used for almost any purpose.
  The principal problem with this provision is that pensions funds 
considered 

[[Page S15765]]

overfunded by IRS for tax policy consideration are not overfunded on an 
actuarial termination basis. As I understand it, this means that while 
the plans have enough money to meet their current ongoing obligations, 
if for some reason the plan terminated, the people who had paid into 
that plan would have no guarantee that the plan could provide the 
pension benefits that they earned over the years. In such a case, the 
U.S. taxpayer, through the Pension Benefit Guarantee Corporation 
[PBGC], would be forced to step in and pay the benefits.
  Mr. President, we know that workers are concerned about their ability 
to retire with a decent standard of living. We also know that our 
Nation is suffering from a lack of savings and capital for economic 
expansion, and that institutional investors like pension funds are the 
single largest investors in capital. It therefore makes absolutely no 
sense to me to provide an incentive to decrease pension security, 
savings, and available capital through provisions like the one included 
in the budget reconciliation legislation before us.
  I think we should be doing more to promote sound pension plans, and 
expand coverage for American workers. This provision seems to me to be 
doing just the opposite: putting existing plans at greater risk without 
expanding coverage. In the time since this and a similar House 
provision have come to the public's attention, numerous pension 
experts, including the American Academy of Actuaries and the PBGC, have 
expressed concern about the effect this provision could have on pension 
fund soundness. I have also heard from constituents expressing similar 
concerns. For all of these reasons, I urge my colleagues to strike this 
provision.
  Mr. BOND. Mr. President, in many respects this is an amazing debate 
we are having today, a debate I was not sure I would ever see--should 
we, or should we not, pass a bill which will get our budget into 
balance over the next 7 years.
  It is historic. It is bold. It is unprecedented. And judging by the 
reaction, it is real.
  Unfortunately, $5 trillion in debt has piled up waiting for this day, 
so even with this action, we are still passing on a huge debt to our 
children and their children.
  When I first got to Washington, after coming from State government 
where we had to balance the budget every year, I was amazed at the 
cavalier attitude taken by so many about budget crisis.
  It did not take me long to learn that walking away from budget 
problems had become so ingrained that success was defined as holding 
the deficit to only $200 billion--meaning we only added $1 trillion to 
the debt every 5 years.
  Unfortunately, that is where President Clinton remains today. While 
we are willing to put before the public the real questions--when do we 
stop adding to the debt? When do we get serious about slowing the 
growth of runaway programs? When will Congress be willing to actually 
say No to a special interest, or a pet program and say ``Sorry, I'm 
worried about adding to my kid's debt.''
  No one said it would be easy--but with the leadership of Senator 
Domenici, and the willingness of Members to stand up and vote for 
action instead of just talking a good game--this Senate will soon take 
that step.
  Make no mistake, the step is a big one, as for the first time in 25 
years Congress has the opportunity to pass a budget which will get us 
to a surplus--rather than just keep adding to our debt.
  The budget before us is tough. It sets priorities. It recognizes that 
government cannot do it all. And it makes the statement that the time 
has come for leaders of today to start paying attention to the 
financial and economic devastation thy are creating for tomorrow's 
generations.
  We have heard many speeches about the need to cut spending, reduce 
the deficit, and get our Nation's books into balance. Everyone who 
looks at our nearly $5 trillion debt recognizes the need to do 
something so that we don't keep piling on that debt for our children 
and grandchildren.
  Over the next few days the American people will have a rare 
opportunity to see exactly what the political leadership's visions for 
our country's future are.
  Too often Congress legislates for the present, ignoring the costs for 
the future. Political expediency replaces thoughtful debate, and at the 
end of the day it is with shock and dismay that the public finally 
realizes what has occurred--and recognizes what additional debt they or 
their children will be forced to pay.
  It takes a long time to build up a $5 trillion debt. And even 
starting today it will take 7 years to get us to a balance, meaning 
that we won't even begin paying off a dime of debt until 2002.
  Some would like us to put off the tough choices for a little longer. 
Others have abandoned finding a solution to the real budget crisis we 
are facing in their zeal to make political points. And still others 
claim to be on board with the concept of balancing the budget--they 
just don't like our approach.
  But as I have said before--talk is cheap. If you say you want to 
balance the budget, let's see your plan.
  If you say you understand Medicare is going broke, and must be fixed, 
let's see your plan.
  Unfortunately, what we have seen and heard so far is much heat--and 
no light.
  Medicare is one of the best examples. Medicare today is paying out in 
claims more than it is collecting in premiums. It is only because of 
the interest earned on the trust fund's surplus that Medicare is not 
insolvent right at this moment.
  This means that as I speak, for every dollar a senior is paying in, 
more than a dollar in claims is being paid out. So why is everyone not 
saying stop, something has to be done?
  Next year even including the interest earned on the trust fund's 
won't be enough to pay out all the claims. Thus next year Medicare will 
be insolvent, and it will be forced to start eating into its rainy day 
fund--the money which has been built up in order to be available for 
the baby boomers who start to retire in the next decade.
  And then if nothing is done, by the year 2002 the surplus will be 
gone and the entire program will be bankrupt and will be forced to shut 
down.
  So again I ask, why is the President not saying we must do something 
to fix this drastic problem--not just delay it again like has been done 
so often before--but actually fix it?
  Why are my colleagues in the Democratic party not saying let us get 
to work on this problem?
  Instead they want to paper over the problems in Medicare, only 
fiddling around the edges, while making no effort to make fundamental 
changes in the program as we realize must be done. We want to make 
savings by giving seniors a real choice--they offer a 2-year bandaid to 
get them beyond the next election.
  So what does our bill do? It takes on the task of reforming and 
overhauling Medicare--both to protect it for today's seniors, as well 
as preserve it for tomorrow's. It also expands choices, and bring the 
program of the 1960's into the health care system of the 1990's. And it 
gives us 25 years of additional solvency--versus the 25 months of the 
Democrats' plan.
  How much clearer can the choice be? A thoughtful long-term solution--
or a get-me-through one more election BandAid.
  Mr. President this debate is much bigger than Medicare. It is much 
bigger than Medicaid, agriculture, civil service retirement, or 
welfare. It is about what financial legacy we want to leave to our next 
generations.
  It is about whether people believe that $5 trillion in debt is 
enough, and whether we in Congress have the courage to hit the spending 
brakes.
  I hope we do. And hope that the President will find the courage to do 
the same.
  Finally, I would like to express my opposition to the amendment that 
the senior senator from Arizona has indicated he plans to offer.
  That amendment would, allegedly, eliminate 12 pork programs--a goal I 
would support if it delivered on that promise. Unfortunately, however, 
the amendment would target several programs which are critical to our 
international competitiveness and our ability to create high-paying 
export jobs. Let me quickly touch on just a few examples:
  First, the amendment would require the Export Import Bank to raise 
loan 

[[Page S15766]]

fees which would have the impact of making Exim financing uncompetitive 
vis-a-vis other countries' export finance agencies. That means U.S. 
companies will lose deals and U.S. workers will lose jobs.
  Second, it would reimpose recoupment fees on commercial sales of 
military equipment overseas. The Bush administration eliminated this 
fee because it was making U.S. export uncompetitive and costing jobs. 
It makes no sense to reimpose it.
  Third, it would cancel NASA's subsonic and supersonic research 
programs. These programs are aimed at ensuring U.S. aerospace companies 
retain their technological edge into the 21st century. If it becomes 
technically possible, it will be economically viable to build only one 
supersonic airplane. I want that plane to be built by Boeing or 
McDonnell Douglas, not by Airbus.


                        CAPITAL GAINS--FAIRNESS

  Mr. HATCH. Mr. President, we need to consider some very important 
facts concerning the fairness of the capital gains tax rate reduction 
in the reconciliation bill before us.
  We have heard some statements here on the Senate floor over the past 
few days by some of our colleagues who believe that a broad-based 
capital gains tax rate reduction somehow favors the rich at the expense 
of middle- and lower-income taxpayers. I want to set the record 
straight on this issue.


                     Who pays capital gains taxes?

  First, Mr. President, let us start by examining who pays capital 
gains taxes in this country.
  The fact of the matter is that most of the tax returns reporting 
capital gains come from taxpayers in the lower- and middle-income 
categories.
  Since there are varying views as to where the middle-income category 
begins and ends, I have prepared two pie charts contained within chart 
1 to illustrate who these taxpayers are.
  The pie on the left shows that, on average, from 1985 to 1992, 62 
percent of all returns reporting capital gains came from those 
reporting $50,000 or less of adjusted gross income [AGI]. I repeat, 62 
percent. This amounted to more than 5\1/2\ million taxpayers per year.
  The pie on the right, Mr. President, shows the same information for 
taxpayers with higher incomes, but still within what most would 
consider as the middle-income category.
  As you can see, 79 percent of all returns reporting capital gains 
came from those reporting $75,000 or less of AGI. On average, this was 
over 7 million taxpayers per year.
  Capital gains realization is hardly the exclusive domain of the rich.
  Actually, these figures dramatically understate the number of people 
in the lower- and middle-income categories who will benefit from the 
capital gains deduction.
  It is estimated that about 44 percent of all people reporting capital 
gains recognize such gains in only 1 out of 5 years, on average.
  In 1986 alone, of the 7.6 million returns reporting capital gains, 
3.1 million of these taxpayers reported no capital gains in the 
previous year.


               The ``Occasional Recognition Phenomenon''

  Since many taxpayers do not have capital gains each year, it is 
obvious that there are millions more of lower- and middle-income 
taxpayers than this chart indicates who will benefit from a lower 
capital gains tax rate.
  This occasional recognition phenomenon also illustrates why the 
numbers cited for the rich are consistently overstated by capital gains 
tax cut opponents.
  By only looking at 1-year segments, capital gains tax cut opponents 
erroneously conclude that once a taxpayer experiences an unusually 
large capital gains recognition in a particular year, he or she will 
stay in the rich category forever. Such is simply not the case.
  Take, for example, a typical farming couple in Cache County, UT, who 
has struggled over the years to make ends meet and finally decides to 
sell the farm and move to the warmer climate of southern Utah.
  Even though this couple may never have reported more than $30,000 of 
farming income in any given year, in that 1 year of sale they will be 
lumped in with the rich because they reported a $250,000 of gain on the 
sale of their farm.
  To conclude that this couple is rich because they realized a large 
capital gain in only 1 year of their life is ridiculous. Yet, this is 
exactly the basis for many of the statistics given by my friends on the 
other side of this issue.
  One study looked at those reporting over $200,000 of income per year 
from 1981 to 1984. Taking just single-year snapshots of the 
realizations, such taxpayers accounted for almost 40 percent of all 
capital gains reported.
  However, when the entire 4-year period was considered as a whole and 
the occasional nature of recognitions was taken into account, their 
proportional share dropped to just 22 percent.
  Thus, the more years that are included in the comparison, the smaller 
the share of gains going to the so-called rich.
  Let me repeat, Mr. President, studies that show lower- and middle-
income taxpayers who receive an occasional larger capital gain as being 
rich are misleading.


     Opponents ignore benefit to lower- and middle-class taxpayers

  Now, I am the first to admit that some who are truly wealthy will 
benefit from a lower capital gains tax rate, and rightly so, as I will 
discuss in a few moments.
  However, the impact of the benefits of a capital gains tax cut to the 
wealthy are greatly overstated, while the positive benefits to lower- 
and middle-income taxpayers are mostly ignored by those who oppose this 
change.
  For example, a Treasury Department study estimates that nearly half 
of the dollar value of all capital gains are reported by taxpayers 
reporting wage and salary income of $50,000 or less.
  Moreover, the same study estimates that three-fourths of all tax 
returns with capital gains are filed by taxpayers with wage and salary 
income of less than $50,000. Yet, to listen to capital gains tax 
opponents, one could conclude that only the rich would be affected by a 
lower rate.
  Mr. President, to get a better feel for how many lower- and middle-
income taxpayers will actually benefit from the capital gains deduction 
in this bill, consider the following.
  It is estimated that about 12 million lower- and middle-income 
workers participate in some sort of stock equity plans with their 
employers--12 million.
  Moreover, many millions of Americans own investments in stocks, 
bonds, and mutual funds. In fact, as of September 1994, there were 93.6 
million mutual fund accounts in America. It is interesting to note that 
52 percent of the 30.2 million families owning mutual funds report 
incomes of $50,000 or below and that 80 percent of those families 
report incomes of $75,000 or below. This is middle America. This is the 
teacher who married the police officer planning for their future.
  In addition, millions of people in the lower- and middle-income 
categories own homes and rental properties that could be subject to 
capital gains taxes upon sale. This bill will benefit all of these 
taxpayers.


                  Capital gains tax rate differentials

  Mr. President, it is well known that in 1986, Congress raised the 
capital gains tax rates on the rich, from a 20-percent top rate to a 
28-percent top rate. What is lesser known, however, is that we raised 
capital gains taxes on middle-income taxpayers as well.
  For example, a family of four earning the median income saw a 50-
percent increase in their capital gains tax rate. A family of four 
earning twice the median income--and these would be the upper middle 
class rather than the rich--saw a 47 percent increase in their capital 
gains tax rate.
  In 1990, Congress once again created a differential between the top 
tax rate on capital gains income and the top tax rate for ordinary 
income.
  By putting in a new 31 percent bracket, but keeping the top rate on 
capital gains income at 28 percent, we once again began to favor 
capital gains income--for some.
  The differential was further increased in 1993 when Congress created 
the 36 and 39.6 percent tax brackets and again capped the capital gains 
tax rate at 28 percent. The result is that taxpayers in the highest 
brackets currently enjoy a lower rate on capital gains, but those in 
the 15 percent and 28 percent brackets do not.
  As you can see from chart 2, Mr. President, this bill remedies this 
situation by giving those in the lowest tax brackets the largest 
percentage reductions in their effective capital gains tax rates.

[[Page S15767]]

  Note that the wealthiest Americans will get only a 25-percent 
decrease in their effective capital gains tax rates, while those in the 
lowest tax brackets will enjoy a full 50-percent reduction.
  Not only will large investors receive incentives to create jobs, but 
this relief will now be enjoyed by smaller investors as well.
  It is high time that lower- and middle-income families get some 
meaningful capital gains tax relief. For the first time in years, 
lower-income taxpayers will enjoy single digit rates of taxation on 
their capital gains.


                               Inflation

  One of the best reasons for a cut in the capital gains tax rate is 
that a sizeable portion of all capital gains reported are caused by 
inflation. In fact, economists estimate that on average, about half of 
all capital gains are inflationary in nature.
  Mr. President, I have never heard anyone try to argue that taxing 
inflationary gains is fair--either for the rich or for anyone else. 
There is simply nothing fair about having to pay tax on inflationary 
gains.
  In fact, a tax on inflationary capital gains is not a tax on income 
at all or even on the increase in the real value of the asset. It is 
purely a tax on capital, very much like the property tax, but assessed 
only when the property is sold.
  This bill helps to ameliorate inflationary gains by providing a 50-
percent capital gains deduction. In most cases, this should effectively 
nullify the tax on the inflation element. This is fair tax treatment--
for everyone.


                            Tax distribution

  Many of my colleagues on the other side of the aisle have expressed 
concern that the dollar amounts of a capital gains tax cut will go 
disproportionately to those in the highest tax brackets. Let me make 
three points about this, Mr. President.
  First, despite the continual rantings and ravings by liberals about 
tax breaks for the rich, our tax system has gotten more and more 
progressive over the past years, as illustrated by chart 3.
  Note that in 1993, the top 1 percent of all taxpayers paid almost 29 
percent of all income taxes while the bottom 50 percent of all 
taxpayers paid less that 5 percent.
  Since 1980, our income tax system has gotten much more progressive. 
If capital gains tax cut opponents think our system is so drastically 
unfair, I want to ask them a question: If these percentages do not 
satisfy you, what percentages will?
  Second, many millions of American families currently pay no Federal 
income taxes at all. It makes little sense to talk about these people 
in terms of tax relief. A hundred percent of zero is still zero.
  By definition, it is impossible to give income tax relief to those 
who pay no income taxes in the first place. If we want to talk about 
taking from higher-income taxpayers and giving to lower-income 
taxpayers, let us call it what it really is--welfare.
  Third, opponents of capital gains tax relief must assume that 
wealthier taxpayers who realize capital gains take the money and bury 
it in the back yard or stuff it into a mattress.
  Opponents ignore the fact that this money is almost always 
immediately put back into the economy, where it goes to work creating 
jobs and adding to investment capital available for business creation 
or expansion. The ultimate fairness of the cut in the capital gains tax 
is that economic and job opportunities will be enhanced for all 
Americans because of this bill.
  In conclusion, Mr. President, for the reasons cited in chart 4, I 
firmly believe that the capital gains tax cut provisions in this bill 
are fair. They are fair for all American families because all American 
families will derive a great deal of benefit from them.
  I sincerely hope that my colleagues will take the time to consider 
the points I have made and vote in favor of this much-needed reform to 
our tax law.
  The bottom line, as I see it, is that our current capital gains tax 
rates are an effective tax on initiative, investment, and planning 
ahead--all things that we say we should encourage people to do.
  It is time for our tax policy to reflect our national values.
  Mr. President, I ask unanimous consent that the two tables referred 
to in my statement be printed in the Record.
  There being no objection, the tables were ordered to be printed in 
the Record, as follows:


                Chart No. 1--Who reports capital gains?


                                                                Percent
AGI >$50,000, 3.4 million people.....................................38
AGI of $50,000 or less, 5.5 million people...........................62
2.9 million people, AGI >$75,000.....................................21
AGI of $75,000 or less, 7 million people.............................79
Source: Treasury Department.

        CHART NO. 2--WHO ENJOYS THE GREATEST TAX RATE REDUCTION?        
                              [In percent]                              
                                                                        
                                                                        
Income tax brackets:.................   39.6     36     31     28     15
Current capital gains tax rate.......     28     28     28     28     15
Effective rate under this bill:......     21     18   15.5     14    7.5
Percentage Reduction:................     25     36     45     50     50
*Assumes the Alternative Minimum tax applies.                           

         CHART NO 4.--Why Is the Capital Gains Deduction Fair?

       It gives the largest percentage decrease to those in the 
     lower tax brackets.
       Most of the returns filed showing capital gains come from 
     lower- and middle income taxpayes.
       It reverses the 1986 capital gains tax increase on the 
     middle-class.
       It reduces, if not eliminates, the cruel and unjustifiable 
     tax on inflationary gains.
       It stimulates the economy to create more jobs and 
     opportunity for those on the lower rungs of the economic 
     ladder.

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