[Congressional Record Volume 141, Number 167 (Thursday, October 26, 1995)]
[Senate]
[Pages S15767-S15770]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              PMA VICTORY

  Mr. PRESSLER. Mr. President, I rise today to declare victory for 
rural community and small city electric ratepayers. I am pleased that 
both the House and the Senate budget reconciliation bills do not 
contain any language requiring a sale of the Southeastern, Southwestern 
or Western Power Marketing Administrations--collectively known as the 
PMAs. As I have stated on this floor many times before, this is a 
critical issue to my fellow South Dakotans.
  As my colleagues know, during Senate consideration of the Budget 
Resolution earlier this year, my colleague from Montana, Senator 
Baucus, and I offered an amendment that expressed the Senate's 
opposition to the sale of the Southwestern, Southeastern and Western 
Area Power Administrations. The Senate voted overwhelmingly against a 
motion to table that amendment.
  The balanced budget reconciliation bill now before us reflects the 
wishes of the Senate. The PMAs represent a government program that 
works. They provide affordable power to rural communities and small 
cities and still manage to turn a profit for the Federal Government.
  As I have said again and again, sale of the PMAs would have a 
devastating effect on South Dakota citizens in rural communities and 
small cities--and on people across the country.
  Public power serves many functions in South Dakota. As a sparsely 
populated State, utilities are faced with the challenge of how to get 
affordable electricity for those who live in small cities and rural 
communities where there are less than two people per mile of 
transmission line. Public power provides the solution.
  Public power, purchased through the Western Area Power 
Administration, known as WAPA, costs South Dakotans an average of 2.5 
cents less than the market rate. This lower cost is essential to 
encourage economic development in small cities and towns. It allows 
revenue to be reinvested in additional transmission lines, and better 
service. The availability of hydropower from the Missouri River to 
rural cooperatives and municipalities has helped to stabilize power 
rates. With 7,758 miles of transmission lines in the Pick-Sloan region, 
WAPA can serve 133,100 South Dakotans--without charging them an arm and 
a leg.
  Public power has brought more than electricity to South Dakota. For 
example, Missouri Basin Municipal Power Agency, based in Sioux Falls, 
has embarked on a program offering incentives for planting trees. The 
goal is to plant at least one tree for each 112,500 meters in the 
Agency's membership territory.
  Public power also brings new jobs to the communities it serves. In 
part due to the low cost of power from East River Electric, there are 
now three injection molding plants based in Madison, SD.
  East River Electric also is involved in other economic development 
activities. It provides classes to help the 

[[Page S15768]]

community attract new businesses, and offers grants for feasibility 
studies associated with economic development projects. South Dakota 
clearly has benefitted from the work of Jeff Nelson, the general 
manager of the East River Electric Power Cooperative.
  Public power is a South Dakota success story. It is a source of 
innovation, development, and community pride. I am sure the same is 
true in other small cities and rural communities across America. That 
is why I fought against proposals to sell WAPA and two other power 
marketing administrations. The proposal to sell the PMAs was a 
budgetary smoke-and-mirrors effort to disguise a backdoor tax on rural 
and small city Americans.
  In fact, a PMA sale would force South Dakotans--and public power 
consumers everywhere--to cover for the rest of America. Why? Because 
the sale of the PMAs could result in rate increases totaling more than 
$47 million.
  Some argued that the sale of the PMAs would generate revenue for the 
Federal Government. Would it? Let us look at the facts.
  PMAs still owe almost $15 billion in principal. Also, more than $9 
billion in interest already has been paid to the Federal Government. By 
selling the PMAs, the government would forfeit future interest earning 
on the outstanding loans.
  In fact, the Congressional Budget Office [CBO] recently released its 
scoring of a House proposal to sell the Southeastern Power 
Administration [SEPA]. The proposal, approved by the House 
Transportation and Natural Resources Committees, limited the sale only 
to actual power generation and the right to market the power.
  CBO scored the House proposal to sell SEPA at zero--showing that the 
sale would cause no gain or loss to the Treasury. In other words, CBO 
certified what I have said all along--that a PMA sale would not 
generate net revenue.
  In addition, CBO estimated that the proposal to sell SEPA would cause 
rates to increase up to 75 percent in some areas. CBO noted that the 
supposed rate ``cap'' included in the House proposal would do nothing 
to protect 95 percent of the rural electric cooperatives or municipal 
utilities that buy power from SEPA from significant rate increases. 
This proves what South Dakotans have known all along--selling the PMAs 
would rob rural ratepayers and destroy a vital community resource.
  Mr. President, I am pleased that with strong bipartisan support, we 
fought successfully to prove the worth of public power. We demonstrated 
how necessary it is to the lives of rural and small city Americans. I 
am proud of the people of South Dakota who have stated their message 
loud and clear--through thousands of postcards, letters, and phone 
calls. South Dakotans such as Ron Holsteen, Bob Martin, and Jeff Nelson 
have been leaders in their opposition to the proposed PMA sale and I 
again congratulate them and commend their hard work. They and their 
counterparts are the true heroes in this victorious battle.
  Public power is a solid investment for the Nation. Public power is 
one of the great success stories of South Dakota. There is no question: 
For now, we have won the war for the continued existence of public 
power. This is a victory for all Americans who reside in small cities 
and rural communities.
  The PRESIDING OFFICER. Who yields time?
  Would the Senator from New Mexico suggest the absence of a quorum?
  Mr. DOMENICI. I suggest the absence of a quorum.
  The PRESIDING OFFICER. I thank the Senator.
  The absence of a quorum has been suggested. The clerk will call the 
roll.
  The legislative clerk proceeded to call the roll.
  Mr. DOMENICI. 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. DOMENICI. Mr. President, I yield 2 minutes to Senator Kyl off the 
bill.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. KYL. Thank you, Mr. President. If there is a single vote on which 
the American people will judge the success or the failure of this 
Congress, if there is a single vote this session that will change the 
course of American history, it will be the vote on the Balanced Budget 
Reconciliation Act, which is before us today.
  This single vote will determine whether we finally face up to the 
grim reality of a national debt that is $4.9 trillion and growing 
daily, a debt that now amounts to $18,500 for every man, woman and 
child in this country, or whether we continue the spending spree that 
we have been on for the last 20 years at the expense of our children 
and grandchildren.
  This single vote is more important than the votes on the balanced 
budget amendment and the line-item veto. Those are the tools that will 
help us balance the budget and keep it there. This bill actually 
balances the budget.
  This single vote will determine whether we keep the promises we made 
to the American people last fall that we would balance the budget and 
provide badly needed tax relief or whether it is business as usual: 
Promises out the door as soon as it is time to make the final 
decisions, the difficult decisions.
  I believe that this Congress, the new majority and the American 
people who sent us here last year believe that it is different. We have 
spoken, we have worked, we have voted for the fiscal restraint for 
years but never had the votes in the Congress to prevail. This time is 
different. We finally have the chance and the numbers to prove what we 
say is what we mean: That Government is too big, that it costs too 
much, that it intrudes too far into the lives of our people and that, 
finally, we are willing to do something about it.
  Mr. President, this is the most crucial vote that we will cast, and I 
am assuming that the majority of this body will support this Balanced 
Budget Reconciliation Act and put this country on the right course for 
the next century.
  I believe this Congress--the new majority that the American people 
sent here last year--is different. We have spoken, we have worked, we 
have voted for fiscal restraint for years, but have never had the votes 
in Congress to prevail. This time is different. We finally have the 
chance, and the numbers, to prove that we mean what we say--that 
government is too big, it costs too much, and it intrudes too far into 
the lives of our people--and that we are willing to do something about 
it.
  Former Education Secretary Bill Bennett probably said it best in 
testimony before the Budget Committee earlier this year. He said:

       We have created a nanny state that takes too much from us 
     in order to do too much for us. This has created 
     inefficiency, sapped individual responsibility, and intruded 
     on personal liberty.

  Mr. President, it is time to change course.
  Fourteen years ago, President Reagan embarked on a similar mission to 
curb Federal spending, cut taxes, and reduce regulation. He succeeded 
in cutting taxes--and that launched the longest peacetime economic 
expansion in our Nation's history. And, I will talk about that a little 
more later.
  Yes, deficits soared. But that was not because of the tax cuts. It 
was because the majority in Congress at the time did not have the 
courage or the will to limit Federal spending.
  In the budget we have before us, spending growth is limited to about 
3 percent a year. Had Congress been able to exercise the same restraint 
beginning in fiscal year 1982--the first year President Reagan had full 
control of the budget--the budget would not only have balanced in 
fiscal year 1989, there would actually have been a $73.5 billion 
surplus. Instead, Congress let spending grow by about twice that rate. 
Spending skyrocketed from $745.8 billion in fiscal year 1982 to $1.1 
trillion by fiscal year 1989.
  So even as revenues grew dramatically--from $617.8 billion in fiscal 
year 1982 to $990.7 billion in fiscal year 1989--the deficit soared 
because spending grew faster. A 60.4-percent increase in revenues was 
not enough for the spendthrift majority in Congress.
  To my colleagues who say this is no time for a tax cut, let me tell 
you that the middle-class tax cut in our budget does not come at the 
expense of a balanced budget, but as a result of one. It is the 
dividend that the American people receive from the downsizing of 
government: the $200 million reduction in the congressional budget; the 
phasing 

[[Page S15769]]

out of the Commerce Department; welfare reform; and the consolidation 
and elimination of other programs to name a few.
  In fact, the Congressional Budget Office has certified that our 
budget meets its deficit reduction target; will help the economy; and, 
as a result, will produce a $170 billion economic dividend. We can and 
should return this dividend to the people. The $170 billion, combined 
with $21 billion from the repeal of corporate welfare, and billions of 
dollars in other savings--none of which comes from Medicare--allows us 
to pay for the tax cut and balance the budget. That is certified by the 
CBO, the agency President Clinton praised as the most accurate 
forecaster of budget numbers.
  My colleagues, taxes are a problem, but it is not because they are 
too low; they are too high. Go out and talk to people in your States. 
Listen to them. The typical family now pays over 40 percent of its 
income in Federal, State, and local taxes. That is more than it spends 
on food, clothing, and shelter combined. Americans are working more 
than 3 hours of every 8-hour workday just to pay taxes to various 
levels of government.
  Back in 1948, the typical family paid only about 3 percent of its 
income to the Federal Government in taxes. The budget balanced that 
year. In fact, the entire Federal budget amounted to only $29.8 
billion--about what we will pay this year for 43 days' worth of 
interest on the national debt.
  Mr. President, the American people are not undertaxed. They are 
overtaxed. They need relief. When politicians say we cannot afford a 
tax cut now, it is because they do not want to give up the money that 
is available for them--for the politicians--to spend. Well, what about 
hard-working families? What about what they can afford?
  These are people struggling every day to get the kids to school, go 
to work, and pay their bills. To the family with two kids earning 
$20,000 a year, a $500 per child tax credit means a lot.
  The Heritage Foundation recently estimated that 344,152 taxpayers in 
Arizona--more than 28 million taxpayers nationwide--are eligible for 
the $500 per child tax credit. Heritage estimated that 47,552 taxpayers 
in Arizona--3.5 million nationwide--would see their entire income tax 
liability eliminated as a result of the $500 per child tax credit. 
Those taxpayers are not wealthy, yet they are the ones who benefit most 
significantly from the Senate tax cuts.
  In fact, 83 percent of the tax reductions in this bill will go to 
those with annual incomes under $100,000, and 70 percent will go to 
those with incomes under $75,000.
  The bill includes a capital gains tax cut. A recent study by the Cato 
Institute found that the capital gains cut will benefit poor and 
working-class Americans most. The study found that the tax reduction 
would unlock hundreds of billions of dollars in unrealized capital 
gains, thus promoting investment in new technologies and 
entrepreneurial ventures. It would ``expand economic opportunities for 
working-class Americans by encouraging capital formation, new business 
creation, and investment in capital-starved areas, particularly inner 
cities, and lead to the creation of more than half a million new jobs 
and increase wages by the year 2000.''
  People across America are frustrated. They are struggling day in and 
day out to make ends meet, while they watch the Federal Government 
squander their hard-earned tax dollars on everything from farm 
subsidies to pork-barrel highway projects, helium reserves, and welfare 
for lobbyists. President Clinton even wants us to pay ``volunteers'' to 
do their work--pay ``volunteers'' in the AmeriCorps program more than 
the average American earns in a year.
  People in homes across the country are struggling with an oppressive 
tax burden while Congress and the President argue about who is rich, 
and about how much ``we'' can afford to give up in tax revenue. My 
colleagues, it is the American people--not government--that needs help, 
and this bill takes a small, but meaningful, step in that direction.
  This bill is not radical or draconian. In fact, the tax cuts will 
total $245 billion over 7 years--just 2 percent of the total amount 
that the Federal Government will collect over that period. It is 
modest, and if the American people knew we were having such a battle 
over just 2 percent, they would be stunned.
  Throughout the debate over the next few days, we will hear a lot 
about tax cuts for the rich. Whenever politicians start to object to 
tax bills because they do not tax the ``rich'' enough, or they provide 
too much relief for the ``rich,'' middle America better hold onto its 
wallet. As I pointed out before, more than 70 percent of the benefit of 
this cut goes to those with annual incomes of less than $75,000, so we 
are not talking about the super rich at all.
  Remember in 1990 when Congress was supposedly going to soak the rich 
with a luxury tax on expensive cars, boats, jewelry, and furs? Well, it 
was not the rich who ultimately got soaked. The sale of yachts fell by 
73 percent, and boatyards died. Sales of Cadillacs declined 17 percent. 
The rich simply avoided the tax by not buying the yacht or the 
Cadillac, and it was the guy on the line who ultimately paid the luxury 
tax--paid with his job. Congress had to repeal it.
  In 1993, President Clinton called on the American people to pay 
higher taxes--he called it making a ``contribution'' to the Government. 
But it was the average woman on her way to work who found that she had 
to pay a higher price for gasoline to get there. It was the senior 
citizen making as little as $34,000 per year who found out he was among 
the ``rich'' President Clinton had in mind; he ended up paying higher 
taxes on his Social Security.
  Now President Clinton says he made a mistake in 1993--that he raised 
taxes too much. I agree that he made a mistake, but if I recall 
correctly, he sent up a budget asking for $359 billion in new taxes--
$100 billion more than he eventually got. It turned out that there was 
no support in Congress for a tax increase of that magnitude, even among 
members of his own party. He ultimately had to settle for a tax 
increase of ``only'' $258 billion--still the largest in history.
  Yes, President Clinton did raise taxes too much, and we have the 
chance in this bill to undo some of the damage. Not only have people 
been taxed too much, but they have lost jobs as well. A constituent of 
mine, Tom Ford from Tucson, AZ, contacted me recently about what the 
Clinton tax increase has done to him.
  Mr. Ford makes a living as a special effects specialist for the 
motion picture industry. He lost one job on a film called ``China 
Spur,'' which was to have starred Willie Nelson, Ernest Borgnine, and 
Heather Locklear. The film was canceled when the Clinton tax increase 
took effect because the investor found he did not have enough money to 
take a risk on the film.
  Tom Ford worked on another movie, ``Waiting to Exhale,'' with Whitney 
Houston. Again, taxes hurt the little guy. The project went forward, 
but corners were cut. Salary and hours were reduced. Whitney Houston 
got her full asking price, and paid all her taxes, as did Gregory Hines 
and Angela Bassett who also starred in the film. But the guys behind 
the scene--people like Mr. Ford--were forced to work for less. It was 
they who bore the brunt of the tighter budget that resulted from higher 
taxes.
  What does that mean? Wealthier taxpayers like Whitney Houston do not 
get hurt. She has a great deal of talent, and will continue to command 
a good wage no matter what taxes are levied. But others are not so 
fortunate. When Mr. Ford does not work, or works fewer hours or for 
less money, he cannot buy the extra equipment he needs for filmmaking. 
And this, in turn, means someone who produces the equipment is also put 
out of a job. He cannot buy the new pick-up truck he needs for his 
business. The Ford dealer in Tucson loses a sale, and the factory 
worker in Detroit sees her job threatened because sales fall off.
  Mr. Ford pointed out the irony in a letter to me. He said, ``the only 
good thing is that with a lower income brought on by higher taxes, I am 
now paying less in taxes to the government.'' But that is not what is 
supposed to happen according to the big taxers.
  If you listen to the other side in this debate, you will hear that 
higher tax rates are supposed to bring in more revenue for the 
Government. But that is not what Tom Ford's experience 

[[Page S15770]]

demonstrates. High tax rates cost jobs and ultimately reduce revenues 
that might otherwise accrue to the federal Treasury.
  That is the experience of the 1980's. Tax revenues increased from 
$517 billion in fiscal year 1980 to $1.03 trillion by fiscal year 1990. 
They nearly doubled. And that is despite the fact that the top income 
tax rate fell from 70 percent to 28 percent. The share of total Federal 
income taxes paid by the top 10 percent of taxpayers, ranked by 
adjusted gross income, rose from just under 50 percent in 1980 to more 
than 57 percent by 1988. During a period in which their marginal rate 
fell by 60 percent, the wealthy paid almost 19 percent more in dollar 
terms in Federal taxes. That is because the tax base expanded as people 
worked more, invested more, and took money out of tax shelters and put 
it into taxable investments instead.
  Just as the local department store does not lose money when it holds 
a weekend sale--volume more than makes up for a reduction in price--the 
government does not lose revenue when it reduces tax rates. Just the 
opposite occurs. With businesses expanding, more people working, and 
more investments being made, tax revenues will increase.
  The opposite occurs when tax rates are increased. People change their 
behavior to avoid the higher tax. After the tax increases of 1990 and 
1993, income tax collections actually declined from 8.6 percent of 
gross domestic product [GDP] to 8.2 percent of GDP in 1994.
  Even if you disregard the dynamic effect of the tax cuts proposed in 
the budget before us today, tax revenues are projected to increase 
substantially. They will increase from $1.35 trillion in fiscal year 
1995 to $1.85 trillion in fiscal year 2002. That is $500 billion--half 
a trillion--more money than we are collecting today.
  Mr. President, how much is enough? Can the Government not get by with 
an extra 35 percent worth of revenue--an extra half-a-trillion 
dollars--to spend? How much more is needed?
  Now there is a lot of talk about the spending cuts in this package; 
that they are too deep or that one group or another is being singled 
out. The fact is, most programs are not being cut at all. Medicare 
spending, for example, will rise from $178 billion this year to $274 
billion 7 years from now. In other words, we will be spending 50 
percent more in 7 years than we spend today. The average Medicare 
benefit will go from about $4,800 per person today to $6,700 in the 
year 2002. That is not a cut. Let us be honest. It is not a cut.
  Student loan volume will grow from $24 billion in 1995 to $36 billion 
in 2002--another 50-percent increase. Be honest: a 50-percent increase 
is not a cut.
  It is the logic that defines a spending increase as a cut that has 
gotten us into this predicament. It is like giving someone a 50-percent 
raise and having that person quit because he thinks his employer cut 
his salary. Let us be honest. An increase is not a cut.
  Let us make no mistake about what these deficits mean. When mom, dad, 
grandma, and grandpa want more from the government than they are 
willing to pay for in taxes today--that is a budget deficit--we are all 
handing the bill, dollar for dollar--plus interest--to our sons and 
daughters, and their children yet to come.
  Most people agree that the Federal Government should maintain a 
social safety net to provide individuals with the hand up that they 
need to escape hard financial times. No one here is proposing that we 
eliminate that helping hand. But, we have got to find a way to provide 
a safety net without leaving future generations with a legacy of debt 
and despair.
  My grandson was born just 5 months ago and already owns a share of 
the national debt that is $18,500 and rising. He can expect to pay 
$187,000 in taxes during his lifetime just to pay the increase on the 
national debt. What will be left of his income to care for his 
children? How will the Government care for the needy of tomorrow when 
every dollar of individual income tax revenue is devoted to interest on 
the national debt?
  Mr. President, a balanced Federal budget offers hope. Yes, it will 
require that Congress prioritize spending so that the most important 
programs are not jeopardized. And wasteful programs will have to be 
eliminated. Some of the luxuries will have to be postponed to another 
day. A balanced budget will require heavy lifting, but it offers hope 
and opportunity.
  The Congressional Budget Office predicts that a balanced budget would 
facilitate a reduction in long-term real interest rates of between 1 
and 2 percent. That means that more Americans will have the chance to 
live the American dream--to own their own home. A 2-percent reduction 
on a typical 30-year $80,000 mortgage would save homeowners $107 a 
month. That is $1,284 a year, or over $38,000 over the life of the 
mortgage.
  A 2-percent reduction in interest rates on a typical $15,000 car loan 
would save buyers $676.
  The savings would accrue on student loans, and credit cards, and 
loans to businesses that want to expand and create new jobs. Reducing 
interest rates is probably one of the most important things we can do 
to help people across this country.
  This bill includes incentives to help people buy insurance coverage 
for long-term health care, and to save in medical savings accounts. It 
includes a tax credit for adoption expenses, and estate tax reform so 
that families are not forced to sell their small businesses just to pay 
estate taxes to the Government.
  This budget represents a break from business as usual. We are finally 
making the tough choices the American people sent us here to make. We 
are keeping our promises--for a change.
  Will some people be unhappy with the bill? Of course. It is always 
easier to hand out money other people earned than it is to say ``no.'' 
Will some say they have been singled out? Of course. But if you look at 
the myriad of interests that say they have been singled out, you see 
that no one has been singled out at all.
  This is a historic debate, the most important vote many of us will 
ever cast. Let us not miss this opportunity or another one might not 
arise until it is too late for our country. Vote for the Balanced 
Budget Reconciliation Act.
  Mr. DOMENICI. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mrs. HUTCHISON. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded and that I be allowed to speak for 2 
minutes as in morning business, not to take away from the time on 
either side.
  Mr. DOMENICI addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, just so everyone will understand, we 
cannot be doing this because we are very, very close on getting to the 
amendments we have agreed to. In this instance, for 2 additional 
minutes, I will not object, just so Senators on our side know we are 
not going to be able to do any more of this until we get on the 
amendment. At this time, I will not object.
  The PRESIDING OFFICER. Without objection, the order for the quorum 
call is rescinded. The Senator from Texas is recognized as in morning 
business.

                          ____________________