[Congressional Record Volume 142, Number 50 (Thursday, April 18, 1996)]
[Senate]
[Pages S3628-S3630]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KERRY:
  S. 1685. A bill to provide income and economic security to the 
American family, and for other purposes; to the Committee on Finance.


          The American Family Income and Economic Security Act

  Mr. KERRY. Mr. President, today I am introducing the American Family 
Income and Economic Security Act.
  Not long ago the Treasury announced that the leading economic 
indicators were up 1.3 percent for February, the gross domestic product 
rose half a percent, the stock market is at record levels, inflation is 
subdued, interest rates are stable, unemployment is the lowest in the 
industrial world, job growth is the highest with over 8 million jobs 
since 1993; and--to topoff all of these positive indicators--the 
Democratic economic plan--that passed without one Republican vote--has 
cut the deficit by more than half--down from $290 billion to $140 
billion.
  We worked hard with the President against Republican stonewalling, 
gridlock, and continued opposition to make this happen so that even the 
Republican Chairman of the Federal Reserve, Alan Greenspan, told me 2 
weeks ago, at a Banking Committee hearing, that this is the longest 
period of the most robust and sustained economic growth since the end 
of the Second World War, and he expects the economy to continue to grow 
``at a steady clip.''
  But this economic growth is best reflected in corporate boardrooms--
businesses are finding it easier to borrow money, interest rates are 
low, executive salaries are up and continue to mushroom, regulations 
are being eased in every sector from financial services to basic 
manufacturing. But, in living rooms across Massachusetts there is 
extraordinary anxiety about jobs, health care, education, wages, and 
retirement.
  Mr. President, I have talked to family after family in Massachusetts 
who told me that people at the top are doing great, but their friends 
on the shop floor are not. Statistics show that corporate executives 
are earning 170 times that of their lowest paid worker. Just last year 
CEO's had an average salary increase of 15 percent while their workers 
are downsized into the street. These workers--whose real wages have 
fallen half-a-percent every year since 1973--worry about the future, 
about elderly parents getting sick, about their kids' education, about 
their own health care if they lose their job, about the debt they are 
carrying, and about their retirement.
  I understand how difficult it is when productivity rose 7 percent but 
real wages fell 3 percent in the first 6 years of the 1990's. A family 
that used to take out a loan for a major expense like a car, now put 
gas on their credit cards. They took out loans to send kids to college, 
now they take out loans to send kids to the pediatrician. The American 
family is sinking further and further into debt and this Republican 
Congress is making it worse.
  In 1995 commercial banks earned an all-time record high profit of 
$48.8 billion while consumer debt has soared 39 percent in the last 5 
years and now exceeds $1 trillion. Personal bankruptcies rose by 6 
percent in 1 year, and consumers owe $360 billion on their credit 
cards. And families in Massachusetts, fourth in the Nation in loan 
delinquencies, have defaulted on $80 million in consumer loans.
  Mr. President, in these economic times, the average American family 
has four credit cards--each with balances of $4,800. It's no wonder we 
are anxious. Thousands and thousands of families are one paycheck away 
from economic disaster. But, it took Pat Buchanan to wake up the 
Republican Party to do something the Democrats have been doing since 
the Roosevelt administration--fighting for working families and people 
struggling to make ends meet. Yet the Republicans have done nothing to 
alleviate this anxiety. They will not even raise the minimum wage--in 
fact they have downsized the American dream for millions of hard 
working families, but voted time and again to increase corporate 
welfare, and give huge tax breaks to the wealthiest Americans.

  Therefore, today, to fight back, I am announcing that I will 
introduce the American Family Income and Economic Security Act.
  It helps families by increasing the minimum wage, helps them educate 
their kids and re-educate themselves, helps secure portable, 
affordable, health care with no preexisting conditions clause, and 
makes investments for retirement easier. I believe that this 
legislation can go a long way to restoring faith in the American dream.
  The American Family Income and Economic Security Act gives incentives 
to businesses that become better corporate citizens and that foster a 
family-friendly environment that provides high-wage jobs for the 21st 
century.
  It includes 10 new approaches to family economic problems, and 10 
initiatives that I have sponsored before. But, what makes this proposal 
unique is that it takes simple, necessary, common sense steps in the 
right direction. Each element of this plan can stand alone. It uses the 
Tax Code to help workers keep up, and rewards businesses that reward 
workers.
  I believe that these proposals are what real families need to make 
ends meet and to feel that they have a chance in the new economy.
  Let us start with wages. Under this proposal we reward work--those 
who are on the job and off the dole--by increasing the minimum wage 
from $4.25 and hour to $5.15 an hour. Maybe my Republican opponents 
don't know what an increase means in real terms: It means an additional 
$1,800--the equivalent of 7 months of groceries.
  Second, when it comes to educating kids--while the Republicans are 
cutting Pell grants and student loans for average working families--I 
want to use the Tax Code creatively. This proposal gives every family a 
$10,000 maximum deduction for tuition costs; and it allows their sons 
or daughters, who take out a student loan, to deduct the interest on 
that loan so they are not saddled with debt as soon as they graduate.

[[Page S3629]]

  But more than helping families pay for tuition costs, I want to help 
parents get the lifetime education and training they will need to 
compete. That is why my proposal encourages companies to provide 
education and training with a $5,200 per employee tax deduction for 
training.
  These proposals are real-life solutions to real-life family problems. 
How can we say that everyone should go to college--everyone should be 
trained and retrained--and then make it as difficult as we can to do 
it. How can we not provide incentives to help educate our workforce 
when we know that in 1972 people with advanced degrees earned 72 
percent more than high school graduates--when we know that by 1992 
those with graduate degrees made 2.5 times more than high school 
graduates--and when we know that today high school dropouts earn 
scarcely half as much as high school graduates and the education gap is 
widening?
  But education costs and retraining are not the only hurdles families 
are facing. Health care costs and the fear of catastrophic illness of a 
loved one add to America's insecurities. Every American has the right 
to feel secure that if they get sick, or their child or parents get 
sick, they will not face financial ruin. So, my plan endorses the 
Kennedy-Kassebaum bill that makes health insurance portable and limits 
preexisting condition clauses. But it goes one step further.

  We know too well the horrors of a family who has tragically lost a 
loved one at a young age. The entire family, in a time of grief, can be 
faced with mounting medical bills. This proposal provides some security 
for younger families who are forced to sell family property because of 
a terminal illness. It zeroes-out capital gains taxes for them to give 
them a chance to recover.
  I am tired of going around Massachusetts and hearing stories of a 
family that took 10 years to crawl out from under the burden of debt 
caused by the loss of a loved one to breast cancer--which strikes 1 in 
every 9 Massachusetts women--or AIDS--which is the leading killer of 
Massachusetts residents aged 25 to 44. I am tired of going back to 
Washington to see Republicans continue their attempts to cut Medicare 
and Medicaid and cruelly leave so many of these young families in their 
political wake.
  Young families are the strength of this Nation. If they work hard 
they have every right to expect success, security, and a piece of the 
dream--and it is up to us to help them achieve it. I came to the Senate 
when my daughters were young and I know how hard it is to have a career 
and be a good parent. Many families cannot afford the cost of daycare, 
and do not want to be separated from their children. That is why I am 
proposing that businesses get a tax credit of up to 50 percent of their 
investment up to $150,000 for establishing on-site daycare centers for 
employees. Since the average American family spends $9,000 a year on 
daycare, it makes sense to help businesses keep families together--kids 
can be a few floors away rather than a few miles away, and we can take 
away parental anxiety while we raise their productivity. The Glass 
Ceiling Commission and others said that on-site daycare raises the 
productivity of American workers by 10 percent. So what are we waiting 
for?
  These are proposals to put more money in people's pockets, and there 
is one more proposal that is especially important to Massachusetts and 
working families everywhere: I am proposing to create a Federal tax 
deduction for local sewer and water fees to help those hardest hit by 
soaring water rates that are above 1 percent of a taxpayers adjusted 
gross income.
  In and around Boston, water rates continue to escalate--from $185 per 
year in 1985 to $525 per year in 1992 and $618 for 1996. By the year 
2000, the rate is projected to rise to $800. The Tax Code allows 
deductions for State and local taxes, and this will similarly avoid the 
double tax on water and sewer rates for homeowners.
  And most importantly I reiterate my strong desire to double the 
income levels for those who participate in IRA's. I want individuals 
with incomes of $50,000 and couples who make $80,000 to be allowed to 
deduct IRA contributions. And I want them to be allowed early 
distribution to finance education, first time home buying, medical 
bills associated with catastrophic illness and long-term unemployment. 
This is a common sense approach to increasing the national savings rate 
without breaking the Treasury. This is an innovative approach that 
gives families the flexibility to grow and build and cope with economic 
reality.
  These are the creative programs we should incorporate into the Tax 
Code instead of giving tax breaks to MacDonalds to finance their 
foreign advertising budget. That is why I sponsored a bipartisan bill 
to cut $60 billion in corporate welfare and that is why I am proposing 
to stop companies from deducting the salaries of employees who earn 
over $1 million a year.
  No wonder the average American does not trust Government to help 
them.
  To begin helping business move us in the right direction I am 
proposing today a seven part business-to-family plan that provides 
direct assistance to high-growth, high-wage, job-producing businesses; 
and punishes businesses that put the bottom-line first and families 
last.
  On the positive side, I am proposing to completely eliminate capital 
gains taxes for investors who hold stock for more than 10 years in 
qualified small, high-growth, job-creating, critical-technology 
companies that do at least 75 percent of their business in the United 
States; and I am proposing to reduce the tax burden by 50 percent for 
investors who hold stock for at least 5 years.
  Massachusetts leads the Nation in these cutting-edge technology-
driven businesses, and is a model for the Nation on making investments 
count for American working families. Let us make the Massachusetts 
high-tech experience, America's experience.
  These businesses are doing it right and expanding into the global 
market, and we should be encouraging that expansion. That is why this 
plan encourages small businesses to export and that is why it levels 
the playing field in Federal export financing between the Export-Import 
Bank's 90-percent guaranteed coverage and the Small Business 
Administration's 75 to 80 percent coverage. The Coalition of New 
England Companies for Trade strongly supports this export enhancement 
idea because they know it will work. But, most importantly, it 
encourages companies to keep jobs in this country and--like Aaron 
Feuerstein--it encourages them to recognize that their employees are an 
asset not a liability.
  My friends, as I meet people across this State, I find that many are 
concerned about their retirement. Employee pension plans should be 
sacred. That is why this proposal makes sure that private pension plans 
are not the toybox of corporate America. I am proposing that we 
prohibit companies from using pension plans when considering financing 
mergers and acquisitions; and we prohibit companies from deducting 
merger and acquisition expenses if the merger results in a 15 percent 
reduction in the work force.
  And we should not be rewarding corporate behavior with misguided tax 
loopholes that gives favorable tax treatment to companies that move 
offshore. If nothing else, a good corporate citizen keeps jobs in 
America, stays in America, and builds the American economy. I am 
proposing that we close those loopholes immediately.
  To take corporate citizenship one step further, I think we should 
punish Federal contractors that hire illegal immigrants. The Federal 
Government should lead by example and not allow its contractors to hire 
undocumented foreign workers at the expense of an American job. That is 
common sense and its the kind of corporate citizenship that we have 
every right to demand.
  I am also proposing that Congress give its unequivocal support to the 
idea of companies granting stock options to people they layoff and 
downsize out of a job. Why should not CEO's with guaranteed golden 
parachutes give loyal workers at least a tin parachute to make 
downsizing easier?
  I am also proposing that we retroactively and permanently extend the 
Research and Development tax credit that is so critical to a pro-
growth, future oriented economy that understands that responsible, 
thoughtful investment in research and development can and will create 
the kind of high-

[[Page S3630]]

wage jobs we need. This provision is, perhaps, the most critical of 
all. It establishes our commitment to investing in the future. It is 
not a gamble or a waste of taxpayers' dollars. It is a sure bet; and we 
should be willing to make it.
  We should be willing to accept the costs of any and all of these 
proposals--first because they can be offset by the $60 billion in 
savings we get from stopping corporate welfare under the bi-partisan 
bill that Senator McCain and I sponsored; and second, because we have 
to step up to the plate for what's right for working families and 
what's right for America.
  So, what does my American Family Income and Economic Security Act do? 
It helps workers, it supports businesses, and it rewards corporate 
citizenship. It addresses the anxieties of American working families, 
and it begins to move us in the right direction. It fights against the 
wrong-headedness of Republican policies that have downsized the 
American dream and shifted wealth to the top 10 percent of Americans.
  It is time to begin the shift back at least enough to protect hard 
working families from the extreme political agenda of the Republicans 
in Congress. So, this proposal is a hedge against the incredible odds 
that working families face every day in meeting the bills for health 
care, education, and a decent retirement. It is a hedge against 
stagnant wages, and it is a challenge to businesses to be good 
corporate citizens, and to build a family friendly workplace so that, 
together, we can build a better stronger American economy.
                                 ______