[Congressional Record Volume 142, Number 121 (Friday, September 6, 1996)]
[Senate]
[Pages S10005-S10011]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TAX RELIEF
Mr. COVERDELL. Mr. President, as we have heard, there is a great
national debate in the making with regard to the anxiety in the
American workplace, anxiety particularly among middle-class working
Americans. I have often talked about a snapshot of an average family in
Georgia that makes about $40,000 to $45,000 a year. Several months ago,
when I took the snapshot of that family--a family of four, with both
parents now working, with two children--we added up the Government
obligations that that family had to pay, the total cost of Government.
At the end of the day, they had 48.2 percent of their gross wages left.
I can think of no institution, including Hollywood, that has had a
more profound effect on the behavior of middle-class America than their
own Government. This morning, I have just been given data that show
that now they only have 47 percent. Just in the last 12 months, they
continue to lose the power of the wages and the independence of what
those wages mean to that family.
[[Page S10006]]
Maybe the First Lady and Senator Dole have defined our disagreement.
In Chicago, she said, very defiantly, that it does take a village to
raise a child. Of course, ``village'' is the Government. Senator Dole
said that it takes a family. All year, we have been debating the
subject about whether the resources should go to the village--the
Government--or whether the resources should be left with the family.
I believe the empirical evidence is unshakable that those resources,
those wages, should be left in the family checking account, so that
that family can undertake the responsibilities that America has always
asked of them--to get the country up in the morning, get it to school,
get it educated, get it housed and fed, clothed, transported and, yes,
in good health and spirits, and to ultimately accept the leadership of
the country. For us to be here this morning debating the fact that an
average family in America is now forfeiting over half of its wages to
the Government at some level, being denied those earnings and the
independence it gives the families to do the things it is supposed to
do--if Thomas Jefferson were here today--and I have said it before--he
would be stunned that we had ever come to a point in America that we
had confiscated that sum of the earning power of the wage earner and
sent it off to some government to remake the village. Maybe those two
sentences have, more clearly than anything else we have heard in a long
time, defined our two views of the country.
I see we have been joined by the Senator from Utah. I yield up to 10
minutes to the Senator from Utah to speak on this subject.
The PRESIDING OFFICER. The Senator from Utah is recognized.
Mr. BENNETT. Mr. President, as I contemplate the issue of taxes and
their impact on the average family, my mind goes back to an experience
that, for me, was very typical--that is, for my generation--but it is
becoming increasingly less typical for Americans. I would like to
recall it as a model for this discussion. When I was in my twenties, I
was in the Armed Forces. At that time, everyone who was male and in his
twenties was in the Armed Forces. The law required that. It was a new
experience, a cultural shock, as they took me to Fort Ord, CA, and cut
off all my hair. I will stipulate that at that time in my life I had
some hair to be cut off, unlike my present circumstance. They put me in
a uniform, put me in a barracks, and changed my life.
I was an employee of the U.S. Army and, as such, I received the
monthly salary of $90. People could say to me, ``Well, you can't live
on $90 a month.'' But the Army would have pointed out to me, if I had
raised the issue, that the Army took care of all of my food, all of my
clothing, the Army took care of my housing, and the Army took care of
my transportation. If the Army did not take me someplace, I did not
need to go there. The Army would tell me that would be the case, and
that the $90 a month I had as my salary was spending money. I could use
it to pay for the haircut that the Army required me to have. I could
use it to buy some candy bars, or whatever movies I might want to go
to. But my life was OK, because the combination of cash and Government-
provided benefits together provided me with a standard of living that
the Army decided was adequate for me.
Why do I cite that in this discussion about taxes? It is because that
is the philosophy that I think we are seeing here, where people say to
us, yes, there is so much coming to the Government in the way of taxes,
but look at what the Government is doing for you in return for those
taxes, so that you would want to continue paying the taxes because your
country needs that money in order to provide you with all of those
wonderful benefits that you are getting.
In the debate when Senator Dole raised the issue of possibly cutting
the tax rate, the first thing we heard was, ``We can't do that because
we can't afford it,'' to which I echo the question: Who is ``we''? ``We
can't afford to give up the revenue that is coming from the tax
rolls.'' Who is ``we''? ``We'' in this case means the average American
family. The average American family currently spends more for those
Government benefits, like the food, the uniforms, the barracks, and so
on that I described when I was in the Army. The current American family
spends more for Government than it spends for food, housing, and
shelter combined. Yet, we need more money to run the Government than
the family needs to feed itself, clothe itself, and house itself. The
question arises, not where will the money go but who will control it?
Let me give you an example. One of the things we buy with Government
money is retraining programs for people who are out of work. In the
State of Utah, we have a training program that is called ATC--Advanced
Technology Centers. It is one of the, I think, most effective
educational programs that has ever been run. I could go on at great
length and describe how it works. The State pays for it. People who
need it enroll in it, and they keep the cash for themselves to make the
decisions with respect to their lives. They enroll in this training
program not because the Federal Government is running it and the
Federal Government has decided that it must be offered. They decide in
terms of their own lives what kind of training they need. They come to
the program, and they choose which part of the program they will take.
And when they feel they have gotten what they need, they leave on their
own. In other words, the decisions on retraining are made by the
individuals--not by the Federal Government, or the State government.
But we will take money away from them to fund some 157 Federal
retraining programs that the Federal Government will then require
people to go to in order to get their unemployment benefits.
Which is the more efficient--where the individual makes the decision,
or where the government makes the decision? The answer is very clear.
The individual makes more intelligent decisions than the government
does. Why? Because the individual is concerned about the effect of that
decision on his or her life, and the government, by necessity, has to
make these decisions for a whole range of folks.
Let us talk about tax money specifically. Right now in this country
real wages are stagnant, and they have been for something like 17
years. Government is not. Government has been growing in that 17-year
period. Once again, we are told, ``We can't cut the amount of tax
burden on the families because we can't afford it.'' Again who is
``we''? What would happen if we were to say, ``All right, we are going
to allow families to keep more of what they earn and forego the
government programs''? An interesting thing would happen. If you were
to say to families who have children--which almost by definition means
that they have financial problems--if we were to say to families that
have children, ``OK, we are going to allow you to keep more of your
money. What are you going to do with it?'' ``Well, we are going to
spend it perhaps on a new car because with children we have to have a
slightly bigger car than the one we had when we were courting. We are
going to replace the washing machine. With children we wash a lot more
clothes than we used to. We are going to buy more clothes for our kids.
We are going to choose so on and so forth.''
I have had economists say to me, ``Why do you support the $500 per
child tax credit, because it is not going to do anything in our
macroeconomic models to increase savings? And the reason you have a tax
cut to stimulate the economy is because you want to increase the
savings rate and so on.'' I will not get into all of that macroeconomic
conversation here. You are right; families will not increase their
savings if you say we are going to give them a $500 per child tax
credit. What are they going to do? They are going to go out and buy
things for their kids. Kids are now consumer kids. There were times
when they were an economic asset. Now kids are a luxury item. We have
them nonetheless. But they cost us money.
What is going to happen when Detroit has to build additional cars
because people with families want bigger cars, when they have to build
additional washing machines, when they have to produce more clothes?
What is going to be the impact of that on the economy and ultimately on
the amount of money that will come back to government in the form of
taxes? I have seen some macroeconomic studies that say the $500 per
child tax credit is going to produce a greater economic
[[Page S10007]]
stimulus than even the cut in the capital gains tax rate. I am not sure
how that all works out. Frankly, neither are they. Because the one
thing we have to recognize is that we are dealing with a $7 trillion
economy, and the size of the $500 per child tax credit in terms of the
impact on the economy as a whole is less than 1 percent. That is true,
Mr. President. If you take the size of the economy as a whole and add
it up for the next 6 years--because 2002 is our target date--you are
talking about roughly $50 trillion worth of economic activity in that
6-year period. The size of the $500 per child tax credit is less than
$500 billion over that same 6-year period, considerably less. So it is
less than 1 percent.
Mr. President, I ask unanimous consent that I proceed for an
additional 2 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BENNETT. Mr. President, we are talking about a tax credit that is
less than 1 percent of the entire economy. But look at what it means to
the families with children. Look at what it means to those who will
make the decisions themselves--that instead of all the benefits like
the Army used to give me in uniforms, barracks, and mess hall
privileges, I say, ``Thanks. Just give me the cash and let me decide
where I am going to live, what I am going to wear, and what I am going
to eat.'' I will make wiser decisions, and the impact on the economy
will be better.
So this is where it ultimately comes down to, Mr. President. Again,
the question: Who is ``we'' when we say we can't afford a cut in tax
rates? The ``we'' is the American people, and I believe the American
people left to handle the cash rather than the so-called ``benefits''
can make a wiser use of that money than the Government can.
I am glad my experience with the Army is over. It was a good
experience. But I prefer the freedom I have to have the money and make
my own choices, and I think most Americans feel the same way.
I yield the floor.
The PRESIDING OFFICER. The Chair recognizes the Senator from Arizona.
Mr. COVERDELL. Mr. President, I yield 5 minutes to the Senator from
Oklahoma.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. INHOFE. I changed my 3 to 5, Mr. President, after listening to
the distinguished Senator from Utah. I shared the same experiences in
the Army, and I know exactly where he is coming from.
Mr. President, when he stated that Jefferson would have been stunned
if he would have known what we have here today, some who were around
back then would not have been so stunned. It was de Tocqueville who
made the observation after writing the book about the great wealth of
this country and what made it so wealthy. He said that once the people
find that they can vote money out of the public treasury, the system
will fail. And I think we are getting dangerously close to that.
As I watched the Chicago convention and all of this emphasis on the
family, I was thinking, ``How in the world could any administration
with such a dismal failure in their treatment of family values be
talking about the family?'' Maybe that is the whole reason they are
doing it.
I think if you go back and look, Mr. President, at the tax increase
that took place in 1993, it was characterized by then chairman of the
Senate Finance Committee, Senator Moynihan, the distinguished Senator
from New York, as the ``largest single tax increase'' in the history of
public finance, or any place in the world. That is exactly what
happened.
What was the nature of that tax increase? It was a tax increase on
the American family. It was a gasoline tax increase. That is not just
for fat cats. That is for everyone who drives a car, drives a truck, or
drives a tractor. It was a tax increase on small business and on
individuals, and even retroactive--going back and saying, ``It is not
enough that we go ahead and tax you from this point forward, but let us
go back to January.'' I think that is the first time in history that
has been done. It was a 70-percent tax increase on the Social Security
recipients who cared enough to prepare for some of their senior years
so they would have as much as $22,000 of income. It was an increase in
estate taxes. And what is interesting about this is we passed a bill,
several provisions that would have been geared just to the family, the
$500 per child tax credit, the capital gains tax reduction, repealing
some of our laws that penalize people who get married, who if you stay
married--actually right now under the law on the books two individuals
who are happily married, if they will get a divorce, can increase their
take-home pay by reducing taxes. Is that what Government is supposed to
do?
Anyway, I enjoyed the statement by Senator Dole when he talked about
doing something about the overtaxation. And if you will analyze what he
was suggesting in repealing that Social Security tax increase, the $500
per child tax credit, the reduction of taxes by 15 percent, the
reduction of capital gains taxes and the repealing of the estate tax,
all he is saying there is let us go back and see what happened in 1993
and let us repeal a portion of that tax increase.
So I would suggest that anyone today who was not supportive back in
1993 of the tax increase should be supporting what Senator Dole is
proposing to do now.
The Senator from Utah mentioned we cannot afford it. I would like to
make one comment. I heard the distinguished Senator from Arizona quote
John Kennedy several times on the fact that back when he was President,
he said we have got to increase revenues and the only way to increase
revenues is to reduce the tax rates. He reduced the tax rates and that
did increase revenue.
So I suggest to the Senator from Utah that we can afford to do this.
We can effectively increase our revenues by reducing taxes. The formula
works out that for each 1-percent growth in economic activity it
increases revenues by $24 billion.
However, we do not have the same kind of Democrat in the White House
today that we had when we had John Kennedy. It was Laura Tyson who said
there is no relationship between the level of taxes a nation pays and
its economic performance. And if you have that philosophy, then you can
say, yes, we cannot afford it.
Indeed, history has shown us in three decades in the last 100 years,
the twenties, the sixties, and the eighties, when we had dramatic
reductions in tax rates, each time we increased our revenues. So I
think it is a question now of are we really concerned about the family,
are we really concerned about doing something about the lessons of
those times? I think the time is here, and we have a Congress that is
willing to do it.
I applaud the Senator from Georgia for bringing up this subject to
discuss today.
Mr. COVERDELL. Mr. President, I appreciate very much the remarks of
the Senator from Oklahoma--as always on this subject precise and on
target, and I am glad he was able to be with us this afternoon.
The Senator from Arizona is here and would need up to 5 minutes. So I
extend 5 minutes to the Senator from Arizona.
Mr. KYL. I thank the Senator.
Mr. President, during the last few weeks, as the Presidential
election campaign has gotten underway, the American people have heard a
great deal about two very different tax plans for the country.
One of the plans proposed by President Clinton involves token relief
if--and I stress if--people spend their money in ways that the
Government deems most appropriate. The other plan represents the most
ambitious, progrowth economic program since the beginning of the Reagan
administration, a program that puts faith in the American people to
spend their money in ways that are best for themselves and their
families and their communities.
Mr. President, the ambitious program that I am talking about is the
one that Bob Dole has made the centerpiece of his campaign. It is a
plan that would cut income tax rates across the board by 15 percent, a
plan that would provide families with an additional $500 per child tax
credit, and an opportunity to save in new education investment accounts
for college education. It would repeal the President's 1993 tax
[[Page S10008]]
on Social Security, and it would provide important incentives for job
creation through capital gains tax reduction.
What does all of this mean for the average American family? For a
family of four earning $35,000 a year, it would mean a savings of over
$1,400 a year, a 51.8 percent reduction in that family's tax bill. In
other words, it cuts the tax bill in half. For a family making $75,000
a year, it means a savings of 26.7 percent. It cuts that family's tax
liability by a quarter. In other words, it provides real tax relief and
targets it to those families who need it the most.
Unlike the plan that President Clinton has proposed, the Dole plan
offers broad-based relief and allows all taxpayers--those who are
married and those who are single, those with children, those without
children--to decide for themselves how they can best use their savings
to help themselves and their communities. Maybe they could use the
money for new school clothes, as Senator Bennett pointed out, or for
books so children can do some extra reading. Maybe they need the money
to put a new roof on the house or put savings aside for a downpayment
on a home so they, too, could fulfill their dreams to own a home. Maybe
someone would use the funds to start a new business or to create new
jobs for young people entering the work force.
The issue is trust. Do we trust the people enough to decide how to
use their own hard-earned income or do we need the Government to decide
for us how to spend our money. The Dole plan puts faith in the people
and so do I.
History shows that when we put our faith in people, the country's
economy as a whole does much better. The Senator from Oklahoma pointed
out that I frequently quote John F. Kennedy in this regard, and I do.
He proposed a tax cut in the early 1960's to help stimulate economic
growth, and that plan ultimately led to one of the few periods of
relatively strong economic growth in our country since World War II.
The economic effects of the Reagan tax cuts in the 1980's were just
as dramatic, leading to the longest peacetime economic expansion in the
our Nation's history. In fact, by the end of President Reagan's second
term in office real gross national product had risen by more than 4
percent a year. Nearly 19 million new jobs were created, more than 85
percent of which were full-time jobs in occupations with average annual
salaries of over $20,000. Real median family income grew every year but
one between 1982 and 1989, rising $4,564 or 12.64 percent. That is real
median income, extra money in people's pockets to help meet their
everyday needs. That is what the Reagan program accomplished.
By contrast, the high tax policies of the 1990's have had exactly the
opposite effect. Real median family income has declined $2,108 or 5.2
percent for the average family. People are caught in the trap of
stagnating, declining wages and higher taxes, and they are hurting. No
wonder it takes two adults in the family working to support the family.
One supports the family; the other supports the Government.
I know that some people are asking whether tax cuts are an option
today in an era when voters and public officials alike are seeking to
balance our Federal budget. Well, John Kennedy also answered that
question noting, and I am quoting:
An economy hampered with high tax rates will never produce
enough revenue to balance the budget just as it will never
produce enough output and enough jobs.
The question is not whether we can afford a tax cut. The question is
can the American people, many of whom are working two jobs just to make
ends meet, afford a Government that continues to take more of their
hard-earned income every year? Can the next generation afford the tax
burden that will be imposed upon it just to pay the debts our
Government is accumulating today? Can we do better for our children
than to leave them with a sputtering economy, falling income and rising
taxes?
The Dole plan is not simply a tax cut but an overall economic plan to
revitalize the Nation's economy by putting faith in people to save and
invest their hard-earned money in ways they deem best for themselves
and their communities. President Clinton has promised that the era of
big Government is over. Bob Dole's economic plan will help keep that
promise.
Mr. COVERDELL addressed the Chair.
The PRESIDING OFFICER (Mr. Frist). The Senator from Georgia.
Mr. COVERDELL. I thank the Senator from Arizona. I think maybe it
will be useful to step back for a moment, to help frame what it is we
are talking about. In 1993, the Clinton administration imposed the
largest tax increase in American history, $491 billion. That resulted
in the highest tax burden, 19.3 percent of the entire economy, that is
being consumed by Government.
So the stage has been set. These are very large numbers, and they
tend not to get brought down to what the effects are on everyday folks
out here. What is happening is the median income for America's average
families is continuing to fall and has been falling for some time. From
1986 to 1993, it dropped $3,800, and continues to fall. These are the
reasons. As Government grows, and grows unfettered, the resources have
to come from somewhere. The families that are most affected are middle-
income families. The very wealthy are able to adjust their lives
accordingly. The very poor are using the safety net. But middle America
is paying these bills.
I am reading from an article that appeared on July 22 in the Atlanta
Constitution. It says:
To fend off that decline and maintain a middle-class
lifestyle, many women who might prefer to remain at home
have, instead, entered the workforce. But even that strategy
has begun to pay lower dividends. In families headed by a
married couple in which the wife is in the workforce, median
income peaked in 1989 and has declined noticeably since.
Another article on this subject:
In particular, declining earnings have fueled the rapid
increase in labor force participation of women, including
women in 2-parent families. Whereas, in 1950, only 20 percent
of married women with children, and 12 percent of those with
preschool age children, worked, by 1990, 40 years later, two-
thirds of married women with children were employed.
A survey, I believe it was done by Rand, was recently released about
the second spouse, or women in the workplace. It said 85 percent of the
women in the workplace would like to alter how they are in the
workplace if they could. Of course they cannot because of the economic
burden that our governments have placed on their families. They are so
high that the option is removed. It is not a decision, to make a choice
to go into the workplace. The Government is forcing it.
Of the 85 percent who said they would alter it, one-third of those
said they do not want to be in the workplace at all, they want to be at
home; one-third said they would like to work just part-time so there is
more time for the family; and one-third of them said they would only
volunteer. They would just work as a volunteer. They do not have that
choice. Congress and the administration, over the last several years,
have made that choice for them as we have ratcheted up the burden.
A moment ago I was talking about the Georgia family and I pointed out
they are forfeiting half their income to some government at this point.
That is enormous. It is just hard to comprehend. During this
administration, that average family's checking account has shrunk by
$200 a month, anywhere from $2,200 to $2,600 a year. That is the impact
on this average family in my State of the policies of this
administration. When they raised the taxes to the record level and
produced this highest tax burden ever, the effect on an average family
in a little town in my State is that their checking account has $2,400
less a year. That is just like removing something like 10 to 15 percent
of their total disposable income.
Is it any wonder that these average working families in our country
are not saving money? Are we surprised they do not save money like they
should, to prepare for a rainy day, prepare for retirement, prepare for
their children's education? What is left to save, after the Government
has marched through your living room and taken half the assets?
Are we surprised that credit card debt is at an all-time high? Are we
surprised that the payments on delinquencies on credit cards have
plummeted? Are we surprised that, if you work from 9 in the morning
until noon every day for the Government, and this
[[Page S10009]]
tax burden has been made so high that you have to have both spouses and
in some cases their children in the workplace, and in some cases not
only do both spouses now work, but, indeed, they have to have two and
three jobs each--Are we surprised that the behavior of that family has
been modified? That the children are left without the kind of attention
those parents would like to give? That they are not there to be the
guide and beacon for those kids? They call that latchkey children. Of
course they are latchkey children. The Government policy from
Washington has increased the burden, increased the burden. We have
pushed both spouses into the workplace. We have now got them to where
they have to have two and three jobs. We have created stress. It is no
wonder there is so much anxiety in middle-class America.
I am reading from another periodical: ``Work and family
integration.''
It is increasingly common for all adult family members to
spend a greater number of hours at work in order to make up
for declining median family incomes. Married women with
children have entered the labor force in record numbers.
They, therefore [it doesn't take a rocket scientist]--they,
therefore, have less time for care-giving in the home. Many
parents, both mothers and fathers, feel conflicted and torn
between spending time with their families and meeting
workplace demands. ``It's like you are caught between a rock
and a hard place, because if you want to have a family, you
want to have a couple of children, and you cannot do that
unless you have lots of money to support them.''
That quoted a woman in her twenties in Salt Lake City.
So, Mr. President, Senator Dole has come forward. There is a lot of
talk about what each of these proposals means, but the bottom line is
this: He is saying that Government, Washington in particular, has put
too much financial pressure on these fragile families. It is creating
havoc, and it ought to be a conscious, fundamental, sound policy to
give them relief, to allow them to keep more of what they earn so that
they can do what they are supposed to do in that home. And, yes, he is
saying we think that the best caretaker of those children is their
parents and the family in the comfort of the home, and, no, a village,
a government is no replacement for that policy.
So he has stepped forward and said, ``I intend, with a cooperative
Congress, to effect lowering the economic burden on the average
family.''
Mr. President, I know that you, the Presiding Officer, would like to
speak on this subject. So I am going to suggest the absence of a quorum
so I might assume your duties so that you can speak on this subject and
then replace me afterwards.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The bill clerk proceeded to call the roll.
Mr. FRIST. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Coverdell). Without objection, it is so
ordered.
Mr. FRIST. Mr. President, I rise today to continue on the topic that
was begun so admirably by yourself, the Senator from Arizona and the
Senator from Oklahoma on the benefits of significant tax relief for all
Americans, for individuals, for their families, for their children, for
the next generation.
Whenever we seem to debate tax policy in this body, we seem to begin
with different premises, and I think we really must focus over the next
year on a principle which I feel should govern our decisionmaking. That
is, that there is no such thing as ``Government money.'' Money today
through taxes comes from individuals, hard-working individuals. It
comes from a person, it comes from a family, it comes from a business,
and it comes to Washington, DC, and not the other way around.
For far too long, the Federal Government has treated the income of
American people as its own money. This practice absolutely must stop.
I want to refer, as I develop this principle over the next few
minutes, to a recent editorial by Washington Post columnist James
Glassman. The editorial is entitled ``It's Your Money.'' I will alter
it a little bit and say ``It's the People's Money,'' because that is
the underlying principle I think we must come back to as we discuss tax
and tax policy.
In that editorial, Mr. Glassman pointed out that there are two
schools of thought on tax policy. Under the first one, using the words
of Mr. Glassman:
We use an old-fashioned business model to think about
taxes. Taxes are revenues, like sales. The objective for the
Government is to match up those revenues with its expenses so
that it doesn't lose money. Under that model--
According to Mr. Glassman--
the Government dispenses tax cuts as a gift from Washington.
But I do not think the American people view their tax dollars in this
fashion. They tell you that. All of us travel around our respective
States and around the country, and they tell you they don't view their
tax dollars that way, so we need to stop viewing them that way in
Washington, DC.
Mr. Glassman described it in the editorial in the following way. He
said the average American, and I begin to quote him, ``views taxes not
merely as bloodless revenues but as the real, hard-won earnings of
individual Americans.''
He says:
Tax dollars begin life as personal dollars. They're yours,
not Washington's.
He goes on to say:
You do agree through the political process to turn over
some of your income, but that deal is transitory and
renewable and it depends on Washington providing good value
for your money.
Mr. Glassman's words, ``good value for your money.''
I don't think we in this body can express this principle enough. It
is the taxpayers' money. When we Senators meet with our constituents in
our home States, we have to remember it is their money. That is where
it originated. And every time we pass a spending bill on the floor of
the U.S. Senate, we must be able to go home and look our constituents
in the eyes and say, ``Here is how we spent your money.''
I brought two charts with me, again, to illustrate how taxes have
taken a bigger and bigger bite out of the family budget. So many people
think so often in the short term and they say, ``Well, taxes are high
now, yes, but they have always been that way. There really hasn't been
much change, and there's not much we can do about it.''
Our responses have to be the facts. We do not have to look that long
ago when people were paying out of their family budget as much as they
are paying in taxes today. We have to look back.
This is taxes out of a typical family budget. This is not an
aggregate figure of billions of dollars, this is a family budget,
something each of us can touch, feel, experience.
The pie on the left shows in 1955 the family budget, this circle
being 100 percent. Total taxes were 27.7 percent in 1955.
If we look in 1995, we see that total taxes are 38.2 percent. All
other parts of the family budget are shrinking as the red part of the
pie has gotten bigger and bigger over time, just over a 40-year period.
You can also look at this at how many hours you work during the day.
If you say this is an 8-hour day that likely you and your spouse are
working, look, 3 hours out of that 8 hours is spent working for
Government today.
Going back to Mr. Glassman's words, we need better value for your
money.
On the second chart, we see a typical family budget, how that budget
of that working family with two children breaks down. This is the
overall family budget, and, once again, in red, we see total taxes. I
just said that 38.2 percent of that typical family budget goes to
paying taxes. Where does the rest of it go?
Just very quickly. House and households, about 15 percent in yellow.
In the blue, medical care about 10 percent. Food, 6 percent.
Transportation, 6 percent. Clothing, 4 percent. And everything else
about 17 percent. This might be education for your children, might be
savings, might be investment for your retirement.
But look, compare what we pay in taxes to medical care, food,
transportation, and clothing, and we can see that what you pay in taxes
far surpasses the 27 percent total of medical care, food,
transportation, and clothing today.
Most Americans do not think of it in that concrete of terms. It is
time we take broadly across this country this process of educating
people, to look at what you do when you increase that red, which has
been done, as we saw, by
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our distinguished colleague from Georgia. We have seen that this red
has been growing and growing over time. What does it squeeze out? It
means that you spend less money on food or transportation or clothing
or savings or investment in your children's future.
You know, in this Congress we have done a number of things, and much
of it gets lost before it gets out to the people broadly. We passed a
$500-per-child tax credit for families making under $75,000 a year. We
passed a marriage penalty relief which increased the standard deduction
for couples filing jointly. We passed a student loan interest credit to
make college more affordable. We passed an expanded individual
retirement account that would allow penalty-free withdrawals for first-
time home purchases, for medical expenses, for periods of unemployment,
for college expenses.
Yes, unfortunately, though this body representing the American people
passed all of that, they were vetoed by the President of the United
States. Well, despite this setback of a way, we now must review our
commitment to allow individual Americans, individual hard-working men
and women, not the Federal Government, to keep more of those hard-
earned earnings.
To those who say that tax relief will blow a hole in the deficit, I
say, join with us as responsible stewards of taxpayer dollars in our
commitment to finding offsetting spending cuts. If we are going to
allow the American people to keep more of what they earn, we have to
slow down this incessant, almost unstoppable growth of Government.
Going back to Mr. Glassman's comments, who said, ``providing good value
for your money.''
We can begin this process by passing a balanced budget amendment to
the Constitution. That way the American people would have a
constitutional assurance that tax cuts would fully be paid for with
spending cuts.
In closing, our challenge is to boil down this large debate of taxes
and economic policy to something that the typical American can
understand. The data speaks very strongly to the typical American. The
tax debate will rage on. We need to come back to that underlying
principle: It is the people's money. I do urge my colleagues to
remember that we--we--we are the trustees of the American Treasury.
Building that trust is one of the most important duties we have as U.S.
Senators. If we always remember that it is the people's money, I
believe we will be responsible trustees.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. COVERDELL. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Frist). Without objection, it is so
ordered.
Mr. COVERDELL. Mr. President, how much time is there remaining?
The PRESIDING OFFICER. There are 8 minutes remaining.
Mr. COVERDELL. Mr. President, I really enjoyed your presentation, as
I told you when you approached the Chair. You raised some questions
that I am going to pursue, even beyond this afternoon, by the pie chart
of the breakdown of the expenditures for the average family. I want to
point out again, an average family in Tennessee cannot be a lot
different than one in Georgia. It is about $40,000, $45,000 that this
average family is earning in Georgia. I assume that is about what it is
here. When you take 40 percent of that amount, you do not have a lot
left. That is not a lot of money.
A point I wanted to make is this is a bit deceptive. It shows that
38.2 percent is paid in total taxes, which, as you pointed out, was
larger than what that family is spending for its house and household,
medical care, its food, its transportation, and clothing. It is just
unbelievable that the Government burden can be that large. But the
point I want to make is that it is even larger than the 38.2 percent.
Maybe we can collaborate on this and we can produce another chart. But
built there is another 12-plus percent that is hidden in the price for
the house and household, medical care, and food in the cost of
Government regulation and management.
We would all agree that there is certainly a role for safety and
health and the like. But that has been growing at an astronomical
level. It costs this family $7,000 a year. That is on top of the 38.2
percent.
On top of it--and I have dealt with this a couple times--when I tend
to say they are forfeiting half their earned wages in Government costs
and burden, well, 38.2 percent is actual tax, but there are more costs
than that. As a result, the burden on that family is just phenomenal,
and it is leaving them in a condition that is very difficult.
I have been reading several statistics here. This is one that I find
most alarming. Net savings and investment average 10.7 percent of the
gross domestic product. I will finish.
We have been joined by the Senator from Michigan who has been at the
forefront of tax relief since his arrival in the U.S. Senate. I want to
acknowledge him.
I just want to make this one last point, that savings and investment
constituted about 11 percent of the gross domestic product in the
1960's and today it is 3.75 percent. That is where the capital to run
this economic engine comes from. That is where the protective device
for all these families is, in their savings. These burdens have pushed
those savings down to one-third of the level they were just 30 years
ago. And that is flirting with fire. That is making a family unable and
the Nation unable to protect itself.
Mr. President, I grant the balance of my time to the Senator from
Michigan. I suspect that is about 4 minutes or so.
Mr. ABRAHAM. That is fine.
The PRESIDING OFFICER. The Senator from Michigan.
Mr. ABRAHAM. Thank you very much, Mr. President. And I thank the
Senator from Georgia for his continuing leadership in providing us
opportunities to address issues of importance.
Today I am glad that we are talking about the burdens that face
American families, because young families confront a lot of challenges
as we move to the end of this century and into the next one. In my own
family, we have added a new member since the last time I spoke in this
Chamber, just yesterday afternoon. So we, as is the case with all other
families that are growing in number, are looking at the challenges we
have, and they are challenges in a variety of areas. One of them is
obviously the financial challenges that new families and young families
confront.
When I am in my State of Michigan, and I suspect the same is true in
Georgia, Tennessee, or any other of the 50 States, what I hear from my
constituents, from working families, is a very common theme. It is the
theme that even though people seem to be working more they find they
have less and less to show for it. We have heard it described as a
squeeze on the middle class. We have heard it described in a variety of
other ways, but we have heard it described consistently in my State for
a number of years.
I have sat down with the families to try to find out exactly why they
feel this way and what it is that has led to this situation. The very
simple fact is, Mr. President, a major reason why our working families
are having a harder time making ends meet is that the tax burdens they
are confronting, each going up at a pace that is faster than the family
income is going up. That, indeed is exactly the case for most people in
America. Indeed, during the last 3 to 4 years, family incomes have been
absolutely stagnant. Meanwhile, Federal taxes have been going up. In
many States, State taxes and local taxes have been going up, as well.
Indeed, it is interesting to note, Mr. President, that across the
board we see families confronting a higher and higher responsibility in
terms of their paychecks headed to Washington than ever before. Right
now, the Federal tax burden is the largest portion of the family
budget, 26 percent, which is more than housing, food or education
costs. When you add on the burdens of State and local taxes, the
percentage goes from 26 all the way up to 38 percent. When you think
about that, Mr. President, you think about almost 40 percent of the
average family's income being sent to government to pay for programs
and services, you realize the extent to which families do feel the
crunch.
[[Page S10011]]
The crunch has created a very interesting set of changes. It has
meant that where in the past one person was working was enough for the
family to stay ahead of the game, today, often it is two people working
at more than one job. At least in the case of the people of my State of
Michigan the solution, it seems to me, is quite clear. Unless we are
going to get to the point where families working two jobs and two
breadwinners working two jobs is inadequate to allow working families
to keep up, we have to give them some relief. The one way the Federal
Government can provide that relief is by reducing the tax burden that
these families face.
Mr. President, I do not have the time today nor do I intend today to
go into a variety of ways by which we can ease that burden. But I think
the kinds of plans that have been put forth by Bob Dole and Jack Kemp,
calling for across-the-board tax relief, combining that with a $500-
per-child tax credit is a step in the right direction. I think that is
what the families of Michigan, the families of America can benefit
from.
I add, Mr. President, in closing, in our State of Michigan we reduced
taxes 21 times in the last 5 years. That has produced record levels of
employment and it has not caused a budget deficit. We have balanced the
budget and created a surplus at the same time. We need to give families
that relief. I look forward to working within the Senate to accomplish
that. I yield the floor.
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