[Congressional Record Volume 143, Number 12 (Tuesday, February 4, 1997)]
[Senate]
[Pages S935-S936]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   TAX CUT AND MEDICARE CUT PROPOSALS

  Mr. BUMPERS. Mr. President, tonight the President will address the 
Nation on the State of the Union. I do not know precisely what the 
President is going to say, particularly about the economy and about the 
budget, tax cuts, the deficit, crime, education, the environment, and 
so on. I am sure he will address each one of those things and more.
  But I would be less than candid with my colleagues and my 
constituents--and I would be less than honest with myself--if I did not 
voice some concerns about what I have been reading about what the 
Republicans want in the way of tax cuts and what the President wants in 
the way of tax cuts, what the President wants in the way of Medicare 
cuts, and what the Republicans want in Medicare cuts, what kind of 
incentives we want for our children to attend college, what kind of a 
tax cut we want for so-called middle class people.
  So let me address those issues seriatim and say, first of all, it is 
my understanding that the proposal which has been in the public domain 
for some time now to cut Medicare by $138 billion over the next 6 years 
will probably be fairly well applauded. Nobody is going to object to 
any proposal that makes the Medicare system sounder and gives our 
elderly Medicare recipients a better sense of security. Anything we can 
do to cause the American elderly population to sleep better at night 
because they know the Medicare system is sound and will be sound for 
the foreseeable future is a highly desirable goal.
  Now, having said that, I think the Republicans will want to cut 
Medicare more than $138 billion. And I am not saying they are right or 
wrong. I do not know what the figure ought to be. I might support 
additional proposals to do anything to make the Medicare system sounder 
than $138 billion will make it.
  But having said that, I am puzzled by how you achieve a balanced 
budget while you are cutting $138 billion in Medicare, which alone 
would go right on the budget deficit over the next 6 years, I believe 
it is.
  But we do not stop with that. The Republicans do not stop with it and 
the Democrats do not stop with it.
  The Republicans have a proposal of a tax cut which they call the 
middle class tax cut. It is designed to provide a $500 tax credit for 
each child in the family, but it is not refundable.
  That means that if you are making $30,000 a year, and you pay $1,500 
in taxes, you would get $1,500 back if you have three children--$500 
for each child.
  But if you happen to have a $30,000 income, and six children, and you 
do not pay any tax, you get nothing.
  So the simple question must be asked, who needs a tax cut more, the 
parents with three children or the parents with six children?
  Move on down the ladder to $25,000, move on down the ladder to 
$20,000, a single mother with one child who is working as a waitress in 
a Senate cafeteria. Her tax bill is $1,000, we will say. She would get 
$500. But if she had three children and was still paying $1,000, she 
would get $1,000, but nothing for the third child.
  The third scenario: If she has children and is paying no tax, she 
gets nothing. And on top of that, as the Presiding Officer will tell 
you, and recall, we cut the earned income tax credit last year, which 
is so beneficial to the mother who is a waitress in a Senate cafeteria 
that I just described because she is entitled to an earned income tax 
credit by staying on the job and off of welfare.

  No less a person than Ronald Reagan said it was the greatest 
incentive for staying off welfare he could think of. Every President 
since that thing first came into effect has said that this is one of 
the best incentives to keep people off of welfare we have. That is to 
say, ``If you stay on the job all year long, don't get on welfare, and 
if you make less than $28,000 a year, we'll give you a sum of money at 
the end of the year, as high as $2,000.''
  So what are we doing here? What kind of social policy is it? Forget 
economics. What kind of social policy is it when we give money to 
people who have one or two children and pay income tax, give no money 
to people who work and pay no income tax because they have enough 
dependents to keep them from paying taxes and maybe whose income was 
cut this year because we cut the earned income tax credit? What kind of 
fairness is that?
  So, Mr. President, I am troubled about the so-called $500 tax rebate 
for all your children. It is not refundable. Only if you pay taxes do 
you get it. Obviously, the people who are hurting most are not paying 
taxes because they do not make enough money.
  Then we have this proposed capital gains tax cut. As I read the 
Republican proposal, CBO scores it to cost $33 billion over the next 5 
years and $111 billion over the next 10 years. And who do you think 
gets the majority of the benefit? Why, it is the people who own stock 
in Microsoft and Intel and IBM. It is the people who are big investors 
in the stock market.
  The rate of 28 percent on capital gains may be a tad high. There is 
probably nobody in this room who would quarrel with that. But if you 
are trying to balance the budget, which we have

[[Page S936]]

been doing a magnificent job of for the past 4 years, why do we want to 
muck it up and start cutting taxes, which is absolutely guaranteed to 
start the deficit back up again?
  We tried that in 1981, cutting taxes massively, increasing defense 
spending massively, and winding up today with a $5.2 trillion debt. 
This is the slowest learning crowd I have ever seen. It is worse than 
trying to housebreak a dog I had one time. We just could not do it.
  So what are we doing talking about these massive tax cuts and 
balancing the budget at the same time? It has never worked, and it 
never will. Where did all this talk get started? If you are going to 
cut taxes, cut taxes for people who honestly need the money.
  If you cut capital gains, with 75 percent of the benefit going to 
people who make over $100,000, where is it going to go? Probably into 
the stock market. The mutual funds are putting $15 billion a month into 
the market right now. Who here believes that the stock market can 
absorb those kinds of investments? Everything that goes up has to come 
down at some point or another. But I am talking about the Republican 
proposal.
  And now the President is going to announce tonight apparently a 
proposed capital gains tax cut for people who have homes worth 
$500,000. If you bought a home 20 years ago for $100,000 and you sell 
it today for $500,000, under the proposal of the President you would 
not pay a nickel tax.

  I remember many years ago when we passed an exemption for homeowners 
to exclude $150,000 of the price tag. You could do that one time in 
your life, a $150,000 exclusion. If you had a $500,000 home that you 
had paid $100,000 for, you not only get your $100,000 cost back, you 
can add $150,000 to that and you have $250,000 capital gains on which 
you would pay a 28 percent tax. The President's proposal is that if you 
have a $500,000 home and you sell it for $500,000 there is no tax, no 
matter what you paid for it. You may have paid $25,000 for it and it 
may be worth $500,000 today because somebody wants to build a 
McDonald's where you are living, no tax. Now, Mr. President, would you 
like to know how many people in this country have a home that is valued 
in excess of $500,000? The answer is 1 percent. The President's 
proposal of a $500,000 exclusion will take care of 99 percent of all 
the homeowners in America. I do not know what the cost of it is 
supposed to be.
  These things are all laudable. I never lost a vote voting for a tax 
cut. When you tell people you are for tax cuts, everybody applauds. If 
there is anything people want to hear, it is that they are overtaxed, 
they are overregulated, they are overeverything. I understand their 
frustration.
  But let me ask you this: When you have an economy that grew at 4.7 
percent in the fourth quarter of 1996--that is a staggering growth 
rate--with an inflation rate of 2.2 percent, about as low as you can 
ever get it, Treasury bills at 5 percent as of yesterday, the 
unemployment rate as low as it ever gets, in short, you have an economy 
that is performing absolutely magnificently, and the deficit has gone 
from $290 billion in 1992 to $107 billion, a 63-percent reduction in 
1996, what are we going to do? We are going to start pandering again. 
Why can we not focus on that deficit? The people of this country have a 
nonnegotiable demand that we balance the budget.
  Do you know why a lot of people are going to vote for the balanced 
budget amendment to the Constitution of the United States? Do you think 
it is because they think it is sound economic or social policy? I do 
not like to denigrate other people. It is arrogant to do that. But I 
can tell you one reason is because they have seen the polls. I know 
what the polls show. One of the reasons the polls show so many people 
want a constitutional amendment to balance the budget is two things. 
No. 1, they think a constitutional amendment to balance the budget and 
a balanced budget are the same thing. A constitutional amendment does 
not guarantee you anything. Yes, it does, too: It guarantees you chaos. 
It is the biggest political scam ever perpetrated and foisted off on an 
unsuspecting public that can bring nothing but utter chaos to this 
Nation down the road.
  Do you know something? People did not elect 100 Senators to come up 
here and vote however the polls show every time. They elected people to 
come up here and to think, to read the Constitution, understand the 
sacredness of the Constitution, understanding that every single little 
problem that comes up ought not to be solved by tinkering with that 
sacred document. I have never voted for a constitutional amendment. I 
thought in 1984 when I voted against that great constitutional 
amendment of prayer in school that I was serving my last term in the 
Senate. Do you know something? I went home and I went from one end of 
the State to the other explaining to the people of my State what that 
meant, how the school boards could pick the prayers the children would 
say and tell them how many times a day they would say them. What kind 
of nonsense is that, giving up the greatest religious freedoms we have 
to the local school board? Do you know what? I had the fundamentalists 
and the mainliners and everybody clapping and cheering because they did 
not want that either. But at least I did not hesitate to talk to them 
about it and tell them where it would lead us.
  So I do not have any hesitancy today in coming to the floor and 
saying I am very apprehensive about all the tax cut proposals. Why are 
we going to cut $138 billion from Medicare and turn right around and 
give it away in tax cuts to the wealthiest people in America? That is 
not my idea of responsible legislation. That is not my idea of a 
responsible economy. If you want a balanced budget, now is the time to 
show it, and do not tell me you will hide behind this constitutional 
amendment and go home and say, ``I did my part. I cut taxes and then I 
voted for a constitutional amendment to balance the budget.''
  Mr. President, I yield the floor and 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. BOND. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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