[Congressional Record Volume 143, Number 57 (Tuesday, May 6, 1997)]
[Senate]
[Pages S3977-S3979]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               SEVEN QUESTIONS ABOUT THE BUDGET AGREEMENT

  Mr. KENNEDY. Mr. President, last Friday, the President and the 
congressional leadership announced that they had reached an agreement 
to balance the budget. I support the goal of balancing the budget by 
2002, and I commend the President's emphasis on improving education, 
expanding health coverage for uninsured children, and extending the 
solvency of the Medicare trust fund.
  But as the administration and the congressional leadership continue 
to negotiate the specific provisions of the agreement, and as more 
information about the agreement becomes available, a number of 
questions arise about the agreement.
  First, what is the distribution of the benefits in the tax package 
over the first 5 years? The new and expanded tax breaks in the 
agreement raise the most troubling questions in this regard. The only 
beneficiaries of the agreement's reductions in the estate tax are the 
top 1 percent of households. Three-quarters of the benefits of the 
capital gains provisions will go to households with incomes in excess 
of $100,000. According to one tax expert, as much as 40 percent of the 
benefits of the tax cuts will go to the top 1 percent of taxpayers.
  We know that the wealthy will receive large tax breaks under this 
agreement. It is fair to ask, how much, if any, of the major sacrifices 
under this budget are the wealthy being asked to share? Are the wealthy 
corporations being asked to give up any of the massive subsidies they 
receive under the current spending and tax laws? I urge the 
administration and the congressional leadership to make a detailed 
analysis of the proposed tax cuts available as soon as possible, so 
that Congress and the country can judge their fairness.
  Second, what is the distribution of benefits in the tax package in 
the second 5 years? Because the capital gains tax break initially 
generates revenues as wealthy investors sell their assets to take 
advantage of the lower tax rate, an accurate assessment of its cost and 
fairness must examine a longer period of time.
  According to an analysis of the Senate Republican leadership's tax 
proposals introduced this January conducted by the Center on Budget and 
Policy

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Priorities, the Republican capital gains tax cut cost $33 billion in 
the first 5 years, and then nearly tripled to $96 billion in the second 
5 years. And their estate tax provisions, which cost $18 billion in the 
first 5 years, ballooned to $48 billion in the second 5 years. We must 
do all that we can to ensure that Congress does not repeat the mistake 
of the excessive 1981 tax cuts that led to the massive Reagan-Bush 
budget deficits.
  Third, what spending cuts will pay for these increased tax cuts in 
the second 5 years? If the cost of the tax cuts in years 6 through 10 
far exceeds the cost in years 1 through 5, will Congress face the 
impossible choice of making severe and unacceptable reductions in 
social programs, or doing nothing and acquiescing in a new round of 
deficits as far as the eye can see?
  Fourth, what are the even longer-term costs of the tax breaks? By one 
estimate, the net cost of the tax breaks will reach $45 billion a year 
by the 10th year. Projecting those rates into the second 10 years--
years 2008 through 2017--the cost of these tax breaks could exceed half 
a trillion dollars for that period.
  The great danger is that these pressures on the deficit will explode 
exactly at the same time that the country faces the severe budget 
pressures caused by the retirement of the baby boom generation. We 
already know that we face intense long-run problems with Social 
Security, Medicare, and Medicaid. The last thing that we should do in 
the current budget agreement is to make those long-run problems worse.
  Fifth, can the country realistically accept the increasingly tight 
caps on domestic investments even in the first 5 years? President 
Clinton correctly resisted deeper cuts sought by Republicans. But the 
agreement slashes domestic investments by at least $60 billion below 
the level needed to maintain the current level of services. That is 
roughly a 10-percent cut in real terms. Discretionary spending has 
remained relatively flat since 1991, and is already at its lowest level 
as a share of the economy in 60 years. These dramatic cuts will mean 
less for vital investments in areas such as research and development 
funded by the National Institutes of Health and the National Science 
Foundation, less for crime prevention and police officers on the 
street, less for repair and upgrading of our Nation's highways and 
bridges, less for education, health and safety, and the environment.

  Can the country afford to continue to shortchange the key public 
investments needed to keep our economy strong into the next century? It 
is only through investment that the Nation can sustain needed economic 
growth. Using the definition of public investment accepted by the 
General Accounting Office--including education and training, public 
infrastructure, and civilian research and development--public 
investment accounted for 2.5 percent of the economy under President 
Reagan. Today, it has fallen to 1.7 percent of the economy. How much 
lower is Congress prepared to see it go?
  Sixth, what is the distribution of domestic discretionary spending 
cuts under this agreement? After protecting high-priority spending 
items, the agreement will force deeper cuts in the unprotected areas. 
The Center on Budget and Policy Priorities found that 34 percent of the 
cuts in nondefense discretionary spending in the last Congress came 
from programs for those with the lowest incomes, such as programs for 
fuel oil assistance, child care, senior nutrition and meals for senior 
shut-ins, vaccinations for children, school lunches, drug abuse 
prevention, and Head Start. Programs for low-income Americans have 
already borne a disproportionate burden of deficit reduction. They 
should not have to bear an unfair burden under this agreement.
  Seventh, will defense spending be able to live within this agreement? 
The Secretary of Defense is conducting a quadrennial defense review of 
strategy, force structure, and modernization needs. Is the spending 
anticipated in this agreement sufficient to meet the commitments that 
the Department feels are essential? If the defense spending levels in 
the agreement are not adequate to meet future security needs, how can 
we ensure that defense increases are offset by reductions in the tax 
breaks, and not by further reductions in needed domestic investments?
  Before we adopt this agreement as a budget resolution, we must do our 
best to obtain serious answers to these serious questions. Fairness is 
a fundamental issue. It will be fundamentally unfair if a handful of 
super-wealthy Americans benefit lavishly from this agreement, while 
millions of average Americans and their families take it on the chin. A 
fairly balanced budget is achievable. But a budget that fails to 
balance the Nation's basic needs will not be worth the paper on which 
it is printed.
  Mr. WELLSTONE. Mr. President, I ask unanimous consent that I may 
speak for 5 minutes as in morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WELLSTONE. Mr. President, I rise to thank the senior Senator from 
Massachusetts for raising very profound, important questions about this 
budget agreement. I came to the floor of the Senate yesterday, and I 
said that I really believed that there is a quiet crisis in our Nation 
when we don't make the kind of investments in providing opportunities 
for all the children in our country and that I find this budget to be 
woefully inadequate when it comes to such a question.
  Mr. President, an agreement is fine, but the question is: At what 
cost? We don't want to leave a whole class of citizens behind. Mr. 
President, as I look at this budget, I have two questions, and the 
senior Senator from Massachusetts raised these questions in a very 
eloquent and important way.
  The first question: If, in fact, we are going to have these tax cuts, 
which, as we look over the first 10 years and beyond, accelerate and 
you have cuts in the capital gains tax and estate tax 
disproportionately flowing to the top 1 or 2 percent, then cuts in 
programs that are important to vulnerable citizens--nutrition, 
education, housing, you name it--really are harsh. This represents no 
standard of fairness to have tax benefits disproportionately benefiting 
the wealthy and at the same time eliminating opportunities for some of 
our most vulnerable citizens, especially children.
  Second, Mr. President, I said yesterday that I really worry about the 
symbolic politics--and I speak only for myself here. I said it 
yesterday, and I say it one more time, I speak more to my own 
colleagues in the Democratic Party.
  It is going to become very difficult for us to be talking about the 
early years, childhood development, the importance of investing in 
children, and the fact that for one out of every four children under 
the age of 3 and 4 in America, and for one out of every two children of 
color in America, it is going to be impossible to talk about our 
schools and the physical infrastructure when we have a budget that does 
not invest in these children. We don't have one cent invested now in 
the physical infrastructure in our schools. Rotting schools don't send 
children a very positive message about themselves.
  We know--the medical evidence is compelling--that we have to do so 
much more on the nutrition front, on the health care front, on the 
child care front, on the intellectual development front if all of our 
children in our Nation are going to be prepared for school, much less 
prepared for life. And there is precious little by way of investment in 
children and in educational opportunities for these children in 
America.
  So, Mr. President, I rise to just simply say to my colleagues that it 
is going to become very difficult for Democrats or, for that matter, 
all of us in the House and in the Senate to say that we are for 
children, that we are for opportunities, that we believe in our 
national values and the quality of opportunity when we do not make the 
investment.
  Mr. President, this is a budget without a soul. This is a budget 
without a soul. This is a budget that leaves too many Americans behind. 
This is a budget that will further intensify the profound problem of 
two Americas. We should have one America. We should have one America 
where all of our citizens--and let's start with our children and 
grandchildren--each and every one of them have the opportunity to reach 
their full potential. This budget

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doesn't make an investment in these children. This budget doesn't 
provide these children with these opportunities, and for the sake of 
tax cuts that in the main go to wealthy people, I don't see the 
standard of fairness. And I don't see the soul of this budget. I think 
we are making a terrible mistake.
  So, Mr. President, as much as I respect colleagues--I see my good 
friend, Senator Domenici, on the floor--my work will be to try to raise 
the bar, have amendments, and improve this piece of legislation so 
that, as a matter of fact, we have a budget that represents an 
investment in the future. When I talk about an investment in the 
future, I talk about an investment in children. That includes poor 
children in America. I do not want to leave them behind.
  Mr. President, I yield the floor.

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