[Congressional Record Volume 143, Number 63 (Wednesday, May 14, 1997)]
[House]
[Pages H2667-H2669]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            BUDGET AGREEMENT

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from Illinois [Mr. Hastert] is 
recognized for the balance of the time as the designee of the majority 
leader.
  Mr. HASTERT. Mr. Speaker, I thank the gentleman from South Dakota, 
who has made a great impact in his freshman year here in this Congress, 
and we certainly appreciate the good work he has done.
  The gentleman is right, this Congress is making history. I think the 
104th Congress made history when we had the contract, and we started to 
do the things that people said, there is some commonsense things that 
Congress ought to do. We ought to make government a little bit smaller 
and smarter. We need to start cutting our cost of government.
  And, of course, the 104th Congress was the first Congress that spent 
less than any other Congress before it, I think which goes back 40 
years. As a matter of fact, we saved $53 billion, but we could not pass 
a balanced budget amendment in that Congress, did not get it through 
the Senate and may not get a balanced budget amendment through this 
Congress. We certainly hope so, and we will come back and work at it 
again.
  But one of the things we need to do is balance the budget. That is 
what it is all about. And we have worked hard to do that. That is one 
of our goals.
  I think the American people, first of all, expect Congress to balance 
the budget. They also expect us to do the job and, if we cannot pass an 
amendment, then we will have to do it the hard way; that is, get down.
  And, of course, one of the things that we have had problems over the 
years is that the amount of money that Congress actually appropriates 
is just a fraction of what the amount of money that Congress actually 
spends. What Congress spends are the entitlements.
  Over the last 50 years, entitlements, that is money that never passes 
through the Committee on Appropriations, that is money that is never 
actually voted on by the Congress, it just is spent. It is the debt. It 
is farm programs. It is Medicaid and Medicare and other things out 
there. Those are the entitlements that have gone awry. They have had an 
increased inflation rate of about 15 percent per year.
  Any time that you have a 15 percent per year inflation rate, we find 
out that all of a sudden the money we have spent every 5 or 6 years 
doubles and that is what has happened to the debt. We find ourselves 
with a debt of over $5 trillion, a huge debt out there, and, as a 
matter of fact, $1 out of every $4 that the Federal Government brings 
in just goes to interest on the debt.
  One of the things we have also found out is that what we have done is 
saddle our children, the gentleman talked about his kids and he worries 
about his kids, we have saddled our children with a debt that they are 
going to have to pay off unless we do something now. And now is the 
time. We cannot pass it off for another year or another decade or into 
the next century. We have to do it now, if we are going to affect the 
future for our children.
  As a matter of fact, a child that is born today will have to go out 
and earn $168,000 or some huge number like that just to pay his or her 
share of the interest on the debt.
  So what has Congress decided to do? What have we tried to lay out? 
What are our parameters here? Well, we want to balance the budget of 
this year, 1997, in a bipartisan blueprint. And we have. We have worked 
with the other side of the aisle. That is what the American people want 
us to do. They elected the President and they elected this Congress. So 
we need to come out together and find a way to work together. And we 
have.
  So we have a bipartisan blueprint for the future in order to get 
Washington's fiscal house in order in the next 5 years. So by the year 
2002, we have balanced that budget.
  So the four principles that I think that we talk about when we have 
tried to work on that budget agreement, budget plan, is that we are 
balancing that budget by the year 2002, and we have to keep it in 
balance. We cannot just balance it once and say we have done that. We 
need to keep it in balance. And if we have any kind of growth at all, 
if we have the kind of growth that we had in JFK's term of office, 
economic growth, we have certainly seen the stock market go up, we have 
seen job expansion, we see the lowest unemployment rate in this country 
that we have seen in decades, so the economy is expanding.

                              {time}  1830

  If we have the kind of expansion that JFK had, we could balance the 
budget

[[Page H2668]]

in a year. We could actually balance the budget and start to bite in 
and take out that debt.
  If we have the kind of expansion we had during the Reagan years, we 
could start to balance that budget in 2 years and start to dig in to 
that debt and pay off that debt and get it down so our kids do not have 
to pick it up.
  And if we have regular growth that we have had, the average growth 
that this country has had, around 2.3 percent, something like that, 
then we could start to balance that budget.
  It will take a little longer, maybe 4 or 5 years, but we are in 
exceptional times. And certainly if we can get the budget agreement 
together and have some type of exceptional growth that we are certainly 
experiencing, we can do a phenomenal thing and try to balance the 
budget and do away with that huge debt we have.
  So that is the first principle we have to keep in mind. Then, one of 
the things that I think we owe to the American people is tax relief. It 
is something the Republicans have talked about for a long, long time. 
We have talked about it in the Contract With America and then we talked 
about it as we came into this election year and through the election, 
and now here we are, we are back in Congress.
  Tax relief. What does that mean? Is it special groups of people? Some 
say we are just giving tax relief to special groups, but it is the 
American workers, the family, the middle-class Americans that need 
help.
  A fellow in my district who is a schoolteacher talked to me and said, 
I earned $35,000 last year. I wanted to do something for my wife and my 
kid, and I wanted to buy a computer so they had something at home to 
work on and enjoy this, so I went out and got a part-time job.
  He made $5,000. Just about $5,000. He said, by the time I ended up 
paying the taxes on that extra $5,000 that I earned, it was not hardly 
worth going out and doing it. It put me in a higher tax bracket. It 
changed the contributions that my wife had to make.
  All this problematic situation that he got into was a disincentive. 
It is a disincentive for people to go out and be productive. He said, I 
would probably have been better off if I had stayed home and did not do 
it. But he did do it. And he is a hardworking American, proud of his 
family, proud of being self-sufficient and taking care of his family 
and buying a home and being part of the American dream.
  So I said, well, one of the things that we are talking about is the 
child tax credit, a $500 tax credit per child. If there are two kids at 
home, it means that that family, for every child they have at home 
under the age of 21, there would be a deduction for $500. If a family 
has three children, it is $1,500 credit.
  That takes off the tax responsibility that a family has on their 
taxes. That is for people who work. That is something that is great for 
people who are providing for their family, buying a home, keeping the 
kids in school, working a couple of jobs to make things work. Those are 
the types of things we can provide for the American family, is that 
type of tax credit, that type of help.
  Also, one of the things we have certainly talked about in tax relief, 
we have a lot of seniors in my district and people who have bought and 
made an investment from time to time throughout their life, hopefully 
to save for their future. Well, their future is here.
  Those people are 65 or 70 years of age, maybe 72, and the house that 
they bought, the tenant house they bought, or the starter house 
themselves, they kept it for a tenant house and built a new house for 
themselves in the 1960's or 1970's, and that tenant house they bought 
for $25,000 or $30,000 back then, today is worth $150,000, $160,000. 
And then they start to figure the capital gains, the penalty they have 
to pay because they made an investment for their future to take care of 
themselves.
  Instead of worrying about Government or some agency or some 
Government handout program to take care of them, they provided for 
their own future. But what is the penalty? It is such a huge penalty on 
capital gains, they say I am not going to hand that money over to the 
Federal Government, I will not sell that tenant house, or I will not 
sell that stock, or I will not hold back the 40 acres we bought a 
couple of years ago because I cannot afford to sell it.
  So capital gains have stopped people from cashing in on those 
investments they made for their future because there is such a penalty. 
We will change that. The capital gains treatment we have in this bill 
will allow our senior citizens in this country to be able to start to 
sell some of those assets off so they can provide for their own future, 
something that they worked on for 25 or 30 or 40 years to make a 
difference.
  Certainly we can start moving those assets around in this country. We 
can talk about the development that we have. Certainly a positive 
thing. And, of course, the death tax that people have to live under. A 
small family business, the family farms that we have; people are afraid 
that if they die they cannot pass their farm on or they will not be 
able to pass their business on to the next generation.
  Mr. Speaker, we are talking about the tax treatment out there, the 
death tax, so that people do not have to give up their small businesses 
or sell everything off on the farm for them to pass it on to their 
children. That is a very, very important issue and something that we 
provide in this bill.
  Mr. THUNE. If the gentleman would yield, I see our distinguished 
leader here on the floor, and we all want to make room because, of 
course, I am sure he will have some very pithy commentary that we can 
enjoy listening to, but I would just like to make one observation about 
something the gentleman said. I think it is an important point.
  A lot of the time it has been suggested that the capital gains issue 
has been depicted as something that only benefits those in the higher 
income brackets and on the death tax as well. I talk to a lot of 
people, I do not come from a State where we have a lot of high incomes. 
We are a resource-, capital-poor State, and yet we have a lot of small 
businesses in my home State and we have a lot of farms and we have a 
lot of homeowners.
  And what people I think fail to realize is that those are the things 
that the capital gains tax relief that we have talked about, the death 
tax relief, those are the things that benefit the small towns, the Main 
Streets, the businesses, the person who wants to pass on their farming 
operation to the next generation, the person, as the gentleman noted, 
who might be approaching their older years and wants to sell a house. 
These are things that are very mainstream issues; they are mainstream 
America. They benefit, I believe, the working people of this country 
who have worked hard and saved and now want an opportunity to realize 
some of the benefits of that effort.

  Mr. HASTERT. Mr. Speaker, I agree with the gentleman. What has 
happened, Uncle Sam has been penalizing folks who want to put the free 
enterprise system to the test and save for the future. Americans should 
be able to keep more of their hard-earned money, and that is what this 
bill would allow them to do.
  Mr. Speaker, I would recognize our majority leader in the House, the 
gentleman from Texas [Mr. Armey], for anything he may have to say.
  Mr. ARMEY. Mr. Speaker, I thank the gentleman for yielding, and let 
me thank the gentleman from South Dakota [Mr. Thune], for engaging in 
this special order.
  I also want to take a moment, Mr. Speaker, to express my appreciation 
for the Speaker's kind indulgence, the gentleman from the First 
District of Tennessee, Mr. Bill Jenkins, who is in the Speaker's chair 
presiding this evening, who has ably succeeded and working in a place 
that was held for so many years by our beloved colleague, Jimmy 
Quillen, and who represents my mother and father-in-law.
  If I could talk about this agreement on the budget for a moment, 
beginning with my mother and father-in-law. We all love our parents, my 
folks being on Social Security and, of course, to some degree also 
dependent upon Medicare for their health and the needs of health in 
their life. There are folks that as we approach this very historic 
budget agreement, on behalf of their grandchildren we have done this in 
such a way to ensure that in fact there will be financial viability of 
Medicare in particular and Social Security sometime in the future for 
their children and grandchildren.

[[Page H2669]]

  This is an enormous comfort for senior Americans, especially those 
who have come to a point in their life where they have come to where 
they have pretty well come to depend on Medicare being there. For 3 
years now, we have had recurring reports from the Medicare trustees 
that the system faced solvency problems, and for 3 years we have tried 
to reach an agreement with the White House by which we could address 
this solvency question so we could give peace of mind and comfort and a 
certain sense of assuredness to our senior citizens.
  So when I look at this agreement and realize that one of the first 
things we have done in this agreement, and thanks largely to the 
persistence and the thoughtful work of the gentleman from Illinois [Mr. 
Hastert], who has dealt with this problem in the greatest of detail, is 
we have assured that solvency of Medicare. Mom and dad do not have to 
worry. Their health care needs will be there, preserved.
  That is very important. And yet we have done that in a manner that is 
respectable to their desire and their concerns about their 
grandchildren, our grandchildren.
  We have a budget that clearly drives consistently to balance no later 
than the year 2002. Why do I say no later than the year 2002? By virtue 
of the manner in which we account for things in Washington, this is the 
least optimistic estimate we could make about when we get that arrival 
date for balance. We do that with real permanent and immediate reforms 
in all entitlement spending programs that assures that the great 
compassion of the American people will be there and available to the 
most vulnerable of our American citizens, particularly the elderly and 
the children that depend upon the programs of the Federal Government 
for food and clothing and shelter.
  But as we reform those programs and make them more responsible and 
more responsive to the needs of the truly needy, we also make room for 
budget savings in the future, and then we are able to couple that with 
tax relief.
  We were talking here a little bit about tax relief, and I would like 
to talk about that one tax relief that people do not always identify as 
a family tax benefit: the reduction in the capital gains tax. As the 
gentleman from Illinois knows, I am an economist by training and, of 
course, the first testament of the discipline of economics is Adam 
Smith's wonderful work ``The Wealth of Nations,'' written, incidently, 
in 1776, where Adam Smith laid out a principle that has been known and 
respected by economists ever since. Never has it come into doubt in the 
development of the discipline of our field that the road to economic 
progress, economic growth, is through abstinence and capital formation, 
savings, and the building of productive capacity. And that, 
immediately, in the person of a family, translates into more, better 
jobs with better chances of promotion.
  And what is that heightens the heart of a mom or a dad, or for that 
matter even more so a grandma and a grandpa, than to see their young 
ones finish their education, their schooling and their training and 
find themselves able to launch into a career where they can begin to 
develop their own family with the confidence that the jobs are there, 
the promotion will be there, the pay raise will be there.
  As we do that, and we have that economic growth, and we have so much 
room for a larger growth rate for the American economy, just to get up 
to the historic average we could grow by at least a percentage point 
more than we do, that means so much in the lives of our children and 
our grandchildren.
  People do not understand that. They think of the capital gains tax 
reduction as something that is done for business. It is not that at 
all. It is done for these youngsters finishing college and looking for 
a job and looking for a promotion when the first baby comes along, 
looking for a raise when the time comes for the braces.

                              {time}  1845

  That is what capital gains tax reduction is all about.
  The other aspect of this agreement that I think heightens the heart 
of our senior citizens especially is after a lifetime of hard work, and 
let us face it, we work for our children each and every day of our 
life.
  I remember when I was a youngster, I sort of implored to my dad, I 
said, ``Now, Dad, they've got a Mother's Day and they've got a Father's 
Day. Why don't they have a kids day?"
  He said, ``Well, son, every day is kids day.'' I think he was right. 
Every day of his life was worked in devotion to me and my needs as we 
do for our children, and then for us to be able as we come along to 
more able take the accumulation of our life's work and our savings and 
our investment and the business that we built or the farm that we 
created and be more able to leave that to our children. We find that 
our life's work has that enormous payoff. Can you imagine what that 
means in the life of grandma and grandpa, mom and dad, and then again 
in the life of those children.
  This is a good budget agreement, Mr. Speaker. I want to thank the 
gentleman from Illinois again for yielding.
  Mr. HASTERT. I thank the distinguished majority leader from Texas. He 
certainly speaks words of wisdom. We listen to those all the time. I 
thank the gentleman very much for being here.

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