[Congressional Record Volume 143, Number 87 (Friday, June 20, 1997)]
[Senate]
[Pages S6017-S6019]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        THE RECONCILIATION BILL

  Mr. WELLSTONE. Madam President, I was on the floor yesterday speaking 
about the reconciliation bill. I decided to not go forward with an 
amendment today. The amendment that I was considering offering, and the 
amendment I offered yesterday to the intelligence bill, speak to the 
issue of tax fairness. But the reconciliation bill will be on the floor 
next week, and the DOD reauthorization is not going to come up in any 
case until after the reconciliation bill. So I will wait until next 
week and then offer amendments directly to the reconciliation bill.
  Madam President, let me just start out with a piece from the National 
Journal of June 21. The caption is ``Fighting Over Taxes.''
  I quote:

       In the coming weeks Wall Street will be lobbying in support 
     of all the new tax measures it likes, notably capital gains 
     tax cuts, expansion of IRA's, and trying especially in the 
     Senate to keep unwanted provisions out of the final bill. 
     ``We have to make sure that they are not offered on the floor 
     to pay for some other provisions,'' said Bruce E. Thompson, 
     Jr., the head lobbyist of the Washington office of Merrill 
     Lynch & Co.

  Madam President, I think this is the real question about this tax 
bill that is before us. The question is, who really has say in this 
process.
  Let me just go back to some charts--again, the Department of Treasury 
analysis.
  Looking at the House bill, the tax cuts disproportionately help those 
who need help the least. If you look at the share of tax cuts by family 
income, the top fifth get almost 70 percent of the benefit of the tax 
cuts, the top fifth. Then the fourth fifth gets 19 percent of the cuts; 
the third fifth, 9.2 percent; the second fifth, 2.4 percent; the bottom 
fifth, less than 1 percent. In other words, the bottom 40 percent of 
the population get a total of about 3 percent of the benefits of these 
tax breaks; the third fifth, the middle class, gets about 9.2 percent. 
Then you get to the top fifth, the top 20 percent, they get almost 70 
percent of the breaks. So you have about 80 percent of the benefits 
going to the top 40 percent, and almost

[[Page S6018]]

70 percent of the benefits going to the top fifth. This is just 
unbelievable.
  Just look at the next chart. This shows the dollar amount that 
families get.
  Again, the source here is the Department of the Treasury, Office of 
Tax Analysis: If you have an income of $400,000 a year, or over, you 
will get about $7,000 a year in benefits under these tax proposals. 
Congratulations. If you earn $200,000 and up, you are going to get 
about $3,706. But on the other hand, if you are down here in the 
$30,000 to $40,000 range, you get $152. If you are $15,000 to $30,000, 
you get about $52. A buck a week.
  If you look at the tax cuts on the House side, and the way in which 
they are back loaded because of the capital gains cuts and the IRA's, 
you are talking about an erosion of revenue to the tune of about $950 
billion by the time we get to the year 2017. It is not just the first 
10 years that matters. It is what happens in the second 10 years that 
is tragic. This is not my analysis. It is the Joint Tax Committee and 
the Center on Budget & Policy Priorities.
  By the way, Bob Greenstein, who is the director of that Center--
people can agree or disagree with some of Bob's views on different 
issues--but his data analysis is impeccable. Bob received the MacArthur 
award, the genius award, for the work he does. And you add to his 
reputation Congress' own Joint Tax Committee.
  On the one hand, Members of Congress say they are for deficit 
reduction, and then they go forward with this erosion of the revenue 
base via back-loaded tax cuts. That is bad enough. The second thing 
that is bad enough, or even worse, is what is going to be the tradeoff. 
We are going to have more and more people that are going to be 65 years 
of age and over, and more and more people that are 85 years of age and 
over. We will have the pressure of supporting them financially and 
covering their medical costs, and we will end up either running the 
deficits back up again, or we will be cutting into what little is left 
by the way of investment and education programs for our children and 
for our grandchildren.
  But what makes this really unconscionable is basically we are talking 
about tax cuts that go to people on the top.
  Let me quote a Washington Times headline from today: from Speaker 
Gingrich--``Gingrich Derides Democrats' Tax Cut Proposal As Welfare.''
  This is unbelievable. What the Speaker is worried about is that 
Democrats--I hope--are going to be on the floor of the Senate next 
week, and in the House, focusing on the welfare of working families.
  Let's not have a play on words here. This is not a debate about 
welfare policy. This is a debate about the welfare of working families 
and their children. That is not rhetoric. That is what this is all 
about.
  So, Madam President, I will suggest to you--and we will see what 
happens next week--that people in the country are going to be sorely 
disappointed and people in the country are just going to shake their 
heads in disbelief. And people in cafes in Minnesota and Maine, when 
they finally get a look at who is really going to get the benefits, are 
going to say, ``Wait a minute. We thought you were talking about tax 
cuts for our hard-pressed families.'' And they are going to find out 
that is not the case at all.
  Apparently, we made some progress in the Finance Committee last 
night, at least for some of the people who are in the $20,000 to 
$25,000 range who weren't going to be getting any child care credit 
because they received earned income tax credit. These are working poor 
people. At least now they're not going to be a 100-percent offset, and 
some of these families are going to be able to get some child care 
credits.
  But, Madam President, this still begs the question as to why in the 
world giving these families a benefit is even controversial. Don't we 
want to make sure that working families' children also get benefits? 
Don't we want to make sure that these tax cuts are not tilted and 
skewed toward the very top--the top fifth--of the population that gets 
the lion's share of all the benefits? Don't we want to target precious 
dollars toward middle-income people and toward working families?
  That is not what this legislation is all about. That is not what 
these tax cuts are all about. That is not what is going to be reported 
out on the floor of the Senate.
  Madam President, I just want to mention one other area that I know is 
near and dear to the Presiding Officer's heart. That is higher 
education. I want to be critical of Democrats and Republicans on this. 
I still say that we are making a mistake here by underreaching. If we 
are going to say that we are concerned about higher education not being 
affordable, and we are going to claim to focus on getting support for 
the people who need it most, how can we talk about tax credits that are 
not refundable? Nonrefundable HOPE tax credits mean that many of these 
families with incomes of $20,000 to $25,000 a year are not going to get 
anything because they don't have any tax liability. That is why the 
Pell grant is a far better way of getting help to the people who need 
it. The IRA's are great if you can afford to put the money in savings. 
We already have the tax incentives for working families to do that. 
They can't do any more.

  The problem for many people is they still struggle very hard to earn 
a decent living and to raise their children successfully. To raise your 
children successfully means to try to be able to send your kids to 
college or to a university. But so many struggling families just don't 
have any money to put into savings.
  So let's just not fool anybody here. We don't have, really, anything 
that I see in this tax cut, in this reconciliation bill, that as a 
matter of fact is going to make higher education affordable for those 
families that have had the most difficult time. We have had a flat 8 
percent graduation rate for families with incomes under $20,000 a year 
since about 1979. That is scandalous. We ought to be making sure that 
those families are part of the American dream as well, and we ought to 
reach well into the $20,000 and $30,000 range of hard-pressed, middle-
income working families. We are not doing that. The President's 
proposal does not do that and certainly the alternatives we have here 
do not represent a step forward. They represent a great leap backwards.
  Madam President, let me just finish up with a kind of appeal --I will 
have amendments next week which will be very specific, and we will have 
up or down votes on them--but right now, I want to make just a broad 
appeal. I am grateful for whatever improvements have been made in the 
Finance Committee. I thank all my colleagues for their work. They have 
made some improvements. However, like my good friend Jim Hightower 
likes to say, you can put an earring on a hog, but you still can't hide 
the ugliness. A couple of earrings don't make a hog beautiful. You can 
put a couple of earrings on this tax cut, this reconciliation bill, but 
you can't make it beautiful; you cannot hide the ugliness.
  Madam President, I ask unanimous consent I have 3 more minutes to 
speak.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WELLSTONE. When you have a tax cut bill, a reconciliation bill 
that gives the vast majority of the benefits to those people at the 
very top and gives middle-income and working families the shaft, you 
don't have justice. You don't have a bill that represents expanding 
opportunities. And, as I said, fix it up, do your best, but, again, you 
can put an earring on a hog, but that won't hide the ugliness. You are 
not going to be able to hide it from people in the country.
  Next week we are going to have one heck of a debate. My appeal is 
that we work together here in this body. But my appeal also is to the 
President: I hope you will hold the line. During the last campaign the 
President talked about economic fairness. Boy, if there ever was a 
place to draw the line and have a debate, it is here. To Democrats, my 
colleagues, I hope you will come out here with an alternative. I hope 
we will be united behind it, and I hope we will stay strong. Because 
this piece of legislation is the exact opposite of what most folks mean 
by fairness. It is no wonder that most people in the country think 
there has been a hostile takeover of the government process. They know 
who has been in there lobbying, they know who is going to get the vast 
majority of the benefits, and they can see that it does not have a 
whole lot to do with them. That

[[Page S6019]]

is the disconnect in American politics today. This reconciliation bill, 
this tax cut, represents a huge disconnect to middle-income and working 
families. It is an outrage.
  Let me just conclude by asking unanimous consent that a Wednesday, 
June 18, piece, ``Rising College Costs Imperil the Nation, Blunt Report 
Says,'' from the New York Times and a Washington Post piece, June 18, 
``Colleges' Failure to Resolve Funding May Bar Millions from Attending, 
Study Finds,'' be printed in the Record.
  There being no objection, the articles were ordered to be printed in 
the Record, as follows:

                [From the New York Times, June 18, 1997]

       Rising College Costs Imperil the Nation, Blunt Report Says

                          (By Peter Applebome)

       The nation's colleges and universities need to cut costs 
     dramatically or face a shortfall of funds that will 
     increasingly shut out the poor from higher education and from 
     economic opportunity as well, according to a blunt and far-
     ranging assessment of American higher education that was made 
     public yesterday.
       The report, by a panel of public and private university 
     officials and corporate executives, says that rising costs, 
     falling public spending and a coming surge in demand are 
     making the economics of American higher education 
     increasingly unsupportable.
       If current enrollment, spending and financing trends 
     continue, the report said, higher education will fall $38 
     billion short of what it needs to serve the expected student 
     population in 2015. To sustain current spending, it said, 
     tuition would have to double by 2015, effectively shutting 
     off higher education to half of those who would want to 
     pursue it.
       The report focuses on one of the great unspoken dilemmas in 
     President Clinton's push to make at least two years of 
     college as common as a high school diploma: higher education 
     is expensive, students pay only a small share of their costs 
     and, while bringing increasing numbers of low-income students 
     into higher education will have long-term economic benefits, 
     it will also have enormous short-term economic costs.
       On the other hand, the report said, with education 
     increasingly crucial to economic advancement, cutting off 
     access to education--particularly to the poor and to 
     immigrant groups who increasingly dominate the student 
     population of states like California, Florida, New York and 
     Texas--would have enormous consequences for the nation's 
     social fabric.
       The report, ``Breaking the Social Contract: The Fiscal 
     Crisis in Higher Education,'' calls for a radical 
     restructuring of universities, including an effort to 
     overhaul university governance to limit the power of 
     individual departments, redefining and often reducing the 
     ambitions of different institutions and a sharing of 
     resources between institutions.
       The report also calls for more public financing, but it 
     stresses that changes in the system should be prerequisites 
     to any increases.
       ``The facts are irrefutable,'' said Thomas Kean, the former 
     New Jersey Governor who is now president of Drew University 
     and is a co-chairman of the panel that wrote the report. ``We 
     are heading for a crisis at the very time we can least afford 
     one.''
       The panel, the Commission on National Investment in Higher 
     Education, is made up of academic and business leaders 
     convened by the Council for Aid to Education, an independent 
     subsidiary of the Rand Corporation.
       Experts say that higher education is already being reshaped 
     by such forces as technology or competition from for-profit 
     institutions, so that a straight-line extrapolation from 
     current economic figures is difficult. And higher education 
     is such a varied enterprise in the United States that a 
     crisis for a public college in California does not 
     necessarily mean a crisis for Harvard or Princeton.
       Still, Roger Benjamin, president of the Council for Aid to 
     Education, notes that even rich universities like Yale and 
     Stanford have faced deficits and retrenchment in recent 
     years.
       And officials in state systems, which educate the majority 
     of Americans, say the gap between resources and costs in 
     higher education is becoming ever more daunting.
       Charles Reed, chancellor of the State University System of 
     Florida, said that over the next 10 years Florida would face 
     a 50 percent increase in students at its public four-year 
     institutions, to 300,000 from 210,000.
       Barry Munitz, chancellor of the California State University 
     System, said California was midway through a half-century of 
     population growth and demographic change that would see the 
     number of children in kindergarten through the 12th grade 
     almost double, to about eight million, and go from about 75 
     percent white in 1970 to about 75 percent minority in 2020.
       Population growth will only accelerate the financial 
     problems facing higher education, the report said. It noted 
     that the index measuring the increases in the price paid by 
     colleges and universities for goods and services, like 
     faculty salaries, rose more than sixfold from 1961 to 1995. 
     The annual rate of growth in the cost of providing higher 
     education exceeded the Consumer price Index by more than a 
     percentage point from 1980 to 1995, the report said.
       And, while costs have gone up, public support has not. 
     Since 1976, public support per student has just kept up with 
     inflation, while real costs per student have grown by about 
     40 percent, the report said.
       To make up the difference, tuition has risen dramatically, 
     with tuition and fees doubling from 1976 to 1994. But the 
     report said that a similar doubling between now and 
     2015 would have a catastrophic effect on access, pricing 
     as many as 6.7 million students out of higher education.
       ``If you were to announce that, given fiscal pressures, the 
     door to social mobility that was good enough for the old 
     generation is really no longer needed by the new one, you 
     might as well stick a ticking bomb inside the social fabric 
     of this country,'' Chancellor Munitz said.
       While calling for more public support, the report said that 
     a solution with colleges and universities themselves.
       ``Given the magnitude of the deficit facing American 
     colleges and universities, it is surprising that these 
     institutions have not taken more serious steps to increase 
     productivity without sacrificing quality,'' the report said.
       The report's recommendations for restructuring--from 
     sharing a library with other institutions to eliminating weak 
     programs--are not new, but there are enormous political and 
     institutional barriers in the way of a major economic 
     overhaul of higher education. Still, some experts say 
     institutions have no option but to find ways to operate more 
     efficiently.
       ``The ability to maximize revenue, given the competitive 
     pressures for state dollars on the one hand and the 
     resistance to future increases in tuition on the other, has 
     about run its course,'' said Stanley Ikenberry, president of 
     the American Council on Education, a leading advocacy group, 
     which was not involved in the report. ``All of that's putting 
     more and more pressure on the operating side of the budget.''
                                                                    ____


               [From the Washington Post, June 18, 1997]

 Colleges' Failure To Resolve Funding May Bar Millions From Attending 
                              Study Finds

                           (By Rene Sanchez)

       A new report on the nation's universities warns that the 
     pressures of growing enrollment, rising tuition, and 
     declining funding have put campuses on a dangerous financial 
     course and threaten to exclude many students from higher 
     education.
       The report, by the Rand Corp., draws a bleak portrait of 
     the financial problems facing universities and suggests that 
     many of them are ``floundering'' in their attempts to solve 
     those problems.
       Thomas Kean, a former governor of New Jersey who helped 
     lead the study, said that if current campus trends in funding 
     and enrollment continue into the next century ``millions of 
     Americans will be denied the opportunity to go to college.''
       The report concludes that neither public nor private 
     support of colleges is keeping pace with campus costs or 
     student enrollment. The report projects that by 2015, the 
     number of full-time college students will swell to 13 
     million, about 3 million more than now.
       That growth, spurred largely by the increasing necessity of 
     a college degree in the nation's labor market, is occurring 
     as college tuition costs are continuing to outpace inflation. 
     Nationally, average college tuition per student, adjusted for 
     inflation, has nearly doubled in the past 20 years, the 
     report concludes.
       If that pattern were to continue for another 20 years, the 
     report asserts, more than 6 million students ``will be priced 
     out of the system.''
       Higher education officials said yesterday that the long-
     term analysis of colleges presented in the report appears to 
     be sound.
       ``It defines the problems well, and speaks candidly about 
     what states and institutions have to do to try to solve 
     them,'' said Stanley Ikenberry, president of the American 
     Council on Education, a Washington group that represents more 
     than 1,300 colleges and universities.
       Leaders of the study faulted both the federal government 
     and, in particular, states for not making stronger financial 
     commitments to higher education. But they also stressed that 
     the management habits of colleges are a substantial part of 
     the problem.
       The report sharply criticizes the way many colleges manage 
     their money, arguing that the financial decisions they make 
     are often ``cumbersome and even dysfunctional in an 
     environment of scarce resources.'' The report urges 
     universities to define their missions more precisely, 
     streamline services, and do more to measure faculty 
     productivity. On many campuses, the report notes, the 
     response thus far to growing financial crises has been 
     ``partial and ad hoc.''
       It also recommends that universities share more of each 
     other's resources and try to save money in the years ahead by 
     relying more on new computer technology and the Internet as 
     tools for class instruction and scholarly research.

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