[Congressional Record Volume 143, Number 96 (Wednesday, July 9, 1997)]
[House]
[Pages H5007-H5013]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         REPUBLICAN TAX PROPOSALS PRIMARILY BENEFIT THE WEALTHY

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from New Jersey [Mr. Pallone] is 
recognized for one-half the time remaining before midnight as the 
designee of the minority leader.
  Mr. PALLONE. Mr. Speaker, as you note this evening, some of my 
colleagues on the other side of the aisle,

[[Page H5008]]

some of my Republican colleagues, made reference to Treasury Secretary 
Rubin's report which was released over last weekend that illustrated 
very clearly how the Republican proposals primarily benefit wealthy 
individuals. In addition, Secretary Rubin expressed serious concern 
regarding the potential for the Republican tax cuts to explode the 
deficit, and I just wanted to mention this report again because I think 
it is significant. It says that only 38 percent of the tax cuts would 
be for middle-class families under the Republican House proposal while 
55 percent of the tax cuts would go to the affluent.
  Now President Clinton's tax cuts are more targeted to the middle 
class. Eighty-three percent of the tax cuts under his proposal would be 
targeted to the middle class, and only 10 percent would be targeted to 
the wealthy.
  Now we are hearing all these statements from the Republicans about 
how these Treasury numbers are inaccurate, the Republican plan does 
give more money to the middle class. Unfortunately, these Republican 
arguments are without basis and they basically ring hollow. It is the 
Treasury numbers that examine the full 10 years of this balanced-budget 
agreement in their calculations. What the Republicans do is they only 
look at the few years in the agreement that they think favor them and 
then skew their numbers to make it seem that they are helping the 
middle class, and in fact they are not.
  One of my colleagues, the gentlewoman from Texas [Ms. Jackson Lee] 
mentioned the Congressional Research Service report which was issued on 
July 2, just last week, and this is a nonpartisan analysis. And what 
that report stated was that the Treasury office's numbers, the Treasury 
Office of Tax Analysis, and I quote, ``provides a more comprehensive 
measure more consistent with how economists would measure the bill's 
benefits to individuals in different income classes.'' They go on to 
state the OTA, the Treasury analysis, is a better representation of the 
permanent distribution.

  So this Republican argument is baseless because the facts back the 
Democrats' argument. The Democratic tax plan primarily benefits the 
middle class, and the Republican scheme primarily benefits the wealthy.
  I just wanted to use an illustration now, if I could, under the 
Republican tax scheme to show how a typical family is not really 
helped, and I use as an example here, as you can see on the chart, of 
Joe and Betty who do not fare well under this Republican proposal. 
Basically Joe cannot figure out why the CEO of his company is getting a 
$24,000 tax break under the GOP plan while he gets almost nothing. 
Joe's wife, Betty, works part-time and worries that she will get a pay 
cut and possibly lose her pension under the GOP plan because her boss 
may turn her into an independent contractor.
  One of the things that the Republicans do not tell you is not only 
that the Republican plan does not provide much in the way of tax cuts 
to the middle class, but they also have these little provisions in the 
bill that change the definition of workers and their rights and whether 
or not they get minimum wage. And one of the things they do is to turn 
a lot of people into independent contractors, so they may lose a lot of 
the benefits that they now have.
  Now Joe and Betty again, they have a daughter Susie who is headed for 
a community college in a few years, and she would likely face $750 in 
tuition costs under the Republican plan compared to the zero tuition 
under the Democratic alternative, because we are a lot more generous in 
what we do to help families pay for higher education.
  Finally, little Joe Junior in this family of four and his sister 
would not receive a child tax credit under the Republican plan, even 
though both parents work and pay taxes.
  Now meanwhile we have got this CEO here of the company where Joe and 
Betty work, and just to give you an illustration, Joe found out that 
they have a memo from their accountant that they project that this CEO 
was going to get a $24,000 windfall of extra income due to the 
Republican tax breaks. In addition, the CEO is thinking about how 
turning low-wage women employees like Betty into independent 
contractors is going to mean big bucks for the company and could mean a 
raise for him under the GOP bill. Of course Mr. CEO's gains are the 
country's losses because the Republican tax scheme will cause the 
deficit to explode.
  I have a number of my colleagues here tonight that I would like to 
yield some time to to talk about what is going on here, but the bottom 
line is that the GOP plan is giving most of the tax breaks to wealthy 
individuals. The Democratic plan is aimed towards the working class, 
towards the middle class. That is what the Treasury report shows, and 
no amount of rhetoric on the other side of the aisle is going to change 
the facts as they exist.
  I would like to yield now to the gentleman from Maine.
  Mr. ALLEN. Mr. Speaker, I think the examples the gentleman gives are 
exactly right. Those examples do show that the benefits of the 
Republican tax cut plan go very much to wealthier Americans and that 
the Democratic alternative, those benefits, the President's plan, go to 
working middle class American families.
  Now we have heard a lot of information tonight, and I want to go over 
some of that information. Two of the previous speakers referred to the 
Clinton Treasury Department numbers, and I want to talk about these 
numbers a little bit. One of them said Secretary Rubin developed these 
numbers, but the last speaker, the gentleman from Minnesota on the 
other side, was more accurate. He said, ``I do not fault Secretary 
Rubin, he was not the first to use those numbers.''
  That is right. He was not the first. They were used in the Bush 
administration. For all of this talk of imputed rental income, this way 
of measuring the economic impact of tax cuts on families has been used 
for some period of time. It was used during the Bush Administration, it 
was used during the Reagan Administration.
  In fact, those numbers, this approach was first developed by William 
Simon, Secretary of the Treasury, 1977. The Treasury Department has 
been using this analysis for 20 years. It was not developed recently, 
it was not developed to have anything to do with the Republican plan in 
this Congress or the Democratic plan. Twenty years the numbers have 
been used.
  So why? Let us ask ourselves why all this talk of imputed income? Why 
all this confusing rhetoric?
  Well, I submit the answer is very simple because of another chart 
that was put up earlier tonight by the gentleman from Georgia, and that 
chart said 76 percent of the benefits go to people earning less than 
$75,000 a year. But if that were true, I say to my colleague from New 
Jersey, he would vote for that bill, I would vote for that bill, all 
the Democrats would stand up and vote for that bill. It is not true.
  Let us take an example. Let us suppose you have a family earning 
$30,000 to $40,000 a year in wages and salaries, and let us suppose 
they also have $100,000 in interest, in dividends, in investment 
income. How is that family categorized under the Joint Committee on 
Taxation numbers, the numbers relied on by the Republican side? They 
call that family a $30,000 to $40,000 family because they say all of 
their investment income is irrelevant, all of their interest income is 
irrelevant, all of their dividend income is irrelevant. We are just 
going to look at their wages and salaries.
  That is how they do the math. It is completely bogus. The fact is 
when the gentleman from Minnesota stood up and said one side is talking 
about imputed income and one side is talking about real income, what he 
neglected to say was that real income just included wages and salaries, 
not dividends, not interest, not investment income. In other words they 
take all of the wealthy, many of the wealthy, and call the middle 
class, call them middle-income families, and it is not true.
  So the question is who wins and who loses under the various plans. 
And let us for a moment forget about how we described family income. 
Let us just look at the middle 60 percent in family income. Let us take 
those at the bottom 20 percent in family income and set them to one 
side, and let us take those at the top 20 percent in income, set them 
to one side. Let us look at the 60 percent in the middle.
  Well, under the President's plan, under the Democratic plan, 67 
percent of the benefits of that tax cut go to those families, middle 
income working Americans, 67 percent of the benefit goes to them.

[[Page H5009]]

                              {time}  2230

  What about the House bill that was passed over our objection? Thirty-
two percent of the benefit of the Republican House bill goes to those 
working families, 32 percent, less than half of the benefit that flows 
to middle America under the Clinton tax cut plan.
  On the Senate side they do slightly better. Thirty-four percent of 
the benefits of the tax cut go to that 60 percent of Americans in the 
middle. Those are the cold, hard facts. That is why we have stood up as 
Democrats and said, if we are going to have a tax cut in this country, 
and we are, and we support a tax cut of the same size as those on the 
Republican side, but we are saying the benefit of this tax cut has got 
to go to working Americans, to middle-income Americans.
  Mr. Speaker, I have just one other point I would like to make. I 
think we have to decide, is this tax cut bill fair. That is the first 
issue. The truth is the Democratic plan is fair and the Republican plan 
is not.
  The second question is this: Is this plan fiscally responsible? What 
the House Republicans have done is they have indexed capital gains to 
inflation. They have backloaded IRAs. The effect of those two decisions 
is to explode the deficit in the outyears. After you get past 15 years, 
that second 10 years, this bill becomes fiscally irresponsible.
  Today in the Washington Post there was a report that we now have 
driven the deficit, the annual deficit in this country, down to $45 
billion; from $280 billion when the Clinton administration started, 
down to $45 billion. Almost all of that is the result of the 1993 tax 
cut bill, for which not one Republican voted.
  The work has been done. We have balanced the budget. This is the 
wrong time to enact policies that explode the deficit in the outyear. 
The Republican tax cut plan is not fiscally responsible. It explodes 
the deficit. It is not fair to middle-income working Americans. We need 
to stand up for the Clinton plan, stand up for the Democratic 
alternative tax cut plan that passed this House, and I look forward to 
working with the gentleman from New Jersey [Mr. Pallone] toward that 
end.
  Mr. PALLONE. Mr. Speaker, I want to thank the gentleman. I think one 
of the points the gentleman is making that we need to stress over and 
over again is, when I was making reference before to this Congressional 
Research Service report that basically says that the Treasury 
Department report is the accurate one, and defies what the Republicans 
were saying tonight, what this Congressional Research Service report 
primarily is saying is that the Republicans are in effect pulling the 
wool over our eyes, because they are looking at how this tax cut is 
distributed under the 5-year plan rather than the 10-year plan. That is 
what we have to look at really, is the 10-year plan, because that is 
where these tax cuts are generated primarily to wealthy Americans in 
the latter part of that 10 years.
  They are the ones who are really being tricky about this on the 
Republican side by not looking at the broader picture and at this plan 
over the 10 years. It is particularly true with capital gains and with 
IRA's, because those are the things where the benefits really increase 
at the latter end of that 10-year period. That is where wealthy people 
get most of the benefits and the average person does not. I think the 
gentleman is making a very good point.
  Mr. Speaker, I yield to the gentleman from Arkansas [Mr. Snyder].
  Mr. SNYDER. Mr. Speaker, I thank the gentleman for yielding to me. I 
agree with the gentleman from Maine. This is not a question of is there 
going to be a tax cut. There is going to be a tax cut, it is going to 
be the same amount of money. The issue is what is the best tax cut for 
working middle-class Americans.
  Of course, being from Arkansas, I am concerned about working middle-
class Arkansans. There has been a lot of discussion about who is going 
to benefit the most under this plan. Every responsible analysis I have 
seen, looking at this plan in its totality over the next 10 years, 
clearly states that the President's plan and the Democrats' plan most 
helps working middle-class families.
  Over the weekend I was really pretty outraged by some of the 
statements in the press made by Republican leaders in this country that 
somehow we Democrats advocating for working middle-class families were 
trying to turn a tax cut bill into a welfare bill. I would like to talk 
about real folks here for a minute.
  I have a constituent who was kind enough to share with me her 
paycheck stub; you know, that thing that you get at the end of the 
month and it just gets your heart to beating fast when you realize how 
much money went to the government. We all go through this every week or 
every month.
  This top portion is her particular paycheck stub. She and her family 
make about $14,000 to $15,000 a year, not a lot of money these days, 
but I have made it before; it is what a lot of us make when we are 
first starting out. This family has 2 children. One of our colleagues 
on the other side of the aisle earlier had a little chart about how to 
calculate the family tax savings, I believe was the way the chart was 
titled. He said just take the number of children and multiply it times 
two, by either the $400 or $500. You take this family here with two 
children and multiply it times two, and you come out with a $1,000 tax 
cut.
  Under the Republican bill that passed out of this House with no votes 
or very few Democratic votes, this family does not qualify for that tax 
cut, so that chart was inaccurate. Why is that? It is because under the 
Republican tax bill that was passed, they do not consider the taxes 
that you pay that are called payroll taxes, those taxes that say, 
sometimes it says FICA, sometimes it says Social Security or Medicare, 
but their tax bill says no, those are not really taxes. We did not 
consider those taxes during the campaign when we were talking about 
folks who play by the rules and pay taxes. We did not mean this family, 
we meant the families we were thinking about.
  So this family on that chart does not qualify for that tax cut. It is 
not advocating a welfare program for me to stand up for Arkansans who 
are in this situation and say this family and these kids also deserve a 
tax cut.
  Another issue that came up a few minutes ago by one of our colleagues 
across the aisle, again going to the family tax savings chart, again 
talking about the second calculation you make is the number of kids in 
the first 2 years of college, and you multiply that times $1,500, that 
number of kids.
  That all sounds good, but that is not what happens under the 
Republican tax bill, and both the Democrat version and the President's 
version are an improvement. Why does that not work? In Arkansas, and I 
know I am going to show my parochial interest, we have a lot of 2-year 
colleges: Foothill Technical Institute in Searcy County, Arkansas, and 
in White County, Pulaski Technical College in North Little Rock; I have 
several of them around the State that have tuitions, annual tuitions 
and fees of less than $1,500 a year.
  Now, under the President's plan and the Democratic House version, if 
the tuition is $1,000, this family, those kids, say we have two kids in 
that college in the first 2 years, two times a $1,000, that is $2,000. 
If you did the Republican version, it is a 50 percent credit, so you 
are taking $1,000 tuition, two kids, $2,000, and 50 percent is $1,000. 
They only get half the credit.
  If we say, well, that is okay, they can go to more expensive schools, 
but we are trying to stand up for working middle class families that 
may not have the resources to send their kids to more expensive 
schools. These are the schools that we work very hard in Arkansas for 
the last several years to develop a two-year college system. I know 
they are the schools the President has cared about when he came up with 
the HOPE scholarship program. It is just not fair that these families 
have to be left out of the full tax relief because they choose or are 
forced to send their children to less expensive schools.
  Mr. Speaker, finally, if I might make a comment about the estate tax 
relief, I know for some of us that is less important than for others. 
In Arkansas we have a lot of farms. We also have a lot of small 
business folks. In estate tax relief, the ability to be able to pass 
the small business or farm on to your kids without being at risk of 
having to sell a portion to pay estate taxes is important to a 
significant number of Arkansans.
  Under the Democratic versions of estate tax relief, for folks with 
small

[[Page H5010]]

businesses and farms the relief is immediate. So if a person, as soon 
as the bill was signed into law if a person were to die, their family 
would be able to benefit from the full estate tax relief. Under the 
Republican version, it does not kick in until the year 2007.
  So to my friends my friends in Arkansas who have small businesses or 
farms, if the Republican version becomes law, all I can tell them as 
their tax adviser is do not die any time soon if you want full relief.
  I appreciate the opportunity, I would say to the gentleman from New 
Jersey [Mr. Pallone] to share my concerns about the Republican bill. I 
think we as Democrats have an obligation to stand up for working middle 
class families throughout this country, and by doing that we are not 
advocating welfare, we are only advocating what just about every 
candidate in America promised in the last election: tax relief for 
working middle class Americans, all of them, not just the chosen few.
  Mr. PALLONE. I appreciate the gentleman's comments, Mr. Speaker. When 
he was talking before about the payroll tax, what the Republicans are 
trying to do is to just look at the Federal income tax and say, unless 
you are paying a certain amount in Federal income tax you should not 
get any tax relief. The gentleman pointed out very vividly how payroll 
taxes for many people, working people, are even a bigger chunk of what 
they have to pay to the Federal Government than the income tax.
  When we think about other taxes, I know in New Jersey, for example, 
we have one of the highest property tax rates in the country. People 
are paying a tremendous amount of property tax. Why is it that all 
these other taxes, whether they be Federal, State, local, whatever they 
are, cannot be considered? People are paying them to the government.
  I do not think we should really make a distinction whether or not it 
is income, payroll, State, local, whatever it is. It is still taxes 
that you have to pay. People need relief. Plus the thing that really 
bothers me is that when this balanced budget agreement was struck 
between the President and Congress it was made quite clear by the 
President that the tax relief had to go to middle-income people and 
primarily to working people. Now the Republicans are basically breaking 
the deal, the way I see it.
  Mr. SNYDER. Mr. Speaker, this issue of payroll taxes is particularly 
important. Before I was elected to Congress I am one of the people in 
the last 15 years that has been considered self-employed. Again going 
back to small business folks, farmers are often for tax purposes self-
employed, as are shop operators, gas stations, the mom and pop stores 
self-employed.
  They can all tell us, they pay almost double the payroll tax, so this 
is a big concern to them when they hear that this Republican bill, the 
one that passed out of the House that the Republicans want signed into 
law, that they may not get the relief, that is of great concern to 
self-employed people.
  Mr. PALLONE. Mr. Speaker, I yield to the gentlewoman from Connecticut 
[Ms. DeLauro].
  Ms. DeLAURO. Mr. Speaker, I want to thank my colleague, the gentleman 
from New Jersey [Mr. Pallone], and it is a pleasure to join with my 
colleagues tonight.
  I would just say that I think it is important to really refute the 
misinformation that is being given out by our colleagues on the other 
side of the aisle. When we talk about who was getting shortchanged, the 
critical question is who is going to benefit from the tax cuts. It is 
the Democratic view that working middle class families ought to have 
the bulk of that benefit.
  Our colleagues on the other side of the aisle would say that they are 
doing that, but in fact if we examine their proposals, as some have 
done here tonight, we will find that working middle class families come 
up short. They get shortchanged on education, education initiatives, on 
the HOPE scholarship. They do not get any benefit for the third or 
fourth year of colleges, for a working family to be able to send their 
kids to college.
  So we cannot, one, make the principle of education a universal for 14 
years, rather than 12, which would be a bold, new idea, to make 
education universal for 14 years in this country.
  Second, if you are a junior or senior, you do not get the advantage 
of any assistance at all.
  They would shortchange those families who are working, who they claim 
are getting an earned income tax, and they somehow have lost the 
definition of what earned income is, because only if you earn an income 
are you eligible for the tax credit, and only if you pay taxes. My 
colleagues here tonight have described the payroll tax.
  Third, whether it is estate tax or capital gains, it is targeted to 
middle class families. They are the families who are getting 
shortchanged. We have to ask ourselves, why they are get shortchanged 
in this equation, and who benefits? I think I want to point out just 
one area, and the contrast of why working middle class families are 
getting the short end of the stick from the Republican tax cut 
proposal, which is because, in just this one area, of the alternative 
minimum tax.
  The alternative minimum tax was put into place in order for the 
richest corporations in this country to be able to have to pay taxes, 
the way everybody else does. It was done in 1986. It has been working 
fine all these years, though I will say in the last session of this 
Congress that the Republicans wanted to repeal and eliminate the 
alternative minimum tax, which would provide a $34 billion windfall to 
the richest corporations in this country.
  So they lost that battle in the last go-round, but they have come 
back again this time to try it again. The public was outraged in the 
last Congress that they would do this, so that Joe and Betty, Dick and 
Jane, we are paying taxes every year, but the Boeings, the Exxons, so 
forth, would have to pay zero in taxes. So they have tried it again 
this time.
  Why we see this shortchanging of working families here is because 
what they would like to try to do is one more time to try to scale back 
on the alternative minimum tax, so that it is not $34 billion windfall 
to the richest corporations in this country, but at the outset it is 
$22 billion, with ultimately the notion that you phase out the 
alternative minimum tax.

                              {time}  2245

  Once again, to provide the richest corporations in this country with 
the opportunity to pay no tax, where you will say to that struggling 
family that wants to send their youngster to a community college, and I 
have a lot of community colleges in the State of Connecticut where the 
tuition is $1,800, but you cannot have $1,500 because we cannot afford 
to do that.
  We will only give you 900 because what we want to do with the balance 
of that money is to make sure that the Boeings and the Exxons can pay 
zero in taxes in this Nation. That is what this is about.
  I will tell you, the American public is not being fooled, because 61 
percent of Americans believe that the Republican Congress is out of 
touch with the American people. According to Newsweek magazine, that is 
before, at the 61 percent, it is before middle-class voters even 
learned that the GOP wants to give a big chunk of their tax cut to 
Donald Trump. That is a quote from the Newsweek article, not something 
that I made up, not something that a Democrat has made up but a third 
party that says this is the direction they want to go.
  I will make one more comment because I think it is relevant to make. 
It is that family that is making the $23,000 a year, again in an 
article in the Wall Street Journal, certainly not a liberal Democratic 
newspaper, where it says the Republican tax-cut dog will not hunt. That 
is because a police officer in Speaker Gingrich's district, paid 
$23,000 a year, family, has two kids, gets $1,668 in the earned income 
tax credit, offsets it, $675 in Federal taxes and yields a check for 
$993. The family pays $1,760 in payroll taxes. His family out of 
pocket, even after the earned income tax credit, would have to pay at 
least $1,100 in taxes. Mr. Gingrich and company ``apparently believe 
giving that young police officer and his family the child credit is 
welfare.''
  On the other hand, what the tax cut proposal on the Republican side 
would provide is for Mr. Bill Gates, richest man probably in the world 
when he gets his capital gains and his estate tax reduction and even a 
new IRA provision that would let him take a $4,000

[[Page H5011]]

tax break for educational expenses for his kids, and a $23,000-a-year 
rookie cop would be denied a tax credit for his kids.
  What this tax bill is about is values. It is about priorities. It is 
what this Nation is about. The Republican tax program is not for 
working middle-class families in this country. The Democratic proposal, 
the President's proposal, is for working middle-class families. I am 
proud to join my colleagues tonight in this special order.
  Mr. PALLONE. What we are hearing is Republican tax breaks are going 
to big business, special interests, wealthy families and all at the 
same time limiting tax cuts for education and families with children. 
It is just incredible.
  I yield to the gentleman from Texas [Mr. Lampson].
  Mr. LAMPSON. Mr. Speaker, I have been listening. This morning also we 
were listening to our colleagues across the aisle talk about in their 
1-minute speeches, one by one come up and complain about the Democrats 
engaging in class warfare.
  Our budget agreement that we voted on earlier this year called for 
$825 billion in tax cuts. Each party came up with a plan to distribute 
those tax cuts. The President presented a plan that would place our 
priority on giving those tax cuts to families to help them support 
their children, pay for college, and to provide for retirement. I 
proudly voted for that package, which I believed was a responsible way 
to cut taxes while we were making significant spending cuts along the 
way.
  Our colleagues across the aisle created their own blueprint also for 
the distribution of these taxes. According to the office of tax 
analysis, as the gentleman has already spoken of a few minutes ago, 
this Republican plan would give two-thirds of the tax breaks, two-
thirds to the wealthiest one-fifth of American wage earners.
  By comparison, the President's plan would provide two-thirds of the 
tax breaks to the middle 60 percent of American wage earners. And they 
have the temerity to accuse Democrats of class warfare. If this is war, 
then let us examine who each side is fighting for.
  The Republicans want to repeal the alternative minimum tax, as we 
heard also a few minutes ago, thereby helping the largest and most 
profitable corporations avoid paying income taxes. The Republicans 
accuse Democrats of class warfare.
  Mr. Speaker, I told the people in the ninth district in Texas that if 
they elected me to Congress, I would fight for working families and not 
for special interests. I see an America today where our stock exchange 
continues to shatter records, but middle-class families still struggle 
to make ends meet.
  I see those families and I want to help them. I cannot help but 
wonder if our colleagues across the aisle do not see those struggling 
families at all or if they are simply blinded to their needs. The 
priorities of the two political parties are crystal clear on this 
issue. I am proud to stand beside the families in Galveston, Texas, 
Beaumont, Texas, in Baytown, Texas who will use these tax breaks to 
improve their day-to-day lives.
  If the Republicans want to call this class warfare, that is just 
fine. This is a battle of our national principles.
  Mr. Speaker, I am proud to stand with the gentleman and our 
Democratic colleagues who are here tonight. I am proud to fight for tax 
relief for working families.
  Mr. PALLONE. Mr. Speaker, I wanted to say quickly to the gentleman, 
and I think we all realize that we are not in the business of 
redistributing wealth, the bottom line is the economy is really good. 
Wealthy people, wealthy corporations are benefiting from it. You 
mentioned the stock market. We read these statistics every day.
  All we are really saying is, this was the promise that was made when 
this balanced budget agreement was signed, is that we only have a 
limited pot of money. This tax relief should go primarily to working 
families. That is where the Republicans have broken the deal on this 
balanced budget agreement. It is just not fair.
  Mr. Speaker, I yield to the gentlewoman from California [Ms. 
Woolsey].
  Ms. WOOLSEY. Mr. Speaker, I thank the gentleman for this special 
order and allowing us to talk about the presidential tax proposal 
because it is absolutely crucial what comes out of this tax vote. It is 
absolutely crucial to our children and to our Nation. We know it. That 
is why we are here tonight in the middle of the night making sure that 
our public knows this.
  What is the key to the President's proposal and why is it so much 
better than the proposal that the Republican majority put forth? Well, 
it is pretty simple. Our plan provides more tax relief for middle-
income Americans. It is that simple. If you want to provide a huge 
April bonus to the very richest in the Nation, it is clear that the 
Republican bill will make that happen. If you want to explode the 
deficit in the coming years, then the Republican plan is actually the 
best choice.

  If you want to go back to the good old days when huge profitable 
corporations paid no taxes, then the Republican bill is the one. That 
is what we are talking about tonight. But if you want to ensure that 
the bulk of the tax cuts go to the middle-income American and if you 
want to make sure that we provide our kids with a real tax break for 
education, then the President's plan is it.
  After all, the Republican bill gives only a third of its tax breaks 
to middle-income individuals. We have said that tonight many times and 
in many ways. But the Democratic alternative provides more than two-
thirds to the middle class.
  Let me tell you something else that is absolutely urgent for all of 
us to understand. The Democratic bill gives our kids the tax breaks 
that they need to get ahead in school and get ahead in life. Almost 
every Member of Congress acknowledges on a bipartisan basis the 
importance of education. So why, why then does the Republican majority 
skimp on the key education tax breaks proposed by the President? Why 
does it break the deal that we reached on a bipartisan basis earlier 
this year?
  Just listen to the differences between the two proposals. We have 
said them tonight. I am going to say them again. The President's plan 
provides a much larger tax credit for the first 2 years of college. The 
President's plan provides a significant new credit for lifelong 
learning.
  Unlike the congressional plan, the President's plan covers all 
students, including part-time students, graduate students and workers 
who are improving their job skills. It makes student loan interest tax 
deductible once again. It provides tax incentives for the construction 
or rehabilitation of schools in distressed areas. It provides tax 
incentives for the private sector to donate much needed computer 
equipment for schools, something we all know we desperately need to 
prepare our kids for the jobs of the future.
  It creates terrific Kidsave accounts that allow parents to make tax-
free withdrawals for higher education costs. And let us look at the 
numbers for education. When you add it all up, the President's plan 
contains $45 billion for different education initiatives, while the 
bill we passed in the House, the majority's plan, the Republican plan, 
provides only 31 billion.
  Now, I am a true believer that the best way we can move our Nation 
forward is by providing quality education and training to every person 
in this country. After all, when we strengthen education, we prepare 
our young people for jobs that pay a livable wage, jobs where they will 
be paying taxes. We prevent families from relying on welfare. We reduce 
crime and we reduce violence and we increase respect for our health, 
our environment and respect for each other. I am a true believer that 
our families need help with the costs of higher education and all 
education.
  After all, the annual cost of a public college education increased 
from 9 percent of a typical family's income in 1979 to 14 percent in 
1994. Middle-income families are struggling to pay these costs, and 
they deserve some real assistance.
  But we cannot do this by talk alone. No, we can stand here every 
night and talk about taxes. But we have to get behind proposals that 
really make a difference for our kids. The President's plan is the one 
that does this. The difference between the President's proposals and 
those of the Republican majority are so significant that they could 
truly mean the difference between success and failure for our kids, the 
difference between economic success and failure in the coming years.

[[Page H5012]]

  I have two words for those on the other side of the aisle who think 
that it is okay to pass a tax plan that provides most of its help to 
corporations and the super-rich and, too, to those who believe it is 
okay to pay lip service to education without getting behind the tax 
proposals that will give us the best education system in the world. 
Those two words are ``get real''.
  The American people are crying out for real tax relief. They are 
crying out for real education benefits. They do not want us to abandon 
the bipartisan budget plan. They want us to live up to it. And that is 
what the President's plan does. It gives middle-income families what 
they need and deserve: lower tax bills and a big boost in their 
education.
  We still have a chance to make a real difference in the lives of 
local families. Let us get 100 percent behind the President's plan. We 
will all reap the long-term rewards for our kids and our Nation. I 
thank the gentleman for the opportunity.
  Mr. PALLONE. I want to thank the gentlewoman for stressing the 
education tax cuts and the ways to improve on the access to education, 
because again we are talking about very limited resources here in the 
context of this balanced budget plan. It certainly makes so much sense 
to spend that money on ways to provide access to higher education and 
relieve the burden, if you will, on families that are trying to put 
their kids through college rather than spend it on some of the other 
things that the Republicans have proposed. It just makes sense in terms 
of investing in our future. I want to thank the gentlewoman.
  Mr. Speaker, I yield to the gentleman from Illinois [Mr. Davis].
  Mr. DAVIS of Illinois. Mr. Speaker, I thank the gentleman for 
yielding to me. Listening to this debate reminds me of Victor Hugo, who 
once said that there is always more misery among the lower classes than 
there is humanity in the higher. It seems to me that the Republican tax 
bill further promotes the misery and suffering of the lower class and 
illuminates the inhumanity of the higher.
  It is true that the Republican tax bill takes from the poor and gives 
to the rich. This bill embodies the very essence of the Robinhood 
concept. Only it is Robinhood in reverse; take from the poor and give 
to the rich. I agree with those who suggest that this bill is bad for 
America.

                              {time}  2300

  The Republican tax cuts make the wealthy wealthier and the poor 
poorer.
  The New York Times said of this cut that the Republican tax scheme 
unfairly benefits the top 5 percent of income earners by providing them 
with over 50 percent of the tax cuts. It showers tax cuts on the 
Nation's wealthiest families. It actually shortchanges the citizen, as 
we have heard, who wants to go to a community college.
  I believe that it is clear that the Democratic plan rewards the 
working class while the Republican plan rewards the wealthy. I stand 
for those who stand with the working people of America. I agree with 
those who believe that we should start where the people are and move 
from there. I thank the gentleman for the opportunity to be here with 
him.
  Mr. PALLONE. Mr. Speaker, I want to thank the gentleman. I think we 
have made the point quite clearly tonight that Democrats are not 
talking class warfare. What we are saying is with the limited amount of 
resources in the tax cuts that are available under this balanced budget 
plan, it certainly makes sense to provide the tax cuts in ways that are 
going to help the average family, the working family and invest in the 
future so that there are opportunities, whether it is education or 
whatever it happens to be.
  It makes no sense to just shower most of these tax cuts on wealthy 
individuals or big business, because it will just not help the country 
in the long run. So I appreciate the gentleman's comments.
  Mr. Speaker, I yield to my colleague from Michigan.
  Mr. STUPAK. Mr. Speaker, I want to thank the gentleman for yielding. 
I was in my office catching up on some mail and signing some letters, 
and I listened to the speakers in the previous special order and the 
beginning of this special order, and I was so pleased to see so many of 
our Democratic freshmen here, the gentleman from Arkansas [Mr. Snyder], 
the gentleman from Illinois [Mr. Davis], the gentleman from Texas [Mr. 
Lampson], and the gentleman from Maine [Mr. Allen] joining with us 
here.
  Something is sort of lost in this whole debate here. I remember when 
I came in in 1993 with the gentlewoman from California [Ms. Woolsey], 
our concern then was the budget deficit and how big it was. It was $293 
billion. I remember that first year, our first year here in Congress, 
still unsure of what had to be done and procedures of the House, but we 
were very concerned about reducing the deficit. It was about $289, $293 
billion.
  We came up with the world's largest deficit reduction plan. Our 
friends on the other side of the aisle would like to call it other 
things, but it was the largest deficit reduction plan. I remember being 
in this Chamber on a very long August night trying to get that package 
through; and we pushed it through, strictly Democratic votes, and we 
did it by one vote. It went to the Senate and they passed it eventually 
by one vote. In fact, the Vice President broke the tie.
  We promised in 1993 we would lower that deficit, and we were at $293 
billion when we came in. And 4\1/2\ years later we are down to, now the 
latest prediction is we will be at $45 billion on September 30 when we 
close this fiscal year. How did we get there? It was because the 
Democrats came together with a Democratic President, and we did a tough 
vote. We lost some Members over that and we are now in the minority, 
but it was the right thing to do for the country.
  I think the thing that is lost in this whole debate is how did we get 
from $293 billion on the verge of balancing the budget? I think that 
has often been lost. And we as Democrats should take credit for 
standing up, taking the tough vote. I remember all the predictions: We 
will throw this country into complete chaos, economic depression, 
massive unemployment, there would be rioting in the streets. And the 
economy has gone crazy. It has given business a shot in this 
administration, a shot of confidence in the U.S. Congress that we knew 
what we were doing; that we are finally going to get this deficit under 
control.
  And we have done it. I think in this whole debate we have to remind 
ourselves how did we get to the verge of balancing the budget. And many 
of us, while we may have voted for the President's plan to give a tax 
break, many of us feel strongly that we should finish the job. In less 
than 12 months we could finally balance this budget and then give the 
tax breaks.
  I may have only been here 5 years, but I know in the U.S. Congress 
tomorrow never comes. We are always worried about today. And we are 
spending money with these tax breaks that we do not have. But we are 
predicting a robust economy for the next few years. So if we are going 
to do tax breaks, they must be so specifically focused because, again, 
the gentlewoman from California knows that when we came here in 1993, 
what was it, the rich were getting richer, the poor were getting 
poorer, and we in the middle class were getting squeezed.
  So even with the bill put forth by the Democratic Party, it is a very 
targeted bill, targeted to help those people who need the help, not 
give away the money, not spend money we do not have. We have done it 
over 5 years with a very controlled fiscal policy. We must continue it 
and it must continue in any kind of tax breaks.
  Now, if I can go to the First Congressional District of Michigan, 
which I proudly represent, that is the north half of Michigan, I will 
tell my colleagues the median family income in my district is $27,482. 
In my poorest county, Keweenaw County, it is $18,459. That is the 
median income. And these are the folks we are trying to help. My State, 
the State average is $36,562. Again, my congressional district, the 
average is $27,482. So there is a big difference. I have a very rural, 
sparsely populated district.
  So take a person or family income of $27,000, or let us be realistic 
here, a working mother, a mother with two children, who probably has an 
annual salary of $17,000 or $18,000. She receives $2,316 from the 
earned income tax credit last year, $2,300. Remember, that was

[[Page H5013]]

in the deficit reduction package we did. We helped out those who needed 
help; $2,300 she receives.
  Under the Democratic bill that we passed earlier, she would get $600 
from the child credit for 1998, 1999 and 2000, in addition, to her 
earned income credit. So she would get about $3,000. This is a mother, 
two children, trying to work and stay off welfare. So we are going to 
give her approximately $2,900.
  Under the Republican bill, what would she get? Nothing. Nothing. In 
fact, she loses money because they take money away under the earned 
income tax credit because she already has an earned income tax credit. 
The $600 she would have received, they take away. The poor get poorer 
and the rich get richer. We in the middle class get squeezed.
  How about a community college student? We were talking about 
education, the gentleman from Illinois and others did. Let us take a 
college student who completes his first year of college. Tuition in my 
district is about $1,400 a year. Parents making $75,000 a year; under 
the Democrat bill, his parents would have received for that first year 
of college tuition about $1,100 in tax credit for his community 
college. He would be eligible for 20 percent tax credit for tuition 
costs in his 3d and 4th year.

  Under the Republican bill, what do they receive for sending their son 
to community college for $1,400 a year annual tuition? He would receive 
$800, not the 1,100 we would give, and the third and fourth year they 
get nothing. There is nothing there. What do they do for the 3d and 4th 
year if they want to get a 4-year degree?
  So these proposals we speak of, the tax breaks, have to be very 
targeted, very specific, and be real to the people we represent. That 
is what I think the Democrat plan does. We do not want to see the rich 
get richer but we hope they would help us out.
  We took the tough votes, and I just wish that we would just finish 
balancing the budget and if there is money left over, give some tax 
breaks. But if we are going to give these tax breaks, then let us make 
sure the folks who need the helping hand, not a handout but a helping 
hand, get a little help. We are a rich country, we are doing well, the 
economy is doing well. Can we not help out the folks who need a little 
extra?
  These figures about median family income, that is my district. I have 
the top half of Michigan, 43 percent of Michigan. It is a large State 
with a median income of only $27,000. That is what we are talking 
about. These are not folks who have all kinds of stocks in the stock 
market, do not have to worry about capital gains tax or estate taxes 
over $600,000. That is just not the folks I represent. And I would hope 
those are the folks we help out instead of the rich getting richer and 
the poor getting poorer and the middle class getting squeezed.
  Again, as I say, I was down writing and signing some letters and I 
could not help reminding myself that 1993 was pretty bleak around here. 
We took the tough votes and we are on the verge of balancing. Let us 
balance this budget and worry about the tax breaks later, but if we are 
going to do it, let us be very specific for the middle class.
  I thank the gentleman from New Jersey for all his hard work in this 
area, and the rest of my colleagues joining me here tonight, and I 
enjoyed the opportunity to discuss this tax package and where we have 
been and where we are now.
  Mr. PALLONE. Mr. Speaker, I want to thank the gentleman from Michigan 
for those remarks and really bringing home how this Republican proposal 
impacts the average American and why the Democratic alternative is so 
much better.
  I will end with this. I want to thank all my colleagues for 
participating in the special order tonight and really urge that my 
Republican colleagues will come along to the Democratic alternative and 
support it. It is not too late. We are in the process of doing the 
budget reconciliation now and certainly hopefully we can come together 
on a tax package that benefits the average working American.

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