[Congressional Record Volume 143, Number 107 (Friday, July 25, 1997)]
[House]
[Pages H5811-H5818]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ON BALANCING THE BUDGET
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 7, 1997, the gentleman from Wisconsin [Mr. Neumann] is
recognized for 60 minutes as the designee of the majority leader.
Mr. NEUMANN. Mr. Speaker, I rise today to talk about a very important
issue facing this Nation: It is the growing debt that faces this
country. Today our debt stands at $5.3 trillion, $20,000 for every man,
woman, and child in the United States of America.
To begin this discussion, I think it is very important that we
understand the difference between balancing the budget, that is,
reducing the deficit to zero, and paying off the debt. The deficit is
the part we talk about out here, and it is important to understand that
the deficit is the overdrawn checkbook. When Washington talks about
balancing the Federal budget, what they are actually talking about is
not overdrawing their checkbook anymore.
What has been going on since 1969 is, every year the Government
collects taxes out of the American people's pockets and it puts it in
their checkbook and then the Government writes out checks. But it
writes out checks for more money than they have in their checkbook. We
all know in our houses that would not work and it does not work out
here.
So what it is they do when the checkbook is overdrawn, is they go and
borrow the amount of money the checkbook is overdrawn. The result of
that borrowing is what is shown in this chart. It is the growing debt
facing this great Nation that we live in.
From 1960 to 1980 the debt did not grow by very much, but from 1980
forward they started overspending by a lot, and they started borrowing
lots of money, and that is why the debt is growing as fast as it is.
And we can see it in this chart. As a matter of fact, right now, today,
we are at about this point on the chart. And it brings to light how
important it is that we deal with not only the deficit but that we
[[Page H5812]]
stop the Government from spending more money than it has in its
checkbook.
But after the deficit is dealt with we still have the $5.3 trillion
debt, and we need to put a plan into place that also deals with that. I
have recently introduced legislation called the National Debt Repayment
Act. And what the National Debt Repayment Act is, it goes the next step
beyond balancing the budget. After the budget is balanced, it says that
we must start making payments on reducing the size of this debt.
I am a former home builder, so we set it up very much like we would
when we borrow money to buy a house. We pay the loan off over a 30-year
period of time. Under the plan, as the surplus is developed, one-third
of the surplus would go to additional tax relief for the American
people and two-thirds would go to start paying down this Federal debt.
A lot of people might ask, how did we get this debt this big and what
is going on out here that would lead us to this size of a debt? I think
it is important that we get a handle on what happened in this city
before 1995.
Before 1995, this city, the people in Washington, continually made a
series of promises to the American people. What I have on this chart is
the Gramm-Rudman-Hollings promises of 1985, and then again in 1987. And
one can see how they promised, and the blue line shows how the deficit
was going to go to zero, they were going to stop overdrawing their
checkbook. The red line shows what they actually did with the deficit.
They made promises to the American people and they broke those
promises.
Again, I would emphasize this is the past. This is pre-1995. Promises
were made, the deficits exploded, the promises were broken.
In Washington, they figured out the logical thing to do if they could
not keep their word was to make a new set of promises. So they made
another set of promises, the Gramm-Rudman-Hollings II, and the blue
line shows what they promised in that set. And again the deficit
exploded and they did not keep their promises. They could not hit their
targets.
The reason we have this debt is because, as these promises were made
in the late 1980's and early 1990's, the people representing the United
States of America, the people here in Washington, they were not able to
keep their commitment to the American people.
In 1993, recognizing that they had broken all their promises, they
got serious about this and they said, ``We know what we can do about
this, we will raise taxes. We will take more money out of the pockets
of the American people. And maybe if we do that, we can stop
overdrawing our checkbook.'' Because if they took more money out of the
pockets of the American people and they put it in their checkbook out
here, they would have more money to spend but they would be closer to a
balanced checkbook.
So they raised taxes in 1993, and I would point out the tax increase
passed the House of Representatives by a single vote. Not one single
Republican voted for it. And it passed the Senate by a single vote.
So we have these broken promises before 1995, we have the tax
increase of 1993, and we have the revolt of the American people in
1994. In 1994 the American people said, ``Enough of this stuff, we do
not want any more broken promises of a balanced budget, and we do not
want these tax increases,'' and they put a new group of people, they
put the Republicans in charge of both the House and the Senate.
Now, I think it is reasonable that the American people should ask are
they any different. Is there any difference between the Democrats that
were here before and this picture of broken promises and higher taxes,
and the group of people that is now in Washington, DC, in control in
the House and the Senate?
{time} 1430
I brought some charts along for that, because I think the answer to
that question is very important. It is more than fair that the American
people ask are they any different than what has happened since 1995,
when we sent a new group there to control. I brought this chart along
because this chart shows just how different things really are.
The red columns that one sees on this chart are our plan to balance
the budget, too. When we got here in 1995, we made a promise to the
American people that we were going to balance the budget too and
preserve this Nation for our children. The red column shows the deficit
numbers that we promised the American people.
This is very different than those last charts, though, however.
Instead of missing the targets, in the first year of our plan, we not
only hit the target but were ahead of schedule. The blue column shows
what actually happened. So in year one, we were not only successful,
but we were ahead of schedule. Along came year two. We were not only
successful but we were ahead of schedule. We are now in year three of
this plan; and, again, we are not only on schedule, we are ahead of
schedule.
It now appears that, because of the success of this group since 1995,
along with a strong economy, that we are in a position to balance the
budget by next year. So we have not only hit our target of balancing by
the year 2002 and keeping our promise, but it now appears that we will
have a balanced budget as soon as 1998, 1999 at the latest, and that is
great news for the American people.
Why is this happening? What is the message here? What is different?
Well, this group curtailed the growth of Government spending to a point
where we were able to hit our targets. No raise of taxes. No taking
money out the pockets of the American people. Our vision was we should
curtail the growth of Washington spending.
When Washington spends less money out of their checkbook, it is no
different than in our household, their checkbook was overdrawn by a
smaller amount. As a matter of fact, if we look at the year 1997, for
example, they overdrew their checkbook by $100 billion less than what
was expected. Well, what happened?
When Washington did not go into the private sector and borrow that
$100 billion, that left the money available in the private sector. With
$100 billion available out there in the private sector, of course that
is more availability of money. More availability of money meant the
interest rates stayed down. And this is where it now translates out of
Washington and into the real world. In the real world, when the
interest rates stayed down, it was very predictable what happened next.
People started buying more houses and buying more cars.
This was our vision in 1995. If Washington could just stay within
their means, could meet their targets and stay ahead of schedule, they
would borrow less money out of the private sector. More money available
would keep the interest rates down. And with the interest rates down,
people would buy more houses and cars and they would do all the things
to make this economy work. Because when they bought houses and cars,
other people had to go to work. That meant they left the welfare rolls,
took less money away from the Government, and started paying taxes in.
That is the working model that has led to this picture. Again, I
cannot emphasize enough how different the picture is now than it was
before. We are not only on track to balancing the budget, we are ahead
of schedule.
I would like to also point out the success that we have had in terms
of curtailing the growth of Government spending. This chart shows it
the best I can. Before the Republicans got here in 1995, Government
spending was going up at an annual rate of 5.2 percent.
We have heard a lot about draconian cuts. I would like to point out
that, since the Republicans have been here, spending is still going up,
much to the chagrin of some us out here, but it is going up at a much
slower rate. What has actually happened is the growth of Government
spending, growth of Washington programs has been slowed by about 40
percent.
Since Washington spending is not growing as fast, we are able to both
reach a balanced budget and offer tax relief to the American people.
What a wonderful situation this is that we have out here right now. We
are now in a position because of this success that we can offer the
American people both a balanced budget and tax relief, $500 per child;
college tuition $1,500 for your kids going to college; capital gains
[[Page H5813]]
being reduced from 28 percent to 20 percent; the death taxes, reform;
the dream IRA has pulled into place. All of these good things are
happening out here because Washington is no longer expanding like it
was before. That is good news for the American people.
I had a conversation this morning and the person was talking and he
said, ``I have got two kids at home.'' And I said, ``Good. January 1 of
next year what you should do is you should walk in the door of your
employer and you should tell your employer you wanted to keep $66 more
in your paycheck in January that you were sending to Washington before.
You just get to keep that money. It is his money anyhow.''
And this person just simply has to walk in the door of his employer
on January 1 next year and say, ``I want to keep an extra 66 bucks a
month of my own money,'' and he gets a $66 raise in one month simply by
walking in and doing it because these tax cuts are put into place. Good
news for America.
The logical question is, ``What is next?'' I think the logical
question, we look at this picture, we look at the broken promises of
the past and the tax increases of 1993 and the American people stepping
forward and rejecting those broken promises and the tax increases, and
they have now moved to a point where they put a group of people here
that are going to both stay on track to balancing the budget and reduce
the taxes at the same time, the logical question is, ``Where do we go
from here?''
I think the answer to that question goes back to kind of where we
started tonight. Even after the budget is balanced, we still have this
$5.3 trillion debt hanging over our head. For any of the viewers that
have not seen this number, this is what the number looks like. It is
staggering. It is $20,000 for every man, woman, and child in the United
States of America. It is $100,000 for a family of five like mine. And
the kicker is, a family of five pays $580 a month in interest only on
the Federal debt.
Now a lot of people say, ``I do not pay that much in taxes.'' Well,
the reality is, you pay taxes all over the place. When you walk in the
store and buy a loaf of bread and the store owner makes a profit on
that loaf of bread, the store owner sends part of that profit to
Washington, DC, to help pay the interest on that Federal debt. So they
are paying it.
So the logical question is, ``What next?'' The logical answer to that
question is after we balance the budget, we should start addressing
this national debt. Recently I introduced a bill called the National
Debt Repayment Act. And it does this. After the budget is balanced, we
cap the growth of Washington spending at a rate 1-percent lower than
the rate of revenue growth. That creates a surplus. Two-thirds of the
surplus goes to paying down this debt. One-third of the surplus goes to
additional tax cuts for the American people. I think it is real
important that we point out, as this debt is repaid, the money that has
been taken out of the Social Security trust fund by the people in
Washington over the last 15 years gets put back into the Social
Security trust fund so Social Security once again becomes solvent for
our senior citizens. The people that are working today would get
additional tax cuts; so for our seniors, solvency in the Social
Security trust fund, security in the Social Security system for our
seniors. For our working families, for people in the work force today,
taxes is part of this bill.
I think most important of all, for future generations, for our
children and for our grandchildren, we get to pass this great Nation on
to our children debt-free. We pay off the Federal debt by the year 2026
under this bill, and we get to pass this great Nation on to our
children debt-free. I think that is the message of the future, and I
think that is the message of the Republican Party.
The past, the party that was here before us in control, the broken
promises of the late 1980's and the early 1990's and the tax increases
of 1993, that is gone. The American people sent a different party here
to run Washington, DC. This party is in the third year of a plan to
balance the Federal budget. We are on track. We are ahead of schedule.
The budget should be balanced in 2002 but probably as early as next
year or the year after, on track, ahead of schedule, by curtailing the
growth of Washington spending so that we can provide both a balanced
budget and lower taxes for the American people.
This vision for the future includes paying off the Federal debt,
restoring the Social Security trust fund, and giving this great Nation
that we live in to our children absolutely debt-free. I can think of no
better vision for the future of our Nation.
Mr. Chairman, I yield back the balance of my time.
The SPEAKER pro tempore. The gentleman from Wisconsin [Mr. Neumann]
yields back his time.
Under the Speaker's announced policy of January 7, 1997, the
gentleman from Minnesota [Mr. Gutknecht] is recognized for the
remainder of the majority leader's hour. That time would be 47 minutes.
Mr. GUTKNECHT. Mr. Speaker, I yield 5 minutes to the gentleman from
North Carolina [Mr. Etheridge].
Regarding Tax Relief for Working Farmers.
Mr. ETHERIDGE. Mr. Speaker, I thank the gentleman from Minnesota [Mr.
Gutknecht] for yielding me the time.
Mr. Speaker, I rise today on behalf of the hard-working farmers of
North Carolina. I want to thank my colleagues that voted yesterday to
preserve crop insurance for tobacco farmers.
Defeating the amendment this week could not have come more timely.
Just this week, rain and wind from Hurricane Danny damaged thousands of
tobacco farms in North Carolina as farmers prepared to go to market. As
insurance adjusters began to survey the damage, farmers will count on
crop insurance to pay the bill as they try to salvage what they can.
If crop insurance were not available to these small farmers, not only
would this year's crop be a near total loss for them, but others would
be forced off the farm entirely. Many of these very farmers are still
repairing the damage to curing barns, irrigation equipment, and other
farm equipment received during Hurricane Bertha and Hurricane Fran just
last year. Others are just now recovering to pay off farm loans and
bank debts that they sustained during that period. And their families
also faced damage from blue mold just last year on their tobacco.
Yesterday's vote was a huge victory for small farmers, especially
poor, minority, and disadvantaged growers. Tobacco has been in the news
a great deal lately. It has been the source of quite a bit of
controversy. However, there is one fact about tobacco that is
indisputable. The golden leaf has helped build the State of North
Carolina, and it has helped transform the Tar Heel State into an
international force in business, technology, education, research,
medicine, and the arts.
Before the turn of the century, North Carolina was known as the Rip
Van Winkle State, devoid of good education, economic wealth, and many
other things that others enjoyed. Jobs were hard to come by, and a
week's pay at a textile mill never seemed to be quite enough to pay the
bills at the town general store.
Education was a privilege only for a very special few people. At the
turn of the century, most children left school early to work on the
farm or in a textile mill, and only a lucky few graduated from high
school, and even less went on to college. Health care was atrocious.
But because of the geography and climate, North Carolina farmers found
that they could grow a variety of crops and especially one that turned
a good crop, flue-cured tobacco.
Tobacco has helped educate our children, help establish our community
college system, build our roads, and send thousands of young people to
a public university system that is the rival of any in this Nation and
around the world. Tobacco and the tax revenues and economic development
it has generated has provided the State and local government the
resources necessary to foster an environment of technological
achievement in our State that would not have been deemed thinkable just
a few decades ago.
North Carolina boasts the best research universities that exist
anywhere. Our community college system is the model used by States all
over the country. North Carolina boasts more
[[Page H5814]]
miles of State maintained highways than any State in this Nation. And
the Research Triangle Park has become a research technological
manufacturing center that has put North Carolina ahead of the pack in
the creation of new jobs and economic development opportunities as we
look forward to the new millennium.
Just over 50 years ago, tobacco was the economy of North Carolina.
And it remains an important part of our State today, but it is a less
important part. North Carolina has a well-diversified, multifaceted
economy, thanks to the sweat and toil of the farmers all over our
State.
But tobacco is extremely vulnerable to the fury of nature.
Hurricanes, tornadoes, floods, and other acts of nature that have
visited North Carolina in recent years have devastated our family
farmers. Crop insurance would have made it more difficult had farmers
not had to insure themselves against nature's fury.
So let me thank my colleagues again for casting a vote on behalf of
family farmers. I also want to thank my colleagues that voted to
preserve the peanut program and the reforms that were made to it in the
1996 farm bill. Because had they not voted against the Neumann-
Kanjorski amendment, peanuts would have been in trouble.
Peanuts have also played a big role in the agriculture economy of
North Carolina. Before tobacco became the king crop, peanuts sustained
the fragile economies in many of our poorest counties in North
Carolina, as it still does today. Peanut farmers face many obstacles,
as do others. Too much water turns them to mush. Too much drought turns
them to dust.
Mr. Speaker, I again want to thank my colleagues for casting their
vote to help our farmers yesterday.
The SPEAKER pro tempore [Mr. Burr]. The gentleman from Minnesota [Mr.
Gutknecht] is recognized and has 42 minutes remaining.
Mr. GUTKNECHT. Mr. Speaker, I would like to talk a little bit about
what has been happening over the last 40 years, what is happening in
the Congress today, and sort of pursue some of the ideas that our
colleague, the gentleman Wisconsin [Mr. Neumann], was talking about.
I am pleased to have joining me the gentleman from Florida [Mr.
Weldon], who came in with me and the gentleman from Wisconsin [Mr.
Neumann] in the class of 1994, to talk a little bit about what is
happening with this budget, what is happening with taxes.
I want to mention something that our colleague, the gentleman from
Wisconsin [Mr. Neumann], neglected to mention. I think it is a very
important point.
{time} 1445
He said that we are ahead of goal, we are under budget, we are closer
to a balanced budget today than we have been since I was in high
school. I would like to talk a little bit about some of the things that
are happening. We have eliminated something like 289 Federal programs.
We have cut over $50 billion in discretionary spending. We have the
first real welfare reform plan passed literally since 1965.
There is a lot of good news that goes along with this. As a matter of
fact, 3 weeks ago when the President did his Saturday radio address, he
said that there are 1,023,000 fewer families on welfare today than were
on welfare when he signed the Republican welfare reform bill just a
little over a year and a half ago. That is good news. It is saving
money. But the goal of the welfare reform plan was not to save money.
The goal of the welfare reform plan was to save people, and to save
families and to save children from one more generation of poverty,
dependency, and despair. We are making real progress in the areas of
welfare reform, in the areas of Medicare reform, entitlement reform,
downsizing the Federal bureaucracy, holding the Federal Government more
accountable, squeezing more out of the taxpayers' dollars. We are
limiting the growth in spending.
In fact, in 1995, when we passed our first 7-year budget plan in
which we said we will balance the budget by 2002 and we will provide
tax relief to working families in the United States, when we passed
that original blueprint for balancing the budget, when we said in 1995
that in fiscal year 1997 we would spend $1,624 billion, that is how
much we would spend in this fiscal year that we are in right now.
The truth of the matter is we are actually going to spend only $1,622
billion. This Congress is actually going to spend less money this year
than we said we were going to spend just 2 years ago. That is good
news. But I think the news is even better if we stop and analyze it,
because in the intervening time because we have had stronger consumer
confidence, we have stronger confidence in the business community, we
have lower interest rates than even the Treasury estimated just 2 years
ago, as a result of all of that, more people are buying homes, more
people are buying cars, the economy is stronger, and the revenues
coming into the Federal Government have actually increased by more than
$100 billion. At the same time revenue has increased by over $100
billion, real spending by this Congress is less than we said it would
be just 2 years ago.
I think that is great news for the American people, and it is
particularly good news I think for our kids, because we are on the path
now toward a balanced budget. There was a published report just a few
weeks ago that said if the economy remains even relatively as strong as
it is today, even close to where we are today, we could actually
balance the budget as early as next year. I think that is great news.
Joining me is the gentleman from Florida [Mr. Weldon]. I welcome any
comments he may have.
Mr. WELDON of Florida. I thank the gentleman for yielding. I wanted
to rise and talk a little bit with the gentleman today and with the
people viewing in the C-SPAN audience a little bit about who this tax
cut package is really going to help. It is important for all our
colleagues in the House of Representatives and everyone watching to
understand exactly what this means for the families and their
neighbors' families. Tax relief is about real people, real Americans.
If the gentleman would allow me to come down there, I want to put up on
that easel next to him a picture of one of those families.
Mr. GUTKNECHT. In fact, while the gentleman is bringing a chart down,
I think he has made an excellent point and sometimes we forget because
we get so bogged down in $1,624 billion and 2.3 percent and $100
billion and $200 million and all of these numbers. We sometimes talk
about these kinds of things as if it were some kind of an accounting
exercise when really this in the end is about real people and how it is
going to affect their lives.
Mr. WELDON of Florida. Mr. Speaker, this is a picture of a family
from my congressional district, specifically the town of Palm Bay, the
town that I live in on Florida's east central coast, an area we call
the Space Coast because of Kennedy Space Center and Cape Canaveral
being there.
This is the Auger family, a middle-class family. Here we have Jim
Auger. He is a plumber. We see him there with his wife and his three
kids. They have a family income of less than $40,000. Jim juggles his
roles as husband and plumber, and his wife, of course, is very busy
with the household chores. I believe she also earns some extra income
cutting hair. They have 3 kids. I want to talk a little bit about the
kids.
The oldest boy is Christopher. There is Christopher there. Then they
have Anthony and their daughter Denae. She is 10 years old. Of course
also they have the two dogs Bridget and Oreo.
Mr. GUTKNECHT. Which dog is which?
Mr. WELDON of Florida. I think this one is Oreo actually. I think I
may have gotten that one wrong.
I want to talk a little bit about what the Republican tax cut package
actually means for them and how it will specifically affect this
family, because it means a lot to this family. In fact, it means a lot
for all families like the Augers, and the importance of this vote
cannot be overemphasized. Indeed, I think it may be one of the most
important votes that we will cast in this Congress.
It is not always easy for Jim to look out for his family and to make
ends meet, especially when so much of his hard earned money goes to the
Federal Government. Indeed, like most middle class working American
families, Jim sends more to the Federal Government than what he spends
on food, clothing, and shelter combined, which is a very significant,
important fact for many American families.
[[Page H5815]]
What they will receive with this middle-class tax cut package is very
important. They will receive $500 for each child.
The gentleman from Minnesota has another picture of the family. I
think what they are doing there is playing Pictionary at that
particular moment. They are not trying to fill out their IRS forms and
figure out how they are going to make ends meet. They are actually
enjoying themselves there.
Mr. GUTKNECHT. I want to get back to an important point because I
think this sometimes is lost. This typical American family, and this is
not all that different from the family I grew up in during the 1950's.
In fact, when I was growing up in the 1950's, the average family, the
largest single payment that they made was for their house payment.
Today the typical family, according to the National Taxpayers Union,
pays more in taxes, we are talking about total taxes, they pay more in
taxes than they do for food, clothing, and shelter combined. That is
why the typical American family is being squeezed so much and why this
tax relief package we are talking about is so important.
Mr. WELDON of Florida. The gentleman raises a very good point. The
typical American family does not pay more in Federal income tax than
they spend on food, shelter, and clothing. But when we add up the FICA,
the Medicare tax, when we add up the property taxes, if they own their
own home, their sales taxes and all the other taxes the families pay
out, the typical American family is spending more money on taxes than
anything else, and it is greater than food, clothing, and shelter
combined.
This family is going to get the $500 per child tax credit. But
because their oldest son is getting close to college age, they can also
get a $1,500 a year eligibility for an IRA scholarship deduction which,
if we do the math and translate it all out, this family will be saving
in excess of $1,500 a year on their income taxes.
Mr. GUTKNECHT. That is money that they get to keep, and sometimes
people misunderstand. They confuse credits with deductions. We are
talking about $1,500 more that this family will have in their
checkbooks to spend as they see fit rather than having that money being
sent to Washington to be spent by Members of Congress and bureaucrats
as they see fit.
Mr. WELDON of Florida. The gentleman is absolutely correct. An
important point here that I would like to make is the Augers are not
the only family in my congressional district who are going to benefit
from this tax relief package. Indeed, the Heritage Foundation, a think
tank here in Washington, DC, did a calculation for me indicating that
84,000 families in my congressional district will see their income
taxes go down based on this Republican middle-class tax cut package.
That will mean $39 million in the pockets of working families in my
congressional district, which includes Brevard County, Indian River
County, Osceola County, and portions of Polk County in Florida. I am
sure in the gentleman from Minnesota's district, it is ditto. He has
got thousands and thousands of families that will benefit from it.
This is a very important point: When we put more money in their
pockets, in working families' pockets, it not only makes it easier for
them to make ends meet, it not only makes it easier for them to be able
to send their kids to college with the tuition tax credits that we are
providing, but it is also going to be good for the local economy, it is
going to be good for the local businessman. If you are a businessman
and you own a hardware store or if you work in a barber shop or a
restaurant, you are going to have more families with more spending
money in their pocket, and that is going to in turn, well, Jim Auger
here in this picture is a perfect example. He is a plumber. There are
lots of families that are going to benefit that he does plumbing work
for. How many families in my congressional district or in the
congressional district of the gentleman from Minnesota [Mr. Gutknecht]
have a leaking faucet that they would like to get fixed but they do not
have the money, the end of the checkbook comes before the end of the
month? What is going to happen, people will have more spending money
and the spinoff benefit will not only be that it is going to be easier
for him to send his kids to college; they are going to have more
spending money. But as well, it may actually help his business because
it is going to help the families that he does plumbing work for.
This is something that has the potential to help everybody in
America. It will create jobs, it will make working families and
families with kids better able to make ends meet, and probably most
importantly, it is going to make it a lot easier for this mom and dad
in this picture to send these three kids to college.
These kids are bright kids and their parents believe they are college
material and that they should be able to succeed in college. But as
everybody knows, it is not just the tuition. It is the room and the
board and the books and paying the medical insurance while the kids are
in college. So providing for a kid for another 4 years and seeing him
through the process of college is very, very difficult on families.
This family is going to be better able to send their kids to college.
That is a big part of what this tax package is all about.
I am very, very pleased to rise today and join the gentleman in this
special order and talk about not just the statistics and not just the
numbers, but real flesh and blood people like the Augers and their
three kids, because this is going to mean a real difference for their
quality of life. For too long, American families like them have been
bearing too much of the burden of government here in Washington. If we
look at the facts and look back 40 years when my mom and dad and the
gentleman from Minnesota's mom and dad were raising our families, I
know I have my sister Carol visiting from Tennessee in the gallery up
there listening to this speech. I have three sisters, Carol is the
youngest, my sister Maryann, who is younger than me, and then my older
sister Christine. When my parents were raising the four of us kids, my
father was a postal clerk, working in the post office, they were
sending about 2, 3, 4 percent of their income to Washington, DC. Now
these families are sending 25 percent of their income to Washington,
DC.
As I understand it, she likes to cut hair and she enjoys cutting
hair. But there are a lot of working moms who would rather not be out
in the workplace. They would rather be home with the kids. Particularly
when the kids are really little, they would rather be home with them.
This tax package is going to go a long way to helping a lot of those
families.
One of the things that I think is most ironic is that not only has
this been a very difficult process over the 3 years to get the
administration to come along with us on a tax cut package, but as well
it really is taking our initiative, the initiative of the Speaker, the
majority leader, the leader in the other body as well as all the other
Members, to really get the President of the United States to fulfill a
pledge that he made in a campaign in 1992 to provide a middle-class tax
break. So it is really a pleasure for me to join the gentleman.
Mr. GUTKNECHT. I will hold this picture up of this family, but I
think if he flips to the next chart, let us talk a little bit about
that. He is absolutely right that the President promised when he ran
for office the first time a middle-class tax cut. He did not promise a
lower income tax cut, he did not promise to cut taxes for people who
pay no income taxes. He promised a middle-class tax cut.
In many respects, what we are doing is we are helping the President
keep that promise. According to the Joint Committee on Taxation, which
is a bipartisan committee and is the official scorekeeper of all tax
bills, 76 percent of the tax relief in the package that passed this
House, and we have not yet got the calculations on the bill that is
being finalized in the conference committee, but my suspicion is it
will be very close to the same number, at least three-quarters of the
benefit of this tax package will go to families who earn less than
$75,000 a year.
{time} 1500
And there are lots and lots of families in that category, and I yield
to the gentleman.
Mr. WELDON of Florida. Yes, if the gentleman would yield, I
appreciate it, thank you.
[[Page H5816]]
I just wanted to explain what this chart represents. And our tax cut
package is about an $85 billion net tax cut, but actually its total
amount is about $115 billion. This pie chart represents all of that
money, the whole tax cut package, and we are looking at who does it go
to. And this section in the yellow here represents 76 percent of that
tax cut package, and it goes to families earning between $20,000 and
$75,000.
That to me says a great deal. It says this truly is a middle-class
tax cut. That is the working middle class.
Now some people may say well, gee, $50,000, $60,000, $70,000, where I
live is not middle class, and that is true. Where I am in Florida,
making $65,000, $70,000 a year, some people would legitimately argue is
not middle class anymore. But I can tell you in some of our more urban
areas, places like New York City, Long Island, Los Angeles, there are a
lot of families struggling to make ends meet on $65,000 a year because
of the very, very high cost of housing where a house can cost $300,000
a year. And if you really look, that is the middle class in the United
States of America, with incomes between $20,000 and $75,000 a year.
This pie chart shows you very, very clearly, 76 percent goes to those
working middle-class families.
Mr. GUTKNECHT. That is what the President promised, and that is what
we have delivered.
Perhaps we can flip to the next chart because this is another chart
that was put together by the Joint Economic Committee on Taxation,
again the people who actually are the official scorekeepers, and what
you see in yellow is current law or pre- the tax cut package that has
been agreed to by the House and Senate. And what you see are the five
different, if you broke the economic groups into equal parts of one-
fifth, the lowest one-fifth of taxpayers currently pay in the yellow
there on the left, they currently pay 1 percent of all the taxes paid
in the United States. The top or the lowest 20 percent of income
earners in the United States currently pay 1 percent. Under this tax
plan they would still pay 1 percent.
If you drop all the way over to the highest 20 percent, they
currently pay 63 percent of all of the taxes paid in the United States.
Under this tax plan they will still pay 63 percent. In fact, if you
really are honest about the way the distribution of this tax cut goes,
it really does little to change the differences between the wealthy and
the poor.
The important point is, and one of the things that our friends on the
left, they do two things with our tax bill that I think in some
respects are incredibly disingenuous. One is they use what is called
family economic income or otherwise imputed income. And by doing that
you can literally take a family that is earning $47,000 a year, which
currently is the median family income, that lives in their own home,
that perhaps has accrued values of pensions, perhaps has an IRA that
they could cash in, have some undeclared capital gains; in other words,
they have got some stock perhaps that they inherited from Aunt Matilda.
And if you put all those together using a very convoluted and tortured
arithmetic developed by the Treasury Department, you can literally take
that typical family, that median family with $47,000 of income, and you
can say they have an imputed income of $80,000 a year. And that is what
sometimes our friends on the left are referring to when they talk about
tax cuts for the rich.
The other thing they do, which I do not think is completely fair or
honest, is they talk about capital gains and they say capital gains are
tax cuts for the rich. Well, in some respects there is some truth, and
as a matter of fact if Bill Gates were to sell all of his Microsoft
stock under this tax plan with the tax relief that we have included in
that for capital gains sales, he would get a very large tax cut. That
is a fact, OK? The likelihood is he is not going to do that. As a
matter of fact, many wealthy people never sell their stock. They leave
it to a trust; in fact, in my guess what probably will happen to Mr.
Gates' stock in Microsoft is one day he will leave it to some
foundation to build electronic libraries throughout the galaxy. That is
what historically has happened with many very wealthy people. They
create foundations, they create trusts, and so in some respects they
really do not take advantage of these tax breaks anyway. But even if
they did, that is their business, it is not the government's business,
and he would still be paying billions of dollars worth of taxes.
But let us talk about normal people. Let us talk about farmers. Let
us talk about small business people. Let us talk about families who
save and invest for their future which, of course, is what ultimately I
think we want people to do more of. One of the problems we have had
with this Tax Code over the last 40 years is that it has discouraged
personal responsibility by saying, you know if you save, if you invest,
if you take care of your family, you will be punished. If you do not do
those things, you will be rewarded. And what we are saying is we have
got to reverse some of those perverse incentives.
But let us talk about tax cuts for the rich, because the truth of the
matter is most people who pay a capital gains tax are rich for 1 day,
the day they sell their farm, the day they sell their business or the
day they sell some other asset or investment which in many cases they
have been paying taxes on for many, many years.
So I happen to believe that we ought to encourage people to invest
and save and that the real purpose of capital gains tax relief is not
to help the wealthy. It is to help more people of modest means become
wealthy and to help those people take better care of themselves and
better care of their families, particularly in their retiring years.
So I strongly support capital gains tax reductions, and frankly I do
not have any problem defending or discussing those back in my home
district, particularly among small business people and farmers, because
they understand that they live poor and they die rich because they have
invested, saved and been prudent.
Mr. WELDON of Florida. I thank the gentleman, and I want to talk
about one particular aspect of the capital gains reduction which is
part of the tax package that is being discussed here in Washington
right now.
The capital gains tax reduction, the reason why I support it and the
reason why many of my colleagues on both sides of the aisle support it
is because it stimulates jobs, it helps create jobs, and the way it
does that is if you have made an investment and you realize some profit
off that investment, if when you go to sell and the government takes
slightly less, you are left with a little bit more. And most people who
make an investment reinvest their money.
Now some people will use it for a vacation or a college education,
but the majority of people reinvest their money right back into the
economy in the form of stocks or bonds or business.
And so when you lower the rate of tax on capital gains, and you leave
more money in people's pockets who are most likely to invest it, they
are putting more money back into the economy, and then, as a
consequence, they are creating jobs.
And what is probably most important about this is they are more often
than not creating good, high-paying, quality jobs. Often it is in high-
tech industries, the kind of industries that are clean, that are less
polluting and that frequently are paying better salaries.
I want to make one other extremely important point. In our Republican
tax cut package we do something called indexing capital gains, and I
want to explain what that is. If you make an investment today, a
thousand dollars, and 10 years from now your investment has doubled in
value to $2,000, according to the current Tax Code you have got a
capital gain on a thousand dollars.
But guess what? Inflation is such that 50 percent of your profit has
been eaten up by inflation, so instead of really having an extra
thousand dollars, because of inflation, the decline in value of the
dollar, you maybe only have realized $500 in real profit.
Indeed, when inflation is going along very rapidly, if inflation was
at, say, 7 percent, and your investment went from 1,000 to $2,000, you
have made absolutely no profit because your $2,000 now only buys what a
thousand dollars did years ago.
[[Page H5817]]
Well, in the current Tax Code, you pay taxes on that inflated money.
You actually have to pay the Federal Government for the inflation, and
I just think that is absolutely wrong, and one of the things I am most
proud of in our tax cut package is we allow you to index it for
inflation.
So if you made that thousand dollar investment and it is now worth
$2,000, but the dollar has gone down in value slightly so your real
capital gains is only $500, you pay capital gains tax on only $500.
What I have been most disappointed in is the President does not want
this provision. He wants it eliminated, and he is going around this
city, and he has his Treasury Secretary, Robert Rubin, going around
saying that this will, quote, explode the deficit, trying to put fear
in the hearts of the American people that this tax cut package is going
to explode the deficit. In truth, it is going to do nothing at all like
that. And in truth, what we are trying to do is just basic fairness. We
are trying to take the family values that you are trying to raise your
kids with every day, a fairness and honesty, and we are trying to apply
it to the U.S. Tax Code. And believe me in this city it is very hard.
But to have the President running around and saying it is going to
explode the deficit, in my opinion, is to say the current system is the
way we want to keep it, we want to tax you on your inflated dollars.
Even if your $1,000 investment is worth $2,000 and inflation has eaten
up half of that, we are going to tax you on all of that.
And I just think that is dead wrong, and it is just not fair. One of
the things that I know that I have been striving for since I have been
here in Washington, all the Members of our freshman class, particularly
the freshman class of the last Congress and the people like Mr.
Gutknecht, is to try to put fairness into the system, fairness in
giving working families like the Augers, the people I showed earlier,
more money to spend at the end of the month, more money for college
education, better able to make ends meet, but also to put fairness into
the law itself and have it make common sense.
Mr. Speaker, it does not make common sense if the dollar has gone
down in value such that your investment is really not worth anything
more, but then for the Federal Government to come along and tax you on
that; well, my colleagues, let me tell you, you can end up losing money
on your investments if the government is going to eat away all of it,
even the gains that have been made purely on inflation. Your purchasing
power can go down, and what happens when you live in a country like
that where they are taxing you on everything and taxing you on your
taxes, well, people will not make investments, and then you will not
create good, high-paying, quality jobs, and then we all suffer.
So we want a Tax Code that makes sense, we want a Tax Code that is
fair, we want a Tax Code that helps working families, we want a tax
system that encourages families to be able to send their kids to
college, and I am very, very pleased to be able to join the gentleman
in this special order here.
Mr. GUTKNECHT. Mr. Speaker, I want to get back to a point the
gentleman from Florida made, and this is one of the things that has
been incredibly discouraging and frustrating in that we have the
President and the Secretary of the Treasury, Mr. Rubin, and I want to
talk specifically about the Treasury Department and their imputed
income scheme and, even more importantly, to talk briefly about their
notion of exploding, reducing capital gains, exploding the deficit. The
real tragedy of that tale is they know that that is not true.
As a matter of fact, the Treasury now has updated numbers that shows
by reducing capital gains at the levels that we are talking about in
this tax bill, you actually increase revenue to the Federal Government
over the next 10 years by an additional $25 billion. Yesterday there
was an article written by one of the former Federal Governors who said
reducing capital gains will actually increase revenues to the Federal
Government by hundreds of billions of dollars more because it will
encourage people to sell assets that they have been sitting on for a
long time and convert those and allow other people to buy them. And as
this happens, as we get more and more transactions, as we get more and
more people investing in savings, as we encourage investments in
savings, you increase the size of the pie.
You do not have to raise taxes to increase revenue. If you lower
capital gains, even the Treasury Department now acknowledges, you
actually increase revenue. You do not explode the deficit, you explode
revenues, because the economic activity is growing and the biggest
benefactors, and I think you said this, again are not the wealthy.
And I will just also quote, there was a gentleman in my office
yesterday, and some people know him, he is the president of Godfathers
Pizza, a remarkable human being, and I asked him that question about
capital gains, and I asked him what kind of tax package would benefit
low- and middle-income people the most. And you know what he said?
Whatever tax package lowers total taxes the most.
{time} 1515
He said, do you know why? He said, because wealthy people already
have all the toys they want. They already have the boats. They have the
Gulfstream IV's, they have lots of toys. So if they have more of their
money to spend, particularly as they sell investments, guess what they
are going to do? They are going to reinvest it. They are going to
invest it in new businesses and new opportunities and new job
opportunities for people who need them the most.
So the real benefit of this package I think goes to people of modest
means and to middle-income families, and that is the way it should be.
Just because there may be some wealthy people who will benefit, that is
no reason to play this class warfare.
I want to remind people and our Members who may be watching, it has
not been that long ago that this Congress started to play this class
warfare game. What happened? They passed something called the luxury
boat tax. They were going to get those wealthy people who bought those
cigarette boats and those wealthy people who bought yachts. They were
somehow going to get them to pay more taxes. Do Members remember what
happened?
Mr. WELDON of Florida. Mr. Speaker, I had or still have one of those
boat companies in my district, Sea Ray, and it just about put them out
of business. As I understand it, 20,000 working Americans who worked in
the boating industry lost their jobs, and I know they laid off lots of
people in my district, and it was a disaster because people stopped
buying the boats, so they got absolutely no income into the Federal
Treasury off of that tax.
And because they stopped buying boats, it put the boating industry in
a tailspin. I know in my congressional district it hurt the company
very, very badly, and people ended up losing their jobs. When people
lose their jobs they go on unemployment, they may end up on welfare,
they are not paying income tax anymore. So that luxury tax I think is
an excellent case study. I am glad the gentleman brought it up.
Mr. GUTKNECHT. It underscores the real danger of playing this class
warfare game. Abraham Lincoln warned many, many years ago that you
cannot help the poor by hurting the rich. In other words, we are all in
the same boat. You cannot sink half of them. When they tried to do it,
when they tried the luxury boat tax, it had a net negative revenue
consequence. That was bad. But what was worse, over 10,000 honest,
hard-working Americans lost their jobs. That is the danger of playing
this class warfare game.
I think we have to talk in the terms that President Kennedy talked
about over 30 years ago. He said a rising tide lifts all boats. When he
cut marginal tax rates across-the-board, guess who benefited the most?
People with the highest incomes. But in the end who really benefitted
in terms of more jobs, more economic activity, and a faster growing
economy? It was people who needed the jobs worse.
President Kennedy understood the principle of a rising tide lifting
all boats. Unfortunately, there are Members of this body today who seem
to think that if you cannot pick winners and losers you should not do
anything to try to improve the state of everybody. I think that is
wrong. I think there are people here who unfortunately have gotten into
this game that there always have been to be losers and
[[Page H5818]]
we must always defend the losers. That is simply not true. We have to
talk about expanding the pie for everybody. If we do, the American
people understand this.
If the gentleman could put up this last chart, I know the gentleman
wants to talk a little bit about the space race. There is an awful lot
of cynicism, Mr. Speaker, and I absolutely understand it. A lot of
times I tell people on my money it does not say, ``in Republicans we
trust,'' it does not say, in ``Democrats we trust,'' it does not say
``in Congress we trust.'' It says ``in God we trust.'' I do not ask
people to trust me, but I do ask them to trust themselves.
What we have put on here, and I hope people can see this chart, if
they want to know how much this tax package will benefit them, we have
a couple of web sites where people can actually call it up on their
computer. There is a GOP tax calculator, and hopefully they can see
that on their television. People can actually calculate the tax relief
for themselves: What does this package mean to me?
Do not worry about what it might mean to some wealthy investor who
may sell a large investment. Obviously they may get a tax break. But
what people really want to know is, what will it do for me? What will
it do for my family? If people look at this in those terms, they will
decide it is a fair tax package, it is good for them, it is good for
their family, and it helps them to save and invest for their future as
well as take care of their kids. I am very proud of this tax package.
Let me say one other thing. I have just written a letter to the
gentleman from Texas Mr. Bill Archer. The President and some of his
friends are saying this gives too much tax benefits to the rich, and
there are families at the lower-income levels who are working but yet
would not receive tax relief under this package. What we have done is
send a letter to the gentleman from Texas Mr. Bill Archer, and this is
from a recommendation from a gentleman who called in on C-SPAN.
He said, ``I understand what the Republicans are saying, only people
who pay taxes are going to get tax relief. But I kind of understand
what the President and some of the Democrats are saying, too, and that
is there are teachers just starting out, fire fighters just starting
out. Under the Republican plan they would not get much tax relief.''
He offered what I think is a simple and sensible compromise solution.
He said, ``Why do we not just say, let each family decide which package
gives them the best bang for the buck?'' In other words, if right now
they get a better deal under the earned income tax credit, they could
take that. On the other side, if they thought they got a better bargain
under the per child tax credit that the Republican conference committee
has worked out, they should take that. They could either have the
system under the earned income tax credit or the per child family tax
credit. Give them the best of both worlds. They could choose one or the
other.
I think that is a reasonable compromise. I would hope that the
conferees would at least look at something like that to try and break
this impasse, so that for the first time in 16 years we can actually
provide working families with real tax relief.
I know the gentleman wants to talk a little bit about, and I want to
give the gentleman a compliment, because he represents Cape Canaveral
and the space industry down there, and the gentleman does it very
admirably. Here recently we have heard a lot of interesting news about
the space program, both with the Mir Space Station that is up there
circling now, and we all hope and pray that that turns out for the
better, but more interestingly, what has been happening on the planet
Mars.
I know the gentleman has some great pictures that have come back from
NASA, and I yield to the gentleman to discuss some of those projects
that are currently going on at Cape Canaveral and with NASA in general.
I yield to the gentleman from Florida.
Mr. WELDON of Florida. I thank the gentleman for yielding, and I
thank him for being a space supporter. I know he has been fascinated by
some of these issues.
I want to talk a little bit about our Nation's space program and the
tremendous asset it is to America. We are a great Nation, 275 million
people, 50 States, from sea to shining sea. It is a very variegated
fabric of what makes up America. There are many great things that make
our Nation great. Our number one asset is obviously our people and the
people who make up so many of the great industries and institutions.
Of course, the space program has been getting a lot of attention
lately, particularly as it relates to exploration of Mars. I wanted to
talk a little bit about that.
Our space program is something that truly fascinates our children.
Teachers in my district tell me, if you want to get kids excited about
math and science and just why it is important and how it applies, just
start talking about the space program and you will get their attention.
Why is that? I think there is something that burns in the heart of
every human being, not just every American but every human being: a
sense of curiosity, what is our destiny. We all know we have explored
the world. There is much more to explore in this world, but we also
know that much of it has been explored.
What is man's destiny? Is it just to reside here on planet earth, or
is it to reach out and truly grasp the stars, to go to other planets,
to visit other stars, to explore new worlds, to some day colonize other
places in the universe?
If I could quote Neil Armstrong, his ``one small step for man,'' we
had a small step a few weeks ago with the Mars Pathfinder, an
incredibly successful mission, a mission that was launched from Cape
Canaveral in December of last year, and it arrived at the red planet, a
successful landing of the Mars Pathfinder vehicle shown here in this
diagram, or this is actually a photograph of Mars. This is a photograph
taken of the Sojourner, the vehicle that is able to go out and explore
around on the planet.
Mr. Speaker, I want to also show this very, very interesting
photograph. The Sojourner rolled off of the Mars Pathfinder and then
turned around and took a picture of the Mars Pathfinder, and here we
can see the Mars Pathfinder, and these bags that are around it are
actually deflated balloons.
The way that Pathfinder landed, once it came into the atmosphere
balloons all around the Mars Pathfinder blew up, and the thing actually
bounced on the surface something like 20 times and then came to rest.
Slowly the air was let out of the balloons, and the thing opened up and
out goes this rover.
Here we can actually see in this photograph the tracks that the rover
made in the surface of the planet. So it is a fascinating vehicle. It
is a tremendous success, something I think that everybody at NASA can
be proud of, particularly the people at JPL.
____________________