[Congressional Record Volume 143, Number 108 (Monday, July 28, 1997)]
[House]
[Pages H5897-H5904]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     THE BALANCED BUDGET AGREEMENT

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from New Jersey [Mr. Pallone] is 
recognized for 60 minutes as the designee of the minority leader.
  Mr. PALLONE. Mr. Speaker, I rise tonight, and we are in really the 
final hours of the budget negotiations with the balanced budget and tax 
cut plan close at hand, and as the final details are worked out 
concerning a number of issues, I want to, on the one hand, talk about 
some of the major achievements that I believe Democrats have succeeded 
in accomplishing if this budget agreement is finally concluded also 
talk about some of the things that I think that Democrats and the 
President need to continue to stand firm on to make sure that this 
balanced budget agreement, when it is concluded, is something that 
helps the average American, the average working American family.
  One of the things that I am most proud about is the fact that the 
President indicated very strongly today that the final agreement will 
contain $24 billion to expand health insurance for kids. Those of us 
who have been involved with this issue for a number of months, actually 
more than a year now, know that a few months ago when the initial 
budget agreement was

[[Page H5898]]

struck, the proposal was for a $16 billion plan that would guarantee 
coverage for about half or 5 million of the 10 million uninsured 
children that we have in this country. Because of the addition of the 
tobacco tax, which appears to be included in the final budget 
agreement, and the additional 8 cents that would be devoted to kids' 
health care in that, we now have a larger part of money, $24 billion, 
and this could actually accomplish, if it is used properly, providing 
insurance for even more than the 5 million kids that were initially 
promised.
  But I have to say that in order to make sure that that money goes to 
pay for kids' health care we have to make sure that the money is used 
by the States for insurance, that there is a good benefit package and 
that there are not ways for States to basically take the money and use 
it for other purposes.

                              {time}  2115

  In that regard, as the final details are worked out concerning 
children's health care, I just wanted to urge my colleagues to stand 
behind the stronger Senate proposal that covers more children, not only 
because it has the extra money available, but because it offers a real 
benefits package and insures that all the money set aside for 
children's health will in fact be used to provide children with health 
care coverage.
  Unlike the House Republican plan, which falls short on kids, the 
Senate plan uses the additional monies from the tobacco tax increase to 
cover probably twice as many kids. While Democrats see this legislation 
only as a first step in covering the 10 million uninsured children, a 
majority of the House Democrats joined me in signing a letter to the 
conferees and to the President outlining the same principles that the 
Senate language embodies.
  Republicans often cite the need to balance the budget for our 
children, and I urge them not to turn their backs on the Nation's 
uninsured kids. Let us support the Senate language. Let us make sure we 
have a good benefits package. Let us make sure we do not have a direct 
service option or a high direct service option that lets the money be 
used for purposes other than kids. Let us make sure that the States 
have to provide insurance for the kids and have to spend at least as 
much money as they have in the past, if not more, to make sure that 
there is adequate coverage for kids.
  The other thing on the tax side that I would like to talk about 
before I yield to one of my colleagues who has been here, the 
gentlewoman from Texas [Ms. Sheila Jackson-Lee], who has been here 
almost every night with me and on other occasions, talking about this 
balanced budget to make sure it includes the Democratic provisions, and 
to make sure it covers and provides tax cuts and benefits for the 
average working family.
  As I think many Members have heard, as my colleagues have heard, one 
of the Democrats' main concerns on the tax side of this balanced budget 
bill is that families that have children who are working but at the 
lower end, if you will, of the economic spectrum, but still paying 
taxes, still paying income taxes, still paying payroll taxes, that they 
get the advantage of the $500 per child tax credit.
  Again, it appears that the negotiators, in coming to a final 
agreement, are about to make sure that there is a guarantee that those 
middle-income families, those working families that pay income taxes or 
pay payroll taxes, that they will still get the child tax credit, even 
though they are also getting the earned income tax credit.
  This has really been one of the more divisive issues in the budget 
negotiations, and I just want to urge the White House once again to 
stand firm in defense of the Democrats' position on this. It really 
goes right to the core of what each party believes is the right thing 
to do.
  Just very briefly, Democrats believe that the right thing to do is to 
provide tax breaks to those who need them. With respect to the earned 
income tax credit, that means extending the proposed $500 per child tax 
credit to the 24 million working families that the Republican bill 
excluded. Under the tax plan that was pushed by the GOP, families with 
children that make less than $30,000 a year would not qualify for a 
$500 per child tax credit. The Republicans fashioned this tax plan so 
that would exclude these families from eligibility for such a tax 
credit because they do not make enough money. It is like a reverse 
Robin Hood doctrine. They would penalize the poor to benefit the rich.
  On the other hand, in the Republican plan we had major reductions in 
capital gains taxes, in indexing. We had major efforts to cut estate 
taxes for wealthy Americans. We also had the corporate alternative 
minimum tax that basically allows corporations to avoid tax liability.
  I think what is happening now is that the Democratic proposal that 
says that those families making less than $30,000 a year should be able 
to get the child tax credit, it looks like we are finally convincing 
our Republican colleagues, and the President is standing firm on that, 
but we have to keep repeating the point as we go down to the final days 
and hours of these negotiations.
  I yield to the gentlewoman from Texas [Ms. Jackson-Lee], who has been 
here, as I said, almost every night talking about why it is important 
to make sure that this budget deal is good for the average working 
family.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I thank the gentleman from New 
Jersey [Mr. Pallone] for his leadership. This has been a team effort in 
being persistent and consistent dealing with some very crucial issues 
that deal with Democratic constituency all over this Nation. In fact, I 
would like to say that this deals with what America stands for.
  The gentleman's commitment has been much appreciated. I have been 
delighted to join the gentleman on this, as well as to join the 
gentleman, along with my Democratic colleagues, on the letter written 
to the President to ask him to stand firm.
  As we speak, rumors are abounding that a deal has been cut. Many 
people ask why we are engaging in this discussion. It is this kind of 
discussion night after night and time after time that I believe brought 
this deal to where it is tonight. Whoever may think that closure is 
here, let me remind everyone that a vote has to be taken. We will 
continue to fight until we find out in final form that these issues are 
in these documents, concise and safe on behalf of all people in need in 
all of America.
  Let me also acknowledge ranking members, the gentleman from South 
Carolina [Mr. Spratt] and the gentleman from New York [Mr. Rangel], who 
worked with the President and the administration, because the gentleman 
is right, the gentleman from New Jersey. As we reminded the conferees 
and reminded the Republicans, we are not going to stand by and see 
kids' health care cut. We are not going to stand by and watch 10 
million children who are uninsured continue to be unempowered and in 
jeopardy because they have no health care, and continue to jeopardize 
young families who had no other resource to provide for their children.
  How many times did we hear the stories of young families saying, I 
could not have my children play in sports, or, I was afraid for them to 
play on the playground or do the normal things children do, because I 
simply did not have any child health insurance?
  I am very proud that we can emphasize as our victory the difference 
between 5.5 million children and 13 million children. It was the 
Democratic effort, the Democratic fight, the Democratic plan, that 
pushed the Republicans for a more expanded child tax credit, moving 
them from a mere 3.9 million families benefiting who made under 
$30,000, resulting only in 5.5 million children being impacted by the 
$500 per child tax credit, to a whopping 8.78 million families, but a 
whopping 13 million children that now would benefit by getting this tax 
credit. I think that is something that is directly attributable to the 
Democratic efforts.

  There is something very important to my community. I want to 
emphasize or at least raise this point because I am still going to be 
looking for the refinement of this issue. One is that we certainly had 
talked about capital gains, and there are some benefits here in 
bringing down the percentages from 28 to 20 percent. But there was a 
lot of discussion, particularly with the Black Caucus, about taking 
some of these funds and reinvesting in inner cities and rural 
communities. I hope we will

[[Page H5899]]

still have an opportunity to talk about reinvestment, for we are better 
when the infrastructure is as good as one's neighbor. I think we should 
not leave that point.
  Another point that I think is key is this whole question of welfare 
to work. We are very, very gratified that $3 billion has been set aside 
but, more importantly, that it will be controlled by the Department of 
Labor. People need to understand the distinction. That means we will 
not have any dipping in the pot.
  We voted on welfare to work, we voted on having Americans move from 
welfare to work, but we had our hands thrown up in the air because, of 
course, in the Republican plan there was not a sufficient amount of 
protection and cover and help for those who needed to move from welfare 
to work, some sort of support system.
  This system, I believe we can make it work. The Department of Labor, 
which is a job-generating department, with its commitment to moving 
women from welfare to work, and other recipients, and now that 
particular pot of money, controlled by cities where the welfare impact 
is most felt, that means that through the formula, the 75 percent 
formula process and 25 percent competitive, we can actually see on the 
ground efforts moving and helping these young mothers and other welfare 
recipients become independent, but through a dignified process, and not 
a process where their whole self-esteem is undermined.
  I have some concerns. I would like to raise these, too. I hope we can 
continue this discussion.
  As I said, for those who do not hear any joy in my voice, I have joy, 
but I recognize there is a vote coming up. We cannot advocate and 
abandon these issues before we get the final vote. I am gratified on 
the kids' health, gratified on the $30,000 a year families who will 
benefit from this tax credit who would not have benefited if we had not 
held to the line and fought the fight.
  But I am concerned that Texas is going to be unevenly impacted. My 
colleague, the gentleman from Texas, Mr. Gene Green, has worked very 
hard. I have joined him on this issue. That deals with privatization of 
welfare by giving it to large corporations, a very sensitive process 
with trained professionals.
  The law even states that this decision-making on who receives welfare 
or who does not is a governmental process, not a corporate process. 
Through the badgering of leadership in Texas, we now have been 
unfortunately driven in this legislation, the budget reconciliation and 
tax plan, to accept privatization in Texas.
  I am not willing to capitulate at this point. I am willing to 
continue to fight. We need to look at this language. We need to make 
sure that the large cities that are going to be so severely impacted by 
decisionmaking outside of the Government arena, in the hands of private 
entities, are not going to impact poor children and elderly citizens, 
the disabled, unfairly. I want the word to go out that we will continue 
to fight and ask the White House for language so we can look and see 
how we can solve this problem.
  Then finally, let me say that something the gentleman from New Jersey 
[Mr. Pallone] and I worked on together, that is the disproportionate 
share that not only Texas but many other States, and New Jersey as 
well, a lot of folk do not understand DSH as having any great impact on 
them, but it really does. It means that the fastest-growing States 
sometimes are penalized for their share of Medicaid dollars in terms of 
the structuring that has gone on.
  We have tried to work with both the administration and the conferees. 
I think we have moved in the direction where we are seeing sort of a 
3.5 percent response to this. Of course, everyone may not be made 
happy, but I think it is important that we do not unfairly burden those 
States that are growing and trying to receive their share of Medicaid 
dollars to help their public hospital systems.
  I have in my district a large share of the public hospital system in 
Houston. I know the service it renders. I know the budget constraints 
it is under. I realize that this process is extremely important. That 
is why I say this is an issue that we must keep under advisement and 
study over the next 48 hours, that we can ensure that we have a 
fairness in the DSH, or the disproportionate share of Medicaid 
distribution.
  All in all, as I see my colleague, the gentleman from Michigan [Mr. 
Bart Stupak,] as well has joined us, and I know how hard he has worked, 
but I think that clearly sometimes these voices of ours may sound as if 
they are ringing in a hollow tunnel. I am glad we kept ringing, and the 
reason is because there is no doubt that this legislation that is now 
at the precipice of a deal would not have been where it is today if we 
had not continued to pound and pound and emphasize that we were not 
going to sell out to special interests, but we were going to get those 
folk who could not be inside the circle, could not get a bus ticket or 
an airplane ticket to get up here to Washington and talk about hard 
working citizens, teachers, and police officers who make $30,000 a year 
or less, I am glad we stood on their side, along with those families 
trying to get their young people to college, with the HOPE scholarship.
  It is a better deal because of the Democratic alternative. I want it 
to be the best deal, and I think we need to keep working and fighting 
the fight until this gets final closure on the floor of the U.S. House 
of Representatives.
  Mr. Speaker, I thank the gentleman for the fight we have waged 
together, along with our Democratic colleagues, on this very important 
piece of legislation.
  Mr. PALLONE. Mr. Speaker, I just wanted to thank the gentlewoman.
  I was just looking at some of the worst features of the House and 
Senate Republican bills that we have been fighting against for the last 
2 or 3 months. Based on the reports that we have heard today about what 
the agreement finally will be, we do not know for sure, but we really 
have, as the gentlewoman said, made some major achievements in fighting 
against some of these worst provisions.
  Just briefly to give an example, the $500 per child tax credit, which 
we mentioned, really was not going to go to most families below $30,000 
in income. Now it will go to them. If they are paying income taxes or 
they are paying payroll taxes, they will still be able to take 
advantage of that $500 per child tax credit.
  Capital gains and indexing, if the gentlewoman will remember all the 
discussions we had about how the indexing provision caused the revenue 
loss to explode, and all this money going to wealthy corporations and 
families that would really explode the deficit, the indexing has been 
dropped.
  Education tax assistance, the GOP plans were far short of the $35 
billion in tax assistance that the President and Democrats had talked 
about now. They have agreed to that.
  Another example is with regard to the minimum wage. I think the 
gentlewoman mentioned that with the independent contractors, where 
people would be taken off their pensions and their benefits and not be 
eligible for minimum wage anymore because they were classified as 
independent contractors.

                              {time}  2130

  That is gone. Really important, with regard to Medicare, we had the 
Senate provisions that raised the age eligibility to 67, that had the 
means testing in part B, that had the home health co-payment, these 
things are all gone. Most important, what we already mentioned with the 
kids health care, that we shall now have a program that has a real 
possibility of insuring the majority of those 10 million uninsured 
kids.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, I think something very 
important that we do not tend to be associated with as Democrats, I 
hope all the small business owners and family farmers really pay 
attention to this legislation, because there is no doubt that on the 
budget and on the tax plan, the tax bill, that the Democrats came out 
on the side of small family farms and small businesses.
  I had my small business owners speak to me in the district and say, 
would we be willing to stand with them. We did, because the relief that 
we are getting for them comes much earlier than the relief proposed 
initially for them out of the Republican plan. I believe we have got it 
moved up to 1.1 million.
  I think that was something that the Democrats worked on, and I think 
it is

[[Page H5900]]

important to note that we are standing up for those who really make 
this country run. They are the engine of this country, small 
businesses, family farms. That is an important aspect of what we have 
worked on and what we can certainly take credit for, for helping those 
who did not have a real voice.
  Mr. PALLONE. Mr. Speaker, I thank the gentlewoman.
  I yield to the gentleman from Michigan [Mr. Stupak]. He has been here 
most nights arguing in favor of the average working family, both on the 
tax cuts as well as the entitlement provisions.
  Mr. STUPAK. Mr. Speaker, I thank the gentleman for yielding to me.
  It is great to join the gentlewoman from Texas [Ms. Jackson-Lee] 
tonight as we talk, hopefully within the few nights we have left we can 
move on to another subject, not that the subject is not important, but 
I think we are putting together a package, we are finally putting 
together a package, and I think probably within the next 24 or 48 hours 
we will have some agreement.
  I could not help but notice as I walked over the storm clouds are 
brewing over there over the Washington Monument. It is starting to rain 
a little bit. I hope, and I truly hope, that as we move forward with 
this spending bill and also a tax cut bill, we are not going to let the 
rain come falling down in the next 5 years, we have a 5-year plan and 
the outyears, it is a 10-year plan, where we have huge deficits like we 
have seen.
  This has to be a fiscally responsible and a disciplined budget, or we 
are going to be back to where we were when I came here in 1993. We had 
a caucus tonight. We had a little bit of an outline of the tax cuts and 
also some of the spending reductions. Our friend from Texas is very 
correct on the DSH payments, disproportionate share, those are 
hospitals who serve people who do not have insurance or the elderly who 
are on Medicaid or Medicare.
  So we, the Federal Government, give them extra money to pay for the 
cost that is not captured by Medicare and Medicaid or the no insurance. 
And States like Texas which have a high DSH payment structure, really 
get hurt hard, at least in the first spending bill we have seen. So I 
am glad you are watching that closely. You are correct, Mr. Green has 
been working with us in the Committee on Commerce to make sure that 
happens.
  As we look at this in the next 48 hours or 24-48 hours, I really hope 
we will not rush through this legislation. I really do not want us to 
go back to the days of spending money we do not have, giving tax breaks 
to corporations and other people that we really cannot afford.
  I just cannot say enough, that if we could get it structured, 
targeted so we do have children's health credit and it is children's 
health coverage, there are 10 million children in this country that do 
not have health care. And the original proposal was to make sure at 
least we got half of them covered with this proposal.
  The bill that went through the House only did 500,000, the Republican 
bill, 1/20 of what we were trying to do or 5 percent. And with the 
agreement or the discussions about maybe putting the tobacco tax back 
on, which would capture some more money so we can pay for the practice 
program, that is the way we have to do it. We have to pay for programs. 
We have to do it with new sources of revenue and not tap old sources so 
we do not start running a deficit.
  On education, you have the HOPE scholarships, the President has stood 
firm with the Democrats. We are going to try to put some money in 
there. But the $500 per child tax credit is really going to be sort of 
the hallmark.
  We have been here for a number of nights trying to argue that the 
people on the earned income tax credit deserve that tax credit. The 
Republican Party has said that those people who are on the earned 
income tax credit should not get a $500 per child, because all they are 
looking for is another welfare payment.
  Let me tell you, I have a person in my district who called me the 
other night. She has two children under the age of 18. Unfortunately, 
she is divorced. Her ex-husband is not real prompt on his child support 
payments. But she is a very hard working woman, works a full-time job. 
When she first got divorced, the best she could do was a $4.95 an hour 
job, 40 hours a week. That is not even $200 gross per week. Then she 
got a better job where she made $7 an hour. Even at $7 an hour, that is 
only $14,560 per year. Every time, whether it was the $4.95 job or the 
$7 job, every time she got a paycheck, what did we take from that 
paycheck?
  We took State taxes. We took Federal taxes. We took Social Security 
out, FICA to pay for the Medicare. So she was taxed as she went along. 
At the end of the year, if she was fortunate enough when she filed her 
income tax, she got the earned income tax credit which basically says, 
if you are below a certain level, we will give you back some money. It 
is usually about a $1,000 to $1,500, depends on where you fall on your 
wages.
  What did it do? She said, I resent the Republican Party saying I am 
looking for a welfare handout. I was never on public assistance, even 
though I had two children. I was supporting them. My ex-husband was not 
real prompt on his child support payments, but I never went on public 
assistance. I worked. And I got a little helping hand from the 
Government. Not a handout, but a helping hand. And what it allowed me 
to do, she said, I remember 1 year very distinctly. She now has a good 
job and does not qualify for the earned income tax credit. She said, I 
remember 1 year, I usually used that EITC to catch up on my bills, but 
1 year I used it, caught up on a couple bills, but I bought four tires 
for my car so I could travel back and forth to work so I could continue 
working so I could stay off public assistance.
  So I advised this young lady that we, the Democrats, would stand with 
her. And night after night we are going to be down here advocating that 
everybody who has a child should be entitled to that $500 per child tax 
credit, if you are making less than $75,000. That is the Democratic 
plan. We hope we will stand with her.
  But as I came over, I mentioned the storm clouds on the horizon. That 
is the way I see this budget. If you go back, I know the gentlewoman 
from Texas [Ms. Jackson-Lee] came after me and the gentleman from New 
Jersey [Mr. Pallone] was here before me, I came in in 1992. That was 
the year, if you remember 1992, the first year President Bill Clinton 
was elected. What happened in 1992. Remember that?
  In 1992, we inherited an economy that had barely grown. There were 
very few jobs being created. The deficit had hit a record level. Mr. 
Boskin, who was Mr. Bush's economic advisor, I still have the report, 
the week before President Clinton took office Mr. Boskin predicted the 
deficit would be $322 billion.
  Real business investment in equipment and everything else was way 
down. It was growing at only about 2 percent a year. Savings and 
investment was down. Consumer confidence in the economy was down. 
Interest rates were rising. A 30-year Treasury note was over 7.5, 
almost 8 percent in 1992. Unemployment was higher than it had been in 
the 1990-1991 recession. Incomes were stagnant. Real average hourly 
earnings fell about 7 percent in this country. Remember, it is the 
economy, stupid, that is what they told us in 1992.
  So what did we do? We got Mr. Boskin's report. Those of us who came 
in in 1993 with the new President, January of 1993, when President Bill 
Clinton took office, the deficit was $322 billion. We said, we have got 
to get at this. We would like to give the middle class a tax break, but 
right now we have to get our fiscal house in order. In 1993, he worked 
with Congress to enact an economic program which would lower our 
deficits and put more investment in hard-working Americans in this 
country. The plan was passed in Congress with only Democratic support.
  Ms. JACKSON-LEE of Texas. Mr. Speaker, if the gentleman will continue 
to yield, that is an excellent point. That was a very hard time. There 
had to be believers in order to come to grips with a very difficult 
decision. That is, a tax increase.
  We can now look back and say the words ``tax increase,'' nobody wants 
to say that, and not a tax cut. Now some 4 years later, we are standing 
on, you made a very valid point, we have to be very cautious, we cannot 
throw caution to the wind, but we are standing

[[Page H5901]]

on an economy smart. We said the economy stupid, but we are standing on 
an economy smart. I think that is an important point, one that is 
growing and that we have to watch.
  Mr. STUPAK. In the 1993 budget vote, probably those of us who lived 
through it probably know it better than any of them, there were 60 some 
Democrats who came in with me, and after that vote my class now has 
maybe 40 Democrats left. We lost about half our Democrats. It was a 
tough vote. We did raise taxes on those whose gross income was more 
than $180,000. I can tell my colleagues, in my district in northern 
Michigan, that is 1,170 families, with the money we taxed, those we 
asked to pay more, the higher income folks. Over 32,000 families in my 
district got the earned income tax credit that I spoke of a little 
earlier. So we taxed those, we asked those who could give us a little 
more to give it. We helped invest in our people.
  Since then the deficit has fallen dramatically. In fact, at the start 
of this year it was about $70 billion. When we close our books here on 
September 30, 1997, it will be approximately, some people predict, as 
low as $35 billion, basically no deficit whatsoever. So we have cut the 
deficit with the help of the President and just Democratic votes by 
over 90 percent in less than 5 years.
  We have the smallest deficits since 1980. And as a percentage of our 
gross domestic product, it is the smallest it has been since 1974. In 
fact, the deficit is less than 1 percent of our gross domestic product 
here in 1997.
  So if you take a look at it, this deficit reduction was based on the 
Democratic plan. Now the GOP gets up, the Republican party gets up and 
says, we passed these budgets and that is what got everything down. 
Since they have taken over majority party, they have not passed one 
budget yet. We have been living on continuing budget resolutions, 
continuing on the same budget, the same plan that the Democrats passed 
in 1993.
  They have not passed a budget yet. I predict this year, even with 
this budget agreement, we probably still will not pass a budget because 
we will get hung up on some things. As you take a look at it, what has 
really happened? Not only did we raise some revenues and invest it in 
people here in this country, but we also, the public sector is much 
smaller.
  We moved forward to cut over 350,000 Federal employees with early 
retirements. We have the smallest Government since the days of John F. 
Kennedy in 1960. Since 1960, our people in this country, 130 million 
people, we are now over 260 million people so we doubled the number of 
people in this country who rely on services from the Federal 
Government, but we have the smallest Federal work force serving twice 
as many people since the days of John Kennedy. So we really did a 
yeoman job in doing this.
  But I am concerned that having done 90 percent of the work, we need 
to finish the job. And I do not want to rush into this agreement that 
is being put together, because we have to take the opportunity now to 
finally eliminate not just the deficit but the structural deficit so 
that we will be able to run surpluses in good economic times instead of 
deficits like we still are today and stay at least in a balanced budget 
during times of recessions.
  If you look at it, we have got to make sure any agreement makes very 
important investments in policy choices for our Nation's economic 
future. We need the savings and reforms that are in the spending bills, 
whether it is DSH payments or whatever it might be, to address the 
Nation's long-term budgetary challenge, past the 1998 election, past 
the election of 2000. If it is going to be a 10-year plan, let us look 
at it for a full 10 years and make sure we address our Nation's long-
term budgetary challenges and needs.
  We are within striking distance of a zero deficit, a balanced budget 
the first time since 1969. It is not time now to abandon the 
responsible, effective strategy we put together in 1993. It cost us. It 
cost us Members and a lot of people questioned what we were doing. But 
it has worked, and it has worked well.
  So as we go here in the next 24, 48 hours and reach this agreement, 
let us reflect on where we have been for the last 4 or 5 years. Let us 
reflect on those days of the high deficits of, again, when President 
Bush left office, 322 billion, and how did we get it down here and make 
sure that the fiscal responsibility that was put in place in 1993 
continues not just for today but for tomorrow and for our future.
  I am very pleased to join my colleagues here tonight and hope those 
folks who are Members in their offices and around this country 
listening to us tonight, ask that question, where is this agreement 
going to be in 4 or 5 years? Let us make sure it does not explode out.

                              {time}  2145

  As I walked over, I could see those storm clouds. And I could also 
see those storm clouds in this budget. And we have to be cautious in 
how we do it.
  We have a line item veto. The first time ever the President has had a 
line item veto. That has been challenged in the courts. We have a 
number of issues that could turn this economic plan on its ear, and it 
is our responsibility, those of us who have the vote, to make sure it 
does the right thing.
  So I am very pleased the President is standing tough, that we are 
going to provide some health care for children in this country, 
education, and give them some hope to get a college education, and a 
$500-per-child tax credit, including those people who earn the earned 
income tax credit.
  I am proud to stand with the gentleman. And those are our parameters 
on the budget cuts, and let us make sure the future is just as bright 
as tomorrow is with this budget agreement.
  I thank the gentleman once again for his leadership on this issue.
  Mr. PALLONE. Well, I thank the gentleman, and I wanted to follow up 
on some of the points that the gentleman from Michigan made, and that 
is with regard to the President.
  If my colleague would remember, I think it was a week or two ago when 
the Treasury Secretary, Robert Rubin, who appeared before our caucus, 
also sent a letter to those who were negotiating the budget in the 
final weeks, and he outlined four key tasks for any tax bill.
  Just to go over those briefly, one was no exploding deficits. Of 
course, the indexing for capital gains is a big factor, and that is now 
gone from what we hear. Then he talked about a fair balance of benefits 
for working Americans. And, again, we have been pushing for the child 
tax credit to be available to the majority of those people who are 
working, who are under $30,000 but they are working and paying taxes.
  And the third one, and I wanted to just mention this because I know 
the gentleman from Michigan and the gentlewoman from Texas have talked 
in the past quite a bit about the education tax aspect of this, he said 
in the letter that the tax cuts have to encourage economic growth. He 
stressed that the most important point in that regard was to make sure 
that our children are well educated in an ever-increasing global 
economy as we approach the 21st century, and that that was a Democratic 
priority, and that the Republican proposal neglects the commitment to 
education and instead offers broad-based tax breaks to wealthy buddies 
who want to make a killing in the stock and bond market.
  Well, one of the things the President insisted on and the Democrats 
insisted on was that this $35 billion be available as part of the tax 
package for education tax credits. And that, from what I understand in 
terms of what the negotiators have agreed to, is part of the final 
agreement.
  It was interesting, because today in my local newspaper, this is a 
syndicated column that I am sure appears in various papers around the 
country. Actually, it is not, it is written by Robert Reich and John 
Donahue. Robert Reich, of course, was the Secretary of Labor, and John 
Donahue was counsel to Reich in the first Clinton administration.
  It says, ``What should be first in line for tax breaks: education, 
capital gains or estates?'' And it says ``the Clinton administration is 
sticking to the late-spring deal it struck with Congress: $35 billion 
earmarked for incentives linked to education.''
  And why? I just thought it was very interesting, just briefly here, 
because it says that ``While there's no consensus on the effects of 
preferential tax rates for capital gains, the best prediction is 
little, maybe no, net increase

[[Page H5902]]

in savings and investment, a lot of maneuvering by accountants and 
lawyers to relabel income as capital gains and a sharp rise in the 
after-tax income of a tiny, wealthy slice of the population.'' But the 
benefits of education tax incentives are focused on working families.
  And basically what we are choosing between is middle class tax relief 
that rewards and encourages investments in America's earning power, as 
opposed to these sterile tax breaks that will deepen the divide between 
the very wealthy and the rest of us.
  I think it was very important throughout these negotiations that the 
President and the Democrats insisted on these education tax breaks 
because of the investment aspect, because of what it means to the 
future of the country, and I know both my colleagues have talked about 
this in the past.
  Mr. STUPAK. If the gentleman would yield on that point, even if we 
put it in everyday terms, we have to remember the HOPE Scholarship is 
not just going to 4 year colleges but 2-year colleges or to go in some 
worker training program. An individual can get up to $1,500 underneath 
the President's HOPE Scholarship plan.
  I have two sons, my oldest son, Ken, will be graduating here in 1999, 
and he is a smart young man and he is going to do quite well in college 
and forward. But if we take a look at it, when he starts working in his 
adult life, it is estimated that he will have to change jobs at least 
eight times in his working career. Eight times.
  He is a very smart young man. Nothing wrong with his ability to 
learn. But the technology is moving so fast that those who begin 
employment in the year 2000, their jobs will become outdated. Outmoded. 
Technology is moving so fast, the job that people have today will be 
outdated and gone tomorrow. So they will need the education skills 
along with the social skills to adapt in an ever-changing society.
  So education is an investment. It is an investment in our future. And 
our children will need those educational skills, whether they are going 
to 2-year colleges or some other training programs or worker incentive 
program or worker enhancement programs so they can stay ahead of the 
curve. So as their job is outdated because of technology, they can 
adapt to tomorrow's world and continue to be a breadwinner and help out 
their family and pay their taxes and everything else.
  I say that half jokingly, but why has this economy done so well? 
Because people pay their taxes and we have revenues coming in, and, 
again, going back to that budget plan. So investing in the future is 
really a current investment in today's education, and will prepare us 
for tomorrow in that ever-changing world and the technology that will 
outdate our jobs, because the jobs that we have today will be outdated 
tomorrow.
  So it is a good point the gentleman makes, and I wanted to bring it 
more into the workplace setting, that education that we will need. 
Anything we can do at the Federal level, we should and we must.
  Mr. PALLONE. I am glad the gentleman brings that up, and if I can 
quickly just mention that job training is just as important an aspect 
of that. What it points out in this article, again, this is in my home 
paper, the Asbury Park Press, is that most students still are paying a 
majority of their tuition bills with their own money. So when we talk 
about these tax incentives or tax credits, they really make a 
difference.

  My understanding is, based on what we are hearing, and again we do 
not have a final document, but what I understand is that of this $35 
billion which is now agreed to, that the President insisted on we have 
a credit of 100 percent of the first $1,000 tuition and fees, and that 
is in the first 2 years, and then 50 percent of the next $1,000 in 1998 
through 2002.
  And if a student is not eligible for the HOPE Scholarship but is 
pursuing a postsecondary degree or a certificate or enrolled in a job 
skills program, a 20 percent credit for tuition and fees up to $5,000 
through the year 2000 and $10,000 thereafter is granted.
  I think the agreement also adopts the student loan interest 
deduction. So there are a lot of incentives in there for people paying 
for tuition out of their own pocket, which most people still do.
  Mr. STUPAK. On the tuition part, is the gentleman saying there is 
going to be a look-back provision for those who already have a 
guaranteed student loan or who are paying off their college loans? Even 
if they are not in college now, let us say they graduated last year, 
are they going to be allowed to look back and at least take off that 
interest?
  Mr. PALLONE. No, I cannot say that, but I think what the gentleman is 
seeing here is not only the HOPE Scholarship but also this 20 percent 
credit for tuition and fees, and then they will be able to deduct the 
interest on a student loan.
  Mr. STUPAK. Interest on the future loans?
  Mr. PALLONE. I think so.
  Mr. STUPAK. I know that is a part that is not clear in the budget 
agreement. Hopefully, it is something we can look at. I am sure when 
the gentleman gets back in his district, as in my district, a working 
class district, many people ask me, ``My son just graduated or my 
daughter just graduated from college, and, geez, I have all these loans 
and paying interest on it, can I at least get that deduction?''
  So far I have not seen it, and I just thought maybe I missed 
something at the caucus today and thought maybe the gentleman picked up 
on that.
  Mr. PALLONE. Again, as the gentleman knows, we do not know what is in 
the final agreement, but my understanding is the President insisted on 
those provisions and that they are in there.
  Ms. JACKSON-LEE of Texas. If the gentleman would yield, I would like 
to challenge sometimes the interpretation made globally about the 
Democrats and their fight for those who make less than $50,000 a year.
  I am proud of that fight, but I think it is important when we discuss 
the issue of capital gains and who gets capital gains to sort of put 
this whole issue in perspective, particularly around this very 
explosive and booming economy, because that is what it is.
  Just a couple of weeks ago the headlines read that the Dow had 
reached 8,000 points. So I do not think that we should in any way feel 
intimidated about allegations that the Democrats are not respecting 
those who have invested in this country and helped by their wealth to 
make this country great. The atmosphere and the economic climate has 
helped to make those who are in business strive and thrive and be 
prosperous.
  It is important, then, that we emphasize the importance of the great 
equalizer, and that is an education. The distinction between how we 
started out with the HOPE Scholarship versus the Republican plan, which 
was to say to those who were already wealthy, ``It is all right, you 
can do an IRA, a savings account, and you can then take a tax deduction 
when your children are ready to go to college.''
  That does not fare well for the average teacher, the working bus 
driver, police officer, who, by the best of what they can do, they have 
to spend as they go. So there is a time when their youngsters come up 
to the time for college and they are looking for monies. They do not 
have savings.
  This HOPE Scholarship, what we fought so hard for, says to them that 
they get that right then and there. They do not have to save the 
$1,000, they do not have to have put away that money in an IRA. It 
simply says that they will get a HOPE Scholarship. And in particular, 
having given the graduation speech to our Houston community college 
system, where almost a thousand graduates graduated in 1997, this 
$1,000 dollars for the first year and $500 for the next year or $1,500 
is a real boost for working class families.
  I think that when we debate the bill as it ultimately may come to the 
floor, I think it is key that we understand the principles by which the 
Democrats have been guided, and that is kids' health, not $16 billion 
but $24 billion for those 10 million uninsured children who are in 
every one of our districts all over this Nation; and then to recognize 
something very important, that this welfare plan that came unsupported 
with compensation to make it work, now we have a real commitment to 
expend $3 billion in and around our communities.

[[Page H5903]]

  I hope our churches, and I see that there are members here from the 
National Church Usher Convention from Houston, TX, and I know how hard 
our churches have worked with me, and they have worked in order to help 
their members who are falling on hard times move from dependence to 
independence. We now have $3 billion that makes the welfare-to-work 
program actually work. It actually gives training a leg up. I hope that 
our communities will be taking advantage of this money that will come 
down to help train individuals to let them work.
  One thing that was really, I think, a tragic reflection on our 
respect for working people was this whole concept of independent 
contractors that took away from individuals the benefits of the various 
coverage that one gets when they are working in their job. If they were 
an independent contractor, they had no health benefits, they had no 
vacation time, they had no overtime.
  We were able to get that out. I think that is extremely positive for 
working Americans. They did not realize what was getting ready to hit 
them. They might move in jobs eight to ten times, but I can tell my 
colleagues that if we were an independent contractor and did not really 
have a job that was secure, we would not feel very good about being 
able to protect our families.
  So I think that we can take great comfort in things that working 
Americans can be gratified for, and that is, of course, the health 
care, the welfare-to-work and certainly the HOPE Scholarship.
  And in taking up my colleague's admonition that we must be cautious, 
I do believe that we should watch the storm clouds that are off to the 
side, and that is why I said that we have 48 hours to ensure that when 
we ultimately cast a vote, these items that we have mentioned here this 
evening, DSH, and I will mention it again, protecting our county 
hospital systems and the individuals who go to these systems, who are 
unable to pay the extra cushion that is needed in order to provide the 
money so that they can have coverage by Medicare and Medicaid, if they 
do not have health insurance, and that is still a lot of people.
  And then just for Texas, this whole question of privatizing health 
care and not allowing those sensitive social workers and government 
employees who have been working on this to be able to make the 
determination of our citizens, whether they are deserving of welfare in 
times when they have fallen on hard times, and putting it into 
computerization, that will be a fight that I will continue because I do 
not see any sunshine at the end of the tunnel.

                              {time}  2200

  But I do think that this fight has been one that we can claim at the 
juncture a quiet victory until we get the last and final word. We have 
been able to stand up for those working families.
  I feel proud that families who have made a commitment to stay off 
welfare may be making $30,000 collectively, two wage earners, that we 
have taken the terminology, the accusations that they are on welfare 
and do not deserve these tax cuts, we have taken that out of the mouths 
of Republicans. We have removed that sort of cancer that was really 
impacting this debate, and acknowledge that these citizens making 
$30,000 or under $50,000 deserve our respect and appreciation because 
they help to build this country and they deserve a $500 a year tax 
credit for their children. And I am very proud to stand up and say it 
was because of our fight that they got that tonight.
  So I want to thank the gentleman from New Jersey [Mr. Pallone] again 
for his leadership on this issue and, likewise, will join him tomorrow 
in debate and over the next 48 hours to ensure that the clock does not 
turn back on the fights that we have made over these last couple of 
months. There has been some hard fights, but I think we ought to 
applaud the conferees, the gentleman from South Carolina [Mr. Spratt], 
the ranking member, and the gentleman from New York [Mr. Rangel], 
members of the Committee on Commerce, and all others who have continued 
in this fight to ensure that we never slip for a moment.
  So I thank the gentleman from New Jersey [Mr. Pallone] clearly for 
his efforts, and I look forward to working with him as we watch these 
next 4 hours.
  Mr. PALLONE. Mr. Speaker, reclaiming my time, I want to thank the 
gentlewoman from Texas [Ms. Jackson-Lee], and I know that both she and 
the gentleman from Michigan [Mr. Stupak] stress the fact that we do 
have to watch what is going on here in the next 48 hours.
  One of the things that we both talked about tonight and we are very 
happy about is the kids' health care initiative, because now it is up 
to $24 billion because of the addition of the tobacco tax. But I have 
to say that in discussions, in debate over the last several months on 
the kids' health care issue, one of the major concerns of House 
Democrats, including myself, and we have a health care task force 
amongst our Democratic Caucus that has articulated this, one of the 
major concerns is that this money not be drained away and used for 
purposes unrelated to insuring kids.
  In one of the aspects of this that we will be discussing and we will 
be insisting on, and I believe that the White House has been insisting 
on, is to make sure that built into this program to insure these 
children at the cost of $24 billion that there are safeguards so that 
in fact the money is used to insure kids.
  The Senate version of this bill was a lot better than the House 
version, and particularly the House version that the Republicans 
reported out of the committee, the Committee on Commerce, and many 
Commerce Democrats were very critical of the lack of safeguards for how 
this pot of money would be used for kids' health care.
  Just to give some examples, there was in the House version what we 
call a direct services option that would have allowed the pot of money 
available for kids' health care when it went to the States to be used 
not to actually insure kids but to be used for certain services that 
they may or may not use.
  For example, money could have gone to children's hospitals but there 
may have been a lot of the uninsured kids that never went to the 
hospital or never were able to take advantage of the services of that 
particular hospital, and they would not be insured pursuant to this 
direct services provision but just get services for certain purposes of 
the hospital.
  Well, that was not acceptable to many of us, and we kept insisting on 
the Democratic side that the direct services option be eliminated or 
certainly curtailed. My understanding is that it has been curtailed. I 
do not know exactly if there is talk that it may be as low as 10 
percent at this point. I still think that is too much. But nonetheless, 
by eliminating or cutting back on the direct services option, we are at 
least moving in the direction of what the Democrats have said needs to 
be done.
  The Senate language actually says that States have to provide 
insurance either through the traditional Medicaid program or through an 
alternative State insurance program and that they have to do what we 
call maintenance of effort, meaning that States have to at least 
provide as much money to pay for kids' health care as they have in the 
past.
  Well, if those provisions are in the final bill that we vote on here 
in the next few nights, and we are told that the Democrats and the 
White House have been pushing for that and that is likely to be the 
case, then we will at least know there are safeguards built in that 
most of this money will go towards actually insuring children.
  Another major issue was the benefits package. We can say we are going 
to have $24 billion available to insure children, and we can say that 
they have to be insured in some way; but if we do not have an adequate 
benefits package, then a lot of them may not get certain services. Our 
understanding is that the White House has insisted on the benefits 
package similar to what was in the Senate version, which is similar 
essentially to what Federal employees get.
  So a lot of the devil, so to speak, is in the details. We do have to 
make sure over the next 48 hours or so that these safeguards are built 
into the kids' health care program so that this money is actually spent 
to insure kids. These are the types of things that we have been talking 
about all along on a number of the tax cut provisions, as well as the 
spending provisions, the balanced budget agreement.

[[Page H5904]]

  I just must say that, although we are still weary about what finally 
results, Democrats can take a great deal of pride in the provisions 
with regard to kids' health care with the coverage now for the child 
tax credit, with the education tax credits, and with so many of the 
other things that we have been talking about all along that should be 
included in this tax cut package and in this spending bill to make sure 
that the benefits go to the average working American.
  Mr. Speaker, I yield back the balance of my time.

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