[Congressional Record Volume 143, Number 111 (Thursday, July 31, 1997)]
[Senate]
[Pages S8404-S8406]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
BALANCED BUDGET ACT OF 1997
Mr. DODD. Mr. President, with today's passage of the Balanced Budget
Act of 1997, the Senate has taken a historic step toward ensuring the
long-term solvency of the Medicare program.
I am pleased that many of the provisions that I found to be so
objectionable when this bill first came to the floor of the Senate one
month ago, have since been removed. In stating my reasons for
originally opposing the bill, I shared my deep concern over the
proposal to raise the age at which individuals are eligible to receive
Medicare from 65 to 67. The likelihood of these seniors finding
affordable private insurance would have been slim--many would have been
forced to forego coverage. It was a wise decision on the part of my
colleagues serving as conferees on this bill that they did not decide
to exacerbate the current problem of lack of health coverage for early
retirees further with this measure.
I am also pleased that a provision that would have required the
poorest and sickest seniors to pay up to $700 a year in home health
costs has also been dropped. Looking to the most vulnerable Medicare
beneficiaries to shoulder this level of cost under the guise of
addressing the long-term financial challenges of this program would
have been indefensible.
In addition to the removal of these onerous provisions, this
legislation has been improved since the vote in the Senate by the
commitment to continue Medicaid coverage for the 30,000 disabled
children who will lose their Supplemental Security Income benefits as a
result of eligibility changes in the welfare reform bill enacted last
year. This provision, which was highlighted as a priority in the
original budget agreement between President Clinton and Congress, was
noticeably absent in both the House and Senate bills. Along with
Senator Conrad, I offered an amendment to continue health insurance for
these children and was disappointed to see it fail by only nine votes.
However, I am grateful to the conferees that protection for these
children of working poor families was achieved in the conference
negotiations.
This legislation will also significantly increase health coverage for
children who currently lack insurance. We certainly have come a long
way on this issue since the debates of earlier years. Even as recently
as last year, the question was still whether or not to provide health
insurance to our nation's children, rather than how we might accomplish
this admirable goal. By adopting the Senate provision, which calls for
$24 billion for this new initiative, we can now offer the hope to more
than seven million children that cost will not be a barrier to securing
health care.
Of course, I am disappointed that the important and courageous
attempt to ask those Americans who can afford to contribute a little
more for their health care to do so was dropped. It is important to
remember that only the wealthiest 8% of seniors would have seen a rise
in their premiums. I maintain my conviction that the adoption of means
testing of Medicare premiums was a step in the right direction toward
the long-term solvency of the critically important safety net that
Medicare provides to millions of senior citizens.
I also continue to have significant concerns about the reductions in
Medicare and Medicaid payments to hospitals and managed care
organizations. In order to ensure that our nation's seniors and lower-
income citizens receive the affordable and high-quality
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care they need, health care providers must continue to be adequately
funded. I am particularly concerned about the reduction in payments to
teaching and disproportionate share hospitals. These hospitals serve a
population that is sicker and poorer than most hospitals. Reduction in
payments of this magnitude threaten the ability of these hospitals to
continue to serve as a safety net for the most vulnerable in our
society.
In addition, I am concerned about the impact of the new HMO payment
structure on low-income seniors who selected managed care plans because
they truly need the additional benefits and low out-of-pocket costs
that these plans can offer. These seniors cannot afford the high
deductibles and copayments of Medicare fee-for-service, nor can they
afford to purchase expensive Medigap coverage. While I am pleased that
Congress has attempted to provide more health care choices for Medicare
beneficiaries, I believe that without adequate funding, these choices
will not be viable ones.
Despite these concerns, this legislation goes a long way toward
providing many of our nation's citizens with the care they need and
expect from Medicare. I view it as an important step toward ensuring
that Medicare is here to serve future generations of Americans. It is
for this reason, Mr. President, that I am pleased to support the
Balanced Budget Act of 1997.
Mr. SMITH of New Hampshire. Mr. President, earlier this week, the
White House and the Congress reached a historic agreement that will
balance the budget by 2002. Today, I rise in support of the portion of
the deal that provides tax cuts to American families and small
businesses: the Taxpayer Relief Act, H.R. 2014. After enduring sixteen
years without any tax relief, Americans will finally benefit from tax
cuts that will affect many aspects of their lives. Under our tax
package, not only will taxpayers immediately see their tax bill go
down, but saving for retirement, paying for college, and investing for
the future will be much easier. I am encouraged and pleased that the
Republican-led Taxpayer Relief Act provides $95 billion in tax cuts
over five years and represents an improved standard of living for
taxpayers at every stage of life.
This tax relief comes at a time when the nation's tax burden is at an
all time high. Partly due to President Clinton's tax hike back in 1993,
today's taxpayers face a combined federal, state, and local tax burden
of nearly 50% of their income--more than the cost of food, clothing,
and shelter combined. In fact, for every eight hours of work, the
average taxpayer spends about three hours just to pay the tax
collector. And too many families could not survive without two incomes
just to make ends meet. We cannot let this situation continue. By
letting hard-working Americans keep more of their own money, we allow
them to preserve their family, prepare for their own future, and invest
in the nation's economy.
The future of the family. I can no longer stand by while families in
New Hampshire lose more and more time together because they have to
work longer and harder to send their pay to Washington. The Taxpayer
Relief Act addresses this growing problem in several different ways.
First, taxpayers with young children will get a $500 tax credit for
every child. In 1999, a middle-income family in New Hampshire with two
young children will save $1,000 with this credit! Second, the tax
relief measure reduces the capital gains rate for taxpayers who invest
for their future. If the same New Hampshire family realizes $2,000 in
capital gains to help pay for college or buy a home, they will save an
additional $100. It would also be easier for this family to sell their
home, as the tax package exempts $500,000 of capital gains on the sale
of a principal residence. Equally important, this tax cut benefits
their grandparents since many senior citizens depend on capital gains
as a primary source of retirement income. Since 56% of taxpayers with
gains have incomes of less than $50,000, and the percentage of families
who own stock has increased from 32% in 1989 to over 41% today, many
Americans will welcome this revision.
Our plan also offers relief to parents who face higher expenses as
their children grow older. Families can save for higher education by
taking advantage of the plan's education accounts, penalty-free
withdrawals for education, or popular tax-free prepaid state tuition
plans. When the student reaches college, parents receive a HOPE tax
credit for tuition and related expenses for four years of college. In
the first two years, for example, parents can receive a tax credit up
to $1,500 to help pay for their child's education. These provisions
help parents in New Hampshire face the challenge of saving and paying
for higher education in order to invest in a brighter future for their
children.
Preparing for the future. Our savings rate is one of the lowest of
all industrialized nations partly because too many Americans find it
difficult to save for retirement and pay high taxes. Under our Taxpayer
Relief Act, individuals planning for retirement will benefit from
expanded Individual Retirement Accounts (IRAs). Specifically, we
created a new ``back-loaded'' IRA--contributions are not tax-
deductible, but withdrawals upon retirement are tax-free if the account
is held for at least five years. Once the IRA is established, penalty-
free withdrawals are allowed for a first-time home purchase or for
higher education expenses. In addition, thanks to the efforts of
Senator Judd Gregg, the bill allows non-working spouses to contribute
to an IRA whether or not the working spouse is already in an employer-
sponsored retirement plan. As a result, a New Hampshire couple can make
a yearly tax-deductible IRA contribution of $4,000, rather than just
$2,000. After 35 years at a 7.5% rate of return, they will have saved a
nice retirement nest egg totaling $617,000!
Investing in the future. Fortunately, small businesses will finally
get a well-deserved break under the Taxpayer Relief Act. Under the
bill, the home office deduction is expanded to help people who work at
home. In addition, the increase in the health insurance premium
deduction for self-employed individuals is phased in more quickly,
rising from 40% this year to 80% in 2006. And by 2007, the premium is
fully deductible. Most important to many New Hampshire families I talk
to, the estate tax changes also help small businesses. Now, parents who
wish to pass on their small, family-owned business or farm to their
children can do so knowing that the first $1.3 million will be excluded
from the extremely high inheritance tax.
Finally, the tax package addresses the need to encourage saving and
investment by cutting the capital gains rate from 28% to 20% (and from
15% to 10% in the lower bracket) for sales after May 6, 1997. The
current high rates discourage the risk taking and creativity necessary
to achieve increased productivity and prosperity. A lower capital gains
rate, however, will make it easier to free up capital to invest in
research, technology and equipment; increase worker productivity; and
ultimately create higher paying jobs. Without a doubt, this pro-growth
initiative will enhance U.S. competitiveness.
I wish I could report the same degree of satisfaction with the final
version of the social spending component of this effort. When I voted
for an earlier version of this portion of the package, I did so with
the hope that the conference negotiations would result in its
improvement. I regret that the social spending provisions produced as a
result of negotiations with President Clinton failed to live up to that
hope.
The conference report on H.R. 2015 contained many valuable
provisions. I am pleased that Medicare beneficiaries will have more
choice about the type of health care delivery plan in which they will
be enrolled, including--for 390,000 seniors--the option to open Medical
Savings Accounts. I welcome the creation of a bipartisan commission to
address Medicare's long-term problems. And I believe that the effort to
reform Medicaid undertaken in H.R. 2015 is overdue.
Unfortunately, however, H.R. 2015 fails sufficiently to move toward
the fundamental, structural reforms in Medicare we all know will be
required to ensure the retirement security of future generations.
Furthermore, I had serious concerns about the fiscal and social damage
we risk doing by retreating from welfare reform and by creating new
entitlement, particularly a flawed child health entitlement which
some--inside and outside of government--plan to use as the foundation
of
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a government-run national health care system. Ultimately, these
reservations dictated a vote against this portion of the legislation.
I have been a strong advocate for a balanced budget, tax relief, and
entitlement reform for the past thirteen years and I am elated that we
have finally made it here. I support the tax cut portion of the
Balanced Budget Act, which provides $95 billion in tax cuts for
American families including a $500 per child tax credit, tuition tax
credits, IRA expansion to include non-working spouses, a capital gains
reduction to create jobs, and reductions in the inheritance tax. These
initiatives are long overdue, and I am proud to be an early and vocal
supporter of tax relief. However, I am concerned that the spending
portion of the budget deal creates a new entitlement program, threatens
to move us toward government-run health care, and significantly
increases social spending which could negatively impact the Balanced
Budget Agreement.
Given that President Clinton submitted a budget earlier this year
which would have added $200 billion to the deficit, the Republican-led
Congress can take pride in this final agreement that implements the tax
cuts fought for by our party for so long. The Tax Relief Act will help
American families keep more of what they earn, save for their
retirement, and promote job creation and economic growth. I support a
balanced budget and look forward to voting to give New Hampshire
families their first tax cut in sixteen years.
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