[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

[[Page S8405]]

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

[[Page S8406]]

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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