[Congressional Record Volume 143, Number 111 (Thursday, July 31, 1997)]
[Senate]
[Pages S8415-S8461]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TAXPAYER RELIEF ACT OF 1997--CONFERENCE REPORT
The Senate continued with the consideration of the conference report.
Mr. ROTH. Mr. President, I yield such time as he may consume to the
junior Senator from Utah.
The PRESIDING OFFICER. The Senator from Utah is recognized.
Mr. BENNETT. Thank you, Mr. President.
I thank the Senator from Delaware for his courtesy and consideration
in allowing me to take this time. I also congratulate both the Senator
from Delaware and the Senator from New York for their ability in
crafting this particular piece of legislation.
When I ran for the Senate in 1992, I made tax reform one of my
primary goals. I must confess that this bill does not meet all of my
expectations and promises as I ran in the campaign, because one of the
things that I was most devoted to was a determination to make the Tax
Code less complex, easier to understand, and tax returns, perhaps,
filed that are the size of a postcard.
This bill does not accomplish that, and I still hold that out as a
goal for the future. But if this bill does not make the Tax Code less
complex, it at least makes the Tax Code less burdensome --less
burdensome for middle Americans, middle-class Americans who have not
received a significant tax break for a long, long time. There have been
tax breaks at the other ends of the Tax Code, yes, at the bottom end
for people who received the earned income tax credit and, some would
argue, too much at the top end. But there has not been the kind of
middle-class tax relief talked about in the 1992 campaign until this
bill.
So while it is not everything that I would want--and there is still
much unfinished business to be taken care of in terms of tax
simplification--it is a step in the right direction that we should
apply. I intend to vote for it enthusiastically and urge all of my
colleagues to do the same.
When I came here in January 1993, the atmosphere was completely
different than the one we find on the floor today. At that time, there
was a determination to see that spending would grow and that taxing
would grow. I am delighted to have been able to be a part of an effort
that has brought us to a case where spending is going down, at least in
percentage terms, and taxes are going down, in terms of the burden that
they are placing on the American people.
So I congratulate all connected with this effort, including, yes, Mr.
President, the President of the United States. I know it is not common
for people on my side of the aisle to stand up and say nice things
about this President, and I have said my share of unkind things in
areas where I feel he has done things that I think are inappropriate.
But as I have said to the President when I have been to the White House
on occasions, ``When you are right, Mr. President, I will back you.
When I think you are wrong, I will oppose you.'' I owe it to him and to
those in his administration who have worked with him on this agreement
to publicly acknowledge that this time I think he has been right. I
congratulate him and those who work with him for their willingness to
do this. I must say that I still had hoped that Senator Dole would be
elected President. I think if he had been, we would be here discussing
the tax simplification that I believe in as well as some tax reduction.
We had our opportunity to make that case in the campaign. For one
reason or another, it didn't fly, and it will have to wait for another
day. But I congratulate all those who have put partisanship aside and
worked together for the good of the people and made a compromise with
which perhaps none fully agree, but for which the American people,
overall, will ultimately be grateful.
For that reason, Mr. President, I am grateful to the two Senators for
allowing me to take this brief time to make these expressions. I
conclude as I began, with my congratulations to them and to their
colleagues on the Finance Committee, to the leadership of both Houses
in both parties, for their ability on the legislative side to work out
an agreement with the President and his associates in the executive
branch to give us at least this first step in the direction of making
the Tax Code less burdensome and less onerous on the American people.
I yield the floor.
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware is recognized.
Mr. ROTH. Mr. President, I yield myself such time as I may use.
Mr. President, when the 105th Congress began, a promise was made to
the American people. They were concerned about Washington's addiction
to spending, and the high deficits that were a consequence of that
spending. We promised to give them a balanced budget. They were
overburdened by rising taxes. They had been shackled with a record-
setting increase in 1992, and were paying more to government than they
were for their own food, shelter, and clothing. We promised them
relief. Our American families were concerned about the education of
their children--about the rising costs of post-secondary schools, and
their ability to help their children enter our colleges and
universities to learn and to prepare for productive futures. We
promised to make education more accessible.
Young Americans, just out of school--many of them starting families--
were finding it increasingly more difficult to buy a home. As a
proportion of their income, they discovered that a mortgage today is
twice as much as it was for their parents. Valiant small businessmen
and -women were finding it increasingly more difficult to build
successful companies. They had lost their home office deductions, the
deductibility of their health insurance, and then--when their company,
despite these and other challenges, proved successful--they had to fear
losing it to death taxes. Again, we promised relief. We promised peace
of mind to senior Americans who were worried about Medicare and its
future. We promised to provide future generations the opportunity to
become more self-sufficient through enhanced individual retirement
accounts, and less dependent on government for their support in the
years to come. And we promised that we would do something to increase
health care coverage for America's children--for America's future.
These, of course, Mr. President, were bold promises. For years, the
Republican Party had advocated these measures, but in a city built on
promises--the majority of which unfortunately go unfulfilled--it was
reasonable that Americans felt that these, too, would remain empty. But
today, Mr. President--today, we can say that these promises made, are
promises kept.
For the first time since 1969, Americans have a balanced budget--a
balanced budget that will be realized within 5 years. For the first
time in 16 years, Americans have real and meaningful tax relief. For
the first time ever, our families will have tax-free education savings
accounts, and for the first time in a decade, we are bringing back the
student loan interest deduction. And these, Mr. President, are not our
only firsts. We are allowing penalty-free withdrawals from IRA plans to
make first-time home purchases.
We are eliminating the capital gains taxes on $500,000 of gain for a
couple that sells their home. We are strengthening and preserving
Medicare by introducing choice and competition to that program. We are
giving States
[[Page S8416]]
greater flexibility and authority to administer Medicaid, and we are
increasing health care coverage for millions of children.
These are all firsts, Mr. President, but there is another first--one
that is more philosophic in nature. For the first time since President
Johnson's Great Society exploded the size and costs of Federal
programs, Americans have a government that is focused on doing more
with less.
When historians look at what has been accomplished here these past
few months, I believe our work will mark the beginning of a new era--an
era which the Republicans have long promised and which President
Clinton articulated when he said that the days of big government are
behind us.
This budget reconciliation package is a strong first step toward
realizing that promise. It is a bipartisan effort--one that could not
have been accomplished without a spirit of cooperation between
Republicans and Democrats, between the Senate and the House, and
between Congress and the President. I'm proud of what we've
accomplished. Members in both Houses of Congress, and on both sides of
the aisle, have reason to be proud, as does Bill Clinton.
Certainly, there are differences between the parties--those
differences can be valuable in the battle of ideas. But this package
represents a collective effort, an effort that is a far cry from the
acrimony, Government shutdowns and the vetoes that attended past budget
debates. I believe our work here demonstrates a coming together on
fundamental issues. Taxes have been too high.
They are still too high. In fact, as a percentage of our GNP, they
haven't been higher than they are right now since 1960. Government has
grown too big, become too inefficient, too overbearing and costly. Too
much power has been taken from our people--from our States--and it's
been centralized here in Washington.
Yesterday we addressed the changes that will take place in Government
programs--especially in entitlements like Medicare and Medicaid. We
explained how this reconciliation package will deliver greater
flexibility to the States for them to administer Medicaid in a more
cost-effective, a more efficient manner.
Today, we focus on the major tax provisions included in our plan, and
how those provisions will provide relief for Americans of all ages--for
our youth, going away to college, for our young families looking to buy
their first home and raise their children, for older families running
small businesses and preparing for retirement, and for those Americans
who are already retired and looking to find comfort and security on
fixed incomes.
This reconciliation package provides relief for all of these. It
includes a $500-per-child tax credit for families with children under
the age of 17. The credit will be available to the working poor through
an enhanced earned income credit. It will cover middle-class families,
couples earning up to $110,000 a year. At $110,000 it will begin to
phase out. And this tax relief will begin next year with a $400 per
child credit in 1998, and the full $500 credit in 1999 and thereafter.
We also provide relief to hard-working, middle-class Americans by
enhancing the individual retirement account. We raise the income limits
on traditional IRA's and create a new back-loaded IRA. In this back-
loaded IRA, the contributions are not tax deductible, but the build-up
and withdrawals are tax-free if the account is held for 5 years and the
account holder is at least 59\1/2\. The income limits for the new back-
loaded IRA will be $95,000 for singles and $150,000 for married
couples. Our new IRA will allow penalty-free withdrawals for first-time
home purchases. Another very important change to the IRA is that we
allow homemakers--below certain family income--to save a full $2,000
annually in an account, regardless of their spouse's pension plan.
Mr. President, I have worked for years to strengthen individual
retirement accounts for working Americans. These changes will go a long
way toward helping Americans prepare for retirement. They will
encourage self-reliance and provide incentive for saving.
This is, indeed, an idea whose time has come. It will be a blessing
to countless Americans as they prepare for the future. And beyond
helping individual families, these expanded IRS's will promote
investment, capital formation and economic growth.
Another important provision of this reconciliation package--one that
will not only provide tax relief, but will, along with our IRA's,
promote investment and jobs, is our capital gains tax cut.
Here, we drop the top rate to 20 percent on investments that are held
for at least 18 months. The rate will drop to 18 percent for assets
purchased after 2000 and held for at least 5 years. For joint filers
with incomes less than $41,200, the top capital gains rate will be 10
percent of assets held for at least 18 months, and 8 percent for assets
held for at least 5 years. Our package does away with capital gains
taxes on the sale of a home, as long as the home is $500,000 or less
for joint filers and $250,000 or less for single filers.
The benefit of capital gains tax relief will be felt not only by our
families, but by America at large. According to economist Lawrence
Kudlow, in a recent Wall Street Journal editorial,
The budget's lower capital gains tax rate will help
maintain U.S. global economic leadership in the 21st century.
This is especially important in relation to the fast-growing
economies of the Pacific rim, with China looming not far
behind. Most of the Asian tigers have lower tax burdens on
capital formation that the U.S.
America, Mr. President, needs this capital gains tax relief. It is
long overdue.
However, the tax relief contained in this package does not end here.
Families will also benefit by the way that this bill offers relief from
the estate tax--the tax that can rob a family of its farm or business
when a father or mother passes away.
To help these families, we raise the unified credit to $1,000,000 per
estate by 2006; and we provide tax-free treatment for family-owned
farms and small businesses for up to $1.3 million. I can't overstate
how important this estate tax relief will be to our families and small
businesses. In 1995, delegates to a convention on small business
survival, ranked killing the estate tax among the top five priorities
on a list of 60 recommendations to the President. This is because many
small business men and women fear the enterprises they have worked
their lives to create won't be around to pass on to their children. The
estate tax relief provided in this package offers a strong first step
toward allaying that fear and providing families the protection they
deserve.
Beyond offering relief for estate taxes, this package also benefits
America's small businesses by accelerating the phase in of the self-
employed health insurance deduction, raising that deduction all the way
to 100 percent, and by clarifying the deductibility of the home office
business deduction. These, Mr. President, are important provisions.
They will promote economic growth, jobs, and family security. They
naturally complement the overarching objective of this legislation to
provide immediate tax relief and to create conditions that will prepare
America and Americans for a bright and prosperous future.
Just how important this objective is can be seen by the fact that a
full 80 percent of the tax relief we offer in this package is directed
at the $500 credit for children and provisions that will promote
education. These education-related measures will go a long way toward
assisting students and their parents in affording the cost of post-
secondary education.
They include the Hope scholarship tax credit, a $2,500-per-year
student loan interest deduction, and penalty-free withdrawal from
IRA's. We can't overstate just how important these measures will be to
American families, to America's students, and to our future. I had
hoped that we could have gone even further in promoting the educational
aspects of this bill. For example, I wanted to maintain a provision
that would offer tax-free treatment for State-sponsored prepaid tuition
plans, a permanent extension of employer provided education assistance,
and a comprehensive education IRA, but in these areas the White House
was unwilling to compromise.
And this brings up a point I would like to make--a point I touched
upon yesterday. No one received everything they wanted with this
package. That, Mr. President, is the nature of compromise. Another
lesson we learn from
[[Page S8417]]
compromise is that it tends to add complexity to the package under
consideration.
We learned how when you have three parties involved in the process--
the Senate, the House, and the administration--each compromise made in
negotiations rendered the final product that much more complex.
Having said this, let me be clear that I am generally pleased by the
outcome. Certainly, I could be more pleased. But the bipartisan effort
that produced this reconciliation package is something to be
appreciated. We accomplished what we set out to do. We provided tax
relief for middle-income families; we provided tax relief to promote
education; and, we provided tax relief that will stimulate economic
growth, opportunity, and jobs.
Let me show just how that relief will affect typical American
families. When I first brought the Senate Finance Committee tax relief
package to the floor--about 6 weeks ago--I introduced three
hypothetical families from Delaware: a single mother named Judy Smith,
a farming family--the Wilsons--and a young professional couple, John
and Susan Jones. Let me show you how this package--in its final form--
will benefit them:
Let's begin with Judy. She has two young children and works as a
legal secretary in Wilmington, making $35,000 a year. Currently she
pays over $3,000 in Federal income taxes--over $3,000. When President
Clinton signs this bill, Judy's taxes will be cut by $800 next year and
by $1,000 the year after. Why? Because of the child tax credit. Judy
will be able to spend that savings as she wants, or she can put it in
an enhanced individual retirement account for her future.
Jim and Julie Wilson, our farming family with three children and an
income of $55,000, now pay over $5,500 in Federal income taxes. When
President Clinton signs this bill, their taxes will be cut by $1,200 in
1998, and by $1,500 in 1999 and beyond, as they will receive $500 for
each child. Julie Wilson will be able to set up a homemaker IRA to save
for her retirement. Looking far ahead, if the farm prospers, Jim and
Julie will be able to pass it on to their children free of the burden
of the estate tax--all because of the middle-income tax relief
contained in this bill.
Finally, Mr. President, let's look at John and Susan Jones. They live
and work in Dover, DE. College graduates, John is a veterinarian and
Susan is a physical therapist. They make $75,000 and have one young
child. Under current law, the Jones family pays about $11,500 in
Federal income taxes. Because of this legislation, they will receive a
$400 tax credit next year, and $500 each year thereafter.
Susan will be able to take the home office business deduction, as her
practice is located within their home, and she will be able to
accelerate the phase-in of the self-employed health insurance
deduction. John and Susan will also be able to deduct a portion of the
interest on their student loans, and they'll be able to set up new
back-loaded IRA accounts for their retirement.
This is how our work will affect these three families, Mr. President.
It will provide relief--much needed relief. As I have said, today the
taxes paid by our families are higher as a percentage of GNP than
they've been since 1960. This bipartisan tax relief effort will do
something about that. It will provide relief as part of a budget
reconciliation package that will lead our Nation to a balanced budget
in 2002. Having said that, however, I want to add that I consider this
only a beginning. Americans not only need tax relief; they need tax
reform. They need tax reform that really does simplify the Tax Code.
They need reform that focuses on fairness. They need reform that
maintains and promotes strong economic growth--growth that will lead to
continued job creation. And they need reform that promotes American
exports and our competitiveness in the global economy.
This is what we will turn our attention to next. And it is my hope
that the same level of cooperation that sustained us in this debate
will attend us as we move from tax relief to tax reform. I appreciate
my colleagues on both sides of the aisle who have been active,
involved, and given to a spirit of willingness throughout this process.
I am particularly grateful to Senator Moynihan--my friend and a
thoughtful, well-esteemed leader.
And again, Mr. President--as I did yesterday--I thank the
professional, capable staff of the Senate Finance Committee for their
countless hours and lost sleep. This was, indeed, a heroic effort.
I yield the floor.
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER (Mr. Burns). The Senator from New York.
Mr. MOYNIHAN. Mr. President, I have the honor now to respond to my
revered chairman, who brought this extraordinary legislation to the
floor and in a very few hours from now will see it sent to the
President to become law.
By day's end, the U.S. Senate will have voted overwhelmingly to
reduce Federal taxes by a net total of $95 billion over 5 years and
$275 billion over 10 years. Whatever one's view of this legislation as
a matter of tax policy, there can be absolutely no doubt that without
the dominant influence of the chairman of the Committee on Finance, we
would not be here today. Absent Senator Roth, we would not be here
today. This conference agreement is a singular achievement for him, and
we congratulate him.
Among other provisions in the legislation, the Roth IRA will soon be
as well-known as the Pell grant. It is a fitting tribute to Senator
Roth's long, persistent, indomitable commitment to encourage savings by
Americans.
For those interested, this is in section 302, Individual Retirement
Accounts, section 408(a), Roth IRAs. It is there in what I think others
across the park in the Supreme Court call black letter law. There, sir,
it is.
There is another aspect of this legislation which has not been
commented on and, I hope, might be. Without perhaps entirely intending
it, and not quite in the mode of how others have done it, after a half
century of discussion, we are, in fact, establishing a children's
allowance in our social policies.
I have had occasion to write about this over the years. We are the
only industrial democracy in the world that does not have a children's
allowance--just a routine thing, a feature of social policy that goes
back to the beginnings of the century. It had various motivations in
Sweden. There was a time when the Swedes thought they were dying out as
a race and needed to encourage more children. So they gave family
allowances. Sometimes called a family allowance. The French much the
same. In places like Canada, just a good social policy.
During World War II, the late Senator Neuberger was working on the
Alaska-Canada highway--ALCAN highway, as we knew it in those days--and
interested in what the Canadians were doing, came upon the family
allowance, the children's allowance, and introduced legislation when he
became Senator after the war. And John F. Kennedy was much interested
in this and cosponsored the legislation. And I can say from the days of
the early Kennedy administration there was an active interest in this
possibility--the elemental proposition that if you have children, it is
going to cost money, and a family raising children needs a little
support. We are giving it. Instead of a direct grant, we are providing
a direct tax credit. The end result will be the same, and a rather
extraordinary bit of social policy is before us which has never been
debated as such, but as I get on in years I begin to think the more you
debate social policy, the less social policy you get, and so we could
perhaps count our blessings in this regard.
But now my friend from Delaware has heard his ranking member say on
many occasions that if it were up to this Senator, we would have no tax
cuts at this time, given the extraordinary condition of our economy
just now, a condition for which many believe the deficit reduction law
enacted in 1993, OBRA 1993, is largely responsible.
I continue to be concerned about whether cutting taxes might undo the
astonishing progress we have made over the last 4 years, because OBRA
93 took hold when we did it. It was, indeed, the largest tax increase
in history, and it has produced extraordinary increases in wealth in
our Nation because it sent a signal to the economy that this Government
was going to get hold of its financing, pay its bills in sound dollars,
not monetize the debt, as the phrase is among economists, inflate the
currency and get rid of your
[[Page S8418]]
debt in that mode. Those are profoundly important signals to the
markets, and we have seen, I believe, the result.
The deficit for fiscal year 1992 was $290 billion and growing. It was
strangling us. We had no prospect whatever of getting out of it. What
earlier on, President Reagan's Director of OMB, David Stockman, had
said, $100 billion deficits as far as the eye can see, had become $300
billion deficits as far as the eye could see. And we turned it around.
We stopped it.
As a result of this aggressive deficit reduction program put in place
by a Democratic Congress in 1993, the deficit for the current fiscal
year could be less than $30 billion, which is about one-third of 1
percent of gross domestic product, a matter of no consequence in the
large sphere of things. The Federal budget is on the verge of balance
at this very moment and for the first time in three decades, and it
would get there without any changes in law. I would estimate that we
might have a balanced budget in the fourth quarter of the next fiscal
year, a year from now. We would have it without change in law. Now we
are putting the date off until the year 2002. I hope that does not
become a fateful mistake. I am not here to alarm anyone, but I think it
needs to be said for the record if the time comes when we have to make
changes. Given the previous success of our action 4 years ago, we may
come to regret what we have done today, but there is not a majority for
that view. There is a very small minority for that view. The
congressional leadership and the President have agreed that there will
be tax cuts this year, and so, given that reality, I joined with the
other Democratic members of the Finance Committee in working with
Chairman Roth in a bipartisan mode.
He has been generous enough to point out, as did earlier in the day
the majority leader, that the Finance Committee was unanimous in
reporting out the measure that we voted on just an hour ago on
spending, and there was an 18 to 2 vote in our Committee on the bill
before us now.
Yesterday, Senator Domenici, the distinguished chairman of the Budget
Committee, said it was the bipartisan solidarity of the Finance
Committee which gave the real impetus to getting the budget agreement
put in place, and I think that is so and nothing, no further tribute is
possible to Senator Roth for having presided over that event.
It is a phenomenon which I hope, and I know he hopes, we might see in
the future. We found that we could do things on a bipartisan basis that
could amaze you. We could raise taxes on tobacco. We could provide the
largest incremental initiative in health care since Medicare and
Medicaid were enacted in 1965--just like that, just in 2 days. Again,
perhaps because it was not debated for a year, we were able to get it
done in an afternoon. I would like to explore that possibility
sometime. Is there an inverse ratio between the amount of debate and
the legislation that emerges? I think you have seen some of that in the
past many years.
I would take the time of the Senate to point to several measures in
the bill which are surely praiseworthy and equally important. One that
has not been commented on anywhere that I have seen in the press is
that the bill before us removes the present $150 million cap on the
issuance of tax-exempt bonds by universities, colleges and nonhospital
health facilities. It sounds like an esoteric matter. What could this
mean? Well, it goes to something that is as important to American life
as anything I know, and it is as characteristic of American democracy
as anything I know.
We are the only democratic nation in the world that has a private
sector in its higher education--not just a few Jesuit colleges here or
every so often a special arrangement in the north of Sweden or the
south of France, and so forth. No, our system of higher education began
as private denominational matters, and we continue to have just about
an equal balance between the great private institutions and the great
public institutions. You could go out to California, in the San
Francisco Bay area, and you would see it is exemplary of Stanford
University, named for a great railroad magnate who gave his money in
the name of his son who died prematurely, and Berkeley, the University
of California at Berkeley, a great State institution.
Now, we have earlier on enabled the private universities, colleges,
and nonmedical health facilities to borrow money on a tax-exempt basis,
which puts them partially on an equal footing with the State
institutions which obtain money directly from the taxpayers, from tax
revenue, and can issue tax-exempt bonds because they are public
institutions.
We capped that amount, and more and more of our institutions have
reached it. And having done that, they are no longer in a position to
build what you could call the capital-intensive science facilities and
suchlike facilities that you need in the area of research on the edges
of knowledge in this country today. And we are the center of such
research. You could hypothesize, if you like, a future where if we did
not do what we are doing, there would come a time when the finest law
school on the west coast would be at Stanford--law schools are not
expensive; you have to add 50 books a year in the library--but all the
physics would be done at Berkeley. Physics is expensive. All the
chemistry, all the great research in astronomy, the outer edges of the
universe to the very core of the Earth itself, all that would be in
public institutions. And the competitive urges and the range of variety
of the private institutions--the University of Chicago, Rice
University, go right down the list of them--that would be lost. The
University of Pennsylvania, New York University, Columbia and, as I
say, across the Nation, those institutions are precious. There is no
reason why Americans should know that the universities and colleges in
the United Kingdom are all public institutions, but it is important to
know that we are singular in this regard, and this legislation responds
to that need. It may just be that no one is interested enough to care,
to take note, but I can assure you the universities involved are very
attentive and are very pleased.
We also extend for 3 years the provision for exclusion from income of
employer-provided educational assistance, which is section 127 of the
Internal Revenue Code. This is a wonderfully unintrusive piece of
social policy. It is probably the single-most successful tax incentive
for education we have. In a world of continuing education, of
continuing developments in science and technology, we have arrangements
whereby an employer can send an employee to school to learn something
special being taught--at night or weekends, whatever--get a degree,
bring the skills back into the workplace. They will be paid more money,
and they will get more income. We will get more revenue. Everyone wins
all around. We in the Finance Committee made this absolutely easy,
workable, a successful program. We made it permanent.
For reasons I cannot understand, and I don't think the chairman could
possibly understand either, the Finance Committee language, which made
it permanent and applied it to graduate school, was dropped in
conference. We had legislation in the Senate to do just this, Senator
Roth and I, with 50 cosponsors. What is the matter with people who
can't see what elemental good sense this makes? The firm that wants to
send a chemist to do postgraduate work in a new field that is just
opening up so he can come back and do it in the private sector of the
economy is just so elemental. That it was not done is disturbing.
Perhaps we will get back to it. I can't imagine why it was not
accepted, but we had no success.
The conferees included another salutary measure by extending for 1
year the deductibility, at fair market value, of charitable gifts of
appreciated stock to private foundations. Absent this, we would have
seen a needless dropoff in charitable giving. And, again, we are trying
to encourage the private sector, that private sector of education we
try to support, the private sector of employer-provided educational
assistance, into giving to private charities.
Now, to another matter of concern--of large concern--just beginning
to be noted. I observed in the Washington Post this morning a comment
on it, and also in the New York Times.
The Senate-passed bill included a measure written by our chairman and
supported by this Senator and others to provide $2.3 billion in
critically needed funding for Amtrak, the National Railroad Passenger
Corporation,
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the last hope of rail passenger service in America. The distinguished
CEO of the corporation, Mr. Tom Downs, said to me, as he would say to
anyone who called and asked, that if he did not get this $2.3 billion,
the corporation would be bankrupt in February or March.
I say to you, Mr. President, that's what this period will be
remembered for, that we did not do this. We had it in the bill. The
Senate voted 80 to 18 for the provision that the chairman provided. And
it was dropped. It was dropped owing to a dispute over other matters
altogether--job protections and outside contracting by Amtrak. It is
provided in this bill that $2.3 billion is there, but it is not
available to Amtrak until some very controversial legislation is
adopted making job protection and such like matters subject to
collective bargaining.
I will be blunt. This could mean the end of Amtrak, the National
Railroad Passenger Corporation. Bankruptcy for Amtrak is an outcome we
should surely do everything in our power to prevent. It would be a
national calamity. I wish to be emphatic in saying that the possibility
is now real, and I hope the administration will join in the effort to
bring about a resolution.
I was surprised, in the often intense debates of this last week on
this matter, that nowhere did we hear from the Secretary of Labor.
Nowhere did we hear from the Secretary of Transportation. What do we
have Cabinet officers for? I don't mean to be critical of any
individual. It occurs to me that they were not invited in. I'll tell
you, I was once an assistant to Secretary Arthur J. Goldberg when he
was Secretary of Labor during the Kennedy administration. We had rail
strikes and soon thereafter, in the Johnson administration, disputes in
the steel industry. Arthur J. Goldberg would have been right in the
middle of it, seeing that workers were protected and that the public
was protected.
This remains to be done. I hope I have sounded an alarm. If I sound
alarmist, Mr. President, may I put it in the Record that I am and I
intend to be alarmist.
Another matter on which we have made an error, in my view, was the
hurtful provision revoking the tax-exempt status of the Teachers
Insurance and Annuity Association and the College Retirement Equities
Fund, known as the TIAA-CREF, a 2-million-member retirement system that
serves 6,100 American colleges, universities, teaching hospitals,
museums, libraries and other nonprofit educational and research
institutions. TIAA was founded by Andrew Carnegie in 1918. It has been
tax exempt ever since. It is a nonprofit charity, and properly not
taxed.
In 1937 it was incorporated under the laws of the State of New York
to ``forward the cause of education and promote the welfare of the
teaching profession''--``forward the cause of education and promote the
welfare of the teaching profession.'' The law further states that the
purpose of TIAA--this is the New York statute--is ``to aid and
strengthen non-proprietary and non-profit-making colleges, universities
and other institutions engaged primarily in education or research.''
And it has done just that. It has long been recognized as a model of
such programs.
As a somewhat unanticipated result, it brought to American higher
education portability of pensions. You did not have to start out in one
institution and after a certain point stay the rest of your life
because you had to have some retirement benefit. It has a great value
to our educational system for the simple reason that it enables a young
person at, say, a 2-year college or a local college, who shows great
promise, does good work, to end up at Chicago or Stanford or Duke,
because they can move. This is part of the agility of American higher
education. There is no reason to tax this, and the Finance Committee
said don't tax it. We never have. The Senate said don't tax it. But
somehow or other we have decided to do so.
Revoking TIAA-CREF's 79-year-old tax exemption will cost the average
retiree who receives $12,000 a year about $600 in income. You know,
librarians are not highly paid. Perhaps that is not widely known. A
$12,000 pension would be quite normal. A $600 reduction would be 5
percent right away. Future retirees currently accumulating benefits are
likely to face reductions of 10 to 15 percent.
Why make the lives of librarians and assistant professors and
teachers in community colleges harder? Why do we do this? Why wasn't
this something that people said no to? The Finance Committee said no to
it. But we were not successful.
Two closing points. In an era in which the most recent Presidential
campaign was captivated--at least sectors of it--by the idea of a flat
tax, it deserves pointing out that this 820-page piece of legislation
will add hugely to the stupefying complexity and mass of the Internal
Revenue Code and its accompanying regulations.
Mr. President, this is not an exercise here in physical therapy. For
as long as I can, I would like to hold it up to show it to you. I dare
not hold it up any longer. If I should drop it, there would go my right
ankle. Did that thump on the desk make itself heard?
In 1986, in the Tax Reform Act of that year, we moved toward the idea
of simplicity in the Tax Code by a broader base and lower rates. Just
an anecdote, the late beloved Erwin Griswold, sometime dean of the
Harvard Law School, sometime Solicitor General of the United States,
was a friend. He used to write me each April describing how long it
took him to complete his tax returns, which he persisted in preparing
himself. Now, mind you, Dean Griswold was perhaps the Nation's foremost
authority on the subject of tax law. He almost began the subject. He
wrote the first text. He describes himself as being a young attorney,
graduate of Harvard Law in the 1920s, in the Solicitor General's
office, and some matters concerning taxation came to him. He, as he put
it in a wonderful address to the bar association tax section, said, ``I
thought of going to the Solicitor General to tell him I didn't know
anything about tax law, but I decided to go to the library instead.''
And he wrote the text.
In his last letter to me, dated April 12, 1994, 7 months before he
died, he wrote that his 1993 tax return took him almost 100 hours to
complete--100 hours for Erwin Griswold to prepare his not very
complicated financial affairs. He was a teacher and a lawyer,
Government employee, and he knew all these matters--yet it took him 100
hours. It would be 110 were he alive into the next tax season.
Let me say, just as an example, a family with three children, two in
college and one under age 17, could be required to calculate the new
child tax credit, a Hope scholarship tax credit for one college
student, and a separate lifelong learning credit for the older child.
Each of these different provisions will have different eligibility
rules and complicated income phaseouts that will have to be calculated
on different worksheets and reported to the Internal Revenue Service on
a variety of forms.
It is no exaggeration, sir--I don't believe it is an exaggeration--to
say that anybody who could fill out the forms necessary to qualify for
these tax benefits would already be an accountant of advanced
experience and achievement and would have no need for the benefits.
I do want to point out that in the statement of the managers
accompanying this conference report, it says, ``The conferees
anticipate that the Secretary of the Treasury will determine whether a
simplified method of calculating the child credit, consistent with the
formula described above, can be achieved.'' So there is hope. But I
wouldn't hope too much.
President Ronald Reagan, our much-loved President Ronald Reagan,
liked to say the Republicans are the party of the Fourth of July and
Democrats are the party of April 15th. With the passage of this
legislation, I think Democrats can no longer take all the credit for
April 15th.
A second and final point. This will be the first-ever tax bill
subject to the line-item veto, which gives the President, ``limited
authority to cancel specific dollar amounts of discretionary budget
authority, certain new direct spending, and limited tax benefits.''
Limited tax benefits are those that provide, a Federal tax deduction,
credit, exclusion, or preference to 100 or fewer beneficiaries.
In January of this year, I joined Senators Byrd, Levin and former
Senator Hatfield in a legal challenge to the line-item veto on grounds
that it violates the presentment clause in article
[[Page S8420]]
I, section 7, of the Constitution. The U.S. District Court for the
District of Columbia agreed and promptly declared the statute
unconstitutional.
But later, on June 26, the Justice Department took the matter to the
Supreme Court itself, and the Court held that we, as legislators, had
no standing to challenge the law, clearing the way for the President to
exercise his new authority.
Now, just 2 days ago, on July 29, the Joint Committee on Taxation met
to consider the list of limited tax benefits in this bill, a list
prepared by the committee staff, that would be subject to the line-item
veto. It was the first time we had done this under the new law, and I
am pleased to report, upon being presented with the 6-page list
totaling 79 separate provisions in this bill subject to the line-item
veto, some members of the joint committee began to display a visible
lessening of enthusiasm for the concept itself.
I have a list here, Mr. President, and take the liberty of asking
unanimous consent that it be printed in the Record, so the
administration will have an opportunity to look up the items, veto them
and then the injured parties can arrive across the park at the Supreme
Court with standing and the Constitution will be preserved.
There being no objection, the list was ordered to be printed in the
Record, as follows:
TITLE XVII--IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO LINE ITEM
VETO
SEC. 1701. IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO
LINE ITEM VETO.
Section 1021(a)(3) of the Congressional Budget and
Impoundment Control Act of 1974 shall only apply to--
(1) section 101(c) (relating to high risk pools permitted
to cover dependents of high risk individuals);
(2) section 222 (relating to limitation on qualified
501(c)(3) bonds other than hospital bonds);
(3) section 224 (relating to contributions of computer
technology and equipment for elementary or secondary school
purposes);
(4) section 312(a) (relating to treatment of remainder
interests for purposes of provision relating to gain on sale
of principal residence);
(5) section 501(b) (relating to indexing of alternative
valuation of certain farm, etc., real property);
(6) section 504 (relating to extension of treatment of
certain rents under section 2032A to lineal descendants);
(7) section 505 (relating to clarification of judicial
review of eligibility for extension of time for payment of
estate tax);
(8) section 508 (relating to treatment of land subject to
qualified conservation easement);
(9) section 511 (relating to expansion of exception from
generation-skipping transfer tax for transfers to individuals
with deceased parents);
(10) section 601 (relating to the research tax credit);
(11) section 602 (relating to contributions of stock to
private foundations);
(12) section 603 (relating to the work opportunity tax
credit);
(13) section 604 (relating to orphan drug tax credit);
(14) section 701 (relating to incentives for revitalization
of the District of Columbia) to the extent it amends the
Internal Revenue Code of 1986 to create sections 1400 and
1400A (relating to tax-exempt economic development bonds);
(15) section 701 (relating to incentives for revitalization
of the District of Columbia) to the extent it amends the
Internal Revenue Code of 1986 to create section 1400C
(relating to first-time homebuyer credit for District of
Columbia);
(16) section 801 (relating to incentives for employing
long-term family assistance recipients);
(17) section 904(b) (relating to uniform rate of tax on
vaccines) as it relates to any vaccine containing pertussis
bacteria, extracted or partial cell bacteria, or specific
pertussis antigens;
(18) section 904(b) (relating to uniform rate of tax on
vaccines) as it relates to any vaccine against measles;
(19) section 904(b) (relating to uniform rate of tax on
vaccines) as it relates to any vaccine against mumps;
(20) section 904(b) (relating to uniform rate of tax on
vaccines) as it relates to any vaccine against rubella;
(21) section 905 (relating to operators of multiple retail
gasoline outlets treated as wholesale distributors for refund
purposes);
(22) section 906 (relating to exemption of electric and
other clean-fuel motor vehicles from luxury automobile
classification);
(23) section 907(a) (relating to rate of tax on liquefied
natural gas determined on basis of BTU equivalency with
gasoline);
(24) section 907(b) (relating to rate of tax on methanol
from natural gas determined on basis of BTU equivalency with
gasoline);
(25) section 908 (relating to modification of tax treatment
of hard cider);
(26) section 914 (relating to mortgage financing for
residences located in disaster areas);
(27) section 962 (relating to assignment of workmen's
compensation liability eligible for exclusion relating to
personal injury liability assignments);
(28) section 963 (relating to tax-exempt status for certain
State worker's compensation act companies);
(29) section 967 (relating to additional advance refunding
of certain Virgin Island bonds);
(30) section 968 (relating to nonrecognition of gain on
sale of stock to certain farmers' cooperatives);
(31) section 971 (relating to exemption of the incremental
cost of a clean fuel vehicle from the limits on depreciation
for vehicles);
(32) section 974 (relating to clarification of treatment of
certain receivables purchased by cooperative hospital service
organizations);
(33) section 975 (relating to deduction in computing
adjusted gross income for expenses in connection with service
performed by certain officials) with respect to taxable years
beginning before 1991;
(34) section 977 (relating to elective carryback of
existing carryovers of National Railroad Passenger
Corporation);
(35) section 1005(b)(2)(B) (relating to transition rule for
instruments described in a ruling request submitted to the
Internal Revenue Service on or before June 8, 1997);
(36) section 1005(b)(2)(C) (relating to transition rule for
instruments described on or before June 8, 1997, in a public
announcement or in a filing with the Securities and Exchange
Commission) as it relates to a public announcement;
(37) section 1005(b)(2)(C) (relating to transition rule for
instruments described on or before June 8, 1997, in a public
announcement or in a filing with the Securities and Exchange
Commission) as it relates to a filing with the Securities and
Exchange Commission;
(38) section 1011(d)(2)(B) (relating to transition rule for
distributions made pursuant to the terms of a tender offer
outstanding on May 3, 1995);
(39) section 1011(d)(3) (relating to transition rule for
distributions made pursuant to the terms of a tender offer
outstanding on September 13, 1995);
(40) section 1012(d)(3)(B) (relating to transition rule for
distributions pursuant to an acquisition described in section
355(e)(2)(A)(ii) of the Internal Revenue Code of 1986
described in a ruling request submitted to the Internal
Revenue Service on or before April 16, 1997);
(41) section 1012(d)(3)(C) (relating to transition rule for
distributions pursuant to an acquisition described in section
355(e)(2)(A)(ii) of the Internal Revenue Code of 1986
described in a public announcement or filing with the
Securities and Exchange Commission) as it relates to a public
announcement;
(42) section 1012(d)(3)(C) (relating to transition rule for
distributions pursuant to an acquisition described in section
355(e)(2)(A)(ii) of the Internal Revenue Code of 1986
described in a public announcement or filing with the
Securities and Exchange Commission) as it relates to a filing
with the Securities and Exchange Commission;
(43) section 1013(d)(2)(B) (relating to transition rule for
distributions or acquisitions after June 8, 1997, described
in a ruling request submitted to the Internal Revenue Service
submitted on or before June 8, 1997);
(44) section 1013(d)(2)(C) (relating to transition rule for
distributions or acquisitions after June 8, 1997, described
in a public announcement or filing with the Securities and
Exchange Commission on or before June 8, 1997) as it relates
to a public announcement;
(45) section 1013(d)(2)(C) (relating to transition rule for
distributions or acquisitions after June 8, 1997, described
in a public announcement or filing with the Securities and
Exchange Commission on or before June 8, 1997) as it relates
to a filing with the Securities and Exchange Commission;
(46) section 1014(f)(2)(B) (relating to transition rule for
any transaction after June 8, 1997, if such transaction is
described in a ruling request submitted to the Internal
Revenue Service on or before June 8, 1997);
(47) section 1014(f)(2)(C) (relating to transition rule for
any transaction after June 8, 1997, if such transaction is
described in a public announcement or filing with the
Securities and Exchange Commission on or before June 8, 1997)
as it relates to a public announcement;
(48) section 1014(f)(2)(C) (relating to transition rule for
any transaction after June 8, 1997, if such transaction is
described in a public announcement or filing with the
Securities and Exchange Commission on or before June 8, 1997)
as it relates to a filing with the Securities and Exchange
Commission;
(49) section 1042(b) (relating to special rules for
provision terminating certain exceptions from rules relating
to exempt organizations which provide commercial-type
insurance);
(50) section 1081(a) (relating to termination of suspense
accounts for family corporations required to use accrual
method of accounting) as it relates to the repeal of Internal
Revenue Code section 447(i)(3);
(51) section 1089(b)(3) (relating to reformations);
(52) section 1089(b)(5)(B)(i) (relating to persons under a
mental disability;
(53) section 1171 (relating to treatment of computer
software as FSC export property);
(54) section 1175 (relating to exemption for active
financing income);
(55) section 1204 (relating to travel expenses of certain
Federal employees engaged in criminal investigations);
(56) section 1236 (relating to extension of time for filing
a request for administrative adjustment);
(57) section 1243 (relating to special rules for
administrative adjustment request with respect to bad debts
or worthless securities);
(58) section 1251 (relating to clarification of limitation
on maximum number of shareholders);
(59) section 1253 (relating to attribution rules applicable
to stock ownership);
(60) section 1256 (relating to modification of earnings and
profits rules for determining whether REIT has earnings and
profits from non-REIT year);
[[Page S8421]]
(61) section 1257 (relating to treatment of foreclosure
property);
(62) section 1261 (relating to shared appreciation
mortgages);
(63) section 1302 (relating to clarification of waiver of
certain rights of recovery);
(64) section 1303 (relating to transitional rule under
section 2056A);
(65) section 1304 (relating to treatment for estate tax
purposes of short-term obligations held by nonresident
aliens);
(66) section 1311 (relating to clarification of treatment
of survivor annuities under qualified terminable interest
rules);
(67) section 1312 (relating to treatment of qualified
domestic trust rules of forms of ownership which are not
trusts);
(68) section 1313 (relating to opportunity to correct
failures under section 2032A);
(69) section 1414 (relating to fermented material from any
brewery may be received at a distilled spirits plant);
(70) section 1417 (relating to use of additional
ameliorating material in certain wines);
(71) section 1418 (relating to domestically produced beer
may be withdrawn free of tax for use of foreign embassies,
legations, etc.);
(72) section 1421 (relating to transfer to brewery of beer
imported in bulk without payment of tax);
(73) section 1422 (relating to transfer to bonded wine
cellars of wine imported in bulk without payment of tax);
(74) section 1506 (relating to clarification of certain
rules relating to employee stock ownership plans of S
corporations);
(75) section 1507 (relating to modification of 10-percent
tax for nondeductible contributions);
(76) section 1523 (relating to repeal of application of
unrelated business income tax to ESOPs);
(77) section 1530 (relating to gratuitous transfers for the
benefit of employees);
(78) section 1532 (relating to special rules relating to
church plans); and
(79) section 1604(c)(2) (relating to amendment related to
Omnibus Budget Reconciliation Act of 1993).
Mr. MOYNIHAN. I thank the President, and particularly thank him for
affording that the Constitution be preserved.
Finally, as I have said, I would have preferred the Senate-passed
bill, in many respects, but committees of conference work by
compromise, and we have a compromise before us which I will support,
again with great thanks to the chairman, to Lindy Paull and to Frank
Polk, and to Mark Patterson and Nick Giordano. I yield the floor.
Several Senators addressed the Chair.
The PRESIDING OFFICER (Mr. Roberts). Who yields time?
Mr. WELLSTONE. Mr. President, I defer to the chairman. I am hoping to
get a chance to speak.
Mr. MOYNIHAN. Mr. President, I believe the chairman would like to
make a comment in response.
Mr. ROTH. Yes, I will be very brief. First of all, I just want to
publicly recognize and thank Senator Moynihan for the role he has
played. I think his statement today is another example of his towering
intellect. We are very fortunate to have an individual who is renowned
throughout this country for his ability to analyze, to study, and come
up with constructive proposals. Certainly, we have all benefited from
his rare intellect.
I would just like to comment on two or three things that he spoke
about in his opening remarks. First of all, I share the pride and
satisfaction in our higher educational system. I have often thought
there are few countries that have anything like ours. They may have one
or two outstanding schools--Oxford and Cambridge in the British Isles;
in Japan they have the University of Tokyo. But we have so many
outstanding schools. My only criticism of what Senator Moynihan said is
he failed to mention the University of Delaware which, I must confess,
is really a hidden jewel. But I share the pride, and I think it is
important that we do everything that we can to strengthen this, both
the private and public sector, in these days where knowledge and
technology is of even greater importance than any other time.
I would also like to speak very briefly about Amtrak, because it
seems to me we have our last clear chance to do something about it. I
have to tell you that for the last several months, I have fought tooth
and nail to try to bring about a solution. Mr. President, I cannot
imagine the leading industrial nation of the world, the only superpower
not having a modern passenger rail system. It is just unconscionable
for that to happen, particularly in these times when we are running out
of--I don't know about the State of New York, but I can tell you, in my
little State of Delaware, we are running out of land. How many highways
can we build? How many planes can fly over? What are we going to do
about the environment? This is a critical matter, not only to the
Northeast but to the entire country.
I couldn't agree more with Senator Moynihan than when he calls upon
the Secretary of Transportation and the Secretary of Labor to provide
some leadership. This can still be salvaged, it still can be saved, but
it means that the parties that are involved and interested are going to
have to get together and bring about the kind of reform that assures a
sound future for our rail system.
This, again I say, is our last clear chance. We have the funds in
there. They are available. Now it is up to those who have the voice on
reform to get together and compromise and work together, just as we did
in our committee.
I again express my appreciation to the distinguished Senator for his
contributions and cooperation.
Mr. MOYNIHAN. Mr. President, can I just say thanks once again to the
chairman, and add that there is every reason to think that Amtrak is on
the verge of financial stability, with a new rail system, fast rail
system, and just when we are about to succeed, we can thwart the whole
enterprise. I hope we will not do that.
Mr. President, I yield the floor. I find my friend has been waiting
so very patiently. The floor is now his.
Mr. WELLSTONE. I thank both colleagues. Mr. President, I ask
unanimous consent to take 15 minutes off the time that has been given
to Senator Bumpers, and I ask Senator Moynihan whether I might get 10
minutes from his time, if that would be OK.
Mr. MOYNIHAN. Mr. President, the Senator most surely can. I wish he
would.
Mr. WELLSTONE. I thank him.
The PRESIDING OFFICER. The Senator from Minnesota is recognized.
Mr. WELLSTONE. Mr. President, let me, first of all, say to Senator
Roth and Senator Moynihan, since my comments will be in disagreement,
that I have tremendous respect for all the work that they have done.
Both of them represent the very best of public service. But I can't, as
a matter of principle, vote for this budget agreement. I support
balancing the budget through a process which observes basic principles
of economic and social justice and embodies the notion of shared
sacrifice in pursuit of the common good, the common interest, the
people's interest. But despite the cheers of its supporters, this deal
fails miserably those tests.
In the midst of all the cheering over this deal, we face a quiet
crisis. It is not a war, it is not a broad economic calamity, but it is
a crisis, nonetheless. This is, by the averages and the indicators, a
prosperous time for our country. It is a time of sustained economic
growth and low inflation, of a booming stock market and low
unemployment. There is no blare of bugles, no moan of universal
distress, no loud hordes of protesters clamoring in our streets. But
averages are misleading. They tell nothing of the end of the curve, the
height at the top or the depth at the bottom, and that is where our
crisis resides. It is a quiet crisis of money, power, and injustice. It
is the crisis of a nation in danger of abandoning the principles of
equality and justice that are so fundamental to our resilience and to
our future together.
The principle of economic justice in this bill has been eclipsed. I
fear it will accelerate growing inequalities in our country that we all
should be committed to combat. We have moved in recent years back to a
darker time. It is a more stratified America. It is really two
Americas: one America with mounting access to the things that make life
richer in possibility; the other caught in a constant struggle to make
ends meet.
One able to purchase the security of gated communities and private
schools; the other beset by the dangers of a decaying social fabric.
One America swiftly navigating the information superhighway, the
other lacking the rudimentary skills needed to navigate an ever-more
complex society.
One enriched by a rising stock market; the other at the uncertain
mercies of the job market.
One wondering when to take a vacation to Europe or Asia; the other
hoping to save enough to take a family to a ball game.
[[Page S8422]]
This other America, this second America is not inhabited by just the
poor or neglected minority. It is, in fact, the residence of the
American majority. It is the homeland of most of our workers, most of
our families, most of our children, and it is precisely this America
that the budget agreement fails to serve fully and fairly.
I would support a deal that required truly shared sacrifice while
investing in our future, but shared sacrifice is not what this package
is all about. Instead, it is about working families sacrificing and
Wall Street investors and big companies garnering the lion's share of
the benefits.
Balancing the short-term budget fairly is a responsible and it is a
worthwhile goal, made easier by our recent economic boom. But building
a strong economy, preserving a shared prosperity, ensuring social and
economic stability for the next generation by investing in their health
and their skills and their character, our children, this is a far
loftier and far more difficult goal for which we should have been
striving in this budget agreement, and this agreement falls short of
those goals.
First, the agreement is unfair. At times, it is grossly unfair, I say
to my colleagues, to the vast majority of working Americans who deserve
real tax relief but will not get it in this bill, because most of the
benefits go to the wealthiest 3 to 4 percent of the taxpayers and the
profitable companies.
Second, this agreement is shortsighted, starving our Nation's
investment needs, investments critical to our future economic and
social prosperity, in order to pay for large, unfair, and unwarranted
tax cuts.
Third, and perhaps most ironically, since its ostensible purpose is
to balance the budget, it is fiscally irresponsible. By locking into
place hundreds of billions of dollars in tax cuts for the wealthy, as
far as the eye can see, many of which will grow larger and larger over
time, it will cause the deficit to explode just as the baby boomers are
expected to retire and begin to draw on programs like Social Security
and Medicare.
While this agreement has been hailed by some Democrats because it
partially preserves funding for certain health care, education, and
other programs that Republicans have been trying to slash for almost 3
years, and it is hailed by Republicans because it contains the huge tax
cuts for the wealthy for which they have so long fought and sought, a
closer look is called for in the midst of all this cheerleading.
As a legislator, I have discovered that too often if the deal appears
to give all things to all parties, as this one does, something is not
quite right.
Americans should take a closer look at the details of this package.
When they do, they will be very troubled by what they see. Even with
the marginal improvements which were forced by the President and the
Democratic colleagues in the Congress, it still is a deeply flawed
agreement which mortgages the economic futures of our children for the
short-term political benefit which some will derive by claiming to have
balanced the budget.
Unless we revisit this deal soon, it will lock us into a program of
huge tax cuts, mainly going to the wealthiest of people, funded by
equally large spending cuts in virtually every single basic function of
Government--environmental protection, airline safety, crime control,
science and health and technology research, health care for the frail
and the elderly and the poor.
And, Mr. President, it will do so while continuing the Republican
Congress tradition of stuffing more money into the Pentagon than even
the Pentagon has requested, more B-2 bombers and ships and fighters
than we need, mostly to preserve jobs in key congressional districts.
As one of my colleagues observed, this bill sacrifices tomorrow's
hopes for today's headlines. That is a mistake for which we will all
pay for years to come, just as we did for the mistakes of the early
1980's and its exploding deficits.
Mr. President, the President of the United States said, among other
things, he would only sign on to a deal that was fair, fiscally
responsible, with no exploding deficits in the next 10 years or so.
These were the basic tests that he said he would apply to any final
agreement. But this agreement clearly fails the fairness test. The sad
fact is that low-income families get virtually nothing--nothing--from
this tax cut bill, working families get very little, and the wealthy
are the big winners in this tax bill.
While the ink is barely dry on the deal--and so we do not have any
official information about its actual distributional impact--we are
asked to vote on this without getting any official information about
who exactly is going to benefit and who is going to be asked to
sacrifice.
Preliminary analysis suggests a disastrously lopsided approach skewed
to the very rich, those making over $200,000 a year annually. That is
not the middle class in America. The nonpartisan group, Citizens for
Tax Justice, has run the numbers through a fairly sophisticated
distributional model. And they found that the tax package delivers
about half of its benefits to the top 5 percent of the taxpayers.
Half of the benefits go to the top 5 percent of the taxpayers. The
average tax cut for middle-class working families and individuals, when
you figure in all the tax hikes and cuts together, is about $200. For
the richest 1 percent, it is about $16,000. I had hoped for substantial
tax relief for working families. This bill only offers about one-fourth
of its overall relief to those making under $100,000 a year. I think
working families should not have to settle for scraps from the tax cut
table. They should have been the first in line for relief. But that is
not the case.
But just a few examples.
The alternative minimum tax was passed in 1986. With tax fairness,
large companies ought to pay, large profitable companies ought to pay
at least some tax. That has essentially been gutted. The Treasury
Department estimates that these changes would take 76,000 profitable
corporations completely off the tax rolls, and to the tune of $18
billion over the next 10 years.
Another example. While this budget provides little or no relief for
working families, it gives wealthy Americans huge capital gains tax
cuts. The vast majority of these benefits from the cuts in capital
gains go to big investors, people making $200,000, $300,000, and
$400,000 annually. Hardly tax fairness.
Mr. President, not only is this deal unfair, it is shortsighted, it
ignores our most critical needs as a nation, including repairing and
rebuilding our crumbling schools. Not one penny is invested in our
crumbling schools, including dealing with our crumbling inner cities,
our underdeveloped rural areas.
Through its spending controls, it provides for huge and still
unspecified cuts in Federal investments that my colleagues apparently
do not like to talk about much, an estimated $272 billion in such
nondefense cuts over the next 10 years while it claims to ``protect''
some priority programs.
I am very skeptical. There is not a penny here for crumbling schools
to secure educational opportunities for children. How come that was not
a priority program? There is too little for job training for dislocated
workers, for workers struggling to move off welfare into good jobs, and
there is too little by way of reinvesting in our inner cities, the
environmental protection, in basic key investments critical to our
Nation's future.
Mr. President, I voted against the spending bill. And I will vote
against this tax bill. I do not understand how my colleagues can
basically view these matters separately. They are part of one package
and one deal. And I will just give some examples.
We now have huge, significant cuts in Medicare and Medicaid. And they
are being used to pay for the tax cuts in this deal, which
disproportionately go to the top 1, 2, 3 percent of the population that
need the assistance the least. That is part of the tradeoff.
Mr. President, Medicare will be cut by $115 billion over the next 5
years. And the proposal assumes $385 billion in cuts over 10 years. In
Medicaid, we will be cutting $13 billion over the next 5 years.
Mr. President, in rural Minnesota, where the hospitals and the
clinics are not greedy--a small profit margin--60, 70, 80 percent of
the patient payment mix is Medicare and Medicaid. Please, do not have
any illusions about this.
[[Page S8423]]
The cuts to the providers will make it difficult for some of these
hospitals and clinics to go on. When they no longer exist, that hurts
our rural communities.
Mr. President, the cuts in medical assistance disproportionately hurt
our children's hospitals and disproportionately hurt our inner-city
hospitals which are safety net hospitals for the poorest Americans--
including children--in America.
My colleagues say to me, ``Well, but this overall agreement, it's not
that bad, after all.'' And I say, ``Compared to what?'' To the earlier
Republican bills, which the huge majority of American people rejected,
this is an improvement. We did not go forward with a $5 copay, even
though it passed in the Senate, for elderly people for home health care
visits.
We have done better by way of graduate medical education. And, yes,
Mr. President, we have $24 billion more in children's health care. And
it includes also some additional parity, nondiscrimination for children
and families struggling with mental illness. I thank my colleague,
Senator Domenici. It is a labor of love to work with him on this.
But, Mr. President, we still do not know at the State level how much
of this will reach the children. We hope it does. There are 10 million
children without coverage. I have seen projections anywhere from 1\1/2\
million to 5 million will be covered, though it is block granted to the
States. And we do not have the ironclad guarantees that we need. We
need to fulfill our goal of providing adequate and complete care for
all children in America.
But, Mr. President, irony built upon ironies. My colleagues say it is
not that bad, we are doing better for children. I give credit where
credit is due. But last Congress we cut $25 billion in the major food
nutrition program for children. It ultimately will be a 20-percent cut
in food stamps, and about 70 percent of the recipients are children.
Almost all of them are in working families, usually families with
incomes under $7,000 a year. This directly affects the quality of their
health care. I did not see any restoration of any funding for the major
child nutrition program in the United States of America.
Mr. President, my colleagues say we did better for legal immigrants.
We restored some of the supplemental security income for those
immigrants that have been in this country, but, Mr. President, we
eliminated all of the food nutrition assistance. So if you have an
elderly Hmong woman in Saint Paul, and she has $450 of SSI and another
$75 in food stamps, and that is her total monthly income--and that is
exactly the figure for many people --we did not restore any, we did not
restore one penny of food nutrition assistance. It is not that bad but,
Mr. President, this piece of legislation is also not that good.
Mr. President, I do not understand exactly what the concept of
justice is here. I do not know what happened to the principle of
justice and fairness. Not only do we have the tax cuts going
disproportionately to the top 5 percent of the population, but even
when we say we are going to help children and families, we decide that
we will do nothing for the poorest.
The child tax credit is refundable. And now we say it is refundable
to families with incomes over $100,000 a year. But if you are a family
with an income of under $18,000 a year, you are not eligible at all. We
decided that families with over $100,000 a year needed the assistance.
But since we have the earned-income tax credits, we decided that
families with incomes under $18,000 a year would not be eligible for a
child credit at all. What kind of standard of justice is that?
I spent a lot of time with those families. I see their struggles.
Don't tell me that those families, families in America with incomes
under $18,000 a year, could not also have benefited from the tax credit
so they could have provided their children with a little bit more.
Don't tell me they would not have benefited. What concept of justice
justifies a tax credit for families with incomes over $100,000 a year,
but zero, no assistance, for families earning under $18,000 a year?
Mr. President, on higher education, we have seen a great deal of
discussion. I find it difficult to say this, but I am going to because
20 years of my life was devoted to higher education. Some of this is a
bit hyped. Some of it is a bit hyped. Some of it is a bit of hype.
Mr. President, I am grateful for the tax deductions. I am grateful
for the tax credits which are nonrefundable, but every single financial
aid officer you want to talk to, everyone involved in financial aid
will tell you we should have expanded the Pell grants. The statistic
that is unconscionable is that a flat 8 percent, since 1979, of those
families with incomes under $20,000 a year, only a flat 8 percent have
been able to graduate, men and women from those families, with
affordability being a key problem. There are other problems but that is
the major problem. There is really nothing in this piece of legislation
for them.
We expanded the Pell grant by $300, but the Pell grant is now meeting
at best about 16 percent of the student's overall need. We could have
expanded the Pell grant program up to $5,000 a year. It would have
reached middle income as well for the same price tag as to what we did
here with the tax deduction and the tax credits.
But, Mr. President, the tax credits are nonrefundable. The tax
credits are not refundable. I will just tell you that if you spend any
time at the community colleges, you will find that most of the students
are older and going back to school, and they have incomes of around
$25,000, $26,000 a year. They are ineligible because they do not have
the tax liability. And we are making the claim that this is essentially
2 years more of free education? It does not hold up. It does not hold
up.
Mr. President, we say we protected priority programs. We have
hundreds of billions of dollars in tax cuts, which will increase with
every year, disproportionately going to the top 5 percent of the
population, and altogether, Mr. President, we came up with not $5
billion that we were going to leverage for some investment in
rebuilding crumbling schools, but we threw in $10 million at the end,
$10 million for all of America. Mr. President, what kind of priorities
are these? How could the administration have bargained this away?
I was down in Delta City, MS, in Tunica, MS. I visited a school. This
was an all-black school. The ceiling was kind of crumbling in. The
toilets were decrepit. If you had wanted to wash your hands after going
to the bathroom, you would not have been able to.
But, Mr. President, I was in Chicago on Monday visiting with some of
the housing projects, and I saw the same kind of schools. You look at
these schools, they are so uninviting. They are crumbling. And we tell
our children we put no value on them when we send children to such
schools. The General Accounting Office tells us it costs $110 billion
if we want to invest in rebuilding these crumbling schools. We have not
invested anything in rebuilding crumbling schools--not really--just $10
million for the whole Nation. That is a joke, and it is a cruel joke.
How can we say that we have protected our major priority programs when
we don't invest anything in rebuilding crumbling schools in America?
Mr. President, it is not just Chicago and Mississippi; it is North,
East, South, and West. I say to my colleagues, if you say you are
committed to education, we can have a debate about educational
standards. Maybe they are good, maybe they are not. We can debate about
how you measure academic performance. We can have all those debates.
But this is simple: Don't send children to schools where the ceilings
are falling in and the stench of urine is in the hallways and the
buildings are decrepit and expect those children to do well. We say
that this budget agreement protects our major priorities. What about
these children? Aren't they our major priority?
Mr. President, I was in Chicago on Monday in the Pilsen neighborhood
with Congressmen Gutierrez and Bobby Rush at the Robert Taylor Home
Housing Project. St. Augustine had a wonderful Head Start Program. It
was a great program. I was inspired by their work. But, Mr. President,
they could take 30-some children at the site we visited, and they have
335 children who want to participate--335 children who could be given a
head start if we fully funded this program.
Altogether we have added $324 million. We have 4 million children in
the United States of America, from birth
[[Page S8424]]
to age 5, who were not served by the Head Start Program, and we have
invested a measly $324 million, which we claim--and it doesn't hold up
under scrutiny--will lead to an additional 1 million children. Why
don't we fully fund Head Start? If the program does what it says it
does, which is to give children a head start, why give the tax benefits
to the wealthiest of people and, at the same time, not the investment
in rebuilding crumbling schools and not an investment in Head Start?
Everywhere I go, all across the United States of America, whether it is
rural or urban, I see the successes with kids, I see men and women who
work with these children. They should be famous. They make too little
money as Head Start teachers or as teacher assistants. We say these are
the critical years, and we say the very early part of children's lives
is the most critical time, and we invest $324 million, and that is it.
Mr. President, many of my colleagues support this bill and they call
it, on balance, a good piece of work. I simply cannot join them in
their enthusiasm because I am too painfully aware of the people this
bill leaves behind. Mr. President, the benefits are skewed toward
America's very wealthy, and when working families find this out, they
will not be pleased.
Mr. President, this piece of legislation, this budget deal, leaves
too many Americans behind. We can and we should balance the budget
fairly and responsibly, observing the principle of shared sacrifice and
economic justice, making the Tax Code fairer, simpler, and flatter in
the process, and investing in our Nation's future. We could have done
that because the economy is booming and it is much easier to do it now
than a few years ago. But with this bill, Mr. President, we have failed
in that effort at fairness.
If this balanced budget agreement is to be the great accomplishment
of 8 years of Democratic Presidency, then history will judge us
harshly. With a budget that we already have, that is essentially in
substantial balance because of the policies of the past 4 years, this
agreement today is really a triumph of the past rather than a bridge to
the century to come.
Mr. President, I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. ROTH. Mr. President, I yield 10 minutes to the distinguished
Senator from New Hampshire.
The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
Mr. GREGG. Mr. President, let me begin by congratulating the Senator
from Delaware for the extraordinary job he has done in putting together
this tax reduction package, which is directed primarily to assisting
American families, working families of middle-income means, to make it
easier on them to meet the day-to-day expenses of raising a family. It
takes giant strides in assisting especially the American middle-income
family in dealing with the cost of education, which is absolutely
critical. The effort that was put into this by the Senator from
Delaware in leading this initiative and pulling this together and
getting it passed is nothing short of extraordinary. It will go down as
one of the finest hours, I think, in this body and certainly in this
Congress. I congratulate him for it.
I wanted to speak briefly about a couple of areas in the bill that I
think are especially positive and for which I thank the Senator from
Delaware for working so hard on them.
First is the area of estate tax reform. We have heard a lot about how
this bill greatly helps especially the small businessperson and farmer
in being able to retain their business and pass it on to their heirs--
their children, in most instances--so they can continue to run the
business, so that all the years of sweat equity put in on building a
family farm or a small business won't be lost or confiscated on the
death of the primary owner of the estate, but rather will be passed on
to his or her family, and the tax burden on that small businessman or
farmer is dramatically reduced.
But there is another item in this bill that has not been talked about
at all, which I think is especially important in places like New
Hampshire, and that is the conservation tax--a tax break for people who
leave their land or keep their land in conservation, or in the
silviculture activities, upon the death of the primary owner of the
estate. This section of the bill, which was initiated by myself and
Senator Chafee from Rhode Island, is basically directed at addressing a
problem which we see especially in New England. There is tremendous
pressure on our forest areas to convert those areas to development.
Many people in New England--especially in New Hampshire--run very small
tree farms, or operate a lumber business, or a logging business, or a
business that in some way uses the forest lands. In addition, there are
a lot of people who, just for the purposes of being good citizens, keep
their lands open. They don't develop them. They keep their lands in a
natural, or fairly close to natural, state, and their lands in many
instances are used for recreation or are used for hunting and used,
obviously, to maintain the environment.
Unfortunately, when these folks pass on, because of the nature of New
England today and the heavy populations that we have and the expansion
of population that we have, in most instances these pieces of land
aren't valued for the purposes of running a tree farm or maintaining
wood lots. They usually are valued for some higher use, defined by the
terms of cost, such as a mall or, in many instances, a housing
development of some nature. The result of that is that the property in
the estate ends up being valued at an extraordinarily high level. The
heirs who receive the land have no option but to sell the land, develop
the land, and as a result, convert the land from forestry use into some
sort of commercial or construction use, which has two events. First, it
obviously ends the ability of the forestry industry to use that land
for the purposes of maintaining forest and silviculture activity.
Second, it ends up developing land. That changes the character of the
State in many ways.
There are a lot of people who would rather not develop the lands. A
lot of heirs are willing to keep the land as a production for forestry
activities, or as a conservation area, but they can't afford to do that
because the taxes are so high. So in this bill, as a result of the
efforts of the chairman of the committee, myself, and Senator Chafee,
there is now a new deduction that allows people, who agree to do it, to
retain their land as a conservation easement when they receive it from
an estate and, thus, keep it as land that is protected for the purposes
of keeping it in a fairly natural state--using it for timbering if they
desire to do so. There will be a deduction relative to the value of
that land of about 40 percent, which is a major plus. It is a major
commitment to the community, a major commitment, obviously, to the
individuals who will be receiving the land, that the Federal Government
isn't going to force people to sell their land in order to pay their
taxes by putting a value on the land that is so high that they have no
option but to sell their land. That is good news.
Now, this only applies to certain types of land. It applies to land
which lies within a certain distance of a national forest or an urban
forest. So it doesn't apply to all of the land in New England or all of
the land in the country. It does apply to land which is basically in
the same area as the area which has already been protected for the
purposes of maintaining its pristine qualities. That only makes sense
that that type of land should be the land that we are targeting, so
that we don't end up with large commercial developments surrounding our
national forests and urban forests.
As a result of this language being put in the bill and the way it was
put in, it will actually apply to about 90 percent of New Hampshire
because so much of it is a national forest. We have the largest
national forest, I believe, east of the Mississippi. Certainly, we have
the largest national forest in the Northeast, or the most visited in
the Northeast, the White Mountain National Forest, which takes up about
17 percent of the State, I believe. Therefore, it has a very
significant land mass within the State. So this is good news for those
of us who believe very strongly that maintaining the character of the
land, in the State of New Hampshire especially, is critical. This will
allow those folks who receive land coming out of an estate to keep that
land as forest land, if they desire to do
[[Page S8425]]
so, and not be forced to sell in order to pay taxes. That is a very big
plus.
The second element I want to congratulate Senator Roth for deals with
retirement provisions in this bill. There is a very positive expansion
of the ability of people to save for retirement in this bill. Of
course, there is the famous Roth IRA accounts, which we heard a fair
amount about, which are a series of expansions of IRA accounts. More
important, this is a whole series of initiatives which came out of a
working group I chair, the leadership task force on retirement reform.
Thirteen of those items are in this bill. They give the small
businesspeople in this country much more flexibility in putting in
place retirement accounts and gives individuals much more flexibility
in the area of being able to participate in saving for their
retirement, and they are very strong initiatives.
I will say a few words about what this tax bill will mean to American
families and to their ability to save for retirement.
Earlier this year I was named to chair a Republican Retirement
Security Task Force. We introduced a series of reforms as S. 883.
Senator Roth's contribution to the task force's work was vital. I
also appreciate his willingness to work in favor of many of these
provisions in this tax legislation.
This Nation faces a dire need to expand retirement saving to meet the
retirement needs of an aging 21st century population.
But behind this general national picture are the real-life concerns
of millions of hard-working American families, who are concerned about
their prospects for retirement. This bill will significantly increase
their chances to achieve a dignified and secure retirement.
I would like to describe some of these provisions and the effect that
they would have for families.
Consider a family, John and Mary Smith, where John is a full-time
paid employee, and Mary is working within the home. Or, perhaps Mary is
working full time, and John is working within the home. Between them,
they earn $50,000. And suppose that John, but not Mary, is able to
participate in a pension plan at work.
Under the old law, this couple could not make a deductible
contribution to an IRA. But under this bill, now Mary can make a fully
tax-deductible $2,000 contribution to an IRA.
And the same is true whether this family earns $50,000 or $60,000 or
$70,000--on up to $150,000. Because of this tax legislation, a huge
number of families will now be able to participate in tax-deferred IRA
accounts.
An article in the Washington Post this morning indicated that fully 7
million new IRA accounts will be opened because of this measure alone.
Think of what that will do for a couple's retirement security--if they
are able to put away $2,000, tax-deferred, every year.
Consider another couple: Michael and Susan Jones. Suppose they have a
family farm. And because of the fortunes of farming, their income goes
up and down from year to year. Perhaps one year they earn $50,000--and
the next year they only earn $30,000.
Under current law, this couple is going to be very concerned about
whether they can save in an IRA. They don't know whether their
contributions will be tax-deductible or not. One year it is, the next
year it isn't. It's very difficult for them to know, as the year
progresses, whether they can afford to put the money in.
Under this legislation, we have created something new for them--the
back-loaded IRA. Now Michael and Susan can make contributions to an IRA
without worrying about whether they will get the tax benefits--because
those tax benefits will come at the end of the road. They don't get the
tax deduction now, when they contribute to the IRA, but they know that
at the end of the game, they will have tax-advantaged earnings through
the IRA. This legislation gives them a new way to gain tax advantages
from savings.
And, this legislation also vastly expands traditional IRA accounts--
doubling the income limits for tax deductibility over the next 5 years.
As a result, millions of Americans will find it easier to save for
retirement.
This legislation also contains many of the pension reform provisions
which we worked so hard to create in S. 883.
This legislation increase the security of employer-provided
pensions--by increasing the amount of employer funding to meet those
pension liabilities.
Under current law, Mr. President, most employers do not have enough
funding in these pension plans to meet eventual liabilities. Not
because the employers won't do it--but rather because the Government
won't let hem. We had sharply limited the amount of funding that
employers may put in these pension plans.
So when Frank Williams goes to work, there is often only enough
funding in his pension plan to support benefits that he would receive
if he and everyone else in the company retired today. Frank hopes to
work longer, to accrue a larger pension benefit someday, as does
everyone in the company. And the liabilities of the pension plan will
eventually be much larger, because everyone working there will someday
be entitled to much higher benefits than are accounted for in current
measures of liability.
Under this legislation, we will raise the limits on employer funding
of pensions--from 150 percent of current liability to 170 percent.
Employers will be permitted to fund at a level that is closer to their
projected liability. This means greater retirement security for all
Americans. It means that there will be more funds in Frank Williams'
pension plan.
Now consider the case of another hard-working American, Walter
Taylor, an aspiring entrepreneur, starting his or her own business.
Under the old law, if he started a pension plan, and he was therefore
paying both the employer match and the employee contribution for his
own pension benefits, he would not get the same tax treatment that
other employers get. This legislation will create a level playing field
for the self-employed, and says that they too will receive the same tax
treatment of their matching contributions that other employers receive.
This will be a tremendous benefit to small businesses, which is where
we most need to expand pension coverage.
This legislation will also make it easier and more convenient for
families to save through IRA's--by facilitating automatic payroll
deductions into IRA's.
This legislation will also make it easier for State and local
government plans to operate, by exempting them from the cumbersome
nondiscrimination rules that were not intended for Government plans.
This legislation will streamline and simplify paperwork and reporting
requirements. It will eliminate the need for obsolete and unnecessary
forms, and will also facilitate the use of electronic technology to
replace old paperwork.
Finally, the legislation will make a number of technical corrections
to the law, straightening out inconsistencies between tax and
regulatory treatment of pension contributions, inconsistencies that
have frustrated employers and pension administrators alike.
I am pleased to have been the principal sponsor of these provisions,
and I commend and thank those who have worked to bring us closer to
enacting them into law.
Mr. President, I thank the Senator from Maine for allowing me to
precede her. I thank the Senator from Delaware for allowing me to speak
and for his extraordinary effort.
Mr. ROTH. Mr. President, I want to thank the distinguished Senator
from New Hampshire for his very gracious remarks.
Privilege of the Floor
Mr. ROTH. Mr. President, I ask unanimous consent that the Joint
Committee on Taxation staff members named on the list I send to the
desk be granted floor privileges for the duration of the consideration
of the conference report on H.R. 2014.
The PRESIDING OFFICER. Without objection, it is so ordered.
The list is as follows:
Staff Members--Joint Committee on Taxation
Angus, Barbara M., Business Tax Counsel.
Arkin, Steven D., Legislation Counsel.
Barthold, Thomas A., Senior Economist.
Hartley, H. Benjamin, Senior Legislation Counsel.
Kies, Kenneth J., Chief of Staff.
Killelea, Kent L., Legislation Counsel.
Mann, Roberta F., Legislation Counsel.
Matthews, Lauralee A., Senior Legislation Counsel.
McDaniel, Alysa M., Legislation Counsel.
[[Page S8426]]
Mikrut, Joseph M., Associate Deputy Chief of Staff.
Navratil, John F., Economist.
Nega, Joseph W., Legislation Counsel.
Owens, Judy K., Legislation Counsel.
Rock, Cecily W., Senior Legislation Counsel.
Schmitt, Mary M., Deputy Chief of Staff/Law.
Schwarz, Melbert E., Accountant.
Smith, Carolyn E., Associate Deputy Chief of Staff.
Wold, Barry L., Legislation Counsel.
Terry, Maxine, Legislation Counsel.
Mr. ROTH. Mr. President, I am now pleased to yield 15 minutes to the
distinguished Senator from Maine.
The PRESIDING OFFICER. The Senator from Maine is recognized.
Ms. COLLINS. Thank you, Mr. President. I thank the chairman, Senator
Roth, for the extraordinary work he has done to bring this before us
today for passage.
Mr. President, I rise today in strong support of the conference
report on the Taxpayer Relief Act of 1997, the first major tax cut for
the middle class that the Congress has passed since 1981.
This historic tax cut bill, along with the companion Balanced Budget
Act, represents very good news for the American people. These measures
put the Federal Government on the road to a balanced budget, and will
provide much-needed tax relief for middle-class families in Maine and
across the Nation.
There are several small business and education provisions that I am
particularly pleased to see included in the legislation before us
today. These proposals have been among my highest priorities since
coming to the Senate.
In fact, the very first bill I introduced as a Senator was designed
to provide tax relief for family-owned businesses and farms. I am,
therefore, delighted that the Taxpayer Relief Act will provide
substantial estate or death tax relief for family-owned businesses and
farms, the backbone of our economy in Maine. Effective in January of
next year, these businesses and farms will be eligible for a $1.3
million exemption from Federal estate taxes, more than double the
current $600,000 exemption.
Mr. President, I cannot tell you how strongly I feel about providing
this relief. Time and again family business owners in Maine have told
me of their painful decisions to dismember their companies, to sell
them to large out-of-State corporations, in order to avoid saddling
their children with enormous debt to pay the estate tax. The tax is
wrong. It is simply unfair. We ought to be encouraging family
businesses to prosper and to continue from generation to generation.
Given that family businesses will create two-thirds of the new jobs
in the future, our Tax Code should encourage their creation, expansion,
and continuation. The current estate tax structure penalizes job
creation and, according to several studies, has actually cost our
Nation as many as 220,000 jobs--220,000 jobs lost because of this
onerous tax. Passing the estate tax relief provisions of this bill will
allow family business owners to invest in their companies, rather than
in a platoon of attorneys, accountants, and insurance agents attempting
to alleviate the estate tax bite.
Adopting this proposal will mean that these businesses and farms can
stay in the family, and be passed from generation to generation, from
parents to their children, instead of being sold in order to pay taxes
as happens all too frequently under the current estate tax laws. These
reforms will help keep the family in our family businesses and good
jobs in our communities.
In addition, the tax package contains some very important reforms
that will help make a college education more affordable for middle-
income families, another of my top priorities.
Mr. President, prior to serving in the Senate, I worked at Husson
College, a small college in Bangor, ME, whose students primarily come
from lower and middle-income families. Most Husson students are the
first members of their family to attend college.
At Husson, I came to appreciate the critical role that Pell grants
and student loan programs play in making college available to many
students, but I also learned that our current programs do far too
little to help many middle-class families who have to carry the heavy
burden of college costs for their children largely by themselves.
This is a very serious problem. I am pleased that this legislation
contains several provisions that are specifically designed to make it
easier for middle-income families to save for their children's
education and to help graduates pay back their student loans.
For example, families will be allowed to establish tax-deferred
education IRA's that reward them for planning and saving for their
children's college education.
Especially important, this legislation allows students to deduct up
to $2,500 annually in interest on their student loans. Many college
graduates are faced with daunting debts that will strain their finances
for years. We currently do not do enough for those for whom the road to
college ends not with a pot of gold but with a pile of debt. Many
college graduates are faced with daunting debts from their student
loans that will strain their finances for years.
Many students in my home State of Maine, when confronted with this
dilemma, either decide not to pursue a college education at all, or
decide to drop out of college. That is one important reason why Maine
ranks a dismal 49th out of the 50 States in the number of high school
graduates going on to college. That is why this student loan interest
deduction is so critical to bringing college within reach of many
middle-income families.
Mr. President, these proposals--the education savings account and the
tax deduction for student loan interest--were included in legislation I
introduced earlier this year, the College Access and Affordability Act
of 1997. I am very pleased to see that they were included in the
conference report. Making higher education more accessible and
affordable is essential if we are to have a high-quality work force
able to compete in a global marketplace in the 21st century.
Finally, Mr. President, I want to note several other important
provisions that will help our small businesses--the job creators in
this country. This legislation will make health insurance more
affordable for the 82,000 people in Maine who are self-employed. They
include our lobstermen, our hairdressers, our electricians, our
plumbers, and many owners of our small mom-and-pop stores that dot the
communities throughout our State.
Under this package, self-employed workers will be able to deduct 100
percent of their health insurance premiums by the year 2007.
Establishing parity of health insurance costs between the self-employed
and those working for large businesses is a matter of basic equity, and
it will also help to reduce the number of uninsured, but working,
Americans.
Finally, another important provision for small businesses is the
restoration of the home office tax deduction, which was nullified by a
Supreme Court ruling several years ago. Home-based businesses are
exploding all over Maine. This bill will enable many entrepreneurs in
Maine and throughout the Nation to once again deduct the very
legitimate expenses associated with working out of their homes.
Mr. President, in closing, I want to once again commend the
distinguished chairman of the Finance Committee, Senator Roth, the
distinguished majority leader, Senator Lott, and Senator Nickles,
Senator Moynihan, the ranking minority member, and all of those who
have played such a vital role in crafting such historic legislation. It
will provide tax relief to our families, to our small businesses, to
our family farms, and to our students--to our entrepreneurs.
It is a terrific bill that deserves broad bipartisan support. This
legislation has my enthusiastic support, and I appreciate very much
being able to speak to my colleagues on this issue.
Thank you. I yield the floor.
Several Senators addressed the Chair.
The PRESIDING OFFICER. Who yields time?
Mr. CONRAD. Mr. President, I yield myself such time as I might
consume off Senator Moynihan's time.
The PRESIDING OFFICER. The Senator is recognized.
Mr. CONRAD. I thank the Chair.
I say to my colleague, Senator Hagel, that I think they are under an
informal understanding of going back and forth. I would be glad to hold
off, if the Senator has another responsibility elsewhere. I would be
happy to stand down and allow him to proceed.
[[Page S8427]]
Mr. HAGEL. My friend and colleague is very generous. My only other
responsibility, after just a couple of brief comments, would be to
preside over your insightful commentary on the floor of the Senate. If
I might take advantage of the Senator's generosity, I would not need
more than 5 minutes at the most.
Mr. ROTH. Mr. President, I yield 5 minutes to the distinguished
Senator from Nebraska.
Mr. HAGEL. I thank the chairman, and to my friend and colleague from
North Dakota, I thank him.
The PRESIDING OFFICER. The Senator from Nebraska is recognized.
Mr. HAGEL. Thank you, Mr. President.
Mr. President, I would like to take a couple of minutes to give some
perspective about what this body has been doing the last few months,
culminating in a vote shortly today or tomorrow on the Tax Relief Act,
and what we have just done this morning in the balanced budget
amendment.
Four years ago almost exactly, the Congress of the United States
passed the largest tax increase in the history of America. I bring that
point to the front because, Mr. President, the agenda has changed. The
issues have changed. We are now talking about cutting spending, cutting
taxes, balancing the budget, and actually stepping up to the short-term
and long-term challenges in our entitlement programs. I might add as
well that this is a bipartisan effort. The vote that we just held this
morning on the balanced budget amendment was 85 to 15 with strong
bipartisan support--Democrats and Republicans working together.
As we approach a new century--a hopeful, dynamic, energetic, new
century full of great promise for our next generation--it is very
appropriate that we take in this body the responsibility to focus on
fiscal change and infrastructure change to prepare us as we go into
this next century. We cannot hope to compete in a global economy when
we overtax, overspend, and overregulate. I believe that all of us in
this body have come to that conclusion.
The House overwhelmingly last night passed the balanced budget
amendment. They, too, will vote on the tax act, as we will shortly. But
sometimes in the rush of the activity and the heat of the moment and
the passion of the politics, we tend to forget what has been
accomplished here. This has been a remarkable accomplishment.
Imperfect? Of course. Tax cuts--not deep enough. Spending cuts--not
deep enough. This body is on record in going further on dealing with
some of the tough, tough issues that we are going to have to deal with
in Medicare and entitlements. But what is important is that we have
made a beginning--a very strong, substantive beginning. It is due to
the efforts of both sides of the aisle and all in this body who have
helped to make this happen.
I listened to my colleagues this morning walk through some of the
specifics of the tax bill. I think they are worthy of what we have done
because, as you frame it up and understand it, what we have done is,
for the first time in 16 years, we are about to bring real tax relief
to Americans. By our vote this morning we have started to begin to
harness the energy and the resources that we have in this country with
showing some fiscal responsibility--balance the budget and, again, in a
bipartisan way. Those are elements that should not be forgotten or
dismissed easily when both sides of this debate talk about what we have
done and what we have not done.
So I, Mr. President, appreciate the opportunity to bring some general
perspective to this, because occasionally we don't step back enough and
understand what really has happened here and how this will strengthen
this country and the opportunities for our young people as we go into
the next century.
Again, imperfect, more to do, strong beginning. And I, for one, Mr.
President, as a new Senator to this body, am proud to have voted for
the balanced budget amendment this morning, and I intend to vote for
the Tax Relief Act when it comes to this floor.
I appreciate the time which my distinguished colleague from North
Dakota and the chairman of the Finance Committee have given me.
I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. CONRAD addressed the Chair.
The PRESIDING OFFICER (Mr. Hagel). The Senator from North Dakota is
recognized.
Mr. CONRAD. I yield myself such time as I might consume off the
ranking member's time.
I thank the Chair.
Mr. President, first of all, I want to acknowledge the efforts of the
chairman of the Budget Committee, Senator Domenici, and the very great
contribution of the ranking member of the Budget Committee, Senator
Lautenberg. In addition, I want to recognize the exceptional efforts
with respect to the tax bill of the chairman of the Senate Finance
Committee, Senator Roth, and Senator Moynihan, the ranking member.
First, let me say with respect to Senator Roth, that he conducted the
Finance Committee as I hope all committees of Congress would be
conducted. He was absolutely fair. He conducted that committee with a
bipartisan spirit. I think it made a great difference in bringing us to
this point.
I think for too long in Congress on both sides there have been those
who conducted themselves in a very partisan way. Senator Roth chose to
conduct himself in a bipartisan way. That did not mean Senator Roth
gave up his long-held views on taxes and spending. He certainly did
not, nor did others of us who may disagree. We had a full and fair
debate, and all of us took principled positions that were ones we
deeply hold. But there is no reason we cannot have full and fair debate
and treat each other with respect. That occurred in the Finance
Committee, and Senator Roth and Senator Moynihan deserve great credit.
I want to say that at the outset. I hope that serves as a pattern of
how we conduct ourselves going forward in the Senate. I think that is
the model of how people in this country would like to see us conduct
our business. So I want to say to Senator Roth, thank you for being a
gentleman and conducting yourself with grace.
Mr. President, I, too, am proud to have voted for the provisions that
we passed this morning that will finish the job of balancing the
unified budget. I am also going to be proud to vote for the tax bill.
While it is not precisely as I would have written it if I were given a
free hand, none of us can be given a free hand. We are part of a
legislative body, 100 on this side, 435 in the House and, of course, we
have the White House to consider because the President can exercise a
veto.
We worked together to fashion a result that is a compromise. I think
it is a very principled compromise. I think it is a fair result.
Frankly, I would have done more by way of deficit reduction. I wish we
had been more ambitious. I wish we would have done more in long-term
reform of entitlement programs. But that was not to be. That is for
another day.
Mr. President, we have made progress. This package in total does not
reduce the deficit as much as I would have liked. But nonetheless there
is solid deficit reduction here, about $175 billion of net deficit
reduction over the 5 years.
I have been part of a group of centrists, a group of 25 Senators
evenly divided between Democrats and Republicans. We had a more
ambitious package of deficit reduction, I would say perhaps twice as
much. I would like to have seen that package passed. We also supported
in the Finance Committee on a bipartisan basis more far-reaching
entitlement reforms, especially with respect to Medicare, but others in
the House would not vote for those changes. Notwithstanding the fact
that I would like to have seen a different package, a more ambitious
package, the fact is this package is worthy of support. It does further
reduce the deficit. It does bring us to unified balance. I want to make
certain we all understand the difference between unified balance and
what I would consider a true balanced budget. But it also provides
expanded educational opportunity for our children. There is provided in
the previous legislation we passed this morning a broader coverage for
children in health care. It provides for tax relief. There are a whole
series of provisions that I think are going to be useful, including
child tax credits and educational credits. There is also tax reform in
a number of other areas, including estate taxes. Estate tax relief will
be especially important in a State
[[Page S8428]]
like mine where we have many small businessmen and farmers. We have a
package of increased savings opportunities. Nobody is more responsible
for those than Senator Roth of Delaware. He has had a passion for
expanding IRA's and they will provide an incentive, I believe, for
further savings and investment.
There are also capital gains changes that will be welcome in many
circles. I personally would not have favored the extent of capital
gains changes passed here. I would have favored a more targeted
approach. But nonetheless, we did reach an agreement, and as I said
earlier, this agreement is worthy of support.
I, too, want to put this in perspective. I may have a different
perspective than the occupant of the Chair as he expressed it a few
moments ago. I remember 1993 very well. The deficit was $290 billion,
and every projection that we had said the deficit was going higher. The
Democrats at that time had just been elected to the White House.
Democrats had control of the Senate and the House. We had to produce an
economic plan, a 5-year plan, and we did. We passed that plan without
any votes from the other side of the aisle, not one.
In that plan, it is true, we raised taxes. I would not agree that it
was the largest tax increase ever. I believe the tax increases that
were passed in the early 1980's were larger in terms of relationship to
the size of our economy. But nonetheless, we did raise taxes, raised
income taxes on the wealthiest 1 percent in this country. We also cut
spending--$250 billion of spending cuts--over 5 years.
That package worked. Some on the other side said that if we passed
that package it would crater the economy, that it would increase
unemployment, that it would increase the deficit, that it would reduce
economic growth. Well, the record is now in. The record is clear. Our
friends on the other side of the aisle were simply wrong. That package
did not increase unemployment. Precisely the opposite occurred. We had
the creation of 12\1/2\ million new jobs in the last 5 years. Inflation
is at a 31-year low. Unemployment is at a 24-year low. We have had
remarkable economic growth. We have had business investment expanding
at a rate of 10.5 percent a year. We have had the largest reduction in
poverty in our history. This has been an economic plan that has worked
remarkably well. So that is my perspective on how we get to where we
are today.
I will just show this chart. It shows the 1997 budget agreement is
only possible because of the savings generated by the 1993 plan.
Interestingly enough, if you look at the years from 1994 to 2002, the
1993 plan generated over $2 trillion of deficit reduction--$2 trillion.
The plan we are talking about today will further reduce the deficit,
but it will produce less than $200 billion of net deficit reduction
through 2002. So most of the heavy lifting was done by the 1993 plan.
I am extremely proud to have been part of that plan because it took
courage to pass that plan. It was controversial and it was difficult,
but it worked.
Mr. President, today we are talking about a tax plan that, as I
indicated, has many important elements. One of the elements that I
think is very important in this debate is we are able to extend the
child credit to people who are paying payroll taxes that do not have
further income tax obligation.
Some said it would be welfare to give a child tax credit to those who
do not have an additional income tax obligation but are paying payroll
taxes. I am very pleased that we were able to prevail in that debate
because the reality is we have tens of millions of people in this
country who are paying more in payroll taxes than they are paying in
income taxes. In fact, 73 percent of the people in this country pay
more in payroll taxes than they pay in income taxes. Those payroll
taxes are not just being used to finance Social Security and Medicare.
They are also being used to finance the ongoing operations of
Government, because every year we are taking the Social Security
surpluses and spending them. We are spending the Social Security
surpluses to support the ongoing operations of Government.
I will display this chart because it shows what has happened with
payroll taxes. They have increased dramatically. They now make up about
35 percent of the revenue of this Government; and, again, 73 percent of
the people in this country are paying more in payroll taxes than they
are paying in income taxes. So I think it is entirely appropriate that
we extended the child credit to offset payroll taxes for those folks
who earn less than $30,000 a year.
I might say, in my State, that is very nearly a majority of the
taxpayers.
The other provisions of this tax bill are also critically important.
I am especially pleased with the education component because we have
made an enormous investment in American families being able to send
their kids on to higher education. That is good news for American
families. The good news does not stop there. We have also expanded the
incentives for people to save and invest. Again, I want to acknowledge
the role of Senator Roth in that regard.
In my State of North Dakota, we have tens of thousands of small
businessmen and farmers who have looked at the estate tax provisions of
current law and said, Senator, these have not been adjusted for
decades. We are still stuck at $600,000, and it is time for an
adjustment. I am especially pleased that in this legislation small
businessmen and farmers next year are going to see that basic estate
tax provision raised to $1.3 million. That is going to make a real
difference in the ability of small business people in my State and the
State of the occupant of the Chair to pass on their businesses or their
farms to family members.
I think that is what we want to do in this country. We do not want to
break up a small family business or a small family farm. Someone may be
listening and thinking, is a small family farm, 1.3 million? Given
what's happened to land values in parts of our State and other parts of
the country, as urban pressures have grown, absolutely that can be a
small family farm. You can have a land value of $1.3 million and have
people who are cash poor. I have friends who are in farming. If you
went to their homes, you would find them living very modestly, very
modestly, indeed--driving old cars, living in homes that have not had
much done to them in maybe 20 years. Yet they have a land value of $1.5
million. But they have very little in the way of cash income. Yet the
current estate tax works to break up those family operations. That is
not what we want to be doing. These estate tax changes are going to be
very positive.
Mr. President, I want to end as I began by saying this has been a
bipartisan effort, it has been a constructive effort, and it has
brought us to this result. It is a good result. I also want to say that
we have more work to be done. When we talk about balancing the unified
budget, what that means is that we are taking Social Security surpluses
and counting those in order to achieve balance. It is not my idea of a
real balanced budget. I will really celebrate the day that we are no
longer counting Social Security trust fund surpluses in order to say
that we have balanced the budget.
Let me just show this last chart, because this shows what has
happened to the so-called unified deficit. It is the blue line. It
shows back in 1992 we had a deficit of $290 billion. It has gone down
every single year since the 5-year plan that we put in place in 1993.
This year the projection is $67 billion. I think when the new figures
come out in the next couple of weeks they will show that the deficit
this year, instead of being $67 billion, as is the current projection,
will be down even substantially from that, perhaps as low as $45
billion. Some are even now saying the deficit this year will be as
little as $30 billion.
We have had a cumulative deficit of only $11 billion in the first 9
months of this year. That is a remarkable success, from a deficit of
$290 billion in 1992 to a deficit this year that may be as little as
$45 billion. Then, under this plan we bump up next year. We don't know
what the new projections will show. Then we are on a steady, declining
path to unified balance in 2002.
But the red line shows something else. It shows that while the
deficit is in fact declining each and every year, we will still be left
with a $109 billion deficit in 2002, when one includes the Social
Security trust fund surpluses. So I think it is fair to say that this
plan does balance the unified budget, it
[[Page S8429]]
does provide tax relief, it does do other things that are very helpful
to the American people. But I think it is also important to remind
ourselves we still have progress that needs to be made. Because in 2002
we will still have a real deficit, when we consider those Social
Security trust fund surpluses that are being thrown in the pot to claim
balance.
Even with that said, the fact is this package does represent progress
at further reducing the deficit. It does represent tax relief. It does
represent the other things that I referenced earlier, like expansion of
educational opportunity for our families. It also provides, in the
earlier legislation passed, a dramatic expansion of health care
coverage for kids in this country who need it.
With that, I yield the floor. I again thank my colleagues who have
worked on a bipartisan basis to achieve this result.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, before yielding time to the distinguished
Senator from Ohio, I would like to thank my good friend and colleague
from North Dakota for his knowledge, his background, and contributions
to this effort. No one has, I think, greater expertise in such matters
as these than this distinguished Senator. I just wanted it to be
publicly known that I appreciate his contribution and look forward to
continuing in a bipartisan spirit.
I am now pleased to yield 10 minutes to the distinguished Senator
from Ohio.
The PRESIDING OFFICER. The Senator from Ohio.
Mr. DeWINE. Mr. President, I thank the chairman of the committee,
Senator Roth, for the fantastic job that he has done. I congratulate
also our majority leader, the chairman of the Budget Committee, Senator
Domenici, as well as the Chairman of the House Budget Committee, John
Kasich, and the Chairman of the House Ways and Means Committee, Bill
Archer--all of the people who have been involved in this really
historic piece of legislation. I rise today in strong support of this
conference report, the Taxpayer Relief Act. This historic budget
agreement is an important step forward for fiscal responsibility,
fiscal responsibility that will balance the budget for the first time
in 30 years. And it will provide much-needed tax relief for working
families.
When we implement this budget agreement, the result will be the first
balanced budget since 1969. That is great news for the U.S. economy as
well as for the working families who will see a decline in the interest
payments they have to carry. This bill will give working families some
long-needed, much-needed, much-deserved tax relief--$90 billion of tax
relief over the next 5 years. Today, the working families of Ohio and
the rest of America are paying record-high taxes. All across America,
total taxes eat up 38 percent of the typical family's budget--38
percent. That is more than the typical family spends on food, clothing
and shelter combined. On these family necessities they only spend 28
percent of their income.
The people who are particularly helped by this are the lower middle
class, the middle class, the working American. A family of four, two
children, two adults, with an income of $30,000, will see tax savings
of 53 percent--53 percent. A family with a $40,000 income, that same
family, would receive a 30 percent tax savings. That same family, at
$50,000, would still receive a 21-percent tax savings. That is real
money. That is very, very significant.
The education tax incentives will also help the next generation. It
will help Ohio families, it will help American families. We all know
education is getting more and more important as we move to a skill-
based economy. We also know it is very expensive. This tax relief bill
will help Ohio's families save and pay for their children's education.
It will expand the IRA's available for education and create tax-free
prepaid tuition plans. It makes interest on student loans deductible
from Federal taxes. It also encourages employers to invest in the
education of their workers by giving them a tax deduction for employee
training and employee education.
This historic tax bill will help families make ends meet over the
short term, and will help them educate their children over the long
term. In my view, this is a modest bill, but it is a very important
bill. It is a historic bill. It is important because it helps America
as a nation reverse course. Mr. President, 50 years ago Americans paid
2 cents out of every dollar they earned to the Federal Government.
Today they are sending 25 cents to Washington alone, and that is not
counting all the other State and local taxes. That's going in the wrong
direction. What we do with this bill is change course and begin to go
in the right direction. The $500 per child tax credit, in particular,
will help ease the burden of working families who need to hold down two
or more jobs to make ends meet.
The tax relief in the agreement will also do a great deal for small
business men and women. The capital gains cuts and the lowering of the
estate tax will help promote economic growth and help preserve family
owned and operated businesses. All of these policy changes in my view
are extremely positive. They represent substantial progress over where
we are today.
I hope that we soon will address the long-term problem, though, of
runaway entitlement spending. We begin to make progress with this bill.
Clearly we have to go further. To balance the budget by the year 2002,
as the budget agreement would in fact do, is very, very important. In
fact, it's a prerequisite for any other progress we intend to make in
economic policy. However, while it is essential, it is only a first
step. We need to view what we are doing today, really, as just that, a
first step. Our next necessary step is to prepare the Federal budget
for the fiscal tidal wave that will occur when the baby boomers start
to retire and become eligible for Social Security and for Medicare. In
my view, we have to start reforming the entitlements in a responsible
and bipartisan way. Congress has been talking about this for years. It
is essential that we make it happen and we make it happen as soon as
possible.
But, for today, this bill and its companion measure are an excellent
step forward, a first step. I am proud to vote yes on both of these
historic conference reports.
Mr. DORGAN addressed the Chair.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, I yield myself as much time as I may
consume of the time allocated to our side.
I come to the floor today to say I intend to vote for this conference
report and am pleased with the work that has been done in the Congress,
and especially the work that has been done by so many people who
invested so many hours to try to do the right thing.
The Senator from Delaware, Senator Roth, who heads the Senate Finance
Committee, has disproved the old adage about what a committee is, which
is: A group of the unwilling chosen from the unfit to do the
unnecessary. This committee, under this chairman's leadership, and the
men and women from the Republican and Democratic caucus who were
assigned to that committee, I think have done some very substantial
work that will engender a substantial vote in the U.S. Senate, a
bipartisan vote. I am glad to stand on the floor in this circumstance
and say, finally, we have reached a point where both parties have come
together to say that we fashioned something that we think will work for
this country.
We have a very different view of how we got here. I heard some
remarks earlier. Some of that is probably typical and traditional
rhetorical comments from both sides about where we have been and where
we are going. I can remember 4 years ago on the floor of this Chamber
when the deficit was going up, up, up and out of control, following a
decade in which the description by the new economic guru to previous
administrations was, ``Well, let's double defense, cut taxes and things
will be just peachy.'' Defense spending doubled, taxes were cut, and we
nearly choked on deficits in this country.
We came to an intersection in 1993, 4 years ago, with a new President
and a Congress, and this President said, ``Let's take a hunk out of
that deficit and tackle that Federal deficit,'' and we voted for it and
did it by one vote--one vote.
I can recall the cries of alarm on the floor of the Senate:
[[Page S8430]]
``You're going to throw this country into a recession.''
``You're going to ruin this country's economy.''
No, we didn't do that. We were willing to stand up and vote for harsh
medicine to say this fiscal policy has been out of control, we need to
get it back into control and play no more games. We cut some spending,
we increased some taxes, yes, and we cut this deficit down, down, down
and down, and guess what happened as a result of it? Unemployment
plummeted. More people are working, inflation is down, the deficit is
down, the economy is growing, and it is a better place because of it,
and only because we are standing on the shoulders of those in 1993 who
cast that vote, some of whom are not here, because we took a clobbering
for that medicine in 1993. Only because of that tough decision are we
now able to do the rest of the work and say to the American people,
this country is moving ahead, moving in the right direction, and
economic growth is sufficient so that now we can provide some tax cuts,
as well as some spending cuts, and not only tackle the rest of the
budget deficit problem, but also provide some much-needed relief to
overburdened American families.
Carl Sandburg said once:
I see America not in the setting Sun of a black night of
despair ahead of us, I see America in the crimson light of a
rising Sun, fresh from the burning creative hand of God. I
see great days ahead, great days possible to men and women of
will and vision.
My attitude about where we are in this country is we are headed in
the right direction. As I said, unemployment is down, jobs are up,
crime is down, the country is growing. Is everything perfect? No, not
at all. We have a lot of changes ahead of us. Is everything in this
bill perfect? No. If I had written it, I would have made some changes.
But have we come together at this juncture, together with a Democratic
and Republican Party, a Democratic President, a Republican Congress,
men and women of both parties to do something that is good? Yes, I
think so.
In this legislation, today we say to the American people we think
education is critically important and we are going to not only invest
in education in the bill we passed yesterday, we are going to provide
significant new tax cuts to relieve the tax burden on families who are
sending their kids to college. The effort that is made in this piece of
legislation to value education is critically important because this
country's future is in educating its kids.
Yesterday, we talked about expanding Head Start to a million new
American children. That is a significant achievement.
Today, we say that families--45 million children in this country--
will receive ultimately a $500-per-child tax credit, which I think will
be a significant benefit to American families.
In addition to the significant achievements in education and the
significant achievements in investing in jobs and other things,
inducing savings and the things that, I think, have great merit for the
future of this country, this legislation provides some specific things
I want to mention just very briefly.
One, there has been a lot of controversy about estate tax reform.
People say if you provide estate tax reform, that affects a small slice
of people with an enormous amount of income. I come from a part of the
country that is sparsely populated and losing population. My home
county has 3,000 people living in an area the size of the State of
Rhode Island. It used to be 5,000, but people are moving and leaving
many rural areas. I want to do everything I can to encourage every
family business and every family farm to be passed from parents to
children, to keep operating and keep open and stay there in rural
America, and this estate tax provision is going to be enormously
helpful in doing that.
I might say that one other piece of good news in this legislation is
parochial, but important, to people of South Dakota and North Dakota,
Minnesota, and other disaster victims around the country. There is in
this legislation several provisions that I had asked be put in that are
going to be helpful to disaster victims. There are a number of
provisions that say, because of disasters you are unable to file your
tax return, and the IRS extends the time in which you are able to file
a return--the IRS said, ``We'll do that, but we still must charge
interest''--this waives the interest for taxpayers who were not able to
file a tax return because their house and all their records are down
the river someplace in a massive flood. That is a tiny little issue,
but important, and I am very pleased that it was put in this piece of
legislation.
The folks who were victims of blizzard after blizzard after blizzard
in the Dakotas, Montana, in our part of the country, who had to sell
cattle because they had no feed and now are going to restore their
herd, this piece of legislation says you are not going to have to pay
capital gains tax on the herd that you sold.
This piece of legislation has a very important benefit to livestock
producers who were victims of the disaster in our part of the country.
It overturns an IRS ruling, a tiny little thing, but it is going to
affect tens of thousands of farmers. The IRS took a position a while
back on what are called deferred contract sales that farmers have made
routinely for years and years at the country elevator, that they were
going to be taxable under certain circumstances. We have no idea where
the IRS came up with that interpretation. It is completely wrong. They
had no basis for doing that.
This legislation says to the IRS that you can't do that. Senator
Grassley and I, and nearly 60 of our colleagues in the Senate, joined
and said to the IRS, ``Look, everybody in America has a right to be
wrong, it is a democracy, but when the IRS is wrong, America pays. In
this case, you're wrong, and we're going to change the law so you can't
misinterpret what we write.''
Those are the kind of things in this piece of legislation that have
great merit. Those are some of the smaller things I wanted to mention.
Finally, in closing, because I know other colleagues have things they
want to talk about, I think this piece of legislation represents an
awfully good instinct of the political system to get together and see
if we can't do things together that represents a consensus that will be
good for the future of this country.
We so often fight among the political parties to prevent the other
side from winning that, instead of getting the best of what each has to
offer, we get the worst of what both can offer. That makes no sense for
this country. This piece of legislation is a credit, yes, to this
President and the White House who worked so hard for it and proposed so
much of this; it is a credit to Senator Roth, Senator Moynihan and so
many others on the House and Senate side from both political parties
who I think have done a commendable job. Would I have written it
differently? Yes. Am I concerned about the outyears a bit? Yes. We need
to put up fences to make sure we don't go back into a deficit
situation.
We haven't finished dealing with the deficit. As my colleague from
North Dakota, Senator Conrad, pointed out, this is a unified deficit.
We still have a Social Security problem we must deal with. I probably
would have preferred to take even more benefits in this piece of
legislation and provided it to working families, but I didn't write
every piece of it, and this is a compromise. I also would have
preferred to have some limit on the issue of capital gains. I support
the capital gains tax treatment that exists, but I would have had some
limit on it.
Having said all that, I am pleased to come to the floor today to say
I can vote for a piece of legislation that I think advances this
country's interest, and it rests on a bed of good news that comes from
our colleagues who, in 1993, stood up and said, ``Count me in, let me
vote for the first giant step in tackling this Federal deficit.'' And
this next step, a bipartisan step which is good for this country, is
one which I hope will give the American people a good feeling about
their future.
Mr. President, I yield the floor.
The PRESIDING OFFICER. Who seeks recognition?
Mr. JOHNSON addressed the Chair.
The PRESIDING OFFICER. The Senator from South Dakota.
Mr. JOHNSON. I yield myself such time as I may consume.
Mr. President, I rise to express my support for this legislation. I
want to
[[Page S8431]]
commend Chairman Roth and the ranking member, Senator Moynihan, and
Senators Lott and Daschle for their leadership. A great deal of good
has come from the bipartisan cooperation put together to produce this
legislation. I certainly will vote for it.
Much has been said by some about the historic nature of this
legislation. Perhaps that is true. But I have to say, in following the
comments of my colleague from North Dakota about the historic context
of how we arrived at this point, that some observation needs to be made
that the truly historic legislation that was passed was the 1993 Budget
Act.
President Clinton inherited a hemorrhaging pool of $290 billion of
red ink that was projected to grow annually when he came to the White
House. His first step was to work with Congress to pass a 5-year budget
plan that passed without a single Republican vote. At that time, I
served in the other body. I remember the immense political pressure
that was brought to bear at that time. I remember the 30-second
television spots that followed, accusing every Democratic Member of
having cast the deciding vote on something that would be catastrophic.
What happened? The $290 billion of red ink has now plummeted this
year to an estimated $67 billion, perhaps as low as $30 billion. We now
have the smallest Federal budget deficit relative to the size of our
economy of any Western industrialized nation on Earth. We have a
vibrant economy, high employment, low unemployment, low inflation, and
we find ourselves now in the midst of a remarkable era.
This legislation is important legislation, but it will finish what we
began in 1993 when we had a $290 billion deficit and brought it down to
as low as $30 billion. This will get us from $30 billion to the finish
line by the year 2002, a good thing to do, a positive thing to do. But
the historic step, the politically courageous step, was taken 4 years
ago.
Is this legislation perfect? No. No, it isn't. That is the nature of
any legislation, particularly, I suppose, of a piece of legislation
that is a product of compromise between very different approaches. I
think some of the high-fiving that has gone on around town may be a bit
unwarranted. I would say, however, that this bill has been made much
better during the course of the debate. The initial legislation, the
reconciliation legislation that we dealt with in both the House and the
Senate, provided very little tax relief, essentially no tax relief, for
families making less than $30,000 per year. There was certainly no
child tax credit for these families.
Now, as I see it, this problem has been corrected, thanks to the
leadership, particularly of the President of the United States, but
also of Senator Moynihan and Senator Daschle, and others who worked
very hard on this. Take a family, for example, with an income of
$23,000 per year, perhaps a teacher, a firefighter, a policeman, a
farmer, a store clerk, any number of people across our country who get
up every morning--they play by the rules, they try to raise their kids
with decent values, they try to keep jeans and tennis shoes on their
kids, they are doing the right thing, they are not on welfare, they are
working hard, oftentimes with two jobs.
But wages, particularly in my State of South Dakota, are not always
what we would like them to be. Farm prices are sometimes low. And these
people, who are working their hearts out, oftentimes are living on very
modest wages. And that family, with a father, in this case, who is
earning $23,000 a year, and mom who is staying home with two kids,
under the original bill and under the original Republican plan, would
have gotten zero in child tax credit. Under the Clinton plan, they
would have gotten $767.
Well, the dust has now settled, and under the conference committee
bill that we are voting on today, that family will get a $675 tax
credit, a very useful sum for those families. People can make a car
payment, a house payment, they can get their kids started with clothes
for school, they can do some positive things. And I think we need to
reward work, particularly at a time when we are reforming welfare and
essentially ending the guarantee of federal support of families. We
need to focus on what more can we do, then, to make work pay. Certainly
this improved child tax credit, along with augmenting the funds in this
legislation relative to health insurance for kids, is a positive step
forward.
It is true that this bill still has some unevenness to it. I have
noticed that a group called Citizens for Tax Justice has an analysis
out that indicates that the wealthiest 1 percent of American families
will benefit by about a $16,000 tax cut because of this legislation.
The average middle-class family will benefit by something less than
$200. That isn't the kind of division that I would have made if it were
up to me exclusively.
But nonetheless, I do see the need to balance the budget by 2002,
provide some key relief, not only with the child tax credit, but
certainly, in the case of education assistance, to provide a $1,500 tax
credit for tuition, tax-deductibility of interest on student loans, and
to expand Pell grants, not only the numbers who are eligible but also
the size of the grants. That is investing in kids, and investing in the
brain power of this country. That is really where we must make a
commitment if we are going to compete in a global economy, not just now
but for generations into the future.
I see positive things relative to agriculture. My colleague, Senator
Dorgan of North Dakota, has gone into much of that. Capital gains
relief for small businesses and family farmers will be helpful. There
is also estate tax relief. Certainly, there are some targeted kinds of
aid for those who have had to liquidate their herds. There is
restoration of income averaging. There are a number of provisions that
will be of great help. That I have to applaud.
I am concerned about the backloading of some of the tax reductions
which has the potential consequence of making balancing the budget
post-2007 more difficult. It would be disastrous for us to have gone
through all of this and then find ourselves the year after balancing
the budget, or only shortly thereafter, going back into red ink again
because of backloaded or phased-in tax cuts that had negative
consequences in the outyears.
That is something we are going to have to be very conscious of in the
future. This is not a matter of turning the Federal budget over to
automatic pilot and now we are home free. It is going to involve
difficult, contentious, but hopefully bipartisan, annual debates about
how to maintain equilibrium between our revenue and our expenditures
while still using our budget for the correct priorities.
I think one of the key political issues in America over these last
several years has been, how do we balance the budget? There is
bipartisan agreement we need to do that. But how, at the same time, do
we protect Medicare, do we continue to invest in education and protect
the environment? How do we do it in a way that reflects the best of our
values and our priorities in this country? Can that be done?
Some of us remember only a couple years ago when there was a proposal
that would have arguably balanced the budget, but it would have
decimated Medicare, it would have taken investment away from education,
it would have been destructive to the environment, and certainly to
rural Americans. Thankfully President Clinton vetoed that legislation.
He said we can do better, we can do better with our priorities and
still get to a zero deficit.
Thankfully, this legislation, for all of its warts and all of its
shortcomings, does in fact get us that remaining $30 billion to $60
billion that we need to balance the budget, and it expands the number
of kids who have access to health insurance. It will be helpful to
small businesses and farms. This bill will increase the tax-
deductibility of health insurance premiums for the self-employed to 100
percent, something long overdue. And it will, I think, help continue
the economic growth that we have seen over these last 5 years where we
have had 5 consecutive years now of deficit reduction and economic
growth.
And so, Mr. President, I think that this is a positive piece of
legislation. It is the product of bipartisan agreement. Thankfully, the
President has used his leverage to make sure that we do in fact live up
to these priorities and to bring some common sense back into this bill.
The truly historic legislation was that of 1993, but this is important
legislation. I support it.
[[Page S8432]]
I voted earlier for the budget portion of reconciliation. I will vote
for this tax portion of reconciliation. I am proud of what our
colleagues on both the Republican and Democratic sides have been able
to do to pull together, to set aside some of the anger and some of the
hostility that too often has characterized political debate in this
country, and to spend a little less time being Republicans and
Democrats and a little more time being Americans.
I think that is what the American people really want. And they want
to see an end result that reflects the best of our cooperative efforts.
This legislation does, I think, take us down that road.
So, Mr. President, while there are things I would have done
differently, and while we do need to understand the historic context of
how we arrived here, this is good legislation, and I yield the floor
expressing my support for this bill.
Mr. CHAFEE. Mr. President, under our order, we are now going back and
forth. Senator Hutchison was next, and she was here just a minute ago.
And I believe she is coming on the floor now. So I ask Senator
Hutchison, are you ready to go?
Mrs. HUTCHISON. I would be happy to yield to my colleague from
Minnesota who I think was here first, and then if I could follow after
the next Democrat.
Mr. CHAFEE. It would then go back over to this side-- Senator Baucus
has been waiting--and then back to you.
Mrs. HUTCHISON. That would be fine.
Mr. CHAFEE. I yield to the Senator from Minnesota.
The PRESIDING OFFICER. The Senator from Minnesota.
Mr. GRAMS. Thank you very much. I want to thank my colleague from
Texas for yielding.
Mr. President, I came to the floor yesterday to discuss in detail my
strong support for the Taxpayer Relief Act of 1997. I do not intend to
repeat the arguments I made then, but I do have just a couple of other
points I think need to be made.
When my good friends, Senator Hutchinson of Arkansas and Senator Dan
Coats of Indiana, and I first proposed the $500-per-child tax credit
back in 1993, we were not doing it to grab headlines and it was not a
piece of cheap political theater. We pursued the $500-per-child tax
credit because we believed that working families are horribly
overtaxed. And how did we know that? Because the American people told
us so.
Americans are by nature a very giving and generous people. For a long
time, they did not complain--at least too loudly--that their tax burden
seemed to be rising every year even though they were not seeing any
improvements in Government services. If anything, their tax dollars
seemed to be buying less and less. But when taxes reached the point
where working Americans were spending more of their hard-earned money
feeding the Government than they were spending to feed, clothe, and
shelter their families, well then, the taxpayers started feeling as
though their generosity was being taken advantage of. They began
demanding that the Government stop spending their dollars so
recklessly. They began asking for tax relief, so they could start
meeting the needs of their own families, instead of feeding
Washington's mixed-up priorities.
So what do working families want from their Government? Well, let me
first tell you what they do not want.
America's working families do not want handouts.
They do not want more government agencies or programs.
They do not want their tax dollars feeding bigger Government.
They do not want the Government to intrude unjustly into their daily
lives.
They just want to go to work to make a good living, have a decent
place to call home, and to have the opportunity to provide for their
children. And they want to keep a little bit more of their own money at
the end of the day. That is what this package of tax relief will
deliver. For my home State of Minnesota, the $500-per-child tax credit
at the heart of our legislation adds up to at least $300 million that
will stay in the hands of families every year. More than 700,000
middle-class children will benefit. That is what families have told me
they want, and that is what we are on the verge of delivering.
It should not be an occasion to celebrate when politicians actually
keep their promises. That is how the process ought to work. But we all
know that Washington has gotten pretty good at making promises, but too
often fails miserably when it comes time to keep some of those
promises. But, today, Congress is delivering on what I consider to be
an irrevocable promise we made to the taxpayers 2\1/2\ years ago. Send
us to Washington, we said, and we will cut your taxes. That is not a
political slogan--that was a promise.
Now, let us not kid ourselves--our package of tax relief is not going
to make anybody rich. As tax cuts go, it is pretty paltry. The net tax
relief amounts to less than 1 percent of all the tax revenue collected
by the Federal Government over the next 5 years. It begins to roll back
the President's 1993 tax increase, but we would have to pass a bill
three times bigger than the one before us today to wipe out the 1993
increase completely. It is an important start, however, in moving the
Government in a new direction.
Relying on a radical philosophy of faster, better, cheaper, NASA
launched the Pathfinder probe and successfully--and dramatically--
opened a new era of exploration on Mars. The return on that investment
has gone far beyond anything that can be totaled up on a balance sheet.
I would like to see the same philosophy of faster, better, cheaper
applied to the rest of Washington as well, for a payback I believe can
be equally as impressive. A faster government has fewer layers of
bureaucracy, so that it can more quickly meet the needs of the people.
A better government is responsive to its citizens and responsible to
its taxpayers. A cheaper government needs fewer dollars to carry out
its work, opening the door to future tax cuts that leave even more
money in the hands of the taxpayers.
Faster, better, cheaper is an idea that worked on Mars. It is an idea
that ought to work just as well here on Earth.
To paraphrase a favorite quote of mine, Mr. President, politics are
temporary--but the American family is permanent. Enactment of the $500-
per-child tax credit is a great victory for families, one I believe
will help bring them together, and hopefully keep them together. I am
proud that I can go back home this weekend and tell the working
families of my State--who for years have watched their taxes rise and
their take-home pay shrink--that Washington finally got the message. We
are at last going to cut their taxes, not because it is the politically
easy thing to do, but because it is the right thing to do.
Again, I want to thank and commend the majority leader and my
colleagues, the chairmen of the Finance and Budget committees, for
having the determination to bring the Taxpayer Relief Act to the floor.
This is a great day in the history of the Senate, and it is also a day
that I am proud to be a part of.
Thank you, Mr. President.
I yield the floor.
Mr. BAUCUS addressed the Chair.
The PRESIDING OFFICER. The Senator from Montana.
Mr. BAUCUS. Mr. President, I yield myself such time as my side is
allowed to consume.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BAUCUS. Mr. President, I think that the American people
essentially want us to do the right thing. They care less whether it is
the Democratic policy or the Republican policy. They care less whether
it is conservative or liberal. Essentially, they say, ``You folks back
there in Washington, come together, do what's basically right, what's
within the realm of reasonableness. Just get your job done. If you do
that, you're doing a pretty good job.''
Mr. President, I think that is what happened here. We Democrats like
to claim lots of credit for this legislation. A lot of us talk about
the 1993 Deficit Reduction Act, which I do think is the cornerstone
which led to declining deficits and allowed the American economy to
begin to prosper, interest rates dropped, with inflation rates lower,
unemployment rates lower, et cetera. Republicans like to claim that,
oh, no, they are the ones that basically did all this. After all, they
are the majority party in the Congress right now.
[[Page S8433]]
But the truth of the matter is that it is the combination of both
sides working together to reach this agreement. And even more truthful,
we have a big assist, and that is the national economy. The economy is
doing very well. We all know that. And that enables President Clinton
to negotiate with the Republican majority in the Congress, and with all
Congress for that matter, an agreement which makes most people pretty
happy. That is, it cuts taxes. When the economy is doing very, very
well, the U.S. Government is bringing in more revenue than it usually
does, and it is easier to cut taxes. That is what we have done here. We
all like to have our taxes cut.
Second, there are additional spending programs in here. One big one
is education, which is very needed in America. We must invest more in
education. All of us know that. If we are going to compete with
countries around the world and we are going to increase the quality of
living for all of our people, it is critical that our young people get
a better start and a better education. We spend quite a bit of money in
this bill on education, whether it is direct spending or tax credits.
So the economy has helped us very much. I wonder where we would be
today, Mr. President, if the economy were not doing well today. Would
we be balancing the budget as quickly? Would we be working as well
together? Would there be as much peace and harmony on both ends of
Pennsylvania Avenue? I see the occupant of the Chair shaking his head
in the negative, and I agree; we would not be doing as well. The
economy gave us a big boost. We are here, in some respects, because of
that.
I, like most Members of this body, support this conference report. It
does do basic things which are important. No. 1, it moves us toward a
balanced budget. We are going to have a balanced budget at least by the
year 2002. My guess, Mr. President, is that we will probably reach a
balanced budget before the year 2002. In fact, the projected budget
deficit for this year is to be as low as $50 billion. So we will
balance the budget. We will be living within our means. That is no
small matter.
We also have tax cuts which help small businesses and help families
around our country and help the country generally. That is good. This
bill also keeps hospitals and clinics open in rural America. I mention
rural America because my State tends to be rural, and we have been
working for many years to be sure that we have quality health care in
our part of the country, as well as in the cities.
This will also help make sure America's children have health
insurance. Not too long ago, we passed the Kennedy-Kassebaum bill,
which would disallow preexisting medical conditions as a condition for
denying insurance to insureds. That helped to buy more health insurance
for programs. We also allow for something called portability; that is,
if a person has health insurance, he can carry it to his next job. We
Americans don't have the world's best health insurance program. Other
countries insure their people a little bit better than we do. But the
one area this bill addresses is health insurance for kids, which is
very important and critical. All of us here are very happy for that.
The bill has some drawbacks and I will address a couple of them later
on. By and large, the benefits far outweigh those drawbacks. Let's
start with the good news.
As work on this agreement began earlier this year, I set a few basic
priorities for myself by which to judge the final result of this bill.
One was that this bill must balance the budget, it must help small
businesses, and it must promote education--those were all priorities of
mine--and, finally, it must be fair; that is, the distribution effect
of this bill must be fair to all Americans. On the whole, I think this
agreement reaches those criteria.
First, we will see a balanced budget by the year 2002. It might even
be earlier. But to be realistic, this bill deserves only a bit of the
credit. I believe that the 1993 budget bill made the real tough
choices, and that was the bill that began us on a glide slope toward a
balanced budget. It was a tough bill. We took some tough medicine back
in 1993. But that laid the foundation for where we are today. It
brought us from a deficit of $290 billion in 1992 to a deficit of
perhaps just $35 billion this year. So we started this effort with most
of the work already done. This is just a small finishing-up effort on
that 1993 bill. I must say, a booming economy is helping us as well.
Second, this bill goes in the right direction on taxes. That is, it
lowers taxes. Overall, it will cut taxes by $90 billion over 5 years.
That is not a revolutionary change, but it is significant, and it is
going to help make a difference to some people. Particularly, the $30
billion in education tax credits is going to help families send their
children to college. That is going to help.
By cutting the estate and gift tax, we will help farm families, small
business owners, and ranchers all across our country keep their land
and their businesses and their operations in the family. That is very,
very important to the people in the State of Montana. We have a lot of
farmers and ranchers who have virtually no return on their investment,
virtually no cash flow, but their land values are accelerating because
some people are moving to Montana--wealthier people--which are pushing
up land values.
Relief in Federal estate and gift tax is critical. We phase in 100
percent health insurance for the self-employed, and that means a lot to
small business people, self-employed people who can't take nearly the
same deduction in taxes and health insurance they pay compared to
people who work for big companies. Generally, in America, the more you
work for a large corporation, the better your health insurance policy,
because your employer takes the full deduction for the health insurance
policy. If you are self-employed, you don't get that; you have to pay
for it all yourself. We began a couple of years ago to phase in a
deduction for the self-employed. This legislation will bring that to a
full 100 percent, albeit over the next 7 years.
A capital gains tax reduction is very important. That should help
savings and investment in our country.
With respect to health care, this agreement also means significant
accomplishments, essentially by providing $24 billion for health
insurance and services for working children. This is $8 billion more
than the original plan, and it is paid for with a cigarette tax that
will create its own health benefits by reducing smoking.
We also set up a new limited-service hospital program, modeled on the
Montana Medical Assistance Facility, or MAF's, which allows hospitals
to keep their doors open in small towns. The MAF is a proven success in
many communities like, in my State, Circle, Culbertson, Big Timber, and
Ekalaka, and this agreement will make those MAF's permanent. This will
also slow a two-decade-long trend that has closed nearly 10 percent of
all rural hospitals.
We also allow rural family practice residency programs that are just
getting started to expand. That is very important. Montana's two
residency programs, one in Billings and other in Glasgow, are critical
to attracting doctors to our State's rural communities. It makes sure
that rural areas get fairer managed care payments from Medicare
compared to the big urban areas.
And not least, we objected to proposals in the last Congress to make
large cuts in Medicare and abolish Medicaid's guarantee of health
insurance for poor people.
But the agreement is not perfect. I would like to note four areas
where I think it falls short.
First, it contains many special interest tax provisions. This means a
much more complicated Tax Code and more tax advantage to wealthy people
and big companies who can hire large numbers of lawyers and
accountants. This tax bill makes our Tax Code much more complicated,
unfortunately. We should return to this issue in the future and work to
simplify the Tax Code and eliminate loopholes.
Second, it includes unreasonably tough cuts in Medicare and Medicaid
reimbursements to health care providers. These reimbursements make up
an average of 55 percent of Montana hospital revenue. And the smaller
facilities, with under 30 beds, already are collecting, on average,
over 4 percent less in revenue than their costs. It is tough to squeeze
these facilities any further.
Third, it misses a chance to improve our national transportation
infrastructure. I, with Senator Warner, and 80
[[Page S8434]]
other Senators, requested extra money for highway and transit
construction. That money would have meant safer travel and a more
productive economy. But this agreement does not have that.
It does move the 4.3-cents-per-gallon motor fuel revenues from the
Treasury to the highway trust fund. But for accounting reasons--that
is, the lack of an offset--that is only phantom money. It will not mean
any real change in the highway and transit budget, and I regret that. I
alert my colleagues that when we take up the transportation bill after
the August recess, we are going to realize how much we regret that.
Finally, this bill ducks some of our long-term fiscal challenges. As
we look 15 or 20 years ahead, we know Americans will live longer. So
the bills we pay for health care and pensions for older men and women
will be much higher than they are today.
With the healthy economy and a good fiscal situation we have today,
we could have taken some steps now to ease the problems this situation
will cause the next generation. This agreement doesn't take those
steps. It is a missed opportunity. I wish we had taken this
opportunity.
But on the whole, this is a reasonably good effort. It does balance
the budget. It helps small business and families. It makes sure
America's children have health insurance, more than today. Those are
very important things for our country, and we ought to get them done.
So I support the agreement, and I urge my colleagues to do the same.
I might say at this point, Mr. President, how much I appreciate the
bipartisan efforts, particularly of the chairman of our committee,
Chairman Bill Roth, who worked very, very diligently to help make sure
that both sides of the political aisle worked well together. That
doesn't always happen in this body. There are some committees where
that doesn't happen much at all. But Chairman Roth, chairman of the
Finance Committee, did work very hard to bring both sides together, and
I think that is one reason we are here today finally with this bill.
I yield the floor.
Mrs. HUTCHISON addressed the Chair.
The PRESIDING OFFICER (Mr. Gorton). Who yields time?
Mr. CHAFEE. We yield such time as the Senator from Texas requires.
The PRESIDING OFFICER. The Senator from Texas is recognized.
Mrs. HUTCHISON. I thank the Chair. Today is a historic day. We will
vote and pass the first substantial tax cut in 16 years, giving much-
needed, long-overdue tax relief to working American families. We have
been working for tax cuts for 3 years now, and we are making a
downpayment on that commitment.
I view the bill that we are debating today as the second half of an
entire economic package. We passed the first half this morning. I was a
somewhat reluctant supporter because, while it does take steps toward a
balanced budget, we missed the opportunity for historic Medicare reform
that would have created real consumer choice and preserved the program
for the next generation. The Senate spoke on this issue. But the
President's opposition to real Medicare reform prevailed in the final
version.
He also walked away from some very important decisions we made last
year on welfare reform. We have hampered the ability of States to
implement the welfare-to-work law. The President has already denied
States, including Texas, the ability to privatize and consolidate
welfare services. In Texas alone, such consolidation would yield annual
savings of some $200 million. The President's continued opposition to
true welfare reform carried the day.
Mr. President, I did support the bill this morning because it is
linked to the tax cuts we are now discussing, and it does bring us
closer to a balanced budget. The tax bill is long overdue relief for
hard-working American families. Republicans took the majority of
Congress with a very clear mandate to make Government smaller, control
spending, and let hard-working Americans keep more of the money they
earn.
We are trying to live up to that promise. We passed a budget plan
that will lead to a balanced budget, and now we are succeeding in
providing substantial tax relief for all Americans.
Who will benefit from this plan? It is the mothers and fathers who
will get help raising their children with a $500 per child tax credit;
homemakers who want to build retirement systems through an IRA; young
couples who are trying to buy a first home, pay for college for their
children, or retirement for themselves; small business owners and
farmers who have spent their lives building a business or farm and want
to pass it to their children; investors who have provided the capital
to start new businesses and create jobs.
A $500-per-child tax credit will mean over 3.5 million families will
no longer pay taxes at all. Instead of writing a $500 check to the IRS,
families will get to keep the money they earn and spend it as they
decide to spend it. Americans really do not need the U.S. Government to
tell them how to spend their money. I think they should be able to
choose for themselves. American families know best whether they need to
spend money on their children, or save it for retirement, or enjoy a
vacation. The Government shouldn't take that money and make their
choices for them. In fact, with this tax cut, roughly 28 million
families will pay fewer taxes. In my home State of Texas the child tax
credit alone will benefit almost 2 million American families.
With the passage of this bill, we will cut the capital gains rate to
20 percent. This will encourage and reward investment and create new
businesses and new jobs. A low capital gains rate is important to our
future and our Nation's ability to save and invest. Our current Tax
Code punishes people for saving and investing. This is wrong. We are
trying to change it.
Lowering the taxation of capital gains will do more than release
hundreds of billions of dollars of tied-up capital. It will bring
immediate relief to investors, small businesses, workers, farmers,
homeowners, and the elderly. We need to encourage investment so that we
can generate the technology, the market, and the jobs of tomorrow.
Today, more than 41 percent of American families own stock. Fifty-six
percent of capital gains are reported by families who earn under
$50,000. Two-thirds of mutual fund shareholders today in America have
household incomes under $75,000. Fifty percent of those who claim
capital gains are senior citizens, many of whom need this money to
improve their quality of life.
In the livestock industry in Texas, over 60 percent of those polled
recently admitted to holding onto assets because they couldn't afford
to give Uncle Sam 28 percent of a capital gains tax.
We cut death taxes so that years of hard work and success won't be
wiped out in one generation. According to a recent survey, 51 percent
of family-owned businesses would have significant difficulty surviving
in the event of a principal owner's death, due to the death tax. The
death tax brings little revenue into the Federal Government--only 1.1
percent in 1997 of all of the Federal revenue. But it does affect
hundreds of thousands of small business owners, family farmers, and
ordinary Americans who work, save, and invest for a lifetime, just to
turn more than half of their hard-earned dollars over to the Federal
Government when they die.
Mr. President, this is walking away from the American dream. What we
have said for over 200 years to people all over the world is, if you
come to America and you work hard, you will be able to keep the fruits
of your labors and give them to your children to give them a little
better start in life than you probably had.
So walking away from that American dream is what we are trying to
prevent today by having some relief in the death taxes that people have
been paying.
What does this mean for homemakers? We build on the progress that we
made last year in giving for the first time the homemakers of our
country the ability to save for their retirement security. This time we
are adding to that by allowing the full deductibility of that $2,000
regardless of what the spouse earns or has in a pension.
How big are these few changes? Let me just give you an example.
Under the old law, a single-income, married couple saving $2,250 a
year--which was their maximum--would have, over 40 years, starting at
the age of 25, when they are 65 approximately
[[Page S8435]]
$629,000 in their retirement nest egg. But today, because of the bill
we passed last year, and this bill combined, after 40 years of setting
aside the $4,000 that they will be able to earn tax free, this couple
will have $1.119 million in their nest egg, an increase in savings of
almost $500,000.
So, Mr. President, when you put this together with the death tax
relief we are giving, you can really see that we are making a
difference for ordinary Americans. Economic growth does result from
lower tax breaks. History shows us that expanded opportunity and
prosperity flourishes under such conditions.
These are the foundations for our democracy. As a result of the
passage of this historic bill, Americans will be keeping more of the
money they earn in their pockets.
Sometimes I hear debate on this floor when people are talking about
these tax dollars as if it is Federal dollars. Federal tax dollars
belong to the Americans who earn them. We want Americans to keep the
money they earn rather than having to send it to Washington for someone
here to make a decision for their families.
We are going to create new jobs, new investments, lower interest
rates, lower home mortgage payments, lower car payments, lower student
loan payments, and higher income for working Americans.
Mr. President, it is not everything we hoped it would be. But it is a
significant downpayment for the hard-working American families. That is
something that I hope we can add to as we look toward the future going
into the 21st century. Hard-working Americans should be able to realize
the American dream of working hard, doing better for their family, and
being able to give their children a start that maybe they didn't have.
That is what this bill will start the process of doing for American
families. I hope we can continue to work even harder for them in the
future.
Thank you, Mr. President.
I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. BREAUX addressed the Chair.
The PRESIDING OFFICER. Does the Senator from Rhode Island yield to
the Senator?
Mr. BREAUX. Mr. President, under the previous agreement, I guess on
the Democratic side, I yield myself 5 minutes.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. BREAUX. Mr. President, my colleagues, it has been interesting to
hear all of the various Members of the Senate come to this floor and
talk about the product that is before us. We have had a few people who
have expressed concerns to the extent that they cannot support the
agreement that is now before the Senate. I think that is unfortunate.
I remember, when I first came to the House of Representatives, I read
a book that was written by Lawrence O'Brien, who had been in the
service of both President Kennedy and President Johnson as the head of
congressional relations. The title of that book was ``No Final
Victories.'' The gist of the story that he was trying to convey was
simply that in this business of governing, in this business of
politics, there are never really any final victories. There are a whole
series of small steps that are taken, small accomplishments and small
achievements that are reached. But there is really never any final
victory because the job is really and truly never done.
When I look at the package of spending cuts and the package of tax
reductions that we have before the Senate this week, I am really
reminded of that whole theme and thesis of Lawrence O'Brien in ``No
Final Victories.'' Because if you ask a question, Is this a perfect
package? the answer, obviously, is no. If you ask the question, Should
we have done more? the answer is obviously yes. If you ask the
question, Are you disappointed and discouraged that things that you
worked on are not in this package? I would say, absolutely. Discouraged
and disappointed in some areas, yes. But defeated, no. Because I think
on balance these agreements that are now before the Senate are major
achievements. They are major steps in the right direction. The work is
not yet finished. There is a great deal more that needs to be done. But
we have, I think, set this country on a course and moving in a
direction which is the correct one for all of us.
One of the things that I am so encouraged by is the fact that we were
able to do it in a bipartisan fashion. The vote in the Senate of 80 to
18 and the vote in the Senate of 72 to 27, I think, on spending cuts
and tax reductions is in fact a major accomplishment. These problems
are too difficult and too serious for one party to be able to do by
themselves. The only way we are ever going to be able to reach these
agreements that put us on the path of really reforming the Government
is to do it together. I think that where we worked best was when we
worked with both sides trying to meet in the center and trying to
cooperate in a fashion that could really bring true reform to this
institution.
The disappointment that I see in the bill is that we missed, for one,
an opportunity to really reform Medicare. I think that what we
essentially did was to follow what I call the SOS premise --same old,
same old. We essentially looked at Medicare and said, ``Well, we have a
lot of problems with it and we all know it is going to go bankrupt and
insolvent at the end of the year 2001. So let's appoint a commission to
try to recommend to Congress what we already know needs to be done.''
I stand here with a great degree of pride and am so pleased that our
colleague from Rhode Island, Senator Chafee, is on the floor with us
today because some of the things that we all know need to be done we
already did when we worked together in the Centrist Coalition in the
last Congress and recommended some real strong, difficult things that
needed to be done with regard to the Medicare Program--which was
offered by our group, a bipartisan group equally divided in the last
Congress, when we took on the tough recommendation of means testing for
wealthier seniors to help contribute more to ensure that the program is
going to be there for their children, for their grandchildren, and for
their great grandchildren.
We needed to recognize that people live longer. So we took the
position of recommending a gradual increase, I might add over the next
30 years, in the eligibility age for Medicare recipients merely
reflecting the increase in life expectancy of all of our citizens,
which is a very good thing to do. We also made tough recommendations, I
think, in trying to bring about more competition in the Medicare
System. But basically those ideas and those concepts, which got 46
votes on the U.S. Senate floor in the last Congress, were dumped in the
conference, dumped not really on the merits but because we needed more
political cover.
What is the political cover that we have decided upon? Well, it is
``same old, same old,'' let us appoint a commission. I would love to
serve on the commission, quite frankly. I would love to try to make the
recommendations that are needed for us to be able to take the action
that is necessary. Unfortunately, while the commission will prepare a
report by March 1999, Congress does not have to act on any of their
recommendations. We can just say: Thank you. It's been a wonderful
opportunity to hear what you have to say, but we don't have to do
anything about it.
I think my colleague from Nebraska said: Wait a minute; we already
had a commission. I served as a cochair of it. We have already made
these recommendations. Why do we need another commission? Why do we
need a commission at all? Why doesn't Congress act as a commission?
You know what. Maybe the answer is that we can designate ourselves a
commission, and instead of calling ourselves the U.S. Senate, we will
call ourselves the U.S. Commission and then we can make the same
recommendations that we have already made and act on it and say, well,
the commission made the recommendation to get the job done that way.
But I think we have missed an opportunity, and that is unfortunate.
If we can't do it this year, it is going to be difficult to do it in an
election year. I am always amazed that everybody tells us to fix it.
How many times have we heard seniors and others tell us to fix
Medicare. They say fix it but don't increase the premium; fix it but
don't increase the age of eligibility. I have said several times
before, if not now, when?
[[Page S8436]]
When are we going to do it? And if not this, what? And if not us, who?
Someone has to take the actions to do the things that are difficult and
make the tough decisions needed to fix the problem.
What is going to happen when we wake up on December 31 in the year
2007 and we still haven't acted on the recommendations of the
commission and we need to do something to fix a program on the brink of
insolvency again? What kind of an answer are we going to come up with
in an emergency? It is far better to try to do this at a time when the
economy is good and people are working together in a bipartisan spirit.
So the fact we have another commission which succeeds the last
commission which succeeds previous commissions is certainly not an act
of courage. It will not make a chapter in the next Profiles in Courage
book that is written about what we have done in the Congress, and that
is unfortunate. But I say that because we should not let the perfect be
the enemy of the good in the sense that we will never be for anything
unless it is perfect. While this is not a perfect package by any
stretch of the imagination, it is a good package. It is one that merits
our support. As long as we know that this package, the tax cut and the
spending cuts and what we have done in Medicare is not the final answer
but just a beginning, I think I would say this to our colleagues who
have worked together on this: At least we have paved the road to make
it easier for future Congresses to reach tough conclusions and make
tough decisions that are really necessary to save Medicare.
So I support the tax package and commend Senator Roth and Senator
Moynihan for doing something that has not been done in a long time,
maybe since the days of my predecessor, Senator Russell Long, on the
committee, when both sides were able to say, all right, we are
different parties but we are all Americans and we need to ultimately
work together if anything is going to be done.
I always take the position that in politics it is better to get
something done and then fight over who got it done, rather than to get
nothing done and then blame the other side for failure. I am glad that
the Finance Committee was truly able to work together and get something
done in a bipartisan way. Now we can go fight about who got it done.
But at least we got something done for the American people. We did that
in this Congress. We did that with these bills. We made tough decisions
both in taxes and in spending. I hope that one day in the not too
distant future the rest of the Congress will be able to act in an
equally bipartisan fashion and get the rest of the job done.
I yield the floor.
The PRESIDING OFFICER (Mr. Smith of Oregon). Who yields time?
Mr. CHAFEE addressed the Chair.
The PRESIDING OFFICER. The Senator from Rhode Island.
Mr. CHAFEE. I would like to take this opportunity to publicly thank
and acknowledge the tremendous work of the Senator from Louisiana in
connection with the Medicare reforms that we undertook. No one was a
stouter soul in that effort to face up to what had to be done if we are
going to continue to have Medicare. It was the Senator from Louisiana
who joined in leading the effort, in having the means testing in the
part B premium and raising the eligibility age to 67 and having a
copayment, a payment for the home health care visits, of 7 percent.
I share the disappointment that the Senator from Louisiana has voiced
in that these elements we worked on did not survive. But I see others
here. The distinguished Senator from New York was right in the lead in
these efforts. All I can say is, disappointed though we were, despite
the overwhelming vote that took place on the floor of the Senate on
both the means testing and the raising of the eligibility age, up or
down votes--one got 70 votes, the means testing, 70 to 30, and the
other got something like 62 to 38, in that neighborhood, over 60 votes,
in raising the age to 67--they didn't survive the conference because of
objections from the other body.
But this is what I want to say, Mr. President. Disappointing as that
was, nonetheless it showed that it could be done, and now it is an
accepted fact in this Senate that all three of those elements are
necessary, and the votes are there to sustain them and make them part
of any further legislation.
So now we have a commission, and as was pointed out, there is no
reporting date for the commission. There is no fast track consideration
for the commission. I may be wrong in the reporting date.
March 1, 1999, I am informed. Well, it is not exactly tomorrow.
However, there is no fast-track procedure; in other words, that it has
to be considered, has to be voted on up or down, one way or another. It
could be like so many other commissions we have had in this body.
Mr. President, disappointed though we might be in those particular
facts, those particular undertakings, nonetheless we have made some
substantial achievements in having them so accepted here.
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. Might I simply join my friend and old colleague on the
Finance Committee in his remarks commending the Senator from Louisiana.
Typically, he did not mention his own work, his own role in this--it
was indispensable--to have a unanimous Finance Committee in these
matters and to make a point. It had been assumed there would be a storm
of disapproval for what we did. There was none. There was none. The
usual interest groups wrote the usual letters and the usual people took
them too seriously. But a day will come when we have learned from this
experience because it was an event.
I thank the Senator.
Mr. CHAFEE. I thank the Senator.
The PRESIDING OFFICER. The Senator from Rhode Island.
Mr. CHAFEE. I yield to the Senator from Indiana such time as he
requires.
Mr. COATS. I thank the Senator.
The PRESIDING OFFICER. The Senator from Indiana.
Mr. COATS. First of all, I wish to associate myself strongly with the
remarks of the Senator from Louisiana and Rhode Island and the Senator
from New York relative to entitlement reform. I spoke at length on it
yesterday, and I will not repeat all those remarks. It was with great
sadness and disappointment we came what I think is as close as we have
ever come in this Congress to addressing the fundamental reforms,
structural reforms that need to take place in our entitlement programs,
particularly Medicare, if we are going to ensure the long-term
viability of that program, which I think we are all committed to do,
and if we are going to prevent a crisis situation in which we will not
act perhaps in a rational, reasonable manner but address it under the
threat of massive underpayment or massive deficit in that program.
It is interesting to me that in the Chamber just a moment ago were
two Republicans and two Democrats, probably covering the ideological
spectrum within our respective parties, all speaking in favor of
entitlement reform. So I am hopeful that we are at least moving in the
right direction. The Senator from New York said that even though we
expected a firestorm of political opposition, it wasn't heard. It
wasn't heard because the American people need to be given more credit
for understanding the nature of the problem and the solutions to the
problem than we give them credit for.
There might have been a time politically when retribution would have
been rendered across the spectrum for anybody who even breathed the
idea that we ought to change Medicare. But today even senior citizens
understand that this very important program cannot maintain its
viability unless some reasonable changes are made, structural changes
are made, in the current program in the way it is currently operated.
Younger people understand, and if you ask them today whether or not
they think there will be a viable Medicare Program for them when they
retire, an alarmingly high percentage say, no, I don't; I think the
payroll taxes that are being extracted from my paycheck are going into
a fund and I will never see the benefits.
So I share the disappointment of our Members in terms of coming so
close and yet not succeeding at this important time. I made the point
yesterday that during difficult economic times,
[[Page S8437]]
when unemployment is high and deficits are running high, we say we
can't make these changes now because it will result in too much
economic dislocation. Here we have the best of times. We have never had
a more favorable time economically and politically in which to address
these questions. Our economy is humming along at a rate that none of us
anticipated, pouring revenues into Washington--which we are giving some
back with this tax cut--which were reducing the deficit, which is what
we need to do. We are balancing the budget. We are the recipients of
very good economic fortunes. And we have in place politically an
administration that doesn't have to stand for reelection, a Congress
that has already gone on record in support of entitlement reform. It
just seems as if all the political stars and economic stars are lined
up and that this is the moment.
I hope these good times last. I hope these good political stars
continue to line up in a way that we can accomplish this. But I think
those who have experienced some years of history understand that the
good times do not always last, that we will be facing different
circumstances in the future, and we may not have the pieces in place to
accomplish this. We do not need another commission. The Senator from
Louisiana is absolutely correct. We have had commissions. We have had
studies. We have more information than we know what to do with. We have
educated the American people. The seniors understand. The young people
understand. Everybody seems to understand. Unfortunately, we always
come down to the point of not now; let's do it after the next election.
Let's get past this next period of time. That is, indeed, unfortunate.
Today I want to focus the remainder of my remarks, and they will be
brief, on the continuing effort to bring tax equity to families. This
is a process that began in the 1980's. I was pleased to be a part of
that, leading the effort in the House of Representatives along with my
colleague Jack Kemp in pushing for family tax relief. We were able to
double the personal exemption, the first major adjustment in the amount
of tax relief that families get for raising children since the
inception of the dependents deduction in 1948. We continue that now
with this bill. I introduced the child tax credit in the Senate in 1992
as part of my families first legislation. I was joined by then
Congressman Rod Grams, now Senator Grams from Minnesota. As he was my
compatriot in this in the House of Representatives, he has continued
that leadership in the Senate. I am pleased to have worked with him in
that effort. This is a culmination of a long effort to readdress the
imbalance that exists within the Tax Code in terms of family tax
relief.
Many people have fought for it, and I commend those who have worked
so hard to achieve this. A disproportionate share of the tax burden on
families has been a problem in both good economic times and bad
economic times. It has increased over the decades even as the cost of
raising children has increased. The Tax Code has been a symbol in the
past of public indifference to the challenge to families, and this tax
measure today is a symbol that our thinking and our actions are finally
changing. Clearly we are beginning to understand that a dollar spent by
families is far more helpful to children and compassionate than any
dollar spent by the Federal Government.
In 1997, Americans will work until the middle of May just to earn
enough to pay their tax bill. Most families must have both parents
working, one to provide for the family, one to pay taxes to the
Government. In fact, families today spend more in taxes than they do on
food, clothing, and shelter combined. The evidence is overwhelming. The
facts are no longer contestable.
The answer is to return public funds to the people and not to funnel
them through the Government. The child tax credit is a tangible
achievement for the people of every State. In my State of Indiana, the
$500 child tax credit will give over 850,000 Hoosier families
representing 1.1 million Hoosier children an average of over $80 a
month extra money for family income. I am as proud, I think, as
anything else that I have done in this body, to be a part of this
effort to restore equity to families, to give them the ability to
retain more of their hard-earned dollars to help raise their children
and pay for the costs of raising those children. It is the most
immediate practical form of compassion I can imagine, allowing them to
spend their own money on their own needs.
Mr. President, I have walked the Halls of Congress for nearly 20
years, and I have watched the high-powered lobbyists gain funds for
special interests and for powerful groups. There have been those who
have stood up over the years for the interests of families. But,
thankfully, over time, those numbers have changed. Today they include
the leadership of Congress in both parties. The largest portion of
relief in this tax bill, 56.2 percent, goes to families, and that is an
achievement in which we can all take pride.
I yield the floor.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. Mr. President I believe the distinguished Senator from
Louisiana would like to speak at this point. She can have as much time
as she would like from our time.
The PRESIDING OFFICER. The Senator from Louisiana.
Ms. LANDRIEU. Mr. President, I appreciate the opportunity to share
just a few remarks about this important budget reconciliation and
adoption. I first thank and congratulate the leaders on both sides of
the aisle, to the chairman and to our ranking member of the Finance
Committee and the Budget Committee, for all of their hard work and
leadership. Nothing of this magnitude is accomplished without good,
strong, well informed leadership. I think we have it in our leaders
here.
This bill is not everything that I hoped for. It is not everything
that any one individual Member would have wanted. And it is not
perfect. But it is a good bill. It is a good start to getting our
fiscal house in order. Getting our fiscal house in order and making
sure we are spending our money wisely, saving where we can and giving
tax relief, is something that I personally feel is supported by the
vast majority of Americans, regardless of party, and so many people in
Louisiana feel this way. On these difficult problems, such as balancing
the budget, neither party can get the job done by themselves. It is
going to take both parties to get the job done in the right way for the
American people.
I am very proud, though, of a couple of points in this bill. Again, I
show the Meyers family from Shreveport. Because of the good work that
we did here in the Senate, and with the leadership of the President--
and I will say many of the Democrats supported the expansion of this
$500 child tax credit to hard-working, not welfare but hard-working
middle-class and moderate-income families--this family, Lois and Scott
Meyers, of Shreveport, will be able to take part in the $500 tax
credit. Families with earnings up to $110,000 will be able to benefit,
which, in Louisiana, covers just about all of our families. The
household incomes of 95 percent of our families are under $75,000. So
the work that we did, and the fight to make this child credit available
to working families like this, I think is something we can all be very
proud of.
Mr. President, 46 percent of Louisiana taxpayers earn less than
$20,000 a year--not get less than $20,000, they work hard and only get
$20,000 a year. This will really help almost 50 percent of the families
in my State and that of Senator Breaux, and we are happy for that
victory.
I also want to say how pleased I am to see our first step, but I hope
not our last step, in providing health care to uninsured children.
Again, these are children who are of working families, whose parents
have jobs--sometimes not just one, sometimes not two, but three jobs--
and are still without health insurance for their children. We could, as
a country, make no better investment than providing critical health
care to zero to 3, zero to 6--helping children to develop in ways that
will save us all, as taxpayers, millions and millions of dollars down
the line for other expenses like criminal justice or special education.
I am looking forward to working with my State leaders to design the
kind of health care program for them that is cost-effective, quality
oriented, child centered and family centered. I am looking forward to
that.
[[Page S8438]]
I also want to say how thrilled I am about the investment in
education. Because, really, with President Clinton's lead, we have now
invested more money in education than since President Johnson was in
the White House. Why is that important? It's important because our
country doesn't have a future if our children and our workers are not
well educated and well trained, to take advantage of the jobs and
challenges that the next century will hold. So the Hope scholarships,
the Pell grant expansions, and the student loan deductions, I think,
are excellent provisions, to say we believe in education. It is the
foundation of our economic development plan for the Nation and we are
going to put our money where our mouth is.
Let me also say to my senior colleague from Louisiana, who worked so
hard on expanding the IRA, I have heard many of our colleagues say that
giving people money to spend is what it's about. I do believe people
can make good choices about the way they spend their money. But I think
the real need is to encourage people to save their money. Our savings
rate in this country is much lower than it needs to be. If we can
encourage people to save for the right things--to purchase a home, for
catastrophic health care needs, for education to improve their
productivity and to give hope to their children--that is really what
this is about.
I thank the members of the committee for fighting hard for expanding
IRAs. It is important to people everywhere, and very important to
people in Louisiana.
Finally, just a word on the estate tax and small business and
farmers. We believe, on this side of the aisle, and there are many on
the other side who thought it was important, if a grandmother,
grandfather, great-grandfather built a farm on the sweat of their brow,
invested in their land, invested in their equipment, they should be
able to pass that farm down to the next generation without having to
sell off the land or sell off the equipment to pay the taxes to our
Government. We heard that. We have responded, and we have now given a
tax incentive to be able to pass those small businesses and farms on,
to people in our country.
Mr. President, I thank you for the opportunity to address the body,
to say this is not a perfect bill but it is a very good step toward
getting our fiscal house in order, to providing much-needed tax relief
to hard-working, middle-class families in our country and to making the
kind of investments that are going to make our country even stronger
and more productive in the future.
On behalf of the Meyers family, to the 236,000 children that will be
able to benefit from health care, and to the almost 400,000 children
that will be able to benefit from this tax credit, and for others, I
thank you so much and I yield the floor.
Mr. GORTON addressed the Chair.
The PRESIDING OFFICER. The Senator from Washington.
Mr. GORTON. Mr. President, in the absence of the Senator from
Delaware I believe I am entitled to yield myself 6 minutes from his
time.
Mr. MOYNIHAN. Of course, Mr. President.
The PRESIDING OFFICER. The Senator from Washington is recognized.
Mr. GORTON. Mr. President, on all too many occasions in this body, we
have been a part of debates, pointing fingers over failure, over a
failure to balance the budget, over a failure to meet the needs of the
American people. We are in a competition again here today, but it is a
far more pleasant competition. It is competition for credit for a
success. It is my view that there is plenty of praise to go around for
that success, from the Republicans and Democrats to the leadership of
the Congress and to the President of the United States.
I believe we have heeded the counsel of the people of the United
States who were not willing to trust either party last November with
full control over the Federal Government, and demanded that we work
together and craft solutions to the challenges facing the American
people. So we have passed a bill that will lead us to a balanced
budget. And so we are about to pass a bill that will: Give needed and
overdue tax relief to the American people; a credit to most hard-
working American families of $500 for each of their children 16 years
old and under; credit and relief for the expenses of higher education
to those same hard-working middle-class American citizens; relief from
the savage impacts of the death tax on small businesses and on farms;
help for the self-employed, in paying for the rising cost of health
care insurance; relief from burdensome taxation on the sale of homes or
the sale of other assets that will lead to more investment and to
better jobs and opportunities for the future; encouragements to save.
Mr. President, is this the last answer to each of these challenges,
to all of our challenges? It is not. I share with the Senator from New
York, the Senator from Louisiana, the Senator from Rhode Island,
disappointment that we missed this opportunity, an opportunity granted
by the courage of Members of both parties in this Senate, to deal with
the underlying challenges to Medicare and to an aging population. But
we did find that we could debate those issues and vote on those issues
constructively and positively in this Senate. I believe we have built a
base on which that debate will be renewed next year, one hopes with
real opportunities for success.
We did not simplify the Tax Code in this bill by any stretch of the
imagination, but I believe we built a foundation upon which we can
debate next year over whether or not we ought to dramatically simplify
and make more fair and easy to understand and easy to comply with, our
tax system. But the fact that we didn't do everything should not
detract from the fact that we did something. We have moved dramatically
forward toward a balanced budget, and dramatically forward toward tax
relief for the American people.
This is a partnership program for which much credit is due very
widely and across both parties. I trust that partnership will be
recognized by an overwhelming vote of approval tomorrow morning.
Mr. MOYNIHAN. Mr. President, if the Senator from New Mexico wishes to
speak, I will yield the floor, of course, but the Senator from Arkansas
would be the next?
Mr. DOMENICI. Senator Bumpers, do you want to go next? You are
entitled to.
Mr. BUMPERS. No, I am willing to let you go and I'll follow you.
Mr. DOMENICI. Thank you very much.
The PRESIDING OFFICER. The Senator from New Mexico is recognized.
Mr. DOMENICI. Mr. President, we are on the threshold of passing the
largest tax cut in 16 years. It's a package that benefits Americans of
all ages and in all tax brackets. Mr. President, 82 percent of the
benefits in this bill go to families earning less than $110,000, during
the first 5 years.
I commend the chairman once again, and the entire Finance Committee
and certainly the ranking member, Senator Moynihan, for their fine
bipartisan work. The hard-working parents of 45 million children will
pay $500 less per child in taxes as a result of this tax credit for
children--45 million children. At least 5 million parents with kids in
college and taxpaying students will have $1,500 per student more to
spend at college, as a result of the tuition credit, and 7.2 million
recent entrants into the job market will be able to deduct their
student loan interest. This package will mean that the American
families will get to keep more of their hard-earned money, instead of
sending it to Washington. This is a very large number of American
families. I have just given you the numbers in millions, and they are
very, very significant in all our towns, all our cities in all areas of
our respective States, be it yours, Mr. President, or mine.
Let me quickly outline the major components of this package, because
I think they are very exciting. Some have said it is a very small tax
cut and, yes, in terms of our gross domestic product, or even our total
tax, it is not a very big tax cut. But I believe we prove here that we
can help many, many Americans, especially those most entitled to help
in areas where we most want to encourage achievement.
The $500 child credit to help the working poor and middle class, the
value of the personal exemption has been eroded over time, and the cost
of raising a family has become more expensive. We all know in our youth
that
[[Page S8439]]
the deduction that our parents got to take because they had a child
they were raising was a very, very significant economic advance to that
family. We let it erode. The credit in this bill will totally eliminate
the Federal income tax burden for more than 30,000 families in New
Mexico and 300,000 New Mexican children's families will be able to take
credit to reduce their taxes. I am particularly pleased that the
Finance Committee decided to design the credit so that the working poor
would also see the benefit of the $500 credit.
In New Mexico, there are 175,087 claimants of the earned-income tax
credit. I applaud the final bill's approach. It is a logical sequel to
the new welfare reform laws we have passed, because it, too, emphasizes
moving from welfare to work.
The $500 child credit will save New Mexico families $461 million over
the next 5 years. For a small State and a poor State, that is a lot of
money that will stay home in the pockets of people and stay in our
States. This is money that they can choose to spend, or they can save
it to meet their needs. A family with two children eligible for two
$500 credits would have an extra $1,000 a year in the family budget.
Some think that is not much, but this would pay the mortgage for 1\1/
2\ months, or pay half of a year's worth of car payments, or buy gas
for the family car for 8 months or groceries for 3 months.
In New Mexico, while 78 babies are born each day, Congress is passing
this bill so that these children and their families will have a
brighter future, more opportunity and keep more of their money.
This tax cut is overdue. Let me repeat, in 1948, the typical American
family sent 3 percent of its income to Washington in the form of
taxes--3 percent. Today, the number is closer to 25 percent with the
Federal tax. Prior to the passage of this bill, most working mothers
were working to pay taxes instead of improving the standard of living
for their families, and that isn't right. Lowering the tax burden will
let moms' paychecks go toward family expenses instead. It is not as
much as everyone would like, but certainly better than doing nothing.
As I see it, the entire package is a giant step in the right direction.
Most people's vision of America and the American dream includes a
college education for their children. This bill helps fund that dream.
It is a big expense and tuition costs have risen far more than
inflation. Parents have told me that they have nightmares about
financing college for their children. In New Mexico, tuition ranges
from $18,700 at St. John's College, to $2,080 at the University of New
Mexico or New Mexico State. Community and technical college tuition is
about half that.
This bill provides a number of separate provisions that help finance
college, but the most significant of them is a $1,500 tax credit that
reduces taxes dollar per dollar for the first $1,000 worth of tuition
paid and 50 percent for the next $1,000 of tuition paid for the first 2
years of college, community college or technical school. A good idea.
During the junior and senior years of college, the tax credit is 20
percent of the first $5,000 in tuition paid. Over time, these tax
credits get bigger so that by the year 2002, the tuition tax credit is
$10,000.
I am pleased that the technical colleges and community colleges
qualify. They are needed. They are filling an ever-more important role
in our changing educational needs.
Student loans are one of the broadest based forms of financial aid
for graduate students. They are instrumental in financing undergraduate
study as well.
The deductibility of student loan interest automatically shifts the
benefit of the provision toward children of low- and middle-income
families. The deduction of student loan interest is well designed to
provide annual tax relief, and can provide a powerful incentive for
more citizens to pursue and push hard for graduate and advanced
degrees.
The deduction is phased in: $1,000 in 1998; $1,500 in 1999; $2,000 in
2000, and $2,500 in 2001.
Mr. President, this bill has a number of IRA's that our distinguished
chairman has been the advocate of. He has adequately explained them and
I won't go into them in detail.
This bill also allows penalty-free withdrawals from all IRA's for
undergraduate, post-secondary vocational and graduate education
expenses.
The bill also makes the exclusion of $5,525 worth of education
assistance paid for by employers permanent. This provision has helped
millions of workers maintain their state-of-the-art skills. As we move
into the 21st century life-long learning will be a way of life.
The great educator Horace Mann said, ``Education is the great
equalizer.''
In our technological society the reverse is also true, lack of
education can leave people behind. For example, while in 1980, a
student graduating from college could expect to earn about 45 percent
more than a high school graduate, today the differential has almost
doubled.
This bill provides $207 million in tax relief over the next 5 years
for New Mexicans to better educate themselves and their families.
Actions have consequences and tax policy has mammoth consequences.
The United States has one of the highest capital gains tax rates and
one of the lowest savings rates among the seventh wealthiest countries
in the world. If we cut the capital gains rate, our economy could
create 150,000, as much as 280,000, new jobs next year. Besides being
good for the economy, this capital gains tax will benefit everyone.
Over a 10-year period, about one-third of all taxpayers sell at least
one capital gains asset. Over a 10-year period, one-third of our
population can take advantage of capital gains. It is not for one small
group; it is for one-third of Americans.
We need to update our image of who benefits from a capital gains tax
cut. In 1990, the typical mutual fund owner is someone in the $35,000
to $75,000 income bracket. The average portfolio is $14,000. Half of
these investors do not have a college degree. This is a very different
image from the wealthy widow toting a pampered poodle down Fifth Avenue
in New York and being the one who can take advantage of capital gains.
But I don't know anyone in New Mexico who has a numeral after his last
name. I do know that New Mexicans pay $638 million in capital gains in
1995. Under this bill, that tax would be considerably reduced.
When the investor invests in companies, the result is capital
formation. Dale Jorgenson of Harvard has noted that almost half of the
economic growth between 1948 and 1980 was due to increased capital
formation and influx into American businesses. Greater economic growth
results as more and better paying jobs arrive on the scene.
I am also pleased that the bill expands IRA's and allows penalty-free
withdrawals for the first-time home buyer and, obviously, we have other
provisions that help homeowners because they, too, get a very
significant capital gains differential when they sell their homes.
As baby boomers age it is very important that they save more for
retirement. The IRA provisions encourages everyone to save more. I see
this as a step toward enacting the U.S.A. tax reform plan that I have
been working on the last few years. Under that plan families would be
given an unlimited savings allowance so that the tax rate on any
amounts saved or invested would be zero until the funds are consumed.
The other major provision in this bill provides death tax relief. The
estate tax is often referred to as the most confiscatory tax of all.
Some call it a tax on success. A recent Tax Foundation study found that
today's estate tax rates--ranging from 18 to 55 percent--have the same
disincentive effect on entrepreneurs as doubling the current income tax
rates.
The unified credit has not been increased since 1987. This bill
slowly increases it to $1 million by the year 2007.
The philosophy behind the estate tax was imported from Europe, for
example, that the accumulation of too much wealth in too few families
is bad. Today, however, that estate tax philosophy is fundamentally
flawed. When applied to closely held business assets, ironically, the
tax produces just the opposite result--often forcing family owned
businesses to sell off to larger public corporations. It raises roughly
1
[[Page S8440]]
percent of annual revenues. At that rate, it is hardly worth the
devastation it causes to family businesses and farms, and
entrepreneurship.
Starting a small business is part of the American dream that allows
any American with a good idea to follow it to prosperity and
independence. In my State I have seen a number of welfare mothers start
successful businesses. The ultimate American dream is to be able to
leave that successful family business to one's children. Too often
current estate taxes force heirs to liquidate the business or family
farm to pay the estate taxes.
The death tax takes its toll. Only 13 percent of family businesses
are passed on to a third generation. The National Federation of
Independent Business testified before the Ways and Means Committee that
``the Federal estate tax represents perhaps the greatest burden today
on our Nation's most successful small businesses.'' This bill helps
lighten that burden.
The death tax changes are timely changes for ranchers. The average
age of America's cattlemen is 55 years old. Some 80 percent of the beef
cattle operations have remained in one family for 25 years or more with
42 percent in the family for over 50 years. Interestingly, 12 percent
of the ranches have been in the same family for 100 years. This bill
will contribute to preserving the great American legacy by helping keep
ranches in the family by providing $25 million in tax relief to New
Mexicans over the next 5 years.
The bill also allows people to sell a house tax free. This is a good
real estate provision. One provision I am not totally satisfied with is
the treatment of investment real estate. The conference report sets the
capital gains rate at 25 percent, I truly believe that equity demands
that the capital gains rate on investment real estate be the same as
the capital gains rate. I hope the Congress will revisit this issue in
the near future.
I am pleased that the bill makes it easier for small business
entrepreneurs to claim the home office deduction. I am also glad that
this bill accelerates the phase-in of the self-employed health
insurance deduction.
The biggest winners under this tax bill are middle-income families
with children, particularly those families earning between $20,000 and
$50,000 per year. Families earning between $50,000 and $100,000 are
given tax relief too, provided they have children or kids in college.
A married couple with household income of $35,000 and two children
under age 17 would see their tax bill fall by $2,000, a 38-percent
decline from what they'd owe under current law.
The education incentive mean that families with children in college
are helped even more. A married couple with income of $35,000 and two
children, one in college and one still at home, would see their tax
bill fall by $2,000, a 76-percent decline from what they'd owe under
current law.
What these families save on taxes represents cash in your pocket; it
represents how much of their own money they get to keep. Think about
how much of a raise a taxpayer would have to get from their boss in
order to be able to increase their take-home pay by that much.
Mr. President, today is a banner day. We finished a bill that
balanced the budget yesterday, and within that framework, today, we are
passing a net tax reduction of $96 billion over 5 years. This makes it
the largest tax reduction bill since President Reagan's tax reduction
in 1981, and the first tax relief bill since President Reagan signed
the 1986 tax reform.
Let me say, for those who are disappointed, I am not the least bit
disappointed. We can always look at this as half-full or half-empty. I
believe, when you look at Congress and the Presidency and the different
philosophies, to be here today with the second of two major bills of
this proportion, moving toward balance and a significant and very well
tailored tax cut, I believe it is a real achievement, and for those who
want more and think we should do more, let me suggest, we have been
trying for a long time to do just this much and have been unable to do
it. So I am very pleased and think the American people will be, too,
when they start to feel its impact in their communities, in what they
pay for taxes and what they keep.
I thank the Senate, and I yield the floor.
Mr. BUMPERS addressed the Chair.
The PRESIDING OFFICER. The Senator from Arkansas is recognized.
Mr. BUMPERS. Mr. President, several years ago, there was a
magnificent book that came out by a great historian, Barbara Tuchman,
called the ``March of Folly: From Troy to Vietnam.'' The book cataloged
how in moments of history, terrible tragedies, terrible mistakes could
have been avoided because there was always some lone voice saying,
``Don't do that.'' Almost invariably, the politics of the moment
dictated otherwise.
The book ``From Troy to Vietnam,'' starts out with the Trojan horse.
Every schoolchild knows the story of how the Greeks went to rescue
Helen from the Trojans. Finally, after many, many months of not being
able to break into the Trojan fortress, the Greeks designed this Trojan
horse, a wooden horse, a fabric horse, as the Aeneid describes it, and
they place this horse outside the Trojan fortress. The Trojans are
afraid that the gods have placed the horse there, and it would be a
terrible tragedy for them if they didn't let the horse into the
fortress. One person, named Laocoon, said, ``Don't let that horse in.
What more than madness has possessed your brains?'' he said. ``What
have the Greeks ever done for us?'' But he was the sole voice of
dissent. So they opened the gates. They let the horse in, and 50 of the
Greeks' finest soldiers poured out of the belly of the horse and took
the fortress.
In World War II, when the debate was going on with the German high
command about whether to get involved in the war, whether to antagonize
the United States or not, the commander of all the German submarines
was consulted. ``If you can sink so much allied shipping,'' they said,
``the United States won't be a threat.'' And the German U-boat
commander said, ``You're silly; you're foolish. We can do a lot of
damage, but we can't come close to sinking that much allied shipping.''
And his voice was drowned out as if he had never spoken.
When the warlords of Japan sat around plotting the attack on Pearl
Harbor, the great Japanese admiral, Yamamoto, stood up and said, ``I've
gone to school there. I know the Americans, I know their industrial
output, I know their tenacity, and I know their love of country. This
will not work.'' He went ahead to say, ``I am at the Japanese Emperor's
beck and call, and I will do anything I am called on to do.'' The rest
of that is history. Yamamoto's voice was drowned out.
Today, we have this reconciliation bill before us. And there were few
lone souls in the U.S. Senate who voted against the great tax cut of
1981, Mr. President. Only 11 people stood up in the U.S. Senate and
said, ``I'm not voting for a concept of doubling defense spending and
cutting taxes and presuming to balance the budget.'' Eleven souls said,
``No, let's not do this. It is the height of folly.''
Our voices were drowned out. At that moment, the national debt was $1
trillion and the interest on that debt in 1981 was $60 billion. Our
voices were drowned out. And 16 years later, because our voices were
drowned out, today's national debt is $5.3 trillion, and the interest
on that debt has gone from $60 billion a year to $359 billion a year.
That is the interest we are paying on the national debt in this year of
our Lord, 1997. You know how much of that $359 billion is as a result
of the craziness of this place in 1981? Approximately three-hundred
billion dollars.
The pages who sit in front of me will not live long enough to see
that figure even reduced very much. You want to do something for the
children? You say, let us give the middle-class children of this
country a tax break. How about tomorrow's children and the children in
the next generation and the next generation? What are you doing for
them? You are saddling them with an incredible debt. When I think about
what we could do if we would not pass this bill. With the economic
growth we have enjoyed for the past six or seven years, and as we
anticipate it will be for the immediate future, would almost certainly
balance the budget in 1998, and we could even run a surplus in 1999.
Balancing the budget is within our grasp, an eyelash away. And this
bill thwarts it in the name of a middle-class tax cut.
[[Page S8441]]
About the only distributional analysis that has been done on this
bill is a study by the Citizens for Tax Justice. And what do they say?
Just look at this chart.
Look at this middle-class tax cut, Mr. President. The bottom 20
percent, people who make less than $12,000 a year do not get a tax cut.
They get virtually no benefit from the child credit and capital gains
and the other major tax cuts. So with the increase in cigarette taxes
and airline ticket taxes, the bill is going to cost them $39 a year. So
much for the poorest of the poor in this country. They not only don't
get a cut, they pay more.
Go to the next 20 percent, the people who make up to $22,000 a year.
What do they get? Why, they get a whopping $8-a-year cut in their
taxes--a few cents a week.
If you combine these two bottom groups, you will see that the bottom
40 percent on average will see their taxes go up by $31 a year.
Then go to the next 20 percent. The next 20 percent, the people who
make $22,000 to $39,000 a year, they are going to wind up with a $171-
a-year tax cut--less than 50 cents a day.
So where is all the money going?
Look at this chart for just one moment. The next 15 percent that,
they get $1,163 a year. What does the next 4 percent get? The people
who make $109,000 to $246,000 get $1,772 a year in tax cuts. And the
top 1 percent, the people who make $246,000 or more, get $16,227 a
year.
So seventy-six percent of all the benefits of this bill go to the top
20 percent of the people in this country. That is a middle-class tax
cut? That is to help the middle-class families of this country?
This bill has had more public relations, more ballyhoo under the name
of a middle-class tax cut. No wonder 54 percent of the people of the
country say they favor this bill. And you know why? Because the
question is asked, ``Do you favor the balanced budget resolution that
Congress is considering?'' Well, of course they favor a balanced budget
resolution. Who doesn't? What a travesty. Mr. President, I have been
divinely hoping that negotiations between the President and the
Republicans would reach an impasse, breakdown, with gridlock, because
if we did nothing the budget would be balanced in 1998, 1 year from
this moment. If somebody had said in 1993, ``You vote for this omnibus
budget reconciliation bill and we'll balance the budget in 1998,'' we
would have insisted they take a saliva test.
When I think of all the good men and women who used to sit in the
House and the Senate, and they are gone only because they had the
courage to vote for that bill in 1993, which raised taxes on the top
1.3 percent of the richest people in America--1.3 percent--because a
few courageous people in this body--Jim Sasser, Harris Wofford, two of
the finest men ever to serve in the U.S. Senate, who are no longer with
us. And a lot more people in the House are no longer with us--they had
the courage to face up to something that was very unpopular at the
time. But even on the outside they can take solace in the fact that
they honored what they believed was a nonnegotiable demand by the
people of this country for a balanced budget.
Do you know what we did as a result of that 1993 vote? I am always
reluctant to talk about this because I have so many good friends on the
other side of the aisle, but truth has to be told. Not one single
Republican in the U.S. Congress, in the Senate or the House, not one
voted for that bill. And the Democratic party suffered at the polls as
a result of that vote.
A lot of people stood on the Senate floor and said the 1993 bill is
going to bring about a terrible recession. So what really happened?
Before we passed that bill, the deficit for 1993 was estimated to be
$290 billion. And as a result of passing the deficit reduction bill, it
turned out to be only $255 billion. In 1994, it dropped to $203
billion. In 1995, it was $154 billion. In 1996, it was $107 billion.
For 1997, it is now calculated at around $45 billion, and many
economists say it could be less. From almost $300 billion, in 4 short
years, to $45 billion because a few people in this body had the spine
to vote for something that was politically unpopular. Those people who
lost their seats as a result of that vote are undoubtedly watching
their hard-won victory being sacrificed on the altar of political
expedience. The balanced budget of 1998 that is just about to elude us.
You know, the economy, if it stays as good as it is right now through
all of 1998, despite the foolishness of this bill, we still might
balance the budget in 1998 if the economy stays good, but only for a
nanosecond. Under the calculations of the bill, we are going to spend
almost $300 billion more in deficit spending over the next 5 years, and
the interest on that will be $15 billion--forever. That $300 billion
goes right on top of the $5.3 trillion you see here. At the end of 5
years, instead of $5.3 trillion, that will be $5.6 trillion. At the end
of 5 years, instead of $359 billion in annual interest, it could well
be $375 billion.
You want to do something for children? Don't saddle them with that
kind of debt.
The Senator from New Mexico pointed out some very cogent points a
while ago with which I do not disagree. I favor the educational
benefits in this bill. I favor the child health care provision which we
are paying for with a cigarette tax. It isn't all bad. But it isn't all
critical, not as necessary as a balanced budget.
We are today going to grab defeat from the jaws of victory. The only
gratifying thing to me about this whole exercise is it shows the
hypocrisy of the constitutional amendment to balance the budget. I
always knew that was political, but it is a very effective political
tool. It took a lot of courage because it was portrayed that if you did
not vote for the constitutional amendment, you were portrayed as being
against a balanced budget. The fact that we are about to pass a bill
which will supposedly balance the budget by 2002 reveals the hypocrisy
of those people who said, ``You have to have a constitutional amendment
to balance the budget.''
And those of us who voted for the 1993 bill to cut spending by $250
billion and increase taxes by $250 billion have something to be proud
of because that act instilled so much confidence in Wall Street and the
people of this Nation, the economy has been on fire ever since. The
Nation thought the people here in Washington had finally stiffened
their spines to do something that was right.
I cannot believe we are in the process of postponing balancing the
budget for 5 years--the very people who said, you must put it in the
Constitution and who said they wanted a balanced budget more than
anything in the world. Here it is within our grasp. And what is their
solution? Postpone it for 5 years, spend another $300 billion in
deficit spending.
Mr. President, the needs in this Nation are truly great. We are the
greatest Nation economically on Earth. We certainly are the oldest
living democracy. We have the oldest Constitution in the world.
Militarily, we are certainly the strongest on Earth, and well we
should be the way we spend money on defense. But when I think about the
needs of this country, if you absolutely have to spend this money,
there are better things to spend it on. We asked the Department of
Education what it would cost to provide every child in America with a
college education--every one who would get a college education if it
were within their financial means. It is very interesting, this tax cut
is roughly $135 billion, and it would take $1 billion less--$134
billion--to provide a college education for every youngster in America
that would want one.
So the next time you talk to the most conservative groups in your
hometown--the chamber of commerce or the Rotary Club--you ask them, do
you think this country would be stronger if we educated with a college
education every kid in America, or if we give a $135 billion tax cut to
the wealthiest people in America? I can promise you that if you were
debating that on national television, it would be 90-10 in favor of
educating our children.
So, Mr. President, I divinely hope that everything I say today turns
out quite differently from the way I am predicting it. But I don't
believe that is going to happen. If Barbara Tuchman were alive, she
would certainly include this vote as one of the top follies in our
Nation's history. Once again, we have managed because of political
expediency to finesse the real problem.
[[Page S8442]]
Mr. President, I yield the floor.
Mr. ROTH. Mr. President, it's time to move beyond the tax and spend
ways that for far too long have marked business-as-usual in Washington.
The Taxpayer Relief Act of 1997, as part of the budget reconciliation
package, signals a new beginning for Congress--the beginning of a trend
that puts Americans first.
To argue that the tax relief contained in this package is too high--
or that the cuts are too big--is to argue that government simply
doesn't tax American families enough. This is absurd. Today, Americans
are paying higher taxes, as a percentage of our gross national product,
than they have since 1960. Today, American families are paying more in
taxes than they are for food, clothing, and shelter combined. High
taxes are forcing parents who would rather be at home with their
children to work longer, or to hold down a second job.
Many, who would rather be homemakers, are forced by high taxes to
enter the labor market, as Americans are finding it impossible to
support their families and the government on one salary.
Despite all of this, we're hearing now that taxes aren't high enough.
Well my question, Mr. President, is just how high is high enough? How
much more would satisfy my colleagues? I'm afraid that Congress could
tax 100 percent of all the wealth in America, and it still wouldn't be
enough for those who refuse to change their tax and spend ways.
You see, I come from another school of thought. I believe that the
money Americans earn belongs to them. I believe our families know best
what to do with their checkbooks. I believe that money earned by an
individual belongs to the individual--that it does not belong to
government--and that government is arrogant to assume that it can
decide how much a hard-working man or woman can keep.
You see, Mr. President, unlike my distinguished colleagues, my
disagreement with this bill is exactly the opposite. My disagreement
with this bill is that the tax relief contained within it doesn't go
far enough. The tax cuts aren't deep enough. That's why I can assure
those who are listening that we will be on this floor again, some time
in the near future. We will be here addressing real tax reform--tax
reform that is structured from the taxpayer's point of view.
But for now, I'm willing to accept this compromise. It was crafted in
a spirit of bipartisanship, with willing and cooperative leaders on
both sides of the aisle. I will vote for this tax relief. But again, I
assure you--I assure the American people--that this relief is only a
first step in an effort that will continue--a bipartisan effort that
will deliver the kind of tax reform Americans deserve.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. BUMPERS. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Privilege of the Floor
Mr. BUMPERS. Mr. President, I ask unanimous consent that the
privilege of the floor be granted to the following members of my staff
during the pendency of this measure: Barry Becton, Catherine Dolan, and
Tom Walls.
The PRESIDING OFFICER. Without objection, it is so ordered.
The PRESIDING OFFICER. Who seeks time?
Mr. ROTH. Mr. President, I would like to take a moment to express my
gratitude to the many staff members who helped us draft this historic
tax relief legislation. These dedicated men and women worked tirelessly
over the last several months. They worked early mornings, they worked
late nights and many times almost all night, as well as weekends, to
help us succeed. I, for one, am deeply appreciative of the staff's
effort. I know that my colleagues are as well.
So, Mr. President, I ask unanimous consent to have the names of the
staff printed in the Record.
There being no objection, the list was ordered to be printed in the
Record, as follows:
Mr. Roth's Personal Office
John Duncan.
Ashley Miller.
SENATE FINANCE COMMITTEE
Lindy Paull.
Frank Polk.
Mark Prater.
Rosemary Becchi.
Doug Fisher.
Brig Gulya.
Sam Olchyk.
Tom Roesser.
Joan Woodward.
Myrtle Agent.
Mark Patterson.
David Podoff.
Nick Giordano.
Maury Passman.
Bill Fant.
Ramon Camacho.
Ginny Flynn.
Christina Pearson.
Senate Legislative Counsel
Jim Fransen.
Mark Matheson.
House Legislative Counsel
Stan Grimm.
Mr. ROTH. I'd also like to thank the staff of the Joint Committee on
Taxation for their hard work and effort on this legislation, including
Ken Kies, Bernie Schmitt, Mary Schmitt, Barbara Angus, Steve Arkin, Tom
Barthold, Pat Driessen, Chris Giosa, Ben Hartley, Rob Harvey, Harold
Hirsch, Melani Houser, Allison Ivory, Ron Jeremias, Kent Killelea, Leon
Klud, Gary Koenig, Tom Koerner, Roberta Mann, Laurie Matthews, Alysa
McDaniel, Joe Mikrut, Pam Moomau, John Navratil, Joe Nega, Judy Owens,
Barbara Robles, Cecily Rock, Mel Schwarz, Carolyn Smith, Bill Sutton,
Maxine Terry, Mel Thomas, Mike Udell, Barry Wold, and Judy
Xanthopoulos. In addition, I'd like to recognize particularly the
assistance of the support staff of the Joint Committee on Taxation.
Without their efforts, this bill could not have been completed in a
timely manner.
Mr. MOYNIHAN. Mr. President, if there are additions from our side, I
know the Senator wishes them to be added also.
Mr. ROTH. Absolutely.
Mr. MOYNIHAN. Mr. President, I ask what time remains on the bill.
The PRESIDING OFFICER. The Senator from Delaware has 3 hours 4
minutes. The Senator from New York has 1 hour 29 minutes. The Senator
from Arkansas has 50 minutes.
Mr. MOYNIHAN. Mr. President, I don't want to introduce any partisan
wrangling, but this side of the aisle has done much better in using up
time than that side. Perhaps we could think of yielding back some time.
Mr. ROTH. Well, I say to my distinguished cochairman that I----
Mr. MOYNIHAN. We talk more than you do.
Mr. ROTH. It takes you longer to make a point.
Mr. MOYNIHAN. I see. I think I will withdraw from this exchange.
Mr. ROTH. Mr. President, I suggest the absence of a quorum and ask
that the time be equally divided between the two sides.
The PRESIDING OFFICER. Without objection, it is so ordered.
The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. ROTH. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. Mr. President, I yield 10 minutes to the distinguished
Senator from Georgia.
The PRESIDING OFFICER. The Senator from Georgia is recognized for 10
minutes.
Mr. COVERDELL. Mr. President, first, I want to thank the chairman and
ranking member for the hours and hours of deliberation and work to
bring us to this point. You are both to be highly commended, along with
several others of our colleagues. But I think all of us in the Senate
are indebted to the hours of commitment, not only to this distinguished
body, but to our country, and we thank you both.
Mr. President, I rise in support of the Tax Relief Act, and I was
most pleased to be able to cast a vote earlier today for the Balanced
Budget Act. I know many have said so, but it is worthy of repeating. We
have waited 28 years to finally have the Congress produce a balanced
budget act that will be signed by the President. That is a massive
accomplishment. Now we are on the
[[Page S8443]]
verge of passing, I think by even a greater margin, a tax relief act,
which is a significant step. It falls short, in my judgment, of what is
truly needed for the American worker and family, but I applaud the
significance of it, the direction of it, and even the amount of it.
I do think it is worth remembering that, in 1990, about this same
time of the year, American workers and families were given a $250
billion tax increase. At that time, it was the largest increase in
American history. It was followed by a promise, in 1992, of a
reduction, which never occurred. In fact, what happened was that
another $250 or $260 billion tax increase was given to the American
worker and family--meaning that from 1990 to 1993, taxes were raised by
over a half trillion dollars, leaving the American worker and American
family with the largest tax levy in our history.
Put in that context, this tax relief is only a 20 percent refund of
the tax increases in the early part of this decade. That is why I say
it falls short of what I think really ought to occur, and I know I am
joined by many colleagues who feel this is a first step and we must
come back and find additional relief for the American worker.
Now, I have said many times on the floor, Mr. President, that I think
it is better to try to bring this down to what it really means to an
average family. In my State, that family makes about $40,000 a year.
When that family pays its current tax burden and when that family pays
its share of the cost of Government and when that family pays its share
of higher interest rates, they are left with about 47 percent of their
paycheck. In other words, this year, they worked from January 1 to July
3 for the Government, which meant that July 4 this year took on a new
meaning. It was not only Independence Day; it was the first day they
got to keep the first dime of their paycheck. Or, in other terms, it
means, in my judgment, if you could conclude that an American family
ought to keep, at a minimum, two-thirds of their paycheck--it ought to
be more--but if you concluded, at a minimum, that American workers
ought to keep two-thirds of their paycheck, that means they are falling
$8,000 short--this average family I am talking about--every year. Just
think of what that kind of resource would do for that average family's
checking account and the kinds of things they could do.
You know, we are always hearing, and we are told over and over that
American families have no savings. Why would we be surprised that they
have no savings, Mr. President, if the Government has been marching
through their checking account taking over half of what they have? The
disposable income that is left can barely deal with the essentials. Why
are we surprised that consumer debt is at an all-time high or that
individual bankruptcies are at an all-time high or why, in the face of
a reasonably good economy, there is still so much anxiety in middle
America? It is because we have left them with so few resources to do
the job we have always asked of the American family.
As somebody said the other day on the floor, the best department of
health and human services is our own American family. But they have to
have the resources, instead of the Department of Health and Human
Services.
So, Mr. President, the fact that we are refunding about $100 billion
of the $500 billion in new taxes is a laudable step and a meaningful
step that will help every generation of Americans--children through the
child tax credits, students through the savings accounts for education
and the tax credit, small businesses and owners of stock and people in
retirement or who are about to go into retirement because of the
capital gains tax reduction and the estate tax improvements. We are
going to move a flood of capital to the newest ideas because we are
going to unlock billions of dollars when we lower the tax burden on
capital.
So, Mr. President, I applaud our leadership. I applaud the members of
the Finance and Budget Committees. I applaud the President for finally
agreeing to sign meaningful tax relief and a balanced budget act. I
believe this is good for America.
I have one disappointment. Mr. President, after agreeing to the tax
proposal, the President sent a late-night letter to our leadership and
said that he would veto all the tax relief for America if we include an
amendment which we passed in the Senate which would have granted a
savings account for families to use for elementary education and high
school education. That is where the problem with American education
exists. This amendment would have allowed average families the ability
to remove from the savings account, without being taxed, money to buy
equipment, like computers, to hire tutors for special education needs,
for special transportation costs, and, yes, for tuition, if they chose
another school to go to. I think it is a severe loss that that
amendment had to be removed. I am here to say to the Senate and to the
House and to the President that the millions of Americans who want
assistance at the elementary and secondary level are not going to go
away. We will come back. We will author new legislation to achieve
these goals focusing on elementary and secondary education. It is going
to be a requirement if we are going to produce the knowledge in our
youth that will be able to lead us into the new century.
So, Mr. President, with that, I conclude my remarks and yield back my
time to the leader.
(Disturbance in the visitors' galleries)
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. Mr. President, I yield the distinguished Senator from
West Virginia, the former President pro tempore, such time as he may
require.
The PRESIDING OFFICER. The Senator from West Virginia is recognized.
Mr. BYRD. Mr. President, I hope that the galleries will be cautious.
They are our guests, and they should understand that the Senate rules
do not allow demonstrations of approval or disapproval.
Mr. MOYNIHAN. Might I just restate that fact, sir?
The PRESIDING OFFICER. The Chair reminds the visitors in the
galleries to refrain from demonstrations.
The Senator from West Virginia.
Mr. BYRD. Mr. President, I rise to oppose this reconciliation bill.
It hands out tax cuts much like adults dole out candy to pacify rowdy
children. The American people are not children, and I believe that we
underestimate both the public's eagerness for these cuts and our
people's comprehension of our Nation's fiscal situation.
Mr. President, this is no criticism of those Senators who worked for
the tax cut. I accord to every Senator the right to express his own
convictions and his own beliefs. And I respect every Senator's
convictions and beliefs. I happen to differ with many of my colleagues
in this instance. I just do not think that it is wise to have this tax
cut. I differ with this administration in that regard. The American
people are not children. I have been in politics more than 51 years,
and the easiest vote for me ever to cast is a vote to cut taxes. That
doesn't take courage. It doesn't take a brave man to do that. That is
easy.
Let us first note that the past actions of the Congress in approving
the tough deficit reduction measure called OBRA in 1993 is largely
responsible for all but erasing the bloated and damaging deficits of
the 1980s. That piece of legislation and the steady economic growth we
have experienced over the past several years have all but brought us
into budget balance. The legislation we passed called OBRA in 1993 and
the steady economic growth that we have experienced and are still
experiencing are what have brought us into budget balance, almost.
Passed without a single Republican vote--not one Senator on that side
of the aisle, not one Republican Member of that body on the other side
of the Capitol, not one voted for that legislation. Not one. That
passed, as I say, only by Democratic vote. Without a single Republican
vote, that politically unpopular measure--OBRA 1993--was the castor oil
that has mostly cured this Nation's serious bout with red ink disease,
and set us on a straight course to budget balance. May I add that this
cure has been achieved without the arsenic-laced medication of a
balanced budget amendment, which so many in this body had prescribed as
the only cure for the ailing patient. They were wrong, and we have
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turned the corner on our budget woes while at the same time preserving,
at least for the moment, the checks and balances so vital to our
continued life as a viable republic. But this legislation pending on
the Senate floor today threatens to negate our progress and throw the
body politic back on the critically ill list.
The outyear losses from the tax cuts contained in this bill could
propel us backward in time to the irresponsible 1980's. May I note that
we are voting on this reconciliation bill without the benefit of the
administration's economic assessment of the outyear impact of these tax
cuts. We shouldn't have to do that. We are rushing to approve these tax
cuts in the misguided belief that the people are clamoring for tax
relief, regardless of the consequences for the deficit in future years.
Although I applaud the sincerity of those who differ with me,
realizing that a tax cut would be part of any deal, who have tried to
make those cuts more fair in their distribution, I cannot fathom the
justification for supporting this whole package based on the meager
benefit that might accrue to the nonwealthy. In my view, those of us
charged with the responsibility to govern must take a larger view of
our total fiscal policies and remember the lessons of the past two
decades.
I am one of the miserable few who retains the miserable memory of
having voted for the tax cut that Mr. Reagan espoused when he first
went into office. I voted for that tax cut, and I have been kicking
myself in the rear ever since. I was wrong. That and the massive
buildup in national defense and the massive growth of entitlements.
These are the things that have brought upon us the ills of today, in
large measure.
We are only now emerging from the crippling restrictions of a massive
deficit, debt which hampered our ability to invest in our Nation's
physical infrastructure, to repair roads and bridges, maintain the
treasures of our national parks, and provide basic amenities to our
people like clean, safe water. There are people in West Virginia who
are lacking in that treasure of safe, clean drinking water. There are
people in other rural States all over this Nation who need clean, safe
water. They don't have it. That same deficit has also prevented
investment in our people's abilities through education, training, and
health policies. Before we have even paused to experience the sweet
liberty of freedom from that crushing burden, we are eagerly engaged in
digging our way right back into debt through these massive back-loaded
tax cuts.
Back loaded. Ah, how sweet it is, to tell the American people, ``We
have cut your taxes!'' Nobody likes to vote for a tax increase. I don't
like to do that. And there are times when we really need to cut taxes,
but this is not the time.
Since the budget has not been balanced since 1969, I guess nobody in
this town can bear the thought of being in balance. Without the hot
breath of the deficit master on our necks each and every working day,
we might actually be able to return to a time when we could address
some of our real problems in this country. We might even see a little
creativity and common sense come out of this city. We might have to
learn to plan and to be proactive about our Nation's problems instead
of slapping on the green eyeshades every morning and focusing on the
comforting familiarity of the deficit devil which has become an all-
purpose collective excuse for doing nothing much at all.
Before we all break out the champagne bottles and congratulate
ourselves on helping the poor, beleaguered population by making the
easiest, no-brainer vote in all of politics--the easiest, no-brainer
vote in all of politics, a tax cut; how easy; how easy it is--let us
sober up for 1 minute and contemplate the obvious fact that one fairly
severe recession in the next several years coupled with the impact of
these back-loaded tax cuts will throw us right back into the deficit
canyon. That is all it will take.
Let us further jog our all-too-short memories and recall that the
national debt as of July 25 is a whopping $5.28 trillion. Yes. Let's
reduce the deficit. But let us put that money on that national debt.
Further, I am told that the latest estimate by the Congressional Budget
Office and the interest due on that debt for fiscal year 1997 is $358
billion. That is just the interest due on the debt--$358 billion. That
is $358 for every minute since the Lord and Savior Jesus Christ was
born--$358 for every minute since Jesus Christ was born. This is not
small change, my colleagues. And it seems to me that even using the
new, new, new, new math, and without benefit of a hand-held calculator,
anyone can see that we cannot prudently afford this tax cut.
So I am critical--yes--of the Republican Party for advocating this
tax cut. I am critical--yes--of this administration and this White
House, of my own political party, for advocating a tax cut at this
time. It is pandering to the American people. It is pure political
demagoguery. That is what it is, pure and simple.
Additionally, any informed observer of our Nation's demographic
trends can easily see that a low birth rate in our Nation's large and
aging baby-boom generation are fusing a fiscal time bomb steadily
ticking along on its inevitable course which will detonate in the
second decade of the next century. The second decade of the next
century. But who cares? Many of those of us who vote for this tax cut
today will not be here. We will not be around. Some of us will be in
our rocking chairs, enjoying retirement.
Do not count me in that crowd. We will not be to blame. Who will be
around to blame us?
That time bomb could lead to a mushroom cloud, a mushroom cloud that
spreads over the country, a cloud of returned budget deficits if we do
not think of ways to responsibly sap its destructive potential.
Mr. President, simply put, our Nation does not need and can ill-
afford tax cuts at this time--not the tax cuts that are included in
this reconciliation bill, not the tax cuts promulgated in recent years
as a result of the so-called Contract With America.
I did not sign on to that contract, the Contract With America. We do
not hear much about that contract these days, not much anymore. I never
signed on to that contract. Here is my ``Contract with America,'' the
Constitution of the United States. Hallelujah! No signed contract for
me. I signed the oath to uphold and defend this Constitution of the
United States against all enemies, foreign and domestic. That is my
contract.
But not any tax cut. Such tax cuts threaten to enlarge the deficit
right at the time we are close to erasing it. Then we are going to
bloat it again, going to blow it up again. More importantly, tax cuts
of the sort being considered today could mushroom the deficit in the
outyears, precisely at the time when our Nation will be graying.
See, I once upon a time had black hair, black as a raven's wing. Not
anymore. I went through a graying process. And today my hair has turned
not to silver but to the 79th wintry snow--I should say 80 in November.
But precisely at the time when our Nation will be graying, and slowly
moving closer to the detonation of that time bomb, the explosion of
retiring baby boomers that threatens to implode our Nation's fiscal
house.
There can be no argument, as there was in the early 1980's, that
these cuts are needed for economic growth. That was the argument they
used back in the early 1980's. We had a new President. His name was
Ronald Reagan. My people said, ``Give him a chance.'' They wrote me
letters and postcards and said, ``Give him a chance.'' Well, against my
own better judgment, I voted for his tax cut. In those days, we could
argue that the cuts were needed for economic growth. That is one of the
arguments Mr. Reagan so well used.
We are currently in our sixth consecutive year of economic growth,
the stock market continues to reach record high after record high after
record high. They wonder how much higher it can go. It became 4,000,
and then it became 5,000, and then it became 6,000, then it became
7,000, then it became 8,000. How much higher can it go? I could have
become a rich man, perhaps, if I had known how to play the stock
market. But I am one who remembers the stock market crash in 1929, so I
have been afraid, afraid of that market ever since. Unemployment
recently dipped below 5 percent. Think of it! And inflation has
remained in check. The stock market has risen into the
[[Page S8445]]
stratosphere, beyond the opening in the ozone layer.
Does this sound like an economy that needs a jump-start through a tax
cut? We were on the right track in 1993. That was the right track. We
don't need this tax cut now. To provide a tax cut now is like
encouraging someone who has just paid off a huge credit card debt,
complete with whopping interest payments to go on a wild and
uncontrollable shopping spree. Where is the learning curve? Where is
the learning curve?
Mr. President, it appears to this Senator that the justifications for
the tax cuts contained in the pending legislation do not extend beyond
the realm of pure unadulterated politics, pure unadulterated politics.
Tax cuts are now, as they have been in the past, the easiest vote a
Member of this body could ever make--easiest vote. Tax cuts sell well
on the campaign trail. They make even rubber chicken taste good. They
seem to magnetically draw checkbooks out of our coat pockets, but in
our current fiscal situation they do not represent sound fiscal policy.
Tax cuts are not in the best interests of our Nation at this time. I
cannot state that strongly enough. To fully prepare for the budget
pressures of the next century, we will need fiscal discipline as never
before envisaged. We will need budget surpluses, not a teetering see-
saw of a balance weakened by looming, back-loaded tax cuts whose costs
continue to escalate and whose effect will be to tilt the see-saw back
toward deficit spending. We will need to make many difficult decisions
with regard to Federal entitlement spending.
In short, Mr. President, we will need compromise on many fronts of
our budget debate. However, if we are to be truly faithful to the
principles of fiscal order and balanced budgets, and if we are going to
be mindful of the America that we leave to our children--we hear so
much about our children--if we are truly mindful of the America that we
leave to our children and to our grandchildren, there is no place, no
place for tax cuts in any compromise proposal at this time.
Mr. President, I yield the floor.
Mr. ROTH. Mr. President, my colleague's argument brings to mind a
letter from a fellow Delawarean who reminded me of the wisdom of
President Abraham Lincoln.
Quoting our 16th President, Mr. Robert Hall, of Hockessin, DE,
reminded me that:
You cannot bring about prosperity by discouraging thrift.
You cannot strengthen the weak by weakening the strong. You
cannot help the wage earner by pulling down the wage payer. *
* * You cannot establish sound security by spending more than
you earn. You cannot build character and courage by taking
away man's initiative and independence.
Only by keeping the economy strong can we balance the budget. And one
certain way to strengthen the economy is to keep our burden of taxation
reasonable, keep it at a level that provides initiative and incentives
for risk-taking and thrift. History has proven that tax cuts stimulate
economic growth.
The Mellon tax cuts at the turn of the century created incredible
prosperity for America. President Kennedy's cuts stimulated the economy
in the 1960's, and in the 1980's, Kemp-Roth led to the longest
peacetime economic expansion in history. Eighteen million new jobs were
created, along with 4 million new businesses. Family income rose and
homeownership boomed as interest rates and inflation fell. At the same
time, Treasury revenues more than doubled, not because Americans were
paying a higher percentage of their income to taxes, but because
Americans had higher incomes.
The truth is, Mr. President, that had Congress held the line on
spending, the windfall to Treasury created by the Kemp-Roth tax cuts
would have put a stake in the heart of the deficit. However, instead of
controlling its appetite to spend--something we're trying earnestly to
do, now, Congress shackled America with the 1990 tax increase. Then, 2
years later, President Clinton imposed the largest tax increase in
history on Americans.
With this package, we begin to reverse these trends, and history is
on our side. A responsible tax cut will strengthen the power of an
expanding economy for our families and Nation.
At the moment, the average American family pays 40 percent of its
income to taxes, and the current Federal system is counterproductive to
economic growth. It double-taxes savings, thwarts investment, hinders
productivity, increases prices, stifles wages, and hurts exports. It is
complex and places disincentives on work.
As chairman of the Finance Committee, I intend, to see this
reconciliation package through, and then, in coming months, I intend to
turn our attention to comprehensive tax reform. We will work for a
fairer, simpler plan that does away with the negative consequences of
the current system--a plan that encourages savings and promotes
American exports. But first we must keep our promise of the tax cuts
we've proposed for the American people.
This legislation keeps that promise.
Mr. HATCH addressed the Chair.
The PRESIDING OFFICER (Mr. Thomas). The Senator from Utah.
Mr. ROTH. Mr. President, I yield 10 minutes to the distinguished
Senator from Utah.
The PRESIDING OFFICER. The Senator from Utah is recognized.
Mr. HATCH. Mr. President, in a different vein than my colleague from
West Virginia, I rise to speak in strong support of this historic
balanced budget and tax relief agreement. On many occasions I have come
to the floor of the Senate arguing the importance of curbing Federal
spending and balancing the Federal budget. It is equally, if not more,
important that we pass on the benefits of a balanced budget in the form
of tax relief to the American people.
Mr. President, I have long been an ardent supporter of tax cuts for
the American people. This bill marks a very decided shift, a dramatic
shift from the tax increases that have been prevalent over the past
decade. The bill before us represents the first real tax cut in 16
years. It was not easy to get here. We can all remember the partisan
budget debates we have had in the past few years. The difference
between those bills and the one before us today is the bipartisan
cooperation that went into this year's legislation. It is because of
unceasing bipartisan effort to end big government and the benefit of a
strong and vibrant economy that we can stand here today debating such
historic legislation.
I maintain, Mr. President, that this bipartisanship developed because
the American people insisted on it. They reelected President Clinton,
but they also reelected a Republican majority in the House and Senate.
And I have to say we would not even be debating a balanced budget bill,
we would not be debating a tax cut bill if it was not for the
Republican majorities in both the House and the Senate. The people who
we each have pledged to serve decided that both points of view were
necessary to get a balanced Federal budget. Congress and the President
finally got the message, and the American people are the beneficiaries.
The package before us contains a variety of tax cuts that will bring
much-needed relief. These tax cuts allow the taxpayers in my home State
of Utah and across the Nation to keep more of their hard-earned
dollars. This bill provides significant relief through: First, a tax
credit for families with children; second, lower capital gains tax
rates; third, tax incentives for education; fourth, small business
incentives; fifth, increased savings through enhanced IRA's; and sixth,
higher death tax exemptions.
The child tax credit is especially important for America's working
families. Raising children in today's world becomes more expensive each
year. This family tax credit will put the tax relief where it is needed
most, in the pockets of parents with small children.
This bill also contains a number of proposals to ease the burden for
paying for college. I hear again and again from parents in Utah and
throughout the country struggling to keep up with the high costs of
college for their children. Mr. President, having put six children
through college myself, I know exactly what they are going through.
This bill will help these families by providing a tax credit for
tuition expenses, a deduction for student loan interest and a new
education IRA to promote saving for education. There aren't many things
in this world that mean as much to us parents as giving our kids an
opportunity that perhaps we didn't have or helping them to get along
with good education.
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The bill also contains important tax cuts to stimulate economic
growth and create new jobs. In the past two Congresses, I have
introduced legislation to cut capital gains rates in half. I am
extremely pleased that this tax package lowers the capital gains tax
rate in half to almost 20 percent. This historical and important change
will not only ease the current double taxation of capital income, it
will encourage more capital investment and help maintain the strong
economic growth that this country has experienced over the past number
of years. In fact, ever since the original recession during the Reagan
years, we basically have had a good economy. We had a couple of
downturns during the Bush years, but the fact is, we are all still
benefiting from having cut the marginal tax rates from 70 percent down
to 28 percent.
I might also add that a great deal of the credit should go to the
distinguished chairman of the Senate Finance Committee, Senator Roth. I
remember in those early days in the late 1970's and early 1980's there
were a number of us who banded together under the leadership of Bill
Roth and Jack Kemp to advance supply-side tax cuts which have proven to
be successful. We are still benefiting from the cuts in those marginal
tax rates from 70 percent down to 28 percent, still benefiting today,
and this administration is benefiting from that. And to blame all of
those deficits on Reagan kind of ignores the Great Society programs,
kind of ignores the fact that during those years Reagan got his
marginal tax cuts but Tip O'Neill got his great spending increases,
and, of course, we had to increase spending on the military.
Ultimately, because of Reagan and his spending, we actually ended the
cold war. And we have saved trillions of dollars because of that.
I want to pay particular tribute to my colleague from Delaware.
Without his leadership, we would not have this bill. We would not have
these tax cuts. And I have to say he has been a strong, firm, solid,
steady leader in these matters.
This capital gains tax rate reduction alone is going to prove to be
very beneficial to our economy. There are trillions of dollars locked
up in capital assets in this economy because people just don't want to
pay a 28-percent top capital gains tax rate and corporations don't want
to pay a 36-percent rate. Unfortunately, we couldn't do much for the
corporations this year because of the limited amount of tax cuts we
have negotiated with the President. But we have done a lot for the
millions and millions of people, now, many in the middle class--50
percent of whom are in the middle class--who now are getting robbed
because of inflated values of their capital assets, which if they sell
they are paying taxes on the inflated value rather than the actual
value. It wouldn't have happened but for our distinguished chairman of
this committee, the distinguished chairman of the Ways and Means
Committee, Bill Archer, and of course my friend--both friends--Bill
Roth, as well.
This is important. For a long time we have made the case if we cut
capital gains tax rates we are actually going to get an increase in tax
revenues. I believe over the next 5 years that will prove to be true.
Instead of losing actual tax revenues we ought to increase tax
revenues. But if all we do is break even or even slightly below
breaking even, it's worth it because it's the type of thing that will
benefit so many millions of Americans, especially those of us in the
middle class who put our hard-earned savings into mutual funds or into
other areas of the stock market or into capital assets that literally
will receive some benefit in the future from what is being done here
today.
Some of my colleagues from the other side of the aisle have
categorized the capital gains tax cut as being for the rich. This is
just not true. The capital gains tax cuts will help any American
investing in a mutual fund, owning a home, or with an IRA which invests
in stock. These are not the rich. These are hard-working middle-class
families saving for their future and struggling to own a piece of the
American dream.
In addition, this bill provides much needed relief from the estate
and gift tax. This so-called death tax is nothing more than a
punishment for success. This tax has the damaging effect of forcing
families to sell a business or a family farm just to pay their tax
liability. Many farms in my State of Utah have been passed on from
generation to generation. Under the current estate tax, it is
inevitable that at sometime in the future these families may be forced
to sell these farms unless this tax is eliminated. This is one area of
unfinished business. I hope that we can continue the process we have
begun here and work together in the future to further reduce this
onerous tax on American family farms and businesses.
This bill also contains a number of proposals that will help small
businesses. Since 1993, I have attempted to clearly define what is a
principal place of business for purposes of the home office deduction.
This bill would clarify that definition and allow thousands of small
business men and women deduct their legitimate home office expenses.
In addition, this bill makes important changes to allow self-employed
individuals to fully deduct the cost of health insurance. The bill also
modifies the employee stock ownership plan rules and other pension
provisions that will allow more small businesses to provide employees
with savings and retirement benefits.
Mr. President, I would like to commend the conferees for including
provisions contained in the International Tax Simplification for
American Competitiveness Act which I introduced earlier this year with
Senator Baucus. This bill will extend the same export benefits to
software products that are available to films and other recordings. It
will also provide relief to U.S. financial services companies,
including banks, security firms, insurance companies and brokers, and
other finance and credit entities. The simplification and other changes
to the most complex area of our Tax Code will enhance the global
competitiveness of American products and companies.
Mr. President, while this bill does, in some ways, create more
complexity in the Tax Code, there are a few sections that simplify
various areas of our tax system. One such provision is a provision that
I have worked hard on--exempting State and local government pension
plans from the cumbersome pension nondiscrimination rules. This
provision reinforces the right that State and local governments have to
determine the compensation of their employees without Federal
Government intrusion.
Mr. President, the passage of this tax relief bill is truly historic.
The taxpayers in my State of Utah and across this country are deserving
of this tax cut. They are overtaxed and over regulated. This bill
provides broad tax relief in many important areas.
The budget conference report also contains provisions to restructure
and preserve the Medicare Program for a decade. These changes are
nothing less than historic in nature and will help insure that Medicare
remains solvent well beyond 2001--the date for financial insolvency for
the Medicare part A hospital trust fund.
Elderly Utahns can rest assured tonight that the Federal Government's
health care commitment to them remains strong and undeterred. And,
while work remains to be done, all future Medicare beneficiaries can
rest assured that Medicare will be there as they become eligible early
in the next century.
I join my colleagues in the Senate and particularly those Senators on
the Finance Committee, on which I serve, where this legislation was
originally developed and drafted.
We all have worked tirelessly over the past 7 months through numerous
committee hearings and through countless committee meetings. We worked
in a bipartisan fashion, resolved our differences on policy, and
ultimately developed a consensus approach to Medicare reform.
The effort has paid off, and the American people are the recipients
of this great and historic dividend.
Nevertheless, we must also recognize--and the American people must
realize--that there still remains considerable work to be done with
respect to long-term reforms of the Medicare Program.
This is why I am delighted the conference report contains legislation
I sponsored earlier this year to establish a National Bipartisan
Commission on the Future of Medicare.
This Commission will be comprised of 17 members who will be charged
to
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develop recommendations to ensure the long-term fiscal health of the
Medicare Program. Those recommendations will be completed and sent to
Congress by March 1, 1999.
I have spent a great deal of time talking with my constituents in
Utah, and I have found that one thing which matters very much to them
is the ability to choose the health care which suits them the best.
Clearly, one of the most significant and dramatic changes to Medicare
will be the new Medicare Choice Program. Under this new program,
Medicare beneficiaries will have the opportunity to choose from a
variety of private health care plan options that best suits their needs
and preferences.
Such plans could include newly created provider sponsored
organizations operated by health care providers as well as medical
savings accounts combined with a qualified high-deductible policy. Utah
providers have urged for several years that we change the law to allow
them the ability to band together and form provider networks, locally
based linkages of physicians and hospitals who will treat Medicare
patients. That change will finally be made.
As a strong supporter of MSA's, I am delighted the bill contains this
provision even though it is a demonstration that is capped at 390,000
enrollees and sunsets on December 31, 2002. Nevertheless, it is an
important first step that I believe will be a resounding success and
reauthorized beyond the 2002 deadline.
This is an important change in Medicare which, since its inception in
1965, has traditionally been structured as a fee-for-service plan.
The Senate recognizes that beneficiaries want more choice in the
manner in which they receive health care. With the introduction of
managed care into the private sector, seniors are increasingly
interested in participating in managed care plans which offer greater
benefits such as prescription drugs and eye and hearing care.
The conference report we are passing today will give seniors that
choice. But it will do so without jeopardizing anyone's right or desire
to remain in the traditional fee-for-service program.
Moreover, we have incorporated protections and safeguards to ensure
that those seniors who choose to participate in a managed care plan
will have the necessary consumer protections such as access to
emergency services 24 hours a day as well as appropriate appeals and
grievance procedures.
Another key interest of Utahns is the necessity of providing cost-
effective, high-quality care for our seniors and disabled who must
avail themselves of either nursing home care or home health services. I
am particularly delighted the report contains important and necessary
changes in the manner in which the Federal Government finances skilled
nursing home and home health care services.
I have long advocated for the establishment of a prospective payment
system, or PPS as it is referred to, for home health and skilled
nursing care. I have introduced legislation--S. 913, the Home Health
Care Prospective Payment Act of 1997 and S. 914, the Skilled Nursing
Facility Prospective Payment Act of 1997--to accomplish this objective.
The major components of that legislation are contained in the
conference agreement we will approve today.
The implementation of a PPS will help address the extraordinary
escalation in program costs associated with home health and nursing
care. These two programs are the fastest growing components of Medicare
and efforts are necessary to address program growth without
jeopardizing quality or access to care.
Accordingly, I am delighted the report before us today incorporates
many of the provisions in my bills including the implementation of a
prospective payment system.
With respect to the $5 copayment for home health care services
originally contained in the Senate bill, I am pleased the final
conference report does not contain this provision. While I recognize
the need to place controls on utilization, I believe the most cost-
effective approach is through a prospective payment system which we now
have in place.
The legislation will also provide Medicare beneficiaries with new and
enhanced health care benefits.
I am particularly pleased that annual mammography screening,
screening for prostate and colorectal cancer, diabetes self-management,
and expansion of immunizations will be phased in and available to
beneficiaries.
In this regard, I am especially pleased that the conference report
contains a provision I raised in the Finance Committee to eliminate the
x-ray requirement as a condition of Medicare coverage for chiropractic
services.
Affording seniors greater access to chiropractic services will not
only result in reduced Medicare expenditures, in the context of total
program costs, but will also reduce needless back surgery for countless
senior citizens.
Mr. President, I would like to turn now to another provision, the
need for which was brought to my attention by Ms. Michelle Newport, a
Christian Scientist in Salt Lake City, UT.
Under several provisions of Medicare and Medicaid law, reimbursement
has been authorized for literally decades for nonmedical hospital and
skilled nursing facility services provided in sanitoria operated by the
First Church of Christ, Scientist.
The need for reexamination of these statutory provisions was pointed
out when the current law was challenged successfully last year in the
case of Children's Healthcare Is a Legal Duty (CHILD) versus Vladeck.
In this case, a Minnesota district court held that the law and their
accompanying regulations violate the establishment clause of the
Constitution as an inpermissible sectarian preference. Pursuant to that
court decision, the Secretary was enjoined from further implementation;
however through the efforts of a number of Members of Congress who
disagreed with this ruling, including House Judiciary Committee
Chairman Hyde, Senator Kennedy, and myself, the court's injunction has
been stayed until August 1997.
The provision included in the bill we are considering today is
intended to address our concern over that ruling. It has been drafted
to be sect neutral. It replaces existing law by providing for
reimbursement of nursing services to individuals who decline
conventional coverage due to sincerely held religious beliefs. The
provision sets up conditions for coverage of religious nonmedical
health care institutions under the Medicare and Medicaid Programs, with
new mechanisms to ensure cost-control of the benefit.
I want to thank Senator Roth and Chairman Archer, and especially
their staffs, for their hard work in crafting a provision which meets
the twin concerns of cost-control and constitutionality. I would also
like to pay special recognition to Gioia Bonmartini of the Finance
Committee staff, and Dean Rosen of the Ways and Means Committee staff,
who worked so hard to make certain an acceptable provision was included
in the conference agreement.
With respect to the delivery of health care in rural America, I am
pleased the report contains provisions I sponsored in the Senate to
increase the level of Medicare managed care payments for rural areas of
the country. The report provides a minimum payment amount of $367 in
1998 that will be updated annually by the growth in Medicare fee-for-
service payments.
Implementation of this provision, although extremely technical in
nature, has been a key objective of Utah's managed care community,
which will now have the incentives to develop and offer managed care
plans in more rural communities.
Before I close my discussion of the health care provisions contained
within this legislation, I want to take a few moments to address one of
the most important components of the conference agreement, the new
child health initiative.
As my colleagues are aware, Senator Kennedy and I introduced the
Child Health Insurance and Lower Deficit Act [CHILD] on April 8. Now,
only 114 days later, we are giving final approval to a substantial new
program which is very similar to the Hatch/Kennedy bill.
The CHILD bills, S. 525 and S. 526, proposed a program which is
extremely similar to that which is contained in the conference
agreement we are considering today. The CHILD bills, as with the
conference agreement, proposed a State-run block grant program to
provide health insurance services to
[[Page S8448]]
low-income children. The program was to be financed by a cigarette
excise tax. Eligibility is to be determined by the States, cost-sharing
is limited for the lowest income, and coverage cannot be provided to
those who are currently eligible for Medicaid, all provisions contained
within our legislation.
It is no secret to Members of this body that the United States has a
deplorable record in making certain that our Nation's most vulnerable,
our children, have access to health care services. By many estimates,
over 10 million of our children are uninsured. That is a situation
which must be corrected, and I am pleased, indeed thrilled, that the
conference agreement contains this new program.
At this point, I would like to insert a summary of the new provisions
for the edification of my colleagues.
Funding level: Provides $24 billion in the first 5 years,
and $24 billion in the next 5 years. Note: the funding levels
add up to $39.65 billion over the next 10 years because
certain Medicaid costs have been taken off the top.
Tobacco tax: Program starts in fiscal year 1998. It is
financed in part through a tobacco excise tax increase. There
is no increase in the first 2 years. For the next 2 years,
there is a 10 cents/pack increase. In the fifth year, fiscal
year 2002, and thereafter, the tax is increased by 15 cents/
pack.
Use of funds: Funds can be used for State block grants, or
expanded Medicaid, or both. Funding can be provided for
community-based health delivery systems, such as Community
Health Centers. The funds cannot be used for any other
purpose than those enunciated in the bill.
Funding distribution: Funds are distributed by a formula
which is initially based on the number of low-income
uninsured children in the State and in subsequent years
blended with the number of children in the State. There is a
geographical adjustment for the costs of providing services.
No State will get less than $2 million/year. Funds are made
available for 3 years, and unused funds can be redistributed
among other States.
Medicaid: If a State chooses to insure new children not now
eligible for Medicaid under Medicaid, they may receive
increased Federal matching equal to 30 percent of the State
share, with an 85 percent cap on the Federal contribution.
Secretarial approval of plan: A detailed process is laid
out for submission of the State plan, or amendments thereto.
Secretarial approval is deemed unless she notifies the State
within 90 days that it is disapproved.
Eligibility: States determine eligibility. Generally,
children can be covered up to age 19 and at 200 percent of
Federal poverty level. However, States which currently are at
that coverage level may expand their programs up to 250
percent of FPL. Covered children cannot be eligible for
Medicaid now and cannot be covered now under group health
plans.
State responsibility: States must show they are: (1) trying
to cover Medicaid eligibles first; (2) not substituting the
new plan for current group health plan coverage; (3) covering
Indian eligibles. States will be required to enunciate
strategic objectives and performance goals, submit an annual
report, and be subject to regular evaluations as to
effectiveness of the plan.
Benefits package: States must provide coverage which is
either equivalent to a benchmark package or a equivalent to a
benchmark-equivalent package, and they can provide even more
from a long list of services, which includes transportation
costs, mental health, home care and dental. The benchmark
package is either: (1) FEHBP-equivalent coverage, which is
Blue Cross/Blue Shield standard option for a preferred
provider organization; or (2) a plan generally made available
to State employees; or (3) the largest commercial, non-
Medicaid HMO in the State. The benchmark equivalent package:
(1) Is actuarially equivalent to one of the benchmark plans;
and (2) covers the following basic services: Inpatient/
outpatient; Physicians surgical and medical; Lab and x ray;
Well-baby and well-child care; including immunizations. The
State may also get approval from the Secretary to offer other
coverage. Current non-Medicaid State plans in New York,
Florida and Pennsylvania are grandfathered in.
Cost-sharing: The amounts must be published in the State
plan, and imposed under a public schedule. Variations based
on family income should not disadvantage lower income
families. No cost-sharing for preventive services. If the
child has income below 150 percent of Federal poverty level
[FPL], the State may not impose a premium above that which
would have been charged under Medicaid, and any deductible or
other cost-sharing must be nominal, as in Medicaid.
Maintenance of effort: States cannot change their Medicaid
eligibility standards in effect as of June 1, 1997.
Abortion: Abortion coverage is specifically precluded,
except for rape, incest or life of the mother cases.
Mr. President, I am extremely proud of this legislation. I think that
a number of important modifications have been made to the final
conference agreement, changes which improve the measure and which will
give the States the flexibility they need to operate the program in a
most efficient manner.
I will say, though, that I am disappointed at the Congressional
Budget Office's estimates that the bill will only cover 3.4 million
children, 1.38 million of whom were previously insured. It is no secret
that I have been critical of the CBO's earlier estimates which I felt
were too low in terms of children covered. I still believe this is the
case, and am hopeful that with the flexibility provisions added for the
Governors we will be able to cover even more children.
As many have noted, this will be the most important new program to
help our Nation's children since enactment of the Medicaid Program over
30 years ago. I am extremely proud to have played a role in its
development.
For not only will the bill help provide children with the health
insurance they need, it will play the dual role of discouraging them
from smoking or using other tobacco products, by increasing the tobacco
excise tax.
During this debate, which was often contentious, I asked my
colleagues, ``Who do you want to help, Joe camel or Joey?'' Sometimes
it didn't seem clear. But at long last, the Camel is losing, and that
is a tremendous benefit for public health.
I do want to take this opportunity to thank those who united behind
this effort, and especially the six Republicans who joined me in
drafting the original child health legislation: Senators Jeffords,
Stevens, Snowe, Collins, Campbell, and Smith. I also want to pay
especial tribute to two Senators who were extremely supportive along
the way, Senators DeWine and D'Amato, who played a crucial role in
supporting this legislation when support was sorely needed.
It is important to note the tremendous leadership role that Senator
Lott played in making certain this provision was incorporated in the
final agreement. He is a true friend of our Nation's children. Finance
Committee Chairman Roth must also be praised for his dedication to
children's health and toward working out a compromise with the House,
and his capable staff Dennis Smith and Julie James deserve especial
recognition, as does Howard Cohen of the House Commerce Committee
staff.
Of course, no list would be complete without mentioning Senator
Chafee, who did so much to advance this debate by pointing out the need
to maintain a strong Medicaid Program and make certain it is enhanced
as we expand children's health funding.
Strong partners in this cause are Senator Daschle, who stood up for
children's health when his national leaders would not, and Senator
Moynihan, who played a crucial role on the Finance Committee. Senator
Rockefeller, again, must be noted for his dedication to this cause, and
for assuming a strong voice of reason role when cooler heads did not
prevail.
And finally, I must pay tribute to my partner in this legislation,
Senator Kennedy. He is the most aggressive and successful legislator I
know. And I am proud that when we can unite on a bill, everyone knows
it will be a very good bill. Because the products of our legislative
liaison always represent the center.
Mr. President, in adopting this legislation today, we are
representing our constituents, the large majority of which time and
time again have signaled they want to do more for children's health.
That day is here.
Mr. President, I am pleased to have the opportunity to vote for this
important tax bill.
I, again, want to express my appreciation, love, and respect for the
distinguished chairman of this committee and the distinguished ranking
member, Senator Roth and Senator Moynihan, and the concomitant leaders
in the Ways and Means Committee in the House.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, I want to express my appreciation for the
generous comments the distinguished Senator from Utah had about me. I
have enjoyed working with him on this most important matter.
At this time I would like to make a point of order that a quorum is
not present.
Mr. DURBIN. Mr. President, if I might seek recognition before the
Senator from Delaware makes that point?
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Mr. ROTH. I am looking for my Democratic counterpart.
The PRESIDING OFFICER. Who yields time?
Mr. ROTH. The Senator can yield to himself whatever time he needs.
The PRESIDING OFFICER. The Senator from Illinois.
Mr. DURBIN. Mr. President, we have reached a historic juncture. Our
Nation has not had a balanced budget since fiscal year 1969, the last
budget year of President Lyndon Johnson's tenure. The budget deficit
began to grow under President Nixon, rose to $74 billion during the
recession we faced under President Ford, dipped and then steadied under
President Carter, until recession hit again and pushed the deficit to
nearly $80 billion. Then it ballooned to more than $200 billion after
the Reagan tax cuts in the early 1980's. It declined to around $150
billion, then skyrocketed during the recession under President Bush.
Quite a roller coaster ride; all of it in red ink.
Many of us believed we could meet our responsibility to live within
our means while helping our economy to move forward. What we needed was
leadership, not only in the White House but on Capitol Hill. When
President Clinton arrived, the deficit stood at an all-time high of
$290 billion. The economy was in stall. It was not mere luck which has
given us 7 years of economic growth and a declining deficit. Many
circumstances are beyond the control of any political leader, but
leaders can make a difference.
President Clinton set a course for economic growth and spending
reduction and invited the Nation to follow. It was difficult medicine:
Tax increases for those who had benefited most from the tax breaks of
the 1980s, spending reductions in programs most Americans support,
targeted tax relief for working families, and targeted investments in
programs that would strengthen the Nation.
Congress took the decisive and difficult step of passing President
Clinton's deficit reduction and economic growth package. It was a
politically costly step. It cost many Members their political lives.
Unfortunately, not a single Republican supported the President's plan
and it passed in this Chamber only when Vice President Gore cast the
tie-breaking vote. But it laid the groundwork for the budget package
before us.
The difficult votes some of us cast in 1993 helped to produce a
strong, growing economy with a Federal budget deficit that has declined
steadily. The deficit was $290 billion when the President took office.
It is conservatively estimated to be $67 billion this year, and could
end up below $40 billion. Deficit reduction and targeted investment
stimulated economic expansion, which created more revenue and produced
more deficit reduction, so that now some people really anticipate the
possibility that we will achieve a balanced budget as early as next
year. When we considered President Clinton's plan, it was called a
deficit reduction plan. No one dreamed that it would end up being a
balanced budget plan. To the surprise of most economists, that
possibility is within our grasp, even this year.
All of this occurred because of President Clinton's leadership and
the support of the Democrats in Congress in 1993. We can be proud of
these achievements. We can take some satisfaction in knowing that our
hard work in 1993 made it possible for another exercise of leadership
in 1997, to produce this balanced budget resolution. We can also take
some satisfaction in knowing the economy is strong. Look at the report
card. Unemployment and inflation, the combined rate, 8.7 percent, the
best since President Lyndon Johnson.
Mr. DASCHLE. Mr. President, will the Senator from Illinois yield for
just a moment?
Mr. DURBIN. I will be happy to yield to the minority leader.
Mr. DASCHLE. I wonder, and I apologize again and thank him for
yielding, I wonder if I might make a unanimous consent--or just note
the absence of a quorum in order to consult with the distinguished
Senator?
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. DURBIN. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DURBIN. Thank you, Mr. President.
I was speaking before the call of the quorum about the economic
report card that we can point to with pride that we have 2.8 percent
annual average inflation, the best since President Kennedy; 12.1
million new jobs in this period of time, the best ever; 1.1 million new
construction jobs, the best since President Harry Truman; a 14-percent
increase in consumer confidence, the best since President Eisenhower.
The list goes on and on.
This budget agreement that we consider today continues the fiscal
responsibility that we have shown since 1993. It includes the spending
cuts we need to balance the budget by 2002 and sets the stage for
continued balanced budgets beyond 2002.
What this budget package shows is that the two parties can work
together to make the necessary choices to balance the budget and
address the needs of the American people.
Is this the budget that I would have written? No, I would have
changed a lot of the provisions. This is probably not the budget that
any single Member of this body would have written, but it is a credible
effort, a reasonable compromise. It is worthy of our support. No
compromise is perfect, but this package will give many Illinois working
families much-needed help in paying for the cost of raising kids and
sending them to college. It addresses today's economic needs and
realities, whether it is paying for day care, braces, health insurance,
for kids or college tuition.
In addition to providing fairness for working families, it provides
fairness for seniors, extending the Medicare Program with reforms that
protect the most vulnerable. It eliminates some provisions adopted on
the Senate floor which would have raised, for example, the Medicare
eligibility age from 65 to 67 over a 20-year period of time, and it
addresses the concern that farmers and small businessowners should be
able to pass on their business and their farm to their children without
a great estate tax responsibility.
The spending bill that we consider preserves the budget and
strengthens the Medicare Program. The Republican Contract With America,
which was considered several years ago by Speaker Gingrich and many
Republicans Senators supported, would have cut $270 billion out of
Medicare over 7 years, a massive cutback in Medicare that would have
imposed excessive new burdens on our Nation's seniors. This budget
package cuts $115 billion over 5 years, without excessive new burdens
on seniors.
It extends the solvency of Medicare for 10 years, keeping our word to
seniors to keep this program strong. It limits the increased burdens on
our elderly seniors who live on limited incomes and are already paying
a large portion of their incomes in medical costs.
It allows for increased numbers of Medicare health plan choices for
our seniors, especially in rural areas. It includes a new package of
preventive benefits, including annual mammograms, diabetes self-
management, and prostate colorectal cancer screening.
It also includes nearly $1 billion in new spending for rural health
initiatives.
When it comes to Medicaid, this is also a good agreement. The
Republican proposal in 1995 would have cut $163 billion from the
Medicaid Program over 7 years. That would have risked the health of
seniors, children, and pregnant women who count on Medicaid for basic
health care and for many seniors' long-term care. This budget cuts only
$13 billion from Medicaid over 5 years. We have balanced the budget
without jeopardizing the safety net for Americans who lack health
insurance.
This agreement marks a historic commitment to our Nation's children.
The package sets aside $24 billion for children's health insurance.
Over 10 million of our children are currently uninsured. This bill
could help up to 7 million of these children become insured. I am
certain that in so doing, it will take a great burden off the minds of
many working families who don't earn enough money to be able to pay for
health insurance today or don't have a benefits package at work that
provides health insurance for their families.
[[Page S8450]]
The one thing this budget package does, which I think is long
overdue, is it provides funding to restore the unfair welfare reform
provisions that would otherwise cut off SSI legal immigrants who are
playing by the rules and paying their taxes but have become disabled or
may become disabled in the future. Without this budget agreement, over
22,000 elderly or disabled legal immigrants in my State of Illinois
would face the loss of their SSI in October. For many of them, this is
their only form of support. I supported the welfare reform bill, but I
agreed with President Clinton that this was one provision that needed
to be corrected. This agreement, this bill, will correct it.
This agreement also commits $3 billion to assist welfare recipients
to move into work slots. The basic principle of welfare reform was that
able-bodied adults should be put back to work. This assistance helps
the States accomplish that goal. The Republican budget in 1995 would
have imposed devastating spending cuts in education, environmental
protection and crime prevention, but this budget protects the
President's priorities in those areas, and the agreement on which this
is based calls for a substantial increase in education funding.
The tax-cut bill offers valuable tax relief to millions of working
families, with a net tax cut of around $95 billion over the next 5
years, tax cuts that are direct dividends of the 1993 budget bill.
This package includes a $500-per-child tax credit for children under
the age of 17, beginning in 1999, with a $400 credit in 1998. The
credit will be calculated before the earned-income tax credit to
maintain the valuable work incentives associated with that credit, and
it would be refundable against the payroll tax for larger families that
face the great expense of raising the next generation.
This credit, which costs $85 billion over 5 years, is the largest tax
cut in this package and one of its most important investments. An
estimated 13 million children in families earning less than $30,000
will receive this valuable assistance which they can use to pay for day
care, braces, or any other expenses the family faces, or to save for
the future. This child credit begins to phase out for individuals
earning $75,000 and couples making $110,000, higher than the President
sought. More importantly, some families earning as little as $18,000
who pay payroll taxes but little or no taxes would also qualify, which
Republicans have resisted.
Education tax credits: This tax cut package also includes the
President's education tax credit proposal, which I strongly supported.
With a value of $40 billion over 5 years, it constitutes the largest
increase in Federal education assistance since the GI bill after World
War II.
This package contains everything President Clinton asked for in
educational tax benefits. If we as a society want to show our youth the
value we place on education, we need to invest in education. This
package does that, with tax relief for college tuition costs and
increases in spending for scholarship grants, literacy programs, and
student loans.
This measure includes $31 billion over 5 years that will allow
middle-income families to receive up to $1,500 in tax credits to offset
the cost of the first 2 years of college. Families will be able to take
the credit against the first $1,000 of costs, plus half of the next
$1,000 of costs. Juniors, seniors, and part-time students can take a
credit of 20 percent of the first $5,000 of costs, to help families
afford the continuing costs of higher education.
In addition, there are $9 billion of other education tax incentives,
including an extension of the exemption for employer-paid undergraduate
tuition, which allows companies to help their employees improve their
skills and knowledge.
Estate tax: The estate tax exemption for farmers and small businesses
will be increased to $1.3 billion next year. This would allow family
farmers and family-owned businesses to pass down the fruits of their
hard work to their children and grandchildren. The estate tax will also
be raised gradually for all other Americans, to $1 million over the
next 10 years, which recognizes the effects of inflation on the
existing exemption.
Capital gains from home sales: For many families without children or
whose children have grown, the most important tax break in this bill
may be the capital gains exclusion for up to $500,000 in profits on the
sale of a home. This will help retirees who want to move to a smaller
home without adverse tax consequences.
Improvements: There are a number of improvements in this bill over
the original Republican plans: The extension of the airline ticket tax
has been improved. Capital gains will not be indexed for inflation, a
GOP proposal that would have mainly benefited the most wealthy of
Americans and would have created enormous pressure on the budget in
future years. Also gone is a GOP demand to pay less than the minimum
wage to people who move from welfare to subsidized public and nonprofit
jobs, and to deny coverage under worker-protection laws.
Flaws: Unfortunately, the tax cut bill has a number of flaws.
The bill waits far too long to increase the tax deduction for health
insurance for self-employed people to 100 percent. I have worked to
give farmers and small businessowners parity with the corporations they
compete with. Corporations can take a 100-percent deduction for health
insurance premiums. The self-employed should be able to do the same.
This bill does not move the deduction to 50 percent until the year 2000
and waits until 2007 to provide a 100-percent deduction. We can do
better than that.
The conferees also dropped the extension of the ethanol excise tax
incentive. I will continue to work for this important measure as part
of the highway reauthorization bill.
The cigarette tax increase--which would discourage our young people
from beginning a lifelong tobacco addiction--was reduced and delayed to
the year 2000.
And we must be vigilant in monitoring the impact of some of the tax
cuts in future years beyond 2002, because some of the provisions that
primarily benefit investors and the wealthy could explode in costs in
the coming decade. We could have better used that money for provisions
like the self-employed health insurance deduction and the ethanol
incentive.
Conclusion
On balance, both the spending cut package and the tax cut package are
worthy of support. They will balance the budget without putting an
undue burden on our most vulnerable people, take some important steps
to address problems such as the lack of health insurance among our
children, and give tax relief to working families who need it most. I
am pleased to support this package.
POINT OF ORDER
Mr. President, at this point, I raise a point of order that section
1604(f)(3) of the bill, H.R. 2014, contains provisions that produce no
change in outlays or revenues during the required period of time and,
therefore, violates section 313(b)(1)(A) of the Congressional Budget
Act of 1974.
The provision which I make reference to would automatically assume
that the tobacco tax increase, which is part of this bill, would be
credited on behalf of the tobacco companies as part of any settlement
that might be reached by Congress at a later date. This is a $50
billion windfall for the tobacco companies, which would absolve them
from responsibilities which they have publicly said that they will
assume.
This $50 billion would be taken out of programs that we think are
necessary for public health, including enforcement of the agreement,
public information campaign, smoking cessation clinics and the like.
So, Mr. President, I raise my point of order at this time.
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, I move to waive all points of order against
the bill that lie under section 313 of the Budget Act. I do so because
I rise in opposition to this point of order. The provision in question
was agreed to at the leadership level in the context of the budget
negotiations, and I have to point out that if this point of order
succeeds, it will delay the bill and, once again, Congress and the
Senate, in particular, would send the wrong message to the American
people.
By delaying the action, if this point of order were to succeed, it
would mean
[[Page S8451]]
the legislation would have to be returned to the U.S. House of
Representatives, acted upon there, before it could return here. I think
that is a delay that the Senate does not seek to choose.
I do not believe that we should delay this historic opportunity that
is within our grasp and, for procedural reasons, I intend to vote
against this point of order and urge my colleagues to do the same.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. Mr. President, might I say that in the judgment of this
Senator, the section that the distinguished Senator from Illinois
wishes to remove is a meaningless provision, with no binding effect. I
point out that the administration has agreed to it, and I offer the
counsel, unsolicited but certainly well meaning, to my friend from
Illinois, that if he feels he has an important issue here, may I
suggest to him the issue would be a lot more salient in the months and
years to come if it is in a statute. It can emerge and we can discuss
it at that time. So I join the Senator from Delaware.
Mr. KENNEDY. Mr. President, I support Senator Durbin's point of order
under the Byrd Rule, which would strike from the tax legislation what
should be called the ``Joe Camel Tobacco Loophole.''
This loophole will allow the tobacco industry to credit the new 15-
cent cigarette tax against the $368 billion it must pay in injury
claims and other health expenses under the so-called ``global
settlement.''
Over the next ten years, the loophole would add a $16 billion tax
break for the tobacco industry, which peddles in deadly products that
already addict 50 million Americans, and cost society $100 billion
annually in medical expenses and lost productivity.
The tobacco industry was also able to water down the 20-cent increase
in the cigarette tax to fund children's health, despite the fact that
it had overwhelming public support and passed the Senate last month by
a vote of 80 to 19.
The lesson is clear. Joe Camel still prowls the halls of Congress.
When tobacco issues are discussed in the light of day, the American
people win. When the debate moves into the back rooms, the tobacco
industry's interests come first, and the public interest comes last.
It's time that Congress stood up to the tobacco industry and said
``no'' to Joe Camel and the Marlboro Man. This tobacco loophole has no
place in this bill, and I urge my colleagues to support the Durbin
point of order.
Mr. LAUTENBERG. Mr. President, I rise in strong opposition to this
motion to waive the Byrd rule.
Mr. President, this has been a long budget process and we are near
completion of these important bills. However we are still in the midst
of a battle to save our kids from the health hazards and addiction of
tobacco. This battle has just started. However, there are some in
Congress who are hijacking this budget reconciliation process in an
attempt to give the tobacco industry the upper hand in legislation
implementing a global settlement of claims against the tobacco
industry.
We cannot allow this to happen. That is why I am opposing this motion
to waive the Byrd rule. Mr. President, the distinguished Senator from
Illinois has raised a point of order to a provision in the tax bill
conference report that would credit the tobacco industry toward
payments due on any legislative settlement with the revenue raised by
the tobacco tax. This is ridiculous. This revenue is targeted toward
children's health in this package. You can't have two uses for one
revenue source.
This is simply a nonsensical device designed to give yet another
break to the tobacco lobby. Well, I will do everything I can to prevent
this from happening in a global settlement.
Mr. DURBIN addressed the Chair.
Mr. ROTH. Mr. President, once again, I urge Members of the Senate to
support my waiver. If my colleague is ready, I yield back the remainder
of my time.
Mr. MOYNIHAN. I yield back the remainder of my time.
Mr. DURBIN addressed the Chair.
The PRESIDING OFFICER. All time has been yielded back.
Mr. DURBIN. Parliamentary inquiry, Mr. President.
The PRESIDING OFFICER. State your inquiry.
Mr. DURBIN. Mr. President, could the Chair inform whether this motion
is debatable?
The PRESIDING OFFICER. It was debatable, but time has been yielded
back.
Mr. DURBIN. Mr. President, I was seeking recognition during the
course of debate. Does that give me----
The PRESIDING OFFICER. The Senator from Illinois does not control the
time. The time is under the control of the two bill managers.
Mr. DURBIN. Thank you, Mr. President.
Mr. MOYNIHAN. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There appears to be a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
waive all points of order with respect to the conference report on H.R.
2014. The yeas and nays have been ordered. The clerk will call the
roll.
The legislative clerk called the roll.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The yeas and nays resulted--yeas 78, nays 22, as follows:
[Rollcall Vote No. 210 Leg.]
YEAS--78
Abraham
Allard
Ashcroft
Baucus
Bennett
Biden
Bond
Breaux
Brownback
Burns
Campbell
Chafee
Cleland
Coats
Cochran
Collins
Conrad
Coverdell
Craig
D'Amato
Daschle
DeWine
Dodd
Domenici
Enzi
Faircloth
Feinstein
Ford
Frist
Gorton
Graham
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hollings
Hutchinson
Hutchison
Inhofe
Inouye
Jeffords
Johnson
Kempthorne
Kerrey
Kerry
Kohl
Kyl
Landrieu
Levin
Lieberman
Lott
Lugar
Mack
McCain
McConnell
Mikulski
Moynihan
Murkowski
Nickles
Robb
Roberts
Rockefeller
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Warner
NAYS--22
Akaka
Bingaman
Boxer
Bryan
Bumpers
Byrd
Dorgan
Durbin
Feingold
Glenn
Harkin
Kennedy
Lautenberg
Leahy
Moseley-Braun
Murray
Reed
Reid
Sarbanes
Torricelli
Wellstone
Wyden
The PRESIDING OFFICER (Mr. Abraham). On this vote the yeas are 78,
the nays are 22. Three-fifths of the Senators duly chosen and sworn
having voted in the affirmative, the motion is agreed to, and the point
of order falls.
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. ROTH. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. CHAFEE. Mr. President, I applaud the Republican leadership as
well as the administration for putting together this tax bill, which is
an integral component of the overall plan to balance the Federal
budget. While I have not been an enthusiastic supporter of tax cuts at
this time, there are provisions in this bill that I have vigorously
sought to have enacted, and which will significantly help the people in
my home State of Rhode Island, as well as the entire country.
The centerpiece of the tax bill is the $500 per child tax credit. For
a married couple with two children that's an extra $1,000 for them to
spend as they see fit.
The bill also includes several provisions that help families meet the
cost of sending their children to college. Under the bill, low- and
middle-income families can qualify for income tax credits of up to
$1,500 to offset the cost of college tuition. To help families save for
education expenses, the bill establishes education savings accounts.
Contributions to these accounts are not tax deductible, but
distributions are tax-free if used for tuition, room and board
expenses.
I am also pleased that the conferees chose to include an extension of
the tax break afforded to employer-provided education. Under current
law, an
[[Page S8452]]
employee is not taxed on amounts paid by an employer for educational
assistance. The exclusion is limited to $5,250 annually. The anecdotal
evidence indicates that this fringe benefit is most often utilized by
lower income workers as a way to develop the skills necessary to land
better paying jobs.
This budget agreement includes several provisions that will encourage
savings and investment. The most important of those provisions is the
reduction in the tax rate on capital gains. The bill lowers the top
rate on capital gains from 28 to 20 percent. For lower income
individuals the rate on capital gains is reduced to 10 percent. At the
turn of the century, the capital gains tax rate will be reduced further
to 18 and 8 percent, respectively, for investors willing to hold their
investments for at least 5 years.
Last year, Congress created the work opportunity tax credit [WOTC] as
a way to encourage employers to hire economically disadvantaged
individuals. These are individuals who have little or no job skills and
as a result are not attractive candidates for employment. The WOTC
Program provides employers an income tax credit for a portion of the
first year's wages paid to these individuals. The bill before us
extends this program through June of next year.
More importantly, this bill makes two improvements to the WOTC
Program. First, the bill creates a two-tiered credit to make it easier
for employers to utilize the program. This is necessary because many
employers were finding it difficult to retain these employees for the
full work requirement period, namely 400 hours, and as a result were
losing the benefits of the tax credit. In many cases the employers were
spending the money to train the employees only to have them leave
shortly thereafter for higher paying jobs. Without some reward for
their efforts, employers were simply dropping their programs.
Under the new structure, employers would be eligible for a reduced
credit if the employee works for at least 120 hours, even if the
employee fails to meet the full 400 work hour requirement.
The second change makes the work opportunity tax credit available to
disabled individuals receiving SSI payments. These individuals were
inexplicably excluded from participation when the WOTC Program was
created last year, and I am glad this bill corrects that error.
The agreement also includes two important provisions for small
business men and women. It delays the implementation of the electronic
funds tax payment system for 6 months to give businesses more time to
get used to this new manner of paying their tax bills.
The legislation also makes it easier for self-employed individuals
who work at home to take an income tax deduction for that portion of
the home used exclusively for business purposes.
The bill also includes the repeal of the excise tax imposed upon boat
diesel fuel. This tax, and the dyeing regime imposed by Treasury, has
wreaked havoc with boaters across the country. It caused many retailers
to choose between selling to recreational or selling to commercial boat
owners, with the recreational boaters usually being left without
service. This led to shortages in many parts of the country and
numerous cases wee reported in which recreational boaters had to go far
out of their way or travel many additional hours to obtain fuel
legally.
Finally, I am very pleased that this bill includes a version of
legislation I authored that creates a powerful new tax incentive to
encourage individuals to preserve open space. A serious environmental
problem facing the country today is the loss of open space to
development. All across the country, farms, ranches, forests, and
wetlands are forced to give way to the pressures for new office
buildings, shopping malls and housing developments.
America is losing over 4 square miles of land to development every
day. In Rhode Island, over 11,000 acres of farmland have been lost to
development since 1974. These open spaces improve the quality of life
for Americans throughout this great Nation and provide important
habitat for fish and wildlife.
In many instances, the loss of open space is simply the natural
outgrowth of urbanization of our society. Other times it is the direct
result of improper planning at the State and local levels.
But frequently, the problem is created by the Federal estate tax. For
those families where undeveloped land represents a significant portion
of the estate's total value, the need to pay the tax creates powerful
pressure to develop or sell off part or all of the land or to liquidate
the timber resources on the land. Because land is appraised by the
Internal Revenue Service according to its highest and best use, and
such use is often its development value, the effect of the tax is to
make retention of undeveloped land nearly impossible.
The bill begins to address the problem caused by the estate tax. The
bill includes a proposal that is modeled after legislation I introduced
earlier this year along with Senators Baucus and Gregg. It excludes 40
percent of the value of land subject to a conservation easement from
the estate and gift taxes.
In order to target the incentives under this bill to those areas that
are truly at risk for development, the bill is limited to land that
falls within a 25-mile radius of a metropolitan area, a national park
or a national wilderness area, or within 10 miles of an urban national
forest.
Of course, as is the case with all major bills, there are a few
provisions in this agreement that I do not support. One such provision
is the restructured aviation trust fund taxes.
As my colleagues know, currently the aviation trust fund is
principally financed by a 10 percent ticket tax. High-cost airlines--
the so-called big seven--have been lobbying Congress for the past 2
years to restructure the aviation trust fund revenues. The big seven
argue that they want to restructure the fees so that the burdens of
funding the Federal Aviation Administration are more fairly allocated.
But this proposal does not do that. In reality, it is a thinly veiled
attempt to shift a portion of their costs to other airlines--
principally low-fare airlines.
Let me expose the folly of this new system. The big seven would have
us believe that their system--which is more or less the proposal
adopted by the conferees--is grounded in fairness. Yet, this new system
does nothing to address the huge loophole under which they avoid paying
the tax on their international flights.
Let me explain. If Continental Airlines flies from Los Angeles to New
York, stops for less than 12 hours, and then continues on to London,
the new fee structure does not apply to that flight. In other words,
the passengers on that flight do not pay the 7.5 percent ticket tax,
nor do they pay the new head tax, notwithstanding the fact that this
flight clearly utilizes the services of the Federal Aviation
Administration as it flies completely across the country.
It is particularly regrettable that the conferees have chosen to
implement this new fee structure prior to the issuance of the report
from the commission Congress established to study this matter. In
October 1996 Congress directed that a commission be formed to assess
the FAA's funding needs and the costs imposed on the system by each
segment of the aviation industry. This report was originally scheduled
for completion in April 1997, but its issuance was delayed until
September. It is incomprehensible to me that the conferees would agree
to take the unusual step of changing the makeup of the ticket tax
before the commission's report was received.
Mr. President, this is one aspect of this budget agreement that I
hope we will revisit once the commission's report is received and can
be reviewed.
I also oppose the agreement's provision extending the diesel dyeing
requirements to kerosene. Since 1995, there has been substantial debate
about the proper tax treatment for kerosene. More than 90 percent of
kerosene consumed in the United States is used for aviation purpose;
accordingly, the fuel is currently classified and taxed as an aviation
fuel.
Kerosene is also blended during cold weather with diesel fuel and
home heating oil to prevent those fuels from congealing; and it is
treated, for tax purposes, as the fuel into which it is blended. Thus,
if kerosene is blended with undyed diesel fuel, it is taxed as diesel
fuel; if it is blended with dyed home heating oil, it is exempt from
tax.
This bill imposes a 24.3 cents-per-gallon excise tax on kerosene when
it is
[[Page S8453]]
removed from the terminal, classifying it as diesel and subjecting it
to the same tax and dye program.
Because tankage in the Northeast is limited, terminals are likely to
have space only for undyed kerosene. Such fuel is subject to tax when
it is pulled from the rack; and, dealers who sell it directly as a
heating fuel or as a blandstock for distillate, and farmers blending it
as an off-highway fuel will be forced to apply for refunds of taxes
paid.
This proposal also raises safety concerns. The New England
Association of Fire Marshals and the Consumer Product Safety Commission
have raised health and safety concerns about the use of dyed fuels in
unvented heaters. Most kerosene heaters have been certified by the
United Laboratories and similar organizations as safe only if they burn
clear, undyed fuel. Accordingly, there is little information available
about the effects of dyed fuel on these heaters, and it would take
several years to have them retested and recertified to burn dyed fuel.
In closing, I would like to express my appreciation and admiration to
the chairman of the Finance Committee, Senator Roth, who did a
wonderful job of guiding this legislation to this point. Without his
willingness to work with all members of the committee, and indeed the
entire Senate, this bill would have had little chance of success.
Mr. KERREY. Mr. President, I support this tax bill as a way to give
working families tax relief and continue our economic growth.
I'm delighted that the tax cuts for working families in this
agreement were made more progressive by Democrats.
I support estate tax relief targeted at family farms and small
businesses as well as a phase-up in the self-employed health deduction
to 100 percent.
And I am pleased this agreement left out attempts by the other body
to raise taxes on ethanol and make it too easy for employers to
reclassify their employees as independent contractors. I would have
been hard-pressed to support this agreement had the language on
independent contractors survived knowing that having this provision in
law would have had significant and harmful effects on the health and
financial well-being of American workers. Consider that under current
law, only 2 percent of independent contractors have health and
retirement benefits, while 50 percent of private employees have those
benefits--adopting the language proposed by the other body would surely
have had harmful health and financial consequences for the American
worker.
Mr. President, I am pleased that a number of savings and investment
incentives like expanded IRA's and education IRA's are included in this
agreement. These provisions are good for what they are. However, I fear
that the people who most need to generate wealth for their families--
middle- and lower-income people--will have the toughest time taking
advantage of these provisions. That is why I am so sorely disappointed
that the conferees chose not to include a robust form of KidSave in
their final agreement. Indeed, given the option I would go further than
KidSave by allowing taxpayers to keep a portion of their payroll taxes
in personal savings.
And I support the emphasis on education contained in this bill
although I am not convinced the money we will spend on some of these
initiatives is the most efficient or effective way to make sure more
kids have access to higher education.
Mr. President, in many ways voting for this bill is a close call for
me. Much of what was good in the Senate Finance bill has been thrown
overboard. And that bill, while complex, pales in comparison to the
complexity of this bill.
Still, I believe this bill will provide tax relief that working
families need. I am especially pleased with the improvements Democrats
secured to make this bill more progressive and in making this bill
reach more working families. I'm also pleased by the emphasis on
education in this agreement, if not by the details of that emphasis.
So, Mr. President, while I intend to vote for this tax package, I am
decidedly unenthusiastic about what we have not done in this tax
package and in this balanced budget package overall: we have not taken
the first steps toward long-term entitlement reform that recognizes the
seismic impact the retirement of the Baby Boom generation will have on
the budget, both in terms of its fiscal balance, the solvency of the
programs that comprise our retirement safety net and the balance
between mandatory and discretionary spending.
Specifically, I am disappointed in two aspects of the tax bill.
First, I am disappointed that the bill does not address what I
believe is the most pressing challenge families face in a global
economy: the need to build wealth.
Mr. President, I ask my colleagues to take a step back from the
rhetoric on this issue and consider the fact that increased income--
which is the object of these tax cuts--and increased wealth are very
different things, and they are particularly different today because, in
my analysis, the global economy is devaluing one--income--while
enhancing the value of the other: wealth.
Let me start with a set of definitions: Income is the regular inflow
of resources on which we depend to pay our bills and live our lives.
Wealth is the ownership of assets that gain in value.
Anyone who's played the old board game Monopoly knows this
difference. Most 10-year-old children who have played this game will
tell you that you don't win by going around and around the board,
collecting $200 every time you pass Go.'' You win by carving out some
of that income to buy properties that grow in value. It seems to me,
Mr. President, that focusing on working families' income--which is
certainly important--while ignoring whether they have wealth is like
trapping them in a game of Monopoly in which all we care about is
sending them around and around the board, passing Go'' and collecting
$200, while ignoring the fact that they don't have enough income left
over to build a stake of ownership and get ahead.
The difference may be best illustrated by the recent stock market
boom and, just as important, who has benefited from it. Let me open
with the simple proposition that those who own wealth in the stock
market own more than a few shares in a mutual fund--they own a piece of
our economy. They own a stake in it. When the economy succeeds, they
succeed. And what they own--capital, and a stake of ownership in the
means of production--is the asset that this economy is rewarding.
Families need a stake of ownership, Mr. President, because I believe
it is the principal factor that will determine whether the global
economy works for them--because it rewards ownership of capital, the
scarce factor of production that is in wide demand all over the globe--
or against them, because the expanding global labor pool means those
who earn their income exclusively from work are facing more and more
competition that is bidding the value of their services down.
Wealth is also important in a global economy because it provides the
security--for rainy days, for retirement--that a global economy
requires. I do not believe that ownership of the means of production
and ownership of a stake in our economy should be limited to the
privileged few. I want every American to have access to it.
I must say that therein lies my ambivalence toward the capital gains
and estate tax provisions of this bill. I supported both, but I note
for my colleagues' consideration that the estate tax only impacts 2
percent of Americans who die each year. The other 98 percent do not
have estates worth $600,000. I'd be willing to bet that a lot people in
this country have only a fuzzy notion of what a capital gain is because
they do not own capital. And I fear that we may have gone too far in
rewarding people who generate income from capital to the detriment of
those who generate income from getting up at 6 every morning and
putting in an 8 or 10 hour day.
And while I supported both of these provisions, I deeply regret that
this budget does not address the ability of the other 98 percent of
Americans to build estates and ownership of capital.
Even as the importance of wealth is growing, the gap in who owns it
and who does not is growing too.
The question, Mr. President, is: Where does wealth come from and why
do working families not have it? The answer is that wealth is built by
saving and investing over a long period of
[[Page S8454]]
time, which requires disposable income that many families lack.
I had hoped we would target tax relief toward freeing the disposable
income that working families need. I have proposed doing so by cutting
the biggest tax working families face: the payroll tax. I call this tax
``The Forgotten Tax.'' I had lobbyists knocking on my door to discuss
every arcana of tax law, but not once did someone knock on my door to
talk about this tax. I hope we'll take a close look at it and talk
about how this tax can be cut to give the working families on whom it
imposes its greatest burden a way to generate wealth through personal
savings.
We missed another important opportunity to help families build
wealth. KidSave, a term that is being bandied about to describe
policies that are foreign to its purpose, would have converted the
$500-per-child tax credit from one that increases consumption by $10 a
week to one that allowed families to build a stake of ownership in the
economy, which, as I have said, I believe is more important than
increasing their income, as much as I support that goal. I believe this
one provision, which was dropped, could have laid down the savings
infrastructure that our children will need in the 21st century to build
a stake of ownership in the economy.
I am pleased that this bill would expand IRA's and allow parents to
open higher education IRA for their children which would become IRAs in
the child's name at age 30 if the child did not use them for higher
education. However, the savings initiatives contained in this bill are
voluntary and for most people they will probably not be ``sweet''
enough get the people who most need to build wealth, to do so.
Second, I also fear this bill will come to be known as the Tax
Complication Act of 1997. This tax bill is going to be a bear to
administer and a bear for taxpayers to understand. As the Washington
Post noted earlier this week, Conceivably an individual reaching
retirement age could have an IRA with deductible contributions,
nondeductible contributions, one rolled over from an employer plan and
one of the new backloaded ones. As the Post dryly notes, calculating
the required withdrawals and taxes would be ``an adventure.''
As I am sure everyone in this chamber knows, not only are there
different income phaseouts for the front and back-loaded IRA's in this
bill, there is still yet another phaseout for rollovers from front to
back loaded IRAs.
I don't mean to single out any one provision for its complexity
factor. Here is yet another: Your capital gains rate. Just what is the
rate under this bill you might ask? That seems like a pretty
straightforward question but not so fast.
Assets held for zero to twelve months will be taxed under this bill
at ordinary income rates--a top rate of 39.6 in other words. Assets
held for 12-18 months and sold will be taxed at the current maximum
capital gains rate of 28 percent. Assets held for eighteen months or
more will get either a 20 percent, or ten percent rate. Assets disposed
of between May 7 and July 29 and held for 12 months will get a 20
percent rate.
But wait, there is more. We have a new 5 year holding period rate.
People paying taxes at the 15 percent rate would get an 8 percent
capital gains rate on assets held for 5 years beginning now. People
above the 15 percent rate would have to wait until the year 2001 to get
the 5 year holding period going, could even take old assets and bring
them up to current value without disposing of them, hold them for 5
years, and get an 18 percent rate in the year 2006.
Oh, and if you own commercial real estate, the rules are different as
well. Under this bill, the depreciated portion of your real estate is
taxed at 25 percent, the amount above that amount is at 20.
If you are working, but not wealthy, and you have more than two
children, you'll probably need to spend some of your child credit
hiring someone to figure out your child credit. Under this bill,
someone with one or two kids would get the child credit before their
earned income tax credit. But if you have three or more kids, you would
have the option of figuring your tax two ways: either take the credit
before the EITC or take the credit up to your employee FICA and income
taxes minus your EITC. At this point, as I understand it, you are no
longer even receiving a child credit. If you get the child credit this
way, you are getting a supplemental child credit, not, presumably and
actual child credit.
Just one more example. The education initiatives. Believe me, in
order to figure them out, you are going to need a degree in accounting
before you are able to do your own taxes. Under this agreement, the
HOPE credit gives you a 100 percent credit up to $1,000 the first 2
years, and 50 percent of $1,000 the second 2 years for ``eligible
expenses.'' That is on a per student basis and it begins in January of
1998. In addition, this agreement has a lifetime learning component
which provides a 20 percent credit for up to $5,000 in expenses on a
per family basis which in 2002 becomes a 20 percent credit against
$10,000. That provision begins on July 1, 1998. The HOPE credit is
indexed in 2001, the lifetime learning piece is not. Income limits for
both are indexed in 2001.
Having expressed those concerns, I do not want to underestimate the
magnitude of the achievement. Continuing the job of balancing the
budget will advance the goal of economic growth. The expanded reach of
the $500-per-child tax credit means real relief for real families. The
great American institution called the family farm will have a greater
opportunity to stay in families. I repeat: I vote yes for what we have
done here, for what we achieved, but with regret for the challenges we
chose not to tackle. We have thrown a first down pass, and the cheers
from the crowd are deserved. But a long distance remains to the goal
line: a federal budget that can cope with the demographic challenges we
face while still preserving our priorities as Americans.
Mr. ROBERTS. Mr. President, I rise today to support--and reflect--on
the Taxpayer Relief Act, which will be passed by the Senate tomorrow. I
am pleased that at long last we are providing tax relief to our
Nation's family farms and businesses and to many individual Americans.
My philosophy long has been that if we can allow any American to keep
one extra dollar of his or her hard-earned income, we have achieved a
measure of victory.
At the same time, I have serious concerns about major parts of this
legislation.
First, let me review some victories. As former Chairman of the House
Committee on Agriculture, I helped steer Freedom to Farm legislation
through Congress. It was an important step in returning agriculture to
the free-market and removing the Government from the operation of
family farms. However, that historic farm legislation will be
successful only if we take steps on the other side of the ledger that
give farmers the tools they need to compete. High on that list are
capital gains and estate tax relief, which are included in this tax
bill.
I have received numerous letters and phone calls from constituents
who purchased their farms and businesses 40, 50, or 60 years ago. These
people want to pass their family farms and businesses to their
children, but cannot because of burdensome capital gains and estate
taxes. I have long argued that it is unfair to tax a family's income
three times--once as income, once as capital gains, and once as an
inheritance. Although this bill does not eliminate capital gains and
estate taxes, the increased exemption for estate taxes and reduced
capital gains rate will make it possible for numerous parents to pass
their farms and businesses on to their children.
I am also pleased we have achieved repeal of the AMT for deferred
payment commodity contracts and income averaging. A farmer must deal
with drought, floods, freezes, and insects, any of which can destroy or
severely harm their crops. Thus, farmers often experience large
fluctuations in income from year to year. These provisions provide
important tools for managing these income fluctuations. While something
is always better than nothing, I am disappointed that income averaging
will only apply to the 1998 and 1999 crop years and not the full
remaining 6 years of the farm bill.
I am also pleased that the bill does not include the onerous House
provisions that would have taxed the tuition
[[Page S8455]]
waivers received by graduate teaching and research assistants at
universities throughout the country. Acceptance of these provisions
would have sharply cut access to graduate school for many students,
created teaching shortages, and greatly increased the cost of
continuing important research projects.
Mr. President, while I am happy to see these provisions included in
the Taxpayer Relief Act, I also have serious concerns with several
provisions of this bill.
First, at a time when Americans have asked us to lower their tax
burden and make the tax code less complex, this bill actually increases
the complexity of the tax code. We have obtained a reduction in the
capital gains rate. At the same time we have set up six different
capital gains rates: 28 percent for collectibles; 25 percent for
recaptured depreciation on investment real estate; 20 percent for all
other capital gains, falling to 18 percent beginning in 2001 for assets
held longer than 5 years; A 10 percent rate for those earning less than
$41,200/year, falling to a rate of 8 percent in 2001 on assets held
longer than 5 years.
If you include the corporate capital gains rate, we now have seven
capital gains tax rates. Only in Washington is an expansion from 3 to 7
tax brackets called simplification.
There are numerous examples where this bill will make the tax code
more complex.
High on that list is the incomprehensible maze of individual
retirement accounts set up by the bill. There is no escaping the fact
American families may need a tax lawyer to establish an IRA--but they
most certainly will need a lawyer to sort through withdrawal of money
from their IRA's.
Additionally, this bill tells Americans: ``The Federal Government
will reward you for having children. The Federal Government will reward
you for limiting your income.''
Have a child, get a $500 credit on your taxes. But if you are a
family making over $110,000 per year you get none of the benefits.
Nearly all of the bill's rewards, in fact, are subject to income
limits.
That is a clear message.
That is more social engineering than tax policy.
Could we achieve the same goal of tax reduction by spreading the cuts
across the board to help every American taxpayer? You bet we could.
Mr. President, we all agree with the goal of assisting families send
their children to college. This bill provides several tax incentives to
do that. But I must ask: ``Have we looked hard at these provisions to
ensure they will not quickly inflate the cost of higher education so
that any benefits to students and families are lost?''
Finally Mr. President, I ask what is in this tax bill for those
individuals who are not rich, who do not have large investments and
savings, and who do not have children?
I received a call this week from a constituent who works on the
assembly line at Boeing Military Aircraft Co. in Wichita, KS. He labors
side-by-side with another worker who earns a salary identical to his.
However, his coworker is married, has two children, and paid $4,200
less in taxes this past year than the single worker. This constituent
commented that his coworker is now getting an additional tax break,
while his taxes will not be lowered one penny by this tax bill. He was
angry, upset, and wanted to know why his Government penalizes him for
being single. Mr. President, I am not sure I have an answer.
I received another call from a father of three college graduates.
This man and his wife used most of their savings to put their children
through college. He has heard about the $500 per-child-credit, tuition
credits, and capital gains reductions. Yet, he had one very important
question. How was this tax bill going to benefit him and his wife,
since none of these benefits apply to them? These constituents are not
unique. They speak for a large segment of decent, hard-working
Americans who have been forgotten in this tax bill.
These constituents have a particularly difficult time understanding
why they are receiving no tax breaks under this bill, but someone who
pays no income taxes can still receive the $500 per child credit as a
refund towards their payroll taxes. My constituents want to know why
these people are receiving a refund on their Medicare and Social
Security taxes, but will still receive the same benefits when they
retire, as those Americans who are working hard to make a living but
who receive few benefits under this bill. Why are we failing to give
tax breaks to people who pay taxes, while giving refunds to those who
pay nothing? Why are we using a tax cut bill to develop and expand a
new form of welfare?
I do not argue that families with children do not deserve tax breaks.
Everyone in America deserves a break from their onerous tax burden.
Unfortunately, in our hurry to give tax breaks to families and people
who do not even pay income taxes, we forgot about those middle-income
Americans who are single, or married with no children, and who work
just as hard to make ends meet as their counterparts with children.
Mr. President, I will vote for the Taxpayer Relief Act because it
contains many tax relief provisions long needed by American taxpayers.
However, I would urge my colleagues to begin thinking seriously about
the need to return to these issues as soon as next year and make new
attempts to simplify our tax laws and make them fair to all classes of
taxpayers.
This tax bill is far from the best we can do.
A good tax bill should not promote disparity between economic
classes, it should not promote social policies, it should not expand
welfare, and it should not create additional employment for CPA's and
tax lawyers.
Mr. LEVIN. Mr. President, I will support this bipartisan tax
reduction bill. This package has the right priorities, emphasizing
education for young people, health coverage for children, and tax
relief for working families. It represents a significant improvement
over the bill originally passed by the Senate, which I opposed.
The improvements in the bill over the Senate bill are numerous. For
instance, the $500-per-child tax credit has been greatly expanded to
include more working families with children. Last week, I highlighted
several Michigan families that would receive significant benefits under
the $500 per child tax credit in the President's plan but would receive
no benefit under the House or the Senate bills. The compromise
agreement grants those Michigan families substantially the same
benefits that the President's plan would. One of those working families
is the Ginn family from Saginaw, Michigan, with an income of $25,000
per year, who would receive no benefit under the $500-per-child credit
in the Senate bill but would receive more than $1,200 in tax credits
under the compromise version. Another family is the Shannon family,
from Livonia, MI, with an income of $18,460 a year, that has a 1\1/2\-
year-old son. They too would receive nothing under the child credit in
the Senate bill but would receive the full $500 under the compromise
version.
Mr. President, I ask unanimous consent that a summary of the tax
benefits for six families from Michigan illustrating the improvements
in this bill be included in the Record following my statement.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See exhibit 1.)
Mr. LEVIN. The education tax cuts that will make college more
affordable for millions of families have been increased by nearly $7
billion over the Senate bill under the compromise agreement. The
legislation includes the $1,500 HOPE Scholarship tax credit which is
available for students in their first 2 years of college. It also
includes a provision that was not included in the Senate bill to give a
20-percent tuition deduction for a student's junior, senior, and
graduate educations. There is an extension of the tax exclusion for
employer-provided education assistance for 3 years and a welcome
reinstatement of the student loan interest deduction which allows those
paying back their loans to deduct up to $2,500 per year.
I am also pleased that the President insisted that the Empowerment
Zone concept that has helped revitalize Detroit and other Michigan
communities be added to the bill.
While there is much to applaud about this legislation, it's not the
tax bill I would have written. While the Treasury Department and the
Joint Tax
[[Page S8456]]
Committee have been unable to supply an analysis of the distribution of
the benefits of these tax cuts in time for this vote, I believe that
more of the benefit of this bill is directed to those who need it
least. I would have preferred a tax bill which targeted even more of
its benefits to working families.
The Corporate Alternative Minimum Tax [AMT] has been significantly
weakened in this bill and a significant number of profitable companies
will pay no tax as a result of this change. The AMT was added to the
Tax Code to ensure that profitable companies pay some tax. While the
capital gains holding period was lengthened by 6 months, I would have
preferred a tax bill which more narrowly targeted the capital gains tax
cut.
There is one more area of this bill which could use some improvement.
While many of the tax provisions that I have already mentioned I fully
support, this bill as a whole does not do anything to simplify the Tax
Code. In fact, it is likely to add a significant number of pages to the
code and add a significant amount of time to the time it takes for
taxpayers to prepare their return. I hope that in the near future we
can improve the Tax Code and make it and the IRS easier to deal with.
However, Mr. President, even with its imperfections, this bill is an
improvement over both the House and Senate passed bills, includes more
of the President's and Democrats' priorities emphasizing education for
young people, health coverage for children, and tax relief for working
families. For those reasons, I will support it.
Exhibit 1
Michigan Families Gain Child Tax Credit Under Budget Agreement
(Source: Office of Senator Carl Levin)
Melissa Shannon, Livonia, MI
Melissa Shannon is a full-time flight attendant for
American Trans Air at Detroit Metro Airport, currently
earning $18,460. She has one son, age 1\1/2\.
Value of child credit: House proposal: $0; Senate proposal:
$0; Clinton proposal: $500; Budget Agreement: $467.
Cheryl Campbell, Flint, MI
Cheryl Campbell works at Compensatory Education center as a
parents' assistant, currently earning $20,000. She is a
single parent with two children, ages 10 and 12.
Value of child credit: House proposal: $0; Senate proposal:
$0; Clinton proposal: $900; Budget Agreement: $900.
Kirt and Cora Harold, Grand Rapids, MI
Kirt Harold is a cosmetologist and Cora Harold does
accounting for a shipping company in Grand Rapids. Their
combined family income is $21,000. The Harolds have 2
children, ages 3 and 4.
Value of child credit: House proposal: $0; Senate proposal:
$0; Clinton proposal: $525; Budget Agreement: $525.
Cathy Smith, Escanaba, MI
Cathy Smith is a computer operator in Escanaba who
currently earns $18,512. She is divorced with two children,
ages 9 an 10.
Value of child credit: House proposal: $0; Senate proposal:
$0; Clinton proposal: $677; Budget Agreement: $677.
Valley Ginn, Saginaw, MI
Valley Ginn works as a secretary at the Saginaw Fire
Department. She has three children, ages 17 months, 28
months, and 7 years.
Value of child credit: House proposal: $0; Senate proposal:
$0; Clinton proposal: $1,207; Budget Agreement: $1,207.
Liane Hagerman, Boyne City, MI
Liane Hagerman works as a public health technician at the
Northwest Michigan Community Health Agency, currently earning
$21,000 annually. She has three children, ages 10, 15, and
18.
Value of child credit: House proposal: $0; Senate proposal:
$0; Clinton proposal: $653; Budget Agreement: $653.
Mr. GRASSLEY. Mr. President, I am privileged to be in the Senate
today to support passage of this historic legislation. In my career as
a Senator, a Congressman, and a State legislator, I have participated
in thousands of bills. Posterity will probably remember only a select
few of them. Of all, I expect, and hope, those who keep apprised of
Congress will remember this tax freedom reconciliation bill among those
remembered most fondly and most often.
This bill is not only about the Government living within the Nation's
means, but about the Constitution itself. Two years ago, the Congress
proved that it could pass a balanced budget. It also learned that the
Constitution anticipates a third participant in the legislative
process, the executive branch. So, we arrive here today not only having
anticipated the needs of the President, we have included the executive
branch as an active participant throughout the legislative process.
The words of the Constitution do not proscribe that Congress and the
President should enter into an agreement defining legislation before it
is actually written. Furthermore, the Constitution does not proscribe
that the Congress should advance legislation with the continued advice
of the Office of the President, the Treasury Department, and the Office
of Management and Budget. The words themselves simply allow the
President the express authority to either enact or veto the bills that
we in the Congress produce.
However, the partnership forged between the President and Congress
prove that the President can, and should, make his intentions known
throughout the legislative process. Since the President can veto any
bill that is sent to him, the process should allow that their contents
of bills should not come as a surprise. But, it is not the President's
reaction that should be avoided. It is the surprise of taxpayers. As
the legislative process has evolved, too much progress occurs behind
the closed doors of committees and caucuses. The people of the Nation
have come to think of the legislative process as a black box. The good
intentions go in one side, but something wholly unknown can come out
the other. The President has always had the authority to veto and the
Congress the power to reconsider.
But, in modern times, our legislative processes have become so
cumbersome that Congress leaves itself without the days necessary to
reconsider huge reconciliation bills. Therefore, we have effectively
revamped the legislative process by allowing the President to play an
earlier role.
Some might say that this is a significant change. Since the
Constitution does not direct such a partnership, it must be implied
therein. Our Constitution intends that we pass laws, not only bills.
Therefore, I turn to the product of this new process: The tax freedom
reconciliation bill of 1997. Earlier today, we passed the balanced
budget reconciliation bill. The latter is the first spending bill that
anticipates a balance in almost 30 years of gridlock. The former is the
first tax bill in 16 years that actually cuts taxes. Together, they are
the first omnibus reconciliation legislation in 4 years that will
become law.
Presently we are considering the tax freedom reconciliation bill. I
am particularly proud of several provisions contained in this bill.
Some of these sections have national perspectives like both the renewed
income tax deduction for interest on student loans and estate tax
relief. Others have a more regional effect such as the law turning back
the unauthorized IRS expansion of the alternative minimum tax against
farmers. All, however, provide relief to hard-working families in the
areas of education and income security.
For education, this tax-relief bill renews the deductibility of
interest incurred on student loans. I have introduced that particular
bill in every Congress since it was repealed in 1986. In the last two
Congresses I was accompanied by my friend from Illinois, Senator
Moseley-Braun. Today, I am happy to announce our success.
When Americans think of investing money, we think of investing in
things--machines, natural resources or businesses. This student loan
provision is an investment in human capabilities and talents. I would
like to do even more than what is offered in this provision. But
restoring the deductibility on the interest paid on student loans sends
a message to college students across the country. Their talents are
worth the investment of dollars.
Students need to know the Federal Government and the Nation value
their contributions. Understanding this, I believe they will have a
greater appreciation of the effort necessary to successfully complete a
higher education. We are clearly sending the message that the Congress
recognizes the financial responsibility students undertake, and we are
willing to do what we can to ease that burden.
For farmers, I am pleased to announce that another of these new laws
will forever repeal the unauthorized IRS advancement of the alternative
minimum tax against traditional farmer deferred commodity contracts.
The President may offer his views on legislation, but the IRS does not
have unilateral power to legislate on its own.
[[Page S8457]]
This is good news for family farmers and rural America. It reaffirms
the intent of Congress that family farmers should be able to continue
receiving the use of the cash method of accounting not limited by the
AMT. The IRS decision last fall to unilaterally change a 16-year-old
tax policy for these deferred payments. The IRS was dead-wrong. Sixty-
three of my colleagues joined my legislation with Senator Dorgan as
solid proof.
In addition to setting the record straight, turning back the AMT for
farmers highlights the larger problem we face when the IRS disregards
the intent and the will of Congress. Here, we had a tax policy in place
for 16 years, and suddenly, the IRS decides to make a 180 degree turn,
which caused a great deal of havoc and concern for thousands of
taxpayers. But, in order to return the law to its original intent, we
had to come up with hundreds of millions of dollars as an offset,
because of the upside-down way we do revenue estimates around here. So,
I hope the Joint Committee on Taxation will be addressing the revenue
estimation problem in the near future.
I am also proud of the future for estate tax relief for families.
When thinking about estate taxes, you have to always keep your eye on
the ball. Estates do not pay estate taxes, surviving families pay
estate taxes. In this bill we do a number of things for death tax
reform. All of these new laws are based on legislation that I
introduced with my friend from Montana, Senator Baucus. Twenty
cosponsors joined in our bill S. 479, the Estate Tax Relief for the
American Family Act. It became the estate tax relief legislation
embodied in this reconciliation bill providing over $675,000 of new
relief.
In current law, the general estate tax exemption is $600,000, but
that number is more than $200,000 behind the rate of inflation. In
nearly every area of my State and the Nation, we saw in the past decade
estate tax ultimately confiscate many family farms. Estate tax reform
is simply about fairness and equity for families.
We've heard some make the faulty argument that the estate tax only
affects a small percentage of taxpayers. Well, the point they leave out
is that many other thousands of taxpayers have to waste a great deal of
money in order to plan their estate so it will remain operational and
in the family.
In addition, without the relief under this bill, the number of those
affected by the estate tax would increase substantially in the next 5
to 10 years.
Let me also add that I strongly support estate tax relief because it
directly helps preserve our natural land. Our estate tax relief is very
pro-environment simply because it helps keep family farms operational
and defers the danger of over-development by urban activities.
In this bill, capital gains tax relief is the partner of estate tax
reform. Capital gains tax relief is similarly vital to my State of
Iowa. A disproportionate amount of farmland is held by older
landowners. To illustrate, studies in my state of Iowa show that 42
percent of farmland is held by taxpayers over the age of 65. Last year,
Iowa State University conducted its annual farm life survey. It found
that in the next 5 years, 21 percent of Iowa farmers are planning to
retire. This high rate of those leaving farming raises important
questions about who will be the next generation of Iowa farmers.
Some of those farmers who retire will want to hold onto the land and
maybe rent it out. Many others want to sell the land, move to town, and
be fully retired. Unfortunately, the capital gains tax has locked them
on the farm. I support an even larger reduction in the capital gains
rate. But, the reduction in the bill is certainly a very positive step
in the right direction.
Finally, I want to talk about the expanded availability of tax
supported individual retirement accounts. With the constraints of the
Tax Code reduced, we will have more people saving for their
retirements. Homemakers will be able to save $2000 per year tax-free
regardless of the tax free retirement program offered to the working
spouse. These new pro-saving laws will reduce the strain on the Social
Security system.
This Congress produced all of this relief for families by using
bipartisanship and cooperation with the executive branch. This
cooperation was not expressed in so many words of the Constitution, but
it must certainly have been implied.
Thank you Mr. President. I yield the floor.
Mr. ROCKEFELLER. Mr. President, before casting my vote for this tax
portion of the budget plan, I want to comment on the aspects that are
of most concern to me.
The basic point I want to emphasize is that my vote for both the
spending bill and this tax bill that make up the balanced budget and
tax plan is the result of weighing its merits against its flaws. The
fundamental job for Congress this year has been to agree on a plan to
balance the budget, which is the main objective of the bills we are
approving this week. Unlike the Republican budgets that I opposed over
the last 2 years, this plan is the result of bipartisan negotiations
and contains real benefits and important compromises in the interest of
West Virginians and all Americans.
At the same time, it has been clear that the only way we could finish
the job some of us started in 1993, to balance the budget and start
dealing with future priorities, was to find middle ground. I recognize
that I cannot write or cause the passage of the budget plan that
reflects exactly how I would chart Medicare's course, design the
childrens' health insurance program, target tax relief, or address
other priorities for West Virginians. Instead, I have worked hard in
the recent months to influence these parts of the budget and make the
best possible case for the approach I think is fair and balanced.
The spending plan approved this morning and the tax bill before us
today are improvements over the extreme Republican budgets that were
rejected in the past 2 years and over the earlier versions of these
very bills. With the many aspects that will benefit West Virginians and
address national priorities, I made the decision to vote for both
bills.
The crucial part of the bill before us is the fact that it will
provide tax relief to 27 million hardworking American families who are
responsible for raising over 45 million children under the age of 17.
Today, Congress joins the President to give those families a per-child
tax credit much like the one that the bipartisan Children's Commission
unanimously recommended when I chaired that commission 7 years ago. We
are delivering real tax relief to American families so that they can
share in the benefits of our sharply declined, and soon to be
completely eliminated, deficit. That is an achievement I think we can
be proud of, particularly because this tax conference report will
benefit 5.9 million lower income families who were left out of the
Senate-passed tax bill. The fight to make the child tax credit fairer
was won by the President and Democrats who refused to ignore the
millions of families struggling the hardest to provide for their
families. Winning, improving the child credit so it is extended to more
American families is important because it means we will more fairly
distribute the benefits of the tax cuts in this bill than under the
initial tax plans passed in Congress.
I am pleased that I can report that 25,000 more West Virginia
families will benefit from the child tax credit as a result of the
changes in the conference report--changing the stacking order of the
child credit, now placed before the EITC, and its partial refundability
for families with three or more children. It is predominantly for that
reason that I will cast my vote in favor of this tax package. Improving
the child credit so it reaches more families, the families who need the
most help to buy their children shoes, pay the mortgage, or deal with
an unexpected medical expense, is a major victory in this tax bill.
With this important improvement, I can support this tax package. The
substantial dedication of funds to provide health insurance to about
3.4 million of the 10 million uninsured children in our country--
totaling $24 billion in new dollars for kids' health--is another major
reason to vote for this bill. The additional financing for kids' health
comes from a hike in the tobacco tax. I think that is a smart way to
pay for this new spending on children's health. I am deeply
disappointed that we did not insist on a meaningful benefit package for
those children, but I will be back another day to fight to improve that
provision.
[[Page S8458]]
But I don't want to cast my vote in favor of this 5-year budget bill
without making it perfectly plain that I have serious worries about the
long-term costs of some of the tax cuts in this bill. Certain
provisions could be a potential tax timebomb because of how their costs
explode in the 5 years following the 5 years in this budget, sometime
after 2002. The explosion of costs in what we refer to as the
outyears--years after the first 5 years of the budget--of the
provisions that benefit the wealthiest Americans are very worrisome to
me. I have to honestly wonder whether or not we will realistically be
able to retain them. The long-term costs of providing such generous
reductions in tax rates for estates and gifts, capital gains, and the
expansion of individual retirement accounts [IRA's] may prove too
expensive to sustain. I cite these particular provisions because they
are the ones that score as relatively small costs in the first 5 years
of this budget, but are projected to multiply 10 and 20-fold in the
second 5 years, according to the scoring of both the Joint Committee on
Taxation and the Treasury Department.
Consider these numbers--estate tax relief costs $5.9 billion in the
first 5 years and jumps to $33 billion in the second 5 years; capital
gains relief scores as if it saves $123 million in the first 5 years
but the cost of that relief increases to $20.2 billion in the second 5
years; and the IRA expansions cost $1.8 billion in the beginning of
this agreement, but rise precipitously to $21.1 billion in the next 5
years. Those are enormous increases, and I worry that we cannot afford
to include such narrowly targeted tax relief over the long term when we
don't know how healthy our economy will be in the year 2002. We may
well have to revisit these benefits and reconsider whether they are
worth retaining. I would be thrilled if our economic growth and
expansion continued at such a pace that we do not have to revisit this
work, but I want my colleagues to know that this is one of my worries
about enacting this tax bill.
I remain very confident that over the next few years we have a unique
opportunity to provide some tax relief to many Americans --and well
understand the promise of that relief helps us deliver an agreement to
balance the budget. At the same time, we are plowing $40 billion into
education tax credits to help 5 million students with a $1,500 HOPE
scholarship to make the first 2 years of college universally available
and a 20 percent tuition tax credit for college juniors, seniors, and
graduate students, along with working Americans to pursue lifetime
learning and get the skill upgrades they need to compete in a changing
economy. This level of tax support for education will help us prepare
our children and our workforce for the new century. I congratulate the
President for holding firm to his commitment.
I am hopeful that both budget bills headed for the President's
signature will make the steps forward that are being promised and
celebrated today. I know that many provisions will directly benefit
West Virginians in key areas. But I also urge everyone in Congress to
keep a careful watch on the results of both bills, and maintain a
commitment to correcting anything that may go wrong and budgetary
effects that may go awry. Let's do our best to achieve the good
promised in these bills, and work to make sure that the legacy of this
legislation will be something we can continue to praise in future
years.
air passenger tax formula
Mr. MURKOWSKI. Mr. President, there are many elements of the tax
package that I strongly support including the children's tax credit,
the reduction in capital gains, and the first step in estate tax
relief. For those reasons, I will vote for the tax package.
However, I want to take a moment to discuss with my colleagues what I
believe is a fundamental inequity in the structure of the package. What
I am referring to is the new air passenger tax formula. The conferees
rejected the Senate's approach, which would have maintained the current
flat 10-percent tax and instead adopted a dual tax structure that
imposes both a flat tax and per-segment, per-passenger tax.
This new formula fundamentally discriminates against low-fare
carriers, especially those who fly smaller aircraft that make multiple
intermediate stops. The new formula will have an especially detrimental
effect on flights to and from the lower 48 from Alaska and Hawaii.
For several years, Congress has recognized the unique travel
circumstances faced by citizens of these two noncontiguous States. In
reality, the only way to get to Alaska and Hawaii is by air. And once
you arrive in Alaska or Hawaii, air travel is often the only suitable
way to get around.
Unfortunately, the new passenger tax formula fails to recognize our
States' strong reliance on the airplane. Passengers in small
communities like Ketchikan could see their air tax bill jump by 30 to
40 percent when the new formula is fully phased in. That is simply
unfair to Alaskans, who already must endure close to the highest cost
of living of any State.
Moreover, the new structure has a hidden timebomb that would explode
if we see a spike in inflation. Not only is the head tax indexed for
inflation, but the special $6 departure fee that is only imposed on
flights to and from Alaska and Hawaii is also indexed. What this means
is that every year, flights to Alaska and Hawaii are guaranteed to see
a double tax hike, whereas flights within the lower 48 will only see a
tax rise on the per-passenger fee.
I think that is fundamentally unfair and it is my intention to
introduce legislation that will reinstate the current air tax structure
for flights to Alaska and Hawaii.
Mr. AKAKA. Mr. President, I echo the sentiments of my colleague from
Alaska. The aviation provisions in this tax bill are unfair to
residents of and visitors to Hawaii and Alaska and will have a
disproportionate impact on carriers that serve our States.
The bill fails to recognize that the 49th and 50th States are
fundamentally different from the rest of the Union in our heavy
reliance on air transportation. As the only noncontiguous States,
Hawaii and Alaska are, for all practicable purposes, accessible from
the continental United States only by air. Furthermore, for different
reasons, travel within Hawaii and Alaska is feasible only by commuter
airline. In effect, Alaska's and Hawaii's air routes serve the same
purpose as other States' highway systems.
The pending measure would abrogate a long history of congressional
support for our States' special aviation needs--needs which are
embodied in current law--by imposing a per segment charge on flights
to, from, and within Hawaii and Alaska. This new tax discriminates
against the low-fare, short-haul carriers that serve the people of our
States as well as the larger carriers that maintain our communications
links with other States.
Carriers that serve Hawaii can ill afford this additional tax burden;
the impact is especially heavy on our local commuter airlines. The
taxes of Hawaiian Airlines and Aloha Airlines alone will rise by as
much as $7.5 million and $6 million, respectively, in the next year as
a result of the new segment fee.
Mr. President, I appreciate the conferees' desire to make excise
taxes reflect usage of the air traffic system. But I do not believe
that the conferees fully understood the implications of the segment tax
with respect to states whose residents and visitors are wholly reliant
on air service for intrastate and interstate travel.
This is clearly an issue that deserves further study. Certainly this
is an appropriate topic of review for the Mineta Airline Commission.
Should the tax bill pass, I hope that Members of this body would agree
to revisit this issue at the earliest opportunity. In any case, I will
join Senator Murkowski and my other colleagues from Hawaii and Alaska
in supporting legislation to restore the current tax treatment of our
two States.
Mr. STEVENS. I also share the concern expressed by my colleagues
about the new air travel segment fee in this bill. I regret that the
Senate was not able to sustain its position of a simple extension of
the 10 percent ticket tax in the conference committee.
We had a vigorous debate last year over financing the Federal
Aviation Administration in the Senate Commerce Committee on another
congressional committees. We decided to establish the National Civil
Aviation Review Commission to examine FAA's true funding needs and
various mechanisms for raising the revenues to meet those needs.
[[Page S8459]]
The Senate and the administration proposed extending the ticket tax
during this budget debate to allow the commission to do its work.
The new fee undercuts the work of the commission by prejudging their
decision. This is not the way public policy should be made, especially
on a matter of such direct importance to the pocketbooks and the safety
of the American public.
Mr. INOUYE. Mr. President, I share the concerns of my colleagues from
Alaska and Hawaii regarding the new airline ticket tax formula. I, like
Senators Murkowski, Stevens, and Akaka, am distressed that a bill that
has so many important provisions that will benefit the Nation and
citizens of Hawaii, badly misjudges the need for and importance of air
transportation in both Alaska and Hawaii.
Hawaii, unlike any other State in the Union, is completely isolated
from any other landmass. In terms of interisland/intrastate travel, my
State is totally dependent on air transportation. Maintaining the
stable, low-fare air transportation system we currently have is
essential to the State of Hawaii. Similarly, we must also maintain a
low-fare environment to stimulate the influx of tourists. Tourism is
Hawaii's No. 1 industry. Given this utterly unique feature of our
State, I am most disappointed that this bill imposes not only a segment
tax on our citizens who must travel between the islands to conduct
daily business and to visit family members, but also imposes the
segment tax, an excise tax and a departure tax on passengers coming
from any other State in the Union to Hawaii. According to the local
carriers in the State of Hawaii, in 1998, interisland customers would
pay an additional 16 percent in taxes, increasing to 54 percent in
2003. No other State, other than Alaska, will face fare increases as
significant as those which the new legislation will impose on the
residents and tourists of Hawaii. We must recognize that Alaska and
Hawaii are unique and must accommodate these States' dependence on air
travel in legislation that impacts the primary means of commerce on our
States.
I am pleased that Senator Murkowski plans to introduce legislation to
rectify this situation and I will strongly support him in those
efforts.
tiaa/cref
Mr. MOYNIHAN. Mr. President, under the Taxpayer's Relief Act of 1997,
the Teachers Insurance and Annuity Association [TIAA] and the College
Retirement Equities Fund [CREF] are taxed under the same regime as life
insurance companies. However, TIAA and CREF are separate companies with
different structures and operations.
TIAA is a nonprofit, legal reserve life insurance and annuity
company. CREF, on the other hand, is a management investment company
registered with the SEC under the 1940 act. CREF was organized in 1952
under a special act of the New York Legislature. CREF predates the
existence of separate accounts and in fact served as the model for the
variable annuity products offered today by life insurance companies
through separate accounts. No portion of a participant's pension
contribution to CREF pays for guarantees or the maintenance of
reserves.
In light of the differences between TIAA and CREF, I would like to
ask Chairman Roth, the distinguished chairman of the Finance Committee
if he would be so kind as to comment on the intent of the bill as it
applies to the taxation of CREF.
Mr. D'AMATO. Mr. President, 2 million college faculty participants--
260,000 in my State of New York--rely on TIAA and CREF pensions to
provide retirement security. Participants know when they choose CREF,
every contribution dollar goes to the retirement annuity accumulations,
or payout company, CREF offers no guarantees nor does it maintain
contingency reserves. Yet CREF performs functions similar to a separate
account of a life insurance company by allowing retirees to receive
variable annuity payouts.
I would like to join Senator Moynihan and ask Senator Roth, the
distinguished chairman of the Finance Committee, to comment on the
intent of the bill concerning the taxation of CREF?
Mr. ROTH. First, I would like to say that I joined my distinguished
colleagues, Senators Moynihan and D'Amato in opposing the repeal of the
tax exemption for TIAA and CREF in conference. However, the Senate did
not prevail.
In light of this unfortunate result, I believe the intent of the bill
is that CREF should be taxed consistent with its unique structure and
apart from TIAA.
Mr. REED. Mr. President, I rise in support of the conference report
on the tax relief package. I believe the conference report represents
significant progress from previous efforts to provide tax relief for
hard-working American families that are struggling to pay their bills,
educate their children, and save for retirement. As one who voted
against the previous Senate version of the tax cut bill, I commend the
conferees and the administration negotiators who worked to address some
of the concerns that I and others expressed with the previous
legislation to develop this compromise.
However, I must also express strong concern with several provisions
that remain in the bill. I believe that the provisions related to
capital gains taxes, IRA's, and estate taxes unfairly benefit the
wealthiest Americans, and threaten to upset the fiscally responsible
decisions, such as passage of the 1993 deficit reduction package, that
enabled us to reduce the deficit to its lowest point as a percentage of
GDP since 1974. However, when considered in the context of the larger
effort at bipartisan compromise and the willingness to expand
healthcare coverage to millions of children, I believe this legislation
presents a good deal for many working American families.
In particular, the tax cuts contained in the conference report
provide a greater amount of tax relief to middle income Americans than
previous versions of this bill. For example, under the bill passed by
the Finance Committee, the second lowest 20 percent of income earners
would have experienced a tax increase, whereas under the conference
report, these Americans would enjoy a tax cut. Although I still have
concerns that a substantial share of the tax cuts will go to the
highest income Americans, these concerns are counterbalanced by the
fact that middle-income Americans will enjoy significant tax reductions
and expanded educational incentives which were not as prominent in
prior versions of this bill.
As I have stated throughout the debate on this bill, I have
reservations about provisions in the bill related to the capital gains
tax, new backloaded IRA's, and the estate tax. Particularly disturbing
is the fact that these tax reductions, which come at a significant cost
after 2002, will almost exclusively benefit the wealthiest Americans.
For example, the Joint Tax Committee has estimated that three-quarters
of Americans receiving capital gains income are households that earn
over $100,000 annually. Similarly, only 1.6 percent of estates are
valued high enough to qualify for capital gains increases. Meanwhile,
these tax cuts will cost $75 billion over 10 years.
Beyond favoring the wealthy, I am concerned that the cost of these
tax cuts, many of which are backloaded, will explode in the years after
2002 and ultimately upset the progress we have made on deficit
reduction. These concerns are supported by the 10-year revenue
estimates recently released by the Joint Tax Committee which suggests
that the cost of this tax bill will be $275 billion over 10 years. This
level of revenue loss may prove difficult to sustain, and I would hope
my colleagues will protect vital investments like education and
infrastructure if difficult economic times arise.
At the same time, I believe that the conferees have made significant
progress on the education tax provisions included in the bill. Of
particular note is the decision to extend education tax reductions for
the third and fourth years of a college education. The Finance
Committee-passed tax bill did not extend benefits to years three and
four, and I believed this was a major shortcoming of that legislation.
By providing benefits for the duration of the average college
education, I believe the provisions included in the conference report
better reflect the realities facing many individuals desiring to get a
college education. Indeed, this compromise before us today provides $41
billion in education tax incentives for those looking to invest in
their education.
[[Page S8460]]
I also support the changes that have been made to the child tax
credit that will enable a greater number of middle- and lower-income
Americans to utilize the credit. By making the credit partially
refundable against payroll taxes, the legislation reflects the reality
that the most significant tax burden of many low-income Americans is
that of the payroll tax. The Senate bill provided no tax credit to many
families making under $30,000. This compromise does.
I would also like to express my support for the decision to keep
provisions in the bill that will expand the use of IRA's to allow
withdrawals for first-time home buyers. Perhaps the greatest hurdle
faced by many first-time home buyers is the inability to get the
necessary funds for a downpayment on a home. Provisions in the tax bill
will lower this hurdle and enable us to continue to increase home
ownership, which is currently at a 17-year high.
In conclusion, I believe the tax bill will provide tax relief to
hard-working American families who have faced stagnating wages and
tough employment prospects. I am pleased that we in Congress have made
the difficult budget decisions which laid the foundation for the tax
cuts we are able to provide today. I would caution, however, that we
must be ever-vigilant in ensuring that the tax cuts will not overheat
the economy or lead to an explosion of the deficit. Indeed, we must be
prepared to make the tough decisions that we will be called upon to
make in the event that the revenue projections in this agreement do not
come to fruition. As we prepare to vote on this legislation, I would
encourage my colleagues to celebrate our success, but to consider the
concerns that I have set forth.
Mr. President, I will support this bill with reservations, but I also
recognize as should we all, that this agreement is a compromise between
a President and a Congressional majority of different political
parties. As such, it embodies the often conflicting demands and ideals
of each group. It is in this spirit that I will vote for the package.
Mrs. MURRAY. Mr. President, I rise today in strong support of the
conference report on H.R. 2014, The Revenue Reconciliation Act of 1997.
This legislation represents the second part of the historic balanced
budget agreement.
As a member of the Budget Committee, I was originally concerned about
enacting major tax changes which would jeopardize our deficit reduction
progress. I did not want to repeat the mistakes of the 1980's. Back
then, Congress did the easy thing in dramatically cutting taxes, but
put off the tough decisions on spending cuts. As a result, the National
debt increased from $1 to $4 trillion, and we've been digging the
country out of that hole ever since.
I also had to be sure that, if we did any kind of tax cut, it would
be targeted, to working families who desperately need relief and that
it was responsible. I had to be sure that it did not add to the deficit
and would truly serve as an investment in our economic productivity.
After months of working with the White House and Republicans, we have
produced a tax relief package that is responsible, targeted, and will
provide significant investment in our economy. It does not add to the
deficit--we borrow nothing to offset these cuts.
The tax relief package includes a $500-per-child tax credit that will
go to every family earning less than $110,000 per year. This tax credit
alone will be available for approximately 27 million families with 45
million children, with 13 million of these children coming from
families with incomes below $30,000 a year. This includes children
who's parents are teachers, farmers, factory workers, police officers,
and nurses--the real working families of this country.
When I first came to the U.S. Senate, I made a commitment to the many
small, familyowned businesses and farms in the State, that I would work
to reduce the estate tax. I had talked to many people with concerns
that their business or farm would have to be sold if they died, rather
than being passed on to their children. Because the estate tax is so
high, younger generations cannot afford to keep the business or farm in
the family.
I introduced legislation to reform the inheritance tax last Congress
for two simple reasons. First, the current tax code hits my home State
of Washington very hard, because we have a very high percentage of
family farms, and tree farms in particular, as well as many
entrepreneurial small, high tech businesses. Second, the impact of the
current structure of the estate tax had to be changed in order to allow
family owned businesses to stay family owned. I am pleased the bill
included estate tax relief that is similar to my legislation.
I am also pleased that included within this tax relief package is the
accelerated phase-in of self-employed health insurance deduction from
40 per cent up to 80 percent. This is a major victory for small
business, farms, and their families. It will also allow more small
business owners to purchase quality health care for their children. I
have long argued that small businesses should be given the same tax
allowance for health insurance as afforded large corporations. This
accelerated phase-in will provide this equity and expand access to
health insurance coverage for many children who's parents are self-
employed.
Perhaps the greatest expense facing many families is that of a
college education. I know many middle-class families in Washington
State who are struggling to pay for their children's college education.
I have also heard from many hard-working adults who cannot afford to
upgrade their skills or further their education. We all know the value
of investing in the education of our children and investing in our own
skills and education. Yet, for many families a college education was
becoming unreachable. The tax relief package before us today will give
middle-class families that extra help to meet the ever escalating cost
of a post secondary education.
The legislation calls for a total of $35 billion in education tax
credits and incentives. This represents the biggest single investment
in the education of our children since 1965. It will give those
families who are struggling to pay for a college education the help
that they need. As we move in to the next century, it means our
children have the skills and education to meet the challenges of
tomorrow. Our work force will need to be one of the most
technologically advanced in the world in order to maintain our
competitive edge and our high standard of living. Investing in today's
children is not just an investment in their future, but it is an
investment that will maintain our position as a global, economic power.
This bill also contains reductions in the capital gains tax. I am
pleased that we have been able to craft this part of the bill so that
it targets regular, middle-class families. Many middle-class families
have been burdened with heavy capital gains when they sold a home or
even sold stocks for retirement savings. In addition, the legislation
drops the capital gains tax from the 20 percent called for in the bill
to 10 percent for joint filers with incomes less than $41,200 who sell
or transfer an asset held for at least 18 months. For higher income
earners the top rate will be 20 percent for investments held for at
least 18 months. Carefully crafted and targeted, a capital gains tax
cut will encourage economic expansion and will provide equal relief to
the middle class. This legislation meets this test.
In 1993 our deficit was close to $300 billion annually. New estimates
for 1997 by the Congressional Budget Office indicate that the deficit
for this year could be as low as $67 billion. We have far exceeded even
my expectations for deficit reduction. The spending plan just adopted
by this body will eliminate this deficit by 2002. Now is the time to
give working families their share of the deficit reduction dividend.
This legislation will guarantee that middle class, working families
benefit equally from the economic gains we have seen as a result of the
Democratic deficit reduction plan of 1993.
I know that this tax relief package and the balanced budget spending
plan would not have been possible without a honest, bipartisan
approach. While I know that many on the other side do not think that
this tax relief package is big enough, any further attempt to cut taxes
would have all but wiped out the $223 billion in deficit reduction that
we witnessed since 1993. This legislation is fair and equitable, but
fiscally responsible as well. For the sake
[[Page S8461]]
of our grandchildren and continued economic growth, we cannot enact
deep tax cuts that force us to only borrow more to pay for these cuts.
Balancing the budget must remain our No. 1 goal and priority.
I urge my colleagues to support this conference report and I yield
back the balance of my time.
Thank you, Mr. President.
____________________