[Congressional Record Volume 143, Number 117 (Monday, September 8, 1997)]
[House]
[Pages H6972-H6977]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                TAX CUTS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 7, 1997, the gentleman from Wisconsin [Mr. Neumann] is 
recognized for 60 minutes.
  Mr. NEUMANN. Mr. Speaker, I rise today to bring back information that 
I heard all over my district this weekend. We had a chance to travel 
and see my son who is a junior in college. I got a chance to talk to 
some of his friends at college as well as some of their parents. I 
thought I would come back today and relay some of the information 
regarding the tax cuts because they still seem to be generally 
misunderstood out there. They affect so many people in so many good 
ways, that this is good news that just plain needs to go out to the 
American people.
  I would like to start today by going through the tax cuts, reminding 
all of my colleagues out there what is all in the bill as it relates to 
these tax cuts. And remember this is legislation that has actually 
passed Congress. This is now the law. The law has changed dramatically 
in terms of how much taxes are owed by families out there, by senior 
citizens out there. The tax laws have changed and they have changed 
dramatically.
  I thought I would start today by revamping what is in the change in 
the Tax Code. Before I go into the specifics of this, I think it is 
important to also note that we are about to balance the budget for the 
first time since 1969. For all the folks out there saying how can you 
both cut taxes and balance the budget at the same time, let me explain 
very simply that by curtailing the growth of Washington spending; that 
is, Washington spending grows less, that leaves more money available 
and it is simply being returned to the American people. So we are both 
balancing the budget and lowering taxes at the same time.
  Let me go into some of the things that I found that my families out 
in the First District of Wisconsin were talking about and found very 
useful for their information. Let me start with the simplest one that 
is the most straightforward.
  Each family with children next year 17 or younger gets a $400 tax 
credit for each child. If we start there with the simplest one, what 
this really means is that in January of next year a family with 
children should go into their place of employment, they should lower 
the amount of tax dollars that are sent to Washington, DC, by $33 per 
month per child. This is literally a change of where the money that our 
workers are earning, where that money is going to. In the past that $33 
came out here to Washington; now it should go into your take-home pay. 
But you have to go in and adjust the W-4 form in order to increase your 
take-home pay and decrease the amount of money that is coming out here 
to Washington.
  The $33 per month per child is very simply $400, the tax credit per 
child, divided by the 12 months in the year. Starting with January of 
next year, a family with children should increase their take-home pay 
by $33 per month for each one of their children. So if you are a family 
of five like ours, you have three kids 17 and younger, for example, you 
should increase your take-home pay by roughly $100 per month starting 
next January. That affects approximately 550,000 Wisconsin families 
alone. But it does not end there.
  Families saving up to send their children to college, there is a new 
education savings account and it works like this: A family with 
children can put $500 per year into a savings account that will then 
accumulate interest tax free until the children are ready to go to 
college, called the education savings account.
  I found that a lot of the grandparents were talking about this 
because a lot of times a birthday will come or Christmas and they will 
not quite know what to get the grandchildren for a gift. This makes a 
wonderful gift. The grandparents can literally put this money into the 
education savings account, and it works like an IRA for the kids. When 
the kids get to college, education age, they simply take the money out 
and use it to go to college.
  Another one for families with kids already in college. If you have a 
freshman or a sophomore in college, virtually all freshmen and 
sophomores in college paying $2,000 a year or more for room, board, and 
tuition will get a $1,500 credit next year on their taxes. If you have 
a freshman or a sophomore in college, it is a $1,500 tax credit next 
year.
  It works like this: It is 100 percent of the first $1,000 of cost and 
50 percent of the next $1,000, or $1,500 total out of a total cost of 
$2,000.
  So for most of the families and most of the college students I was 
talking to over in New Ulm, MN, most of those families will get a 
$1,500 credit next year for the freshman and sophomore. If you are 
beyond the sophomore year, it is 20 percent of the first $5,000, or in 
most cases it is $1,000. So for freshmen and sophomores, the tax credit 
is $1,500. For juniors, seniors, and beyond that, the tax credit is 
$1,000.
  And again, if you are not paying that much overall for your room, 
board, and tuition and total cost of going to college, it is prorated 
backwards. Freshmen and sophomores, virtually all of them that we 
talked to, would be eligible for the $1,500 per year credit. Junior, 
seniors and beyond, many of them are going to be eligible for the full 
$1,000, and some of them prorated amounts.
  These are major changes in Tax Code policy that are going to allow 
our families with children and with college age children to keep more 
of their own money. Let me give you an example what we found.
  Friends of ours from church, they have got one off in college, just 
started this year, is going to the same school as my daughter, Carthage 
College in Kenosha, WI. They have got two kids still at home. That 
family is eligible for $1,500 for the student enrolled at Carthage and 
$400 for each one of the two kids at home for a total of $2,300.
  Let me translate that again. In January of next year, this family 
should literally start taking home roughly $200 a month more of their 
own money instead of sending it to Washington. Again, this is a family 
with a freshman who got $1,500 for the freshman college credit, $400 
for each of the other two children still at home, for a total of $2,300 
that they keep in their house instead of sending it to Washington.
  It was really interesting because when I talked to some of the folks 
out there they said, I do not have kids and, therefore, I am not 
eligible for any of this. A lot of those families found that they had 
stock that had appreciated in value. They were going to sell that 
stock. Of course the capital gains rate has been reduced from 28 to 20 
percent. Again, I pause in between. This is not Washington jargon. This 
is the law. This has been passed. It has been changed. The benefit is 
there. It is on the books. The capital gains tax rate has been reduced 
from 28 percent to 20 percent, if you sell stocks or bonds or whatever 
else it is you might have in that portfolio. I caution folks, take a 
good look at this, because there are time limits on how long you have 
to have held the investment.
  Let me go to another one that a lot of folks did not realize. This 
affected

[[Page H6973]]

one family. We saw some friends of ours that had moved from Wisconsin 
to Minnesota. In fact, they had sold their home in Wisconsin.
  As most people do that have been in their home for a period of time, 
they made a profit selling the home. That is the way it works. The 
change in the tax law now says that if you sell your home after you 
have lived in it for 2 or more years, there are no Federal taxes due.
  I started explaining this to one family in Green Bay, WI. The caller 
on this radio show asked me three times if I was sure I had this right. 
If you have lived in your home for 2 years or more, principal residence 
for 2 years or more, and you sell the home and make a profit, there are 
no Federal taxes due.
  The old age 55, where folks in their early 50's wanted to sell but 
waited for the 55 exclusion, the exclusion is gone. It is at any time 
during your life. If it is your principal residence for 2 years or 
more, there are no Federal taxes due on the sale of your home. A person 
in a situation of a job transfer, like our friends we saw in Minnesota 
this weekend, where they sold a home in Wisconsin and moved to 
Minnesota, they are no longer forced to purchase a home of equal or 
greater value to put off paying taxes. That is the way it used to be. 
It is not true anymore. If you sell your home, there are no Federal 
taxes due if it has been your principal residence for 2 years or more 
in virtually all cases.
  I have not talked too much about the farmers. Ninety percent of all 
farms can now be passed on to the next generation because of this new 
tax change without paying Federal taxes on it as it is passed from one 
generation to another. Same thing on closely held family businesses.
  Then I saw some union workers. Some of the union workers said, but my 
kids are all grown and gone and they are out of college; I do not 
qualify for any of those things you just described. In fact, I am in a 
pension plan where I work and therefore none of that stuff is 
applicable to me.
  I said, did you think about the Roth IRA. People in their early 50s, 
kids grown and gone, they are out of college. They are no longer around 
and not eligible for any of these other tax cuts. They said, well, we 
are not thinking of selling our house. I said to them, why do you not 
think about the Roth IRA. The Roth IRA is a brand new account that is 
going to help allow millions of Americans prepare to take care of 
themselves in retirement.
  The Roth IRA works like this: You can put up to $2,000 per year into 
the Roth IRA. The interest that accumulates or stock appreciation or 
whatever you put this Roth IRA into, as it appreciates in value, you 
reach retirement age, you take the money out. You do not pay taxes on 
it. The Roth IRA is sort of like the IRA of old only backward and open 
to a lot more people.
  It used to be in the old IRA's, this is still available for those 
people that were eligible before, but in the old IRA you put $2,000 in, 
you wrote it off on your taxes this year. Under the Roth IRA, you do 
not get the tax deduction this year but when you take the money out in 
the future, the appreciated money, you do not pay taxes on it in 
retirement. It is a great way to save for retirement for millions and 
millions of Americans that virtually takes into account any of the 
other folks that were not covered or benefited by one of the other tax 
cuts that I spoke of earlier.
  I talked to some young couples who were thinking of a first home or 
saving up for a future college education, maybe had a bachelor's degree 
and looking to go back to school, complete a master's or a doctorate. 
Under the new IRA's, they can also save up for their first home or for 
future education costs under the Roth IRA.
  So the good news is these tax cuts, when we were all over and done 
discussing them, we found that virtually every American benefits in 
some way, shape, or form from the tax cuts. From families with $400 per 
child, to the $1,500 for college credit, to the $1,000 for those that 
are further on in college, to those that are saving for their own 
retirement, to those who are already in retirement and sold their home, 
virtually everybody across the board benefited from the tax cut 
package. It is just time that America understands what is in it.
  My fear is this. My fear is that January is going to get here and 
those 550,000 families in Wisconsin that are eligible to keep $33 per 
month per child more of their own money in their own home, they are not 
going to do it. They are going to let that money keep flowing out here 
to Washington. When Washington sees the money, as hard as Members like 
myself are going to fight to stop them from spending it, it is going to 
be more difficult with the money out here in Washington than if the 
folks keep the money in their home themselves.
  That money belongs to our families in Wisconsin and other families 
across America. Those families ought to keep their own money. Do not 
send it out here to Washington and hope you will get it back a year 
later. Keep it in your own home. You earned it. It is not a gift from 
Washington. Keep your own money and make the changes as soon as you 
can. You are eligible in January of next year and those changes should 
be put into effect immediately. If you have got a freshman in college, 
125 bucks a month you ought to be keeping of your own money. If you 
have a child under the age of 17, 17 and under, $33 a month. Make the 
changes in your withholding immediately so that money does not get out 
here to Washington first. Good news for America.
  I conclude this portion of what I have to say here today on the tax 
cuts in a very upbeat mode because we have not only lowered taxes, we 
did not do it at the expense of future generations of Americans. We 
have lowered taxes at the same time we balanced the budget, and we did 
it by controlling Washington spending. And I think that is what the 
change in 1994 was all about.
  With that having been said, I think we should talk about what has 
happened in the past out here in Washington because it is pretty 
significant. There is a lot of people very concerned about it, myself 
included. It is really the primary reason I left the private sector.
  What I have in this chart is the growing debt facing the United 
States of America. We can see that from 1960 to 1980 this debt grew in 
a very small amount, but from 1980 forward, this debt has grown right 
off the chart.
  A lot of people look at 1980 and they say, that is when Ronald Reagan 
was elected. That is the Democrats, they blame the Republicans. And 
Republicans go, that is that Democrat Congress. They spent out of 
control and the Republicans all blame the Democrats.
  The bottom line is that as Americans we need to understand what we 
are about here on this chart. If we keep fighting, Republicans and 
Democrats, the problem is not going to get resolved. This is an 
American problem. We need to look at this picture and understand the 
problem is real and start addressing the problem.
  If you have not seen how much debt we are in as a Nation, it is 
almost scary to talk about it. The number is $5.3 trillion and the 
number looks like this. The people that were here in Washington before 
1995 saw fit to spend $5.3 trillion more than they collected in taxes 
basically in the last 15 years.
  Let me translate that into English. I used to teach math. We used to 
divide the total debt by the number of people in the country. Every 
man, woman, and child in America today is responsible for $20,000 of 
debt. If we divided debt up amongst all the people in the country, 
$20,000 for every man, woman, and child in America, and for a family of 
five like mine, it is $100,000.
  Here is the kicker on the debt. That is real debt. And like all debt, 
you pay interest on it. A family of five today in America is literally 
paying $580 a month every month to do nothing but pay interest on the 
Federal debt.
  Let me put this another way: The Federal Government is collecting 
taxes out of the paychecks of workers all across America, for a family 
of five in the amount of $580 a month, to do nothing but pay interest 
on the Federal debt.
  A lot of folks are going, I do not have to worry, I do not pay that 
much in taxes. The reality is every time you walk in the store and you 
do something as simple as buy a loaf of bread, the store owner makes a 
small profit on that loaf of bread and part of that profit gets sent 
out here to Washington, DC. You guessed it. It goes to pay interest on 
the Federal debt. As a matter of fact, $1 out of every $6 that the 
Federal Government spends, remember,

[[Page H6974]]

when they spend money, they are collecting it out of your paychecks 
first, $1 out of every $6 that they collect out of your paychecks goes 
to do nothing but pay interest on the Federal debt.

                              {time}  1445

  I think it is reasonable to ask how it is that we got to this 
situation. I think to answer that question we ought to look back at 
what was going on out here before 1995 so we can see the difference.
  In 1994 the American people said, we are not going to put up with 
this anymore, and they elected a new Congress. And I think it is 
important to look at the difference between the past and what is 
happening now and understand that there has in fact been a very 
significant change.
  This is the Gramm-Rudman-Hollings bill of 1985 and the blue line 
shows how they were going to decrease the deficits and get a balanced 
budget in 1991. The red line shows what they actually did back then. 
They did not meet those targets. They left the blue line literally 
after 1 year and they never came close to hitting the targets again.
  Well, they did what Washington does pretty well. When they saw they 
could not make the first projections, they gave some new promises out 
of this city, and the new promises went like this: Well, we will 
balance the budget by 1993. We see we cannot keep the old promises, so 
we will make some new ones.
  But what happened is after a year and a half they quit honoring their 
promises again. And in 1993, the year they were supposed to have the 
budget balanced, based on all those promises again, instead of 
balancing the budget, they raised taxes.
  The thinking went like this: Well, we understand we cannot control 
Washington spending. So what we will do instead is we will simply reach 
into the paychecks of American workers and take more money out here to 
Washington, because if we get more money out of their paychecks, we can 
maintain our Washington programs, keep spending money out in this city, 
and eventually we will get to a balanced budget because we will keep 
taking more and more money out of their paychecks.
  That was 1993. The biggest tax increase in American history was 
passed in that year.
  That has led to the problems of today. Raising taxes did not and does 
not work to balance the Federal budget. That is not how to go about 
balancing the Federal budget.
  Well, in 1994 the American people looked at this situation and said 
broken promises, higher taxes? That is not what we want going on in 
Washington, DC. We want a group of people out there who will promise us 
a balanced budget, keep their promises and, at the same time, lower our 
taxes.
  That was 3 years ago. And I think it is reasonable that the American 
people start asking what has happened since 1995 when we put the 
Republicans in control of the House of Representatives and we put the 
Republicans in control of the Senate. Has it been different?
  Let us be fair about this. They left a Democrat President in control 
out here. So the American people have a right to ask, with Republicans 
in control of the House and Republicans in control of the Senate and, 
in all fairness, a Democrat President, what is going on?
  Well, in 1995, we laid a plan into place to balance the Federal 
budget, too. We inherited this. If we had done nothing when we came 
here, if we had done absolutely nothing when we got to Washington, this 
was where the deficit was going to. As a matter of fact, it would have 
grown to $350 billion. When we got here in 1995, if nothing would have 
changed, we would have played golf, we would have played basketball and 
not done our job, the deficit was growing and it was going to keep 
right on growing.
  After 12 months, and many people remember the hassles of the first 12 
months of 1995, in those 12 months we went through battle after battle 
after battle to change what was going on in Washington, DC. By the end 
of December, if we had quit at that point, the yellow line shows where 
the deficit would have gone.
  But we had this plan in place, and the plan was the green line. This 
green line is much like what we saw in the Gramm-Rudman-Hollings 
promise of the past chart. The only difference is, instead of missing 
our targets, we are not only on track but ahead of schedule.
  Remember, this is the promise. Much like the promises made under 
Gramm-Rudman-Hollings, but instead of being above that target we are 
below the target. We are not only on track to a balanced budget but we 
are significantly ahead of schedule.
  Is there anything different from pre-1995 to post-1995? You bet your 
bottom dollar there is a lot of difference out here. Instead of missing 
our targets, we are on track and ahead of schedule, and we will deliver 
to the American people a balanced budget, literally by the year 1999, 
at the latest, maybe even 1998, 3 years ahead of schedule. No more 
broken promises.
  We are not doing it with higher taxes but by controlling the growth 
of Washington spending.
  When I am home in my district and I am telling this, a lot of people 
say, yes, but the economy is strong. It is all the economy that is 
doing it. And in all fairness, the economy is strong. But we have had 
strong economies in the past, and when we have had strong ecomomies in 
the past, and Washington slides to revenue, Washington simply increases 
their spending to match that increase in revenue and the deficits kept 
going up.
  Washington is different since 1995, and I think the people have a 
right to know. Before 1995, when we got here, this red column shows how 
fast spending was going up. It was going up 5.2 percent annually. When 
we got here in 1995, we slowed the growth of Washington spending. 
Instead of going up at 5.2 percent it is now going up at 3.2 percent, 
frankly, faster than some of us would still like to see it. We would 
like to see this even smaller yet.
  But let us be real about this. We had a 40-percent drop in the growth 
of Washington spending in a 2-year period of time. We have a strong 
economy, extra revenues coming in and, at the same time, we have slowed 
the growth of Washington spending.
  The result? The result is we can both balance the budget and reduce 
taxes at the same time. That is great news for the future of this 
country.
  I brought a chart to help explain this a little better, because it 
gets reasonably simple to understand how that changes the impact of 
what is going on out here and why we are actually at a balanced budget 
sooner rather than later, and why we can both reduce taxes and balance 
the budget at the same time.
  This red line shows spending growing at 5.2 percent, just like the 
last chart I had up here, and we will notice when we get to 1995 the 
red line starts going up at a slower rate. Well, since the red line is 
going up at a slower rate and the blue line shows revenues, and the 
blue line keeps going up at a very strong rate, well, if the red line 
goes up slower and the blue line goes up faster, we reach a balanced 
budget ahead of schedule.
  That is, in effect, what has happened. We can see from this picture 
that as the revenues grow at a faster rate, and spending, instead of 
growing at a faster rate to keep up with that, grows at a slower rate, 
we get to the point where the two lines cross each other and, in fact, 
we have a balanced budget not only in the year 2002, as promised, but 
significantly ahead of schedule, perhaps 1998 or 1999.
  It is also interesting to note what happens next. With the revenues 
continuing to grow and the spending growth slow, we actually create a 
surplus out here where we can look at having more Federal dollars 
coming in than what we are spending.
  Now, I do not think we should negate our obligation and 
responsibility here. With more Federal dollars coming in than what we 
are spending, we certainly have a responsibility to return some of 
those dollars to the American people, but we also still have that $5.4 
trillion debt staring us in the face, and that has to be paid down.
  But the point here is that as revenues keep going up and spending 
growth is slowed, we get to a balanced budget not only on track, but 
ahead of schedule and we actually start developing surpluses as early 
as the year 1999. This is phenomenal news for the United States of 
America, and it is a phenomenal change from where we were before 1995.

[[Page H6975]]

  The credit for all of this? The credit should go to the American 
people because, after all, it is the American people that saw fit to 
change who was in control of Washington, who saw fit to send a group 
out here that would in fact control the growth of Washington spending 
as opposed to spending more in the face of a strong economy.

  I have one other chart up here that just helps us also to see just 
exactly what is going on and how much we are keeping our commitment to 
the American people. The red columns here show the promises made by the 
new Congress in 1995 when we got here. And these are easy to check; 
these are actually down in law.
  This is the deficit projection that we said, in order to reach a 
balanced budget, we had to achieve. Well, in 1996 we said the deficit 
had to be $154 billion, as we laid out our path to a balanced budget. 
It came in actually not only on target but ahead of schedule at $107 
billion.
  The second year, 1997, we had projected it had to stay at least at 
$174 billion in order to keep us on track. Actually, it is coming in, 
the chart shows $67, it is actually coming in at $34 billion.
  I want to talk a bit about how this helps the economy and why we are 
seeing such a boom even though we are at the end of what might be 
considered a normal business cycle. This means the Government spent 
$100 billion less than everyone expected them to spend. When the 
Government spends $100 billion less, and that means they borrow less 
out of the private sector, that means there is $100 billion more money 
available in the private sector.
  This is kind of the law of supply and demand. If there is more money 
available in the private sector, needless to say, the interest rates 
will stay down. With the interest rates down, of course, the natural 
things happen: People buy more houses, they buy more cars, they buy 
more things. And when people buy more houses and cars, because the 
interest rates are down, that of course means there are job 
opportunities because people have to build those houses and build those 
cars and build those washers and dryers and all the other things they 
are buying to go into those homes.
  So it works pretty much like this. The Government not only hit their 
target but they are way ahead of schedule, $100 billion. Since they 
borrowed $100 billion less out of the private sector, that left $100 
billion more available in the private sector. Well, banks had to lend 
that money out, so they kept the interest rates down so people would 
buy more houses and cars, people bought more houses and cars, and when 
they did that, of course other people went to work and started paying 
taxes instead of drawing off the welfare roll.
  That was our theory back in 1995. This picture shows how well that 
theory works. It is kind of a self-fulfulling prophecy. As the 
Government borrows less, there is more money available, the interest 
rates stay down, and when the interest rates are low and capital is 
available, that means people buy houses and cars. When they buy houses 
and cars, we expect the unemployment rate to stay low, and that is 
actually happening all around us right now.
  So I contend the picture we are looking at is not really not to be 
expected; it should be expected, because the theory is now a reality. 
It is not a theory any longer; it is now a working model. And in fact 
we see in this picture our working model is very effective and works 
pretty well.
  Now, having said all that, I go back to the first chart we had up 
here. It is the chart that shows the growing debt. Because as positive 
and optimistic and upbeat as all this is, we have talked about the fact 
that it has changed since before 1995. In the past we had the broken 
promises of Gramm-Rudman-Hollings; in the past we had the tax increases 
of 1993, and in 1994 the American people changed that. They put the 
Republicans in control of the House and the Republicans in control of 
the Senate and, in all fairness, they have left a Democrat President in 
charge, so let us keep it as bipartisan as we can. But the reality is, 
it changed dramatically in 1994.
  So, with this change, we have reached a balanced budget for the first 
time in a generation and lowered taxes for the first time in 16 years, 
but we have still got this problem that we are right here on this debt 
chart. So I think the remaining question that has to be asked is, if 
this group that is now in charge out here is actually going to solve 
the problems facing this Nation, balancing the budget for the first 
time since 1969, lowering taxes for the first time in 16 years, 
restoring Medicare, what about that debt that is still out there facing 
the American people? Are we really willing to leave that as the legacy 
that we pass on to our children?
  If nothing is done about it, we keep the budget balanced so we do not 
borrow more money, we will still pass that $5.3 trillion debt on to our 
children. That is the remaining question that needs to be answered.
  I am happy to say that we have developed a plan that specifically 
addresses that question. It is called the National Debt Repayment Act. 
Now, under the National Debt Repayment Act, of course our ultimate goal 
is to pay off the Federal debt to pass this Nation on to our children 
debt free. When we think of the benefits of passing this Nation on to 
our children debt free, it would be nice if, a generation from now, a 
family of five did not have to send $580 to Washington to pay nothing 
but interest on the Federal debt.
  Here is how the plan works. After we reach a balanced budget, and 
again it has to do with the revenue line climbing faster than the 
spending line, after we reach a balanced budget, we cap the growth of 
Washington spending at a rate 1 percent lower than the rate of revenue 
growth.
  Now, a lot of folks will look at this red line, which is the spending 
growth, and say, wait a minute, I have been hearing about these 
draconian cuts that are being made in Washington, but how come that 
spending line is still going up there?
  Well, it is time the American people get to know the truth. Even when 
Washington slows the growth of Washington spending, the spending line 
is still going up. They are still spending more money each and every 
year. Many of us would like to see this red line much flatter than what 
it is.
  I have made a reasonable projection here as to what can be 
accomplished in this community, even with all the pressures to do all 
the different things being leveled on the many people out here in 
Washington.
  So what our bill does is, it says, we will let spending go up but at 
a slower rate than the rate of revenue growth. If revenues go up faster 
than the rate of spending growth, that creates a surplus. That surplus 
is used to two ways: First, we use one-third of it to further reduce 
the taxes on the American people.
  And let me address further reducing the taxes on the American people. 
Our Tax Code is so complicated that virtually no one out there can 
understand it. Our tax code is so complicated, and I was so frustrated 
this morning, I about threw one of our staff members out the window, 
and I owe him an apology, because I was so upset, because as we started 
going through the tax rules, they are so complicated it seemed like 
nobody was willing to write down what the actual answer to our question 
was, because nobody was 100 percent sure because the rules are so 
complicated.
  So as we look at this picture and realize that we can, in fact, 
create these surpluses by controlling the growth of Washington 
spending, one-third of those surpluses dedicated to additional tax 
cuts, let us start by looking at opportunities to reform the Tax Code 
in its entirety, maybe throw out the IRS as we know this complicated 
monster to be today, and start with something newer and simpler that 
people can in fact understand. So I would suggest we use the additional 
tax cuts for across-the-board tax cuts.
  And the other thing I think needs to be eliminated is the marriage 
tax penalty, and it is important to get to that in a hurry.

                              {time}  1500

  In America today, if four people all work at the same job and all 
earn exactly the same income but two of those people are married to 
each other and two of those people are living together, forget the 
social evaluations on what you think of that, the facts are that two 
people that are married to each other pay more taxes than the two 
people that are living with each other, and that is not right in this 
Nation. That is promoting exactly the opposite of what many of us would 
think we should be

[[Page H6976]]

promoting in this country. I would say we need to eliminate the 
marriage tax penalty and look for across-the-board tax cuts, and with 
that one-third let us look to revamp the tax system in its entirety and 
get to something that we can understand.
  I have another example of how frustrating it is. My 14-year-old son 
who mowed lawns and made $900 mowing those lawns owed $128 into the 
Social Security system, but because he was self-employed, filling out 
the forms is complicated enough that you need an accountant to do it. 
That is how ridiculous our tax system is today.
  As we look at this picture, and we realize that simply slowing the 
growth of Washington spending will allow us to develop this surplus and 
one-third of the surplus goes to additional tax cuts hopefully 
revamping the tax system, the other two-thirds goes to paying down 
debt. Let us make this very, very clear. If this program is put into 
place in 2026, the entire debt, all of it, would be repaid. That is to 
say, we could pass this Nation on to our children debt-free. Think 
about the difference and the contrast in these legacies. As we look 
before 1995 we were looking at passing on a legacy of trillions and 
trillions and trillions of dollars of debt to our children. We can now 
look forward to a bright future in America where instead of passing on 
a $5-plus trillion debt we could literally be on track to pay the 
Federal debt off in its entirety and instead leave our children a 
legacy of a debt-free Nation. What a wonderful opportunity we have 
staring us in the face in understanding that if we simply control the 
growth of Washington spending we can literally repay the Federal debt. 
Two-thirds of that surplus then is allocated toward repaying the debt.
  I would like to go into one other thing as we are paying down the 
debt that is very important. The Social Security trust fund plays into 
this picture very prominently. In Social Security today, we collect 
more tax dollars than what we are paying back out to our senior 
citizens in benefits. As a matter of fact, this year alone the Federal 
Government will take out of paychecks taxes that equal $70 billion more 
than what is paid back out to senior citizens in benefits. If you 
collect more money than you are paying out to seniors in benefits, the 
question is what happens to that $70 billion? It is supposed to be 
sitting out here in Washington in a savings account on reserve so that 
when the baby boomer generation hits retirement and starts drawing 
Social Security, the savings account is there, you get the money out of 
the savings account and make good on the Social Security checks.
  I suspect this will come as no great surprise to anyone when we 
acknowledge the fact that there is no savings account. All of that 
money that has been collected that was supposed to be put on reserve 
for Social Security has been spent on other Washington programs. It is 
all part of the $5.4 trillion debt. Again I say $5.3 trillion and $5.4 
trillion sometimes. The debt is rapidly growing almost as we are on 
this floor speaking. The debt is growing at roughly $10,000 a second 
even as I speak here today and even as it has been slowed. That is why 
it is so important we keep this on track. The Social Security trust 
fund is collecting more dollars than it is paying back out to seniors 
in benefits. It is supposed to be sitting in the savings account; it is 
not, it has been spent on other Government programs, all part of the 
$5.4 trillion debt.
  That brings us back to this picture. As we develop these surpluses by 
controlling the growth of spending, as we drop those surpluses and we 
start paying off the Federal debt, one thing we are doing is putting 
the money back into the Social Security trust fund.
  Again, let me make this clear. The money that is being collected 
today for Social Security over and above what is being paid back out to 
our senior citizens in benefits, it is currently being spent on other 
Washington programs. That is wrong. That needs to be stopped. Under the 
National Debt Repayment Act, all of that money that has been taken out 
of the Social Security trust fund would be returned to the Social 
Security trust fund and Social Security would once again be solvent for 
our senior citizens.
  Where are we going with the National Debt Repayment Act? Under the 
National Debt Repayment Act for seniors the Social Security trust fund 
would be restored. All of the money that has been taken out of Social 
Security would be put back into the Social Security trust fund. For 
people in the workforce today and for anyone who has ever been 
frustrated filling out their tax forms, under our National Debt 
Repayment Act, one-third of the surplus is going to additional tax cuts 
each year, which could then be used to revamp the IRS and make a 
simpler system overall. Most important for our children, most important 
of all for the children of this Nation, we can give them a legacy of a 
debt-free country instead of passing on a $5.3 trillion debt from our 
generation to theirs. Once again, the next generation in America can 
look forward to a stronger and a better America like we could when our 
parents passed this Nation on to us. That is what this is all about and 
that is what it should be all about.
  I would like to kind of summarize today by going back through the tax 
cuts just briefly and then summarizing the past and the present to wrap 
up my hour on the floor today. Tax cuts I found to be the most 
nonunderstood package out there in America today. I am going to run 
through them quickly. If you have got children 17 and under, most folks 
are going to get a $400 credit or $33 a month. Starting in January next 
year, workers should start keeping $33 more a month in their paychecks. 
You do that by adjusting your W-4 forms. If you have got a college 
student who is a freshman or sophomore, you get $1,500 starting January 
of next year, again adjust your pay-checks so you keep $125 a month of 
your own money instead of sending it here to Washington. After all you 
earned it. It is not a gift from Washington. You earned it. Please keep 
it starting in January of next year. If you have got children 
noncollege age 17 and under, it is $400. $400 divided by 12 is $33 a 
month. Start keeping it in January of next year. If you have a freshman 
or sophomore in college, it is $1,500 a year, $125 a month. Keep it in 
your paycheck. Do not sent it out here. For juniors and seniors in most 
cases it will be $1,000 a year. Again, it is based on 20 percent of the 
first $5,000 of cost.
  Young couples, if you want to save up to buy your first home, you can 
do that in the tax-free savings account, called the Roth IRA. Farm 
owners, if you want to pass your farm on to the next generation, in 90 
percent of the cases you will be able to do it without paying taxes. 
Same thing for all businesses. For the small business owner, and I did 
not mention this before, the deductibility of health insurance is going 
up to 100 percent over the next 10-year period of time. Homeowners, 
perhaps the most significant change in the Tax Code, if you own your 
home and it was your principal residence for 2 years or more, and you 
sell that home, there is no Federal taxes due on this. To the young 
lady in Green Bay, WI, who called me three times to make sure I had 
that right, yes, I have that right. If you sell your home and you are 
in your principal residence for two years or more, you do not owe the 
Federal Government taxes on the sale of that home. For many of the 
senior citizens who bought at $22,000 and are selling their home for 
$70,000, this is a huge change. For many people in America who have had 
a job transfer and in the past gone into the new city and felt 
obligated to buy a house as expensive or more expensive than the one 
they sold, from now on that is your choice. There are no Federal taxes 
due on the sale of your home if it has been your principal residence 
for 2 years.

  Again to the young woman in Green Bay who called and asked three 
times, we do have it right. There are no taxes due on the sale of your 
home. The capital gains tax reduction is from 28 percent down to 20. It 
goes to 18 even later on in the tax bill. Capital gains, depending on 
your income level, if you are earning $41,000 a year or more, your 
capital gains tax rate will go to 20 percent, it used to be 28 percent, 
that is $8 for every $100 you make on the sale of a stock, bonds or 
that sort of entity. If you are in a lower income bracket, it goes to 
10 percent. Capital gains is another reduction.
  How is all of this possible? This is all possible because the people 
that you all, the American people, sent to Washington, the people that 
you sent to Washington have restrained the growth

[[Page H6977]]

of Washington spending. Instead of Washington spending more money, we 
are able now to let you keep more of the money you earn in your own 
home instead of starting new Washington spending programs out here, and 
the programs are not working. Spending was going up by 5.2 percent 
before we got here. We have slowed the growth by 40 percent. It is now 
going up by 3.2. It is still going up too fast for many of us.
  I have talked to a lot of my constituents out there who are very 
concerned about the fact that Washington spending is still going up too 
fast and I have to tell all of those folks I agree with them, it is 
still going up too fast but it is going up at a much slower rate than 
it was before. Because we have a strong economy coupled with a slower 
growth of Federal spending, we are now able to balance the budget for 
the first time since 1969, lower taxes for the first time in 16 years, 
and restore Medicare all at the same time. This is good news for 
America. This is what we got sent here to do in 1995, and I am happy to 
report back to the American people that with the Republican-controlled 
House and Republican-controlled Senate and in all fairness with a 
Democrat President, we have gotten to the point where we have literally 
balanced the budget for the first time since 1969, when I was a 
sophomore in high school, lowered taxes and restored Medicare.
  The future, even after the budget is balanced, we have still got that 
$5.3 trillion debt staring us in the face. The Social Security money is 
part of that $5.3 trillion debt. I am happy to report that we have a 
bill on the table today that will in fact pay off the entire Federal 
debt by 2023, restore the Social Security trust fund for our senior 
citizens and lower taxes each and every year as far as the eye can see, 
giving us the opportunity to dump the IRS as we know it today and get 
in a system that is easier, simpler, and fairer to the American people. 
That is a complete picture of an entirely changed Government in 
Washington, DC. The past of broken promises and higher taxes changed in 
1995 to a Government that is going to do the right thing, balance the 
budget, lower taxes, restore Medicare, and a group of people that are 
actually looking forward to the future and acknowledging that we still 
have these problems that must be addressed. We are going to pay off the 
Federal debt, restore the Social Security trust fund, and lower taxes 
even further and reform the IRS. That is what the future holds, and for 
a change we should be looking brightly to the future and to bright, 
wonderful opportunities of growth and hope and prosperity for our 
children for the next generation. That is what this is all about and 
that is what the American people as well as my colleagues here in 
Washington need to know has changed out here. It is a phenomenal 
change. More important than any of the people here in this city is what 
it means to the future of this great Nation we live in. Once again our 
generation has a chance to look forward to the next generation and say 
in fact that we are able to pass America on to the next generation in 
better shape than we received it in.

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