[Congressional Record Volume 143, Number 142 (Tuesday, October 21, 1997)]
[House]
[Pages H8917-H8922]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CONGRESS SHOULD EXERCISE OVERSIGHT REGARDING IRS
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 7, 1997, the gentleman from New York [Mr. Owens] is recognized
for 60 minutes as the designee of the majority leader.
Mr. OWENS. Mr. Speaker, I suppose the item of the day in terms of
significant news is the fact that the Democratic minority leader has
decided to also throw his lot in with those who want to make the
highest priority of reforming the IRS, the Internal Revenue Service. I
want to get on board, too. I cannot think of any American out there who
does not think that we could improve the Internal Revenue Service in
some way, and hopefully in a way which relieves us of some of the
unjust items that have affected us in the past in some way.
But, in all seriousness, it is long overdue. The IRS has been
neglected by Congress for too long. Congress, in general, is delinquent
in its oversight responsibilities for the Federal Government. In the 15
years that I have been here, I have watched how time is frittered away
and it is always the item which captures the most headlines for the
moment that gets the most attention, while the important functions of
government, and the gigantic agencies of government, like the Internal
Revenue Service, they go on and on and they get very little oversight.
I suppose that is why IRS stumbled into a $4 billion blunder in the
setup of their computer operation in an attempt to computerize
themselves. Not enough Congressmen were watching. Not enough outside
independent monitoring was going on, and there are probably numerous
other areas in the IRS which need reform.
Mr. Speaker, I certainly hope that the debate on IRS will not
degenerate or remain at the level that it is. It is sort of standing at
a very low level. We are interested more in paper clips and rubber
bands and operations that are at a very primitive level than we are in
the total philosophy that guides IRS and the total setup of policies
that emanate from the Congress through the Committee on Ways and Means
and the Senate Finance Committee.
I hope that the debate about IRS will be a long and fruitful one. I
hope that it will be a very thorough one, and I hope that we will look
at all aspects of what is happening with our Internal Revenue Service,
what is happening with our revenue collection processes.
Revenue has always been, and I have said this many times before,
neglected by people who are progressives, liberals, whatever we want to
call us these days. We have never spent enough time looking at revenue
collection, taxes, tax policies, and that has caused some serious
problems, the fact that there has never been a balanced debate or the
kind of attention focused on the revenue process that we should have.
For the past few years, I have been insistent that we take a hard
look, an intense and thorough analysis of what is going on with respect
to revenue collection. I was fascinated. I am not on the Committee on
Ways and Means, I am on the Committee on Education and the Workforce. I
am concerned primarily about why there are no funds for programs like
the school construction program. I am concerned about the fact that
while we are lumbering along with an antiquated education system in
some obvious ways. It needs help from the Federal Government and we are
not supplying that help. I am concerned about our priorities and why we
continue to give the impression to the American people and the world
that we are a bankrupt Nation or almost a bankrupt Nation when it comes
to the area of education, in the area of youth employment or a number
of other worthwhile programs. We always have enough money for defense
and we increase the defense budget, but we do not have enough for
education.
So, my concern for expenditures related to positive programs like
building schools led me to take a closer look at the revenue side of
the equation and several years ago, I became fascinated by the fact
that our income tax collection process, our income taxes produce a
large amount of taxes from individuals and families and a much smaller
percentage from corporations.
Corporations are where the money is, so I was fascinated by the fact
that at present about 11 percent, of the last figures I looked at, the
records that I saw, 11 percent in 1996 of the income tax collected was
collected from corporations, while four times that much was collected
from families and individuals, 44 percent.
So, the policies and the laws which govern and guide IRS are of very
great interest to me. How much of that inequity in collection,
inequality in the collection between corporations and families and
individuals is due to the fact that Congress made the wrong kinds of
laws, or the laws are imbalanced, they are not in balance in terms of
collections from corporations versus individuals and families. How much
is doing to the wrong policy? The wrong philosophy? And how much might
be due to IRS and its administration, its implementation of the
policies that have emanated from Congress? Is IRS delinquent in the way
it pursues collection of revenue from corporations? Does it spend too
much time, an inordinate amount of time pursuing families and
individuals and shy away from pursuing collection of taxes from
corporations because they are so big, they are so complicated, they
have lawyers, they have tax accountants?
We have all seen in the past remarks made by people in the executive
branch of government concerning the need to focus on collecting taxes
where we can collect them more rapidly. I think in the Reagan
administration there was a statement made that IRS should not waste so
much time with corporations, it takes too long to get the collection.
Middle-class people are the people who will respond when the IRS goes
for the collections. If there are problems, then pursue middle-class
taxpayers and we will get a better return, a more rapid return in terms
of collection.
How much of that permeates the modus operandi of the Internal Revenue
Service?
Those kinds of questions I would like to see raised and answers.
There is another aspect of the debate which I think also I have
raised before and we should take a hard look at, and that is how fair
is our revenue collection policy and how fair are the procedures?
When we have a situation which has persisted for a long, long time,
more than 10 years, we will talk about just the last 10 years, but it
is probably the last 20 years that we have had the situation with
respect to New York City and New York State. We have a situation where
big cities like New York City and big States like New York, industrial
States, have consistently paid more into the Federal coffers, the
Federal Treasury, than they have gotten back. The balance of payments
has been way out of kilter consistently over the years. I have
discussed it on the floor of this House on several occasions.
Senator Moynihan quite a number of years ago started making a study,
an analysis, of which States are in a position where they are paying
more into the Federal Treasury than they get back in terms of Federal
aid. So it has become a very thorough kind of analysis, and now it is
supported by the John F. Kennedy School of Government at Harvard and
they produce a nice booklet every year and the latest version of the
booklet I have in my hand. It is entitled ``The Federal Budget and the
States: Fiscal Year 1996,'' the 21st edition.
{time} 2115
I was wondering before about how long we have done this, 21 years.
For 21 years this study has been done, and Senator Moynihan does it now
in conjunction with the John F. Kennedy School of Government. It is
available,
[[Page H8918]]
and I hope that certainly the policymakers in States like New York, New
Jersey, Connecticut, the States that find themselves paying enormous
amounts more into the Federal Treasury than they are getting back in
terms of Federal aid, New York State is not so bad.
This year we only paid $14 billion more into the Treasury than we are
getting back. In the past it has been $16 billion and at one point it
was $23 billion more was being paid by the taxpayers of New York into
the Federal coffers than they were getting back in various forms of
aid. This ranges all across the board, all forms of Federal aid.
So it is interesting that New York State columnists and New York
State legislators, Congressmen, city councilpersons, assemblymen, State
Senators have never been that concerned about this imbalance. Senator
Moynihan first made a speech about it at a community college in New
York State, New York City. He was hoping it would attract the attention
of the press, but it did not.
The press, over the last 21 years, has basically ignored a basic
injustice in revenue collection and distribution. We do not get back
nearly as much as we put in. New York State now ranks third among those
who suffer from this imbalance. At the same time New York State now
ranks third in the amount of poverty that it has. That is pointed out
in Mr. Moynihan's statement here. It is an important piece of irony.
I am sort of stimulated and led to return to this discussion, and
maybe I will be repetitious and say things I have said before here, but
I am led to return because there was a columnist in the New York Post
on Monday, October 13, who happened to single me out in his discussion
of the New York economy and in his discussion of the fact that this
piece of literature is produced every year and that New Yorkers seem to
ignore it.
Mr. Fred Siegel, a columnist for the New York Post, I do not know
much about Mr. Siegel, I have not read him that often, but I think it
is interesting that he pointed out in his column that we have this
situation where the economy of New York City is in serious trouble. It
is ready to fail.
The point he was making primarily was that in the present mayoral
election in New York City, we have a municipal election, borough
president Ruth Messinger is running against incumbent Mayor Rudy
Giuliani. He was stating that in this election there is very little
talk about the economy of the city. The discussion of the economy of
the city does not focus at all on the fact that New York City and New
York State are in the situation where they continue to pay more into
the Federal Government's coffers than they get back.
And during the course of his discussion, he says that this is a
subject that officials should be addressing, the mayor and his opponent
should be addressing it. And he also pointed out that the Members of
Congress should be addressing this subject. Particularly, he says
Representative Major Owens devotes his time to long rambling and
incoherent speeches on poverty and welfare reform before an empty House
Chamber. I was stimulated, of course, to respond to Mr. Siegel and I
think that Mr. Siegel and all the columnists in New York City's papers,
the Times, the Daily News, the Post, columnists, reporters, Mr. Siegel
has thrown out a challenge to elected officials.
I would like to throw that challenge back to the columnists and
reporters. Why is it that the editors, the columnists, the reporters of
New York City and New York State refuse to accept the fact that we are
being swindled and that we are a donor State to an ungrateful set of
States out there who make speeches on the floor criticizing New York
all the time.
Why do we continue to accept the drain from New York State without
putting up a fight, even if we can do no more than have a rhetorical
fight at this point? Certainly the people of the State ought to be
aroused by the columnists as well as by elected officials and begin the
debate. We do not even have a debate now. There is really no challenge.
I have quotes here from Mr. Siegel and other columnists who think
that New York's Congresspeople are not interested in this problem and
we have done nothing in the past. I do not know about my colleagues in
the Congress from New York, but I have the proof here that I have
consistently spoken about this very problem. I only went back one year,
1996, and I found three occasions where I talked at considerable length
about the problem of the drain of dollars from New York State and New
York City: March 12, 1996, March 22, 1996, and April 16, 1996. I talked
at length about this very problem. I quoted from the statistics from
the previous edition of this book, the Federal Budget and the States.
I would like to say Mr. Siegel and all the other columnists and the
editorial boards of the New York Times, the New York Post, get a copy.
It is a fascinating book. It was made even simpler to read this time.
Join the few Members of Congress and other political leaders who are
aware and who are discussing this matter.
Mr. Siegel is to be congratulated. He put his finger on a very
important problem in terms of the mayoral election. There is not enough
discussion about New York's economy. His article appeared in the Post,
as I said before, on Monday, October 13, and is entitled ``New York
Economy Ready to Fail but City Politicians do Nothing to Stop the
Hemorrhage of Wealth.''
I am just going to quota a few items from Mr. Siegel's column. He is
really writing about the mayoral election and that is his primary
concern. He criticizes both candidates for mayor, the democratic
candidate, Ms. Messinger and the incumbent Mayor Guiliani. He even
throws in the candidate for the Socialist Workers Party, Olga
Rodriguez, and says she at least talks about the economy, even though
she is still trying to fight the October revolution. Talks about the
kinds of things that have been discredited in terms of the fall of the
Soviet empire.
But he does talk about it, and I think it is a proper point of start,
a jump-off point for a bigger discussion. And I hope that other
journalists and editors will pick up and we can really begin to deal
with the problem.
Quoting from his article, Mr. Siegel says, and I quote, on Thursday,
the Federal Reserve Chairman, Alan Greenspan, warned that the economy
is on an unsustainable track. Less cautious observers suggest that
stocks are overvalued by 20 percent. Is there a crash in the offing?
Probably not. But there does not have to be for the city to suffer.
Should the market drop to 6000, a level that just a few years back was
unthinkably high, the city will start to slide into a fiscal meltdown.
What Mr. Siegel is saying is that the present prosperity of the city,
such as it is, and it is a spotty prosperity, certain neighborhoods
have not enjoyed it at all, but overall the city looks good on paper.
The mayor has just announced a surplus of more than $150 million. The
Board of Ed has announced a surplus of more than $150 million. The
Transit Authority has announced a surplus. These are all bodies which
inflicted heavy taxes on the backs of the poorest people in the city,
heavy suffering on the backs of the poorest people in the city.
The Transit Authority raised the fare from $1.25 to $1.50, and people
going to work every day can feel that in their pocketbooks in terms of
poor people having to pay $1.50 to ride the subway or the bus. But now
they come up with a surplus. And that is a whole other discussion.
The mayor has cut numerous programs in neighborhoods. He has cut back
drastically on the hospitals, city hospitals, a number of other places
where tremendous cuts were made. And the most devastating cuts of all
were, of course, made in education. We are suffering mightily as a
result of those cuts. But we now have a surplus, and part of the reason
given for the surplus is because the stock market is booming. And New
York City and New York State have a tax on stock market transactions.
Every time there is a transaction, we reap revenue.
So what Mr. Siegel is saying is that that will not go on for much
longer. We cannot expect to prosper or to have our budget balanced
indefinitely by the gyrations of the stock market. We have to do
something better than that. And I agree with Mr. Siegel on that point.
The low rate of job growth, I will quote Mr. Siegel again. Beyond the
halo of Manhattan prosperity, unemployment is 11.4 percent in Brooklyn,
[[Page H8919]]
12.6 percent in the Bronx, total employment, according to a report from
the State Comptroller's office, has grown by 1.1 percent over the past
3 years and New York State as a whole. That may be good for New York
but it is considerably less than half the national rate of 2.7 percent.
We are at the peak of the national business cycle, but the gap between
the city unemployment rate and the national unemployment is the highest
in recorded history.
To sum up and clarify, I am reading from an article by columnist Fred
Siegel that appeared in the New York Post on October 13, entitled New
York Economy Ready to Fail but City Politicians do Nothing to Stop the
Hemorrhage of Wealth. In this column he mentioned my name and said that
while this is going on, we are neglecting the problem of the fact that
we have a hemorrhage of wealth and people like Major Owens make long,
rambling and incoherent speeches on poverty and welfare reform before
an empty House Chamber.
My speech, I assure, is not incoherent at all. Step by step I am
saying that I agree with you that we have neglected, as political
leaders and as columnists and editors, we have neglected a major
problem. I hope that your article and my speeches here, which are not
different from the kind of speeches I have been making all along, will
spark a debate among New Yorkers so that they can get themselves
together and understand where the enemy is and go out and demand a just
sharing of Federal revenue.
We are $14 billion in the hole this year, $16 billion last year. And
it has gone as high as $23 billion, where $23 billion more has been
paid into the Federal coffers than we received back.
At the other end of the spectrum, we have New Mexico, which receives
the greatest amount per capita of Federal aid above the amount that it
puts in.
{time} 2130
We have places like the Speaker's county in Georgia, which is one of
the highest per capita recipients of Federal aid. We have the great
State of California, which has a booming population, but compared to
New York, their balance of payments has gone way down because they are
the recipients of disaster aid.
If it is not a mud slide, it is a hurricane or an earthquake that
leads to Federal money being pumped into California's economy. And
California now is contemplating El Nino and the results of El Nino and
what El Nino might do to the weather, and the weather may lead to some
catastrophic natural disasters.
I am all in favor of people being helped when they have natural
disasters, but this may be one of the areas where States should go it
alone and not have to come to the Federal Government for a handout. It
is certainly a very unfair situation for certain States to continually
have floods and earthquakes and various catastrophes that they know are
going to happen and they are not prepared for them. As a result, their
economy is rewarded by enormous amounts of money being pumped in to
deal with those disasters.
Somebody should do a study on California's economy, the amount of
damage done, the estimate of the damage versus the amount of Federal
aid that flows in and the amount of Federal aid combined with the
amount of local and State aid, and we might find that disasters are
really a great benefit in kind of a perverse way.
I am not going to go into it in too much detail, but all of these
things need to be looked at when we start criticizing the kind of
economy we have in New York. And it has been the subject of a great
deal of criticism, which I will quote in a few minutes.
But I want to continue and complete Mr. Siegel's article. Mr. Siegel
goes further and says the low rate of job growth accounts in part for
the facts that despite the city's image of wealth and power, 2 million
New Yorkers live in poverty. Two million New Yorkers live in poverty.
An average household income, adjusted for the cost of living, is about
16 percent below the national average. These numbers will only grow in
the case of a recession.
I want to repeat that, quoting from Fred Siegel's article, the low
rate of job growth accounts in part for the facts that despite the
city's image of wealth and power, 2 million New Yorkers live in
poverty. And the average household income, adjusted for the cost of
living, is about 16 percent below the national average. These numbers
will only grow in the case of a recession.
He has already quoted before that unemployment in Brooklyn is 11.4
percent; unemployment in the Bronx, 12.6 percent. While the city's
overall economy is benefiting from the stock transfer tax and the city
has a surplus in its budget, rampant poverty is still there. And New
York State, as a whole, now ranks third in terms of being among the
poorest States in the Union having the greatest amount of poverty. Two
million New Yorkers living in poverty.
Mr. Siegel goes further and says that the growth of wealth and power
in the high-tech West has been one of the two massive transfers of
wealth and power undermining New York's position in the national
economy. The shift of economic power to the West is matched by the
continuous movement of Federal dollars to the South.
Senator Patrick Moynihan just issued his 20th annual study of the
balance of payments between various States in the Federal Government.
Well, Mr. Siegel, it was not the 20th, it was the 21st balance of
payment study between various States and the Federal Government. For
the 20th consecutive year, the average New Yorker sends roughly one
thousand more to Washington than he or she gets back, and it is even
worse for New Jersey and Connecticut, residents of New Jersey and
Connecticut and the surrounding metropolitan region.
The South, by contrast, is the big net winner. Continuing to read
from Fred Siegel's article of October 13 in the New York Post, ``Did
this massive redistribution of resources come up in the mayoral debate?
No. Is it a pressing matter for our daffy delegation of Congress?'' And
he goes on to criticize Congress Members from New York for not paying
attention. Even drops my name, as I have just read before.
But I am not guilty, and Mr. Siegel, I would like to join with you,
as I said before, in stimulating the most voluminous, thorough, intense
debate possible about this whole matter.
Successful institutions, Mr. Siegel says, like successful people,
learn from their pasts and adapt to new conditions. Neither of the
major candidates seems capable of the adaptations necessary to stem the
flood of wealth and influence away from New York.
And, like Mr. Siegel, I am baffled by the fact that New York leaders,
politicians, clergymen, columnists, editorial writers for years on end
continue to ignore what is contained in this book. The Federal budget
of the States contains a graphic picture of the wealth flowing out of
New York State into the rest of the country.
We could use $14 billion. Our economy could certainly benefit from
$14 billion being sent back. Or even $7 billion. Let us take half.
Maybe there should be some kind of revenue-sharing provision written
into the Tax Code where States are always given back at least half of
what they put in beyond what they normally get back from the Federal
Government.
Maybe that would be a creative idea and maybe it would be acceptable
to everybody, because the people in this Chamber who yell the loudest
about States' rights are the ones who seem to benefit the most from
this imbalance. The Representatives of the recipient States are the
ones who talk most about States' rights and the need to have States do
it on their own, go it on their own, do not interfere, no mandates. If
we do not want any mandates, that might be a good idea. But why should
we have Federal dollars flowing in large amounts into the States who do
not want Federal interference?
Now, certainly the tradition of the Northeast and New York State
supplying more in terms of its contribution to the Federal budget than
it gets back is a tradition that was not blindly initiated. I think
Franklin Roosevelt and people who developed the New Deal knew very well
that the rest of the country needed help and they deliberately came up
with policies that related to taxes and expenditures which spread the
wealth across the country. The greatest beneficiary of the New Deal
were the southern States, and they still are the greatest beneficiaries
of the way that we distribute Federal dollars.
The New Deal was something that New Yorkers were proud of, and for
[[Page H8920]]
years progressives and liberals have always been proud of the fact that
money has flowed from the northeastern States, the industrial States,
out into the rest of the country. And we have taken care of the
national interest that way. However, in the past few years, New York
and the big cities like Chicago, in an industrial State like Illinois,
and New York and New Jersey, and these big industrial States that have
big cities are being constantly criticized for serving as a drain on
the Federal Treasury.
People who don't look at the figures tell us that New York is a great
drain. I do not know where his assumptions came from, but the gentleman
from Georgia [Speaker Gingrich] more than once on the floor of this
House over the last 10 years that I have been here has been
particularly focused on New York City and New York State as being
wasteful of Federal dollars.
I think that at one point in 1995 he stated that New York was quote,
``Saddled with a culture of waste for which they want us to send a
check.'' New York was saddled with a culture of waste for which they
want us to send a check. Who is us? Send it from Georgia? Georgia is a
recipient. They get more money from the Federal Government than they
pay in. How would they send a check to New York? We continually send
the check for the rest of the country.
The Federal Government is not going to bail out the habits that have
made New York so extraordinarily expensive, quoting the Speaker again.
The Speaker stated that the Federal Government is not going to bail out
the habits that have made New York so extraordinarily expensive.
Conventional wisdom came to be believed on the floor of this House
that New York was a financial sinkhole. New York was inefficient,
wasteful, a drain on the public purse. I suppose that the Congressmen
and Senators from New York have a lot of blame to bear. They must bear
the burdens of blame for allowing this to happen, when we have the
figures here for the last 20 years which show that New York has not
been a burden on anybody. We have been the donor of large amounts of
taxes flowing into the rest of the country.
Now, in the days of FDR, it was a conscious transfusion. They
consciously decided that the northeast States, and New York among them,
should help to supply the money needed to sustain the economies of the
rest of the country. What started as a transfusion, a voluntary
transfusion, has now become bloodsucking. It is really sucking the
blood of a dying economy.
Mr. Siegel is right, the New York economy needs help. It is the last
place that should have to continue to send out billions of dollars that
do not come back. Speaker O'Neill used to say that all politics is
local. All income taxes are local and many other taxes are local, but
certainly income tax. People live in a locality. They live in a city, a
village or a State. They pay their taxes, and they flow up to the
Federal Government.
The Federal Government does not generate any taxes. In Washington, we
print dollars, paper, but those paper bills are symbolic of the revenue
that is collected from across the country. So it comes out of the
localities and the States. It comes from New York, the billions come,
and they do not go back in any just way to a State that now needs it to
come back.
There was a time when we did not need it, but we need it now, and the
Members of the congressional delegation of New York ought to lead the
fight to get into this debate about the Internal Revenue Service, a
discussion of how revenue is distributed in America. Nobody has a right
to take from one set of localities and give to another unless there is
some kind of formula, some kind of rationale.
It is now a habit. It is not a voluntary transfusion, it is
bloodsucking. We have to stop the tax sucking, the bloodsucking, and
look at the dying economy of New York City and reroute the blood,
reroute the taxes back into the economy of New York City.
Let me just read from Mr. Moynihan's introduction to this year's
edition of this wonderful book that comes out every year, The Federal
Budget and the States. In his introduction he says some interesting
things. He talks about, a little bit about the history of taxes, income
taxes, for example.
An income tax was proposed by the Secretary of the Treasury,
Alexander J. Dallas, in the Madison administration as a means of
financing the War of 1812. The war ended before anything was agreed,
but the idea was in place and the legislation with respect to income
tax was enacted in the Civil War and continued until 1872.
Legislation that put the income tax in place actually had been
conceived as early as Madison's administration during the War of 1812,
but it was enacted in 1872. In that period, New York alone, quoting
from Mr. Moynihan's report, New York alone paid one-third of the entire
tax when the tax first began. Massachusetts and Pennsylvania each
contributed about 13 percent, thus approximately 60 percent of the
total revenue collected came from only three States.
Historically, the northeast has taken care of the rest of the
country. It started that way and it still is that way. I am sure that
at different points in time it has been voluntary, it has been given
freely, but now we have a situation where ungrateful recipient States
are like jackals criticizing the policies and economies of the donor
States.
{time} 2145
Mr. Moynihan continues in another section where he talks about the
16th amendment. There was legislation that established the income tax,
but that only lasted until 1872. Later on, in 1913, the 16th amendment
was ratified, in 1913. It provided that Congress shall have power to
lay and collect taxes on incomes from whatever source derived without
apportionment among the several States and without regard to any census
or enumeration. The 16th amendment, in 1913. That is a long period of
time between amendments. The 15th amendment had been passed in the
1800's. We had the 13th amendment, which freed the slaves, the 14th
amendment, which established equal rights, and proposed to punish the
people who rebelled against the Government. That part is always left
out. There is more in the 14th amendment about punishing the rebels
than there is about equal rights. But nevertheless the 14th amendment.
Then the 15th amendment which gave the right to vote to the newly
freed slaves. Then it was not until 1913 that we had another amendment
to the Constitution. That amendment did what legislation had started
before, it enshrined in the Constitution the power of Congress to lay
and collect taxes on incomes from whatever source derived without
apportionment among the several States and without regard to any census
or enumeration. The States in the Northeast could have objected at that
time. They might have had the power to stop it at that time, but they
did not because they had this spirit of being responsible for the rest
of the Nation. They also made some assumptions about the fact that at
that time a large percentage of the funds collected by the Federal
Government were going into the Armed Services, the military budget and
a large part of that military budget was being spent in the big
northeastern States. To continue from Mr. Moynihan, his introduction:
``It may be noted that this was the First Amendment to the
Constitution to be adopted since the time of the Civil War. The
regional conflict never ceased. The time simply came when the poorer
regions were assumed to have the better of the argument and the votes.
The programs that followed may have been a good idea when New York was
singularly the most prosperous state in the Nation and these programs
were an act of social conscience designed to uplift the downtrodden or
unenlightened elsewhere. We sent the money to Washington, received
precious little in return and felt very good. Somehow as late they
don't seem to show as much gratitude as they used to.''
A very important statement. New Yorkers gave freely because they
wanted to uplift the downtrodden or unenlightened elsewhere, the money
went to Washington, the New Deal moved even faster, and yet we got
little back in terms of gratitude. Mr. Moynihan is to be congratulated
for his thoroughness and his diligence over the years in staying with
this subject and getting the most objective analysis
[[Page H8921]]
possible so that the figures that we quote here are generally accepted
as credible. We have a situation, however, when we look at all of the
available numbers, the quote from the report now is very apt, quoting
again from Mr. Moynihan's introduction:
``We will have more to say about this subject at another time but
consider for the moment the logic of the 95 percent minimum return
advocates. He is talking about transportation and the fact that there
has been a great complaint about States which pay the gasoline tax not
receiving 95 percent of the money back in terms of highway and
transportation funds. Take it a step further. If the Federal highway
program exists merely to collect gasoline taxes and return them
precisely to where they were paid, why bother.''
Quote from Mr. Moynihan again: ``Let the final word be that of Gerald
B. Solomon of our 22nd Congressional District in the Upper Hudson
Valley of New York. Mr. Solomon happily is also the chairman of the
House Committee on Rules.'' Quoting from Mr. Solomon, ``Anyone who
thinks that their State is being short-changed because they don't get
back what they contribute in a gas tax is ignoring a whole series of
factors and should take a hard look at New York. New York pays $18
billion,'' he is quoting the previous years, ``$18 billion more in
Federal taxes than we receive in Federal funds. If they want to raise a
stink, then let's redo the formulas for everything. New York could use
an additional $18 billion.'' End of quote from Mr. Gerald Solomon,
Republican from the State of New York's 22nd Congressional District.
When we look at the mix of defense expenditures, gasoline taxes and
return for transportation costs, the expenditures for Medicaid, aid to
families with dependent children or welfare, when we look at the whole
mix and put it together, military expenditures, also, New York still
comes out as a donor. It gets back more from Medicaid and Medicare than
most States, but we are forced to pay 50 percent of the total Medicaid-
Medicare costs, whereas in Mississippi the Federal Government pays 70
percent and the Federal Government only pays 50 percent of our costs.
Per capita we have a larger number of people so we get back more
Medicaid and Medicare funds than probably any other State per capita.
But when we balance that off against what we get back for
transportation, military contracts, when it all is balanced out, the
taxpayers of New York in 1996 were still paying into the Federal
Government $14 billion more than they received back. This is worthy of
a debate.
Mr. Siegel, get yourself a copy of the book, arouse your fellow
journalists and editors and let us go to work. Let us take a close look
at the pages of a book which spell out the situation State by State and
educate the people of New York as to what is the problem with respect
to their taxes not returning to improve their quality of life and how
are they being swindled. Let us look at Alabama on page 1. Alabama is a
recipient State. They receive far more than they pay into the Federal
Government's coffers. Alabama continues to retain its positive fiscal
relationship with the Federal Government with a balance of payments
surplus of $1,421 per person, the eighth highest in the Nation. They
get back $1,421 for each person in the State than they pay in. Relative
low per capita income results in tax collections of about 13 percent
below the national average. Alabama ranks fourth in the Nation for
payments to individuals and 14th for defense spending, leading to
overall Federal spending that is 16 percent higher than the national
average. The State of Alabama receives 16 percent more, its Federal
spending, receipt of Federal funds is 16 percent higher than the
national average. It has consistently been that way for a long, long
time, certainly the last 10 years. Our dollars flow to Alabama. Alabama
is not grateful. Alabama talks a great deal about States rights and not
having people outside interfere.
The State of Georgia, let us read the synopsis on the State of
Georgia. Georgia is almost equal to the national averages for both
taxes and spending, varying by less than 1 percent in each direction.
It began and ended the period from 1981 to fiscal year 1996 with
moderate balance of payments surpluses. In the early to mid-1980's,
rising Federal tax payments fueled by economic growth outpaced the
State's success in attracting defense dollars, with the result that its
balance of payments surplus fell slightly. The dramatic decline in
defense spending in the late 1980s dropped the State into a deficit
position in fiscal year 1988. Defense spending increased in fiscal year
1992 and went up again in the past year, so Georgia ends the 16-year
period with a balance, a small balance of payments surplus of $66 per
capita and a rank of 27th. Over the years, Georgia has received per
person as high as $434 more per person than it has paid in and it
presently receives $66 more when you take the whole State into
consideration. In a previous year, this book zeroed in on some counties
and they found that the county that Speaker Gingrich represented was
the county that received the highest per capita in amount of Federal
spending than any other county in the country.
New Mexico ranks at the very top. It is number one when it comes to
recipient States. New Mexico receives more than any other State in the
Union. New Mexico, the synopsis reads, leads the Nation with the
greatest balance of payments surplus. Per capita Federal spending is
about 45 percent above the national average, assisted by strong defense
spending. While the average State receives about $865 per capita in
defense spending in fiscal year 1996, New Mexico received nearly 3
times that, $2,400 per person. The State also ranks high for
intergovernmental assistance, particularly Department of Interior
grants to minerals management and Native American programs. Per capita
income is very low and tax collections are about 23 percent below the
national average. They collect very little, send very little to the
Federal Government but the amount that they receive is the greatest in
the whole country. In past years they have cited New Mexico as also
being the recipient of a tremendous amount of agricultural subsidies.
The agricultural subsidies also were driving the amount of per capita
Federal spending in New Mexico up. They have always had an interesting
record. If we look at the record of New Mexico all the way from fiscal
year 1981 to fiscal year 1996, they have always been above the $2,500
mark in terms of per capita. For each person in New Mexico, they
receive more than $2,500. It generally has run much higher than that.
$3,048 per person in 1981, $3,005 in 1985, $3,313 in 1986, $3,421 in
1987, $4,464 in 1988 and on and on it goes, always very high in terms
of what they receive per person versus the amount that they pay in.
Likewise, on the other end of the spectrum, New York has always had a
negative balance. We have received less consistently since 1981 per
person. The $14 billion overall from 1996 translates into $773 we
receive less per person in New York than we pay in. That is what the
overall figure of $14 billion translates into on a per capita basis. In
1981 it was $312 less. It went as high as $1,016 per person less in
1989, $1,101 in 1994, $1,070 in 1995, receiving per person in New York
that much less than we are paying into the Federal coffers. New York
once again finds itself among the States with the largest per capita
balance of payments deficits. The deficit fell by about 20 percent in
fiscal 1996 but the total deficit of $14 billion still ranks third in
the Nation. New York ranks near the bottom for most Federal spending,
almost 12 percent below the national average of 1996. Defense spending
has fallen sharply since the mid 1980s and New York ranked 46th in
defense spending last year. New York's success in attracting grants to
State and local government can be traced to Medicaid assistance, AFDC
and surface transportation grants. New York ranks 12th in the real per
capita income and tax collections are about 4 percent above the
national average.
I know that statistics can be boring and maybe these are boring but
they are certainly not incoherent. There is a story here that we must
listen to in the statistics. Mr. Siegel and other journalists have to
pay more attention to these statistics. New York is to be applauded for
the fact that this year its economy, partially as a result of the
booming stock market, New York State, its economy is such that they
have placed in the budget more money for schools, more money for
education. It has also voted to launch a bond issue for school
construction, more than $2
[[Page H8922]]
billion bond issue to help construct schools. It is to be applauded for
as a State moving ahead to try to fill the gap. In New York City in
1996 we had 91,000 children who did not have a place to sit in a
classroom. This year we cannot find out the number because this is an
election year in New York and they kept secret the exact number of
children who did not have a place to sit. The estimate is that at least
there were 80,000 who did not have a place to sit at the start of
school.
{time} 2200
They have to shuffle about and find places in the hallways and the
closets, and, in some cases, the bathrooms were converted in order to
have a place for the kids to sit. Again, we continue to have a
situation where some children are forced to eat lunch at 10 o'clock in
the morning because the school is so overcrowded until the lunchroom
cannot take all the students. They have to have three or four lunch
periods, so the first lunch period has to begin at 10 o'clock in the
morning. That is child abuse, to force a child to eat lunch at 10
o'clock, but that is the case in a number of schools in New York City.
So New York State has begun, at least to do more than just wringing
its hands about its need for more schools. New schools, renovated
schools, et cetera, will do more when we get the bond issue passed. But
in the meantime we are paying more money into the Federal coffers than
we are receiving back. The Federal Government ought to float a school
construction initiative.
The President proposes a mere $5 billion over a five-year period, and
that was dropped out of the negotiations. We need to come back to that.
We need to understand that if we are not willing to launch a school
construction initiative to make sure of the schools across the country.
The General Accounting Office estimates that the problem is about
$120 billion in infrastructure needs across the whole country. There
are rural schools, suburban schools, a number of places where they need
new schools, not just in the inner-cities. The total tab would be,
according to the General Accounting Office estimate, about $120
billion. Here we had a proposal in the State of the Union message for a
mere $5 billion and they dropped that.
If you are not willing as a Nation through the Federal budget to deal
with the problem of school construction and some other acute problems
in places like New York, then give us our money back. Give us back the
$14 billion or give us back half of it. We can solve our own problems.
We have a situation where it is an involuntary transfusion. It is
blood sucking, really, when you have a State which has an acute poverty
problem, a city like New York, which has 2 million people who are poor
out of a population of close to 8 million, but 2 million are poor. We
need our money back.
I want to repeat and emphasize the fact that this is not stated
enough by journalists, by columnists, by editorial boards in New York
City and New York State. When Mr. Siegel says that this Congressman is
one of those who has not addressed the problem, I want to read and
close out with a couple of quotes from my previous statements on the
floor of this House.
I think just last March 12, 1996, I made the following statement: New
York State is a State in the Nation which provides the greatest amount
of surplus in terms of Treasury. When you compare what New York State
receives from the Federal Government, what it receives from the Federal
Government in terms of aid, it is much less than it pays in. That has
been true for the last 20 years.
This is my quote from last year. In 1994, the last year they had
figures available, New York State paid the Treasury $18.9 billion more
than it got back from the Federal Treasury in State aid. New York was
the most generous of the States. We were at the very top in 1994. I
quoted from the booklet in 1994.
This was, for the benefit of Mr. Siegel and the other journalists who
want to check it out, this is in the Congressional Record, March 12,
1996, H-2117.
On that same date, I made several statements about Medicare and
Medicaid. If New York State stood alone, it would be in receipt of
$18.9 billion that it does not have now. If you gave us back the $18.9
billion in 1994 that we paid into the Federal Government, which was
greater than the amount we got back in terms of aid, we could solve our
budget problems. In fact, just give us back half that amount.
I am like a broken record, the same things I am saying tonight, I
have said it many times before. It is not incoherent, Mr. Siegel. It is
repetitious, I confess, but it needs to be repetitious because nobody
seems to pick up on these important messages. If we had $9 billion, the
New York State budget could be balanced and you would have a lot left
over. We could take care of our own summer youth program, our own
construction problems. If you give us back the greater amount of money
we pay in, we could stop waiting for the Federal Government.
I mention this because the criticism on the floor of the House
repeatedly aims at New York and calls New York a welfare State.
I think during that same discussion I talked about the Speaker's home
State of Georgia, meanwhile, is one of the large number of southern
largely Republican States that receives far more from the Federal
Government than they send out in taxes.
I quoted Mr. Moynihan at that time. Mr. Moynihan said, ``I told Mr.
Gingrich, what are you talking about my friend? In Atlanta 59 percent
of the children are AFDC, Aid for Families with Dependent Children. In
a single year, where do you think that money comes from?'' By the way,
Atlanta is in Georgia, and in case somebody doesn't have his geography
straight, Atlanta is in Georgia, and Atlanta is the Speaker's home
state. Those are some comments, but there are many, many paragraphs
where I expanded on the same argument.
Also, for the benefit of Mr. Siegel and any other journalist who
wants to criticize this for not speaking out on this subject of
providing leadership, on March 22, 1996, I announced I was going to
have a town meeting, and the subject of the meeting was the fiscal
future of New York City.
The discussion begins with a discussion of what is happening here in
Washington, because the fiscal future of New York City is inextricably
interwoven with the policies of general aid here in Washington, our
capital. I am going to start by talking that New York City is often
discussed on the floor of the House of Representatives. People often
talk about New York City and New York State. It is a favorite target of
the Speaker of the House. Speaker Gingrich often refers to New York
State and New York City as a welfare state and a welfare city. For that
reason, the people of New York need to understand the perspective of
our relationship with Washington better.
I again repeat, we are called a welfare state and a welfare city. We
are often accused of being a drain on the Nation, and yet New York City
pays taxes to the tune of $9 billion more into the Federal Government
and New York State pays another $9 billion, a total of $18.9 billion in
1994.
The total of New York State and the city for that year was $18.9
billion. The year before that, in 1993, it was $23 billion more to the
Federal Government than we received back from the Federal Government.
Mr. Speaker, I said at that time, it is baffling. We do not
understand why Members on the floor of the House like to single out New
York City. New York City and New York State are often singled out for
its high expenditures for Medicare and Medicaid.
Well, after we take away our high expenditures for Medicaid and
Medicare, which are the highest in the country, I will admit that, and
I can think of no more noble way to expend public funds than by taking
care of the sick and the infirm and the elderly in nursing homes, no
more noble way to expend funds. But we do not waste money when we take
care of the sick and the infirm.
In closing, I want to repeat and sum up, so that nobody will accuse
me of being incoherent, this discussion is very much related to the
topic of the day, the IRS and revenue collection. Revenue collection
and the IRS should not be a discussion that takes place in a trivial
manner. Let us talk about the philosophy of taxation and revenue
collection, the implementation of that philosophy and how that impacts
on the states that are now donors, while other states are traditional
recipients.
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