[Congressional Record Volume 144, Number 1 (Tuesday, January 27, 1998)]
[House]
[Pages H23-H28]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SAFEGUARDING SOCIAL SECURITY AND THE PRUDENT USE OF BUDGET SURPLUSES
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 as the designee of the majority leader.
Mr. NEUMANN. Mr. Speaker, I would like to begin today on a solemn
note and extend my condolences to the Bono family and recognize Sonny
for the great man he was.
I will never forget the first time that my daughter found out that
Sonny Bono was serving in Congress and came in with the same class that
I came in with in 1995, and she could not figure out what her father
was doing in the same place as somebody as important as Sonny Bono.
So, Mary, our condolences are with you and your family; and our
thoughts and prayers are with you and your family. I, for one, think
you are going to be a great Congresswoman if you decide that is the
direction you are going to go.
Mr. Speaker, on a light and positive note I would like to extend my
congratulations to the Green Bay Packers. I am from the great State of
Wisconsin and some think they did not win their second Superbowl on
Sunday. In fact, what happened is that they just put off winning their
second Superbowl in the 1990's for 12 months.
Some people around this Nation and some of my colleagues do not
realize that the Packers are made up of a lot more than a football
team. There is a lot of integrity in that group of individuals, people
like Reggie White, who our young people look to as an example of
leadership and for all the right reasons in this Nation. It is truly a
pleasure to have not only the greatest football team in the country but
also a team with the integrity that the Green Bay Packers have in the
great State of Wisconsin.
[[Page H24]]
On to the third topic and perhaps the most timely topic that we will
address here today. The State of the Union address is, of course, this
evening. And as I listened to the 1-minute speeches here this morning I
kept hearing this one word repeated over and over and over again. It
was ``expansion.'' Expansion of this and expansion of that and
expansion of the next thing.
The bottom line that I hear back home in Wisconsin is that what the
people would like is to be able to keep more of their own money to make
decisions on how to spend it themselves. When we hear the word
expansion this evening, we need to understand that what they mean is
expansion of Washington spending programs.
Do some of those expansions help people? Sure, they do. Of course,
they do. But the question is, are we better off expanding those
programs, taking money out of the pockets of people to pay for these
expansions? Or would we be better off just letting people keep their
own money and let them make decisions on how to spend the money
themselves?
So as we go into this evening we need to understand that there is
going to be a lot of new programs described, and they are going to
sound just like apple pie and America. They are going to sound really,
really good. And, frankly, if they are really, really good programs and
the Democrats or the President would describe what it is that he is not
going to do in government, that he is going to end some wasteful
Washington spending program and reprioritize that money with something
different, I guess I, for one, would be willing to listen to that.
But if what we are going to do tonight is talk about how we are going
to use surpluses to expand Washington, rather than use those surpluses
to pay down the Federal debt and return the money back to the people so
that the people can keep more of their hard-earned money, then I would
say it is going to be a very rough year ahead for us as we debate these
issues. Because I, for one, believe that the American people support
less Washington and keeping more of their own money in their own homes
through the tax cut programs that are being proposed out here or
across-the-board tax cuts, better yet.
One of the topics that we understand is going to be discussed in
great detail tonight is the topic of Social Security, and I do
understand that the President is going to suggest that taking some of
the surpluses that are materializing and applying them to Social
Security. So let me start with what exactly a surplus means and what a
balanced budget means here in Washington. That is very important to
understand as we look at what we are going to do with these surpluses.
First, what is a balanced budget? Washington definition, it sounds
pretty good on the surface. Washington's definition of a balanced
budget is that the amount of money coming in is equal to the amount of
money going out, and I would have to agree that on the surface that
sounds like a pretty good definition.
It is important to recognize that that is the definition that has
been used out here since the late 1960s, the last time we had a, quote,
balanced budget. It is very significant that we have reached the point
where the budget is balanced under Washington definition for the first
time since 1969-1970; and, in fact, it is not political rhetoric or
promise or any other political jargon.
The facts are in: From December 1, 1996, to November 30, 1997, for
the first time since 1969-1970, the United States Government did not
spend more money than it had in its checkbook.
Let me say that once more. It is so significant and it is such a
change from where we have been in the past. For the first time since
1969-1970, and this is in the books. The books are closed on this. For
the first time since 1969-1970, the United States Government for a 12-
month period of time did not spend more money than they had in their
checkbook. That is to say, by Washington's definition, the budget is
balanced.
On the surface, this is great news. And not only on the surface. It
is great news because before we can go on and address the other
problems facing our Nation: Social Security, paying down the debt,
lowering taxes. We first had to quit spending more money than was in
the checkbook, and we first had to quit spending our children's money.
This is great news. It is a tribute to people like John Kasich and
Newt Gingrich and Trent Lott. Let us even mention President Clinton, so
we don't fall into the demagoguing like the other side seems to be
starting.
I learned this real quick in Washington, that there is absolutely no
end to what we can accomplish in this city if we are willing to give
somebody else the credit for doing it.
So let me give credit to lots of people, both sides of the aisle for
getting us to where we are today. But, most important, let me give that
credit back to the American people because it is a strong economy that
has generated lots of extra revenue that is as important as what has
been done here in Washington.
I do not want to downplay the significance of the Washington role in
this. In all fairness, Washington has had good economies between 1969
and today, and every time in the past that Washington had a good
economy they saw the extra revenue coming in, and they spent it as fast
as it came in.
So, in all fairness, this is a combination of the people in
Washington for a change not spending the extra revenue that is coming
in. At the same time, the economy has stayed very, very strong, and we
slowed the growth of Washington spending by over 40 percent since 1995
when I was first elected.
So it is a combination of those two things, and it is significant,
and it is important, and credit should be dished out for those things.
But we should also understand that we are not at the end of the road.
We have reached a milestone, but we have a long, long ways to go.
Let me explain in more detail what is wrong with the Washington
definition of a balanced budget.
I come from the business world. I never held office before this one.
I left the business world to run for office because I did not think it
was right that we were spending our children's money. I did not think
it was right how Social Security was being handled, and I thought taxes
were too high and government was too big in general.
When we look at the solution that we have now reached a balanced
budget, we need to understand the second part of this problem. The
second part of this problem is in Social Security. In the private
sector where I come from if we had treated a pension plan the way the
United States Government treats Social Security, they would have
arrested me and my business. It would have been illegal.
Let me show why that is true and explain Social Security. It is
pretty straightforward.
The United States Government is collecting $418 billion in taxes from
the workers of this country under the heading of Social Security. It is
paying out to our senior citizens $353 billion. Now, obviously, if
there is more money coming in in this system than what is going out,
there is some money left over.
Social Security, the way it is set up today, is working. They are
collecting more money than they are paying out to seniors in benefits;
and the reason they are doing that, they are doing that because they
recognize that in the not too distant future the baby boomers start to
retire and these two numbers are going to turn around. There is going
to be more money going out in benefits than there is coming from the
taxpayers.
Now, at that point we are supposed to be able to go to this surplus
that has been accumulating. You see this extra money, it is supposed to
be set aside in a savings account. When these two numbers turn around
and there is not enough money coming in to pay the benefits to our
seniors, at that point we are supposed to be going to the savings
account, getting the money out of the savings account and making good
on the Social Security system.
Let me give a couple of dates. If this system were working the way it
is laid out here on this chart, Social Security is safe at least to the
year 2029. So as we are listening to the State of the Union this
evening, it is very, very important that we understand that if Social
Security were working the way it was set up and designed, the system is
solvent at least to 2029 and potentially significantly beyond that
year.
However, and this should not come as a surprise to many Americans, I
know
[[Page H25]]
out in Wisconsin when I talk with folks it is not a big surprise to
them, that is not what is happening in Washington.
{time} 1530
That extra money that is coming from Social Security is being put
immediately into the big government checkbook. If this is the extra
money coming in, those dollars are put immediately into the general
fund, or think of it as the big government checkbook. The government
then spends all the money out of that big government checkbook, and
there is no money left to put down here in the Social Security Trust
Fund where it belongs. So as a result, they put it in the big
government checkbook. They spend all the money out of the checkbook,
and at the end of the year they simply make an accounting entry and put
an IOU down here in the Trust Fund.
It should be clear that when we say the budget is balanced, what we
are really saying is that this checkbook over here equals zero, or if
there is a surplus, there is a little bit of money left in that
checkbook over there. So that includes this $65 billion that came from
Social Security was put into this account. It was then spent. And when
they say the budget is balanced, that means they have spent that Social
Security surplus as well, and IOUs are put down here.
Tonight when we listen to the State of the Union address, what I hope
we will hear the President do is talk about a bill that we had proposed
first 2 years ago when I first came here in 1995 to stop this, and more
recently last year when we generated nearly 100 sponsors here in the
House of Representatives. The bill is called the Social Security
Preservation Act. It is bill number H.R. 857.
What the Social Security Preservation Act does, bill number H.R. 857,
is it simply takes that Social Security money, that $65 billion, and
puts it directly into the Social Security Trust Fund. That means the
Social Security money is not even getting into the big government
checkbook.
What does that mean? Well, if we go back to this other picture, if we
go back to this other picture where that Social Security money got put
into the checkbook, and then they spent all the money out of the
checkbook, and that is what they mean by a balanced budget, utilizing
that Social Security money, the checkbook is not overdrawn. What that
means is that if we do not put that money in the big government
checkbook, we put it immediately down here in the Social Security Trust
Fund where it belongs, that means there is still a shortfall here.
So when we talk about surpluses, it is important to know that what
they actually mean here in Washington is that there is more money in
the checkbook than what has been spent, but part of that money is the
Social Security money. To the extent our President tonight suggests
that we take that extra money and put it down here in the Social
Security Trust Fund, so that Social Security is once again solvent for
our senior citizens, I think you will find not only myself but other
Members of this Congress supporting him.
There is a lot of other things going on tonight. I think virtually
every American at this point in time knows that there are going to be
distractions from this speech tonight due to some private things that
are happening in his personal life. We should let these facts unfold
slowly, take a deep breath and see what the truth is. Nobody wants to
downplay the significance of them, but they have not been proven at
this point in time.
So for tonight, let us focus on these kinds of issues that are most
important, and while these facts are unfolding on the other side here,
let us focus on doing what is right for the future of the country. Let
us keep our eyes where they belong, focused on the good of the future
of this Nation that we live in.
I think it is very, very important as we discuss the Social Security
issue that we understand that beyond the problems the President is
having, again, I do not want to downplay them because I do not find
them acceptable, but beyond those problems we do have issues facing
this country that are very, very important to the country. And we do
not want to lose track and lose sight of the vision that we have for
the future as it relates to Social Security.
Let me suggest a vision. The first vision is this: We stop Washington
from spending the money that is supposed to be going into the Trust
Fund. We get the money put back in the Trust Fund that is supposed to
have been put there in the first place. If we were to do that by the
year 2002, there would be about $1.2 trillion sitting down here to
guarantee the solvency of Social Security to our senior citizens.
At that point in time, that Social Security money is actually down
here in the Trust Fund; there is real dollars there. At that point in
time, if somebody wants to begin a discussion about something else
relating to Social Security, I would listen to it. But before that
discussion even begins, we need to make sure that the money is down
here in the Trust Fund so Social Security is solvent for our senior
citizens.
I have got a couple other charts that I would like to look at just
briefly to kind of remind us where we are at as we focus on the State
of the Union address. This first chart that I have here shows the
growth of the national debt from 1960 all the way up to 1995. I think
it is very, very important we keep this picture in mind as we keep
hearing these words, expansion of, expansion of, expansion of; bigger
Washington; Washington helping people, as opposed to people helping
themselves; Washington doing it as opposed to people doing what is
right for themselves; Washington collecting the money out of the
pockets of people so Washington can expand their programs.
We need to keep this picture in mind tonight. This shows the growth
of debt from 1960 to 1995. You will notice the debt did not grow very
much from 1960 to 1980, but from 1980 forward it has grown right off
the chart. Again, I know all the Democrats say, that is the year Reagan
was elected; and all the Republicans go, if the Democrats had not spent
all that extra money in those years, we would not be in this mess.
The facts are, it does not matter if it is a Democrat or Republican
problem at this point in time. It is an American problem because we are
right at the top of that chart right now. We better do something about
it before it is too late.
I am happy to say that the growth rate has been slowed dramatically,
and we are in the process of changing it. But when we listen to the
State of the Union tonight and they talk about spending this extra
money, let us not forget this picture.
The debt today in this Nation is about $5.3 trillion. The number
looks like this for the folks that have not seen it before. If you
divide that number by the number of people in the United States of
America, our government is in debt $20,000 for every man, woman and
child in the United States of America. I have got three kids and a wife
at home in Wisconsin. For our family of five, that means the United
States Government has borrowed $100,000.
Here is the real kicker. It is this bottom line here that is the most
significant thing on here. This is real debt. Interest is being paid on
this debt. A family of five like mine is literally paying $580 a month
every month to do absolutely nothing but pay interest on the Federal
debt. A lot of people say, well, that does not include me. I am not
paying that much in taxes. Wrong. When you do something as simple as
walk in a store and buy a pair of shoes for your kids, the store owner
makes a profit on that pair of shoes, and part of that profit comes out
here to Washington in the form of taxes, and, you guessed it, one out
of every $6 that they send out here goes right back here to do nothing
but pay interest on the Federal debt.
This needs to be kept in mind as we listen to the State of the Union
tonight. We do not have a surplus that is available for spending. The
United States Government is collecting too much taxes and doing too
many things in this country, and we have run up this debt that needs to
be addressed.
I would like to talk a little bit about how we got here, and I think
we should give credit to how different things are right now today. What
I have got here is a picture of the Gramm-Rudman-Hollings bill of 1986.
There was also one in 1985. Many Americans remember Gramm-Rudman-
Hollings. Many Americans remember the budget deal of 1990.
[[Page H26]]
All of these things were going on in the past.
The Gramm-Rudman-Hollings of 1987, by the way they all looked the
same, here is the blue line that shows how the deficit was supposed to
go down to zero by the year 1993. The red line shows what actually
happened out here in Washington. Promise after promise after promise
was made to balance the Federal budget, and, in fact, promise after
promise after promise was broken to the American people. In fact, in
1993, they looked at this deficit in Washington, and Washington
concluded, we cannot control Washington spending. The only thing we can
do is reach into the pockets of the American people. And it was in 1993
that they decided to close this gap. What they would do is reach into
the pockets of the American people and take out more taxes.
What exactly did they do? Well, they raised the gasoline tax by 4.3
cents a gallon. They did not even spend it on building roads. They
raised Social Security taxes on seniors earning $32,000 a year or more.
They raised some marginal tax bracket. They raised taxes, period. They
reached into the pockets of the American people, took more money out
here in Washington, and their idea of balancing the budget was simply
collecting more money from the people as opposed to controlling the
growth of Washington spending.
I think it is important as we look back and remember the past, the
broken promises and the higher taxes, that we also evaluate if there is
anything different from 1995 to 1998. When the Republicans took over in
the year 1995, we laid out a plan to get to a balanced budget, and, in
all fairness, the President signed into this plan as well. Again, we
promised the American people a balanced budget by the year 2002.
The American people yawned; they laughed at us. They said, you are
just like all the rest. You will not get this budget balanced. Again, I
qualify this, as we started this discussion today, when they say
balanced budget, that means the dollars in equals the dollars being
spent. But I am happy to say that for the first time we are not only on
track to balancing the budget, but, in fact, we have balanced the
budget for the first time statistically in the books. From December 1,
1996 to November 30, 1997, the United States Government did not spend
more money than they had in their checkbook. In fact, this red line did
hit zero.
Is there a difference? Here is Gramm-Rudman-Hollings of the past.
Here is what we are doing today, and, in fact, yes, there is a very big
difference.
I hear a lot of discussion about how this happened and how this came
about. There are two ways to balance the budget. One thing you can do
is continue Washington growth in spending and just let things go up out
here, reach into the pockets of the American people and get more money
out here in Washington. That was the 1993 plan; that was not the 1995
plan. The 1995 plan was to control the growth of Washington spending.
When we were elected, we recognized that the American people did not
want more Washington and more taxes. What they wanted was a balanced
budget by reducing the growth of Washington spending. They wanted less
Washington and more money in their own pockets.
Again, I think it is important we look at statistically what has
happened. I brought a picture with me to show this. Here is how fast
spending was growing before 1995. It was growing at a 5.2 percent
annual rate. Here is how fast spending is going up since 1995: 3.2
percent. And as a matter of fact, last year, the numbers are now in,
this number is only 2.6 percent. So the growth rate of Washington
spending has been cut literally in half in less than 3 years.
I would encourage my colleagues to do this at town hall meetings. I
have been asking my constituents which one of two things they think is
most likely to happen. Listen carefully to these two choices. The first
one is that a Martian spaceship lands in the back yard, and the
Martians get out of it, come in, have a cup of coffee, go back in the
spaceship and go back to Mars. Second one is that the United States
Government got more than $100 billion of unexpected revenue and did not
spend it.
What happens with most of my constituents is they start laughing and
going for the coffee pot because they do not believe it is possible
that the United States Government got $100 billion in unexpected
revenue and did not spend it. But the facts again are statistically in
the books. In 1995, when we got here, we laid out a spending plan. We
said we would not spend more than $1,624 billion in the year 1997, and,
in fact, we spent about $20 billion less than that.
For anyone who has a hard time believing this, do not feel bad. When
I told my wife these numbers for the first time, she said somebody in
Washington was lying to me, just to give you an idea that in our house
we do not always trust it all either.
I encourage you go to the Internet. This information is available.
Check out the 1995 budget plan, how much we said we were going to spend
in 1997, and then check out how much was actually spent so you
understand just how far we have come.
At the same time look at the revenue projections. The revenue
projections were about $1,450 billion; $1,555 billion actually came in.
That is to say, over $100 billion of unexpected revenue came in, and we
spent 20 billion less than promised. That is an amazing accomplishment
in this country. It is a statistical fact that is easily checked out,
and I would encourage my colleagues to start talking about this because
it helps the American people understand just how different this country
is today versus where we were a few years back.
What else has happened on account of this? I don't think we should
just look at balancing the budget and where we are at today. I think we
should look at where we are going to in the future. With this slowed
growth of spending at the same time our economy is remaining strong, we
are going to start running surpluses under Washington's definition. As
these surpluses start to develop, I think the first thing we need to do
is pay attention to the Social Security Trust Fund. That money that has
been taken out of the Social Security Trust Fund needs to be put back.
We have written a bill in our office called the National Debt
Repayment Act. Remember all that Social Security money is part of that
$5.4 to $5.3 trillion debt. In the National Debt Repayment Act, what we
do with these, quote, surpluses, we take two-thirds of the surpluses
and start repaying the Federal debt. In repaying the Federal debt, all
of that money that belongs in the Social Security Trust Fund gets put
back into the Social Security Trust Fund, and Social Security is
solvent at least to the year 2029 and beyond.
We do not need anything else in Social Security to make it solvent.
So if you hear anybody else talking about tampering with Social
Security because it is going bankrupt, my colleagues, you need to go to
those people and say the real problem is that that money needs to be
put back in the Trust Fund. National Debt Repayment Act, two-thirds of
the surplus goes to paying down the Federal debt, much like you would
repay a home mortgage, and in paying down a debt, the money gets put
back into the Social Security Trust Fund.
There is going to be a lot of competition for that other third. In
our bill we return that other third to the American people in the form
of tax cuts.
There are two things wrong in this Nation, as I see it, as we look at
our vision for the future. One is that we still got this $5 trillion
plus dollar debt hanging over our heads that we are about to pass on to
our children. The second one is that the Social Security Trust Fund Is
going too high. Third one is that taxes are too high.
The National Debt Repayment Act repays the Federal debt so our
children inherit a debt-free Nation. It puts the money back into the
Social Security Trust Fund so Social Security is once again solvent,
and it lowers taxes for virtually every taxpayer in the United States
of America.
I would keep going back to this chart because this chart is the key
to everything. As long as we can control the growth of Washington
spending, as long as we can slow down how fast this government is
growing, as long as we can slow down the expansions that you are going
to hear about tonight, as long as we stay firmly rooted in this concept
that we cannot let this government grow, we will be in a position to
continue the tax cuts, to make payments on the Federal debt and to
restore our Social Security Trust Fund.
[[Page H27]]
{time} 1545
Speaking of tax cuts, I did not mention that for the first time in
nearly 16 years there was a significant tax cut passed last year. And
again I go back to this chart. Had the spending in this column since
1995 been up here at the same level it was before, we would not only
not have a balanced budget, but we also could not talk about tax cuts
to the American people. But because this spending has been slowed, and
remember in the most current year it is down to 2.6 percent, because
this spending has been slowed, we are now in a position where we have a
balanced budget, we can make the first payment on the Federal debt,
much like we would make a home mortgage payment, we can restore the
Social Security trust fund so Social Security is solvent for our
seniors, and we can lower taxes on working Americans.
Last year we passed the first significant tax cuts. And I would
encourage my colleagues again at their town hall meetings to talk with
their constituents first and foremost about the $400 per child tax
credits.
If a worker looks at their paycheck from December of last year and
then they look at their paycheck for January of this year, for every
child under the age over 17, the paycheck in January of this year
should be $33 per month higher.
I will say that once more. This $400 per child tax credit for every
child under the age of 17; if a worker does absolutely nothing, they
will get the 400 bucks at the end of the year. But if a worker is smart
enough to go in and change their W-4 form, and it is very, very simple,
you walk into your placement and ask for a new W-4 form. When you fill
out the new W-4 form, what will happen is it will give you another $33
per month per child under the age of 17 in your take-home pay.
What is really going on here? What is really going on is when we look
at your paycheck and the money that you have earned, the American
people, $33 a month that was coming to Washington is now going to stay
in the hands of our constituents and the families back home in
Wisconsin and across America.
I have been asking my constituents the question. I find one that has
a couple of kids, or three kids ideally, because if you have three
children under the age of 17, the tax cut literally means $100 per
month more in the home. And I have been simply asking this very common
sense question. If we are talking a hundred dollars a month that that
family has earned, who can spend that money better, the people in
Washington, albeit with good intentions, the people in Washington; or
do you think that family could spend that hundred dollars a month
better in their own homes if they kept it instead of sending it to
Washington? That is what the tax cuts are all about.
We did not stop at the $400 per child tax cut. If you have a college
student that is a freshman or sophomore, in the vast majority of cases
you are eligible for a $1500 tuition tax credit.
I was at a college over the break here and I was talking to a group
of about 800, and apparently they were in from all over the country at
this particular college group. And I told them about this $1500 per
student tax credit. Sunday night in my house I got a call from a young
lady in Tennessee. She had seven children. They were earning about
$70,000 a year. Why it was Tennessee instead of Wisconsin, I cannot
tell you, except these young people must have been in the audience and
struggling to pay their college tuition bills.
So she started talking to me, ``Mark, how do we actually do this?'' I
said, ``Well, listen, you have a sophomore in college. They are paying
about $3,000 for their tuition, in this particular case, after all the
other grants and things. That means you are going to get a $1500 tax
credit for that sophomore in college. What you need to do is go in and
change your W-4 form to take more exemptions and start keeping an extra
$125 a month right now.''
One of the problems with tax cuts is that you do not get the money
back until next April, one of the problems is that those college bills
are coming due right now, today. So what the workers need to do is go
in and change their W-4 form. If they have a freshman or sophomore in
college, it is $125 a month or $1500 total. Just start keeping that
extra money. Increase the withholding to the point where the take-home
pay goes up increases $125 a month and send that on to the college
student to help pay their tuition.
If you have a junior or senior, grad student, et cetera, it is 20
percent of the first 5,000 up to 1,000 maximum. So for parents of
college students who are juniors, seniors, grad students, et cetera, it
is 20 percent of the first 5,000 up to $1,000 maximum. And, again, just
go in and change your W-4 form.
Here is what will happen. For those people that do not go in and
change their W-4s and start keeping the money now, that means it is in
your money, you are sending it out here to Washington, Washington will
see this big heap of money out here and they are going to want to and
spend it. So you could be a tremendous service to this country if you
would go in and change your W-4s and keep your own money instead of
sending it out here. Because once it gets out here, the temptation to
spend it is enormous. And you will hear that in the State of the Union
this evening, if you have not heard it already.
Couple of other things on tax cuts. If you own a home and you sell
your home, you have lived in it for 2 years or more, in virtually every
case in America today, virtually every case, there is no longer any
federal taxes due when you sell that house.
If you have invested in stocks and bonds, I have been doing a very
interesting thing in my town halls at home. When I go out and meet with
constituents, I ask a roomful of people how many of you have invested a
stock, bond or mutual fund of any sort. And I have found that almost
every hand in the room goes up in almost every case. Well, when you
make a profit on your stocks and bonds, and by the way, I for one
sincerely hope the people making an investment in this country, that
buy stocks, bonds or mutual funds, I sincerely hope you make a profit
doing it. I really do, because that is what investment is all about.
The difference is that the capital gains tax rate, the rate you pay
on the profit that you make, has been reduced from 28 cents out of
every dollar you earn down to 20 percent out of every dollar you earn.
I have to keep referring this back to what is going on out here. I want
to refer to this chart once more. When we hear about these tax cuts and
our families keeping more of their own money in their own families,
what we are really talking about is Washington not spending this extra
money. This is how fast spending was going up before. This is how fast
it is going up now.
And when we talk about getting to a balanced budget ahead of
schedule, sure the economy is strong, very true, but it is also the
fact Washington has chosen not to spend this money and, instead, let
the families keep that money in their own home. Let those people that
invest in stocks and bonds and mutual funds and make a profit, let them
keep more of that profit they make. That is what this is all about.
Another one that is very, very important, the education savings
account, I call this the grandparent account. If there is a family out
there with kids and they would like to save for the kids' college
tuition, they can now put $500 per child into a savings account to save
up for the kids' college tuition. I call it the grandparents' account
because a lot of times grandparents' will make this $500 deposit.
Roth IRA for the empty nesters who say none of that stuff affects me.
Many of those folks in their 40s and early 50s, where the kids are
grown and gone, they are saving up for their own retirement. In the
Roth IRA it is $2,000 a person that can be put away and saved. When you
take that money out in retirement, there is absolutely no taxes paid on
the interest or the appreciation of whatever it is that you have put
into the Roth IRA account. There are absolutely no taxes due on any of
the earnings when you take it out at retirement. This is a phenomenal
change in the Tax Code to encourage savings and investment in our land.
I am going to conclude my portion here today by talking about one
last tax cut that I think is very important for the future, and I think
it says a lot about what a lot of us believe that are serving here
in Congress today, and that is the adoption tax credit.
In the past it has cost $10,000 to adopt a child in this country, and
there are
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many families that would like to adopt children and just plain cannot
because of the cost involved. We have changed the tax code so there is
now a $5,000 adoption tax credit to help those families that would like
to adopt children.
In summarizing, we have come a long ways in a few years. We are
through those broken promises of Gramm-Rudman-Hollings I and Gramm-
Rudman-Hollings II, the budget deal of '90, the budget deal of '93.
That stuff is in the past. Raising taxes to get to a balanced budget,
that is in the past. That is not what is going on out here any more.
Controlling the growth of Washington spending, slowing down how fast
spending is growing in this government. I would like to see this get
down to a zero at some point. So we have a long ways to go. But by
slowing the growth of Washington spending, coupled by a strong economy,
we have actually reached a balanced budget not in 2002 as promised, but
rather 4 years ahead of schedule.
We are about to make the first payment, and here is our vision for
the future, we are about to make the first payment on that debt. And
over a period of time we have the plan written to pay off the Federal
debt so our children can receive this Nation absolutely debt free. As
we pay that debt off, Social Security is restored. The money that has
been taken out is part of that debt, so we pay that money back into
Social Security and Social Security is solvent for our seniors.
The third part of the vision is that we continue to lower taxes on
American workers because we know the tax rate in this country is too
high. That is where we are going.
So as you listen to the State of the Union tonight, I think it is
very, very important that we understand that if you hear the word
``expansion,'' that means more Washington. And just temper your
reaction to these new good programs with an understanding that
expansion means the American people send more money to Washington so
Washington can decide how to spend that money as opposed to Washington
spending less money, leaving it in the pockets of the American people
for them to decide how they can best spend their money in their
families.
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