[Congressional Record Volume 144, Number 14 (Tuesday, February 24, 1998)]
[Senate]
[Pages S882-S884]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         WHY WE MUST RETURN ANY BUDGET SURPLUS TO THE TAXPAYERS

  Mr. GRAMS. Mr. President, I rise today to express my strong 
disappointment as my colleagues waffle on our commitment to allow 
working Americans to keep a little more of their own money.
  I rise as well, Mr. President, to make the case for returning any 
potential budget surplus to the taxpayers.
  Mr. President, I was shocked to pick up the Washington Times on 
February 18 and find the headline ``Senate GOP leaders give up on tax 
cuts.''
  Having been elected on a pledge to reduce taxes for the working 
families of my state, the idea that we would so quickly abandon a core 
principle of the Republican Party is a folly of considerable 
proportions, one I believe would abandon good public policy.
  In all the legislative dust that is kicked up in Washington, someone 
has to consider the impact of high taxes and spending, and speak up for 
the people who pay the bills: the taxpayers.
  When the Republican Conference met on February 11 to outline our 
budget priorities for the coming year, I joined many of my colleagues 
in stressing the need for continued tax relief. I did not leave the 
room with the belief that we had abandoned the taxpayers.
  Yet that is precisely what the Conference's ``Outline of Basic 
Principles and Objectives'' does, because under the Conference 
guidelines, tax relief for hard-working Americans would be nearly 
impossible to achieve.
  Mr. President, since its very beginnings in the 1850s, the Republican 
Party has dedicated itself to the pursuit of individual and states' 
rights and a restricted role of government in economic and social life.
  In 1856, the slogan of the new party was ``Free Soil, Free Labor, 
Free Speech, Free Man.'' It is still our firm belief that a person owns 
himself, his labor, and the fruit of his labor, and the right of 
individuals to achieve the best that is within themselves as long as 
they respect the rights of others.
  The fundamental goal of the Republican Party is to keep government 
from becoming too big, too intrusive, to keep it from growing too far 
out of control.
   We constantly strive to make it smaller, waste less, and deliver 
more, believing that the government cannot do everything for everyone; 
it cannot ensure ``social justice'' through the redistribution of 
private income.
  These two different approaches of governance are indeed a choice of 
two futures: A choice between small government and big government; a 
choice between fiscal discipline and irresponsibility; a choice between 
individual freedom and servitude; a choice between personal 
responsibility and dependency; a choice between the preservation of 
traditional American values versus the intervention of government into 
our family life; a choice of long-term economic prosperity and short-
term benefits for special interest groups, at the expense of the 
insolvency of the nation.
  I think history has proven that whenever we have stuck to Republican 
principles, the people and the nation prosper, freedom and liberty 
flourish; whenever we abandon these principles for short-term political 
gains, it makes matters far worse for both our Party and our country.
  Here are two examples. Facing a $2 billion deficit and economic 
recession in 1932, the Hoover Administration approved a plan to 
drastically raise individual and corporate income taxes.
  Personal exemptions were sharply reduced and the maximum tax rate 
increased from 25 percent to 63 percent. The estate tax was doubled, 
and the gift tax was restored. Yet the federal revenue declined and the 
nation was deeply in recession.

[[Page S883]]

  President Reagan took the opposite approach in 1981 when he enacted a 
25 percent across-the-board tax, and again in 1986 when he signed a 
landmark piece of legislation to reduce the marginal tax rate to a 
simple, two-rate income tax system: 15 percent and 28 percent.
  What resulted was nothing short of an economic miracle. Our nation 
experienced the longest peacetime economic expansion in American 
history, the benefits of which we are still enjoying today.
  Over eight years, real economic growth averaged 3.2 percent and real 
median family income grew by $4,000, 20 million new jobs were created, 
unemployment sank to record lows, all classes of people did better, and 
in spite of lower rates, tax revenues increased dramatically.
  Mr. President, let us not forget the fact that the Republicans gained 
control of Congress in 1994 because we were the champions of the 
taxpayers--the American people trusted us to carry out our promise when 
we said, ``Elect a Republican majority and we will work to let you keep 
more of the money you earned.''
  The taxpayers elected us with the expectation that Republicans would 
seize every opportunity to lessen the tax burden on America's families.
  They certainly did not elect Republicans thinking we would be a 
collaborator of the President's tax-and-spend policies--that we wouldd 
build a bigger, more expensive government at the first chance we got 
and completely abandon our promise of tax relief for them.
  Is this the same Republican majority that arrived in Washington in 
January of 1995, ready to create fundamental change in a government 
that had enslaved so many working families for so many years?
  Is this the same Republican majority that promised the American 
people that there was no turning back to the era of big government and 
higher taxes? Is this the same Republican majority that I was so proud 
to be part of?
  It has been tremendously disappointing to me, and I believe the 
majority of taxpayers, to read the recent comments from those who have 
endorsed the President Clinton's ``save Social Security first'' 
gimmicks and are seeking to eliminate meaningful, achievable tax cuts 
from the next fiscal year's budget.
  As I said before on this floor, if we do not carry out the taxpayers' 
agenda, we may as well pack up our bags and go home, because we will 
have failed. And the price of that failure will fall on the backs of 
those we were elected to represent. I believe any retreat from that 
promise would be a terrible mistake.
  Tax relief is still critical for America for two basic reasons--moral 
and economic.
  First, there is a moral case to be made for continuing tax cuts.
  The robust American economy and working Americans, not government 
action, have produced this unprecedented revenue windfall. These 
unexpected dollars have come directly from working Americans--taxes 
paid by consumers, individual labor, and investment income. This money 
belongs to the American people.
  Washington should not be allowed to stand first in line to take that 
away from American families, workers, and job creators. It is moral and 
fair that they keep it.
  We have also heard the argument that we already had a large tax cut 
last year, so there is no need for more tax cuts. Let me set the record 
straight.
  Last year, after spending $225 billion unexpected revenue windfall 
and busting the 1993 budget spending caps to do it, the Republican 
Party delivered tax relief only one-third as large as what we would 
promised in 1994.
  Those tiny tax cuts--no more than slivers, really--amounted to less 
than one cent of every dollar the federal government takes from the 
taxpayers. Is one cent worth of tax relief too much? I do not really 
think so.
  And the President today wants to increase spending by $123 billion 
and increase taxes $115 billion, wiping out entirely--and more--the tax 
reduction of 1997.
  A recent Tax Foundation study shows that 1997's tax cuts came too 
late to stem the rising tax burden on the American families.
  The study finds that Federal, State and local taxes claimed an 
astonishing 38.2 percent of the income of a median two-income family 
making $55,000--up from 37.3 percent in 1996. That is about a 1 percent 
increase.

  When we ask the Government to take a small cut of 1 percent across 
the board they say it's impossible. But nobody asked the taxpayers how 
they were going to manage to pay another percent more of their income 
in taxes. They either had to reduce their spending or make do without. 
But the Federal Government doesn't have to do that. Federal taxes under 
President Clinton consumed 20 percent of America's entire gross 
domestic product in 1997. That is the highest level since 1945, when 
taxes were raised to finance the enormous expenses of the Second World 
War.
  The average American family today spends more on taxes than it does 
on food, clothing, and housing combined. If the ``hidden taxes'' that 
result from the high cost of government regulations are factored in, a 
family today gives up more than 50 percent of its annual income to the 
government. At a time when the combination of federal income and 
payroll taxes, State and local taxes, and hidden taxes consumes over 
half of a working family's budget, the taxpayers are in desperate need 
of relief.
  Thanks to the Clinton Administration, the Democratic minority, and 
the Republicans of this Congress, big government is alive and well. In 
fact, the Government is getting bigger, not smaller. Total taxation is 
at an all-time high. So is total Government spending. Annual Government 
spending has grown from just $100 billion in 1962 to $1.73 trillion 
today, an increase of more than 17 times. Even after adjustment for 
inflation, Government spending today is still more than three times 
bigger than it was 35 years ago. It will continue to grow to $1.95 
trillion by 2003 nearly $2 trillion a year. In the next 5 years, the 
government will spend $9.7 trillion, much of it going toward wasteful 
or unnecessary government programs. Tax relief is the right solution 
because it takes power out of the hands of Washington's wasteful 
spenders and puts it back where it can do the most good: with families.
  There is also an economic case for cutting taxes for working 
Americans. Lower tax rates increase incentives to work, save, and 
invest. They help to maximize the increase in family income and 
improvements in standards of living. Beyond the direct benefits to 
families, tax cuts can have a substantial, positive impact on the 
economy as a whole. It was John F. Kennedy who observed that:

     an economy hampered with high tax rates will never produce 
     enough revenue to balance the budget just as it will never 
     produce enough output and enough jobs.

  President Kennedy was able to put his theories to work in the early 
1960s, when he enacted significant tax cuts that encouraged one of the 
few periods of sustained growth we have experienced since the Second 
World War. Twenty years later, President Ronald Reagan cut taxes once 
again. The reinvigorated economy responded enthusiastically.
  Mr. President, should we save Social Security first or provide tax 
cuts first? My answer is that we must do both in tandem. We had a very 
similar debate last year about whether we should balance the budget 
first and provide tax cuts later. The truth is we can absolutely do 
both at the same time, as long as we have the political will to enact 
sound fiscal policies.
  I agree with the Conference leadership that reforming the Social 
Security and Medicare programs to ensure their solvency is vitally 
important. Any projected budget surplus should be used partly for that 
purpose. Yet, I believe strongly that the Congress owes it to the 
taxpayers to dedicate a good share of the surplus for tax relief. After 
all, the Government has no claim on any surplus because the Government 
did not generate it--it will have been borne of the sweat and hard work 
of the American people, and it therefore should be returned to the 
people in the form of tax relief.
  Our Social Security system is in serious financial trouble, a fiscal 
disaster-in-the-making that is not sustainable in its present form. 
Simply funneling money back into it will not help fix the problem. It 
will not build the real assets of the funds for current and future

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beneficiaries and it does not address the flaws of the current pay-as-
you-go finance mechanism. Without fundamental reform, using the general 
revenue to pay for Social Security equals a stealth payroll tax 
increase on American workers. I believe using part of the budget 
surpluses to build real assets by changing the system from pay-go to 
pre-funded is the right way to go.
  The President is maintaining that not one penny of the surplus would 
be used for spending increases or tax cuts. To that, I must say Mr. 
Clinton is not being at all truthful to the American people. In his FY 
1997 budget, he proposes $150 billion in new spending, which is well 
above the spending caps he agreed on last year. In the next five years, 
he will raid over $400 billion from the Social Security trust funds to 
pay for his Government programs. If Mr. Clinton is serious about saving 
Social Security, he should stop looting the Social Security surplus to 
fund general government programs, return the borrowed surplus to the 
trust funds, and withdraw his new spending initiatives--only then will 
he be qualified to talk about saving Social Security.
  Wrapping up, Republicans should not allow Mr. Clinton to hold any 
budget surplus hostage. We should continue pursuing our ``taxpayers' 
agenda'' and do what is right for working Americans. It is clear to me 
that returning part of the budget surplus to the taxpayers in the form 
of tax relief is the right thing to do. But how should we do it? In my 
view, the best way is to have an across-the-board marginal tax rate cut 
and eliminate the capital gains and estate taxes. This will help to 
improve American competitiveness in the global economy and increase 
national savings.
  However, tax cuts will not solve the problems once and for all. The 
origin of this evil is the tax code itself. We must end the tax code as 
we know it and replace it with a simpler, fairer and more taxpayer-
friendly tax system.
  By creating a tax system that is more friendly to working Americans 
and more conducive to economic growth--one based on pro-family, pro-
growth tax relief--Congress and the President can make our economy more 
dynamic, our businesses more competitive, and our families more 
prosperous as we approach the 21st century.
  Again, to omit tax cuts from this year's budget resolution is totally 
unacceptable to Republicans seeking to deliver on our commitment to 
return money to the taxpayers. I will not walk away from our obligation 
to the American taxpayers to pursue a Federal Government that serves 
with accountability and leaves working families a little more of their 
own money at the end of the day. I intend to make good on my promise to 
the taxpayers, and I urge my fellow Republicans, especially our 
leadership, in the strongest terms possible, to honor your commitment 
as well by considering meaningful tax relief in the budget resolution.
  I yield the floor.

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