[Congressional Record Volume 144, Number 74 (Wednesday, June 10, 1998)]
[Senate]
[Pages S6018-S6033]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        NATIONAL TOBACCO POLICY AND YOUTH SMOKING REDUCTION ACT

  The Senate continued with the consideration of the bill.
  Mr. GRAMM. Madam President, I think somewhere I heard the old saying, 
``No good deed goes unpunished.'' In trying to see if we might find 
some consensus on this issue, I tried to write our marriage penalty 
repeal amendment in such a way as to limit the amount of resources that 
it took from the underlying bill.
  I did it recognizing that the underlying bill is as full of fat as 
any bill could possibly be. It is a bill that provides funding for a 
Native American antismoking campaign that will spend $18,615.55 per 
Native American who will be served. It is a bill that pays trial 
lawyers $92,000 an hour. It is a bill that pays tobacco farmers $23,000 
an acre, and they can keep the land and go on farming tobacco.
  With all of these gross expenditures, our colleagues say that if we 
take more than a third of the money we are raising in taxes--which they 
say they are not increasing the tax to raise money--but if we take any 
more than a third of it and give it back, then somehow the bill is 
going to collapse.
  Then I try to adjust the amendment to keep it within those 
constraints, and our dear colleague from Massachusetts accuses me of 
taking money from Social Security. And it goes on and on and on. ``No 
good deed goes unpunished.''
  I have the ability to modify my amendment. I want my colleagues to 
understand that if we don't work out something on this amendment pretty 
soon, I am going to modify my amendment, and I am going to take every 
penny of this money out of this larded bill. So I can solve all of 
these problems. I tried to help somebody. I tried to work out a 
consensus, and now we are not able to do it. But I can fix that 
problem. I can fix the problem by taking the money out of this bill, 
and I am prepared to do that. I am not going to do it right now. I am 
going to wait and see if we can work something out. But I am prepared 
to do it. I have a modification. I have a right to modify my amendment, 
and I will modify my amendment at some point if we don't work something 
out.
  Madam President, I want to address a number of issues that our 
colleague from Massachusetts raised.
  Our colleague from Massachusetts says, ``Well, I have a marriage 
penalty correction device, but mine doesn't cost as much and gives more 
relief.''
  So the question is, How is that possible? Well, the answer is that it 
gives no relief to one particular kind of family. That is a family 
where one of the parents decides to stay at home and work within the 
home--one of the hardest and most difficult jobs in America and one of 
the most important jobs in America.
  We have not seen their amendment, but the way our Democrat colleagues 
could give a marriage penalty for so much less money is that it is a 
marriage penalty correction that you get only if both parents work 
outside the

[[Page S6019]]

home. That is not the way we have done it. We have not done it that way 
because I do not want the Government to be making the decision as to 
whether a parent works outside the home or works inside the home.
  Let me say, it is a tough decision for people to make. Some people 
make it based on economics; some people make it based on their careers. 
And I think families need to make it, not the Government. My mama, as I 
have said earlier, worked all my life because she had to. My wife has 
worked all my children's lives because she chose to. She had a career. 
She wanted to do it. But the point is, the Tax Code should not 
discriminate against parents who choose to make an economic sacrifice 
to have one of the parents stay home and raise the children.
  So the magic in this Democrat alternative, if such an alternative 
exists, is they can do it for less but the way they do it for less is, 
they say if you have a stay-at-home parent, you get no relief from the 
marriage penalty.
  They are going to complicate this issue. But, fortunately, I 
understand this issue. So let me try to straighten it all out before 
they waste all the time trying to complicate it, because I can answer 
it and will save everybody time.
  There is something called a marriage bonus. If there has ever been a 
totally fraudulent concept, it is the marriage bonus. This thing that 
we call in the Tax Code a marriage bonus is, if you marry--and let me 
just speak from the point of view of a male--if you marry a lady and 
she comes and lives with you in marriage, you get to take her personal 
exemption and you also get an adjustment to your standard deduction.
  So I am sure that people will laugh at this, but since our colleagues 
are going to go to great lengths to talk about it, let me just destroy 
it, and we will not waste our time.
  Something is called a marriage bonus when--let us say you have John 
and Josephine who fall in love. And Josephine is just getting out of 
college. Her father and mother have been taking a personal exemption 
for Josephine. She marries John. And John is already working. Josephine 
is getting ready to go into the labor market. They went to the 
graduation and she got her diploma. Then they walked down the aisle and 
said, ``I do.'' And sure enough, John gets to declare $2,700 on his tax 
return for her personal exemption. And John gets $2,850 added to his 
standard deduction. But does anybody believe that John can feed, 
clothe, and house Josephine for $5,550? Some bonus. That is no bonus.
  Let me show you what has happened. In 1950, the Tax Code of America 
was such that for the average family of four--husband, wife, two 
children--75.3 percent of their income was totally shielded from any 
Federal income tax. This meant that by the time they took their 
personal exemptions--and they got four of them--that shield was 65.3 
percent of their income. Then they got their standard deduction, and 
that shielded 10 percent of their income, for a total of 75.3 percent.
  So in 1950, the cold war had heated up, we were going into Korea, 
defense spending was rising, but we still shielded 75.3 percent of the 
income of the average family of four in America from any income taxes 
because of the personal exemptions and the standard deduction.
  The personal exemption was $500 in 1950. To be the same level today, 
the personal exemption would have to be $5,000. But it is $2,700. So 
today, the same family of four, making the average income in the 
country in 1996, has only 32.8 percent of their income shielded. Every 
bit of the additional income is being subject to income taxes.

  So what happened between 1950 and 1998? What happened between 1950 
and 1998 is that the real value of the standard deduction and the 
personal exemption declined dramatically because it did not keep pace 
with inflation. So whereas in 1950, 75.3 percent of the income of the 
average working family in America was totally shielded from income 
taxes, now the average family in America, family of four, making the 
average income, has only 32.8 percent of their income shielded from 
taxes.
  So since 1950, what has happened? Rich people paid a lot of taxes in 
1950, and rich people pay a lot of taxes today. Poor people paid no 
income taxes in 1950, and they do not pay any income taxes today. What 
happened to the tax burden between 1950 and today? It almost doubled. 
Who paid it? Middle-class families. Today, the number that just came 
out showed that 20.4 percent of all income earned by all Americans is 
taken by the Federal Government, and when you take State and local 
taxes, the tax burden today is at the highest level in the peacetime 
history of the United States of America. No American has ever lived 
with a peacetime tax burden higher than today. Even though we won the 
cold war, tore down the Berlin Wall, cut defense by 50 percent, we 
still have the highest tax burden in American peacetime history because 
of passing bills like the one that is before us today.
  What is the amendment that I have offered with Senator Domenici and 
Senator Roth trying to do? What it is trying to do is address the 
problem, shown on this chart, where working families end up paying more 
and more of their income. When you have a working spouse today, that 
working spouse is paying 60 percent of their income in taxes that did 
not exist in 1950.
  What Senator Domenici, Senator Roth, and I are trying to do is to 
correct that. We are trying to take a first step to correct this 
marriage penalty, which is basically a penalty that falls on 31 million 
Americans where they actually pay an average of $1,400 a year more 
because they are married than they would pay if they were single. We 
want to give them an additional $3,300 deduction. We want to put it 
above the line so it applies to the earned-income tax credit. And our 
Democrat colleagues say, ``No, we don't want to do it that way.''
  Let me tell you what they want to do. No. 1, they want to say that if 
a family chooses to have one of the parents stay at home with their 
children, that that parent is worthless and therefore they should get 
no correction for the marriage penalty at all.
  What Senator Domenici, Senator Roth, and I are trying to do is to not 
tilt the Tax Code against stay-at-home parents.
  I am not trying to make a judgment. In the two families I have had 
the privilege to live in my parents'; and now my own family--both 
parents have worked. I am not trying to stand in judgment on whether 
both parents should work or they should not work. Families should do 
what works for them. But we should not have a Tax Code that penalizes 
people who give up income in order to have one parent stay at home with 
the children. That is the proposal that the Democrats are making.
  The second proposal they are making is, do not give any of this to 
moderate-income people. I did not hear anything in their proposal about 
making it a rebate to people who are getting the earned-income tax 
credit.
  Let me tell you why that is so important. You have a lady who is 
washing dishes and you have a man who is a janitor in a school. They 
might be about as well off on welfare as they are working, but they are 
proud, they are ambitious, they want to be self-reliant. So every 
morning they set the alarm for 6 o'clock. When the alarm clock goes 
off, their feet hit the ground. They get up, they get dressed, they go 
to work. They often work more than one job. They meet and fall in love. 
It looks like their dream has come true because together they can have 
more.
  But under the existing Tax Code each of them making very low income 
qualifies them for an earned-income tax credit. They lose the earned-
income tax credit if they get married. So they face a huge penalty, 
often more than $1,400 a year if they get married.
  In our amendment, we apply the correction to this perversion in the 
Tax Code called the marriage penalty so that even people that are 
getting the earned-income tax credit can deduct this $3,300 before they 
gauge their eligibility. Why? First of all, we are for love. Secondly, 
if a lady washing dishes and a man who is a janitor in a school fall in 
love, we want them to get married. What society would want to 
discourage that from happening? They may get married, have a child, 
their child may become President of the United States.
  The alternative being offered is so much cheaper. One of the reasons 
it is cheaper is that it doesn't apply to these very low-income people. 
We thought it should apply to very low-income people. The reason is 34 
percent

[[Page S6020]]

of the money they are taking out of the pockets of working Americans 
through this tobacco tax come from people that make $15,000 a year or 
less. They should not be excluded from this provision.
  To sum up the points I wanted to make, I want the marriage penalty to 
be corrected. I want this tax deduction to apply to families, whether 
they both work outside the home or whether they decide they will 
sacrifice, take less income, and one of them will stay home and raise 
their children. I am not trying to make a judgment as to whether that 
is better or worse. I think it depends on the people and what they 
want. But I don't think the Tax Code should treat people differently 
based on that decision. Our colleagues who supposedly are offering an 
alternative think it should. Our colleagues say, look, if you don't 
work outside the home, you don't work. If you don't work outside the 
home, you are not due any correction for this penalty.
  Then as the final absurdity they say, after all, John, by marrying 
Josephine, he already got $5,550 tax deduction by getting her personal 
exemption and part of her standard deduction. But who can live on 
$5,550? What kind of bonus is that? It just shows you the absurd 
language we have developed to defend a provision in the Tax Code which 
is absolutely indefensible.
  I want, in this amendment, to give at least a third of the money we 
are taking from working Americans back to them. Our colleagues try to 
get us to focus on these terrible tobacco companies and forget about 
the fact that tobacco companies are paying no taxes at all under this 
bill. In fact, this bill makes it illegal for the tobacco companies not 
to pass through the tax to consumers. Who is paying this tax? A 
majority, 59.1 percent of this tax is being paid by families that make 
less than $30,000 a year. So I have made the modest proposal to give a 
third of the money back to moderate-income families so that those who 
were in favor of the bill can say, well, we raised tobacco prices. 
Hopefully, that will discourage children from smoking. Hopefully, it 
will discourage other people from smoking. Just don't impoverish blue-
collar workers in America who smoke and who, paradoxically, are the 
victims of this whole process.
  The incredible, unthinkable, virtually unspeakable truth about this 
bill is it doesn't penalize the tobacco companies. It penalizes the 
victims. We tell everybody you have been victimized by the tobacco 
companies. They knew you would get addicted to nicotine, and they 
conspired to get you to smoke. Then this bill says we are going to do 
something about it; we are going to tax you, not the tobacco companies.

  Always seeking to do good, I had this modest amendment to take a 
third of the money and give it back to moderate-income families in 
repealing the marriage penalty and making health insurance tax 
deductible for the self-employed. I tried to do it in such a way as to 
protect some of their huge trust funds. Now they say, no; you can't do 
that. So at some point, if we don't work this out, I am going to modify 
my amendment and I am going to take all the money out of the bills 
trust fund.
  The truth is we should be giving back about 80 percent of this money 
in tax cuts. We should be using the other 20 percent--10 percent of it 
on antismoking, 10 percent of it on antidrugs, and that ought to be it.
  In any case, if we are going to debate this issue, I think our 
colleagues are going to be a long time explaining why, if mom or dad 
decides to stay at home, they are discriminated against under this Tax 
Code. I don't think people are going to be in favor of that and I hope 
something can be worked out.
  Finally, at the end of the budget cycle in the year 2007, we have a 
choice: We can repeal these marriage penalty provisions and take all of 
it out of this trust fund, or we can set a portion of it out of this 
trust fund. I can do it either way.
  I am beginning to be convinced, as my dear colleague from Arizona has 
been convinced throughout this debate, that no good deed goes 
unpunished, even when you try to do what you believe is a good work. If 
you try to do something good and you try to be reasonable and you try 
to make things work, something is going to happen to punish you for it. 
I think that is a shame for the process.
  I wanted my colleagues to be aware, when we are talking about giving 
a $3,300 tax deduction for working families, that you have to wonder 
why is that reasonable? Well, in 1950, 75.3 percent of their income was 
totally shielded from income taxes because of the standard deduction 
and the dependent exemption. Because of inflation since that time and 
because the personal exemption has not been raised to equal inflation, 
now only 32.8 percent of their income is shielded from taxes.
  I am not going to apologize for trying to let working families keep 
more of what they earn. Nor am I going to apologize for having a 
provision that says to parents you can get this tax deduction if both 
of you work or you can get it if one of you works and you have to make 
the decision about what works for you and your family. I don't think 
doing it any other way is going to be successful. I hope we can work 
this out. But it may be preordained somewhere at a higher level than we 
are and maybe for some good purpose that this can never work out and 
this might never be done.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
  Mr. KERRY. Mr. President, I will speak for a moment and then spend a 
moment to visit with the Senator from Arizona.
  Let me correct one thing the Senator from Texas said. The Senator 
knows just a little while ago I was talking to him and I offered him a 
compromise which includes the capacity to raise the level of benefit to 
the spouse--working mom or pop--who stays home with kids.
  But what the Senator is ignoring also is that under the marriage 
penalty, so-called, the mother who stays home, or father who stays home 
today and isn't working and that he wants to reward, is, in fact, 
already rewarded because the structure of tax is such that with a 
single earner and one parent staying home, they get a marriage bonus.
  So we have a tax structure that already rewards the very person the 
Senator from Texas is talking about. In addition to that, I suggested 
to him that we ought to be able to work out some way to augment that a 
little bit. I think that is reasonable. So let's not get into a notion 
that somehow people want to be more protective of mom and pop who want 
to stay home with the kids. This debate is about whether or not we are 
going to be able to have enough money to do the things this tobacco 
bill must do, which is to reduce the number of kids smoking.
  You never hear the Senator from Texas talk about how we are going to 
save lives in America. We hear him talking about saving taxes, but not 
saving lives. We never hear him talk about the 400,000 people a year 
who die because they smoke. You also don't hear him refute the tobacco 
company's own memoranda, which talks about how they know that when the 
price goes up, the number of people who buy their cigarettes goes down. 
That is tobacco company fact; it is not made up on the floor of the 
Senate.
  So let's begin to deal with the reality here. The reality is that if 
you don't have the ability to affect the behavior of our kids in this 
country, we are not doing the job on this legislation. And while it is 
all well and good to want to restore some money back to people to take 
care of the marriage penalty--and I am for that--we want to do that in 
a way that is reasonable within the other obligations of this 
legislation. That is what we are fighting for here--to maintain common 
sense in this.
  I am happy to work out some kind of compromise with the Senator. I 
think it is important to understand that has to be fair. If we take 80 
percent of this bill in order to rebate people who are already getting 
benefits, we will have departed from all common sense and fairness.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. DORGAN. Madam President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Madam President, I am interested to see that at a time 
when the tobacco bill is on the floor of

[[Page S6021]]

the Senate, we are debating the marriage tax penalty. It is unique, I 
suppose, that in the U.S. Senate one does not have to talk about the 
subject that is on the Senate floor at that time. We experienced, 
earlier in this session, the majority leader bringing to the floor a 
piece of legislation which created a parliamentary situation where no 
one could offer any other amendments except those he would prefer to 
have offered because he was afraid someone on this side of the 
political aisle would offer an amendment not related to the subject. So 
we had a legislative logjam on a number of pieces of legislation. That 
was his right, and I complained about it at the time. And at the same 
time, the majority leader was complaining that somebody might offer an 
amendment that had nothing to do with the bill on the floor of the 
Senate.
  Well, here we are. We have a tobacco bill on the floor of the Senate 
and what have we been talking about now for a number of days? The 
marriage tax penalty. We had a tax bill on the floor of the Senate some 
long while ago and we debated that. But now, on the tobacco bill, we 
are talking about the marriage tax penalty.
  I don't think the Senator from Texas will get anybody to swallow the 
bait here that a marriage tax penalty is justifiable. The Congress has 
worked on the marriage tax penalty attempting to fix it, to reduce it, 
to abolish it, and to otherwise change it for a long, long time. Long 
after this debate is over, there will be discussion about this so-
called marriage tax penalty. Should it be abolished, should it be 
fixed? Of course, it should. Easier said than done, but we ought to do 
it.
  But we are now on a tobacco bill. I bring this discussion back to the 
reason that we have a bill on the floor of the Senate dealing with 
tobacco. I want to read again, for some of my colleagues and those who 
are interested, what persuades those of us in the Senate who support 
this tobacco legislation and think this legislation is necessary.
  I was on the Senate Commerce Committee when we passed the legislation 
out of the committee. I voted for it, and I supported it. Senator 
McCain was the principal author of the bill, and Senator Conrad, my 
colleague from North Dakota, has also written a piece of legislation 
which found its way, or at least in large part, into the McCain 
legislation. I compliment both of them, and others, including the 
Senator from Massachusetts, and a number of others who have worked hard 
on this legislation.
  But why tobacco legislation? Because many of us believe that it is 
inappropriate in this country to allow the tobacco industry to continue 
to try to addict America's children to nicotine. Some say, ``Well, gee, 
that is not what has been happening.'' Of course it has been happening. 
Several court cases have now unearthed the memoranda and the 
information from the bowels of the tobacco companies that they didn't 
want to disclose but were required to disclose. This information showed 
exactly what their strategies were in recent decades to try to addict 
America's children to tobacco.
  Almost no one reaches adult age and discovers that what we really 
wanted to do and have failed to do is start smoking. Does anybody know 
a thoughtful adult who scratches their head and says, ``Gosh, what have 
I missed in life? I know what it is. I need to start smoking. That is 
what I am missing. That is what will enrich my life.'' Did you ever 
hear of anybody doing that? I don't think so. The only way you get new 
smokers is to get kids to smoke.
  On Friday, I described for my colleagues some of the data and the 
memoranda that were in the files of the tobacco companies. I want to 
read some of them again, because I want us to be talking about the 
subject of tobacco on the floor of the Senate.
  But why do we want to do something to tell the tobacco industry they 
can't addict America's children to nicotine when it is legal to smoke, 
and it will always be legal to smoke. It is an adult choice. But it is 
not legal, and ought not be legal nor morally defensible for anyone to 
say we are going to try to addict 15-year-old kids, or 13-year-old 
kids, to our cigarettes in the name of profit.
  So let me proceed to describe some of the documents, that we have 
unearthed in various court cases and elsewhere, that describe what the 
tobacco industry has done. At the end of that, I will ask my colleagues 
if they think this behavior is defensible. If you don't, then we ought 
to pass this kind of legislation and stop talking about other subjects.
  In 1972, Brown & Williamson, a tobacco company: ``It is a well known 
fact that teenagers like sweet products. Honey might be considered.''
  In 1972, they are talking about adding honey to cigarettes. Why? 
Because kids like sweet products. Does that sound like a company that 
is trying to addict kids to cigarettes? It does to me.
  In 1973, RJR, a tobacco company, says: ``Comic strip type of copy 
might get a much higher readership among younger people than another 
type of copy.''
  They are talking about advertising. Does this sound like a cigarette 
company that is interested in trying to get kids to smoke? It does to 
me.
  In 1973, Brown & Williamson: ``Kool''--
  This is a quote. The cigarette brand Kool:

       Kool has shown little or no growth in the share of the 
     users in the 26 and up age group. Growth is from 16- to 25-
     year-olds. At the present rate, a smoker in the 16- to 25-
     year-old age group will soon be three times as important to 
     Kool as a prospect in any other broad age category.

  This is a company that is talking about 16-year-olds and how 
attractive it is that 16-year-olds are using their cigarettes.
  Philip Morris, 1974: ``We are not sure that anything can be done to 
halt a major exodus if one gets going among the young.''
  ``This group''--now speaking to the young, according to Philip 
Morris--``follows the crowd, and we don't pretend to know what gets 
them going from one thing or another. Certainly Philip Morris should 
continue efforts for Marlboro in the youth market.''
  Is this a company looking at selling cigarettes to kids? I think so.
  In 1974, R.J. Reynolds, they write, speaking of kids: ``They 
represent tomorrow's cigarette business. As this 14- to 24-age group 
matures, they will account for a key share of the total cigarette 
volume for at least the next 25 years.''

  This is a company talking about the 14-year-old smoker.
  In 1975, a researcher for Philip Morris writes: ``Marlboro's 
phenomenal growth rate in the past has been attributable in large part 
to our high market penetration among young smokers 15 to 19 years old. 
My own data, which includes younger teenagers, even shows higher 
Marlboro market penetration among 15- to 17-year-olds.''
  Does anybody who reads believe after reading this that the tobacco 
companies weren't vitally interested in selling cigarettes to these 
kids? Of course they were.
  In 1975, RJR-Nabisco talks about increasing penetration among the 14- 
to 24-year-olds: ``Evidence is now available to indicate the 14- to 18-
year-old group is an increasing segment of the smoking population. RJR 
Tobacco must soon establish a successful new brand in this market if 
our position in the industry is to be maintained.''
  In 1976, that is RJR saying about 14- to 18-year-olds that we have 
got to get a new cigarette out there to attract these people if we are 
going to retain our position.
  In 1978, the Lorillard Cigarette Company said the following: ``The 
base of our business is the high school student.''
  ``The base of our business is the high school student!'' This from a 
tobacco company.
  In 1979: ``Marlboro dominates in the 17 and younger category 
capturing over 50 percent of the market,'' Philip Morris writes 
proudly.
  In the name of profit, they say: Our cigarettes dominated the 17-year 
and younger category. We capture over 50 percent of the market.
  They make it sound like a county fair, don't they? A blue ribbon--a 
fat steer gets a blue ribbon. We were able to get 15-, 16-, and 17-
year-old kids to smoke. We win.
  Now tell me that this industry doesn't target young kids to smoke.
  Marlboro Red, a derivative of Marlboro, I guess--I have not seen a 
Marlboro Red cigarette. But a Marlboro Red in 1981, a Philip Morris 
researcher

[[Page S6022]]

writes: ``The overwhelming majority of smokers first begin to smoke 
while in their teens. At least part of the success of our Marlboro Red 
during its most rapid growth period was because it became the brand of 
choice among teenagers who then stuck with it.''
  I think maybe ``stuck with it'' is a misnomer. I think maybe ``who 
were addicted to it'' rather than ``stuck with it.'' The whole purpose, 
of course, is you attract a 15-year-old to start smoking and you have 
got a customer for life.
  Smoking is legal in this country, and it will always be legal. Adults 
have the right to make the choice to smoke. Three hundred thousand to 
four hundred thousand people a year die in this country from choosing 
to smoke, from smoking and smoking-related causes. Three hundred 
thousand to four hundred thousand people a year die from having made 
that choice. You have heard the statistics: every day, 3,000 kids will 
start to smoke; 1,000 of them will die from having made that choice.
  The question for us is, will we as a country continue to sit on our 
hands and say to the tobacco industry, ``It is all right, we understand 
your future customers are our children; it is all right, our sons and 
daughters are available to be a marketing target for you? Should it be 
all right to say that you can advertise to them; you can make pitches 
to them; you can provide all kinds of subtle approaches to our kids 
that smoking is cool, smoking is something you ought to do, smoking 
tastes good, smoking feels good, your peers smoke so you ought to 
smoke''? Is that something this country wants? Is that something this 
country is going to allow to continue? I don't think so.
  Let me continue.
  The tobacco industry in 1983, says Brown & Williamson, will not 
support a youth smoking program which discourages young people from 
smoking. In 1983, you heard all of the references that I used about the 
pitches that were made by the industry to the children and the 
importance they placed in having those children as their customer base.
  And then in 1983 they say this tobacco company ``will not support a 
youth smoking program which discourages young people from smoking.''
  Well, I guess that is because they knew who their customers were. 
They knew where their future profits would come from.
  ``Strategies and Opportunities,'' a memorandum, 1984, from R.J. 
Reynolds, and I quote:

       Younger adult smokers have been the critical factor in the 
     growth and decline of every major brand and company over the 
     last 50 years. They will continue to be just as important to 
     brands [and] companies in the future for two simple reasons: 
     The renewal of the market stems almost entirely from 18-year-
     old smokers. No more than 5 percent of smokers start after 
     age 24. . . . Younger adult smokers are the only source of 
     replacement smokers. . . . If younger adults turn away from 
     smoking, the industry must decline, just as a population 
     which does not give birth will eventually dwindle.

  Let me read again what the tobacco industry understood.

       No more than 5 percent of the smokers start after the age 
     24.

  If you don't get them when they are kids, you are not likely to get 
them. If you don't addict someone in childhood to nicotine, you are not 
likely to be able to addict them when they become adults.
  In 1986, R.J. Reynolds--they were talking about their advertising for 
Camels:

       [Camel advertising will create] the perception that Camel 
     smokers are non-conformist, self-confident, and [they] 
     project a cool attitude, which is admired by their peers. . . 
     . [They aspire] to be perceived as cool [and] a member of the 
     in-group is one of the strongest influences affecting the 
     behavior of [young adults].

  It is pretty clear. And this is just a smidgeon of the evidence that 
has come from the tobacco industry about what they have been doing over 
the years to appeal to a customer base coming from our children.
  Now, they have always insisted they have not been doing this. In 
fact, until a couple of years ago the CEOs of tobacco companies 
insisted that nicotine was not addictive. Nicotine was not addictive. 
They are the last Americans, apparently, to be willing to testify under 
oath that nicotine was not addictive. But, of course, now most of them 
admit they understand nicotine is addictive. And we raised the question 
in a piece of tobacco legislation whether this country wants to 
continue to countenance this behavior. Smoking is legal, but should we 
allow tobacco companies to target children to become addicted to 
nicotine? The answer clearly ought to be no, and the answer ought to be 
delivered with some urgency on the floor of the Senate.
  We have a tobacco bill that was brought to the floor of the Senate 
which had a number of very important goals, the most important of 
which, in my judgment, was to interrupt, intercept, and stop the 
tobacco industry from appealing to our children. Among other things, it 
will raise the price of a pack of cigarettes. But what will happen as a 
result of that price increase and the revenue that comes from it will 
be a range of programs such as smoking cessation programs, so that 
those who are now addicted to cigarettes and want to get off of that 
addiction will have the opportunity, the resources, and the wherewithal 
to do that.
  Also, the bill had a prohibition on advertising directed at children 
and a prohibition on vending machines in areas that are available to 
children. The smoking cessation programs will be supplemented by 
counteradvertising programs. Counteradvertising programs that tell 
America's children that smoking does not make sense, smoking can injure 
your health, smoking can cause death, smoking is a contributing factor 
to causing heart disease and cancer and more. Counteradvertising will 
be very helpful, it seems to me, to warn kids away from cigarettes.
  Additionally, the resources will be used to invest in the National 
Institutes of Health where research occurs every single day to try to 
respond to the health consequences of not just the addiction to 
cigarettes, but cancer and heart disease, and a range of other problems 
as well. I cannot think of anything that gives me more pride than to 
decide that we are going to take substantial new resources and invest 
them in the National Institutes of Health which will result in 
exciting, wonderful, and breathtaking new changes in health care and 
medicines.

  That is the subject for the Senate: Do we want to stop the tobacco 
industry from trying to addict our children? Do we want to put together 
an approach that does all of these things, counteradvertising, smoking 
cessation, investment in the National Institutes of Health, and a whole 
range of things? I think most people would say, absolutely, this 
legislation makes a great deal of sense?
  And so the bill comes to the floor of the Senate, and to describe the 
pace in the Senate as a glacial pace is to describe a condition of 
speeding. I mean, glacial doesn't begin to describe the pace of the 
Senate when we have a bunch of people who are determined to slow 
something down. Glaciers at least move forward by inches. You bring a 
tobacco bill to the floor of the Senate and then we have somebody who 
wants to speak for 46 hours on the Tax Code. Well, God love them, they 
have every right under the rules of the Senate to talk about whatever 
they want. We could talk about almost anything that anybody wants to 
come and talk about on the floor of the Senate, and so today we are 
talking about the marriage tax penalty.
  The Tax Code is a fascinating subject, and if ever there was anything 
in need of reform it is America's Tax Code. It seems to me that there 
is a time and a place for us to work together in a thoughtful way to 
reform the Tax Code, to fix the marriage penalty, and to do a whole 
range of other things that decrease its complexity, make the code much 
more understandable, and much fairer. But I wonder if we ought not keep 
our eye on the ball this afternoon and see if we can't pass the tobacco 
bill, see if we can't do what this piece of legislation that we 
designed will do, and that includes the five or six steps I have just 
described.
  If one thinks they are unimportant, I suppose you can conceive of a 
dozen other things that you want to do to change the subject. We could 
have a discussion, I suppose, this afternoon about the space station. 
Gee, that is a controversial subject. You could have an amendment here 
and we could debate the space station for the next 4 or 5 hours. Or we 
could have a discussion about the nutrition of canned soup

[[Page S6023]]

from the grocery store shelves or our trade problems with Australia.
  There is no end to the subjects if somebody wants to change the 
subject. There is no end to the other things to ruminate about or talk 
about if one doesn't like the subject of this bill, which is producing 
a piece of legislation that deals with the tobacco issue the way I have 
just described it.
  Let me go back to where I started. After having read the evidence and 
information that comes from the files of the tobacco industry, if 
anyone does not yet believe that these companies were targeting 
children because they knew the only opportunity for them to profit in 
the future would be to get a customer base among young people, if 
anyone doesn't yet believe that, they are not prepared to believe 
anything about this subject.
  The evidence is clear. It is not debatable. It is in black and white. 
The industry didn't want to give it up. They were forced to. And this 
country now should make a decision: is this behavior tolerable or 
should we stop it? I hope at every desk of this Senate when the roll is 
called and the Senator is named, I hope they would stand up and say 
that we ought to stop it. No company in this country has the right to 
try to attract a 14-year-old son or daughter in an American family to 
become addicted to tobacco. No company has that right. Tobacco is a 
legal product for those age 21 or over. It ought not be right for any 
company to try to addict our children to tobacco.
  That is what this is all about. It is not about the marriage tax 
penalty. It is not about the space program. It is not about Food for 
Peace. It is not about the Food Stamp Program. It is not about any of 
that. It is about the tobacco issue.
  I am as patient as anybody. I can be here 2 weeks from now and we can 
be talking about new discoveries in the habits of earthworms or 
whatever it is somebody wants to talk about 2 weeks from now.
  But in the end, this Congress will have to deal with this bill. Are 
we going to pass a tobacco bill? And to those who do not want to pass 
it, those who do not want to vote for it, I would say: Just give it 
your best shot and then stand up and vote against it. If you don't like 
it, vote against it. But don't thwart the will of the American people 
to pass legislation that will stop the tobacco companies from addicting 
our children. Don't do that. You will be on the wrong side of history 
on this question.
  Ten years from now, 5 years from now, you will look back at that 
vote, you will look back at this debate, and you will have to ask 
yourself, if you vote the wrong way--How on Earth could I have been so 
out of step with common sense? How on Earth could I have been so out of 
step with what this country needed to have done at that time?
  I notice my colleague from North Dakota is on his feet, waiting 
patiently to speak. I have only 25 more minutes--I am, of course, only 
kidding. Senator Conrad from North Dakota has been a principal author 
of a piece of legislation that has become a part of the bill that is 
now on the floor of the Senate. I mentioned the role that Senator 
McCain and Senator Conrad and others have played. I think it has been 
very important. I know there are people outside this Chamber who watch 
this debate and whose teeth you can hear gritting a mile away, they are 
so upset about what is going on here. Tough luck. Just tough luck. 
Times have changed.
  With Senator Conrad's help and Senator McCain's help and the help of 
others who have done, I think, remarkable work on this kind of 
legislation, we will in the end--whether the opponents like it or not--
pass this tobacco bill. There will be enormous pressure on the House of 
Representatives to pass a similar piece of legislation. We will have a 
conference. I predict we will have a new law in this country before the 
end of this session of Congress that does something that we can be 
proud of and should be proud of on behalf of our children.
  So as I yield the floor, let me compliment my colleague, Senator 
Conrad, for the work he has done for so many months on this 
legislation. And, as I do, let me also pay a compliment to the chairman 
of the committee on which I serve, Senator McCain, who similarly has 
done some wonderful work on this legislation.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Faircloth). The Chair recognizes the 
distinguished Senator from North Dakota.
  Mr. CONRAD. Mr. President, I thank my colleague from North Dakota for 
his strong advocacy, because this is an important issue. It is an issue 
that is going to affect the lives of the American people for years to 
come. We all know the statistics--over 400,000 people a year die in 
this country from tobacco-related illness. As we have held hearings all 
across the country, we have heard from the people affected by those 
deaths very moving testimony. I still remember very clearly in Newark, 
NJ, hearing from a coach, Pierce Frauenheim, a big, tough, strong guy 
who is a football coach and assistant principal.
  When he testified, you could barely hear him talk. He described how 
after a lifetime of smoking he was diagnosed with cancer of the larynx, 
and he described to us the terror that he felt when the doctor told him 
that his life was threatened and that the only hope for him was a 
laryngectomy in which his larynx would be taken out. He went through 
that procedure, and thank God it did save his life. But he is left now 
as somebody who can barely talk. You can barely hear him. He told us of 
how much he hoped his message would influence others and that perhaps 
by his experience and his suffering others could avoid the fate that he 
had experienced. How often we heard that story.
  Most recently, when the task force met we heard from a former Winston 
man. He would go around to parties and events, representing Winston. 
Now he has lung cancer. He described to us what it is like to be under 
a death threat.
  And we heard from a woman who was a model for Lucky Strike, who has 
also had a laryngectomy, and also had other forms of cancer. She was 
required by the terms of her contract to smoke. She took up the habit 
as a very young woman and now describes the pain and suffering she has 
experienced.

  So many of these witnesses have actually broken down and cried at our 
hearings, moved by the emotion of what they have experienced. I wish my 
colleagues could have been there through every hour of what we heard, 
because I don't think there is a Member of this Chamber who could have 
remained unmoved. But we know the history of this industry.
  We had a representative of the industry come and see me and tell me 
we are unfairly vilifying this industry. I said to him, frankly, this 
industry has done a great job of vilifying itself. They came before 
Congress. They said under oath their products didn't cause these 
diseases. They said their products were not addictive. They said they 
had not targeted kids. They said they had not manipulated nicotine 
levels to foster addiction.
  We now know each and every one of those statements was false. We do 
not know it by somebody else's words, we know it by the industry's own 
words, because we have now seen the documents. I have read hundreds of 
pages of these documents that reveal how this industry testified 
falsely, knowing full well what they were saying was untrue.
  I was kind of struck by this cartoon by Herblock that was just in the 
Washington Post on May 27. The headline is, ``Have I Ever Lied To 
You?'' It is a picture of the tobacco companies. This man in the fancy 
suit has a button on saying ``tobacco companies.'' He is a 
representative of the tobacco companies. Here is a person who is 
reading a tobacco industry ad and watching a tobacco message on taxes 
on television, all with the headline, ``Have I Ever Lied To You?'' We 
know the tobacco industry has lied to us. They have done it repeatedly. 
I regret to say they are doing it in this debate.
  I would like to focus now on the question that is before us, the 
amendment of the Senator from Texas, because during the budget debate 
the Republicans on the Budget Committee repeatedly said: The tobacco 
funds should go to Medicare and should not be used as a piggy bank for 
unrelated spending or tax priorities. That was the position they took 
in the Budget Committee.
  The Senator from Texas serves on the Budget Committee. Now he is 
sponsoring an amendment that uses the

[[Page S6024]]

money substantially in a way that is at variance from what he said in 
the Budget Committee. He said, and I quote:

       The fundamental issue is going to be that we want to 
     dedicate the tobacco settlement to saving Medicare, and the 
     minority wants to spend the money on a myriad of programs, 
     many of which have absolutely nothing to do with the tobacco 
     settlement.

  That is what the Senator from Texas said in the Budget Committee. He 
said all of the money ought to go to Medicare. Now we look at his 
amendment--not a dime of the money goes to Medicare. My, what a change 
a few months has made. We in the Budget Committee debated this issue 
for an entire day, and over and over and over the Senator from Texas 
said: All of the money ought to go to save Medicare. Now he offered an 
amendment on the floor of the U.S. Senate and guess what? There is not 
one penny for Medicare. What happened? We were supposed to be using 
this money, he said in the Budget Committee, to save Medicare. Now all 
of a sudden Medicare gets nothing.
  Under the bill I introduced, Medicare got a chunk. We also gave a 
substantial chunk to the States because they are the ones that brought 
the suits that are before us. We also used the money for health 
research and for public health care campaigns--countertobacco 
advertising, smoking cessation, smoking prevention. Under the amendment 
of the Senator from Texas, not only is there no money left for 
Medicare, which he said all the money should go to just a few months 
ago, but you know what? There is no money left for public health 
programs--none--zero. This is a bill that is supposed to be protecting 
the public health. There is no money left for public health and there 
is no money for Medicare, which just a few months ago he said was the 
absolute priority.
  This chart shows the effect of the Gramm amendment which really does 
turn the tobacco bill into a piggy bank for unrelated matters that our 
colleagues on the other side of the aisle were decrying during the 
Budget Committee deliberations. Look what has happened here: 35 percent 
of the money, if we agree to the Gramm amendment, goes for an unrelated 
tax cut. We have the Coverdell amendment that takes 13 percent of the 
money, so now half the money is for matters that are unrelated to 
tobacco legislation--half the money.
  There is no money for Medicare. Research will get 13 percent of the 
money. Veterans will get 4 percent. Farmers will get 9.8 percent. The 
States, boy, they are going to be in for a big surprise. The States 
were going to get 40 percent of the money. They are the ones who 
brought the lawsuits. They were given 40 percent of the money because 
that is the amount of the money they got in the settlement with the 
tobacco industry. If we adopt the Gramm amendment, they are going to 
get 24 percent of the money.
  Tobacco control and public health gets zero. Medicare gets zero, 
which they argued in the Budget Committee hour after hour ought to get 
all the money and now gets no money. And public health gets no money--
nothing for smoking cessation, nothing for smoking prevention, nothing 
for countertobacco advertising.
  I thought this was a public health bill. I thought that is what this 
was about. Our friends on the other side said it was a bill to help 
save Medicare. That is when we were in the Budget Committee. Now they 
come up with nothing for Medicare, not a penny. What a difference a few 
months makes.
  The Gramm amendment, in conjunction with the Coverdell amendment, 
will spend tobacco money on programs that have nothing to do with the 
tobacco settlement.
  Frankly, I am in favor of using some of the funds for drug control. I 
am in favor of using some of the money to address the marriage penalty. 
But the way they have done it, there is nothing left for Medicare and 
there is nothing left for public health. I just don't think that makes 
sense. I don't think that can stand the light of day. I don't think 
that can stand scrutiny. I think our colleagues are going to have some 
explaining to do if these amendments are adopted.
  Every single public health expert has testified that if we are going 
to be serious about protecting the public health and reducing youth 
smoking, then we have to have a program that is comprehensive in 
nature, and part of that has to be smoking prevention programs, smoking 
cessation programs to help those who are addicted get off the products, 
and we also need countertobacco advertising to warn people of the 
dangers of using these products, to warn them of the cancer risks, to 
warn them of the risks to their heart, the risks of heart disease, the 
risks of emphysema and the other diseases which cost so many people in 
our country their lives.
  I can remember very well a young woman who came and testified at our 
hearing, again, in New Jersey, a young woman named Gina Seagrave. She 
told about her mother who took up smoking at a young age and died at a 
very young age from a smoking-related illness. This young woman broke 
down and cried. She described to us the devastating effect this had on 
her whole family, because losing their mother really hurt the entire 
family. It hurt it very badly. She described what they had been through 
since their mother had passed away.
  In every town and in every State I have gone to, to listen to 
witnesses, they have described to us the trauma that they have 
experienced because of the addiction and disease caused by the use of 
these products.
  I grew up in a household where my grandparents raised me. My 
grandfather was a smoker. It probably shortened his life. I think of 
all those families we have heard from who told us of what it meant to 
have a father taken, a mother lost, a brother who died because of the 
addiction and disease caused by these products. This is the only legal 
product in America, when used as intended by the manufacturer, that 
addicts and kills its customers. Those are pretty harsh words, but it 
is the truth, and it is the reason we have a challenge and an 
opportunity. The challenge is to overcome the power of this industry 
that wants nothing done. The opportunity is for us to act and to make a 
difference in the lives of the people we represent.
  The Senator from Texas talks a lot about this being a huge tax on 
low-income Americans. He doesn't tell the other side of the story. The 
other side of the story is that there is a huge tax already being 
placed on low-income Americans, and it is because of the use of these 
products. There is a massive shift that is going on in this country 
because of the costs of this industry.

  Mr. President, $130 billion a year is the consensus calculation on 
what this industry costs Americans--$60 billion in health care costs, 
$60 billion in lost productivity, $10 billion in other costs. Nobody 
gets hurt worse by those facts than low-income Americans. Low-income 
workers' payroll taxes are paying about $18 billion a year in Medicare 
costs.
  Our friends on the other side talked about that incessantly in the 
Budget Committee, that it is costing Medicare $18 billion a year and 
that all of the money ought to go to protect Medicare. That was their 
argument in the Budget Committee. Now they come out here on the floor 
and offer an amendment that gives zero for Medicare. How do they 
justify that? What caused this dramatic transformation? What caused 
this incredible change from being the defenders of Medicare to now not 
caring about Medicare at all? I don't know what happened. It is amazing 
what occurs in this body, the inconsistency. One month, Medicare is the 
priority; in fact, it is the only priority. The next month, it matters 
not at all. What a difference a few months makes.
  The fact is, smoking is a huge tax on low-income Americans. The 
average pack-a-day smoker will spend $25,000 on cigarettes over his or 
her lifetime. The average pack-a-day smoker is being affected in many 
ways. Not only are they paying $25,000 for cigarettes, but they are 
paying $20,000 in medical costs over their lifetime--$25,000 for the 
cigarettes, $20,000 for medical costs. That is $45,000 tobacco use is 
costing the average pack-a-day smoker. We talk about a heavy economic 
impact on low-income folks; that is the heavy impact. It dwarfs 
anything that is being done here to counteract it.
  Mr. President, the biggest tax cut we could give low-income Americans 
is to reduce that cost. The McCain bill will cut smoking by about one-
third. That will produce a savings of $1.6 trillion over the next 25 
years. That is the

[[Page S6025]]

smart way of helping low-income Americans.
  When we look at the Gramm proposal with respect to the so-called 
marriage penalty, we see that he is not really just addressing the 
marriage penalty. In fact, a lot of folks are benefited in the Tax Code 
by being married. Maybe we can put that next chart up that shows what I 
am talking about.
  This is something we know with great certainty, because we can study 
married couples and we can see who would benefit by filing as single 
individuals, who gets helped and who gets hurt by filing as a married 
couple. What we find is, for adjusted gross incomes of under $20,000, 
the significant majority of people get a bonus by filing as a married 
couple. We see a very small group--those are in red--who are actually 
penalized. A little over 10 percent of couples with combined income 
under $20,000 have a penalty by being married. The significant majority 
of people, almost two-thirds, receive a bonus by filing as a married 
couple, those who have adjusted gross incomes of under $20,000.

  If we go to AGIs--adjusted gross incomes--of $20,000 to $50,000, over 
50 percent benefit. They pay less filing as a married couple than they 
would pay filing separately. About 40 percent have a marriage penalty.
  From adjusted gross incomes of $50,000 to $100,000, more of those, as 
a percentage, are penalized. About 50 percent have a marriage penalty; 
about 40 percent have a marriage bonus.
  That is also true of those with adjusted gross incomes of over 
$100,000. About 50 percent have a penalty; about 40 percent have a 
bonus.
  Given this information, it is relatively easy to put together a 
remedy that delivers the relief directly to those who actually have a 
marriage penalty. That is what the Democratic proposal does.
  Unfortunately, this is not the approach of the Senator from Texas. He 
has opted instead to take a scattershot approach that benefits equally 
those who are helped and those who are hurt. The result is, those who 
are hurt get less help than they really deserve. That is why the 
Democratic alternative is superior for those who really have a marriage 
penalty.
  I believe that this is unfair. We ought to give those who actually 
experience the marriage penalty the help they really need to overcome 
it. It does not make sense to me to give the help to those who are 
benefited by being married in the same way that you help those who are 
being hurt. The result is, you do not give enough to those who are 
being hurt. That is not fair. I just do not know what sense it makes.
  The Senator from Texas has told us on the floor that the average 
family would save about $1,400 in taxes under his proposal. Let us look 
at an example. A couple earning $25,000 is in the 15 percent tax 
bracket. Under the Gramm proposal, this couple would get a $3,300 
above-the-line deduction, but only when fully phased in. In actual tax 
savings, this couple would realize 15 percent of that deduction, or 
$495. That is a far cry from the $1,400 advertised on the floor of the 
Senate. A couple earning $50,000, in the 28 percent bracket, would get 
a savings of $924--again, a far cry from the $1,400 advertised here on 
the Senate floor.
  Bear in mind that those calculations are based on the $3,300 
deduction being fully phased in. The $25,000 couple waiting to realize 
its $495 savings is going to have to wait until the year 2008, because 
that is when it is fully phased in. What they will get next year, under 
the Gramm plan, is not the $1,400 that has been advertised, but $125. 
That is what they are going to get next year, not $1,400; they are 
going to get $125. For the year 2002, that savings goes up to almost 
$150. Well, that is a whole lot less than $1,400. By 2007, the savings 
is up to $297.
  So millions of families, who think of themselves as average hard-
working people, are going to be wondering where their $1,400 of savings 
are. The fact is, they are not going to see it, because it has been 
overstated here on the floor of the Senate what the savings actually 
will be.
  I am hard pressed to decide what is the worst feature of the 
amendment of the Senator from Texas: The reckless reductions it will 
require in public health programs or the downright stinginess of the 
remedy it purports to deliver to couples who actually incur a marriage 
penalty.
  If we are going to do something about the marriage penalty, we ought 
to focus the benefit on those who are being hurt. That would be dealing 
with the marriage penalty. But to spread it around to people who are 
helped and hurt by the marriage penalty denies those who are actually 
penalized from getting the help they deserve.
  Mr. President, I think what we have before us is an important choice. 
The Democratic alternative focuses its relief on those taxpayers who 
are actually being penalized. By contrast, the proposal offered by the 
Senator from Texas dilutes that relief to provide for couples paying a 
marriage penalty as well as those who are actually receiving a marriage 
bonus.

  You hear a lot of talk about the marriage penalty. We do not hear 
much talk about the marriage bonus. But the fact is, at many income 
levels many more are being benefited by the marriage bonus than are 
being affected by the marriage penalty. Because the Democratic 
alternative is targeted to low- and moderate-income couples, we can 
make their relief much greater. I think that makes sense for those who 
are actually experiencing a marriage penalty.
  In addition, we can save money to use to promote the public health. 
After all, that is what this bill is supposed to be about. I must say, 
I have viewed with some concern the developments on the floor over the 
last week, because now we have an amendment before us that, amazingly 
enough in a public health bill, provides no money for public health.
  And after the arguments of our friends on the other side of the aisle 
that were so strenuous in the Budget Committee--they said we had to 
take every dime of this money and use it for Medicare--now we are about 
to vote for an amendment that does not give one dime to Medicare. What 
a transformation. They have gone from 100 percent of the money going to 
protect Medicare to none of the money going for Medicare. While they 
are at it, there is not going to be a dime of money to protect public 
health, either, in a public health bill.
  Let us defeat the Gramm amendment and stay on course with a public 
health bill that addresses the real concerns and the real challenges 
facing the American people.
  I thank the Chair and yield the floor.
  Mr. FORD. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. CONRAD. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CONRAD. Mr. President, while we are waiting, I thought I would 
just go through what I call the top 10 tobacco ``tall tales'' that we 
have heard from the tobacco industry during this debate.
  Tall tale No. 1 was that tobacco has no ill-health effects. Remember 
that? They came up to the Capitol, and they put up their hands, and 
they swore under oath that these products did not cause ill-health 
effects. But then we got the documents. We got them because of court 
action. We got access to the documents, and we found out, in the 
industry's own words, what the truth is.
  Here is the truth on that claim that tobacco has no ill-health 
effects:

       Boy! Wouldn't it be wonderful if our company was first to 
     produce a cancer-free cigarette. What we could do to the 
     competition.

  This is from a mid-1950s Hill & Knowlton memo quoting an unnamed 
tobacco company research director.
  That is tall tale No. 1.
  Tall tale No. 2 is, again, tobacco has no ill-health effects. Again, 
we have an industry document that reveals the falsity of that claim. 
This is from a 1978 Brown & Williamson document that says: ``Very few 
customers are aware of the effects of nicotine, i.e., its addictive 
nature and that nicotine is a poison.''
  Again, that is not from the public health community. That is from the 
tobacco industry's own documents.
  Tall tale No. 3: Nicotine is not addictive.
  The truth, from a 1972 research planning memo by RJR Tobacco: 
``Happily

[[Page S6026]]

for the tobacco industry, nicotine is both habituating and unique in 
its variety of physiological actions.''
  This industry, I tell you, these guys come up here, they don't come 
with a lot of credibility because they have told a lot of tall tales.
  Tall tale No. 4, again, the claim that nicotine is not addictive.
  This is from a 1992 memo from the director of portfolio management 
for Philip Morris' domestic tobacco business: ``Different people smoke 
cigarettes for different reasons. But, the primary reason is to deliver 
nicotine into their bodies . . . similar organic chemicals include 
nicotine, quinine, cocaine, atropine and morphine.''
  Now, again, this is the industry--their documents--revealing what 
they know and what they think of their own products. They say it is not 
addictive and yet they say it is the same as cocaine, the same as 
morphine, the same as atropine.
  Tall tale No. 5: The tobacco companies did not manipulate nicotine 
levels.
  The truth, again, from an industry document, a 1991 RJR report: ``We 
are basically in the nicotine business . . . effective control of 
nicotine in our products should equate to a significant product 
performance and cost advantage.''
  Tall tale No. 6: Tobacco companies did not manipulate nicotine 
levels.
  This is from a 1984 British-American Tobacco memo: ``Irrespective of 
the ethics involved,''--that is an interesting statement--
``Irrespective of the ethics involved, we should develop alternative 
designs which will allow the smoker to obtain significant enhanced 
deliveries [of nicotine] should he so wish.''
  They have been manipulating nicotine levels for a long time.
  Tall tale No. 7: Tobacco companies don't market to children.
  This is from a 1978 memo from a Lorillard Tobacco executive: ``The 
base of our business are high school students.''
  They didn't market to kids? They didn't target kids? Here you have a 
major tobacco company executive saying the major business is high 
school kids, the same kids tobacco companies don't market to--children.
  This is from a 1976 RJR research department forecast: ``Evidence is 
now available to indicate that the 14- to 18-year-old age group is an 
increasing segment of the smoking population. RJR must soon establish a 
successful new brand in this market if our position in the industry is 
to be maintained over the long term.''
  Well, I don't know how it can be more clear.
  Tall tale No. 9: Tobacco companies don't market to children.
  This is from a 1975 report from a Philip Morris researcher: 
``Marlboro's phenomenal growth rate in the past has been attributable 
in large part to our high market penetration among young smokers . . . 
15 to 19 years old . . . my own data . . . shows an even higher 
Marlboro market penetration among 15-17-year-olds.''
  You wonder what they thought when they went home at night.
  Tall tale number 10, again, the claim tobacco companies don't market 
to children.
  This is from ``apparently problematic research,'' a Brown & 
Williamson document:
  ``The studies reported on youngsters' motivation for starting, their 
brand preferences, as well as the starting behavior of children as 
young as 5 years old . . . the studies examined . . . young smokers' 
attitudes toward addiction and contain multiple references to how very 
young smokers at first believe they cannot become addicted, only to 
later discover, to their regret, that they are.''

  That kind of sums it up. That is the issue before the Senate. Are we 
here to protect kids or are we here to protect the bottom line of the 
tobacco industry?
  The Wall Street analysts that came before my task force indicated 
that, indeed, if this legislation were passed, it would reduce the 
profits of the industry, but not dramatically. In fact, the industry 
would still enjoy very, very high profit levels. Remember, this 
industry has a profit margin that is three times the profit margin of 
most companies that are in packaged good industries in America. They 
have a profit margin of 30 percent. Other package goods average a 
profit margin of 10 percent. They would still enjoy dramatic profits, 
even if we passed this legislation according to the analysis of the 
people who should know best, the Wall Street analysts that report on 
this industry.
  I yield the floor.
  The PRESIDING OFFICER. The Chair recognizes the distinguished Senator 
from Idaho.
  Mr. KEMPTHORNE. Mr. President, thank you.
  With this amendment we are debating today, which is a critical 
amendment, we will bring the last significant aspect of our Federal Tax 
Code that is of particular concern to Idahoans, and I think really all 
Americans, and that is the marriage tax penalty.
  I ask myself one fundamental question before I make up my mind on any 
issue we deal with on the floor of the U.S. Senate. That is, Does this 
policy make sense for the American people?
  Let's apply this question to our current Federal Tax Code which, 
quite simply, penalizes a working couple for getting married. Should 
folks pay more tax because they are married? Absolutely not.
  The marriage tax penalty raises revenue for the government--no 
question about that. It raises revenue. But it is bad public policy. It 
most often raises taxes on lower and middle-income families who claim 
the standard deduction. Now, that is wrong. We must strengthen the 
bonds of family to strengthen the fabric of our society. If we believe 
in family, we believe in marriage. So why in the world do we have a 
public policy on the books that somehow creates a penalty for being 
married? That is totally counterproductive to our values of this 
society, of this Nation.
  Before 1969, marriages were treated by the Federal Tax Code like 
partnerships, allowing husbands and wives to split their income evenly. 
In 1969, however, this practice of income splitting was ended, and thus 
was created the marriage tax penalty.
  Since that time, with our Nation's progressive tax rates, tax laws 
have meant that working married couples are forced, forced to pay 
significantly more money in taxes than they would if they were both 
single. Currently, 42 percent of married couples suffer because of the 
marriage tax penalty.
  Let me provide an example. A single person earning $24,000 per year 
is taxed at a 15 percent rate. Now, if two people, each earning 
$24,000, get married, however, the IRS, by taxing them on their 
combined income, taxes them in the 28 percent bracket, not the 15 
percent that they would be taxed as individuals, but 28 percent because 
they have joined in holy matrimony.
  It is also important to be aware that the marriage tax penalty hits 
the American people not only at the Federal level but also on their 
State taxes. Idaho generally conforms its State tax code to the Federal 
law. If the Federal Government alters its standard deduction levels, 
for instance, Idaho most likely will as well. While the focus of ending 
the marriage tax penalty has been primarily at the Federal level, we 
cannot discount the fact that this is, in essence, a double hit for 
working American couples who are trying to fulfill what this country 
believes in.
  I think that we can all agree that the Federal Government should not 
be penalizing marriages, a sacrosanct institution and the bedrock of 
our social structure. It is time for the Federal Government to end this 
injustice to the American family.
  I urge my colleagues to support the amendment of the Senator from 
Texas, Senator Gramm. I commend him for his efforts.
  Mr. President, just to reiterate, we think about this society and we 
think about all the problems and challenges that are facing America 
today. Senator Frist of Tennessee was chairman of a task force on 
education in America. He pointed out many of the statistics, many of 
the problems that we are having with regard to our children. He pointed 
out how many of these children, more and more, are coming from families 
where there is not both a father and a mother. That is a significant 
problem--a significant problem.
  How do we respond with public policy? Well, if you are married, there 
will be a penalty. I happen to be the chairman of the Military 
Personnel Subcommittee of the Armed Services Committee. We are starting 
to have problems with recruitment of young people

[[Page S6027]]

to the military services. We need 176,000 young people every year to 
join the military--the finest military in the world. At one of the 
hearings, I asked the generals and admirals testifying this: ``Tell me, 
is there something about this issue of values that we are hearing 
about?'' And they said: ``Yes, there is; there is very much a problem 
with values among all people.'' In fact, all branches of the military 
services have now added 1 week to the basic training to try to somehow 
instill in them core values--knowing right from wrong. A three-star 
general of the Marine Corps said, ``We now have a new category of young 
person; we just call them `evil,' and there is nothing we can do with 
them.''
  As the occupant of the Chair knows, it used to be that if you had a 
troubled youth, in all likelihood if you could send them off to the 
military, they would be straightened out. That is not the case anymore. 
I mention these challenges because it comes back. Do any of us believe 
that 1 week of basic training with 17- and 18-year-olds is somehow 
going to instill in them the values they should have learned many, many 
years ago, that they should have been raised upon, knowing right from 
wrong? That comes from a family environment, a family environment where 
a mother and father are there, where mother and father will tuck the 
child into bed, where mother and father will listen to their prayers--a 
mother and father, a married couple.
  Yet, we have public policy on the books today that penalizes married 
couples. That is wrong; that is flawed public policy. It is time that 
this Nation correct that. That is why I am proud to stand in support of 
this amendment that will correct this. It is a clear signal, a loud 
signal, that we are going to reclaim this society and the fabric of 
this society by affirming that marriage is positive; we will not 
penalize those who choose to go into marriage.
  So, again, I urge all my colleagues to support this amendment by the 
Senator from Texas.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. GRAMM. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Abraham). Without objection, it is so 
ordered.
  Mr. GRAMM. Mr. President, I wanted to respond to some comments. I was 
over in a conference on the IRS reform bill when several of our 
colleagues came over to comment on the pending amendment. I want to try 
to address briefly some of the issues that they raised.
  Let me begin by trying to delineate between the marriage penalty that 
is pending in the amendment before us and some of the alternatives that 
appear to be supported by opponents of this amendment.
  The principal feature of the amendment before us is an effort to give 
back roughly a third of the money that is collected in the cigarette 
tax embodied in the bill before us. A tax that is very regressive in 
its impact. As I noted earlier, 59.1 percent of the taxes are collected 
from people who make less than $30,000 a year.
  This amendment gives a rebate to moderate-income Americans, who will 
be devastated by this bill which will raise the tax by $1,015 per year, 
for the average smoker who smokes one pack of cigarettes a day. If the 
objective of the tax is to discourage smoking, if we hope to get a 50-
percent reduction in smoking among teenagers as a result of raising the 
tax, if the objective is to discourage smoking and not to take money 
away from blue-collar workers to give to Government to spend, then the 
logic of the amendment that is now pending is that we should take 
roughly a third of the money we collect and give it back to people and 
families who make less than $50,000 a year by repealing the marriage 
penalty.
  Some of our colleagues have come to the floor with very pretty charts 
with my name on them. I appreciate the free advertising. I hope my 
mother saw them. They were beautiful charts. But they refer to 
something called a marriage bonus, and I think what is happening is 
this whole debate is getting skewed by people who do not want to focus 
on the issue. So let me explain what we are doing. Then I want to say a 
little bit about this marriage bonus, and then talk about why doing the 
marriage penalty in the way that is being suggested by the minority 
will discriminate against stay-at-home parents.
  First of all, under the current Tax Code there are 31 million 
families that end up paying an average of $1,400 a year more in income 
taxes because they fall in love and get married than they would pay if 
they stayed single. I think it is a uniform position in the country as 
a whole and in the Senate in particular that it cannot be prudent tax 
policy, even in the economy of the greatest nation in the history of 
the world, to have a tax policy that discourages people that fall in 
love from getting married.
  I think our colleagues on both sides of the aisle would agree with 
the premise that the family has been the most powerful institution in 
the history of mankind in terms of promoting progress and happiness. 
Those are two important things. So what I am trying to do in this 
amendment is to repeal that marriage penalty so we do not discourage 
people who fall in love from getting married and forming families and 
achieving the stability and the happiness and the fulfillment that 
comes from being married.
  Now, I think there is a general view that we should do that. Not 
everybody wants to pay for it. Not everybody supports the fact that I 
am taking a third of the money from this bill which was going to things 
like paying lawyers $92,000 an hour, or paying farmers $23,000 an acre 
when they do not have to give up the land and do not have to stop 
farming tobacco, or paying $18,615.55 for smoker cessation programs for 
every Native American who smokes. They would rather spend the money on 
those things than to correct the marriage penalty. But I do not think 
philosophically anybody objects to the thesis that a tax policy that 
discriminates against marriage is counterproductive, in this Nation or 
any other nation.
  Now, there are two issues that have been raised by opponents. One 
issue has been that we could do it cheaper if we excluded couples where 
one of the parents does not work outside the home. That is, if we only 
gave the marriage penalty correction to those couples that make roughly 
the same income.
  Now, when we put our amendment together, we looked at that. We 
thought about it for about a microsecond, and we rejected it because if 
you do it the way the minority wants to do it, you end up giving a tax 
break only to those couples where both have roughly equal incomes. But 
for families that make a decision to sacrifice so that one of them can 
stay home and work in the home, which is real work, maybe the most 
important work on the planet, for those who choose to do that they 
would be discriminated against by the provision that the minority is 
proposing to offer.
  Under our amendment, you get $3,300 of deductions whether or not both 
parents work outside the home.
  Now, why did we do that? We did it because we do not believe the tax 
policy of the country should discriminate against people based on 
whether or not they both work outside the home. And let me make it 
clear. I am not trying to tilt the Tax Code one direction or the other. 
My mother worked all my life because she had to work. My wife has 
worked all our children's lives because she wanted to work. And I am 
not making a judgment about whether it is better for both parents to 
work or one parent to stay at home. I think that is something each 
family has to make a decision on based on what they want for 
themselves, their children and what they can afford. But the point I 
want people to understand is that the amendment that is before us 
treats couples exactly the same whether they both work outside of the 
home or whether one works outside the home and one stays home to be a 
homemaker, to raise the children. I do not believe the Tax Code should 
discriminate against people based on the decision they make about 
whether to work inside or outside the home.

  The way we have written the bill we do not discriminate. You get the 
benefit if both parents work and you get the benefit if only one parent 
works because we give a $3,300 tax deduction.

[[Page S6028]]

We do it above the line so you get to deduct it before you calculate 
what your taxable income is.
  So that very modest-income people who get an earned tax credit, but 
who still work, can still take the credit. For example: a lady who is 
washing dishes and a man who is a janitor are both working. They are 
trying to get ahead, they are trying to be self-sufficient, they both 
get an earned-income tax credit, and they each have two children. They 
meet and say, ``I have found the solution; I am going to form a 
family.'' They find if they get married, they lose the earned-income 
tax credit and they suffer a substantial decline in income. So they 
decide not to get married.
  Well, one of the things we wanted to do in our amendment was to 
assure that we made this adjustment so that people at very low-income 
levels who in many cases are penalized most by the marriage penalty 
would get the relief. That is why we did our amendment the way we did, 
and it does cost more to do it that way. But if you do not do it that 
way, you discriminate against families where one parent stays at home 
and works at home, and you discriminate against very low-income people 
who are working and often working two or more jobs, but are still 
getting some assistance in the earned-income tax credit.
  I think when our colleagues criticize this they do not really 
understand that what they are saying is if you stay home and raise your 
children, you should be discriminated against. I think when people 
understand the distinction they are not going to be for doing it their 
way.
  The second issue I wanted to address because it did come up while I 
was gone is the so-called misnomer of a marriage bonus. If there has 
ever been a fraudulent concept in the history of American taxation, it 
is the so-called marriage bonus.
  Now, let me define this marriage bonus. You have a guy named John, 
and he has a job, and he is out working. He is a sales representative, 
and he is traveling all over the country selling school supplies. And 
you have a girl named Josephine, a young lady who is graduating from 
high school. Now, she graduates from high school and then the next day 
she and John walk down the aisle and get married.
  What the minority is calling a tax bonus is that Josephine's father 
was taking a dependent exemption because he was supporting Josephine 
while she was living in the family home, going to school. He was paying 
her expenses, and he got to write off on his income taxes every year or 
deduct $2,700.
  Now, what is being called a marriage bonus is that by marrying 
Josephine and forming this family, before Josephine goes out next year 
and gets a job herself, John is going to be able to write off $2,700 in 
a dependent exemption. He is also going to be able to raise his 
standard deduction, because he is married, by $2,850. So that he is 
going to get a deduction by marrying Josephine of $5,550.
  I want to pose this question to our colleagues who think that is such 
a terrible thing and that anybody who is getting that should not get 
the benefit of eliminating the marriage penalty. How many fathers go to 
the wedding and when they get to the point where they say, ``Is there 
anybody here who objects?'' Bill, Josephine's father, stands up and 
says, ``Wait a minute, I object to this marriage, because if Josephine 
gets married, I'm going to lose $2,700 of deductions and, as a result, 
it is a bad deal for me''? I never heard of that happening.
  How many people rush out to get married because, by marrying someone 
with no income, you get $5,550 of deductions? That is not that much 
less in taxes; that is just the amount you get to deduct. Does anybody 
believe that you can feed, clothe, and house a spouse for $5,550?
  But to listen to our colleagues talk, you get the idea that this is 
some big bonus, that this is some unfair provision in the Tax Code, 
because by John marrying Josephine and forming a couple and filing 
jointly, his deductions go up by $5,500, and that is a ``marriage 
bonus.'' Some bonus. Does anybody believe that John can pay for having 
a wife for $5,550? No. It is not a bonus; it is simply the way the Tax 
Code works.
  Why should we give more protection to family income? This chart 
really tells the whole story. This chart shows 1950 and 1996, the last 
year when we have complete data on how much of the income of average-
income working families with two children was shielded from Federal 
income taxes by personal exemptions and by the standard deduction. 
Basically, what this chart shows is that in 1950 the personal exemption 
and the standard deduction for a family of four making the average 
income in the country shielded 75.3 percent of their income from any 
Federal taxes. In fact, in 1950 the average family with two children 
was sending $1 out of every $50 it earned to Washington, DC; $1 out of 
every $50. Because of inflation not keeping up with the rise in real 
income and because the standard deduction and personal exemption didn't 
keep up with inflation, today they shield only 32.8 percent of the 
income of the average family of four. So, whereas in 1950 the average 
family making the average income, with two children, was sending $1 out 
of every $50 it earned to Washington, today the average family with two 
children is sending $1 out of every $4 it earns to Washington, DC.
  Under these circumstances, is it obvious that one of the things we 
need to do is to shield more family income from Federal taxes? That is 
what this amendment is about. In 1950, rich people paid a lot of taxes. 
Today, rich people pay a lot of taxes. In 1950, poor people paid no 
income taxes. And in 1996, poor people pay no income taxes.
  How did the tax take double? How did taxes, as a percentage of the 
economy, double the Federal level between 1950 and 1996? It doubled by 
raising the burden on families with children from $1 out of every $50 
to $1 out of every $4. So, under these circumstances, it makes 
perfectly good sense to me that we would want to do something to help 
working families shield more of their income and, in doing so, end the 
starvation of the one institution in America that works, and that is 
the family. We are feeding Government, and we are starving families.
  What the amendment I have offered, with Senator Domenici and Senator 
Roth, tries to do is to give some of this money that is being taken 
from working families in this confiscatory excise tax back to working 
families. So while raising the price of tobacco products and hopefully 
discouraging people from using it, we do not impoverish people who are, 
in this case, the victims by having become addicted to tobacco 
products.
  That is what this debate is about. So I hope people do not get 
confused about this silly business about a marriage bonus. The idea 
that somehow you are getting a bonus when you take a spouse, by the 
fact that your tax deductions go up by $5,500 ridiculous. Nobody ever 
got married thinking that they were going to benefit with a $5,500 is 
deduction when they have to pay for the expenses of their spouse. That 
is not a bonus. In fact, that is inadequate. That is outrageous. It 
ought to be higher.
  Finally, to suggest that we want to fix the marriage penalty but only 
if both parents work is ludicrous. I want to fix the marriage penalty, 
but I don't want to tilt the Tax Code against families where one parent 
decides to stay at home. That is really what the debate is about.
  I hope reason will prevail here. Sometimes it does; sometimes it 
doesn't. But, I hope it will in this case. And I yield the floor.
  Ms. MOSELEY-BRAUN. Mr. President, I oppose the Gramm amendment. It is 
an attempt to distract the Senate's attention from what should be the 
focus of our attention. It is a thinly veiled ploy to kill this bill, 
the only vehicle this body has had to address the epidemic of teen 
smoking and the disastrous effects on the health and well-being of 
generations of Americans who were lured into smoking by tobacco 
companies.
  This amendment has no place as a part of this bill, and because of 
the way it is financed, it has no place in any bill. I strongly agree 
we ought to face the marriage penalty issue as soon as possible, and I 
also would like to accelerate full deduction of health insurance 
expenses for the self-employed. I do not think, however, that we can 
address these issues by adding to one of the greatest problems facing 
our country's future economy--the solvency of the Social Security 
system.

[[Page S6029]]

  Just two months ago, this body agreed that the budget surplus should 
be reserved for reforming our Social Security System. It was a wise 
decision, for no one can honestly deny that the Social Security Trust 
Fund faces long-term problems. Based on information from the 1998 
Social Security Trustees' report, it appears that, by the year 2013, 
Social Security benefit payments will begin to exceed the payments into 
the Social Security Trust Fund from employers and employees. By the 
year 2032, the Trust Fund will have used up its accumulated surpluses 
and will be unable to fully meet its obligations to American retirees. 
In order to guarantee the viability of the Trust Fund for our children 
and grandchildren, we must focus on its long-term future and begin the 
process of making necessary changes.
  Workers, the very workers that Senator Gramm seeks to help under his 
amendment, pay into the Trust Fund all their lives and expect--
rightfully so, I might add--Social Security to be there for them when 
they retire.
  Because Congress has not yet acted to preserve the long-term 
viability of Social Security, I cannot support any proposal that would 
exacerbate the financial difficulties facing the Social Security Trust 
Fund. This amendment, however, will do exactly that. I cannot, in good 
conscience, vote for this amendment.
  I want to be clear that I am extremely troubled that some married 
couples are being taxed at a higher rate than they would be if they 
were single filers. I find it appalling that 20.9 million couples, some 
42% of all American couples paid penalties totaling $28.8 billion just 
last year alone. Senator Gramm's right--we ought to fix this problem. 
But it is wrong to do it at the expense of further damaging a 
retirement security component that is so vital to the American people.
  Fortunately, we have another option. The Democratic alternative would 
address the marriage penalty problem without further endangering Social 
Security. This alternative targets more tax relief directly to the 
couples who are actually penalized by the tax code. The Gramm 
amendment, on the other hand, would not only provide less relief to the 
42% of couples who currently pay a penalty, but would also provide a 
windfall to the 51% of married couples who currently receive a bonus 
(on average of $1,380 per couple) under our tax code. In addition, the 
Democratic alternative addresses the need to accelerate the health 
insurance deduction for the self employed in an manner that is sensible 
and sound.
  Overall, the Democratic alternative is a more thorough, more 
targeted, and more sound proposal, and in any event, it is better tax 
policy.
  I do not believe that it is wise to try to solve one problem by 
creating another, and I believe that the Democratic alternative avoids 
that pitfall, whereas the Gramm amendment does not. I urge all my 
colleagues to vote against the Gramm amendment, and for the Democratic 
alternative.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. TORRICELLI. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. TORRICELLI. Mr. President, anyone who has been listening to this 
debate on the Senate floor in the last few weeks is now familiar with 
the painful but very real statistics. Each day, 3,000 young Americans 
begin smoking and eventually 1,000 will die. I can think of no issue on 
the floor of this Congress which could more directly affect the lives 
of Americans for a generation to come to finally deal with the reality 
of tobacco and its assorted dangers.
  Legislation offered by Senator McCain, which I enthusiastically 
support, makes a contribution in several important ways to dealing with 
this problem: First, it requires a warning label and restricts 
advertising designed to attract children to smoking cigarettes; second, 
it grants broad authority to the Federal Drug and Food Administration 
to regulate tobacco products, their advertising, and their 
distribution; third, it establishes a national tobacco trust fund for 
smoke cessation programs, health research, and compensation for States 
and farmers as a result of tobacco smoking and the program; and, 
finally, it also penalizes companies up to $3.5 billion per year if 
they fail to meet their targets to reduce youth smoking.
  There is, however, a less addressed but equally significant impact of 
this legislation that also needs to be addressed. It has been raised by 
the Senator from Texas, Senator Gramm, and now by the Senator from 
South Dakota, Senator Daschle, that there are unintended tax 
consequences of this legislation. I am relieved that my colleagues 
joined in the judgment not to raise the tobacco tax to $1.50 per pack 
but cast their votes, as I did, to keep this tax $1.10. It is, 
nevertheless, the reality that this taxation upon cigarettes could be 
the most regressive tax ever passed in American history. This tax 
burden is falling disproportionately on the working poor and, indeed, 
on poor families themselves.
  It has been noted that the total tax burden of families who earn 
under $10,000 a year would increase by 40 percent as a result of this 
tobacco tax. Indeed, three-quarters of the tax would be paid by 
families who earn under $50,000 per year. This would add a tax burden 
to an American population that is already excessively taxed.
  I understand that it is President Clinton's priority that a new 
Federal surplus be used primarily to deal with the future obligations 
of Social Security. I support him in that initiative, as I believe 
there are important initiatives of education and health care that are 
unaddressed in our country. But the tobacco legislation brings into 
focus another reality: The average American family is still paying too 
much taxation. Indeed, the CBO reports that taxes on the American 
public have recently reached 20 percent of the gross domestic product. 
Not since the Second World War has the total tax burden on the American 
people, as a percentage of our economy, been so high. According to the 
Joint Committee on Tax, Americans earning $30,000 and less will pay 59 
percent of this new tobacco tax, which is being added on this already 
heavy burden.
  The answer of the Senator from Texas is to primarily deal with this 
new burden by dealing with what is known as the marriage penalty. 
Indeed, in 1996, 21 million couples encountered an average penalty 
because of their joint filings as a result of their marriage of $1,400. 
That represents 42 percent of the American people--married couples--are 
paying more as a consequence of their marriage.

  A proposal by Senator Gramm combines a phase-in of tax relief for the 
marriage penalty, with tax credits for the self-employed to purchase 
health insurance, for costs of upwards of $16 billion during the first 
5 years, and $30 billion in years 6 through 10.
  Responding to criticism that earlier versions of his amendment would 
have completely drained the public health funds in this bill, Senator 
Gramm now proposes to limit the use of the tobacco trust fund from one-
half to one-third of the revenues in the outyears for dealing with this 
elimination of the marriage penalty. He does so, however, by using the 
general revenues of the Federal Government. The consequences of using 
these general revenues for the admittedly important objective of 
eliminating the marriage penalty is that it contradicts President 
Clinton's goal of first using Federal surpluses to deal with Social 
Security.
  Indeed, on a bipartisan basis, I could not understand and it would be 
difficult to accept that this Congress would not want to first deal 
with ensuring the financial safety of Social Security before dealing 
with other admittedly important tax objectives. Specifically, the Gramm 
amendment potentially would remove $90 to $125 billion worth of Federal 
revenues that the President has designed to deal with the future 
security of Social Security, specifically for the baby boom generation.
  I think Senator Daschle has a better idea. He offers an alternative 
which allows this Congress to remain focused on securing Social 
Security for the next generation while dealing with this admittedly 
high tax burden and the unintended consequence of regressivity of the 
tobacco tax.
  First, Senator Daschle would ease the tax burden on American families

[[Page S6030]]

by providing full deductibility for health insurance premiums for the 
self-employed. No issue could be more important for people starting 
their own businesses, for middle-income families, than dealing with 
this full deductibility of health insurance.
  Second, it maintains the integrity of the tobacco bill and still 
protects Social Security. So the programs now envisioned in the tobacco 
bill would remain--dealing with public health, tobacco farmers, 
reimbursement to the States--while at the same time allowing us to 
provide this tax relief.
  The difference, of course, between Senator Daschle's proposal and 
Senator Gramm's proposal is that Senator Gramm did not simply deal with 
the marriage penalty--because only 40 percent of all married couples 
are paying a marriage penalty, he was providing tax relief beyond this 
and thereby causing this financial strain. The alternative offered by 
the Senator from South Dakota, Senator Daschle, deals simply with those 
families who are actually paying the marriage penalty and thereby 
allows us to do so in a more responsible fashion.
  This, I believe, is the better alternative, but I hope the Senate 
does not simply deal this year with the question of the tax burden on 
the American people by only addressing the question of the marriage tax 
penalty. That will suffice for the tobacco legislation. I hope and I 
trust by the time the Senate is finished dealing with tobacco 
legislation that we have dealt with deductibility for the self-employed 
of their health insurance and the elimination of the marriage penalty.
  Before yielding the floor, I hope that the Senate would follow the 
debate that has now begun as a consequence of the important analysis 
offered by the Senator from Texas, Senator Gramm, on both the overall 
national tax burden and its regressivity by dealing with other tax 
issues in the remainder of this session.
  First, if not in this legislation, then before this session adjourns, 
the Senate should deal with the fact that there are too many Americans 
of modest means who are finding themselves in the highest tax bracket. 
Today, a single individual is paying a 28 percent Federal income tax 
with a salary of $25,300, and a married couple with only $42,350 in 
income is paying a Federal tax of 28 percent in income taxes. 
Therefore, we are applying the highest rate to people of genuinely 
modest means.
  I believe we would make a real contribution to tax fairness in the 
Senate in this year if the 15 percent bracket could be expanded to 
$35,000 for individuals and $70,000 for married couples. This would 
move more than 10 million Americans from the 28 percent tax bracket to 
the 15 percent tax bracket and genuinely ensure that middle-income 
people are able to take advantage of a lower 15 percent bracket. No 
single proposal would grant tax relief on a broader, more comprehensive 
basis to middle-income Americans.
  Second, before this Congress adjourns this year, I hope the Congress 
will return to the issue of capital gains simplification. I have joined 
with Senator Mack and Senator Breaux to encourage that savings and 
investment income be restored to a 12-month holding period in order to 
avail ourselves of the lower capital gains tax rate that was instituted 
by this Congress on an earlier date.
  Third, return again to the issue of estate taxes by building on the 
$1 million exemption from the estate tax in last year's tax bill by 
slashing the estate tax rate by 25 percent. We made real progress last 
year by raising the exemption to a $1 million, but the Federal tax rate 
and the State tax remain confiscatory at an unbelievable 55 percent.
  Fourth, and finally, I hope this Congress, before concluding its work 
this year on the Federal Tax Code, will return to the incredibly poor 
savings rates in this Nation. The United States now suffers from the 
lowest savings rate in nearly 60 years. I believe this Senate should 
exempt the first $500 in interest from taxation, ensuring that any 
family in America that saves $10,000, whether in equity or bonds or 
savings accounts, would not pay taxes on that first $10,000. Nothing 
would do more for Americans to prepare for their own retirement, to 
provide security for American families, than transforming every $10,000 
in savings in America by every family instantly into a tax-free 
account. This could be done simply by exempting the first $500 in 
interest. For those 60 percent of American families that have no 
equity, no savings other than their house, and live in the dangerous 
position of paycheck-to-paycheck, this, for the first time, would 
provide a real incentive for those families to save money.
  Mr. President, my purpose today primarily was to draw attention to 
the worthwhile objective of providing some tax relief in the tobacco 
legislation for those families, primarily of low and moderate means, 
who will disproportionately be shouldering this burden of increased 
tobacco taxes. But I wanted to take advantage of the opportunity both 
to demonstrate the relative advantage of Senator Daschle's proposal, to 
provide this tax relief within the tobacco bill, thereby not 
jeopardizing the revenues available to deal with providing some safety 
for Social Security, but also to point out to the Senate that, beyond 
dealing with the tax burden of families because of the tobacco 
legislation and thereby providing relief in the marriage penalty and 
the self-employment full deductibility on health insurance, the Senate 
should be setting its sights on other areas as well in the remainder of 
this year--an encouragement in savings, general income tax relief for 
middle-income families, and on the inheritance tax. The Senate has a 
larger obligation of easing the tax burden, and I believe the debate 
that has begun in the Senate has begun to outline the possible 
components, beyond the tobacco legislation, of broader tax relief for 
the American families.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Santorum). The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. GRAMM. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                    Amendment No. 2686, as modified

  Mr. GRAMM. Mr. President, I send a modification of my amendment to 
the desk.
  The PRESIDING OFFICER. The amendment is so modified.
  The amendment (No. 2686), as modified, is as follows:
       At the end of the amendment, insert:

     SEC. ____. ELIMINATION OF MARRIAGE PENALTY.

       (a) In General.--Part VII of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to additional 
     itemized deductions for individuals) is amended by 
     redesignating section 222 as section 223 and by inserting 
     after section 221 the following new section:

     ``SEC. 222. DEDUCTION FOR MARRIED COUPLES TO ELIMINATE THE 
                   MARRIAGE PENALTY.

       ``(a) In General.--In the case of a joint return under 
     section 6013 for the taxable year, there shall be allowed as 
     a deduction an amount equal to the applicable percentage of 
     the excess (if any) of--
       ``(1) the sum of the amounts determined under subparagraphs 
     (B) and (C) of section 63(c)(2) for such taxable year 
     (relating to the basic standard deduction for a head of a 
     household and a single individual, respectively), over
       ``(2) the amount determined under section 63(c)(2)(A) for 
     such taxable year (relating to the basic standard deduction 
     for a joint return).
       ``(b) Limitation Based on Modified Adjusted Gross Income.--
       ``(1) In general.--No deduction shall be allowed under 
     subsection (a) if the modified adjusted gross income of the 
     taxpayer for the taxable year exceeds $50,000.
       ``(2) Modified adjusted gross income.--For purposes of this 
     subsection, the term `modified adjusted gross income' means 
     adjusted gross income determined--
       ``(A) after application of sections 86, 219, and 469, and
       ``(B) without regard to sections 135, 137, and 911 or the 
     deduction allowable under this section.
       ``(3) Cost-of-living adjustment.--In the case of any 
     taxable year beginning in a calendar year after 2007, the 
     $50,000 amount under paragraph (1) shall be increased by an 
     amount equal to such dollar amount multiplied by the cost-of-
     living adjustment determined under section 1(f)(3) for the 
     calendar year in which the taxable year begins, except that 
     subparagraph (B) thereof shall be applied by substituting 
     `calendar year 2008' for `calendar year 1992'. If any amount 
     as adjusted under this paragraph is not a multiple of $5,000, 
     such amount shall be rounded to the next lowest multiple of 
     $5,000.
       ``(c) Applicable Percentage.--For purposes of this section, 
     the applicable percentage shall be--
       ``(1) 25 percent in the case of taxable years beginning in 
     1999,
       ``(2) 30 percent in the case of taxable years beginning in 
     2000, 2001, and 2002,

[[Page S6031]]

       ``(3) 40 percent in the case of taxable years beginning in 
     2003, 2004, and 2005,
       ``(4) 50 percent in the case of taxable years beginning in 
     2006,
       ``(5) 60 percent in the case of taxable years beginning in 
     2007, and
       ``(6) 100 percent in the case of taxable years beginning in 
     2008 and thereafter.''
       (b) Deduction To Be Above-the-Line.--Section 62(a) of the 
     Internal Revenue Code of 1986 (defining adjusted gross 
     income) is amended by adding after paragraph (17) the 
     following new paragraph:
       ``(18) Deduction for married couples.--The deduction 
     allowed by section 222.''
       (c) Earned Income Credit Phaseout To Reflect Deduction.--
     Section 32(c)(2) of the Internal Revenue Code of 1986 
     (defining earned income) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Marriage penalty reduction.--Solely for purposes of 
     applying subsection (a)(2)(B), earned income for any taxable 
     year shall be reduced by an amount equal to the amount of the 
     deduction allowed to the taxpayer for such taxable year under 
     section 222.''
       (d) Full Deduction for Health Insurance for Self-
     Employeds.--The table contained in section 162(l)(1)(B) is 
     amended--
       (1) by striking ``and 1999'',
       (2) by striking the items relating to years 1998 through 
     2006, and
       (3) by striking ``2007 and thereafter'' and inserting 
     ``1999 and thereafter''.
       (e) Clerical Amendment.--The table of sections for part VII 
     of subchapter B of chapter 1 of such Code is amended by 
     striking the item relating to section 222 and inserting the 
     following new items:

``Sec. 222. Deduction for married couples to eliminate the marriage 
              penalty.
``Sec. 223. Cross reference.''

       (f) Reduction in Transfers to National Tobacco Trust 
     Fund.--
       (1) In general.--Except as provided in paragraph (2) and 
     notwithstanding any other provision of this Act, the amount 
     credited to the National Tobacco Trust Fund under section 
     401(b) of this Act for any fiscal year shall be reduced by 
     the amount of the decrease in Federal revenues for such 
     fiscal year which the Secretary of the Treasury estimates 
     will result from the amendments made by this title. The 
     Secretary shall increase or decrease the amount of any 
     reduction under this section to reflect any incorrect 
     estimate for any preceding fiscal year.
       (2) Limitation on reduction after fiscal year 2007.--
       (A) In general.--Except as provided in subparagraph (B), 
     with respect to any fiscal year after fiscal year 2007, the 
     reduction determined under paragraph (1) shall not exceed 33 
     percent of the total amount credited to the National Tobacco 
     Trust Fund for such fiscal year.
       (B) Special rule.--If in any fiscal year the youth smoking 
     reduction goals under section 203 are attained, the 
     limitation under subparagraph (A) shall not apply.
       (g) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

  Mr. GRAMM. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. KERRY. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. KERRY. Mr. President, the pending business, I believe, is the 
Gramm amendment; is that correct?
  The PRESIDING OFFICER. That is correct.
  Mr. KERRY. Mr. President, I move to table the Gramm amendment, and I 
ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the motion to 
lay on the table the amendment No. 2686, as modified. The yeas and nays 
have been ordered. The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Pennsylvania (Mr. 
Specter) is absent because of illness.
  Mr. FORD. I announce that the Senator from Delaware (Mr. Biden) is 
necessarily absent.
  The result was announced--yeas 48, nays 50, as follows:

                      [Rollcall Vote No. 154 Leg.]

                                YEAS--48

     Akaka
     Baucus
     Bingaman
     Boxer
     Breaux
     Bryan
     Bumpers
     Byrd
     Chafee
     Cleland
     Collins
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Feingold
     Feinstein
     Ford
     Glenn
     Graham
     Harkin
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Mack
     Mikulski
     Moseley-Braun
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Snowe
     Torricelli
     Wellstone
     Wyden

                                NAYS--50

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Burns
     Campbell
     Coats
     Cochran
     Coverdell
     Craig
     D'Amato
     DeWine
     Domenici
     Enzi
     Faircloth
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Kempthorne
     Kyl
     Lott
     Lugar
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                             NOT VOTING--2

     Biden
     Specter
       
  The motion to lay on the table the amendment (No. 2686), as modified, 
was rejected.
  Mr. GRAMM. Mr. President, I move to reconsider the vote.
  Mr. LOTT. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER. The question is on agreeing to amendment No. 
2686, as modified.
  The amendment (No. 2686), as modified, was agreed to.


                Amendment No. 2688 to Amendment No. 2437

  (Purpose: To provide a deduction for two-earner married couples, to 
  allow self-employed individuals a 100-percent deduction for health 
                insurance costs, and for other purposes)

  Mr. DASCHLE. Mr. President, I send an amendment to the desk and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from South Dakota [Mr. Daschle] proposes an 
     amendment numbered 2688 to amendment No. 2437.

  Mr. DASCHLE. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:
       At the end of the amendment add the following:
       The provisons of Senate Amendment No. 2686 are null and 
     void.
    TITLE ____--TAX BENEFITS FOR MARRIED COUPLES AND SELF-EMPLOYED 
                              INDIVIDUALS

     SEC. ____01. DEDUCTION FOR TWO-EARNER MARRIED COUPLES.

       (a) In General.--Part VII of subchapter B of chapter 1 of 
     the Internal Revenue Code of 1986 (relating to additional 
     itemized deductions for individuals) is amended by 
     redesignating section 222 as section 223 and by inserting 
     after section 221 the following new section:

     ``SEC. 222. DEDUCTION FOR MARRIED COUPLES TO ELIMINATE THE 
                   MARRIAGE PENALTY.

       ``(a) In General.--In the case of a joint return under 
     section 6013 for the taxable year, there shall be allowed as 
     a deduction an amount equal to the applicable percentage of 
     the qualified earned income of the spouse with the lower 
     qualified earned income for the taxable year.
       ``(b) Applicable Percentage.--For purposes of this 
     section--
       ``(1) In general.--The term `applicable percentage' means 
     20 percent, reduced by 2 percentage points for each $1,000 
     (or fraction thereof) by which the taxpayer's modified 
     adjusted gross income for the taxable year exceeds $50,000.
       ``(2) Transition rule for 1999 and 2000.--In the case of 
     taxable years beginning in 1999 and 2000, paragraph (1) shall 
     be applied by substituting `10 percent' for `20 percent' and 
     `1 percentage point' for `2 percentage points'.
       ``(3) Modified adjusted gross income.--For purposes of this 
     subsection, the term `modified adjusted gross income' means 
     adjusted gross income determined--
       ``(A) after application of sections 86, 219, and 469, and
       ``(B) without regard to sections 135, 137, and 911 or the 
     deduction allowable under this section.
       ``(4) Cost-of-living adjustment.--In the case of any 
     taxable year beginning in a calendar year after 2002, the 
     $50,000 amount under paragraph (1) shall be increased by an 
     amount equal to such dollar amount multiplied by the cost-of-
     living adjustment determined under section 1(f)(3) for the 
     calendar year in which the taxable year begins, except that 
     subparagraph (B) thereof shall be applied by substituting 
     `calendar year 2002' for `calendar year 1992'. If any amount 
     as adjusted under this paragraph is not a multiple of $2,000, 
     such amount shall be rounded to the next lowest multiple of 
     $2,000.
       ``(c) Qualified Earned Income Defined.--

[[Page S6032]]

       ``(1) In general.--For purposes of this section, the term 
     `qualified earned income' means an amount equal to the excess 
     of--
       ``(A) the earned income of the spouse for the taxable year, 
     over
       ``(B) an amount equal to the sum of the deductions 
     described in paragraphs (1), (2), (7), and (15) of section 62 
     to the extent such deductions are properly allocable to or 
     chargeable against earned income described in subparagraph 
     (A).

     The amount of qualified earned income shall be determined 
     without regard to any community property laws.''
       ``(2) Earned income.--For purposes of paragraph (1), the 
     term `earned income' means income which is earned income 
     within the meaning of section 911(d)(2) or 401(c)(2)(C), 
     except that--
       ``(A) such term shall not include any amount--
       ``(i) not includible in gross income,
       ``(ii) received as a pension or annuity,
       ``(iii) paid or distributed out of an individual retirement 
     plan (within the meaning of section 7701(a)(37)),
       ``(iv) received as deferred compensation, or
       ``(v) received for services performed by an individual in 
     the employ of his spouse (within the meaning of section 
     3121(b)(3)(A)), and
       ``(B) section 911(d)(2)(B) shall be applied without regard 
     to the phrase `not in excess of 30 percent of his share of 
     net profits of such trade or business'.''
       (b) Deduction To Be Above-the-Line.--Section 62(a) of the 
     Internal Revenue Code of 1986 (defining adjusted gross 
     income) is amended by adding after paragraph (17) the 
     following new paragraph:
       ``(18) Deduction for two-earner married couples.--The 
     deduction allowed by section 222.''
       (c) Earned Income Credit Phaseout To Reflect Deduction.--
     Section 32(c)(2) of the Internal Revenue Code of 1986 
     (defining earned income) is amended by adding at the end the 
     following new subparagraph:
       ``(C) Marriage penalty reduction.--Solely for purposes of 
     applying subsection (a)(2)(B), earned income for any taxable 
     year shall be reduced by an amount equal to the amount of the 
     deduction allowed to the taxpayer for such taxable year under 
     section 222.''
       (d) Clerical Amendment.--The table of sections for part VII 
     of subchapter B of chapter 1 of such Code is amended by 
     striking the item relating to section 222 and inserting the 
     following new items:

``Sec. 222. Deduction for married couples to eliminate the marriage 
              penalty.
``Sec. 223. Cross reference.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

     SEC. ____02. DEDUCTION FOR HEALTH INSURANCE COSTS FOR SELF-
                   EMPLOYED INDIVIDUALS.

       (a) In General.--Paragraph (1) of section 162(l) of the 
     Internal Revenue Code of 1986 is amended to read as follows:
       ``(1) Allowance of deduction.--In the case of an individual 
     who is an employee within the meaning of section 401(c)(1), 
     there shall be allowed as a deduction under this section an 
     amount equal to 100 percent (75 percent in the case of 
     taxable years beginning in 1999 and 2000) of the amount paid 
     during the taxable year for insurance which constitutes 
     medical care for the taxpayer, his spouse, and dependents.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

     SEC. ____03. REDUCTION IN TRANSFERS TO NATIONAL TOBACCO TRUST 
                   FUND.

       Notwithstanding any other provision of this Act--
       (1) the amount credited to the National Tobacco Trust Fund 
     under section 401(b) of this Act for any fiscal year shall be 
     reduced by the amount of the decrease in Federal revenues for 
     such fiscal year which the Secretary of the Treasury 
     estimates will result from the amendments made by this title, 
     and
       (2) for purposes of allocating amounts to accounts under 
     section 451 of this Act, the reduction under paragraph (1) 
     shall be treated as having been made proportionately from the 
     amounts described in paragraphs (1), (2), and (3) of section 
     401(b) of this Act.

     The Secretary shall increase or decrease the amount of any 
     reduction under this section to reflect any incorrect 
     estimate for any preceding fiscal year.
  Mr. DASCHLE. Mr. President, I want to explain this particular 
amendment because I believe it is very important that everyone 
understand the juxtaposition of the Democratic amendment and the so-
called Gramm amendment.
  A vote for the Gramm amendment was a vote either to take about $120 
billion of budget surpluses away from our effort to shore up Social 
Security or to drain 80 percent of the money out of the tobacco trust 
fund, money that would otherwise be going to States' antismoking 
efforts, medical research and farmers. That is the choice presented by 
the Gramm amendment from 2008 through 2022.
  That was the problem we had with the Gramm amendment. In the out 
years, after 2008, it either took so much money out of Social Security 
and out of the surplus, or it took 80 percent of the tobacco money. We 
were not satisfied with this choice. We were not supportive of, first, 
the overall amount of money to be taken, and, secondly, the pots from 
which it was to be taken.
  That is only the first problem--where the money to fund the tax cut 
would be drawn from in the out years. The second problem is that, in 
the first ten years, the revised amendment costs 50 percent more than 
the Democratic alternative; that is, $46 billion versus about $31 
billion. But, here is the catch: it actually delivers far less marriage 
penalty tax relief. So while it costs more, it does far less with 
regard to the marriage penalty itself. The reason for that is about 60 
percent of the Republican tax cut goes to couples who have a marriage 
bonus in the sense that they pay less if they are married than if they 
filed single returns.
  Keep in mind that today about 52 percent of those who are married get 
a marriage bonus. There is actually an incentive built into the Tax 
Code to be married. The other 48 percent incur a marriage penalty. 
Sixty percent of the Gramm amendment goes to those who have a marriage 
bonus. So, in addition to the current marriage bonus, they will get a 
Gramm bonus. In our view, given the fact that this additional bonus 
costs so much and comes from either Social Security or tobacco, the 
additional Gramm bonus does not make a lot of sense.
  The Democratic alternative, by contrast, focuses about 90 percent of 
its tax cut on families who are actually penalized by providing a 20% 
deduction against the income of the lesser-earning spouse, phased out 
between $50,000 and $60,000 of family income. If the Republicans were 
genuinely interested in the marriage penalty relief problem as Senator 
Gramm and others have proclaimed, they would vote for the Democratic 
amendment. It would provide a bigger cut in the marriage penalty for 
most couples than the Gramm amendment over the next 10 years.
  Let me give a couple of examples. A couple making $35,000, with 
income split $20,000 and $15,000 between the two spouses, would see the 
following circumstances if this amendment were to pass. In the year 
2002, under Gramm the couple would receive an average additional income 
of about $1,000. By comparison, under our 20-percent second earner 
deduction alternative, the couple would receive an additional reduction 
of $3,000, that is, 20 percent of $15,000.
  Mr. President, that represents about three times as large a tax 
deduction and would provide nearly three times as much tax relief--
three times more tax relief under the Democratic amendment than under 
the so-called Gramm amendment. Next, take a couple making $50,000, 
split $25,000 and $25,000 between the two spouses. Again, under the 
Gramm amendment the couple would receive an average additional 
deduction of about $1,000 in 2002. By contrast, our amendment would 
provide an extra $5,000 deduction, representing five times the amount 
of relief as under the Gramm amendment.
  So because we target our benefit to those who are actually penalized 
by the penalty rather than spread it across those who now enjoy a tax 
bonus for being married, we are able to deal with the penalty in a far 
more consequential way over the next ten years.
  To recap, the Gramm amendment costs 50 percent more over the first 10 
years than the Democratic alternative and gives far less marriage 
penalty relief during this period. It makes more sense to redirect the 
additional $15 billion that Senator Gramm spends on bigger marriage 
bonuses to the original purposes of this bill--to public health, to 
research, to state programs, and to farmers.
  That in essence is the difference between our two approaches. Let's 
spend and invest those resources on the things that this bill is 
designed to do. Let's do as Senator Gramm suggests, focus on the 
problem he has described, that is, the marriage penalty, and try to 
deal with it as effectively as we can. By following that counsel, by 
taking that approach, we should pass the Democratic amendment, we 
should ultimately accept this compromise and the balance that it 
reflects, a balance between investments in public health and tax 
reductions. This is a prudent balance that recognizes the importance of 
this tobacco legislation as it was originally intended.
  Mr. President, I yield the floor.

[[Page S6033]]

  Mr. LOTT. Mr. President, I move to table the amendment and ask for 
the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the motion.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. NICKLES. I announce that the Senator from Pennsylvania (Mr. 
Specter) is absent because of illness.
  Mr. FORD. I announce that the Senator from Delaware (Mr. Biden) is 
necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 55, nays 43, as follows:

                      [Rollcall Vote No. 155 Leg.]

                                YEAS--55

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Burns
     Campbell
     Chafee
     Coats
     Cochran
     Collins
     Coverdell
     Craig
     D'Amato
     DeWine
     Domenici
     Enzi
     Faircloth
     Feingold
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kempthorne
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                                NAYS--43

     Akaka
     Baucus
     Bingaman
     Boxer
     Breaux
     Bryan
     Bumpers
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Feinstein
     Ford
     Glenn
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Mikulski
     Moseley-Braun
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Torricelli
     Wellstone
     Wyden

                             NOT VOTING--2

     Biden
     Specter
       
  The motion to lay on the table the amendment (No. 2688) was agreed 
to.


                         Privilege of the Floor

  Mr. KERRY. Mr. President, I ask unanimous consent that the following 
members of my staff: Scott Bunton and Dave Kass, and Gregg Rothschild 
of the Small Business Committee staff be granted privileges of the 
floor during the pendency of the tobacco legislation.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________