[Congressional Record Volume 144, Number 129 (Thursday, September 24, 1998)]
[Senate]
[Pages S10870-S10871]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          THE 1998 TAX MEASURE

  Mr. FEINGOLD. Mr. President, I rise to offer a few comments on the 
budget picture and the tax measure that appears likely to move through 
Congress in these few days remaining in the session.
  Over the last several days, a number of my colleagues have come to 
the floor to voice concerns about the increasing use of the emergency 
spending provisions in our budget rule as a device to circumvent the 
tough limits we have imposed on our budget requiring that all new 
spending be paid for.
  Those Members are properly alarmed because those spending provisions, 
which by any reasonable measure were predictable and expected, have now 
been designated as emergency appropriations precisely to avoid the need 
for offsetting spending cuts.
  Mr. President, I want you to know that I share the concerns of those 
Members.
  The spending limits to which we agreed in the bipartisan budget 
agreement last year are indeed tough. They were intended to be tough. 
But if we are to make progress toward a truly balanced budget, those 
limits have to be respected--not just last year's but also this year 
and into the future.
  Along those same lines, I have some very serious concerns about the 
proposed tax bill that is working its way through Congress. To many it 
will not come as a surprise that I have serious concerns about this 
measure.
  In 1994, I was the first Member of either House to fault both parties 
for the irresponsible tax policies they were advocating while our 
Nation still faced a very serious budget deficit. Then, as now, I 
firmly believed that balancing the budget has to be our highest 
economic priority, and that the irresponsible tax legislation being 
offered at that time made that task much harder. I think that 
subsequent events have proved that point.
  The 104th Congress pursued the so-called Contract With America 
budget, a proposal that featured massive cuts in Medicare and Medicaid 
to help fund an irresponsible tax cut. That proposal in effect tried to 
serve two masters at the same time--a reduced deficit, and a massive 
tax cut.
  The result was a measure that was unsustainable economically and 
politically, and the political gridlock that followed in the wake of 
that budget produced a Government shutdown, and little, if any, new 
progress toward balancing the Federal budget.
  So the result was that the 104th Congress missed an important 
opportunity to finish the job that we started in the 103d Congress with 
the successful enactment of the historic deficit reduction package 
passed in August of 1993. It was the 1993 deficit reduction package 
that helped finally turn the budget around. It also helped turn 
Congress around by focusing attention on the need for continuing 
deficit reduction.
  Unfortunately, the 104th Congress failed to advance the work of the 
103d Congress. It sadly lost the focus of deficit reduction and the 
politically driven tax cut proposal undercut the potential for a 
sustainable deficit reduction package.
  Then, at the beginning of the 105th Congress, we began to regain part 
of our focus on reducing the deficit. The political gridlock that 
characterized most of the previous Congress was really a slap in the 
face to many, and the following Congress--this Congress--there was a 
historic bipartisan effort to get back on track.
  As a Member of the Senate Budget Committee, I was proud to be part of 
that bipartisan effort.
  Once again, let me pay special notice to our distinguished chairman, 
the Senator from New Mexico, and our ranking member, the Senator from 
New Jersey, for their leadership in helping to craft a bipartisan 
spending-cut bill that we passed in 1997.
  Mr. President, taken together, the 1993 deficit package, and to a 
lesser but still important extent the 1997 budget-cutting bill, have 
put this Nation on the road--``on the road''; we are not there yet, but 
on the road--to a truly balanced budget. We are not there yet, but the 
goal is in sight.
  As I noted, I was proud to support the budget-cutting bill last year. 
I voted for the tough spending cuts that included. However, I did not 
support the separate irresponsible tax-cut bill that was also part of 
those discussions.
  A large part of the reason we have not reached our goal of a balanced 
budget is last year's tax-cut legislation. In fact, that tax cut should 
not have been enacted for a great many reasons. But first and foremost, 
Mr. President, it shouldn't have been enacted because it was premature. 
In effect, it created over a 10-year period a $292 billion net tax 
cut--a net tax cut of $292 billion--while we were still facing 
significant budget deficits.
  Mr. President, the bottom line is that because our budget is still in 
deficit, the tax cut was effectively funded with Social Security 
revenues. Make no mistake about it. That $292 billion comes out of the 
Social Security trust fund, because it is the only pot that is left 
when you have a deficit.
  Mr. President, this terrible problem in last year's tax bill is the 
very same problem that plagued this year's tax proposal.
  There are other problems, as well, with last year's tax bill. Not 
only was it premature, but the bill's costs were heavily backloaded, 
putting even a greater burden on our children and grandchildren, and 
even adding more complexity, if you can believe it--even more 
complexity--to a Tax Code already thick with it.
  And by committing revenues to a variety of specific interests, it 
further

[[Page S10871]]

jeopardized the broad-based tax reform that so many of us genuinely 
want to see, and that we really thought was going to happen after the 
1994 election.
  Mr. President, the most telling legacy of last year's premature tax 
cut is that, if it had not been enacted, our Federal budget would have 
finally achieved a significant surplus by 2002 instead of having to 
wait until at least as long as 2006, 4 years earlier.
  Mr. President, this bears repeating.
  As we have talked for years about how we wanted to have a truly 
balanced budget by the year 2002, that goal and that achievement was 
sacrificed to the desire to give out a premature tax cut last year. If 
Congress had not enacted last year's premature tax cut, today we would 
be looking at the chance of real budget surpluses in the year 2002 
instead of having to wait at least until the year 2006, and perhaps 
beyond, if the appetite for premature tax cuts is not satiated.
  Mr. President, this mistake of last year should have been a lesson 
for us. Regrettably, it appears at least some have not learned a 
lesson.
  We now come to the end of the 105th Congress, and again we are 
presented with yet another tax-cut proposal.
  Estimates from the Joint Committee on Taxation puts the cost of the 
tax cuts in this new proposal at about $86 billion over the next 5 
years. Naturally, all of us who care about truly balancing the budget 
say, ``OK. Where are the offsets? What about the offsets? What revenue 
increases or spending cuts are included in the package to offset this 
cost of $86 billion in lost revenue?''
  Apparently, other than about $5 billion in revenue offsets, there are 
none. So it begins to look an awful lot like the 1997 tax bill, which 
involved at least $86 billion to $90 billion in net tax reductions--not 
offsets--over the course of 5 years.
  Mr. President, this new proposal essentially has no offsets. It is a 
net $80-billion-deficit increase.
  How can this be? What possible justification is offered to again 
balloon the deficit in this way?
  The answer is the same shell-game explanation that has been given to 
the public for about 30 years.
  Proponents of this legislation argue that somehow there is no 
deficit, that the budget currently has a surplus, and that all this tax 
bill does is merely return some of that surplus to the taxpayer.
  That portrayal of our budget is simply wrong and, frankly, is 
misleading.
  We do not have the surplus. The budget this year is projected to have 
about a $40 billion deficit. And except for briefly achieving balance 
in 2002 and 2005, the Congressional Budget Office does not project a 
significant budget surplus until at least the year 2006, 8 years from 
now, if, and only if, their economic assumptions hold. And they, of 
course, are optimistic economic assumptions based on the rather healthy 
economy we have enjoyed for several years.
  In response to a letter from our ranking member on the Budget 
Committee, the Congressional Budget Office indicates that if a 
recession similar to the one that occurred in 1990 and 1991 were to 
begin in late 1999, the budget's bottom line in that year would be 
close to $50 billion worse than is currently projected. CBO goes on to 
note that this impact on the budget would grow to almost $150 billion 
by the year 2002.
  Put simply, if we were to experience a recession similar to the one 
we experienced in 1990 and 1991, instead of having a balanced budget in 
the year 2002, we would have a budget deficit of $150 billion--all the 
more reason for us to be fiscally prudent.
  Let me reiterate, we do not have a budget surplus today. Our budget 
is currently projected to end the current fiscal year with a deficit of 
about $40 billion. How can proponents argue that we have a budget 
surplus when we do not? What is the difference? What is the difference 
between their view and their argument and the real budget? The 
difference is Social Security. Those who are pushing this tax measure 
want to include Social Security trust fund balances in our budget. They 
want to use Social Security balances to pay for their tax cut. And that 
is what is wrong with this tax cut.
  A recent release from the Concord Coalition said it quite well. They 
said, ``It is inconsistent for Congress to say that Social Security is 
`off budget' while at the same time using the Social Security surplus 
to pay for tax cuts or new spending.''
  That is exactly what is being proposed here. Years of fiscal 
discipline are being squandered for the sake of an election year tax 
cut bill.
  What is equally troubling, the future discipline that will be needed 
to finish the job and balance the budget is also put at risk by this 
tax bill. Our budget rules cannot by themselves eliminate our deficit 
and balance the budget, but they can help sustain the tough decisions 
we make here. They play an important role in ensuring that Congress 
does not backslide in efforts to balance the budget.
  The tax measure as it currently is being debated in the other body 
appears to violate several critical budget rules. It violates the pay-
go rule, which is supposed to ensure that tax and entitlement bills do 
not aggravate the deficit. It violates section 311(A)(2)(b) of the 
Budget Act by undercutting the revenue levels established in the most 
recent budget resolution. And it may violate section 306 of the Budget 
Act if, as some believe will happen, the majority includes language 
which would include further provisions to avoid the automatic cuts made 
by the sequester process.
  This proposal may well become a triple threat. It ignores rules 
requiring offsets, it ignores rules establishing revenue floors, and 
before we are done it may also seek to circumvent the sequester 
provisions--the last line of defense to protect the budget.
  I know this can sound very complicated. The people pushing this tax 
bill are counting on it sounding complicated. But it is really not 
complicated. Put simply, what they want to do, just like they did last 
year, is to use the Social Security trust funds to pay for an election 
year tax cut. They will balloon the deficit and imperil Social 
Security, and that is a bad idea.
  This is the legacy of the tax bill as it is the legacy of the 1997 
tax bill--raiding the Social Security trust fund, busting the budget 
and trashing budget discipline, all for an election year tax cut. For 
the sake of expediency, this body will be asked to put fiscal prudence 
on the block.
  Last year's tax bill was premature. This year's tax bill is equally 
reckless. We are within sight of our goal of a truly balanced budget. 
We really should not stray from that path. I urge my colleagues to join 
with me to oppose any tax measure which violates our budget rules and 
sets us once again on a fiscally irresponsible course.
  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. 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.

                          ____________________