[Congressional Record Volume 145, Number 39 (Thursday, March 11, 1999)]
[Senate]
[Pages S2581-S2582]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. COVERDELL (for himself, Mr. Torricelli, and Mr. Abraham):
  S. 593. A bill to amend the Internal Revenue Code of 1986 to increase 
maximum taxable income for the 15 percent rate bracket, to provide a 
partial exclusion from gross income for dividends and interest received 
by individuals, to provide a long-term capital gains deduction for 
individuals, to increase the traditional IRA contribution limit, and 
for other purposes; to the Committee on Finance.


                          the small savers act

  Mr. COVERDELL. Mr. President, I rise today, joined by my good friends 
Senator Torricelli and Senator Abraham, to introduce legislation whose 
time I believe has clearly come. We are faced with a real crisis. That 
crisis is the state of personal savings, savings by families that let 
them prepare for the bumps in the road.
  Families are not saving, and I believe it is not happening because 
our government takes too much from them. A recent report by the 
Congressional Budget Office showed that taxes on the American public 
are at their highest level since World War II. Too many middle-class 
families have been squeezed to the point where they live paycheck to 
paycheck without the option of saving for the future.
  Today, the Nation's economy remains the envy of the world. The United 
States has the first federal budget surplus in thirty years, 
unemployment is down and the stock market is up, but there are 
troubling signs on the horizon. Manufacturing activity slowed in 
December for the seventh straight month, dropping to its lowest level 
in almost eight years as global economic problems continued to hinder 
exports. At the same time, personal savings are at Depression-era lows.
  In 1982, families saved nine percent of their personal income. In 
1992, it was between five and six percent. Last year, it was one-half 
of one percent and headed into the red. Personal savings is so 
important because it helps prepare families for any crisis that could 
occur, such as a health emergency or job loss.
  Having said that, I believe we would all do well to remember the 
lessons from the biblical parable of Joseph. Recall that Joseph warned 
Pharaoh his kingdom would experience seven years of plenty followed by 
seven years of famine. His message to Pharaoh was to build reserves 
during the years of plenty in preparation for the years of famine, so 
that his people would not suffer. To ensure the longevity of our recent 
economic gains, it is important to remember the lessons of Joseph and 
heed the words of President Kennedy who, in his second State of the 
Union address said: ``Pleasant as it is to bask in the warmth of 
recovery . . . the time to repair the roof is when the sun is 
shining.''
  One-third of Americans have no savings at all, and the next third 
have less than $3,000 in savings. Although the baby-boom generation has 
contributed to the explosion of people investing in the equities, only 
two in five baby boomers will have enough savings to maintain their 
current standard of living when they begin to retire in 2011.
  The Small Savers Act would help to reverse these troubling trends. 
First, our proposal returns middle class taxpayers to the lowest 
Federal income tax bracket. Under our legislation, 7 million taxpayers 
would no longer find themselves taxed at 28%. Instead, they would be 
taxed at the 15% bracket.
  Second, it would encourage modest savings and investment. We propose 
to enable savers to earn $500, or $250 for singles, in interest and 
dividends without paying a tax. According to the Joint Economic 
Committee, 30 million low and middle income taxpayers would be able to 
save tax free. Our proposal also would wipe out capital gains taxes for 
10 million low and middle income investors by exempting the first 
$5,000 of long-term capital gains. For those committed to ending the 
taxation of capital gains, this would be an opportunity to take that 
first step while encouraging lower and middle class workers to invest 
for their future.

[[Page S2582]]

  Finally, we provide for a modest $1,000 increase in the contribution 
limit for deductible IRA contributions, from $2,000 to $3,000, and 
index for inflation after 2009. These contribution limits have not been 
raised since 1981.
  The Nation faces many challenges in the years ahead. None is more 
important than sustaining economic growth and ensuring our retirement 
security. The Small Savers Act is a modest and progressive step to 
begin shoring up personal savings and to keep the Nation on the path to 
long-term economic health.
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