[Congressional Record Volume 145, Number 95 (Wednesday, June 30, 1999)]
[House]
[Pages H5164-H5170]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  POLITICAL PARTICIPATION IN AMERICA, AND INEQUITIES IN THE NATION'S 
                            MONETARY POLICY

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 1999, the gentleman from Vermont (Mr. Sanders) is recognized 
for 60 minutes.
  Mr. SANDERS. This evening I hope to touch on some issues that are not 
often discussed here on the floor of the House, and along with me I am 
happy to welcome the gentleman from Oregon (Mr. DeFazio).
  I want to begin by touching on an issue that I believe is perhaps the 
most important issue facing this country. It is not talked about 
enough, but it is something that all of us should be deeply concerned 
about. That is, Mr. Speaker, in the last election, 36 percent of the 
American people voted. That means almost two-thirds of the American 
people did not believe it was important enough for their future to come 
out and vote.
  What is even more alarming is that among people 24 years of age or 
younger, we had, if Members can believe it, 18 percent of those people 
voting. Eighty-two percent said they were not interested in voting. 
That is frightening unto itself, but it bodes very poorly for the 
future because there is very good evidence that if young people do not 
vote, it is much less likely that they will vote in the future.
  So what happened in recent elections is that fewer and fewer people 
are participating. The vast majority of low-income people do not vote. 
Most working people do not vote. But then, on the other hand, we have 
upper income people who do vote, and upper income people who contribute 
heavily to both political parties and into the political process. So 
the voices of working people and low-income people are virtually not 
heard in this institution. Their needs are not taken account of as 
legislation is dealt with.
  But for those folks who have the money, the wealthiest one-quarter of 
1 percent who make 80 percent of the campaign contributions, Congress 
continuously does their bidding, pays attention to their needs. I think 
we have a vicious circle, that as Congress pays more and more attention 
to the needs of the wealthy and not to working people, not to the 
middle class, then the vast majority of the people turn off even 
further from the political process and say, hey, this Congress does not 
represent me. Why should I vote?
  Tonight I want to touch on a number of issues. But before we get 
going, I yield to the gentleman from Oregon (Mr. DeFazio).
  Mr. DeFAZIO. Mr. Speaker, following on that point, the question 
really is, for whose benefit is the country run and the economy run?
  If we ask, and I have asked, groups of students in my district, now, 
who do you think has the most impact on the economy in the United 
States in government, most people would guess the President. Some talk 
about the Secretary of the Treasury. A few guessed the Congress, the 
House and Senate. But virtually none say, well, Congressman, I know who 
it is, it is the Federal Reserve. It is that appointed, unelected, 
group of extraordinarily wealthy individuals, for the most part, who 
meet in secret.
  Today they met in secret downtown in Washington, D.C., in their 
marble palace, sitting at their exotic long boardroom table, marble, 
with nice exotic hardwoods, and they made a decision that I suppose 
does not sound that important to most people, but the impact will be 
tremendous.
  Again, it goes essentially to who really runs this country. They 
decided to raise interest rates by one-quarter of 1 percent. That does 
not sound like a lot, except there are tens of millions of Americans 
who tomorrow will wake up to find that their mortgage rate went up, 
their credit card rate went up, their adjustable car loan went up.
  In fact, it is computed that that one-quarter of 1 percent increase 
will cost a family money. Here is a family that has a $100,000 
mortgage, a $15,000 4-year car loan, and $2,000 on a credit card. It 
sounds pretty middle class to me. It will cost them $6,913 for the 
mortgage, $84 on the car loan, and $16 on the credit card; $7,013, that 
one-quarter of 1 percent rate.
  I suppose that would be justified if there was a reason to do it. 
What is the reason? Are we worried about inflation, which is at or near 
historic lows? I do not think so. It might be that the Fed is worried 
about higher wages. The gentleman and I have talked about that 
previously. Sometimes the Federal Reserve gets worried when the 
unemployment rate drops below 5 or 6 percent.
  They had a rule for years saying it should not go below 6 percent. 
Then they said maybe 5 percent. They get worried, because what happens 
if unemployment drops?
  Mr. SANDERS. What will happen is then, horror of all horror, wages 
may go up. Let me just touch on that very important point.
  We hear every day on the television, we hear it on the radio, we read 
it in the newspapers, that we are living in the midst of one of the 
great economic booms in our history. Maybe that fear that with low 
unemployment wages might go up has in fact prompted the Federal Reserve 
to do what it did today.
  But I want to, for the Record, Mr. Speaker, give a chart which very 
clearly belies this nonsense that there is an economic boom for the 
middle class or for working people.
  According to information assembled by the Economic Policy Institute, 
and I do not think there is a lot of debate about this, in 1973 the 
weekly earnings, the real average weekly earnings of workers in the 
United States, was $502, okay? In 1973, the weekly earnings, average 
earnings, were $502.
  In 1998, in the midst of a great economic boom, the weekly earnings 
were $442, a 12 percent reduction in real wages. The reality is that in 
order to compensate for the lowering of real wages, the average 
American today is working significantly more hours. People are working 
two jobs, people are working three jobs.
  So if the Fed thinks that they have got to once again increase 
unemployment to dampen wage increases, I would have very strong 
disagreement, because in reality today the average person in the middle 
class is struggling. The gentleman and I have discussed it before. It 
is true in Oregon, it is true in Vermont.

[[Page H5165]]

  How many people that we know are working two jobs, three jobs, 50, 
60, 70 hours a week to pay the bills? The idea that anybody in a public 
position of trust would take action which would result in lowering 
wages, forcing people to work even longer hours, is to my mind an 
outrage.
  Mr. DeFAZIO. If the gentleman will continue to yield, let us think 
about this again. If this unelected group, the Federal Reserve Board 
who meets in secret, some of whom work for banks and in fact can 
individually profit their employer without any conflict of interest 
rules, if they raise interest rates, and they did not raise them 
because wages are running away and people are seeing big increases in 
their wages, they must have had another reason.
  The pundits tell me that perhaps that other reason is that they are 
worried about the bubble in the stock market. I have a little problem 
about that. The question is, if you whack the people on Main Street by 
raising again, as these statistics show, their payment for their 
$100,000 mortgage, $15,000 car loan, and $2,000 credit card, and a lot 
of folks have more than that on their credit card, if they are going to 
pay $7,000 more for those loans because of this one-quarter of 1 
percent increase, how is that going to somehow translate to a message 
to the people on Wall Street, the speculators, who are driving up, what 
did Greenspan call it, irrational exuberance on Wall Street?
  If he is worried about this irrational exuberance on Wall Street, why 
did he not do something about Wall Street? They have the tools. Right 
now on Wall Street with just a $1,000 investment, you can on margin go 
out and buy a whole bunch more stock. They could control that. There 
are steps they could take to directly control that.
  But no, they are going to whack the people on Main Street and say, 
see, we are going to cause some of you to lose your jobs, drive up 
unemployment, maybe we will drive down wages. We are going to cause 
this disruption in the economy, and we are hoping that will percolate 
up to Wall Street. This is kind of a bizarre way to run an economy, but 
I think it has something to do with who they work for, the major banks, 
and what lack of control the Congress has.
  No one knows what the Federal Reserve does or why they do it. It is 
all secret.

                              {time}  1800

  Congress has ceded all authority to them in the making of money and 
controlling interest rates and basically managing the economy. They are 
managing it for their banker friends who are deathly afraid of 
inflation or deathly afraid of higher wages for the corporate CEOs, but 
not for average folks.
  I think that is an extraordinary turn of events. I think it brings us 
back again to who makes the contributions, who basically runs this 
organization when it comes to election time, and to whom are many of 
our colleagues beholden. It, unfortunately, is not the average people 
on Main Street, but it is those people on Wall Street. It is those 
people in the banking industry, the pharmaceutical industry, the 
insurance industry, and others.
  In fact, I noted today in the paper that, in this presidential race, 
George W. may not even take public matching funds because he has raised 
so much money and intends to raise so much money, obscene amounts of 
money is flowing in so fast, they cannot count it, that he just does 
not think he will need those public matching funds and those 
constraints on spending.
  Now, one has got to wonder who those people are contributing all that 
money and what they expect to get in return.
  Mr. SANDERS. Mr. Speaker, let me interrupt the gentleman from Oregon, 
if I might, by giving some facts and figures. Mr. Speaker, I will also 
include for the Record, information about campaign contributions and 
lobbying expenses.
  Last week, and I hope to get into this a little bit, the gentleman 
from Oregon (Mr. DeFazio) and I talked about the issue of 
pharmaceutical drugs, about the crisis that exists all over the United 
States where we have elderly people and people with chronic illnesses 
who cannot afford the high cost of prescription drugs.
  We talked about the fact that the same exact drug manufactured in the 
United States of America is sold for significantly lower prices in 
Canada, in Mexico, and in Europe, and that the American consumer is 
being ripped off.
  We talked about the huge profits of the pharmaceutical industry and 
the fact that the United States is perhaps the only major Nation on 
earth that does not regulate the price that pharmaceutical companies 
can sell their product. Lo and behold, apropos of what the gentleman 
from Oregon was talking about, now let us just see how money works and 
the relationship to the very high cost of prescription drugs in this 
country and to lobbying expenses and campaign contributions.
  It turns out that, for the first 18 months of the last election 
cycle, the pharmaceutical industry had lobbying expenses of over $74 
million and made more than $7 million in campaign contributions, which 
put them at the very top of any industry in America.
  So if consumers want to know why we are paying so much more for the 
exact same prescription drug in this country as the Canadians and the 
Mexicans and the Europeans do, then they might well look to the reality 
that the pharmaceutical industry is pouring huge sums of money, not 
only into Congress, but into State legislatures throughout this 
country.
  They are number one. They are at the very top of the list of people 
who spend money on lobbying expenditures or campaign contributions, 
followed, I might add, not very far behind, by the insurance industry, 
which might help us explain why we are the only Nation in the entire 
industrialized world that does not have a national health insurance 
system.
  So whether the issue is banking, whether the issue is interest rates, 
whether the issue is the high cost of pharmaceutical drugs or all of 
the other absurd priorities that exist in this Congress, I think one of 
the important factors to examine is who makes the campaign 
distributions, who puts money into lobbying; and that tells us a whole 
lot about the end results which we see.
  Mr. DeFAZIO. Mr. Speaker, since the gentleman from Vermont raised the 
insurance industry, some of our colleagues spoke at an earlier hour 
about the need for a Patients' Bill of Rights. As the gentleman pointed 
out, the insurance industry is the second greatest funder of 
congressional campaigns and has been particularly generous to the 
majority party.
  We found in the last Congress that we were able to get a very 
truncated Patients' Bill of Rights through the House, and the Senate 
did not act at all because of the fear on the part of the insurance 
companies that it might impinge upon their profits.
  Let us just talk for a minute about what that means. I have talked to 
some folks from the Heart Association who are very concerned. They 
spent years educating Americans to, when they have got that pain, they 
should go to the emergency room. Well, guess what, now with an HMO, one 
does not go to the emergency room, one is supposed to call the 
insurance company first in some plans and talk to a clerk somewhere who 
one may have awakened from their late evening nap, and ask them for 
permission to go to the emergency room. Sometimes it is denied. Take an 
aspirin and call the doctor in the morning.
  The Heart Association is very worried about the message we are 
sending here. So part of the Patients' Bill of Rights is called a 
prudent person rule. If one has got an extreme pain in one's chest and 
one thinks one is having a heart attack, one does not have to call a 
clerk who works for the insurance company to get permission to go to 
the emergency room.
  Of course, they say they do not deny permission, they just will not 
pay for it if one goes. Now, how many Americans can afford a $500 or 
$1,000 visit to the emergency room? Not very many. So this is 
extraordinary. So that is one thing in the Patients' Bill of Rights.
  There is another case in Virginia, a young woman who fell off a 
cliff, broke her back. They medivac'd her by helicopter. When she got 
to the hospital, they worked on her right away. She was in serious 
condition. Her insurance company later refused to pay because she 
lacked prior authorization.
  I asked, when was she supposed to make the call? On her cell phone as 
she fell through the air? Or perhaps she

[[Page H5166]]

should have asked to use the radio in the helicopter while she was 
being medivac'd.
  No, these are absurd things. These are no brainers for the American 
people. We should have the right, we pay our insurance premiums, to 
have that kind of fair treatment. But guess what, the insurance 
industry does not think so, and a majority of my colleagues here in 
Congress do not think so, because they are much more attentive to the 
insurance industry then they are to the needs of their constituents. 
That is an outrage, and that should change.
  I am one of many who have signed a petition here in the House to 
force a Patients' Bill of Rights to the floor of the House because the 
Republican leadership refuses to let the bill be heard.
  We have over 180 people on that bill, and I tell my colleagues we 
will not be denied; and if the American people would begin to speak up 
to their representatives, they would not. But again, we are back in 
this circular situation where the people who fund the campaigns have 
more at risk and are more likely to be heard than the people who are 
being denied the care in their insurance plan.

  Mr. SANDERS. Mr. Speaker, the gentleman from Oregon touches on 
perhaps the most fundamental issue that we can discuss; and that is, in 
the midst of all of the media hoopla about how great the economy is 
doing, the reality is that there are tens and tens of millions of 
people who are hurting very badly and, in many ways, are in worse shape 
today than they were 20 or 25 years ago. The gentleman is touching on 
one area, and that is the area of health care.
  Now, I want to know one simple thing. It would seem to me that, if 
the economy is booming, what that would translate to, among other 
things, is an improved health care system for all of the people. It 
makes sense to me. The economy is booming. That means that more and 
more people have health insurance, better quality of health care, 
better able to go to the physician of their choice, the specialist of 
their choice, more access to prescription drugs. That is what a booming 
economy would seem to me.
  But the reality, as the gentleman has just indicated, is very much 
not that. The reality is that we have some 43 million Americans who 
have zero health insurance. The reality is that we have tens of 
millions of Americans who have very large deductibles and co-payments. 
That means that, if they get sick, they hesitate to go to the doctor, 
because they do not have the cash to pay for the visit.
  The end result of that is that doctors now tell us that the patients 
that they are seeing are far sicker than the patients that they used to 
seeing because people do not have the money to pay because they have 
high deductibles.
  In terms of prescription drugs once again, at a time when the average 
profits in 1998 for the 10 largest pharmaceutical companies in this 
country were $2.5 billion, that was the average profits for the 10 
largest pharmaceutical companies, we have people in the State of 
Vermont, people all over this country, elderly folks, sick people who 
literally have got to make the choice as to whether they purchase the 
prescription drugs they need to keep them alive to ease their pain or 
whether they heat their homes in the winter, whether they buy the food 
that they need.
  Ah, but the pharmaceutical industry, enjoying huge profits has all 
kinds of money available for campaign contributions to maintain the 
status quo.
  I will submit for the Record, Mr. Speaker, a chart which I think the 
American people would be interested in hearing about which talks about 
how much more senior citizens in the United States pay for prescription 
drugs than do seniors in other Nations.
  If a product used, one of the more commonly used prescription drugs 
in this country used by seniors, cost $1, in Germany that product costs 
71 cents; in Sweden, 68 cents; in the United Kingdom, 65 cents; Canada, 
64 cents; France, 57 cents; and Italy, 51 cents.
  But once again, getting back to the gentleman's point, if we are 
talking about a so-called booming economy, I would think that what the 
health care system would be doing is making it easier for people to get 
in, making it easier for people to get the quality care. As we both 
know, as a result of the growth of managed care and HMOs, that is very 
often exactly the opposite of what is happening.
  Mr. Speaker, I yield to the gentleman from Oregon (Mr. DeFazio).
  Mr. DeFAZIO. Mr. Speaker, part of the problem there, I want to go 
back to the point about seniors and the cost of drugs. But just on the 
issue of access to health care and the fact that so many people have 
been deprived to access to health care, part of the problem is the fact 
that more and more Americans are working in temporary jobs.
  In fact, the number of Americans in the last 25 years holding 
temporary jobs without benefits instead of full-time jobs with benefits 
has gone up by a factor of eight, eight times as many people. The 
largest employer in America now is not General Motors. It is not 
Microsoft, it is a Manpower, Inc., a temporary employing employer.
  Now, those people are forced to take jobs, generally at wages lower 
than what they earned in their last full-time job, with no benefits, 
including no insurance benefit. Now, that is a crisis for many families 
in this country, and that is something that needs to be dealt with.
  They say, well, if they had insurance at their last job, they can 
purchase it under COBRA. That is right. We did provide relief for a few 
people with the Federal law that says they can purchase the same health 
care they had. But guess what? When people lose their jobs, most people 
cannot afford $350 a month premiums to come out of their unemployment 
insurance and still put food on the table, pay the rent, and pay the 
light bill. They cannot afford that.
  But talking about that, I have done recently, with the help of the 
gentleman from California (Mr. Waxman), a survey of seniors in my 
district in terms of the prices they are paying for commonly prescribed 
drugs for seniors. The results are absolutely extraordinary. I will be 
releasing the survey next week. But it turns out that many seniors are 
paying 4 to 7 times as much as people who have health insurance, full 
health insurance for exactly the same drugs over the counter.
  Now, there is something wrong with that. The insurance companies have 
gone to the pharmaceutical industry and bargained a good price. They 
are getting a great price. A senior walks in and buys the same 
prescription over the counter, sometimes they need essentially a life-
saving prescription, and they pay 4 to 7 times more. They cannot afford 
it.
  The President is trying to deal with that in his proposal with a 
minimal beginning of prescription drug coverage. That would be an 
improvement over the current system. But much more can and should be 
done dealing with the prices these insurance companies charge.
  The gentleman from Vermont has tried for a number of years to make a 
very simple point, a lot of drugs are developed after the public has 
spent a lot of money developing the research for particular drugs. In 
fact, one drug that is very effective for uterine cancer was developed 
by the National Institutes of Health. All the research was done, all 
the processes on how to make it. The bark out of which the first drugs 
were made before they developed an artificial process came off of 
Federal land.
  So we have taxpayers pay to discover and develop the process for the 
drug. Taxpayers own the property from which the natural substance, the 
bark, is coming from. Guess what, the Federal Government gave an 
exclusive right to Bristol-Myers Squibb to market this drug with no 
price caps. Guess what? With no sunk costs, they did not go through a 
lengthy development process, and very low cost to get the product. They 
were charging outrageous prices because women desperate with this type 
of cancer needed the drug.
  Now, the gentleman has proposed a simple principle. They should repay 
the Treasury for that research. They should repay the taxpayers. Now, 
has that become law? It seems to me most Americans would agree that 
would be fair.
  Mr. SANDERS. Mr. Speaker, I would say that the pharmaceutical 
industry, which spends over $80 million in the last election cycle in 
opposition to any serious reform was successful in helping to defeat 
that proposal. But we will be back, and we are going to be back with 
another good proposal.

[[Page H5167]]

  That is that one of the outrages that currently exists, as I 
mentioned earlier, is that the same exact prescription drug 
manufactured by an American company is sold in Canada, Mexico, and 
around the world for far lower prices than it is sold in the United 
States.
  I know the gentleman intends to release a study in Oregon, but we 
have already released one in the State of Vermont. What we found is 
that, for the most commonly used prescription drugs that senior 
citizens need in Vermont, those drugs cost 81 percent more than in 
Canada and 112 percent more than in Mexico.

                              {time}  1815

  And in response to that absurdity, I have introduced legislation 
which would allow American pharmaceutical distributors to be able to 
purchase their products from Canada, from Mexico, and from any other 
country to take advantage of the lower prices so they could resell 
those products back in the United States at far lower prices than is 
currently the case.
  I know the gentleman knows that the problem here is not with the 
independent pharmacist. That person has no choice but to sell the 
product for a high price because he is purchasing it for a high price. 
Well, now we are going to let competition reign. Now we will let the 
distributors buy at a lower price in Canada, Mexico or anyplace else. 
This is exactly the same product that is sold in the United States for 
a far higher price.
  And I should mention that, as a matter of fact, on July 7 I intend to 
take a van of senior citizens and people with chronic health problems 
to Canada. It is only an hour and a half away from us. We are going to 
go to Montreal and we are going to purchase prescription drugs and we 
are going to show the degree to which prices in Canada are so much 
lower than they are in the United States.
  In my State already many people are going over the border to Canada 
to take advantage of the lower prices. I know in the southern part of 
this country people are going to Mexico. That is an absurdity. 
Americans should not have to skip over the border, north or south, in 
order to get a discount on drugs manufactured by American 
pharmaceutical companies. That is an outrage. And we are going to do 
everything we can to see that the American consumer is treated the same 
way that the Canadians, the Mexicans, and the Europeans are treated.
  Mr. DeFAZIO. Is the gentleman telling me these are exactly the same 
drugs? These must be generics or something like that.
  Mr. SANDERS. No, these are the same drugs manufactured in the same 
factory, often in the same bottle, often in Puerto Rico. The same exact 
products.
  I want the pharmaceutical industry to tell the American people why if 
they go to Europe, if they go to Mexico, if they go to Canada they can 
purchase the product that they sometimes need to stay alive. The 
gentleman and I both know of the horror stories of people struggling to 
combat their illnesses, a question of life and death, and not being 
able to afford these outrageously high prices.
  And as the gentleman indicated a moment ago, to add insult to injury, 
the taxpayers of this country pour huge sums of money into research and 
development. And then, when they develop the product, instead of saying 
to the pharmaceutical company that is going to distribute it, that is 
going to sell it, that they have to sell that product, because it was 
developed with taxpayer money, they have to sell that product at a 
reasonable price, instead of that the NIH gives the product over to the 
pharmaceutical industry who then sells it at any price that they want, 
meaning that the taxpayer who helped to develop the drug often cannot 
even afford to purchase the drug that he or she developed, which is an 
issue that must be addressed.
  Mr. DeFAZIO. I have also recently found out, which causes me great 
concern in my district, that there is a problem with retired military 
getting their prescriptions filled. We have no active military base in 
Oregon, and they are not eligible for a mail order program which is 
maintained by the military, so what they have been doing is pooling 
together with volunteers to go up to Washington State with all their 
prescriptions, and then have a person go and fill a couple hundred 
prescriptions and load them in a van and drive them back down to 
Oregon.
  Now, this is another example of Americans who have been made a 
promise, in this case veterans, that we would take care of them; that 
we would take care of them for life, and now they are not getting their 
prescriptions filled. In fact, the military has proposed that they do 
not want to have this volunteer van service anymore. And I said, well, 
then, how about making these people eligible for mail order 
prescriptions? I have a Blue Cross/Blue Shield card, so I can get some 
product out of a pharmacy in Florida for an absurd price if I want to 
way wait a week or 10 days. So I said, how about the military setting 
up something like that. Well, that is difficult. We are still fighting 
over that.
  But that is just another category of people that are getting hit. 
They cannot afford to go to the pharmacy and buy these things. They 
have to get them through the military, and now they are being told they 
cannot do that.
  Mr. SANDERS. Mr. Speaker, the gentleman touches on an issue I know 
both of us have worked on, and that is veterans' rights, and this gets 
again back to the issue of the so-called booming economy and the 
priorities being established in the Congress.
  Now, it seems to me that in terms of veterans, these are men and 
women who have put their lives on the line. They did what their 
government asked them to do. They signed a contract, sometimes in 
blood, with the United States Government. And I regard it as completely 
unacceptable that the government reneges on the contract that it signed 
with those people.
  And when we talk about priorities and we talk about the so-called 
booming economy, I find it hard to understand how any Member of this 
Congress could support on one hand huge tax breaks for the wealthiest 
people in this country, who in recent years have seen extraordinary 
increases in their wealth, and then with the other hand say to the 
veterans of this country, well, gee, I guess we are having problems 
with prescription drugs, we just do not have the money to help. We may 
have to downsize the VA hospitals. We may have to cut back on the 
quality of care that we give.
  Now, what a sense of priorities it is to say to millionaires and 
billionaires, oh, we hear your pain, we are going to give you huge tax 
breaks; but to the veterans of this country, to the senior citizens of 
this country, to the working people of this country, gee, we are sorry, 
we just do not have the funds to help in your hour of need.
  Now, we have talked about health care, we have talked about 
prescription drugs, we have talked about the Federal Reserve, and we 
could go on and on, but the bottom line is that what goes on in this 
country increasingly is that the people on the top are doing 
extraordinarily well, the people in the middle are working longer hours 
for lower wages, and the people down below are hurting very severely.
  I find it basically wrong, and there is no other word that I can use, 
that in the United States of America today we have the most unfair 
distribution of wealth and the most unfair distribution of income in 
any industrialized society. We have a situation in which the wealthiest 
1 percent of the population now own 40 percent of the total wealth of 
this Nation, which is more than the bottom 95 percent. We have just 1 
percent or more wealth from the bottom 95 percent.
  As the gentleman knows, in recent years, we have given huge tax 
breaks to upper income people at the same time as we have cut back on 
the needs of our veterans and we have cut back on the needs of many, 
many other people. So when I go back to Vermont, people say to me, 
middle class people say, gee, we cannot afford to send our kids to 
college; how can you be in a Congress which can provide huge tax breaks 
for those people who really do not need it?

  So I think we have to get our priorities right. And what our 
priorities should mean is that we should join, in my view, the rest of 
the major countries in this world and say that health care is a right 
of citizenship, not a radical idea; that every man, woman, and child 
should be entitled to health care

[[Page H5168]]

because they are citizens of this country; that we should be putting 
more money into higher education so that middle class families do not 
have to go deeply into debt to send their kids to college; so that the 
young people do not have to get out of college $20,000, $30,000, or 
$40,000 in debt.
  So I would suggest that maybe the Congress would want to start 
focusing on the needs of ordinary people rather than just those people 
who make the campaign contributions.
  Mr. DeFAZIO. Well, I am surprised we got back to campaign 
contributions, but I think the gentleman is making an excellent point. 
Again, the question is on behalf of whom does this body make policy day 
in and day out and to whom is the majority beholding?
  They are talking about a vision. They have a vision for a future, a 
tax system, which the gentleman was just talking about, and it is an 
interesting vision. And the vision is that we should do away with death 
taxes. Of course, in the last Congress we acted so that anyone with 
assets of less than $1 million in the very near future will be subject 
to no death taxes. But they are worried about those people with assets 
of over $1 million; that they might have to pay taxes upon transferring 
them to their heirs. So their vision is we would do away with all 
inheritance tax and then would reduce the capital gains tax to zero.
  Now, here is the ultimate absurdity, and this is not about wealth 
envy or something else, it is about everybody carrying their fair share 
of the burden in our society, and somewhat that depends upon the 
ability to pay. We can only squeeze so much out of a minimum wage 
worker. But if someone has a lot of discretionary income, they can 
afford to pay a little bit more. But in their vision that they have put 
forward to us, there will be zero inheritance tax and zero capital 
gains tax.
  Now, let us just say if someone was lucky enough to be, well, let's 
say Bill Gates' child, that person, and he says, by the way, that he is 
going to give most of the money away to charitable undertakings. And 
that is wonderful, and I think the American people will appreciate that 
gift. But let us just say he reserves a billion dollars for his child, 
and the child gets a billion dollars when they graduate from college. 
Well, under this vision of the future, that child would pay zero 
dollars on taxes for the inheritance. And if that child chose to invest 
the money for a living as opposed to working for wages, they would pay 
zero dollars in Federal taxes, zero dollars in FICA taxes.
  So it sort of begs the question, as the elite make more and more of 
their money off unearned income, why is it that wage-earning people 
have to pay 28 or 31 percent, or even the people at the top, 39.6 
percent of their income in taxes, but these other people who do not 
have to work for wages, who are lucky enough or skillful enough to just 
live on unearned income, pay at the rate today of 18 percent with a 
vision of going to zero?
  Mr. SANDERS. Let me see if I understand what the gentleman is saying. 
It is a very radical concept. Is the gentleman suggesting that somebody 
who works by the sweat of their brow for 50, 60, 70 hours a week trying 
to make $25,000, $35,000, or $40,000 a year to maintain their family at 
a level of dignity and decency, that those people should be paying less 
in taxes than people who make millions of dollars investing in the 
stock market?
  Mr. DeFAZIO. Well, I was not even taking it that far, but that is an 
interesting point.
  Mr. SANDERS. It is radical, I know.
  Mr. DeFAZIO. That is pretty radical. The gentleman sometimes is known 
to be out there a little bit.
  But I will take it back to a simpler prospect. A person who works 50 
hours a week, say a retail clerk, and brings home $40,000, $50,000 a 
year in a good union job. That is possible. Let us not even go to the 
issue of someone with a very large income and someone with a modest 
income. Let us say two people earned $40,000 a year. One earns $40,000 
a year by investing money they inherited, the other earns $40,000 a 
year by working 40 hours a week in a wage-earning job. The person who 
earns $40,000 a year is paying taxes at about the rate of 28 percent 
and the person who invests for a living is paying 18 percent.
  Now, I have a hard time understanding why that is fair; why the 
person who does not work for wages pays a lower rate. And, of course, 
if the person who works for wages is self-employed, not only do they 
get socked with a 28 percent rate, they also get socked with paying the 
FICA tax on both sides, so their tax rate suddenly jumps up around 40 
to 50 percent. But their vision for the future is that 1 percent or so 
who can just live off investments should pay no taxes to the Federal 
Government.
  Now, my question would be how then are we going to maintain the 
government and who is going to pay?
  Mr. SANDERS. Well, I think while it is certainly not fair, it is 
understandable. Because once again we have got to deal with the reality 
that the wealthiest one-quarter of 1 percent of the population make 80 
percent of the campaign contributions. Unless I would be very mistaken, 
and I do not think I am, when these guys kick in $50,000 or $100,000 or 
$1 million, and their corporate friends kick in huge sums of money to 
both political parties, maybe that is the reason that they are making 
those contributions.
  After all, imagine just trying to live on a couple hundred million 
dollars a year when one can get a tax break and earn even more money. 
My guess is that when they go to these $50,000 a plate dinners, they 
are not sitting there saying, raise the minimum wage, that is why we 
contributed $50,000; expand the Pell Grants; provide health care to all 
people; cut the cost of pharmaceuticals so that ordinary folks can 
afford it.

                              {time}  1830

  My guess would be that people who contribute huge sums of money to 
the political parties are not quite so interested in the needs of the 
middle class and working families of this country but rather their own 
interests. And one of their own interests is to pay less and less and 
less in taxes, and that certainly has happened in recent years.
  Mr. DeFAZIO. Well, certainly, then, we can expect that we will take 
up campaign finance reform soon here on the floor of the House.
  Mr. SANDERS. Well, we certainly would like to do so. But once again, 
money is talking.
  The American people in poll after poll say they want changes in the 
obscenity of the current campaign finance system. But the monied folks, 
hey, they like the system the way it is.
  See, in a democracy we have one person, one vote. If we have money, 
if we do not have money, we get one vote. But in the current system, we 
have one person, one vote. But then the other person has one vote plus 
the ability to contribute endless sums of money and have access and 
impact on the legislative process. So for those folks who have the 
money, they do not want to see campaign finance reform.
  It is a real outrage that the House leadership has refused to bring 
back onto the floor a reasonably conservative bill that would ban soft 
money that passed overwhelmingly here last year. They do not want to 
bring it back. And they are going to wait and wait so that it will 
become impossible for the Senate to act and will continue this charade 
by which big money pours into both parties and to the presidential 
candidates and which Government continues to work on the needs of 
upper-income people rather than the middle class.
  Mr. DeFAZIO. Mr. Speaker, the gentleman is making an excellent point 
there, and it is very disturbing to me and many other Members of this 
chamber.
  I believe the gentleman has probably signed what is called the 
discharge petition. That is, a majority of Members of this House if 
made to vote would vote for campaign finance reform, but the leaders of 
the Republican party are attempting to protect their Members from 
making that vote.
  In the last Congress, Speaker Gingrich managed to delay and delay and 
the gentleman from Texas (Mr. DeLay) managed to offer many, many, many 
mischievous amendments. But ultimately, finally, the House passed its 
judgment. As the gentleman says, overwhelmingly, faced with the 
obscenity of today's campaign finance system, an overwhelmingly 
majority of this House said we have to take these minimal steps towards 
reform. Our constituents demand it.

[[Page H5169]]

  But now here we are a little more than a year later, same place, a 
majority support reform, but we cannot get a bill to the floor of the 
House. The Speaker says, well, I will only bring it up later in the 
year, late enough so that we know it will not go anywhere in the Senate 
and then we will be launched into the presidential campaign year. And 
we all know that we are not going to reform campaign in the middle of 
the most expensive presidential campaign in the history of the United 
States.
  Mr. SANDERS. What is really very clear, I do not think there is any 
debate on this, is the Speaker and the House leadership understands 
that if that bill came before the House, as the gentleman has just 
indicated, the vast majority of the people would vote for it because 
they would be embarrassed to go back home and say, ``we voted against 
campaign finance reform.'' But if it does not come before the floor of 
the House, they do not have to make that vote.
  Now, we are running out of time. The gentleman from Oregon (Mr. 
DeFazio) has recently made I think a very important contribution in 
terms of this whole discussion over Social Security. As the gentleman 
knows, we hear very often about how Social Security is going bankrupt, 
there is no money in it, and blah, blah, blah, which happens to be 
untrue.
  Right now, if the United States Congress does nothing, which I think 
is not a good idea, I think we should act, Social Security will be able 
to pay out every benefit owed to every eligible American for the next 
34 years. So that is not a system on the verge of bankruptcy. But as we 
become an older society and as people live longer, there are problems 
that we must address.
  I know the gentleman has just recently introduced very, I think, 
interesting Social Security legislation.
  Mr. DeFAZIO. Yes. Just one point beyond that for people who are being 
stampeded into the idea that we have to destroy the system to save it.
  Even if Congress did nothing, as the gentleman says, for 35 years 
Social Security could deliver on 100 percent of promised benefits and 
after that 73 to 75 percent of promised benefits into the indefinite 
future. That means it has a 25-percent that starts 35 years from now.
  Does that sound like a system we need to destroy, the most successful 
social system this country has ever seen that has been responsible for 
lifting tens of millions of seniors out of poverty?
  Mr. SANDERS. Mr. Speaker, I find it very ironic and interesting that 
time and time again, and I guess we are not going to have time today to 
talk about corporate control over the media, a very dear subject to me, 
but I find it amazing that we hear Social Security crisis, bankrupt, no 
money available, and the young people by and large believe us by now 
because they have heard it so much, when there is no debate.
  If the Congress does nothing, Social Security will pay out every 
nickel owed to every eligible American for the next 34 years.
  We have crises today. We have people sleeping out on the street. 
Elderly people cannot afford their prescription drugs. Veterans are not 
getting the health care they need. But those, apparently, are not 
crises. But this non-crisis is now being subjected to a situation where 
people want draconian response which would destroy the system.
  But maybe the gentleman wants to say a few words.
  Mr. DeFAZIO. Mr. Speaker, I would pause at something, but I do want 
to explain my plan, that that has something to do with the fact that if 
it were broken up into 70 to 80 million pieces that there would be an 
awful lot of commissions out there for brokers. And all the intense 
pressure here in Congress to break Social Security up and make it into 
individual accounts is coming from Wall Street, the same people of 
course who are contributing tremendous amounts of monies to people's 
campaigns.
  But let me explain a simple fix for Social Security. About half the 
American people pay more in Social Security taxes to the Federal 
Government than they do income taxes. We should deal with that issue. 
We should give them some tax relief.
  Now, we also want to make certain that the system is solvent for the 
future. So I put those two ideas together. If we did one thing, if we 
lifted the cap, right now if they earn $72,600 they pay Social Security 
on every penny they earn. If they earn $15,000, $20,000, $40,000, up to 
$72,600, Social Security on every penny they earn. If they earn a 
million dollars, they only pay Social Security on the first $72,600. 
That means their effective rate of tax is less than one percent; and it 
is over 6 percent for Social Security alone, not the Medicare portion, 
for individuals who earn $20,000 a year.

  So lift that cap. If we lift the cap and say fair is fair, everybody 
will pay the same amount on all they earn, that sounds like the flat 
tax that my colleagues over here are always pushing, then that would 
raise more than enough money to fix the system and make it solvent 
forever.
  But I want to take some of that money and invest it in tax relief. We 
could also exempt the first $4,000 of earnings for every wage-earning 
American. That means everybody who earns less than $72,600 a year, that 
is 95 percent of wage-earning Americans, would get a tax break under 
this proposal. And then with a few other changes in Social Security, 
investing some aggregate amount of the surplus, taking away from 
Congress which borrows it and spends it and replaces it with IOUs into 
index funds and other investments, we could ensure, and I have a letter 
from Social Security saying my plan would do this, the solvency of 
Social Security for 75 years, which is as far out as they project it, 
while providing tax relief for 95 percent of Americans.
  I also deal with two other problems. I give five child care dropout 
years so that the families that cannot afford child care or choose to 
stay home with their kids in their formative years will not be 
penalized in their ultimate Social Security benefits; and then finally, 
a slight increase in benefits for people over the age of 85 who are at 
a very high rate of poverty.
  We could do all that by lifting the cap on the wages. That is, 
everybody pays the same amount. But, unfortunately, I believe that a 
lot of people who are talking about financing campaigns are probably in 
that same category.
  Mr. SANDERS. Very interesting. They do polls and they ask the 
American people, how do you think we should deal with the Social 
Security situation?
  The one alternative is to raise the age at which they get benefits. 
The other solution is to cut back on benefits. And the American people 
respond. Then they said, what about raising the cap, exactly what are 
my colleague is talking about. Poll after poll shows the American 
people think that is a very good idea. They think it is appropriate.
  As the gentleman just indicated, if they raise the cap, not only can 
they can create Social Security solvency for the 75 years that the 
actuaries actually want, they could actually have a tax deduction for 
low and medium income workers, which makes a lot of sense to me.
  But amazingly, despite the fact that this is an idea that the 
American people want, how many people in the Congress are even prepared 
to talk about that idea? Not a whole lot.
  Mr. DeFAZIO. Well, I am circulating a letter to all our colleagues 
this week asking them to sign on to the bill, which I will introduce 
when we return from the July 4 break.
  I think that certainly there will be many who will be interested in a 
progressive Social Security reform, a way to cut taxes for 95 percent 
of wage-earning Americans and assure the future of Social Security for 
generations to come. It sounds like a pretty good deal to me. And we 
will see if, for once, we can overcome the influence of those few 
wealthy people who spend so much financing the campaigns, particularly 
on the majority side of the aisle here.
  Mr. SANDERS. I think we are coming toward the end of our time. I want 
to thank the gentleman from Oregon (Mr. DeFazio) for all of the work 
that he does in the Congress and for his participation this evening.
  I would like to conclude on this note. We have touched on a number of 
problems, but that does not make us pessimistic. It is my belief, and I 
know I speak for my colleague as well, that if

[[Page H5170]]

working people and middle-income people and young people get involved 
in the political process, if they let the Congress and the President 
hear from them, if they make the political leaders of this country 
understand what their needs are and they will get involved, we can turn 
this country around.
  We should not be proud that the wealthiest people have seen huge 
increases in their income and their wealth at the same time as we have 
the highest rate of childhood poverty of any industrialized nation. We 
should not be proud that 43 million Americans have no health insurance 
and that we are the only country in the industrialized world without a 
national health insurance system. We should not be proud that the CEOs 
make over 300 times what their workers make and that in the midst of 
the so-called economic boom, the average American worker today is 
earning less than was the case 25 years ago.
  But ultimately to turn that around, to make the Government of the 
United States work for the middle class, work for working families, 
rather than for upper-income people, people are going to have to get 
involved in the process. They are going to have to vote. They are going 
to have to be informed about the issues. They are going to have to run 
for office. They are going to have to revitalize American democracy and 
pay tribute to the founders of this country who gave us the radical 
concept of democracy.
  So I would hope that all of our people, especially the young people 
who are turning their backs to our Democratic system, get involved and 
stand up and fight for the rights of ordinary people.
  Mr. Speaker, I thank the gentleman for joining me this evening.

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