[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.
____________________