[Congressional Record Volume 145, Number 107 (Tuesday, July 27, 1999)]
[Senate]
[Pages S9315-S9317]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                TAX CUTS

  Mr. DURBIN. Mr. President, during the course of this week, we will 
debate in this Chamber one of the most important issues in terms of the 
future of our economy.
  Most of us can remember it was not that many years ago that the 
Federal budget was swimming in red ink. My Republican colleagues came 
to the floor of this Senate 2 years ago begging for the passage of a 
constitutional amendment to balance the budget. They were so distraught 
and despondent over deficits that they said the only way to bring this 
House into order was for us to have the Federal courts impose their 
will on Congress: The Federal courts must stop Congress from 
spending. The so-called balanced budget amendment failed by one vote. 
There were great tears shed on the floor of the Senate by Republican 
Members and even a few on the Democratic side that we had missed the 
opportunity to end the era of deficits.

  Barely 24 months later and how this world has changed. We are now in 
the world of surpluses, or at least anticipated surpluses. President 
Clinton's deficit reduction plan of 1993 accounts for about 80 percent 
of this deficit reduction and surplus creation, and the other part came 
from bipartisan agreements since that time.
  My Republican colleagues have shifted from this debate about amending 
the Constitution, saying we are so awash with money in Washington that 
we have surpluses to be given back to

[[Page S9316]]

people in the form of tax breaks, primarily for the wealthiest of 
Americans.
  Many on the Democratic side take a more conservative view. It is 
hard, I am sure, for our Republican friends to stomach this, but we are 
the conservative party when it comes to fiscal issues because we 
believe if there is to be a surplus, it should be dedicated first to 
making certain Social Security is strong for decades to come; second, 
to make certain Medicare receives an infusion of capital so we don't 
see an increase in premiums or a reduction in services; and third and 
most important, buy down the national debt.
  We can speculate for hours on end on the floor of the Senate about 
the state of America and its economy. However, certain things are 
obvious. We have more than $5 trillion in national debt that costs $1 
billion a day in interest. We have a Social Security system that needs 
money. We have a Medicare system that does, as well. We should take 
care of those three items before we go off on some lark of spending $1 
trillion in tax breaks for wealthy people.
  One might expect to hear that from a Democratic Senator and expect to 
hear the opposite from a Republican Senator because that is the nature 
of this debate. I appeal to the American people to step back for a 
second and look for a credible, objective arbiter. Let me make a 
suggestion: Alan Greenspan, Chairman of the Federal Reserve Board, who 
is credited as much as the Clinton administration with bringing about 
the economic prosperity that has brought down inflation, increased 
employment, increased the number of new businesses, increased housing. 
What does Alan Greenspan say about the $1 trillion tax cut? He says it 
is not wise, not good policy. He said there may be a time in a 
recession when a tax cut makes sense but to put this tax break for 
wealthy people on the books now is to fuel an economy too much, to 
create inflationary pressure.
  What would be the response of the Federal Reserve Board? Obviously, 
raise interest rates. What happens when interest rates are raised? The 
cost of a mortgage payment goes up for people who have an adjustable 
rate mortgage. People who have equities in mutual funds for retirement 
find those equity values falling as interest rates go up. Chairman Alan 
Greenspan, the objective arbiter, says to the Republicans: Please, 
stop; don't do this. You are overreacting to what we hope is the good 
news of a surplus.
  That is the critical difference.
  We know the Republican tax breaks are primarily geared for wealthy 
people. We know after 5 years, the Republicans have to dip into the 
Social Security trust fund to pay for their tax breaks. We know they 
provide no money whatsoever for Medicare. We know that if we follow 
their scenario we will be forced on the floor of the Senate and the 
House of Representatives to make dramatic cuts in education, in 
environmental protection, in the basics that Americans expect from our 
Federal Government.

  It is a recipe for economic disaster and a recipe for fiscal 
irresponsibility.
  Mr. SCHUMER. Will the Senator yield?
  Mr. DURBIN. I am happy to yield to the Senator.
  Mr. SCHUMER. I thank the Senator for yielding.
  One of our great historians said those who don't learn the lessons of 
history are condemned to repeat it. We are about to repeat the same 
kind of mistake that was made 20 years ago. We have an economy that is 
moving along smartly and well. We have inflation in check. We have job 
growth. Americans are prosperous and happy.
  All of a sudden, almost with happy recklessness, the other side wants 
to blow all this up.
  In 1981, we passed a huge dramatic tax cut. What happened? Interest 
rates went through the roof. Unemployment rates went from 4 or 5 
percent to 7, 8, or 9 percent. Americans were out looking for work. It 
took an entire decade to rectify that.
  Adding insult to injury, not only is this idea reckless in terms of 
the soundness of our economy as my colleague from Illinois has brought 
up and as Alan Greenspan stated, now we have CBO, which has always been 
known as a bipartisan, careful agency, saying this huge tax cut is very 
wrong, as every major economist that I have read about has also stated. 
It should be done when we move into recession if, God forbid, we do but 
not now.
  CBO says this balances the budget better than saving the money and 
putting it aside for debt reduction and for Medicare. The world is 
almost being turned upside down. I plead with the CBO Director to get 
his bearings. I have never seen CBO act in such a wild and almost 
irresponsible way.
  We know the budget caps are going to be lifted. What did the 
Republican leadership do in the House yesterday? They passed another 
emergency bill. Last week, the census was an emergency, not contained 
in the budget caps. This week, it was something new. Just yesterday 
there was an emergency, another $5 billion. They are going over the 
budget caps. CBO says they won't; it will go to debt reduction. It is 
absolutely awful.
  CBO is one of the few compasses we have as we sail through these new 
economic waters. For them to get so partisan and so off base by making 
an assumption that is virtually laughable, I plead with the head of CBO 
to reexamine his statements. To say a $1 billion tax cut will reduce 
the deficit more, or a $700 billion tax cut will reduce the deficit 
more than a $300 billion tax cut, with most of the remainder going to 
be put aside for debt reduction to help the Medicare system is absurd.
  I ask the Senator from Illinois his view of what CBO is doing. When 
we lose our moorings, when we lose our lodestars, when the whole debate 
becomes entirely political, we are in trouble.
  Mr. DURBIN. I agree with my colleague from New York. We have not run 
into such economic doubletalk and gobbledygook since the days of the 
appropriately named Laffer curve.
  I yield to the Senator from California.
  Mrs. BOXER. I thank the Senator for yielding for a question. I want 
to join in on the CBO question. I have gotten to the point where I 
don't listen to any bureaucrats. I listen to the Nobel Prize-winning 
economists. They are saying the Republican plan is risky and dangerous. 
Many signed a letter. I am going with them.

  We cannot trust the CBO anymore.
  I want to ask my friend about the tax break and the question: Is this 
fair? The Senator has an important chart. I found out yesterday under 
the Republican Senate plan anyone earning $1 million a year gets back 
$30,000 each and every year in a tax break, while those at the bottom 
hardly get anything.
  I want to pose a question to my friend from Illinois. A millionaire 
gets back $30,000. That equals the average income of an average 
citizen. In other words, a millionaire gets back as much in a tax cut 
as the average American, who gets up every day and goes to work for 8 
hours a day, earns in a year.
  I pose the question to my friend: Is this fair?
  Mr. DURBIN. I think the Senator from California has once again 
identified the Achilles' heel of Republican tax policy. They just 
cannot help themselves. Whenever it comes time for a tax break, they 
always want to give it to Donald Trump. I think Mr. Trump is doing 
well. I think Mr. Gates is doing very well. I don't think they need a 
tax break to be inspired to go to work tomorrow. The Republicans insist 
that is the case.
  Look what it does: For the top 1 percent of wage earners in America, 
the Republican plan, the Republican tax breaks give an average of 
almost $23,000 a year. Of course, for those bottom 60 percent, people 
with incomes below $38,000 a year, they receive $139 a year.
  The Republicans say: Wait a minute, the rich are paying all the 
taxes; they should get the tax break; it should come back to them.
  Yet when you look at it, they are taking them at the expense of 
working families who are concerned about the future of Social Security, 
concerned about the future of Medicare, and want to make certain we 
keep up with our basic commitments to education and environmental 
protection.
  The PRESIDING OFFICER (Mr. Bunning). The Senator's time has expired.
  Mr. DURBIN. I thank the Chair.
  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Mr. President, I ask unanimous consent to have the time 
extended to 10 minutes.

[[Page S9317]]

  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________