[Congressional Record Volume 145, Number 107 (Tuesday, July 27, 1999)]
[Senate]
[Pages S9318-S9321]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                TAX CUTS

  Mr. SCHUMER. I wish to continue the line of discussion we were in 
before about these two alternative tax cut plans. Again, my greatest 
worry is not in how the pie is divided, although I certainly very much 
disagree with the Republican way that is done but, rather, in the 
overall strength of our economy.
  To put a huge tax cut in place now, at a time when inflation is low, 
unemployment is low, and jobs are being created, has the potential of 
throwing a monkey wrench into our economy. Targeted tax cuts, things 
aimed at helping middle-class people with their big financial nuts, 
whether they be health care or college tuition or retirement--those 
make some sense. But a huge across-the-board tax cut, in my judgment, 
could throw the economy dramatically off kilter. Will it? No one can 
predict. But there is an old expression: If it ain't broke, don't fix 
it.
  Our economy has been moving along well, and now, I think mainly 
because of some ideologues, we are being pushed to do something that 
risks the great recovery we are now having. That is issue No. 1.
  Issue No. 2 is saving Social Security and Medicare. Again, you cannot 
have the money go for everything. Despite CBO's awful statements in the 
last few days--and I will talk about those in a minute--when you have a 
dollar, you can use it for something. You can return it to the 
taxpayers, you can spend it on a program, or you can put it away for 
some kind of obligation that might occur later.
  The two great obligations we have to the American people, fiscally 
speaking, are Social Security and Medicare. If you look at this chart, 
the Republican plan takes that Social Security surplus and makes it a 
deficit from 2005 on.
  How many Americans, for a quick tax cut--most of which they will not

[[Page S9319]]

see because it will go, just by definition, to the highest income 
sector--would risk their Social Security for that tax cut? My argument 
is: Very few.
  How many Americans would risk their Medicare--and, God forbid, they 
or a loved one became ill--for what have proven to be in the past 
chimerical tax cuts, things that people do not see? Very few.
  So what we are talking about here is very simple--targeted tax cuts 
that will help the middle class and preserve Social Security, which is 
the plan the Democrats have put forward, or a huge tax cut, mainly 
going to people who are doing remarkably well at the highest end of the 
spectrum and risking Social Security and Medicare.
  Mr. DURBIN. Would the Senator from New York yield for a question?
  Mr. SCHUMER. I am happy to yield to my friend from Illinois for a 
question.
  Mr. DURBIN. Over the course of the last several months we have had a 
lot of debate on the floor about a lockbox, a Republican lockbox that 
is going to protect Social Security and Medicare--lockbox, lockbox, 
lockbox. I think what we are dealing with when we look at the 
Republican tax break bill is the Republican ``loxbox''--it smells 
fishy--because in the year 2005 they start dipping right into Social 
Security. They are taking money out of the Social Security surplus to 
give tax breaks to wealthy people.
  I ask the Senator from New York--I am sure I can speak for people 
from Illinois as well--as you go around the State of New York and ask 
people what our priorities should be, if we are going to have a 
surplus, how many of them have said to you: Well, let's give tax breaks 
to Donald Trump and let's take money out of the Social Security 
surplus?
  Mr. SCHUMER. I say to the Senator from Illinois that, first of all, 
my constituents say: Preserve Social Security and Medicare, No. 1; and, 
second, if you are going to do certain tax breaks, make them targeted 
to help the middle class, not these big across-the-board tax cuts.
  I also say to the Senator, in certain parts of my State they would 
want a ``loxbox,'' but in many others they would refuse that.
  Mrs. BOXER. Will the Senator yield for a question?
  Mr. SCHUMER. I am happy to yield to the Senator from California for a 
question.
  Mrs. BOXER. I thank the Senator.
  I say to the Senator from New York, I really appreciate his 
contribution to this debate. I always go back, in my mind, to who is 
getting these tax cuts--the Donald Trumps, the Bill Gateses, et cetera. 
The other chart that was used before by my friend from Illinois showed 
very clearly that if you earn about $800,000 a year, you get back 
$22,000 a year; if you earn about $25,000 a year, you get back about 
$129.
  I want to talk about that for a moment and ask my friend a question.
  Mr. President, $129 is nice to have. No one would turn it away. But 
if at the same time you suddenly get a bill for $250 a month more for 
your Medicare, because the Republican plan doesn't put a penny in for 
Medicare solvency, now you are behind the eight ball, are you not? That 
$129 you get back is gone, plus you may even have to take care of your 
parents because Medicare is not going to survive.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mrs. BOXER. Mr. President, I ask for 1 additional minute in morning 
business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. BOXER. I say to my friend, could he comment on the cruel irony 
of this?
  Mr. SCHUMER. Mr. President, I think the Senator from California 
brings up an extremely valid point. The American people are most 
worried, not about their present tax situation, although everyone would 
like lower taxes, no question--particularly in my State, property 
taxes, which we have nothing to do with, are through the roof. What 
they care about are the big financial nuts that might bother them.
  As the Senator from California said, God forbid a parent becomes ill, 
God forbid a spouse becomes ill, and Medicare is not there or it is so 
reduced that they have to shell out tremendous amounts of dollars from 
their own pocket before Medicare bites in. That is what worries people. 
That is why, I say to the Senator, I am pushing a tuition deductibility 
proposal because the average middle-class family is doing fine, but 
when they get hit with these huge tuition bills, it is tough for them 
to pay.
  One other point, which relates to what the Senator said, going back 
to what CBO has done in raiding these two plans. I want to come back to 
this because it is so worrisome. What they have done is, they have said 
a plan that cuts taxes by $700 billion reduces the deficit more than a 
plan that cuts taxes by $300 billion--
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. SCHUMER. I ask unanimous consent for 1 additional minute.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SCHUMER. I thank the Chair, and I thank the Senator.
  CBO has said putting $300 billion aside for deficit reduction reduces 
the deficit less than putting nothing aside for deficit reduction.
  I have, in my 18 years in the House and now my 1 year in the Senate, 
always relied on CBO as a lodestone, as a morning star--fixed, correct, 
dealing with the excesses politicians have on both sides of the aisle. 
That has seemed to be true whether they were appointed by Democrats or 
Republicans. For the first time, I think we are going to start doubting 
the veracity of CBO in a significant way because they have so twisted 
their economic logic that economists across America are scratching 
their heads.
  We need a CBO to be fair and nonpartisan. CBO is vitally important to 
us being honest in reducing the deficit; when either party does fiscal 
hi-jinks, they are called to the carpet.
  Again, I make a plea to the CBO Director: Reconsider what you have 
said or, at the very least, give it a better explanation because right 
now people who follow economics across America are scratching their 
heads and saying: What has happened? How the heck can CBO score things 
the way they have? The only answer that seems to be available is 
politics. That would be a shame.
  I yield the floor.
  Mr. BIDEN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. BIDEN. Mr. President, I ask unanimous consent to proceed for 20 
minutes as in morning business or until the managers of the legislation 
come forward and decide they want to begin the next piece of 
legislation.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BIDEN. Mr. President, before I get to the subject I wish to speak 
to, which is the nuclear test ban treaty, I will address a comment to 
my colleague from New York, Senator Schumer.
  I, as all Democrats and some Republicans, think a tax cut should be 
progressive and equitable. To tell you the truth, I would like to be in 
a position to give the wealthy a tax cut if that were the case. That 
would be fine as long as we first gave the tax cut to the poor and the 
middle class.
  I was speaking to the Senator from Illinois a moment ago. In my 
State, which has, as all of our States, very wealthy individuals, I 
found an interesting phenomenon. Given a choice, if you go back to my 
State and ask anybody who made $1 million last year or is likely to 
make one next year, and said: We can continue the economy to grow the 
way it has the last 7 years, or give you a $30,000 tax cut a year, 
there isn't any question what they choose. They say: Whoa, leave well 
enough alone. I am making a lot more than $30,000 a year in the market. 
I am making a lot more than $30,000 a year in my investments. I am 
making a lot more than the $30,000 a year I would get in the tax cut 
from the lower interest rates. I am making a lot more.
  How many times have we heard the only thing that has remained 
constant in this changing economic environment over the last decade is 
tax cuts are a stimulus? We have one guy sitting at the helm. His name 
is Greenspan. He has been doing everything but taking an ad in the New 
York Times to say: Whatever you all do, if this economy heats up, if 
you stimulate this economy, I am telling you what I am

[[Page S9320]]

going to do; I am going to raise interest rates.
  He hasn't used those exact words, but the market responds to every 
word he says.
  I don't know anybody who thinks that if there were almost an $800 
billion tax cut, we are not going to have interest rates raised.
  I don't understand the math. To be more crude about it, I don't even 
understand the politics. It used to be good politics for our Republican 
friends to try to paint us into a corner and say: We are for tax cuts; 
Democrats are not for tax cuts ever. Therefore, Democrats are big 
spenders; therefore, we are good guys. Therefore, vote for us.
  I understand that. We do the same thing with them on Social Security. 
We assume no Republican can be devoted to Social Security, and they 
assume no Democrat could ever want a tax cut. That is politics. I 
understand that.
  The part I don't understand is to whom they are talking. Even their 
very wealthy constituency--not all wealthy people are Republicans, but 
it tends to be that way--is saying: Hey, go slow here.
  I hear the name of Bill Gates thrown around and others such as Gates. 
They are an aberration even among the wealthy. But the wealthy in my 
State, if they could pick any one thing out of the Roth tax proposal, I 
know what it would be. It would be the elimination of the inheritance 
tax. There are only about 820,000 people in all of America who would be 
affected by it, but that is something--I happen to disagree with them--
that is a big deal. That is a big-ticket item. That is worth a lot more 
than 30,000 bucks, but that is not the thing that would fuel a heated 
up economy. I am not proposing that. I am trying to figure out the 
politics.
  Mr. SCHUMER. Will the Senator yield?
  Mr. BIDEN. I am delighted to yield.
  Mr. SCHUMER. I think the Senator makes a very good point. Our No. 1 
argument is the one the Senator made. It is not middle class versus 
wealthy. It is not redistribution. That is an argument.
  The No. 1 argument is a very simple one: The economy is doing 
remarkably well. The people at the highest end of the economic spectrum 
have benefited the most. That is how it usually is in America. And here 
we are, everything is going along nicely, interest rates are low, 
fueling economic growth, allowing people to buy homes, allowing people 
to take second mortgages so they can buy other things. We are going to 
change conditions so that Alan Greenspan would be more likely to have 
to raise interest rates. And he, a Republican conservative, fiscal 
watchdog, says: Don't do it. And we are proceeding headlong into a wall 
to do it.
  The Senator from Delaware has asked an excellent question: What is 
motivating this? I think it is leftover politics from the early 1980s.
  Mr. BIDEN. I think that is right.
  Mr. SCHUMER. There is a view, first, that Democrats haven't learned 
our lesson, which we have since 1994, which is we can't spend on 
everything we want to, even though we would want to. What we have 
proposed doing with this money is not spending most of it on new 
programs but putting the vast proportion away into Social Security and 
Medicare and reducing the deficit.
  Second, it is based on the theory that the tax system is out of 
whack. When you look at it, the percentage of tax paid is going down; 
the economy is moving. It is almost ``Alice in Wonderland.'' So I think 
the Senator from Delaware makes an excellent point. Whether you believe 
in the politics of redistribution or not--and there is a division in 
this country, in this body, and in our party, as a matter of fact--even 
if you don't, this tax cut, so massive, so much risking the monkey 
wrench being thrown in the economic engine that is purring smoothly, is 
a real risk.
  Mr. BIDEN. If the Senator will yield, I would like to make an 
observation or a comment. I heard some of our Republican friends use 
the old phrase ``if it's not broken, don't fix it.'' They can't stand 
status quo. I think they can't stand the fact that it is happening on 
Democrats' watch. I think part of the problem is they have to say 
something. It is similar to cops, the very thing they said would not 
work. It was terrible what Charlton Heston--or ``Moses'' Heston--said. 
They are going to have 100,000 social workers.
  Regarding the deficit reduction package in 1994, every Republican 
leader stood up and said this will mean chaos, recession, loss of world 
stature, et cetera, et cetera. They turned out to be wrong; these 
things are working. Cops are making the crime rate go down. The deficit 
reduction package worked. We are now in a position where we are doing 
better than ever. It is as if they have to have something. We 
politicians, I know, sit there and say if the other party does 
something, or my opponent does something, and it works, instead of 
saying it is working, we have to think of something better.
  I think the public is prepared to give everybody credit. Everybody 
deserves credit. The people who deserve the most credit are the people 
in the business community because of their productivity and the way 
they trimmed down. I can't figure it out. For the first time in my 27 
years as a Senator, this seems to fly in the face of the orthodoxy of 
the Republican Party. I mean, if you had said to me 15 years ago--first 
of all, I would not have believed what I am about to say. But if you 
said to me 15 years ago: Joe, in 1999, you are going to be standing on 
the floor of the Senate, and one of the choices you are going to 
participate in making is not whether or not we balance the budget but 
whether we take money and reduce the accumulated national debt or give 
a tax cut, first of all, I would not have believed that option would be 
available. I would not have believed we would be in that position. 
Forget, for a moment, the two pillars: Social Security and Medicare. 
Leave them aside for a moment. I would have said: First of all, it 
won't happen. But if it does, on the idea of reducing the national 
debt, in every basic economics course you took when you were a freshman 
in college, they said if you can ever reduce the national debt, the 
impact upon interest rates, the impact upon home rates, the impact upon 
the economy would be incredible.

  And then, if you asked me: OK, what do you think the Republican Party 
would do? I would say that is easy. They would reduce the debt. These 
are the pay-as-you-go guys, the guys who say pay off your debts. These 
are the guys who had a clock ticking in your city, in Time Square, or 
down by the railroad station, Penn Station, a big clock, saying the 
national debt is going up. It was paid for, I suspect, by some wealthy 
Republican. So the clock was ticking. And not only have we stopped the 
growth of the debt, but it is ticking in a way that we can have those 
numbers go in reverse.
  Mr. DURBIN. Will the Senator yield?
  Mr. BIDEN. Yes.
  Mr. DURBIN. As a member of the Judiciary Committee, I am sure the 
Senator from Delaware remembers 2 years ago on the floor of the Senate 
our despondency over the deficits, which led some Members on the 
Republican side to call for a constitutional amendment to balance the 
budget, where the Federal courts would force Congress to stop spending. 
We were so despondent that we were going to really change the 
constitutional framework. That failed by one vote.
  Two years later--the Senator from Delaware is right--somehow or 
another, the Republican Party is searching for its roots and searching 
for its identity. It has now gone beyond the era of Gingrich and Dole, 
and it is trying to find out what it stands for anymore. As the Senator 
from Delaware said, they used to stand for fiscal conservatism. We have 
a trillion-dollar tax cut, primarily for the wealthiest people, that 
will divert funds that could be spent to retire the national debt, a 
debt of over $5 trillion, which costs us a billion dollars a day in 
interest. We collect taxes from American families--payroll taxes--for a 
billion dollars a day in interest.
  Would the Republicans join the Democrats and say our first priority 
is to eliminate this debt? No. Instead, they are saying our first 
priority is tax breaks for the higher income individuals, which could 
endanger the economy.
  I think this Republican Party is searching for identity. I think the 
Democrats have a situation that I would like to test in an election. If 
this were a referendum, as in parliamentary forms of government, I 
would like to take this question to the American people: Do you want a 
trillion-dollar

[[Page S9321]]

tax break for the wealthiest people over the Democratic approach to 
take whatever surplus we have and put it into Social Security, put it 
into Medicare, and bring down the national debt?

  I think ours is a sounder approach. I ask the Senator from Delaware, 
in his experience in history and in American politics, has he ever seen 
the world turn so upside down that we Democrats are now the fiscal 
conservatives?
  Mr. BIDEN. No. I must say to my friend from Illinois that I haven't. 
I really think a legitimate debate--a debate that is a close call, in 
my view, would be whether or not, for example, we should be spending 
the surplus to reduce the debt, or spend the surplus--we can do both--
or spend more of the surplus to reinforce Social Security and Medicare. 
That is a traditional debate that we have. Republicans used to argue we 
are spending too much money on Medicare--not just that it is broken, 
but we are spending too much; and Social Security is inflated and we 
should be cutting it back.
  If you told me 15 years ago that the debate would be Democrats saying 
let's not put as much away to reduce the debt, put more in Social 
Security and Medicare, and with what is left reduce the debt, and the 
Republicans would have been saying let's reduce the debt, and once that 
is done, let's try to fix Medicare and Social Security--well, I don't 
know. The third rail of politics has become Social Security and 
Medicare. Obviously, they have to be for that; everybody is for that. 
So nobody really talks about it.
  Some courageous guys and women talk about it on the floor, about what 
we should be doing. But it is just a shame because there is a 
legitimate debate here. The truth is, for example, if you said to me 
reduce the debt or spend more money on cops, I would be for spending 
more money on cops. So it is true that there are some of us in this 
party who would want to spend more of the surplus for worthwhile 
things, such as education, law enforcement, et cetera. And it is a 
legitimate debate. They would say: Look, Biden wants to spend more 
money instead of putting it onto the debt. But that is not even a 
debate. That is not even a debate.
  The debate now is to give a tax cut that no one seems to want. I 
would love a tax cut. My total salary is what I make here, and the 
American people pay me a lot of money. I would love a tax cut. I would 
love even more--since I have a third child going off to college for the 
first year, and room, board, and tuition in any private school in this 
country is about $30,000 a year, I selfishly would love a tax break 
there. But what I would not love is my adjustable rate mortgage to 
change. I would not want that to change. Give me a tax cut and one 
little bump in my adjustable rate mortgage, and I am up more than I can 
save by the tax cut. So I don't know.
  Both of our parties are going through a little bit of establishing, 
going into the 21st century, what the pillars and cornerstones of our 
philosophies are. Ironically, I think for the change we are sort of a 
little ahead of the Republicans on where we are. It doesn't mean the 
American people agree with us. The debate over there seems to be that 
the jury is still out on where they will go. I hope, for everyone's 
sake, we get our bearings a little bit because it would truly be a 
shame if, as a consequence of a political judgment, we imperil what is 
the most remarkable recovery in the history of the world, essentially.
  The economy in America has never been stronger within our borders or 
comparatively internationally. I hope reason takes hold because even I 
think Republicans and Democrats know more about what the polling data 
says than I do. But my instinct tells me this is yesterday's fight. 
This is yesterday's fight, but it could be tomorrow's tragedy if it 
prevails.

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