[Congressional Record Volume 145, Number 107 (Tuesday, July 27, 1999)]
[Senate]
[Pages S9325-S9327]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                TAX CUTS

  Mr. DURBIN. Mr. President, this morning we devoted most of the 
morning business to a discussion of an item which will come before us 
soon, and that is the whole question of how our economy is to look for 
the next few years. There are two very different visions of that future 
which will be articulated on the floor--one on the Republican side and 
another on the Democratic side.
  The Senator from Wyoming was kind enough to speak and to tell us 
earlier about his concerns over taxes. Certainly, his concern is shared 
by many on both sides of the aisle. He made a point which I think is 
worth noting and explaining. Yes, it is true that Federal tax receipts 
are higher than they have ever been from individuals and families, but 
it is also true the tax rates on individuals and families, in every 
income category, are at some of the lowest levels they have been in 
modern memory.
  The reason why taxes and tax receipts are higher reflects the fact 
that the economy is strong, people are working, they are earning money 
in their workplace, as well as in their investments, and they are 
paying some tax on it.
  If you look at the dynamic growth in taxation on American families, 
you will find it is not from Washington but, rather, from State 
capitals and local sources, local units of government. That, to me, is 
an important point to make as we get into a question of whether we 
should cut Federal taxes.
  I, for one, believe we can cut Federal taxes and do it particularly 
for the lower and middle-income families and really enhance our 
economy--if they are targeted; if they are contained. Because people 
who get up and go to work every day, and sweat out the payroll tax, 
which is usually higher than their Federal income tax liability, are 
the folks who need a helping hand.

  Sadly, the Republican proposal before us, which will be about a $1 
trillion tax cut over the next 10 years, does not focus on the lower 
and middle-income families. It reverts to the favorite group of the 
Republican Party time and again in tax policy--those at the higher 
income levels. So we see dramatic tax cuts for the wealthiest American 
families and ``chump change,'' if you will, for working families.
  That in and of itself is an injustice. The Republican Senator who 
spoke before me made the statement that he could not see why giving 
more money back to people to spend could possibly hurt the economy. In 
fact, it is a source of concern.
  You notice that about once a month, or once every other month, we 
wait expectantly for news from the Federal Reserve Board as to whether 
they are going to raise interest rates. It is an important issue and 
topic for many Americans. If you have a mortgage with an adjustable 
rate on it, the decision by Chairman Greenspan of the Federal Reserve 
to raise interest rates will hit you right in the pocketbook. Your 
mortgage rate will go up. The payment on your home will go up.
  Most people think this is a decision to be made looking at the 
overall economy. I suggest most American families look at interest rate 
decisions based on their own family. What will it do to my mortgage 
rate? What will it do, if I am a small businessperson, to the cost of 
capital for me to continue doing business? These are real-life 
decisions.
  If the Republicans have their way this week and pass a tax break, 
primarily for wealthy people, injecting money into the economy, it will 
increase economic activity. It is expected, then, that some people will 
buy more. It may mean Donald Trump will buy another yacht or Bill Gates 
will buy something else.
  That money spent in the economy creates the kind of economic movement 
which the Federal Reserve watches carefully. If that movement seems to 
be going too quickly, they step in and slow it down. How do they slow 
it down? They raise interest rates.
  So the Republican plan, the tax break for wealthy people, the $1 
trillion approach, is one which runs the risk of heating up an economy, 
which is already running at a very high rate of speed, to the point 
where the Federal Reserve has to step in. And once stepping in and 
raising interest rates, the losers turn out to be the same working 
families who really do deserve a break.
  It has been suggested that if we, instead, take our surplus and pay 
down the national debt, it not only is a good thing intuitively that we 
would be retiring this debt, but it has very positive consequences for 
this economy.
  Consider for a moment that in the entire history of the United 
States, from President George Washington through President Jimmy 
Carter, we had accumulated $1 trillion in debt. That means every 
Congress, every President, each year, who overspent, spent more Federal 
money than they brought in in taxes, accumulated a debt which over the 
course of 200 years of history, came to $1 trillion, a huge sum of 
money, no doubt.
  But after the Carter administration, as we went into the Reagan 
years, the Bush years, and the early Clinton years, that debt just 
skyrocketed. It is now over $5 trillion. That is America's mortgage. We 
have to pay interest on our mortgage as every American family pays 
interest on their home mortgage. What does it cost us? It costs us $1 
billion a day in interest to borrow the money, to pay off our national 
debt--$1 billion a day collected from workers through payroll taxes, 
from businesses and others just to service the debt.

  So the question before us is whether or not a high priority should be 
reducing that debt. Frankly, I think it should be one of the highest 
priorities. You know who ends up paying that interest forever? The 
young children in our gallery here watching this Senate debate: Thank 
you, mom. Thank you, dad. Thanks for everything. Thanks for the 
national debt, and thanks for the fact that we are going to have to pay 
for it.
  We have some alternative news for them that may be welcome. We have a 
chance now to help you out. We have a chance to take whatever surplus 
comes into the Federal Government because of our strong economy and use 
it to retire the national debt, to bring it down.
  That is the proposal from the Democratic side, from President 
Clinton, and most of my fellow Senators who share the floor with me on 
this side of the aisle. It is a conservative approach but a sensible 
one.
  The alternative, if we do not do it, I am afraid, is to continue to 
pay this $1 billion a day in interest on the debt and not bring it 
down.
  If we stick to a disciplined, conservative approach, we can bring 
down this debt.
  Chairman Alan Greenspan said last week: Yes, that is the highest 
priority. You want this economy to keep moving? You want to keep 
creating jobs and businesses, people building homes, starting new small 
businesses, and keeping inflation under control? He said the worst 
thing you can do is create new programs and spend it, going back to the 
deficit days. The second worst thing you can do, as the Republican 
proposal suggests, is give tax breaks to wealthy people. The best thing 
he said to do is to retire the national debt.
  It is eminently sensible on its face. We step forward and say 
bringing down that debt is good for the economy, will not overheat it, 
will not raise interest rates. You see, if we can have interest rates 
continuing to come down, it helps families. How does that happen?

[[Page S9326]]

  The Federal Government is a big borrower. Because of our $5 trillion-
plus debt, we have to borrow money from all over the United States and 
around the world to service that debt. If we start getting out of the 
borrowing business, there is less demand for capital, and the cost of 
capital--interest rates--starts going down. What would a 1 percent 
reduction in the interest rate mean to families across America over the 
next 10 years when it comes to their mortgage payments? Savings of over 
$250 billion. Frankly, taking the conservative approach, paying down 
the national debt is not only good to keep the economy moving forward 
but, over the long term, the lower interest rates are good for 
everyone: good for families who want to buy homes; good for businesses 
that want to expand and hire more employees, and good all around.

  That is the bottom line of this debate. The Republican approach is to 
spend it on tax cuts, give it to wealthy people. The Democratic 
approach is pay down the national debt, invest the money in Social 
Security and in Medicare. That, I think, is the more responsible course 
of action. What the Republicans would do in the second 5 years of their 
tax cut is actually mind-boggling, because they would be reaching into 
the Social Security trust fund to pay for these tax breaks for wealthy 
people. So folks today who are paying a high payroll tax, putting money 
in the Social Security trust fund so it is there for the baby boomers 
and others in the future, would actually be funding a tax cut for some 
of the wealthiest people in America instead of leaving that money in 
the Social Security trust fund where it belongs to meet the obligations 
of that system that is so important to millions of families.
  I yield to the Senator from California for a question.
  Mrs. BOXER. I thank the Senator from Illinois. We are having this 
conversation while we await the arrival of the interior appropriations 
bill, which I know we are both looking forward to working on with the 
rest of the Senate.
  Nothing could be more important right now than the business that will 
come before this body tomorrow, a huge Republican reconciliation bill 
which includes these massive tax cuts to the wealthiest and, as a 
result of that, really crimps the functioning of the rest of the 
Federal Government.
  Again, because my friend is so clear thinking, I underscore what he 
said in this colloquy.
  The Democratic plan makes four very important decisions. First, the 
Democratic plan takes care of Social Security for the extended future. 
It says every single dollar of the surplus that belongs to Social 
Security will be locked up for Social Security, while the debt is paid 
down at the same time. The difference with the Republicans is, they dip 
into the Social Security trust fund 6 years from now.
  Secondly, the Democratic plan says: What else is important? What else 
is the safety net for our people? Medicare. So it treats Medicare, in 
essence, the same way we treat Social Security. We treat it as the twin 
pillar of the safety net. We say we will take care of Medicare to the 
tune of over $200 billion. We lock that up. And while it is sitting 
there, it is used to pay down the external debt of the country.
  The third thing we do--I have alluded to that--is debt reduction. 
Debt reduction is the external debt, the debt that is owed to private 
people, Americans and those around the world who pick up our bonds. We 
owe them debt. I see my friend from South Carolina who has pointed this 
out. Because of that debt, we are paying over $300 billion a year in 
interest payments which, as my friend said, is bad for the economy. It 
is wasteful. It does no good to anyone.
  Then there is a fourth piece. That is, we take care of the business 
of Government. We leave enough over to take care of education, to take 
care of health research, to take care of airport safety, safety in the 
streets, highways, transit, the things that our people want us to do; 
we take care of the basic business of Government, no frills but the 
basic business of Government. Educating our kids is basic. If we don't 
do that, we are nowhere as a country.

  My question to my friend is this: Unless we are not hearing the 
people, they want us to take care of Social Security and lock it up for 
the future. They want us to take care of Medicare and lock that money 
up for the future. They want us to reduce that external debt so the 
interest payments on the debt disappear. And they want us to take care 
of the basic business of Government: taking care of our kids, health 
research, the things we stand on this floor day in and day out talking 
about, how important it is to improve the quality of life for our 
people. That is what we do.
  The Republicans, the only thing they do is take care of the wealthy. 
Yes, they take care of some of Social Security, but in the second 5 
years, they are dipping into that pot, too.
  Does my friend agree with the sort of wrap-up I have given of his 
remarks? Are we on the same page? And, in conclusion, does he think our 
plan meets the needs of our people and their plan is risky, it is 
frightening, it pays off the wealthy and does nothing for our other 
needs?
  Mr. DURBIN. I agree with the Senator from California. I will say this 
only one more time on the floor. She may have missed it earlier, when I 
characterized this whole discussion about the lockbox. There is this 
proposal that comes forward that we create a lockbox for Social 
Security and for Medicare. In other words, you can't get your hands on 
it if you want to create a new program or whatever it might be. It is 
going to be separate, locked away from the grasping hands of any 
political leaders. So those who follow the debate will hear this: 
lockbox, lockbox, lockbox. But as we look carefully at the Republican 
tax break proposals, they reach into that Social Security lockbox in 
the year 2005 and start taking money out for tax breaks for wealthy 
people.
  I said on the floor earlier, at that point it is no longer a lockbox, 
it is a ``loxbox,'' because it smells a little fishy. This is no 
lockbox, if you can reach in and take from it. That is, frankly, what 
we are going to face with the Republican tax break proposal.
  I also say to the Senator from California and the Senator from South 
Carolina, who is the acclaimed expert when it comes to budget--and we 
are anxious to hear his comments and contribution--the other thing that 
is interesting is the Republican tax break plan is based on the theory 
that we are going to stick with spending caps forever. We are going to 
keep limitations on spending and appropriations forever. And with those 
limitations, the surplus grows, and they give it away in tax breaks 
primarily to wealthy people.
  Look what is happening around here. The so-called caps are being 
breached and broken even as we speak. They came up last week and said--
what a surprise--it turns out we have to take a census in America every 
10 years. That is an emergency, an unanticipated event.
  A census an unanticipated event? We have been taking the decennial 
census for centuries--not quite that long but at least for a long time. 
Now they are calling it an emergency to pay for the census so they can 
go around the caps, so they can spend the money.

  It is my understanding that within the last few hours, the House of 
Representatives has also decided that spending for veterans hospitals 
is an emergency, and, therefore, we will go around the caps. Frankly, 
funding the census and funding veterans hospitals would be high on 
everyone's list here, but to call this an unanticipated emergency--most 
of the men and women who are being served by those hospitals served us 
and our country in World War II and Korea. We know who they are, and we 
know the general state of their health. It is predictable that they 
would need help at veterans hospitals. It is not an unanticipated 
emergency.
  We are dealing in fictions; we are dealing in doubletalk, in an 
effort to get around the spending caps, which is the premise of the 
Republican tax break, that we are going to have spending caps forever. 
They are violating their premise even as they offer this tax break 
proposal.
  I will make this last point to the Senator from California. She 
really addresses, I think, one of the basics. There are many on the 
Republican side who believe that, frankly, Government just gets in the 
way of a good life for Americans. I disagree. I think in many respects 
Government is important to a good life for many Americans and their 
families.
  The Senator from California and the Senator from Illinois can 
certainly

[[Page S9327]]

agree on the issue of transportation. In Chicago, which I am honored to 
represent, virtually any radio station will tell you every 10 minutes 
the state of traffic on the major expressways around Chicago. I am sure 
the Senator from California can tell the same story. It is getting 
worse, more congestion, more delays, and more compromise in the quality 
of life.
  We don't want to step away from a Federal contribution to 
transportation, not only highways but mass transit. Frankly, if we move 
down the road suggested by Republicans, it would jeopardize it. The 
same thing is true about crime. It ranks in the top three issues that 
people worry about. The COPS Program, which Democrats supported along 
with President Clinton, has created almost 100,000 new police. That 
brought down the crime rate in America. We want to continue that 
commitment to making our neighborhoods, streets, and schools safer 
across America.
  Finally, education. I am glad the Senator from California noted this. 
The Federal contribution to education is relatively small compared to 
State and local spending, but it is very important. We have shown 
leadership in the past and we can in the future. It really troubles me 
to think we are now at a point in our history where, if no law is 
changed and everything continues as anticipated, we will need to build, 
on a weekly basis, for the next 10 years--once every week for the next 
10 years--a new 1,000-bed prison, every single week for the next 10 
years because of the anticipated increase in incarceration.
  I think dangerous people should be taken off the street and out of my 
neighborhood and yours. But I don't believe Americans are genetically 
inclined to be violent criminals. I think there are things we can do to 
intervene in lives, particularly at an early stage, to make kids better 
students and ultimately better citizens. That means investing in 
education. The Republican plan steps back from that commitment to 
education, as it does from the commitments to transportation and 
fighting crime. That is very shortsighted. We will pay for it for many 
decades to come.
  So this debate, some people say, is about a tax break. It is about a 
lot more. Will the economy keep moving forward? Will we make important 
decisions so the next generation of Americans is not burdened with 
paying interest on our old debt, and will we make good on our 
commitment to American families when it comes to important questions 
involving transportation, crime, education, and the quality of life?
  Mrs. BOXER. Will my friend yield to me for a question?
  Mr. DURBIN. I yield to the Senator from California for a question.
  Mrs. BOXER. Mr. President, I want to ask him a question about an 
issue he and I have worked on together for so many years. It takes us 
back to when we were in the House together. We served together there 
for 10 years. That is the issue of health research.
  Right now, only one out of every three approved grants is actually 
being funded. So that means cures for cancer, Parkinson's, AIDS, heart 
disease, stroke, you name it--the biggest killers--are not being found. 
In other words--let me repeat--we have one out of every three grants 
approved by the National Institutes of Health because they are very 
promising. If some scientist has a theory about how to cure prostate or 
breast cancer, he may not be able to get it done.
  This will be my final question. As he goes through the Republican 
plan, which leaves virtually zero room, as I read it, for increases in 
this kind of basic spending, does the Senator not think we are 
shortchanging American families? When I talk to them, that is what they 
are scared of most.
  Mr. DURBIN. I thank the Senator from California for her observation. 
Yes, many years ago when we were on the Budget Committee in the House, 
we worked together on medical research and dramatically increased the 
amount of money for it. It was one of the prouder moments serving on 
Capitol Hill. I have found, as I have gone across Illinois and around 
the country, that virtually every American family agrees this is an 
appropriate thing for the Federal Government to do--initiate and 
sponsor medical research.

  A family never feels more helpless than when a disease or illness 
strikes somebody they love. They pray to God that the person will 
survive, and that they can find the best doctors. In the back of their 
minds they are hoping and praying that somewhere somebody is developing 
a drug or some treatment that can make a difference. And that 
``somewhere,'' many times, is the National Institutes of Health in 
Washington, DC, in the Maryland suburbs nearby.
  If we take the Republican approach of cutting dramatically the 
Federal budget in years to come for a tax break for wealthy people, we 
jeopardize the possibility that the NIH will have money for this 
medical research. That is so shortsighted.
  It is not only expensive to continue to provide medical care to 
diseased or ill people, but, frankly, it is inhumane to turn our backs 
on the fact that so many families need a helping hand. I sincerely hope 
before this debate ends, we are able to bring Republicans around to the 
point of view that when we talk about spending on the Democratic side, 
it is for the basics--transportation, fighting crime, helping 
education, and medical research. I would take that out for a referendum 
across this land. I think that is the sensible way to go.
  I yield the remainder of my time.
  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER. The Chair recognizes the Senator from South 
Carolina.

                          ____________________