Congressional Record, Volume 145 Issue 109 (Thursday, July 29, 1999)

[Congressional Record Volume 145, Number 109 (Thursday, July 29, 1999)]
[Senate]
[Pages S9651-S9737]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

TAXPAYER REFUND ACT OF 1999--Resumed

The PRESIDING OFFICER. The clerk will report the bill.
The legislative assistant read as follows:

A bill (S. 1429) to provide for reconciliation pursuant to
section 104 of the concurrent resolution on the budget for
fiscal year 2000.

Pending:

Abraham amendment No. 1398, to preserve and protect the
surpluses of the social security trust funds by reaffirming
the exclusion of receipts and disbursement from the budget,
by setting a limit on the debt held by the public, and by
amending the Congressional Budget Act of 1974 to provide a
process to reduce the limit on the debt held by the public.
Baucus motion to recommit the bill to the Committee on
Finance, with instructions to report back with an amendment
to reduce the tax breaks in the bill by an amount sufficient
to allow one hundred percent of the Social Security surplus
in each year to be locked away for Social Security, and one-
third of the non-Social Security surplus in each year to be
locked away for Medicare; and an amendment to protect the
Social Security and Medicare surplus reserves.
Robb amendment No. 1401, to delay the effective dates of
the provisions of, and amendments made by, the Act until the
long-term solvency of Social Security and Medicare programs
is ensured.

Motion to Waive the Budget Act Amendment No. 1398

The PRESIDING OFFICER. The Senator from Nevada.
Mr. REID. Mr. President, the pending amendment is not germane. I
raise a point of order that the Abraham amendment violates section
305(b)(2) of the Congressional Budget Act of 1974.
The PRESIDING OFFICER. The Senator from Michigan.
Mr. ABRAHAM. Mr. President, pursuant to section 904(c) of the
Congressional Budget Act of 1974, I move to waive the Budget Act for
consideration of the Abraham amendment.
Mr. GRAMM. I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?

[[Page S9652]]

There appears to be a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. There is 2 minutes of debate.
Who yields time?
Mr. REID. Mr. President, in a letter dated April 21, 1999, on a
similar provision, then-Secretary of the Treasury Robert Rubin wrote to
Senator Moynihan that this ``provision could preclude the United States
from meeting its financial obligations to repay maturing debt and to
make benefit payments--including Social Security checks--also worsen a
future economic downturn.''
The lockbox in this proposal is potentially destabilizing in a manner
reminiscent of the constitutional amendment to require a balanced
budget.
I remind those who propose rigid 10-year schedules for reducing the
publicly held debt that economics does not follow the agricultural
cycle. There will be periods when surpluses, both on and off budget,
will fall far short of projections. We should not impose a debt
reduction schedule, enforced by a declining debt cycle ceiling, even if
it can be overridden with 60 votes. To do so will risk default every
time the debt ceiling is lowered.
Mr. ABRAHAM. Mr. President, first of all, we have endeavored to and
have modified our amendment to try to address some of these concerns. I
think we have done so. I believe we have given sufficient flexibility
so that there will not be the concerns that were raised in that letter.
This lockbox does not need a lot of debate. Americans have been
hearing us talk about it now for almost 3 months. We will continue to
try to get a straight up-down vote on this. I would note that once
again this morning another procedural roadblock has been put in place
to prevent us from getting a straight up-or-down vote. I regret that. I
was prepared to come today and offer both sides the opportunity to have
straightforward votes. If one side or the other in their various
lockbox proposals got 50-plus votes, they would win and we could give
the American people what I believe they want, and that is protection
for their Social Security dollars sent to Washington. But again, once
more, what we have had is a procedural impediment placed in the way of
getting final action on this legislation.
Mr. President, I urge my colleagues who have previously supported
this lockbox to do so. It is a tougher lockbox that protects Social
Security. If we want to do it, I say vote ``yes.'' Vote to waive the
Budget Act.
The PRESIDING OFFICER. All time has expired. The question is on
agreeing to the motion to waive the Budget Act. The yeas and nays have
been ordered. The clerk will call the roll.
The legislative clerk called the roll.
The yeas and nays resulted--yeas 54, nays 46, as follows:

[Rollcall Vote No. 227 Leg.]

YEAS--54

Abraham
Allard
Ashcroft
Bennett
Bond
Brownback
Bunning
Burns
Campbell
Chafee
Cochran
Collins
Coverdell
Craig
Crapo
DeWine
Domenici
Enzi
Fitzgerald
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Voinovich
Warner

NAYS--46

Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Breaux
Bryan
Byrd
Cleland
Conrad
Daschle
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Graham
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Roth
Sarbanes
Schumer
Torricelli
Wellstone
Wyden
The PRESIDING OFFICER (Mr. Frist). On this vote the yeas are 54, and
the nays are 46. Three-fifths of the Senators present and voting, not
having voted in the affirmative, the motion to waive the Budget Act is
rejected. The point of order is sustained, and the amendment falls.
Mr. ROTH. Mr. President, I ask unanimous consent that the remaining
votes in this series be limited to 10 minutes in length, and I ask that
all the Members of the Senate stay on the floor. We have a full and
busy day.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BAUCUS. Mr. President, I move to reconsider the vote.
Mr. REID. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

Privilege Of The Floor

Mr. LEAHY. Mr. President, I ask unanimous consent that Peter
McDougall of my staff be given floor privileges throughout the day.
The PRESIDING OFFICER. Without objection, it is so ordered.

Motion To Recommit

The PRESIDING OFFICER. The question is on the Baucus motion.
Mr. BAUCUS. Mr. President, I understand each side has 1 minute of
explanation.
The PRESIDING OFFICER. The Senator is correct.
Mr. BAUCUS. Mr. President, this is a very simple matter before the
Senate. It is a choice: Do we want to protect Medicare or not. It is
that simple. That is the choice that we are presented with today.
The amendment I am offering is the House lockbox which passed the
House by an overwhelming margin--it only had three or four votes
against it--along with the Medicare lockbox. The Medicare lockbox we
provide sets aside one-third of the on-budget surplus for Medicare. It
can be used in whatever way we want to use it for Medicare, including
to provide an affordable prescription drug benefit or for shoring up
Medicare solvency.
That is the choice before the Senate. Do we preserve Medicare or not.
Our choice here today, however, is nothing compared to another choice.
That is the choice that about 16 million seniors must make every day:
Do I choose to buy my medicine, choose to pay the rent, or choose to
buy food?
We are saying set aside and preserve for Medicare one-third of the
on-budget surplus so that the choices facing seniors are not quite as
abhorrent.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Mr. President, this is another opportunity on the part
of the other side to propose to the American people that they want
anything but tax relief. This is a motion to recommit. It would do
nothing to protect Medicare. It is the President's proposal, which is a
phony transfer of IOUs to the Medicare trust fund. It does nothing to
help senior citizens. It is just an effort to lock up $300 billion so
you can't give the American people a tax cut, plain and simple. They
don't want to confront the issue of a lockbox for Social Security so
they muddle it up and instead of trying to solve something, they would
like to create an issue instead of a solution.

Frankly, there are hardly any experts in America who look at this
lockbox concept for Medicare and say it helps the seniors or it helps
Medicare. If this is the plan the President is alluding to across this
land, then he has none.
I believe, since the other side did not let us have a vote, we ought
to do ours procedurally also, and I am compelled to do that.
Therefore: The language in this amendment is not germane to the bill
before us, so I raise a point of order under section 305(b)(2) of the
Congressional Budget Act.
The PRESIDING OFFICER. The Senator from Montana.
Mr. BAUCUS. Mr. President, pursuant to section 904 of the Budget Act,
I move to waive the applicable sections of that act for the
consideration of the pending amendment.
Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Budget Act in relation to the Baucus motion to recommit S.
1429. The yeas and nays have been ordered.
The clerk will call the roll.
The legislative assistant called the roll.
The yeas and nays resulted--yeas 42, nays 58, as follows:

[[Page S9653]]

[Rollcall Vote No. 228 Leg.]

YEAS--42

Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Bryan
Byrd
Cleland
Conrad
Daschle
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Graham
Harkin
Inouye
Johnson
Kennedy
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Schumer
Torricelli
Wellstone
Wyden

NAYS--58

Abraham
Allard
Ashcroft
Bennett
Bond
Breaux
Brownback
Bunning
Burns
Campbell
Chafee
Cochran
Collins
Coverdell
Craig
Crapo
DeWine
Domenici
Enzi
Fitzgerald
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hollings
Hutchinson
Hutchison
Inhofe
Jeffords
Kerrey
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Voinovich
Warner
The PRESIDING OFFICER. On this vote, the yeas are 42, the nays are
58. Three-fifths of the Senators duly chosen and sworn not having voted
in the affirmative, the motion is rejected. The point of order is
sustained, and the motion falls.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, I move to reconsider the vote.
Mr. MOYNIHAN. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. ROTH. Mr. President, I ask unanimous consent that all amendments
and motions to recommit to S. 1429 must be filed by 2 p.m. today at the
desk and with the bill managers.
Mr. STEVENS. Reserving the right to object, what time was that?
Mr. ROTH. Two p.m.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.

Amendment No. 1401

Mr. ROTH. Mr. President, I think we are ready for the vote on the
next amendment.
The PRESIDING OFFICER. There are 2 minutes equally divided. Who
yields time?
Mr. ROBB addressed the Chair.
The PRESIDING OFFICER. The Senator from Virginia.
Mr. ROBB. Mr. President, this amendment simply delays the effective
date of the tax cut that is proposed. There are many who believe that a
tax cut of this magnitude at this time would be ludicrous. But that is
not the issue. The issue is whether or not we ought to go ahead with a
tax cut notwithstanding the fact that we have not protected Social
Security and Medicare.
Most of the people who have spoken so far have talked about their
concern for doing just that. The lockbox provisions were proposing to
do just that.
If you want to save Social Security and Medicare, this is an
incentive. It will delay the implementation of the act, but it will not
negate the effectiveness of the act.
I ask that our colleagues vote to support this particular amendment,
save the one-half of 1 percent of the total which would be expended
this year, and not lock in cuts that would cost $792 billion, which
would be almost impossible to reverse should that prove to be the case.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. THOMPSON addressed the Chair.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. THOMPSON. Mr. President, no one in this chamber thinks other than
that we want a real, sound, solid, and solvent Social Security system
and Medicare system. Most of us, however, realize we will only have
that if we have fundamental reforms in those systems, such as that
proposed by the Medicare commission at which the President scoffed.
This amendment will serve to actually make Social Security and
Medicare less sound. It will actually delay the process of real reform.
The solvency dates that are used in this legislation are taken from the
President's proposal and will invariably result in pouring more and
more general revenues into these entitlement programs, delaying the day
when we have to face up to the fact that we have to have fundamental
reform.
Our bill sets aside 75 percent of the surplus for Medicare, Social
Security, debt retirement, and other spending priorities. With regard
to the 25 percent remaining, there is no reason to delay tax cuts.
If we saved every penny of the surplus, put it into Medicare and
Social Security, it would not do one thing toward solving the
fundamental problem.
This language is not germane to the bill now before us; therefore, I
raise a point of order, under section 305(b)(2) of the Congressional
Budget Act of 1974.
Mr. ROBB. Mr. President, pursuant to section 904 of the Congressional
Budget Act of 1974, I move to waive the applicable sections of that act
for the consideration of the pending amendment, and I ask for the yeas
and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Congressional Budget Act in relation to the Robb amendment
No. 1401. The yeas and nays have been ordered. The clerk will call the
roll.
The legislative clerk called the roll.
The yeas and nays resulted--yeas 46, nays 54, as follows:

[Rollcall Vote No. 229 Leg.]

YEAS--46

Akaka
Baucus
Bayh
Biden
Bingaman
Boxer
Bryan
Byrd
Cleland
Conrad
Daschle
Dodd
Dorgan
Durbin
Edwards
Feingold
Feinstein
Graham
Harkin
Hollings
Inouye
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Sarbanes
Schumer
Snowe
Torricelli
Voinovich
Wellstone
Wyden

NAYS--54

Amendment No. 1405

(Purpose: To return to the taxpayers a portion of the budget surplus
that they created with their tax payments)

The PRESIDING OFFICER. Under the previous order, the Senator from
Texas is recognized to offer an amendment.
Mr. GRAMM. Mr. President, I send an amendment to the desk in the
nature of a substitute for myself, for Senator Lott, Senator Nickles,
Senator Mack, Senator Coverdell, Senator Craig, Senator McConnell,
Senator Inhofe, Senator Hutchison, Senator Bunning, Senator Kyl,
Senator Bob Smith of New Hampshire, Senator Allard, and Senator Hagel,
and I ask for its immediate consideration.
The PRESIDING OFFICER. The clerk will report.
The assistant legislative clerk read as follows:

The Senator from Texas [Mr. Gramm], for himself, Mr. Lott,
Mr. Nickles, Mr. Mack, Mr. Coverdell, Mr. Craig, Mr.
McConnell, Mr. Inhofe, Mrs. Hutchison, Mr. Bunning, Mr. Kyl,
Mr. Smith of New Hampshire, Mr. Allard, and Mr. Hagel,
proposes an amendment numbered 1405.

Mr. GRAMM. Mr. President, I ask unanimous consent that reading of the
amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.

[[Page S9654]]

(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
Mr. GRAMM. Mr. President, I have the highest admiration for the
chairman of the Finance Committee. I am supportive of the tax cut he
has crafted in committee. I intend to vote for it on final passage if
this amendment fails.
But I believe we need a clearer vision. I believe we need to define
very precisely what we would like to use this tax cut to do, rather
than running around trying to stick a nickel in everybody's pocket with
a targeted program.
I would prefer to have a tax cut that has clear themes and this is a
very simple substitute because it consists of simply five things. So
this is a tax cut that you can explain to every American, and it
contains basic principles that I believe every American can understand
and support.
The first principle is we ought to have an across-the-board tax cut
of 10 percent. Now, I know our Democrat colleagues are going to jump up
and down and say, first of all, that 32 percent of American families
pay no income taxes, and so if you have an across-the-board tax cut,
they will not get a tax cut. And that is right. Tax cuts are for
taxpayers. If you don't pay taxes and we have a tax cut, you don't get
a tax cut. Most Americans don't get food stamps; most Americans don't
get TANF; most Americans don't get Medicaid because they don't qualify
for those programs. If you don't pay taxes, you don't qualify for a tax
cut.
Our Democrat colleagues are obviously going to jump up and down and
say that Senator Rockefeller, who pays 10 times as much taxes as I do,
with a 10-percent across-the-board tax cut, will get 10 times as big a
tax cut. That is right, but he pays 10 times as much taxes. If you ask
people in your church to take up money to build a new parsonage and it
turned out you had taken up too much money, and you decided to give it
back, isn't the logical way to give it back to simply take how much an
individual gave and take the amount that you didn't need and give it
back to them proportionately?
So the point is, the first principle we believe in is there ought to
be an across-the-board tax cut, so every American who pays income taxes
will get a tax cut. Now, our Democratic colleagues have said they
believe if you are rich, which means you are in the upper half of the
income distribution--and they design that as roughly making somewhere
around $50,000--you don't deserve a tax cut. In their proposal, you
basically don't get one. I want to remind my colleagues that by
excluding people who pay 99 percent of the income taxes in America,
they are excluding from a tax cut 62 percent of all homeowners, 66
percent of all Americans between the ages of 45 and 64, 67 percent of
all families who have children in their homes, 67 percent of all full-
time workers, 68 percent of all Americans who have some college
education, 69 percent of all married couples, and 80 percent of all
two-wage earner families in America.
Our Democrat colleagues love investment, but they hate investors.
They love the benefits of capitalism, but they hate capitalists. An
across-the-board tax cut gives everybody a tax cut, and if people pay a
lot of taxes, they get a bigger tax cut--not proportionately, but they
get the same tax cut. If that offends you, if you believe that somehow
people who make over $50,000 a year are the enemies of the people and
they ought to continue to be punished, you would want to be against
this provision.
The next thing this provision does is it eliminates the marriage
penalty. Most Americans are not aware of that because our Tax Code is
so perverted, if two young people, both of whom work, fall in love and
get married, they, on average, pay the Federal Government $1,400 a year
in taxes for the right to be married. My wife is worth $1,400, but the
point is, she ought to get the money, not the Government. We eliminate
the marriage penalty.
Secondly, we have income splitting. Now, I know some of our Democrat
colleagues are going to get up and say, well, look, if the husband
earns all the money and the wife stays at home and raises the children,
they ought not to get the correction for the marriage penalty. Well, we
do income splitting. We have decided we don't want to inject the Tax
Code in the decision about whether people work outside the home or not.
My mama worked every day that I was a child, and she did it because she
had to do it. My wife has worked every day that our children have been
alive because she wanted to do it. I am not trying to distort the
decision one way or another, or make a judgment. All I am saying is
that people who stay at home and raise their children contribute to
America. They make a big contribution. By allowing a couple, where only
one of them works outside the home, to split their income and attribute
half to each one of them--that is what the partnership of marriage is
about--we are able to give them a substantial reduction in the penalty
they pay for being married.

The next provision is, we repeal the death tax, which is a certain
kind of death penalty. I like the death penalty where we put murderers
to death. I don't like the death penalty when working people die and we
end up forcing their children to sell their business or their farm. All
over America, people work a lifetime to build up a business or a farm,
and then when they die, their children have to sell that business or
sell that farm to give Government 55 cents out of every dollar they
earned in a death tax. This provision repeals the death tax.
Now, I know that our Democrat colleagues are going to get up and say,
well, these are rich people. But I want to give you an example. When I
first met a printer from Mexia named Dicky Flatt, I met him about 25
years ago. He was in business with his daddy, who worked on these old
calculator machines that businesses use. His mama kept all the books,
his wife basically was working in their stationery shop, and Dicky
Flatt did the printing business. They had an old building in Mexia, and
it was cracking right down the middle. They kept putting sand in the
bottom and kept tar-papering over the top. They had one bathroom, and
it didn't have a door on it; it had a curtain on it. So when you went
in to use the bathroom, you pulled the curtain.
Now, they worked hard in that business. So now Dicky Flatt has torn
down that building. He has built a Morton building, a metal building,
and he has a good size print shop and stationery shop. He sent his two
sons to Texas A&M. They have come back and have gone into business with
him. He works every day. He gets in at 6 and leaves about 8. He is
there on Saturday until 6 o'clock. Whether you see him at the PTA, Boy
Scouts, or the Presbyterian Church, try as he may, he never gets that
blue ink off the ends of his fingers.
Now, Dicky Flatt may be rich, for all I know. He doesn't live like a
rich guy. When his brother died of cancer, he took over his school
supply business with his wife. My basic point is that Dicky Flatt and
Linda, his wife, have worked 6 days a week their whole lives. They
built up this business. Every penny they put into it has been in after-
tax dollars. How can it be right to force their two boys, who now work
in that business, to sell that business when Dicky and his wife Linda
die in order to give the Government 55 percent of it, in order to take
the money from Dicky Flatt and give it to people who have been sitting
on their fannies in Mexia, not working on Saturday, and in some cases,
not working at all? I am sure we are going to hear that this is for
rich people. I want to put a human face on it.
When we revolted against King George, he wasn't doing things such as
the death tax. This is an outrage. This is an assault on every value
this country stands for, and I want to repeal it and repeal it
outright.
I want to index the capital gains tax.
That is the fourth provision of this bill.
I want to say that from this day forward, if you buy a house as an
investment and the price doubles and you sell the house for twice as
much as you paid for it, you haven't made any money, you simply kept up
with inflation. But under current tax law, you have to pay the Federal
Government a capital gains tax on the doubling of your house's price
even though that new price will buy only the amount of goods you could
have bought with the money for which you bought the house. So the next
thing we do is index the capital gains tax for inflation.
Finally, we eliminate not the last outrage in the Tax Code but it is
a big

[[Page S9655]]

outrage. If General Motors buys you health insurance, it is tax
deductible for them, but if you buy it for yourself, it is not tax
deductible. We eliminate that by saying that no matter who buys health
insurance in America, the employer or the employee, a retiree or a
worker, a homemaker or someone who is employed in the economy, that
health insurance is tax deductible.
It is a simple tax cut that you can put on one piece of paper. If you
pay taxes, you are going to get a 10-percent reduction in income taxes
out of this bill. It is easy to figure. If you pay $1,000 in income
taxes, you are going to get $100. If you pay $10,000, you are going to
get $1,000. If that breaks your heart, so be it. I think most people
will like it.
Second, we eliminate the marriage penalty and we allow income
splitting. If you have one parent who stays at home, you are able to
divide the income in half and have each of them claim half that income
that belongs to them. This is endorsed by every family group in America
because it is the right thing to do.
We repeal the death tax outright over a 10-year period--no ifs, ands,
or buts. If you live 10 more years, under this bill, and you build
something with after-tax dollars, it belongs to your family forever.
That is simple arithmetic. I think we can all understand it.
We index the capital gains tax so that you never pay capital gains
tax again on inflation. This is a big issue for every homeowner and for
every investor in America.
Finally, we provide full deductibility of health insurance. This is
an equity issue. It is something that ought to be done.
This is a tax cut you can understand. It represents what I believe is
the vision of the party of which I am proud to be a member. I hope my
colleagues will vote for this substitute. I believe it represents a
dramatic improvement and simplification in the Tax Code.
I reserve the remainder of my time.
The PRESIDING OFFICER (Mr. Allard). Who yields time?
The Senator from Montana.
Mr. BAUCUS. Mr. President, I yield 1 minute to the Senator from
California and then 10 minutes to the Senator from Wisconsin, off the
bill.
The PRESIDING OFFICER. The Senator from Delaware controls the time in
opposition.
Mr. BAUCUS. The Senator from Delaware delegated that to the Senator
from Montana.
The PRESIDING OFFICER. The Chair thanks the Senator for that
clarification.
The Senator from California is recognized.
Mrs. BOXER. Thank you, Mr. President. I thank Senator Baucus.
My colleague from Texas says the Democrats hate investors and the
Democrats hate capitalism. As a former stockbroker, I deeply resent his
remarks. Maybe when the Senator from Texas was a Democrat he hated
capitalism and he hated investors, but the Democrats around here don't.
One of the reasons we are not supporting his amendment is that we think
it is bad for capitalism and we think it is bad for investors.
I have to say that this amendment, which reflects what the House did,
is a risky and radical amendment. It hurts the middle class. He says he
loves the middle class. He talks about his momma and Dicky Flatt. And I
love to hear him do it. But the bottom line is, the result of his
amendment will hurt the very people he says he wants to help because it
is such an unfair tax cut that would go to the very wealthiest and hurt
the middle class and the working poor.
I say to my friends who may be listening to this debate, the Senator
from Texas is a great debater but he was wrong when he said the Clinton
plan would lead to economic disaster and he is wrong today. I hope we
will vote down his amendment.
I yield my time.
The PRESIDING OFFICER. The Senator from Wisconsin.
Mr. FEINGOLD. Mr. President, I thank the Senator from Montana.
Mr. President, I rise to offer some comments on the reconciliation
tax measure we are considering.
First, let me note that we have come a long way in the last seven
years.
When I first came to the Senate, we were facing an actual budget
deficit of $340 million.
That was the real figure--the figure that did not use the Social
Security Trust Fund balances to mask the deficit.
Thanks in large part to the President's deficit reduction package in
1993, and to a lesser extent the bipartisan budget cuts of 1997, we are
approaching a truly balanced budget.
I emphasize `'approaching,'' Mr. President, for we are not there yet.
The budget projections of the Office of Management and Budget, and of
the Congressional Budget Office, are just that--projections.
We do not currently have a budget surplus, not without including the
Social Security Trust Fund balances.
Mr. President, I do not mean to minimize the wonderful budget
turnabout that has been achieved.
But we should not be building massive new commitments on a shaky
foundation of questionable budget assumptions.
And that is just what we have.
The assumptions underlying the tax measure we will debate depend on
Congress making cuts of $775 billion in real spending over the next ten
years compared to current levels.
Let me note that this level of cuts does not include any additional
cuts that might have to be made in order to offset the cost of
unanticipated emergencies.
Let me repeat that, Mr. President.
The $775 billion in real spending cuts over the next ten years does
not include the spending we do to help the victims of hurricanes,
earthquakes, tornadoes, floods, or any kind of international emergency.
But, for the moment, let us suppose that there will be no hurricanes,
or earthquakes, or tornadoes, or floods in the next ten years.
Let us suppose that there will be no international emergencies that
require our assistance.
Will Congress find the political will to cut spending by three-
quarters of a trillion dollars over the next ten years?
Mr. President, Congress has yet to demonstrate it can stay even
within the current spending caps, let alone find an additional three-
quarters of a trillion dollars in cuts.
Last fall, Congress passed an omnibus appropriations bill that busted
the current spending caps by more than $20 billion.
This past winter, even before we passed a budget resolution, the
Senate passed another budget buster, S. 4, the military pay and
retirement measure, which over the next ten years would add another $62
billion in spending.
And just a few weeks ago, Congress busted the spending caps yet again
with $15 billion in additional spending.
Mr. President, this is not a record of fiscal discipline.
Nor is it the kind of record that should give anyone confidence that
the budget assumptions underlying this tax bill are sound ones.
Mr. President, the assumptions underlying this tax bill are grounded
not in fiscal reality but in political expediency.
But, let us assume that somehow, Congress was able to enact the
three-quarters of a trillion dollars in spending cuts.
And let us further assume, as we did earlier, that there will be no
hurricanes, or floods, or earthquakes, or drought, or any other kind of
natural disaster for the next ten years.
And that there will be no more Bosnias or Kosovos or Iraqs--no
international emergencies of any kind for the next ten years.
Even under all of these assumptions, would this tax proposal be a
sound one?
The answer is no, because even if each and every one of those rosy
scenarios comes true, this bill would use over $75 billion in Social
Security balances to pay for the tax breaks.
Mr. President, I strongly oppose using Social Security to fund tax
cuts; that is why I voted against the 1997 tax cut package.
We simply should not be using Social Security balances--balances
needed to pay future benefits--to fund other government programs, or to
pay for tax cuts.
Of course, some may argue that even more spending cuts will be found
in order to avoid the use of Social Security balances--on the top of
the three-quarters of a trillion dollars in cuts assumed in this
measure.

[[Page S9656]]

Mr. President, granting even this still rosier scenario, would this
tax measure be fiscally responsible?
I regret that it would not, because not only does this tax bill risk
our current budget, it puts future generations at risk as well.
Mr. President, while the revenue impact of any tax cut measure can be
expected to grow over time, the policies outlined in this measure
explode.
Consider that while in the next ten years, the cost of this proposal
is an already whopping $800 billion--if those tax policies are
continued, the cost in the second ten years will be a nearly
unbelievable $2 trillion.
If you add the additional interest payments that will arise from debt
service, the total cost of the tax policies in this bill rise to over
$3 trillion.
For those who may have forgotten, let me remind my colleagues that it
is in that second ten years when the baby boomer generation begins to
retire and put increased pressure on Social Security, Medicare, and the
long-term care services provided under Medicaid.
If ever there were a time to be prudent, now is the time.
As improved as the short-term budget picture is, the longer-term
budget picture is little changed.
We still face serious problems in Medicare, and as I noted, the baby
boomer generation will put enormous pressure on that program, as well
as on the long-term care services, many of which are provided through
Medicaid.
There is also a consensus that we should address the long-term fiscal
health of Social Security, and the sooner the better.
And finally, Mr. President, we still face a mountain of debt that was
run up during the 1980s and early 1990s because of the deficits that
were run up during that time.
In each of these areas, there is a stark choice: we can act now to
address each of these areas; or, we can ignore them, watch the problems
get much worse, and leave the work and cost of reform to our children
and grandchildren.
Mr. President, for me, that's an easy choice.
I do not want my children footing the bill for the failure of past
generations to act responsible.
I want to support a tax cut, but not one that jeopardizes the work we
have done to straighten out the current budget and squanders the
opportunity to reduce our debt and put Social Security, Medicare, and
our long-term care system on sound footing.
Mr. President, let me take a moment to look at the make-up of the tax
measure itself.
One might expect that a tax cut of $800 billion would provide the
sort of broad-based tax benefits that would be politically attractive.
But given the amount of revenue dedicated to this tax cut, the
benefits to the average taxpayer are surprisingly small, and the
overall package is heavily skewed to some of the wealthiest individuals
and corporations in the world.
As was noted by the tax watchdog group Citizens for Tax Justice, the
tax bill gives three-quarters of its benefits to the best-off fifth of
all taxpayers.
By contrast, only 11 percent of the tax bill's benefits go to the
bottom 60 percent of all taxpayers.
While the average tax reduction for the wealthiest 1 percent of
taxpayers--those with incomes over $300,000--is over $23,000 a year
under this bill, those with more average income do not do quite as
well.
The average tax cut for those who are among the middle fifth of
taxpayers will be $279, or about $5 per week.
For those in the bottom three-fifths of all taxpayers, the average
tax cut is even smaller--about $140 per year, or less than $3 per week.
Mr. President, under this $800 billion tax bill, the majority of
taxpayers will have an average tax cut of $3 per week.
Maybe the proponents of this bill are hoping most of America will use
this windfall to buy one of those overpriced cups of coffee.
Well, Mr. President, thanks to this tax bill, once a week, three-
fifths of America will now be able to go to one of those fancy coffee
shops and get a frothy decaf cappuccino latte with skim milk.
This tax bill is a bad tax policy any way you brew it.
Mr. President, I recognize that some may genuinely believe we should
dedicate about $800 billion to tax cuts over the next ten years.
The tragedy is that even in that context, the $800 billion was spent
unwisely, because in addition to Social Security, Medicare, long-term
care, and reducing our national debt, one of our highest priorities
should be significant reform of our tax code.
It was just a few months ago that we heard how critical fundamental
tax reform was to our future.
Flat tax, consumption tax, a national value-added tax--there were a
number of significant proposals that sought to address the inefficiency
of our current Tax Code.
Simplification was the order of the day, and let me add, Mr.
President, that while I did not support many of those proposals, I
think many of the proponents of reform got it exactly right.
Our Tax Code should be simplified.
We should reduce the number of special interest tax breaks and use
that savings to lower the tax rates for everyone.
I participated in just that kind of exercise at the State level as
chair of the Taxation Committee in the Wisconsin State Senate.
As we all know, there will be winners and losers in a reform of our
tax code, and I can tell you from direct experience that the best time
to enact tax reforms is when you have additional resources to help
increase the number of winners and decrease the number of losers.
Mr. President, this tax bill and the House version both squandered
that opportunity as well.
We might have had a significant start on real tax reform.
Instead, we got a grab bag of goodies for special interests added to
a tax code already thick with complexity.
A recent article in the Washington Post listed a number of the
special interest tax breaks in this bill and the House version.
They include tax breaks for: multinational corporations, utility
companies, railroad, oil and gas operators, timber companies, the steel
industry, seaplane owners in Alaska, sawmills in Maine, barge lines in
Mississippi, Eskimo whaling captains, and Carolina woodlot owners.
This bill is a dream come true for business lobbyists.
The Post reported one lobbyist as saying, ``If you're a business
lobbyist and couldn't get into this legislation, you better turn in
your six-shooter.''
Mr. President, in the name of complete disclosure, let me note that I
understand the Democratic alternative, which I may support, suffers
from the same problem, though to a much lesser extent.
And it will come as no surprise to my colleagues that I firmly
believe this kind of pandering to special interests is a direct result
of our campaign finance system.
There's ample evidence to that effect right here in this bill.
The campaign finance system gives wealthy interest an open invitation
to influence legislation in this body, and in this bill it's clear that
special interests accepted that invitation in droves, Mr. President.
For the benefit of my colleagues and the public, I'd like to share
just a few examples of what these interests gave in PAC and soft money,
and what they got in either this bill, the House tax measure, or both.
I do this from time to time; it is known as ``The Calling of the
Bankroll.''
According to the Washington Post, an umbrella organization called the
Coalition of Service Industries, a coalition of banks and securities
firms, won a provision to extend for five years a temporary tax
deferral on income those industries earn abroad. The value of this tax
deferral: $5 billion over ten years.
So we know what Congress has given the Coalition of Service
Industries, but what has the Coalition of Service Industries given to
candidates and the political parties? During the 1997-1998 election
cycle, coalition members gave the following:
Ernst & Young--more than half a million dollars in soft money, and
nearly $900,000 in PAC money.
CIGNA Corporation--more than $335,000 in soft money, and more than
$210,000 in PAC money.

[[Page S9657]]

American Express--more than $275,000 in soft money and nearly
$175,000 in PAC money.
Deloitte and Touche--more than $225,000 in soft money and more than
$710,000 in PAC money.
Of course, as I said Mr. President, this is just a sampling of what
Coalition of Service Industries members have given. I'd be up here a
lot longer if I had a document all the millions of dollars these groups
have given.
But it doesn't stop there. These two tax bills mean Christmas in July
for special interests, Mr. President, with gifts for jut about every
industry in Santa's bag.
The post reports the utility industry got a provision affecting
utility mergers in the House measure, which, if it survives, is worth
more than $1 billion to the utility industry. The provision would
excuse the payment of taxes on the fund that utilities set up to cover
the costs of shutting down nuclear power plants.
Utilities companies that operate nuclear power plans would be
particularly grateful to see this provision passed, Mr. President.
Their depth of their gratitude would be matched only by the size of
their campaign contributions during the last election cycle, including:
Entergy Corporation, which gave $228,000 in soft money and nearly
$250,000 in PAC money;
Commonwealth Edison, which gave $110,000 in soft money and more than
$106,000 in PAC money;
And Florida Power and Light, which gave nearly $300,000 in soft money
and more than $182,000 in PAC money.
As it does so many other issues, our campaign finance system is
preventing real reform to our tax code, and those who doubt that only
need to look at this bill.
Mr. President, the best thing we can say about this tax bill is that
it will not be enacted into law.
The President will almost surely veto it, and he will be right in
doing so.
This bill is fiscally irresponsible.
It depends on budget suppositions that are at best fanciful.
It uses Social Security balances to pay for tax cuts.
It proposes a tax policy that no only jeopardizes our current budget
but our future fiscal health.
It sticks our children and grandchildren with the cost of paying-off
the debt run up over the past two decades, and leaves them the task of
extending the solvency of Social Security, strengthening Medicare, and
reforming our long-term care system.
And it hands our special interest tax breaks galore while providing
little tax relief to the vast majority of taxpayers.
Mr. President, I will vote against this bill, and urge my colleagues
to do so as well.
Mr. President, I yield the floor.
Mr. BAUCUS. Mr. President, I yield 5 minutes to my good friend from
Delaware, Senator Roth.
Mr. ROTH. Mr. President, Senator Gramm has provided Members with a
straightforward alternative to the bipartisan Finance Committee bill. I
compliment him on the clarity of his approach, much of which I favor.
Although provisions of Senator Gramm's substitute have appeal for me,
frankly, I could not have used it as a basis for the Finance Committee.
His proposal contains elements that would not garner a majority of
committee members.
In addition, Senator Gramm's substitute, though popular with many in
the Senate Republican caucus, would not pick up support on the other
side of the aisle. For that reason, his proposal would not be a
blueprint for tax cuts, in the form of a signable bill, that we can
deliver to the American people now.
Finally, although Senator Gramm's amendment is simpler, it leaves out
many bipartisan tax measures that address important tax issues. For
instance, education savings incentives are deleted. This means parents
who want to save for a child's college education would be left out of
the picture. We're talking about millions of parents and students in
every state.
Yet another example is the student loan interest deduction. Under the
Finance Committee bill, at least three million graduates, bearing the
burden of college debt, would be allowed to deduct student loan
interest on their tax returns.
In my legislation I try to focus on matters of need to the American
family. I provide incentives to promote savings, pensions, IRAs. Many
in retirement depend not only on Social Security, which we will
address, but also on personal savings and pensions. My bill addresses
that. There is nothing to correct the problems of AMT, the alternative
minimum tax. Unfortunately, thousands upon thousands of American
families will be hit by AMT and not enjoy the full benefit of many
programs such as the child tax credit.
Finally, nothing is done with respect to charitable giving. We have
proposals that will promote and create incentives.
For these and other reasons, I must oppose Senator Gramm's well-
intentioned amendment.
I reserve the remainder of my time.
Mr. BAUCUS. Mr. President, I yield myself such time as I might
consume.
The Finance Committee has already rejected this provision. The
Finance Committee deliberated this amendment in committee, and, by a
large margin turned it down because it is excessive. It is
irresponsible, in my judgment. It is not the right thing to do. It says
we are going to take the entire on-budget surplus. And because of the
tax cut plus the lost interest on the debt, there is nothing left for
Medicare, discretionary spending or any other programs which will be
cut anyway by a very large margin.
It is excessive, too, compared to the bill passed by the committee
because it is so backloaded. It is so top heavy. By that, I mean the
bulk of the cost of the provisions are at the very end--6, 7, or 8
years from now. No one can predict the future of this country and what
position we will be in 6 to 8 years from now.
I was speaking to the CEO of a major American company a few days ago,
a man we all know, a company we all know very well. He told me they
can't begin to plan for the future. They do have 5-year plans but they
know the 5-year plans are not going to be accurate. So they have to
just do the best they can on virtually a quarterly basis. They have to
go ahead in the areas they think are the areas of the future, but it is
almost impossible to plan in this modern era.

So I say, if we today were to lock in provisions in the law which
will hemorrhage this country's budget surplus based upon ephemeral,
distant projections which are never accurate, that is not responsible.
That is not the right thing to do. And that is what this amendment
does. That is why basically, fundamentally, without going into all the
details of it, why this does not make sense. It has often been stated
during this debate that the time when the baby boomers begin to retire
is when these things really start to kick in and the costs explode.
I think prudence is the watchword here today. History sometimes is a
guide. Look at the 1980s. What happened in the 1980s? There was a huge
tax cut. Congress succumbed to the siren song of supply side economics.
What was supply side economics supposed to do? It was supposed to make
deep tax cuts, spend more on defense, and guess what, folks, that is
going to cause the budget to be balanced. That was what supply side
economics was supposed to do--advocated, by the proponents of this
amendment. It was going to balance the budget.
The theory is the trickle down theory: Cut the taxes of the most
wealthy, they invest a lot more, it trickles down and the economy
starts humming and it balances the budget. That was the Laffer curve.
Guess what, it did not work. We kind of knew it was not going to work,
but it was such a temptation, such a siren song to vote these huge tax
cuts, hoping, hoping, hoping that what the proponents said would come
true. Guess what, it did not. It did not come true at all.
The tax cut was passed in 1981. Then what happened in 1982? This
Congress, a Republican Congress, and President Reagan, had to change
course. They had to raise taxes. The Republican Congress and Republican
President raised taxes in 1982. Then guess what. This tax increase was
not enough because the deficits were just so large. The Republican
Congress and Republican President had to raise taxes again in 1984.
They had to raise taxes more because the deficit was so large. The
national debt in 1980 was roughly about

[[Page S9658]]

$1 trillion; 8 years later it was roughly $3 trillion, maybe close to
$4 trillion. It tripled and quadrupled during that time of the huge tax
cuts. Then we had to add more taxes back again in 1982 and 1984.
So, in many ways this is history repeating itself. Democrats in the
Senate support a tax cut. We support using a third of the on-budget
surplus to pay for a tax cut. But we are just saying don't use all of
the on-budget surplus for tax cuts with virtually all going to the most
wealthy Americans.
Do you know what else is going on here? I do believe the proponents
of this bill are so--not distrustful, but so opposed to Government that
they want these huge tax cuts partly to force down deeper cuts, way
below the baseline in spending. I think they want to cut veterans'
benefits 30 percent; they want to cut health education 20, 30 percent;
want to cut these programs. I think there are really many on that side
who want to make these cuts. They want to. As strange as that might
sound, they want to. That is another reason for this huge tax cut
because it will force cuts in spending later on.
We have already cut spending. Discretionary spending has been cut so
much by this body over the last 10 years it is unbelievable. And the
size of government has gone down, with many fewer federal employees
than there were years ago.
To sum it all up, we have seen this provision in the Finance
Committee. The Finance Committee soundly rejected this amendment. I
urge the Senate to also soundly reject this amendment. It is not good
policy.
I reserve the remainder of our time.
The PRESIDING OFFICER. The Senator from Texas.
Mr. GRAMM. Mr. President, I yield 10 minutes to the distinguished
Senator from Tennessee.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. THOMPSON. Mr. President, I think Senator Gramm is bringing a very
important principle to the table, one that we need to address: If we
are going to have a tax cut, what kind of tax cut should we have? What
is best for the economy, and what is fair?
There was a consensus in this country, 10, 15 years ago, that we
needed to have a tax policy based upon a broader base and lower rates.
That is essentially the tax bill that came out in 1986. We came down to
two tax rates. We had a 15-percent and a 28-percent tax rate. There was
a broader base, where more people were paying taxes, but lower rates.
In the 1990s, we have gotten away from that. We have gotten away from
that principle and gone, instead, toward what has been referred to as
targeted tax cuts. That its basically the Government--we, the
President--that decide, on an individual basis, who deserves the tax
break or tax cut in any particular year. Usually it is based upon how
much clout they have, or some notions of fairness of a particular
congressional makeup at some particular time. So now we have wound up
with higher rates and a narrower base. We now have five income tax
rates instead of the two we had back in 1986 in addition to phaseouts.
The Tax Code, not only do we have additional rates, it has become more
progressive, even in addition to those rates.
I do not think a lot of people are aware of this. I think most
Americans think initially, basically, they can look at tax rates and
see what their tax burden is. But then you look at all the phaseouts
that we have. Congress has decided in its wisdom that people of a
certain income level do not deserve some of the deductions, exemptions,
and benefits that others deserve. So we have a personal exemption
phaseout.
We have an itemized deduction phaseout at basically the $124,000
level for individuals. I am talking about individuals and not couples,
in terms of the dollar amounts I am using. The personal exemption
phaseout; itemized deduction phaseout, limitation of only being able to
deduct that amount over 2 percent of itemized deductions; a 7.5 percent
floor on medical deductions; a 10 percent adjusted gross income floor
on casualty deductions; a $500 child credit that phases out at an
income level of $75,000; a dependent child credit that begins to be
phased out at an income level of $10,000--if you make that much it
begins to be phased out; a deductible IRA, $30,000; an education IRA,
$95,000; the HOPE credit, college credit, begins to be phased out at
$40,000 for an individual. So we want to help you go to college, we
want to help your kids go to college--as long as you do not have a job,
basically is what that amounts to.
We have a life-time learning credit of $40,000; student loan interest
deductions, at $40,000 it begins to be phased out; education savings
bond interest--if you make $52,000 you begin to lose that; elderly/
disabled credit, $7,500; adoption credit/exclusion, $75,000; DC first
time homebuyer--if you make $75,000, you begin to have that phased out
as a taxpaying individual; rental real estate losses; rehabilitation
tax credit--on and on and on.
In addition to continuing to raise the tax rate--the highest one in
1986 was 28 percent and now it is up to 39.6 percent plus the maximum--
plus the limited itemized deductions and phaseout of personal
exemptions, you wind up with an effective rate of over 40 percent. When
you remove the cap on Medicare tax, plus these phaseouts, you are
looking at, in some cases, close to an effective 45-percent tax rate,
something like that.
My only point is that, as we decide how to go forward, we need to
understand that we have a progressive system as far as our income Tax
Code is concerned, and that is the way it ought to be. A lot of people
believe it is that way. But every time we have a tax cut, we cannot say
let's give everybody the same dollar amount back in taxes regardless of
how much they paid in because we have a very progressive system.

We have progressive tax rates up to 39.6 percent, with phaseouts so
that if you are making any money, if people are working hard and making
a pretty good living, they begin to lose the deductions and credits.
That makes it even more progressive.
We come along and say we are going to give a tax cut now, and we say
if the other guy is paying twice as much in taxes as I am, give him a
tax cut. He lost all these exemptions because he is making good money.
He is paying twice as much in taxes. But we come along with a tax cut
and we say they are going to both get the same amount back? I do not
think that makes much sense.
Let's say the economy was good and we were able to have successive
tax cuts over a period of time and we gave the same dollar amount back
to everybody regardless of how much they were paying in taxes. We would
have a narrower and narrower base all the time and fewer and fewer
people paying any taxes at all. We would continually be taking people
off the tax rolls. We already have 43 million people who do not pay
taxes.
As progressive as our Tax Code is, as does the Senator from Texas, I
make no apologies for the proposition that when it comes time for a tax
cut, let's base the tax cut on how much people are paying in.
We have to ask ourselves a fundamental question: Are we interested in
punishing folks who make a good living or are we interested in
collecting money for the Federal Government to pay legitimate
Government expenses? History shows every time we have had a reduction
in tax rates, we have more money. Every time the Government reduces
rates in any appreciable amount, the Government winds up getting more
money.
In the 1920s, it was true. In the 1960s, under President Kennedy, who
said a rising tide lifts all boats, it was true. In the much maligned
1980s, which laid the groundwork for the greatest economic prosperity
this world has ever known, it was true.
Increased revenues in the twenties was 61 percent over a 7-year
period. In the sixties, a revenue increase after inflation was about 33
percent. In the eighties, after cutting the tax rates, revenues
increased 28 percent because it reduced the incentive to hide income,
to shelter income, and to underreport income.
Similarly, the share of the tax burden paid by the rich rose
dramatically as the rates fell. By cutting rates, we get more money out
of the rich.
Do we want to be concerned about how much somebody is making and try
to hold that down or do we want the money for the Federal Government? I
thought the idea was to have a fair Tax

[[Page S9659]]

Code but to raise the money for the legitimate expenses of the Federal
Government.
In the 1920s, they called rich $50,000. I guess things have not
changed that much. But in 1921, the rich paid 44 percent of the income
tax. In 1928, after the rate cut, they paid 78 percent of all taxes.
The gap was not quite as pronounced later on, but in 1963 under
President Kennedy, at the time of the cut, the rich were paying 11.6
percent of all the taxes being paid. In 1966, they were paying 15.1
percent. In the 1980s, we were talking about the top 10 percent----

The PRESIDING OFFICER. The Senator's time has expired.
Mr. THOMPSON. I ask for another 3 minutes.
Mr. GRAMM. I yield the Senator another 3 minutes.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. THOMPSON. In the 1980s--1981--the rich were paying 48 percent of
the taxes. In 1988, they wound up paying 57 percent of the taxes. We do
not get a lot of credit taking up for the rich, but our responsibility
as public servants is to look out for the country and have policies
that are going to get the most money and not try to be too concerned
about who is going to get this share of the economic pie: I am going to
get yours; you are not going to get mine. Our concern should be with
making that economic pie better.
As far as an across-the-board cut is concerned, every serious
observer nowadays thinks it is sound economic policy. Lawrence Lindsey,
former Federal Reserve Board member, George Shultz, former Secretary of
State, and even the oft quoted Chairman Greenspan--there may be some
discussion as to when he thinks a tax cut should come about, but he
says when it comes about, it ought to be an across-the-board rate
reduction. This is sound economic policy.
I know the prospects for this particular amendment, but all of this
business about soak the rich and unfairness, we need to keep a little
balance and keep things in mind. If we want more money, if we want to
be fair--first of all, we have to recognize we have a very progressive
system in this country, so when it comes time for a tax cut, let's pay
some attention to the idea of across the board and not have politicians
deciding the detailed targeted tax cuts for their favorite people, but
make it across the board. It is more fair, and it will get more money
for the Federal Treasury. I yield the floor.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, I yield myself such time as I may take off
the bill.
Mr. President, a number of my colleagues have attacked the Reagan tax
cut. With that I strongly disagree.
I have no argument with those who want to bring up history in their
attempt to argue against the need for this tax relief package. But I do
have an argument when they attempt to change facts and debunk what
was--and continues to be--a tremendous economic legacy.
First, let me make it clear that cutting taxes to keep the economy
strong did not begin with President Reagan--nor is the idea isolated to
one political party or the other.
In the 1960s, President Kennedy ushered America into economic
expansion with his own historic tax cuts.
In fact, in recalling our history it might help us to remember
President Kennedy's statement to the Economic club of New York in
December 1962. On that occasion, he said:

Our true choice is not between tax reduction, on the one
hand, and the avoidance of large federal deficits on the
other. It is increasingly clear that...an economy hampered by
restrictive tax rates will never product enough revenues to
balance our budget just as it will never produce enough jobs
or enough profits.

Second, the facts concerning President Reagan's economic record are
very clear: everyone benefited from the broad based 25 percent across-
the-board tax cuts signed into law by President Reagan. The facts show
that all income groups saw their incomes rise during the period of 1980
to 1989. The facts show that during that period, the mean average of
real income rose by 15.2 percent, compared to a 0.8 percent decline
from 1970 to 1980.
And what of record-setting deficits? Did cutting taxes 25 percent
across the board deplete the Treasury revenues? Absolutely not. Again,
the records, the facts show that Federal revenues actually exploded. As
Americans grew in wealth, Treasury revenues grew. Between 1981 and
1987, they grew 42 percent.
The deficits remind my debunking colleagues--were not created by
cutting taxes and stimulating economic growth; they were the product of
a Congress that refused to hold the line on spending. While revenues
increased 42 percent, following those tax cuts, spending increased by
50 percent.
And, my colleagues, that is unlikely to happen after this tax relief
package becomes law, as Congress is largely controlled by the same
individuals who--2 years ago--passed the first balanced budget in a
generation.
Mr. President, I yield the floor.
Mr. HOLLINGS addressed the Chair.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. HOLLINGS. I yield the distinguished Senator from North Dakota 10
minutes off the bill.
Mr. DORGAN addressed the Chair.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, what a remarkable debate. At a time when
so many Americans think so much in politics is fuzzy and they can't see
much of a difference between the two parties, this is a bright-line
test. There is a radical difference in terms of what we stand for and
what we fight for and what we have passion to change. I want to
describe a little of that difference.
But first I want to go back to what some would call ``the good old
days.'' Let's go back to the year just before we passed, by one vote,
the bill that increased some taxes for a few people in this country,
cut some taxes for others, cut some spending, and put this country back
on track with an economic plan that resulted in where we are today.
In 1993 I voted for that package. We did not get one vote from the
other side of the aisle--not one. It passed by one vote in the House,
one vote in the Senate. We did not get one vote to help us from the
other side of the aisle.
In fact, some on the other side of the aisle stood up and said: If
you pass this, this country is going into a depression. If you pass
this, it will ruin the American economy. It will throw people out of
work. It will injure this country. Well, we passed it anyway.
Do you remember those days? The Federal deficit then was $290 billion
and growing. We had nearly 10 million Americans out of work, looking
for a job. The Dow Jones Industrial Average just barely reached 3,000.
Inflation was double what it was last year. There were 97,000 business
failures.
Then we passed a piece of legislation that put this country back on
track--over the objections, I might add, of the folks who bring----
Mr. REID. Will the Senator yield?
Mr. DORGAN. I am happy to yield.
Mr. REID. The Senator from North Dakota--this is a question--
indicated that the Democrats did not receive a single Republican vote
in the 1993 budget; is that true?
Mr. DORGAN. That is correct.
Mr. REID. Does the Senator also remember some of the statements of
doom made?
Mr. DORGAN. I do, indeed.
Mr. REID. Do you remember this one made by the author of this
amendment:

I want to predict here tonight that if we adopt this bill
the American economy is going to get weaker and not stronger,
the deficit four years from today will be higher than it is
today and not lower . . . when all is said and done, people
will pay more taxes, the economy will create fewer jobs,
Government will spend more money, and the American people
will be worse off.

Do you remember that statement?
Mr. DORGAN. Of course I remember that. There were predictions of
doom, saying, if you pass this, you are going to throw this country
into a tailspin.
This is a country that had a $290 billion deficit, an anemic economy,
with 10 million people out of work. This is a country that desperately
needed a change in direction. We made it without the help of one vote
from the other side.
Frankly, I thought a couple of the folks you referenced were going to
do a half-gainer off the Capitol Dome, they were so upset about us
changing the fiscal policy of this country. But we did it.

[[Page S9660]]

Guess what happened. Guess what happened. This country's economy has
seen robust economic growth. Seven years later, we do not have a budget
deficit. No, we do not have a $290 billion, and growing, budget
deficit. We have a budget that is nearly in balance. Economists are
predicting surpluses for the next 10 years--I might point out, the same
economists who predicted in the early 1990s we would have a full decade
of sluggish, anemic growth in this country.
I mentioned yesterday these are the same economists who can't
remember their home phone number or address telling us what will happen
3, 5, and 10 years from now. We ought to be careful about these
predictions. We do not have a budget surplus yet. The 10 years of
estimated $3 trillion surpluses do not exist, and we have folks on the
floor who are breathless to try to deal with them through tax cuts.
Mr. REID. Will the Senator yield for another question?
Mr. DORGAN. I am happy to.
Mr. REID. I ask my friend from South Carolina, who is managing this
bill, that whatever time I use asking these questions be yielded off
the bill so the Senator does not lose his time.
Mr. HOLLINGS. Yes.
Mr. REID. I say to my friend, the statement I read to the Senator
just a short time ago was given August 5 by the author of this
amendment that we are now debating. A day later, on August 6, do you
remember this statement? I quote:

I believe that this program is going to make the economy
weaker. I believe that hundreds of thousands of people are
going to lose their jobs as a result of this program. I
believe that Bill Clinton is one of those people.
The fact is, does the Senator from North Dakota realize that there
have been 18 million jobs created in those 7 years? Hundreds of
thousands losing their jobs?
You do remember this statement, don't you?
Mr. DORGAN. Oh, I do. In fact, the same people who made those
predictions that were so wrong are now telling us they have new
predictions and we should believe the new predictions.
Mr. REID. I say to my friend, do you also understand that since this
statement was made we have had the lowest inflation, the lowest
unemployment, in some 40 years? Does the Senator acknowledge the fact
that the deficits, when these predictions were made, which were about
$300 billion a year, are now down to nothing? Does the Senator realize
that?
Mr. DORGAN. The economy has performed in a way no one expected. But
we knew that the direction this country was headed in was wrong--$290
billion in a year in deficits, and heading up; more inflation, more
people out of work. And we proposed to change the fiscal program for
this country.
It took some guts to vote for it because it was not very popular. But
I said to the folks I represent: Don't blame me for voting for that.
Give me credit for it because I stand behind this program. We did what
was necessary to put an end to these Federal budget deficits and to put
this country's economy back on track--over the objections of a lot of
folks in this Chamber who today are telling us they have a new vision,
a new idea.
We have heard their ideas. An old fellow in my hometown--a small
town--once told me: Never buy something from somebody who is out of
breath.
There has been an almost breathless quality to the efforts by the
majority party, for 6 months, to get to the floor as quickly as they
could with their tax cuts.
If this is a battle of the pie charts, I say you win, we just give
up. Here is a pie chart. Let me just show you. Let us just right at the
start of this discussion say: You win; this is your pie; if it is a
battle of the pie charts, you get the pie award. Republican tax breaks:
$23,344 for the top 1 percent of the income earners. So you win the pie
award.
Of course, these folks down here, they pay taxes, too. They all go to
work. They pay payroll taxes. Eighty percent of the people in this
country pay more in payroll taxes than income taxes.
But you breathlessly run to the floor of the Senate with a bill that
says let's cut income taxes, because that allows you to give a huge
portion of this pie to the largest income earners in this country. In
the meantime, there are folks working today for the minimum wage, $5,
$6, $7 an hour, who pay a payroll tax, a big tax, pay more in payroll
taxes than they do in income taxes. Are they going to get a tax cut?
No; they don't count because they ``don't pay taxes.'' They are not
taxpayers according to this strategy and this kind of philosophy. That
is what is wrong with it.
Let me just run through a couple charts.
One of my colleagues showed this earlier this morning. I want to show
it again.
The bottom 60 percent of the income earners, under this plan, will
get $141 in tax breaks a year; the top 1 percent, $23,344 a year. And
people say: How dare you tell us this benefits the rich. How dare we?
It happens to be the fact.
As I said, so much of politics is fuzzy. But you do not need strong
glasses to see this chart. There is nothing fuzzy about this. If you
decide you do not want to do this, then do not do it. It is easy to
amend your bill. If it is not your intention to give the bulk of the
tax cut to the wealthiest Americans, then do not do it. But do not
complain to us that we are calling attention to it when you do it. If
you do not stand behind it, then change it.
My problem is this: I don't understand what conservatism means
anymore. I thought being conservative would be to try to put this
country at a lower risk with respect to future opportunities and its
future economy. Conservatism apparently means put the country at higher
risk. If you see a glimmer of a prospect of an estimate by an economist
that there might be a surplus, rush to the floor of the Senate and
propose a three-quarters-of-a-trillion-dollar tax cut. Is that
conservative?
It was a perfect symmetrical proposition that, on the floor of the
Senate yesterday, the first vote was to waive points of order that
would exist against their bill, waive points of order for a conference
report that has not yet been written, for a conference that has not
been held. That was, in my judgment, in perfect symmetry to the
proposition they bring to the floor to provide tax cuts, paid for with
surpluses that don't yet exist. What perfect symmetry. But how
perfectly awful as public policy to do that and put the country at this
risk.
We have some choices. The choice is that we have good economic times
in the future. Let us all hope and pray we do because that is good for
this country. More people are working. Fewer people are on welfare. The
country is growing, less inflation. It is a wonderful opportunity we
have in this country. But the same people who opposed the fiscal policy
that got us here have decided they want to create a new fiscal policy
and a new strategy that puts all of that at risk. They know we are
heading towards a serious problem.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. DORGAN. I ask for an additional 5 minutes.
Mr. HOLLINGS. An additional 5 minutes.
Mr. DORGAN. We are heading toward a demographic time bomb in both
Social Security and Medicare. The question is, If these surpluses
exist, what shall we do with them; reduce the Federal debt? That has
gone from $1 trillion to $5.7 trillion in two decades. Reduce the
Federal debt? The answer of the Republicans is no. How about extend the
solvency of Social Security because we know we face this problem. Older
people living longer; fewer people working to support them. Extend the
solvency of Social Security? No. How about extending the solvency of
Medicare? No.
The only answer coming from that side of the aisle is take three-
quarters of a trillion dollars, package it up, put a huge bow around
it, and then bring it to the floor of the Senate, and then complain
about a pie chart that shows they have cut out the biggest piece for
the wealthiest Americans.
Mr. DURBIN. Will the Senator yield for a question?
Mr. DORGAN. I will.
Mr. DURBIN. I suggested that the amendment being offered by the
Senator from Texas, which as I understand it, is the House version of
the tax cut, is even worse than the Senate version when it comes to
helping working families, and frankly, I think, gives the

[[Page S9661]]

word ``conservative'' a bad name. I ask the Senator if he would
consider the following:
In this Nation where we revere free speech, we basically let people
say what they want to say. Some people have gone so far as to suggest
that tomorrow will be the end of the world. Well, when tomorrow comes
and goes and the world doesn't end, most of those people shrink away.
The people who are offering this amendment, in 1993, said the Clinton
plan for deficit reduction was the end of the economic world for
America. We would see deficits as far as the eye could see. We would
have unemployment, high inflation, the economy was in terrible shape.
As a result, not a single Republican would vote for the Clinton plan.

I ask the Senator, did the world end, as Senator Gramm and others
suggested, with this Clinton plan? The same group is suggesting to us
today that Alan Greenspan is wrong, Bill Clinton is wrong again, and
that we have to pass this tax break for wealthy people which will
endanger our economy.
Mr. DORGAN. Well, the Senator knows the economy not only did not
collapse and crash and go into a depression as a result of our new
fiscal policy; the economy blossomed and grew and everything changed.
The deficits were gone. The deficits were at $290 billion and growing.
We changed the fiscal policy.
A number of our friends stood up and said: You do this and you are
going to collapse this country's economy. In fact, the fellow who has
offered this amendment is an economist, taught economics. I taught
economics in college. I have been able to overcome that and lead a
reasonably productive life, but economists can argue forever about all
these things.
The question is whether we are going to put the country at risk by
moving away from a fiscal policy that we know works and taking three-
quarters of a trillion dollars from surpluses that do not yet exist and
giving big tax breaks.
This amendment is the House tax bill. I want to read for the author
something he probably heard me read yesterday.
Mr. GRAMM. Will the Senator yield to correct a factual error? First
of all, there is nothing wrong with the House tax bill.
Mr. DORGAN. I will yield.
Mr. GRAMM. This amendment is substantially more focused than the
House tax bill.
The PRESIDING OFFICER. Does the Senator yield?
Mr. DORGAN. I did yield, and he made his point. Reclaiming my time,
my understanding was it was described as the House tax bill. If you
have made a couple of grammatical changes to that, so be it. Let me
make the case, with regard to the House tax bill and, similarly, the
Senate bill, Kevin Phillips, a Republican columnist, said the
following:

We can fairly well call the House legislation the most
outrageous tax package in the last 50 years. It is worse than
the 1981 excesses. You have to go back to 1948.

The PRESIDING OFFICER. The Senator's time has expired.
Mr. HOLLINGS. Two additional minutes.
Mr. DORGAN. The point I am making is this: This is not a Democrat
talking. This is a Republican saying this. We all know what is in this
legislation. This legislation is a piece of legislation that does what
is always done by the same suspects that bring this to the floor. They
are always shading, not just shading, they are galloping towards the
highest end of the income ladder to provide very significant cuts. The
folks on the lowest rung of the ladder, they pay payroll taxes and they
are told they don't count. So the lowest 20 percent are going to get a
$22 tax break; the top 1 percent, $23,300.
So the question is, when you stand up and say that is unfair, what is
unfair? That we are telling people what is in your bill? Is that
unfair? Do you want to change the bill? Do you deny this? Do you want
to change the bill? Offer an amendment, I will support the amendment to
change the bill, but don't say it is unfair when we tell people what
the tax cut is going to be--$22 for the lowest 20 percent of the
American people, and the $23,300 for the top 1 percent--because you
have decided that people who pay payroll taxes don't count as taxpayers
and you don't intend to give them any help. It is the folks at the
upper end of the income ladder who are going to get huge tax breaks
from the income tax system.

Mr. DURBIN. If the Senator will yield for a question, perhaps Bill
Gates and Donald Trump do need a tax break. Maybe the Senator from
Texas believes that is a good reason to pass the bill.
The PRESIDING OFFICER. The Senator's 2 minutes have expired.
Mr. DURBIN. I ask that the Senator be given 3 additional minutes.
Mr. HOLLINGS. Three additional minutes.
Mr. DURBIN. I ask the Senator from North Dakota: Is it true or not
true that in the last 2 weeks Alan Greenspan, Chairman of the Federal
Reserve Board, has testified before Congress several different times
warning us that this kind of tax proposal that is coming from the
Republican side could jeopardize the economic expansion? Is it not true
that it is within the power of the Federal Reserve Board, by their
monetary policy, to raise interest rates if they see indications of
inflation, and by raising these interests rates, put an additional
economic burden on families who are paying for their mortgages, family
farmers who are trying to stay in business, and small businesses alike?
Is it not true that if we see inflation come on the scene and interest
rates go up, that a $22 tax break for working families will disappear
in a heartbeat?
Mr. DORGAN. Well, that is the case.
I submit this: In a quiet moment, in a secluded corner, in a private
conversation, most Members of the Senate who are supporting this three-
quarters-of-a-trillion-dollar tax cut would admit that a better
approach for this country and its future and certainly its children
would be to use anticipated surpluses, first, to begin to pay down the
Federal debt. If during tough times you run up the debt from $1
trillion to $5.7 trillion and then in good times you say, but we can't
pay down the debt, there is something fundamentally flawed about that
strategy.
I think if you take all the politics and fuzz out of this and get in
a quiet corner, those who are really conservative and have conservative
values about these issues as embodied in the fiscal plan we passed in
1993, I think they would admit that we ought to take some of this
surplus and reduce Federal indebtedness. I think they would also admit
there is not an intention to kick 100,000 kids off of Head Start or to
decimate the education program. Yet that is where we are headed, on
auto pilot, because this surplus is garnered by those who want to
package it up in a tax cut that predominantly benefits the upper-income
folks.
We ought to do the right thing. The right thing, it seems to me, for
our children's sake, is to tell them we are going to begin using some
of this to reduce Federal indebtedness, and for our children's sake,
that we are going to use some of this to extend the solvency of
Medicare and Social Security, two programs that have made this country
a much better place in which to live for millions and millions of
Americans. We ought to do that. All of us know we ought to do it.
Regrettably, we are on the floor in a perverted process. Reconciliation
was never intended for this process--never.
Yet, we are here because it muzzles us up with a 20-hour debate and
does not allow a full debate about fiscal policy and tax cuts. And I
say to those on the other side, you will get your bill and have your
votes and you will pass a bill. But, in my judgment, you will put this
country at risk because you are spending, through tax cuts, surpluses
that do not yet exist, just as yesterday you wanted to waive points of
order on a conference report that had not yet been drafted.
I yield the floor.
The PRESIDING OFFICER. The time yielded to the Senator has expired.
Mr. GRAMM. Mr. President, I want to take a little time off the bill
to answer all this stuff, but first I want to give Senator Grams an
opportunity to speak for 5 minutes.
The PRESIDING OFFICER. The Senator from Minnesota is recognized.
Does the Senator from Delaware yield time off the bill?
Mr. ROTH. The Senator from Texas--
Mr. GRAMM. I am yielding time off the amendment. I will ask for time
off the bill to answer the points that have been raised.
The PRESIDING OFFICER. The Senator from Minnesota is recognized.

[[Page S9662]]

Mr. GRAMS. Mr. President, I ask if I may be recognized for up to 10
minutes.
The PRESIDING OFFICER. Is there objection?
Does the Senator yield 10 minutes?
Mr. GRAMM. Five minutes is all the time I have. I am sorry.
Mr. GRAMS. Mr. President, I rise to support the tax relief plan
offered by Senator Phil Gramm. But I also want to talk a little bit
about what we heard from our Democratic friends and colleagues on the
other side.
Make no mistake about it, the surplus dollars out there are going to
be spent. The question is, Who is going to spend it? Are we going to
allow it to be returned to the hard-working families and Americans and
allow them to spend it, or are we going to let Washington spend it? To
some, it seems that if the taxpayers spend it, it will jeopardize the
economy, but if we trust the President and trust Washington, the money
will be spent correctly.
Also, I heard them talk about 1993 and what a great turnaround in
fiscal policy for this country it was, and that it was due to their
efforts that turned this economy around. The CBO finds the increased
revenues were propelled by personal income tax increases, and it cites
four reasons for this unexpected revenue: First, the rapid growth of
taxable income, which raised the tax base for personal income receipts;
second, adjusted gross income, which has grown even more rapidly than
taxable personal income, mainly through the realization of capital
gains--the capital gains tax increased by 150 percent between 1993 and
1997, which is a third of the growth of the tax liability relative to
the GDP--third, raising taxes paid on pensions and IRA retirement
income; fourth, and most important, is the increase in the effective
tax rate. That is people making a little more money, inflation pushing
them into the higher brackets, and now not paying 15 percent but 28, 31
percent or higher.
By the way, this is also what CBO said. It points out that the
revenue windfall did not result from legislative policy changes, which
my Democratic friends have claimed. In other words, the CBO says the
legislative initiatives taken by the President and the Democrats did
not generate this surplus; what generated this surplus was the
investment in the economy by businesses, through the Reagan era of tax
relief bills, and also by the high productivity, work, and effort of
the American people. It wasn't by what Washington did; it was in spite
of what Washington did that led to this.
So, clearly, all four reasons that we have a surplus are the result
of the productivity of working men and women and businesses in this
country.
Before I run out of time, I want to show you this chart. This depicts
what is going to happen to the surplus. This is excess money that
taxpayers have sent to Washington. Here is what I have often said. Here
we have the man saying, ``I found someone's wallet, and I want to do
the right thing, so I plan to spend the money carefully.''
That is what our Democratic colleagues and the President want to do.
When they find the money on the street, instead of giving it back to
the people it belongs to, they are going to spend it carefully for you.
Again, this debate is not over anything except who is going to spend
the money. As the Senator from North Dakota said, it is a clear, bright
line. The line is: Do we want Washington to spend your surplus tax
money, or do we want to return it to you and allow you to spend it on
your priorities?
Thank you, Mr. President. I yield the floor.
Mr. GRAMM. Mr. President, I ask our distinguished chairman to yield
me 5 minutes off the bill.
Mr. ROTH. I yield 5 minutes off the bill to the Senator from Texas.
Mr. GRAMM. Mr. President, in Ronald Reagan's own words, I want to
take our Democrat colleagues down memory lane. They have such fond
memories of what President Clinton has done, and I would like to tell
the rest of the story. It is true that Bill Clinton was elected
President. It is true that he came to Washington and proposed the
largest tax increase in American history. It is true that not one
Republican voted for that tax increase. It is true that it passed by
one vote. It is true that the largest tax increase in American history
now bears heavily on working Americans.
Everything else they said is not true. Let me try to explain why.
They quote people saying harsh things about the Clinton program. Let me
tell you the rest of the program. The rest of the program was a massive
stimulus program where the Clinton administration proposed spending $17
billion, in 1993 alone, on everything from ice skating rink warming
huts in Connecticut to alpine slides in Puerto Rico. I had harsh things
to say about it, and I am proud of that. I am very proud that
Republicans, who were in the minority, killed that bill with a
filibuster.
Bill Clinton didn't just propose the largest tax increase in American
history, he proposed having Government take over and run the health
care system, collectivizing American medicine, forcing everybody into a
Government-run health care collective, which was a giant HMO run by the
Government. It would have meant Government taking over one-eighth of
the American economy. I said it would be a disaster. I am proud that I
helped lead the effort to kill it, and I am proud that it is dead where
it belongs. That is the Clinton program. The point is, we were able to
defeat every part of it, except the tax increase.
Now, when the Republican majority showed up in Washington, DC, in
January of 1995, they received this budget from President Clinton. On
page 2 of this budget, President Clinton outlines what his budget was.
It had a deficit for fiscal year 1995 of $192 billion, and then the
next year $196 billion, $213 billion, $196 billion, $197 billion, and
$194 billion. That was the Clinton budget.
But we elected a Republican majority in Congress. What happened? With
that Republican majority in Congress, we were not able to pass every
bit of our Contract With America, but we reformed welfare, we cut
spending, we stopped the runaway spending freight train of Bill
Clinton. And under a Republican majority, while Clinton's deficits
looked like this, the real deficit started to fall and turn into a
surplus which is indicated on the chart.
The question is, Who led, who followed, and who got out of the way? I
believe that the Republican Congress led, the Democrats in Congress
followed, and Bill Clinton got out of the way.
So if we are going to tell the history of what happened in the
Clinton era, let's not just remember his tax increase, let's remember
his stimulus package, which we killed. The Democrat majority could not
get 60 votes, and it died. Clinton was heartbroken, but it died. And we
defeated the Clinton health care bill. It would have taken over one-
eighth of the American economy, and Americans were so shocked at the
Clinton program that they elected the first Republican majority since
the 1950s.
When we took over, things changed. With the same old Bill Clinton who
was here in 1995, when the deficit was $200 billion, what changed was
the Republican majority.
I just say to the American people, give us a Republican President,
and we will again control spending, and we will let working people have
more of what they earn.
Mr. President, I yield Senator Hagel 5 minutes off the amendment.
The PRESIDING OFFICER. The Senator from Nebraska is recognized.
Mr. HAGEL. Mr. President, thank you.
I first want to add my thanks to the chairman of the Finance
Committee, Senator Roth, for the leadership he has brought to the floor
on such an important issue on a very substantive vehicle that we are
using now to really make some decisions on behalf of the American
public.
I have heard this morning that this is an issue about priorities.
Surely it is. This is about priorities. This will further be about
priorities as we debate this issue throughout the day, and actually
throughout this year and into next year, because the priorities are
about whose money it is. It is not my money. It is not Senator Gramm's
money. It is not President Clinton's money. It is the taxpayers' money.
We tend to allow that to slip aside here when we are engaged in this
theoretical debate.
Second, we all have to appreciate that we live in the mythical
kingdom around here. The political kingdom says that all the clouds and
all the

[[Page S9663]]

goodness will reside here in the knowledge and the fountain of wisdom
coming forth from Washington. We are seeing a great dynamic of that
given when we are trying to take the people's money and then tell them
how we will spend it and give it back to them because we are benevolent
Senators; we are benevolent representatives of the people; we can
figure it out better.
If there is a sense of arrogance in this, I think you are right if
you sense that, that the Congress is going to decide who gets what; we
are going to make that decision. So we are going to target all of these
pieces of the pie because we can decide better for the American people
how they should spend their money, if we decide to give them back some
of their money.
I have also heard some interesting conversations this morning about
projections. As a matter of fact, I used to have a real job, and in
that real job I was a businessman. I had to deal with projections
because I had to put together budgets. Those budgets had to direct
research and development. Those budgets had to direct investment,
capital, and what we were doing for the long term. Yes, they are
imperfect. Ten-year budgets are slippery, and they are dangerous. But
the fact is, we must base a budget upon something. That budget must be
based upon a relevant series of assumptions. So that is a given, and we
have to deal with that.
After we get through that, then we have to make some tough decisions.
That is what we are going through today. I believe this bill that we
have brought to the floor this morning does that. I think it does it
first in a very responsible way. It does it in a way that allows 75
cents of every surplus dollar to go back into debt reduction projects--
Social Security, Medicare, important Government programs such as
defense. The first real obligation of responsibility of the Federal
Government is national security--veterans programs, education, medical
research, and health care. That money is there.
We are talking about a $3 trillion budget surplus--both on the budget
and off the budget, meaning in Social Security and out of Social
Security--$3 trillion over the next 10 years. I don't know if that is
going to materialize, but one of the things we know is that we have to
make some tough decisions based upon what we know and what we project.
This bill does it very responsibly. It does it in a way that addresses
those needs of our Republic and what we have committed to the American
public.
My goodness, to say that giving 25 percent of that back to the
American public in a tax cut is somehow irresponsible is well beyond my
calculations.
Senator Mack was on the floor yesterday. I want to repeat a couple of
points he made. One, he said, for example, how can a $4 billion net tax
cut for fiscal year 2000 overstimulate demands in a trillion-dollar
economy? Of course, as of now, this bill phases in those tax cuts over
a series of 10 years.
Senator Mack said yesterday, and as my colleague again reminded us,
he asked rhetorically, ``Would a $39 billion tax cut in the year 2002
overheat the economy when this is only .004 percent of the total
projected GDP?''
I think you get the message.
We are engaged once again in this mythical kingdom of fantasy. The
fact is, this money is the taxpayers' money. The fact is, this is a
responsible direction of those resources that surely, if they are
allowed to stay here in Washington, will be spent.
The President has given us ample opportunity to look over that very
generous menu he has presented to us with all of his new spending.
Mr. President, I strongly support this amendment.
I yield my time.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. MOYNIHAN. Mr. President, I think our distinguished friend and
colleague, Senator Hollings, is next.
The PRESIDING OFFICER. The Senator from South Carolina.
Mr. HOLLINGS. I thank the Senator.
Mr. President, on behalf of myself and the distinguished Senator from
Connecticut, Senator Lieberman, I send a motion to the desk in
accordance with the rule, by 2 o'clock, that they be filed and we
intend to make later today.
The PRESIDING OFFICER. The Senator is recognized.
Mr. HOLLINGS. I thank the distinguished Chair.
Let me just say quickly to clear the Record that the Senator from
Texas was talking about what the Republicans have done for the economy.
I can tell you what they have done for the economy. They came in
1995, and for 1996 they worked, of course, on the budget. They
immediately increased spending for the next year of $148 billion. They
increased spending, and the budget went up another $50 billion. This
year, of course, it is another $50 billion, and they have added. The
track record will show that they have added $661 billion to the
national debt.
But what did President Clinton do in 1993? And we did not have the
largest tax increase. That was under Senator Dole. I will show the
articles analyzing both.
But I readily acknowledge that I voted and supported and worked like
a tiger to get the Deficit Reduction Act of 1993 passed, which
prevailed by one vote. Yes, we did cut spending, we did downsize over
300,000 Federal jobs. But more than anything else, yes, we raised
taxes.
The Senator from Texas, when we raised the taxes on Social Security,
was adamantly opposed to that, and he said--I will use his expression--
you increase taxes on Social Security and they will hunt you Democrats
down in the streets and shoot you like dogs.
The Senator from South Carolina never forgot that expression. That is
how tough we had it. They were going to hunt us down.
Of course, the chairman of the Finance Committee at that time,
Senator Packwood, said, ``I will give you my home if this thing
works.'' The chairman of the House Budget Committee, Mr. Kasich, said,
``I will change parties and become a Democrat if this thing works.''
And it is working.
That is a tremendous frustration I have because it is working. We
have the lowest unemployment, the lowest inflation, and the economy is
moving along. Mr. Greenspan, not just on yesterday but earlier in the
year, in February, said stay the course.
My usually responsible Republican friends--I come from a Republican
State, unfortunately--have given us what was called outrageous on
Monday by the best of the best conservatives, Kevin Phillips--I ask
unanimous consent that this be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

Commentary by Kevin Phillips on National Public Radio's Morning
Edition, Monday, July 26, 1999

Bob Edwards: The Republican party last week had its tax
reduction proposal passed by the House of Representatives.
Commentator Kevin Phillips says it's the most unsound fiscal
legislation of the last half century:
Kevin Phillips: Tax bills often deal with Pie in the Sky.
The mind boggling ten-year cuts passed late last week by the
House of Representatives however deserve a new term: Pie in
the Stratosphere. That's because the cuts are predicated on
federal budget surpluses so far out, six, eight or ten years,
that it would take an astrologer, not an economist to predict
federal revenues. The most publicized provision, phased in
ten-percent across the board reductions in federal income tax
rates, looks excessive. But these at least stand to be
delayed by a legislative trigger, if surpluses and debt-
reduction don't occur as assumed. Not so for the truly venal,
smaller provisions. Ones too complicated to be explained in
40 seconds on the TV news shows. Democrats are certainly
correct about the imbalance of benefits by income group.
Treasury figures show that the top 1% of families, just 1%,
would get 33% of the dollar cuts, the bottom 60% of families
get a mere 7%. Conservatives reply that the tax cuts are
simply going to the people who pay the taxes and have the
incomes. That's partly true. The top 1% of families have
about 13% of the nation's income but that's under an official
definition that excludes capital gains. If you include
capital gains in household income, the top 1% may indeed have
some 20% to 30% of the national total these days. Which gets
us to the real guts of this bill: Two low profile, but high
favoritism provisions. First, reduction of the top federal
capital gains tax rate from 20% to 15% and, second, the
phasing out of the federal gift and inheritance taxes. Both
changes would concentrate a huge portion of their benefits in
the top 1%.
The top 1% of American taxpayers reported about 60% of the
taxable capital gains dollar values several years back. To
reduce their capital gains rate from today's 20% to 15% is
unnecessary in terms of investment stimulus. All of the bull
markets of the last 50 years have occurred when the top cap
gains rate is in the 20 to 28% range. The bills special
interest provisions phasing out the Federal estate and gift
taxes over the next

[[Page S9664]]

decade could be even more costly. Demographers say life
expectancies ending in the years 2000 to 2010 will send a
tidal wave of estates through the inheritance processes. The
top 1% of families have the great dollar bulk of what are now
taxable estates and if these are not substantially taxed,
wealth and position in America will be more and more
inherited, not earned.
We can fairly call the House legislation the most
outrageous tax package in the last 50 years. It's worse than
the 1981 excesses, you have to go back to 1948, when the
Republican 80th Congress sent a kindred bill to President
Harry Truman. Truman vetoed it, calling the Republicans
bloodsuckers, with offices in Wall Street. Not only did he
win reelection, but the Democrats recaptured Congress. We'll
see if Bill Clinton and Albert Gore have anything resembling
Truman's guts.
Mr. HOLLINGS. Mr. President, one sentence of his commentary: ``We can
fairly call the House legislation the most outrageous tax package in
the last 50 years.''
That is why I come to the floor to speak. I agree with Mr. Phillips.
This tax bill turns everything on its backside when we have a good
going economy, and the Republicans come in with, of all things, a tax
cut. How come? I will tell Members exactly. I can't find out what was
first, the chicken or the egg, but OMB got into this blooming 2000
election, and CBO has a Republican--not any Alice Rivlin or Bob
Reischauer, but they have a Republican fix--Mr. Crippen over at CBO. I
have been working on this budget since we passed it back in 1973.
Both CBO and OMB started finding money. How we could as a party put
in tax cuts and have the real issue for the election 2000.
This is very interesting. You don't find the word ``unified, unified,
unified.'' That is all I have heard for the last 20 years--unified. It
is not a unified budget. It is an outright budget surplus. That is what
the CBO called it. It is not a budget surplus at all. The fact is, and
I will quote the figures, the debt goes up each year for the next 5
years.
I ask unanimous consent to have printed in the Record from the CBO
report on page 19.
There being no objection, the material was ordered to be printed in
the Record, as follows:

TABLE 10.--CBO BASELINE PROJECTIONS OF INTEREST COSTS AND FEDERAL DEBT (BY FISCAL YEAR)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Actual
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST OUTLAYS (BILLIONS OF DOLLARS)

Interest on Public Debt (Gross interest) \1\ 364 356 358 358 350 345 342 338 333 328 323 316
Interest Received by Trust Funds:
Social Security......................... -47 -53 -59 -67 -74 -82 -91 -100 -110 -121 -132 -144
Other trust funds \2\................... -67 -68 -70 -73 -74 -76 -79 -81 -84 -87 -89 -92
-----------------------------------------------------------------------------------------------------------
Subtotal............................ -114 -120 -129 -140 -148 -159 -170 -182 -194 -208 -222 -236
Other interest \3\.......................... -7 -7 -6 -7 -7 -7 -8 -8 -8 -8 -8 -9
-----------------------------------------------------------------------------------------------------------
Total........................... 243 229 222 212 194 179 164 148 131 112 92 81

FEDERAL DEBT AT THE END OF THE YEAR (BILLIONS OF DOLLARS)

Gross Federal Debt.......................... 5,479 5,582 5,664 5,721 5,737 5,760 5,770 5,770 5,732 5,675 5,600 5,500
Debt Held by Government Accounts:
Social Security......................... 730 856 1,003 1,157 1,321 1,493 1,675 1,869 2,075 2,292 2,520 2,755
Other accounts \2\...................... 1,029 1,107 1,188 1,267 1,350 1,431 1,510 1,589 1,666 1,743 1,813 1,880
-----------------------------------------------------------------------------------------------------------
Subtotal............................ 1,759 1,963 2,190 2,425 2,670 2,925 3,185 3,458 3,741 4,035 4,333 4,635
Debt Held by the Public..................... 3,720 3,618 3,473 3,297 3,066 2,835 2,584 2,312 1,992 1,640 1,267 865
Debt Subject to Limit \4\................... 5,439 5,543 5,626 5,684 5,700 5,724 5,734 5,736 5,699 5,643 5,568 5,469

FEDERAL DEBT AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT

Debt Held by the Public..................... 44.3 40.9 37.5 34.2 30.5 27.1 23.7 20.3 16.8 13.2 9.8 6.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Excludes interest costs of debt issued by agencies other than the Treasury (primarily the Tennessee Valley Authority).
\2\ Mainly Civil Service Retirement, Military Retirement, Medicare, unemployment insurance, and the Airport and Airway Trust Fund.
\3\ Mainly interest on loans to the public.
\4\ Differs from the gross federal debt primarily because most debt issued by agencies other than the Treasury is excluded from the debt limit. The
current debt limit is $5,950 billion.

Source: Congressional Budget Office.

Note: Projections of interest and debt assume that discretionary spending will equal the statutory caps on such spending through 2002 and will grow at
the rate of inflation thereafter.

Mr. HOLLINGS. Gross Federal debt, on page 19: In the year 1999,
$5.582 trillion; it goes to $5.664 trillion; 2001, $5.721 trillion;
2002, $5.737 trillion; 2003, $5.760 trillion; 2004, $5.770 trillion.
Up, up, and away. Deficits, not surpluses; deficits--the
Congressional Budget Office says--as far as the eye can see.
The Republicans were going to take the $1.9 trillion of Social
Security. We have to not get into Social Security. We have to find $1
trillion for the tax cut about which we have been talking. So they said
we have another $1 trillion. How do we do it? They said--at least the
Republicans, and I will limit my comment to that because that is what
they have in this particular amendment--they said: Let's not just have
current policy. Let's stick to the spending caps that we put in.
They violate the spending caps. They violated it again last year, $21
billion, and we already are up to $17 billion and it is going to be at
least $35 billion or $40 billion or more at the end of this year--
already in violation of the caps. When the majority says they keep the
caps on with no emergency spending and the economy stays at a growth of
around 2 to 2.5 percent. The chairman of the Budget Committee on Sunday
said CBO estimated two recessions--That is not right and I would like
to correct that. CBO in this book does not project any recession during
the next 10 years, rather 2.5-percent growth.
If you can get all of that growth you can get and have unemployment
staying the same way, inflation staying way down, interest rates down,
you obey the caps and you have no emergencies whatever. And then you
find some money.
However, I point out that they knew where most of the money, 80
percent, was coming from--the other trust funds.
I ask unanimous consent to have printed in the Record that page in
the report, Trust Funds Looted to Balance the Budget.
There being no objection, the material was ordered to be printed in
the Record, as follows:

TRUST FUNDS LOOTED TO BALANCE BUDGET
[By fiscal year, in billions]
------------------------------------------------------------------------
1999 2000 2004
------------------------------------------------------------------------
Social Security.............................. 857 994 1,624
Medicare:
HI......................................... 129 140 184
SMI........................................ 39 44 64
Military Retirement.......................... 141 148 181
Civilian Retirement.......................... 490 520 634
Unemployment................................. 79 88 113
Highway...................................... 25 26 32
Airport...................................... 11 14 25
Railroad Retirement.......................... 23 24 28
Other........................................ 57 59 69
--------------------------
Total.................................. 1,851 2,057 2,954
------------------------------------------------------------------------

Mr. HOLLINGS. So we have the other trust funds to the tune of a 10-
year period of $800 billion. We have $1 trillion to spend and that is
the gamesmanship. There actually is no surplus. They are increasing
deficits. If you don't believe CBO, believe at least the President.
I ask unanimous consent to have printed page 43 of the OMB report.
There being no objection, the material was ordered to be printed in
the Record, as follows:

[[Page S9665]]

TABLE 22.--FEDERAL DEBT WITH SOCIAL SECURITY AND MEDICARE REFORM
[In billions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Estimates Projections
-----------------------------------------------------------------------------------------------------------------------------------------------------
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Debt held by the public:
Debt held by the public, beginning of 3,653 3,531 3,404 3,255 3,101 2,933 2,744 2,525 2,262 1,964 1,625 1,249 944 637 335
period...............................
Debt reduction from:.................. ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........
Off-budget surplus: ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........
Surplus pending Social -137 -144 -154 -165 -175 -193 -202 -215 -225 -233 -243 -246 -248 -246 -241
Security and medicare reform.
Social Security solvency 0 0 0 0 0 0 0 0 0 0 0 -107 -125 -145 -166
transfers....................
Returns on investment of 0 0 0 0 0 0 0 0 0 0 0 -3 -14 -27 -43
transfers \1\................
Medicare solvency transfers....... -5 -0 -12 -5 -7 -10 -29 -59 -83 -113 -142 -67 -68 -65 -58
Less purchase of equities by Social 0 0 0 0 0 0 0 0 0 0 0 110 139 172 209
Security trust fund \1\..............
Other financing requirements \2\...... 21 17 17 16 15 13 12 11 9 8 8 8 8 9 9
-----------------------------------------------------------------------------------------------------------------------------------------------------
Total changes................. -122 -127 -150 -154 -167 -189 -219 -263 -298 -339 -376 -305 -307 -302 -291
-----------------------------------------------------------------------------------------------------------------------------------------------------
Debt held by the public, end of period 3,531 3,404 3,255 3,101 2,933 2,744 2,525 2,262 1,964 1,625 1,249 944 637 335 44
Less market value of equities......... 0 0 0 0 0 0 0 0 0 0 0 -110 -248 -420 -629
Debt held by the public, less equity 3,531 3,404 3,255 3,101 2,933 2,744 2,525 2,262 1,964 1,625 1,249 834 388 -85 -585
holdings, end of period..............
Debt held by Government accounts:
Debt held by Government accounts, 1,962 2,172 2,377 2,612 2,848 3,096 3,363 3,667 4,012 4,394 4,823 5,299 5,822 6,374 6,949
beginning of period..................
Increase prior to Social Security 205 204 222 230 240 254 271 280 289 299 310 315 318 317 314
reform...............................
Social Security and Medicare solvency 5 0 12 5 7 10 29 59 83 113 142 173 193 210 224
transfers............................
Earnings on solvency transfers 0 0 1 1 2 2 3 6 11 17 25 35 42 48 55
invested in Treasury securities......
Less purchase of equities by Social 0 0 0 0 0 0 0 0 0 0 0 -110 -139 -172 -209
Security trust fund \1\..............
-----------------------------------------------------------------------------------------------------------------------------------------------------
Total changes................. 210 204 235 236 249 266 304 345 382 429 476 523 552 575 593
-----------------------------------------------------------------------------------------------------------------------------------------------------
Debt held by Government accounts, end 2,172 2,377 2,612 2,848 3,096 3,363 3,667 4,012 4,394 4,823 5,299 5,822 6,374 6,949 7,543
of period............................
Plus market value of equities......... 0 0 0 0 0 0 0 0 0 0 0 110 248 420 629
-----------------------------------------------------------------------------------------------------------------------------------------------------
Debt and equities held by Government 2,172 2,377 2,612 2,848 3,096 3,363 3,667 4,012 4,394 4,823 5,299 5,932 6,623 7,369 8,172
accounts, end of period..............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes accrued capital gains.
\2\ Primarily credit programs.

Note: Projections for 2010 through 2014 are an OMB extension of detailed agency budget estimates through 2009.

The page shows increasing deficits going up. The national debt goes
up from $5.6 trillion to about $7.6 trillion; $7.587 trillion over 15
years.
What do we have? We have an increase in the debt of Social Security
of which the distinguished chairman has the jurisdiction. They owe it
$857 billion. In 10 years, they will owe Social Security $2.7 trillion
and they are talking about saving Social Security--lockbox. This is a
shameful sideshow out here. There is no dignity left in this Senate. No
responsibility.
If they can put up a chart, run away, whine, and say the people back
home know how to spend--if we have all the money, why can't the people
get it back? They didn't give it back to the Social Security people
when he was going to shoot me in the streets. They didn't give it back
to where they came from, the wage earners, the payroll tax.
Oh, no, as the Senator from North Dakota said, the rich get it all.
Come on. It seems as if there would be a conscience in this crowd. I
don't think this will sell with the American people when they hear the
truth. That is what I am trying to give them here today--the truth.
The distinguished Senator from Texas comes up. I knew it because I
have been working at his side in previous years. He comes up and the
first thing he said is the real problem is how to give it, and the best
was ``across the board.'' I knew he was going to get to Dicky Flatt. He
immediately changed subjects and the debate became the Gramm amendment,
which is supposed to go between workers, wage earners, and deadbeats.
If he can put that one over, then he has won the day with the hard-
working people and Dicky Flatt.
Come on, give us a break. We have been through that. There is no
education in the second kick of a mule.
We have a good economy. Alan Greenspan, the best of the best, who has
helped us maintain that, says stay the course. The Hollings-Lieberman
motion is not to take sides in this intramural between tax cuts and
spending. But just saying: Finance Committee, come back with a bill
that says any surplus you find, apply it to reducing the national debt.
Let's all go home. I think we will win the approval of the American
people.
Now, not coming in with all of the lockboxes, that immediately puts
back the money into IOUs. They issue these Treasury bills, which are
nothing more than an IOU under section 201 of Social Security, and then
they spend the money on other things. There is not any true lockbox.
We had an amendment and I showed that to the majority leader. I
circulated it to all the Senators. That is why if they allow us to put
our amendments up, including my amendment to cap the debt, we will get
the truth. All I want to do is say cap the debt as of September 30,
1999. If you have nothing but surpluses, then run around asking how to
spend it or how to give a tax cut or whatever.
I will agree that you are right if there is a surplus. But the debt
won't go down at the end of the fiscal year. They didn't want that
vote. That is why we are in a filibuster about the lockbox. Somehow,
somewhere, we have to get the truth out and cut out this whining about
the people back home know how to spend their money. The point is, you
cannot cut taxes without increasing spending. That is the great fiscal
cancer we have developed in the 1980s with the Reagan tax cuts. The
national debt was less than $1 trillion, less than $1 trillion at that
particular time. Now we have a $5.6 trillion debt. With all of that
``growth, growth, growth--we are going to have growth everywhere,''
what has grown is the national debt with an interest cost of $1 billion
a day.

I served on Peter Grace's commission against waste, fraud and abuse.
The only thing Congress created was the biggest waste of all, spending
$358 billion in interest costs. If we had that $358 billion, we could
do all these things--Social Security, Medicare, research, tax cuts and
everything else. We are going to spend it on account of a political
sideshow and use our credibility to get by. The reason we creditably
get by, and I will finish in a moment. We had a wonderful debate in the
1930s. I will listen to that any time.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. MOYNIHAN. Mr. President, off the bill we yield the Senator 2
minutes.
The PRESIDING OFFICER. The Senator is recognized for an additional 2
minutes.
Mr. HOLLINGS. We had a wonderful debate in the 1930s between Walter
Lippmann and John Dewey. It was Mr. Lippmann's contention that the way
to maintain and strengthen a democracy was get the best of minds in the
various disciplines--foreign policy, economic policy, housing,
whatever--get them around the table, determine the public's needs, the
Nation's needs, determine a policy to answer those needs, and give it
to the politicians in Congress and let them enact it.
John Dewey, the educator, said no. He said give the American people
the truth. Let the free press give the American people the truth, and
the truth will be reflected through the Congressmen and the Senators in
the Congress

[[Page S9666]]

and we will have a strong democracy. And that is what we did for 200-
and-some years. As Jefferson said, ``When the press is free and every
man can read, all is safe.''
What has happened? We are not safe any longer because the press has
gotten into entertainment and they have joined the conspiracy and they
call spending increases spending cuts and they call deficits surpluses.
That is our dilemma. That is our dilemma. The only thing that is going
to save us is that free press getting back to their professional code
of conduct, and cut out the entertainment, and get back to telling the
American people the truth. Then we would not have to argue about tax
cuts. It has to be an embarrassment to come out here with a tax cut. It
would be an embarrassment to come out here and just spend billions and
billions of dollars that we do not have. This year we are spending $103
billion more than we are taking in. We are in a deficit position.
I thank the Chairman and I yield the floor.
The PRESIDING OFFICER. The Senator from Texas is recognized.
Mr. GRAMM. I yield 5 minutes to the distinguished Senator from Texas.
The PRESIDING OFFICER. The distinguished Senator from Texas is
recognized for 5 minutes.
Mrs. HUTCHISON. Mr. President, I want to address some of the issues I
just heard from the Senator from South Carolina. The first is quoting
of Alan Greenspan, the Chairman of the Federal Reserve Board. I believe
Dr. Greenspan's comments have been taken far out of context. Because if
you look at what he said, plainly it is if the choice is more spending
or tax cuts, I will take tax cuts.
It is true he said he would be very cautious.
Mr. HOLLINGS. Will the distinguished Senator yield?
Mrs. HUTCHISON. I will yield on your time.
Mr. HOLLINGS. The Senator was correct in what I was saying. I said
nothing about tax cuts--I favored those over spending. I said in my
motion there is a surplus that we apply to reducing the national debt,
and I quoted Mr. Greenspan as of February, when he said, ``Stay the
course.'' I didn't say Greenspan said I prefer tax cuts over spending.
I did not use that quote.
Mrs. HUTCHISON. Dr. Greenspan said: If it is a choice of tax cuts
versus spending, he takes tax cuts. Paying down the debt is exactly
what the Republican plan does. So I think it is very important we keep
Dr. Greenspan's comments in context.
If you look at the President's plan, he takes $1 trillion and spends
it. The Republican plan takes the same $1 trillion and gives $792
billion back to the people who earned the money, and we have a cushion
for spending on issues such as Medicare and education in the rest of
the $1.3 trillion in surplus that comes from income tax withholding.
The Republican plan takes all of the payroll taxes that we heard the
Senator from North Dakota talk about and puts that into Social Security
reform and stability. So when we are talking about a lockbox, we are
saying all the payroll taxes for Social Security that people pay in
will be set aside for Social Security. That is $2 trillion. That is
exactly what the President's plan sets aside for Social Security.
It also has the effect of paying down debt by about 50 percent,
according to the estimates. So you pay down debt and you stabilize
Social Security with $2 trillion that is set aside from the payroll
taxes that people pay in.
But for the other $1 trillion we are looking at that comes from
income tax withholding, we have very different plans. The President
would spend it. The Republicans would let the people who earned it keep
it, and we would hold the rest in abeyance for spending on Medicare,
education, national defense.
Why do we want the people who earn this money, who work so hard for
it, to be able to keep it? Because we believe the people who earn it
need the relief for their own purposes--for them to decide how they
want to spend their money. The typical American family is paying more
in income taxes in peacetime than ever in our history--38 percent in
income taxes. A 10-percent across-the-board tax cut is fair to
everyone. Because when people paid their taxes last year--they know
what they paid, and they can take 10 percent off that. That is the most
fair of all tax cuts, to let people keep more of what they earn. In
fact, our tax relief package is less than the tax increases that
President Clinton put in place in 1993. At that time, President Clinton
said he was going to tax the rich and he put in that category people on
Social Security who earned $34,000 a year. That is what he declared as
rich. I think these people deserve a break, and that is what we are
trying to give them.

We are giving marriage tax penalty relief. This morning at my
constituent coffee, I met a schoolteacher and a football coach. I am
going to estimate they earn about $35,000 and about $40,000 apiece.
They get hit right square between the eyes with the marriage penalty
because when you put their incomes together, they go into a new
bracket. They are earning, then, $65,000 to $70,000 for a family of
four.
That is wrong. We should not tell people because they get married
that they owe more in taxes, just because they got married.
The PRESIDING OFFICER. The Senator's time has expired.
Mrs. HUTCHISON. Mr. President, did Senator Hollings' question come
off his time or mine?
The PRESIDING OFFICER. It came off of his time.
Mrs. HUTCHISON. Mr. President, it is time we provide marriage tax
penalty relief, tax relief across the board, death tax relief so people
will not have to visit the undertaker and the tax collector on the same
day and give up the family farms that have had to be sold because of
death taxes. That is wrong. This amendment will correct that situation.
It is time we give relief to the hard-working people of our country.
I yield the floor.
The PRESIDING OFFICER. The time of the Senator has expired.
The distinguished Senator from Minnesota is recognized.
Mr. WELLSTONE. Mr. President, I understand I have 10 minutes. I will
try to cut that in half in the interest of moving this along.
I cannot believe the amendment that is before this body. I am
speaking about the Gramm amendment. The Center on Budget and Policy
Priorities does very good work, as does Citizens for Tax Justice. Let's
take the 10-percent tax rate cut across the board: this is what they
say. 60 percent of the benefits of this tax cut will go to 10 percent
of the taxpayers with the highest income. The bottom 60 percent of all
taxpayers will share just over 9 percent of the total benefits under
this plan. The average tax cut under the Gramm amendment, for the
lowest income, 60 percent of all taxpayers, those with incomes below
$38,000, will be about $99.
By contrast, those in the top 10 percent will enjoy an average tax
cut of about $4,000. Tax cuts for the 1 percent highest income, those
making more than $300,000 a year, will average $20,000 a year. I am not
even talking about estate and capital gains tax cuts, which make the
Gramm amendment even more regressive.
To pick up on the comments of my colleague from South Carolina, the
original House Ways and Means Committee proposal in the second 10 years
would explode the debt, costing $2.8 trillion. This may be only $2
trillion. But even here, $2 trillion is a lot of money. From 2010 to
2019, this tax cut package in the Gramm amendment will probably cost
about $2 trillion. That is what it will cost us.
Mr. President, Kevin Phillips, in some commentary the other day on
``Morning Edition,'' talked about the House proposal. I think what he
said applies to this Gramm amendment:

The mind-boggling 10-year cuts passed late last week by the
House of Representatives . . . deserve a new term: [Not pie
in the sky but] pie in the stratosphere.

That is what this Gramm amendment is: pie in the stratosphere.
Sometimes my colleagues on the other side of the aisle--and I say
this with a twinkle in my eye, it is never hatred; we always enjoy our
work--they will accuse some of us of class warfare. I say to my
colleague from Texas, this is class warfare. This is class warfare: 60
percent of the benefits go to the top 10 percent of all taxpayers. The
bottom 60 percent gets 9 percent. The average tax cut for most of the
people in my State of Minnesota is about $99. But if you make over
$300,000 a year, there will be an average

[[Page S9667]]

tax cut of $20,000 a year. I say to my colleague from Texas, this is
class warfare. That is what his amendment is.
In some ways, I am glad to fight this war because the vast majority
of people in this country, when they realize who gets the benefits and
who does not, when they realize what this amendment does in the second
10 years, here is what they are going to say. They are going to say: We
heard enough about how this surplus belongs to us. We are responsible
adults. We are responsible parents and grandparents, and we believe
that whatever the performance of our economy--and I hope it will be
good; we do not know, this is all assumed--and whatever we have by way
of surplus, here is what we believe: We believe that it does not belong
to us; it belongs to our children and our grandchildren.
That means we pay off some of the debt we put on their shoulders, and
that means we also make sure that Medicare and Social Security are
there for them. It also means our children and our grandchildren,
regardless of whether they are rich or poor, have opportunities; that
there is equal opportunity for every child. That is what the American
people believe. That is what Minnesotans believe.
I love this Gramm amendment. I love it because I think it presents in
the clearest possible way to people in Minnesota and people in the
country what we are about, whose side we are on. It is a class warfare
amendment, and it should be trounced in a vote. I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. MOYNIHAN. I yield the Senator from Michigan 10 minutes.
The PRESIDING OFFICER. The distinguished Senator from Michigan is
recognized for 10 minutes.
Mr. LEVIN. I thank the Chair. Mr. President, I thank my good friend
from New York.
The tax program which is in the amendment before the Senate, like the
plan that it would amend, is unfair to middle-income Americans. It is
economically unwise, and it is based on unrealistic assumptions. The
unfairness in the underlying bill it would amend is perhaps best shown
in the fact that about two-thirds of its tax benefits go to the upper
one-fifth of our people. The amendment makes that worse. It makes an
unfairness doubly unfair because it will give almost 80 percent of the
tax benefits to the upper one-fifth of the income bracket.
In addition to being unfair, it is also economically unwise because
it jeopardizes Medicare, it fails to strengthen Social Security, and it
risks higher interest rates. Yesterday, Alan Greenspan, testifying
before the Banking Committee said:

We probably would be better off holding off on a tax cut.

Why? Because of the uncertainty of budget surplus projections and also
because we should normally reserve tax cuts for periods of economic
slowdown.
The implication, in his words, has also been pretty clear over these
last few months, which is that a large tax cut would cause the Fed to
increase interest rates. For the average middle-income taxpayers, a
rise in interest rates means larger mortgage payments, larger loan and
credit card payments, larger payments on that automobile, and that
would far outweigh the small share of the benefits from the tax cut
which that average taxpayer might receive.
The tax program that is being offered to us is also based on
unrealistic projections. Projections are always risky. We have seen
many Federal budget estimates, and we know that as quickly as the
surpluses appear, they can disappear. The estimates of both the
Congressional Budget Office and the Office of Management and Budget
have frequently been far off the mark in recent years, and that is not
their fault. We have some bright economists in the CBO and the OMB.
They have a difficult task. Forecasting the performance of the economy,
particularly over the course of several years, is more art than
science, and there is a lot of guesswork in it.
For instance, the CBO estimated that the unified budget surplus for
fiscal year 2000 will be $79 billion. But 4 months later, in a January
1999 CBO document, the surplus for fiscal year 2000 was estimated at
$130 billion. In 4 months, it jumped from a $79 billion estimate to a
$130 billion estimate. The July estimate for fiscal year 2000 now
projects a $161 billion surplus. So there has been a change of over 100
percent in the projection of the surplus in less than a year. If most
Americans were confronted with such uncertainty over their own budget
situation, they would follow a cautious course, and we should, too.
The projections in both the underlying proposal and the pending
amendment to it are extremely risky because they are based on
assumptions about domestic spending levels that are highly unrealistic.
The on-budget surplus, which the Republicans now say will pay for the
tax cut, is reliant largely on massive cuts in discretionary spending,
$595 billion over 10 years. That is a 23-percent cut in real terms from
the 1999 level adjusted for inflation. Can we really believe we will be
cutting discretionary programs by 23 percent in real terms?
Is that what we are doing now?
If a realistic defense spending level is adopted--even the
President's proposal; if we assume just that--the domestic spending cut
will grow to $775 billion over 10 years, which is a 38-percent cut in
real terms.
We have seen proof in the last few weeks that these levels are
unrealistic. The so-called spending caps are already being exceeded by
attaching emergency spending labels to new funding. We have already
heard from the chairman of the Appropriations Committee that these
limits, or caps, are going to be lifted in any event. The House tends
to use emergency spending to get around the caps. Apparently, we are
going to be more forthright and just lift the caps.
So most people in Congress already believe--whether they acknowledge
this publicly or not--that the caps are simply not going to hold. So we
already have strong evidence that the basis of the surplus projection
is not realistic or credible.
The proposal before us is going to take the economy backwards, just
as we are climbing out of a deficit ditch.
In 1992, the deficit in the Federal budget was $290 billion. We made
remarkable progress which has brought us now to the threshold of
surpluses. It came in large part because of a deficit-reduction package
which President Clinton presented in 1993 and which we passed by a
margin of one vote. We should not now, by passing a tax bill such as
the one before us, head down the road toward new future deficits.
The alternative that Democrats offered yesterday was far better, by
all three tests--the test of fairness, the test of prudence, the test
of credibility. But by those same three tests, we should hold off on
any tax cut. We should hold off on any tax cut, period.
First, we should see if the surplus is real before we adopt tax cuts.
Second, if the surpluses are real, we should pay down the national debt
faster. And third, we should save tax cuts for a time of economic slow
down.
The argument is made that this is the taxpayers' money. It is. But
the economy is the American taxpayers', too. The economy belongs to the
American taxpayer. Social Security belongs to the American people, just
as this money belongs to the American people. The surplus belongs to
the American people. So does the Medicare program belong to the
American people. Our education program, helping people through college,
belongs to the American people, just as the surplus does.
These are taxpayers' dollars. There can be no dispute about that. But
the veterans' program is the American people's program. When we cut
veterans' health care, we are cutting into something that the American
people want. It is their program, just as the surplus, just as the
taxes, are the American people's.
The American people are speaking loudly, at least to me, at least in
my office, when I go back home to Michigan every weekend and talk to
the American people. What they are telling me is: Pay down the debt,
protect Social Security, protect Medicare. Do what you need to do to
invest in education. Don't cut veterans' programs. But we don't need
this tax cut that is being proposed at this time, not just because it
is unfair to middle income Americans--which it is, since most of the
benefits go to the upper fifth--but we don't need the tax cut because
we want debt reduction, real debt reduction.

[[Page S9668]]

That is what they are telling us. That is what the American people,
who produced this surplus, who send us the tax money, are telling us.
They are telling us that loudly, not just in public opinion polls--in
the mail that we open up, in the phone calls we get, and in the
personal pleas we get when we go home.
That is exactly what we should do: To hold off on any tax cut and
reduce the debt with the money that otherwise would go to that tax cut,
again, not just because it is unfair--which it is--but because it is
unwise and imprudent.
Mr. President, I yield the floor.
Mr. GRAMM addressed the Chair.
The PRESIDING OFFICER (Mr. Bunning). The Senator from Texas.
Mr. GRAMM. Mr. President, it is my understanding that the Democrat
side of the aisle has completed their run of speakers. They have a
little time left. I have a little bit more. But it would be my
intention, if it suits everybody else, to go ahead and try to answer
all of these points that have been made, and try to deviate from my
background as a schoolteacher and not take all day, and then go ahead
and yield back my time if they would yield back theirs, and then we
will set my vote aside and let Senator Kennedy offer his amendment, if
that will suit everybody on time.
The only thing I want to be sure of is--since I want to be sure I get
to answer every point that has been made--I would like to be the last
speaker on my substitute. So if that works with everybody, I am happy
about it; if not, we can do it another way.
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. The Senator's proposal is entirely agreeable. I cannot,
however, let pass the notion that Texas may be the only State in the
Union where a former professor of economics refers to himself as a
sometimes schoolteacher. But that is the way it is. We look forward to
hearing all he has to say.
Mr. REID. Will the Senator yield for a question?
Mr. MOYNIHAN. Sure.
Mr. REID. So we have someone here to speak when the Senator finishes,
could the Senator give us an estimate of when he might complete his
statement on this amendment?
Mr. GRAMM. Mr. President, how much time do I have?
The PRESIDING OFFICER. Eighteen and a half minutes.
Mr. GRAMM. I will be through before that. Senator Kennedy may want to
start making his way over here.
Mr. President, we are about to wrap up the debate on this amendment.
I think sometimes it is easy to get carried away and get in the
business of trying to look at people's motives. I would like, in my
concluding comments, to try to set this whole thing in perspective.
I wonder sometimes if our Democrat colleagues do not just rediscover
every once in a while how progressive--and that is the term that was
made up by the people who wanted the Tax Code to be highly skewed,
where higher income people paid the great preponderance of taxes in
America.
We are today talking about cutting income taxes. Our dear colleague
from Minnesota points out that if you make less than $30,000, you are
going to get less than $100 of income tax cuts in this bill. But what
our colleague fails to recognize is that 50 percent of Americans pay
only 4.3 percent of the income taxes; 32 percent of American families
pay no income taxes whatsoever.
So I know it makes for a good sound bite to say 32 percent of
Americans will get no income tax cut if you cut taxes across the board
by 10 percent, but they do not get a tax cut because they do not pay
income taxes.
Tax cuts are for taxpayers. The people who will get a tax cut under
this bill get no food stamps. Is that an outrage? People who will get a
tax cut under this bill do not qualify for Medicaid. Is that an outrage
that they do not qualify for Medicaid? People who will get a tax cut
under this bill do not qualify for Aid to Families with Dependent
Children. Is anyone outraged about that? I am not, because AFDC, food
stamps, Medicaid are not for everybody; they are for poor people. Tax
cuts are for taxpayers.
So when our colleagues stand up and say the top one-quarter of the
taxpayers in America will get 60 percent of the tax cut under this
bill, don't forget that the top 25 percent of income earners in America
today pay 81.3 percent of all the taxes.
Why would anybody be shocked that a group of people who pay 81.3
percent of the taxes might get 60 percent of the tax cut? In fact, what
our dear colleague from Michigan was pointing out is that the Roth bill
is, from the point of view of the existing Tax Code, putting a heavier
burden on higher income people. My amendment does not do that. Now,
some of our colleagues, a few minutes ago, suggested that I was
offering the House bill. The House tax cut bill is 457 pages long. The
tax cut I am offering is 46 pages long. This is a very simple tax cut.
At the end of my comments, I will go over what it does and does not do.

It is true that the top 1 percent will get more tax cut than the
bottom 50 percent. The top 1 percent of income earners in America earn
16 cents of every dollar earned, but they pay 32.3 percent of the
taxes. The bottom 50 percent pay only 4.3 percent of the taxes. So if
you are giving a tax cut, people who pay taxes get it. If you are
giving welfare or Medicaid, people who are poor get it. I don't know
why that comes as a shock to our Democrat colleagues.
Our dear friend from South Carolina said the rich get it all. Well,
the plain truth is that the average family in America making $50,000 a
year, they are rich, according to the Senator from South Carolina. But
the average family making $50,000 a year will get $624 in a tax cut by
the 10-percent across-the-board tax.
How is it that only rich people are getting the tax cut? Well, you
have to remember that when the Democrats, in 1993, raised taxes, they
defined ``rich'' as anybody making over $25,000 a year when they taxed
people earning $25,000 a year on their Social Security benefits. I hope
people are not confused when they hear the Senator from South Carolina
say under the Gramm amendment rich people get it all. I hope they
understand that rich people are people over $25,000 a year. When
Senator Hollings was saying, yes, he voted to raise taxes on Social
Security, that was on rich people who made over $25,000 a year. Don't
forget the code when we are talking about these things.
There are a lot of people on the Democrat side of the aisle who say
hold off on the tax cut. Well, I don't find that unappealing. Just to
level with people, if we could stop the spending spree that is underway
and hold off on the tax cut and have an election--I believe we are
going to have a Republican President; I think I know who it is; I
believe we are going to have a Republican majority in both Houses of
Congress--I think we could do a better job 2 years from now. So when
Senator Levin says hold off on the tax cut, why do I not end up
supporting his position?
Well, the problem is, this is the Congressional Budget Office
analysis of President Clinton's budget. He is proposing to spend $1.033
trillion, not only every penny of the surplus, but he is having to
plunder Social Security for 3 out of the 10 years. So while our
colleagues are saying don't cut taxes, what they are not telling is
that the President has proposed spending every penny of the non-Social
Security surplus, plus part of the Social Security surplus.
We are already $21 billion over the budget this year. I would be
willing to wait when we had a President who I think would support a
better tax package, but under President Clinton's budget, we will have
spent every penny of the surplus before we can elect a new President.
So that is why we have to act now.
The second thing is about how large this tax cut is, how outrageous,
how obscene. If you want to spend all the money, any tax cut is
obscene. If you don't want a tax cut, all tax cuts are for rich people,
all tax increases are on rich people. So most people, at least in that
language, don't have a stake in it.
But the problem is, all tax increases are on working people and our
tax cut is for working people. The question is, Is it too big?
When Bill Clinton became President, Government was taking in taxes,
17.8 cents out of every dollar earned by every American. Because of the
massive tax increase in 1993 and because

[[Page S9669]]

people, as incomes have gone up, have moved into higher brackets,
Government is now taking a peacetime record 20.6 percent of the economy
in Federal taxes.
Now, if we took all $1 trillion of the non-Social Security surplus
and gave it back to the American worker in tax cuts--and I remind
Senators, we are giving less than $800 billion because we are keeping
$200 billion for Medicare and for emergencies--if we gave it all back,
the tax burden, at 18.8 percent of every dollar earned, would still be
substantially higher than it was the day Bill Clinton became President.
So even if you adopt our tax cut and even if the President signed it,
when he left office and when this tax cut was fully implemented, he
could say: Taxes were substantially higher when I left than when I
came--even though supposedly we are talking about a huge tax cut.
Now, finally, if you take the arithmetic and you say: How big is this
tax cut relative to the level of taxes we are collecting, over a 10-
year period, the tax cut is a whopping 3.5 percent. Over a 10-year
period, if we adopt our tax cut, we are reducing revenues by 3.5
percent.
How can the President say this tax cut endangers the American
economy? In fact, the day before yesterday he was saying it endangers
women's health care; if we let working people keep more of the money
they earn, it is going to hurt women's health.
I don't know, if this debate goes on another day or two, he may say
that infantile paralysis will be back, that polio will suddenly descend
on America. If you let people keep more of what they earn, it could
happen. The bubonic plague could come back. The point is, we are
talking about 3.5-percent tax cuts over 10 years.
Why are we doing this? We are doing it because we are going to
collect $3 trillion in taxes over the next 10 years above the level we
are going to spend. We are taking $2 trillion and putting it away so
when we get a President that has the courage to fix Social Security--we
do not have such a President today, I am sad to say, but when we get
one, we will have the money and we will be ready to do it.
Then out of the trillion that is left, we are saying, let us give
eight-tenths of it back in tax cuts and let us keep two-tenths of it
for Medicare and for any emergencies we might have.
Our colleagues say, if you give these tax cuts, the money is gone
forever. That is interesting because we raise taxes round here all the
time. But yet when they spend this money on $1.033 trillion of new
programs, it is as if we can snap our fingers and have it back.
The truth is, you can always get money back that you give to the
American public in tax cuts. If we start 81 new programs, which is what
President Clinton wants to do, we will never be able to get that money
back. We will never be able to end those programs. That is what the
debate is about.
I see that one of my colleagues who had asked to speak before, came
and waited for others to speak, has come back. How much time do I have
at this point?
The PRESIDING OFFICER. The Senator has 6 minutes.
Mr. GRAMM. I yield that Senator 5 minutes of my time, and then I will
sum up with the last minute.
The PRESIDING OFFICER. The Senator from Arizona.
Mr. KYL. Mr. President, I have heard the name of the Federal Reserve
Board Chairman, Alan Greenspan, invoked in this debate as if the
Chairman would oppose the tax-relief bill. That is not my understanding
of where Mr. Greenspan stands on the issue. I want to include for the
Record at the end of my remarks a copy of a Wall Street Journal
editorial on the subject that ran on July 27, 1999.
When Chairman Greenspan testified before the Banking Committee last
week, he said that he would delay tax cutting and apply the surplus to
debt repayment--but here is the part of the quote that many in the
media have failed to report. He said he would defer tax cuts:

. . . unless, as I've indicated many times, it appears that
the surplus is going to become a lightening rod for major
increases in outlays (emphasis added). That's the worst of
all possible worlds, from a fiscal policy point of view, and
that, under all conditions, should be avoided.

Mr. Greenspan went on to say, ``I have great sympathy for those who
wish to cut taxes now to pre-empt that process, and indeed if it turns
out that they are right, then I would say moving on the tax front makes
a good deal of sense to me.''
Mr. President, Chairman Greenspan's view is important because
opponents of this tax relief bill claim that the Federal Reserve will
respond to its enactment by raising interest rates to the cool economy.
But Mr. Greenspan's remarks make it clear that the real threat to
continue prosperity is bigger government, not tax relief. And if the
tax overpayment is not returned to taxpayers, I think it is clear that
it will be spent long before it can be applied to debt reduction.
Just consider that President Clinton is proposing new spending
amounting to $826 billion--more than the 10-year cost of the tax-relief
bill that is before us. Remember, too, that our tax bill accounts for
only about 25 percent of the available surplus. In other words, we are
only proposing to refund about 25 cents of every surplus dollar to the
people who sent it to us--hardly a risky or irresponsible thing.
Seventy five cents of every surplus dollar would be dedicated to
preserving Social Security and Medicare, and funding other domestic
priorities.
Remember, to the extent that there is a surplus, we will have taken
care of our core obligations already--things like education and health
care, running our national parks, and providing for the national
defense. It may be true that refunding the overpayment will mean we
cannot fund some low priority programs, but that is the point:
taxpayers ought to be able to decide how to spend their own hard-earned
money before Washington wastes it.
Critics of the tax-relief bill also claim that it cannot be justified
because projected surpluses may never materialize, that Congress and
the President will be unable to live within the spending limits we
agreed to on a bipartisan basis only two years ago. In other words,
they contend that spending the surplus is a preordained outcome. To me,
that is not a reason to defer tax relief. It is the very reason we need
to pass tax relief--before Washington can find new ways to spend the
tax overpayment.
Mr. President, I think it is important to clarify that we are talking
about what to do with the non-Social Security surplus. Our plan saves
all of the Social Security surplus for Social Security. President
Clinton says that it is his goal as well, but his budget would actually
spend $158 billion of the Social Security surplus on other programs. If
our colleagues on the other side of the aisle would end their
filibuster against the Social Security lockbox bill, we could pass it
and make sure the Social Security surplus is not spent.
Let me turn for a few moments to the specific provisions of the tax-
relief bill that is before us today. I want to begin by commending the
chairman of the Finance Committee for producing a bill that fully meets
the instructions of the budget resolution we passed earlier this year
and provides a full $792 billion in tax relief over the next decade.
But I must say that I would have written the bill very differently.
It seems to me that there are too many provisions that are targeted too
narrowly. For example, the bill includes a tax break for the renovation
of historic homes. That is great if you intend to engage in such
renovation. But if you do not have the means to own a historic home, or
do not want one, you get no relief.
People with a foreign address would have their frequent flyer miles
exempted from the 7.5 percent air passenger ticket tax.
Generation of electricity from chicken litter would earn a tax break.
And if you are fortunate enough to get certain scholarships, your
award would be excluded from tax.
These four provisions alone--and each may have merit in its own
right--have a combined revenue impact of about $4 billion over 10
years--money that I would prefer to put toward broad-based, growth-
oriented tax relief that help all taxpayers.
While there are many worthwhile provisions in the Finance Committee
bill, a better approach is embodied in an amendment that will be
offered by Senator Phil Gramm of Texas. Whereas the committee bill
attempts to spread

[[Page S9670]]

relief among some 130 parts of the Tax Code, the Gramm amendment would
focus on just five areas, using the surplus to finally correct some of
the most unfair and egregious provisions of the law.
The Gramm amendment would, for example, expand on the provisions of
the underlying bill to completely eliminate the marriage-tax penalty.
What rationale can there possibly be for imposing such a penalty? All
of us say we are concerned that families do not have enough to make
ends meet--that they do not have enough to pay for child care, college,
or to buy their own homes. Yet we tolerate a system that overtaxes
families. According to Tax Foundation estimates, the average American
family pays almost 40 percent of its income in taxes to federal, state,
and local governments. To put it another way, in families where both
parents work, one of the parents is nearly working full time just to
pay the family's tax bill. It is no wonder, then, that parents do not
have enough to make ends meet when government is taking that much. It
is just not right.
The marriage penalty alone is estimated to cost the average couple an
extra $1,400 a year. About 21 million American couples are affected,
and the cost is particularly high for the working poor. Two-earner
families making less than $20,000 often must devote a full eight
percent of their income to pay the marriage penalty. The highest
percentage of couples hit by the marriage penalty earns between $20,000
and $30,000 per year.
Think what these families could do with an extra $1,400 in their
pockets. They could pay for three to four months of day care if they
choose to send a child outside the home--or make it easier for one
parent to stay at home to take care of the children, if that is what
they decide is best for them. They could make four to five payments on
their car or minivan. They could pay their utility bill for nine
months.
The Finance Committee bill goes a long way toward resolving the
marriage-penalty problem, and I thank the chairman of the Finance
Committee for that; but since we have the resources to solve it fully
once and for all, we should.
The death tax is just as wrong, and we ought to do something about
it, too. The Gramm amendment includes the provisions of the Kyl-Kerrey
bill, as modified by the House, that would eliminate the death tax
outright.
Although most Americans will probably never pay a death tax, most
people still sense that there is something terribly wrong with a system
that allows Washington to seize more than half of whatever is left
after someone dies--a system that prevents hard-working Americans from
passing the bulk of their next eggs to their children or grandchildren,
or even their local charities. Liberal Professor of Law at the
University of Southern California, Edward J. McCaffrey, put it this
way: ``Polls and practices show that we like sin taxes, such as on
alcohol and cigarettes.'' ``The estate tax,'' he went on to say, ``is
an anti-sin, or a virtue, tax. It is a tax on work and savings without
consumption, on thrift, on long term savings. There is no reason even a
liberal populace need support it.''
Economists Henry Aaron and Alicia Munnell reached similar
conclusions, writing in a 1992 study that death taxes ``have failed to
achieve their intended purposes. They raise little revenue. They impose
large excess burdens. They are unfair.''
In fact, 77 percent of the people responding to survey by the Polling
Company last year indicated that they favor repeal of the death tax.
When Californians had the chance to weigh in with a ballot proposition,
they voted two-to-one to repeal their state's death tax. The
legislatures of five other states have enacted legislation since 1997
that will either eliminate or significantly reduce the burden of their
states' death taxes.
Talk to the men and women who run small businesses around the country
and you will find that death taxes are a major concern to them. The
1995 White House Conference on Small Business identified the death tax
as one of small business's top concerns, and delegates to the
conference voted overwhelmingly to endorse its repeal. Remember, this
is a tax that is imposed on a family business when it is least able to
afford the payment--upon the death of the person with the greatest
practical and institutional knowledge of that business's operations.
Although the death tax raises only about one percent of the federal
government's annual revenue, it exerts a disproportionately large and
negative impact on the economy. In fact, Alicia Munnell, a former
member of President Clinton's Council of Economic Advisors, estimates
that the costs of complying with death-tax laws are roughly the same
magnitude as the revenue raised. In 1998, for example that amounted to
about $23 billion. In other words, for every dollar of tax revenue
raised by the death tax, another dollar is squandered in the economy
simply to comply with or avoid the tax.
Over time, the adverse consequences are compounded. A report issued
by the Joint Economic Committee last December concluded that the
existence of the death tax this century has reduced the stock of
capital in the economy by nearly half a trillion dollars.
By repealing the death tax and putting those resources to better use,
the Joint Committee estimates that as many as 240,000 jobs could be
created over seven years and Americans would have an additional $24.4
billion in disposable personal income.
Unlike the Finance Committee bill, which leaves the death tax in
place indefinitely, the Gramm amendment would repeal the tax--pull it
out by its roots. The House has already passed similar provisions, and
the Senate should, as well. Death-tax repeal is a must.
Mr. President, there are three other components of the Gramm
amendment that I will touch on only briefly. First, it would reduce
marginal income-tax rates by 10 percent across the board. In other
words, all taxpayers would see their tax bills reduced, proportionate
to how much they pay. This is probably the fairest way of returning the
tax overpayment.
Second, the amendment would index capital gains for inflation,
recognizing that the Treasury should not reap the benefit of
inflationary policies.
Third, it would provide a full deduction for health insurance for the
self employed.
Mr. President, the Gramm amendment would provide broad-based relief,
and would do so in a way that is not only fair, but which would keep
the economy growing and providing a better standard of living for all
Americans.
I will vote for the Gramm amendment. If it is defeated, I will vote
for the underlying bill in order to get it to conference where the bill
could be improved. I will, however, reserve judgment about whether to
support the conference report until I can see if it comes close to the
Gramm amendment or the House bill.
Before concluding, I ask unanimous consent that the Wall Street
Journal editorial from July 27, 1999, which I mentioned at the
beginning of my remarks, be printed in the Record at this point.
There being no objection, the editorial was ordered to be printed in
the Record, as follows:

Review & Outlook--Truth and Taxes

Ronald Reagan once famously noted that ``facts are stubborn
things,'' but that was before the Clinton Presidency. One
consequence of Clintonism is that facts have been irrelevant
to political debate, as for example in the current fight over
tax cuts.
Under the new Clinton rules, by now imbedded in media
coverage, it doesn't matter whether something is true; what
counts is whether it works politically. Thus last week
Federal Reserve Chairman Alan Greenspan suddenly found
himself hailed as a hero of the Democratic Party, allegedly
for trashing the House Republican tax-cut bill.

[[Page S9671]]

Or so the news reports said. We read his remarks, however,
and the truth is more interesting.
Mr. Greenspan: ``My first priority, if I were given such a
priority, is to let the surpluses run.''
Rep. John LaFalce (D., N.Y.): ``Thank you, Mr. Chairman.''
Mr. Greenspan: ``As I've said before, my second priority is
if you find that as a consequence of those surpluses they
tend to be spent, then I would be more in the camp of cutting
taxes, because the least desirable is using those surpluses
for expanding outlays.''
For some reason the press corps never mentioned this
spending caveat, as large as it is. We don't know how they
missed it, because a short time later the Fed chief said he'd
delay tax cutting ``unless, as I've indicated many times, it
appears that the surplus is going to become a lightening rod
for major increases in outlays. That's the worst of all
possible worlds, for a fiscal policy point of view, and that,
under all conditions, should be avoided.
``I have great sympathy for those who wish to cut taxes now
to pre-empt that process, and indeed, if it turns out that
they are right, then I would say moving on the tax front
makes a good deal of sense to me.''
Now, also keep in mind that Mr. Greenspan is a central
banker. He runs monetary policy, which means he needs the
political running room to raise interest rates from time to
time. Like all central bankers, he gets irrationally
exuberant about deficits, which he fears could return and
complicate this task. Ergo, he'd prefer surpluses to pile up
from here to eternity.
Yet, if the surpluses are going to be spent, he'd still
rather cut taxes first. And indeed, last week Mr. Greenspan
repeated his belief that the revenue-maximizing tax rate for
capital gains is ``zero'' and that he prefers a cut in
marginal tax rates.
As it happens, last week the Beltway's media sleuths also
ignored some startling facts from the Congressional Budget
Office. CBO--historically no friend of tax-cutting--compared
Congress's budget proposals with Mr. Clinton's. And it found
that, despite its $800 billion tax cut over 10 years,
Congress's budget actually reduces the federal debt more than
does Mr. Clinton's
How can this be? because Mr. Clinton proposes to spend that
money instead of use it to retire debt, just as Mr. Greenspan
fears. Here's the CBO math on the Clinton proposals:
$111 billion for Medicare, including $168 billion for the
new prescription drug bribe less other savings;
$245 billion for USA Accounts, another political handout;
$328 billion for additional discretionary spending--$127
billion for defense and $201 billion in nondefense
programs''; and
$142 billion for higher debt service costs because of the
higher spending.
The GOP tax cut is about $792 billion, while Mr. Clinton's
new spending would amount to $826 billion. In short, Mr.
Clinton isn't against the GOP tax cut because he wants to
save it for posterity. He's against it because he wants to
spend that money instead. Which by Mr. Greenspan's own
testimony last week means the Fed chief would endorse cutting
taxes first.
And, by the way, don't believe Mr. Clinton when he claims,
as he did in his Saturday radio address, that ``the GOP tax
cut is so large it would require dramatic cuts in vial areas,
such as education, the environment, biomedical research,
defense and crime fighting.'' As CBO also shows, since 1990
domestic spending (not including entitlements) has increased
by 5% a year; that's roughly double the rate of inflation.
Mr. Clinton has taken to lying with such fluency that his
whoppers are barely even noticed. We're not optimistic that
anyone else will keep him honest. But we thought our readers
would like to know.

Mr. KYL. To reiterate, the bill includes a tax break for the
renovation of historic homes. That is great, if you intend to engage in
such a renovation and you have a historic home. But if you don't have
that kind of a home, it is not going to do you much good. People with
foreign addresses would have their frequent flier miles exempted from
the 7.5-percent passenger ticket tax.
Generation of electricity from chicken litter would earn a tax break.
If you are fortunate to get certain scholarship, you could be excluded
from a tax. These four provisions alone, which may well have merit,
have a combined revenue impact of about $4 billion over 10 years--money
I would prefer to put toward the kind of relief Senator Gramm has been
proposing. That is why I support his amendment.
Let's take one of the provisions of his amendment, whereas, the
committee bill attempts to spread relief. Out of about 130 different
parts of the Tax Code, the Gramm amendment focuses on just 5 particular
areas, using the surplus to finally correct some of the most unfair and
egregious provisions of the law. For example, it eliminates the
marriage tax penalty.
The Finance Committee proposal goes a long way toward working on that
marriage penalty, but it does not eliminate it. The Gramm proposal
would do that. It is not fair that we overtax families just because
they are married. The impact is estimated to cost the average couple an
extra $1,400 a year. About 21 million American couples are affected. It
is no wonder both spouses in the family are having to work. One, in
effect, is working for the family, and the other is working to pay off
the taxes. They are upset with this marriage tax penalty. I support
that provision.
While we deal with the death tax in the Finance Committee proposal,
we don't eliminate it. It ought to be eliminated. The Gramm proposal
eliminates it along the lines of the Kyl-Kerrey bill. I appreciate
Senator Gramm including our provision in his amendment. The death tax
is the most unfair tax of all. Death should not be a taxable event. If
you want to tax people because they make some economic decision to
spend money, to take money out of an account, to sell an asset, then
tax that economic decision. They understand going in what the
consequences are going to be. But nobody chooses to die. Why their
heirs should have to pay a tax because of a death is beyond most of us.
It brings in about 1 percent in revenue. It is not worth it. An awful
lot of small businesses and farms, which have all of the assets tied up
in equipment and the capital of the business itself, end up having to
sell their assets in order to pay the taxes. The idea that it was to
prevent the accumulation of wealth no longer works. In today's world,
when you have to sell the business, you usually sell to some big
conglomerate that then takes it over.

So the death tax is unfair. Our proposal, which in effect converts it
to a capital gains tax on the sale of the assets if and when they are
ever sold, is a much fairer proposal. It still permits the Government
to recover some of the money, but it is not based upon the death of the
individual, it is based upon the sale of the asset when the people want
to sell it.
There are three other components I will touch on briefly. First, it
reduces the marginal income tax by 10 percent across the board. In
other words, all taxpayers would see their taxes reduced, proportionate
to how much they pay, as the Senator pointed out. It is probably the
fairest way of returning the tax overpayment. The amendment would index
capital gains for inflation, recognizing that the Treasury should not
reap the benefit of inflationary policy. Finally, it would provide a
full deduction for health insurance for the self-employed, something I
think everybody would like to see done.
We can afford to do those things, and we ought to do those things in
this amendment. I will vote for the Gramm amendment. If it is defeated,
I will vote for the underlying bill in order to get it to conference
where it can be improved. I will reserve judgment on whether to support
the conference report until I see whether it comes closer to the
approach Senator Gramm has taken.
Mr. GRAMM addressed the Chair.
The PRESIDING OFFICER. The Senator from Texas is recognized.
Mr. GRAMM. Mr. President, I have worked up an example that I think
tells the story here at the end of the debate. The question is, If we
have a simple tax cut that cuts taxes across the board by 10 percent,
eliminates the marriage penalty, repeals the death tax, indexes capital
gains taxes, and gives a full deduction for health insurance, what will
it mean to your family?
Obviously, it is easy to take how much taxes you pay and then take
the 10 percent. Here is an example. Take this couple Senator Hutchison
talked about, where you have a teacher and a football coach and they
are married. Together, they make $70,000 a year. Now, I know there are
some people on the other side of the aisle who are going to say they
are rich. They have two children, and they might have one of them in
college. If they have both of them in college, they are among the most
financially stressed people in America.
But what would happen under this bill is that the 10 percent tax cut
would mean that this family--a coach and a teacher, making $70,000 a
year--would get an $800 tax cut; actually, it would be an $809 tax cut
because of the 10 percent across-the-board cut; they would

[[Page S9672]]

get a $1,400 tax cut from the marriage penalty elimination, meaning, in
total, they would get $2,200 in tax cuts. That is roughly, I think,
what working middle America is about.
Mr. President, I yield all my time back.
Mr. MOYNIHAN. Mr. President, this side of the aisle yields all our
time back.
Mr. GRAMM. Mr. President, I ask unanimous consent that the Gramm
amendment, No. 1405, be temporarily set aside in order for Senator
Kennedy to offer a motion relative to prescription drugs. I further ask
consent that following the debate time on that motion, the Senate then
proceed to a vote on or in relation to the Gramm amendment, No. 1405,
to be followed by a vote on or in relation to the Kennedy motion. I ask
unanimous consent that no other amendments be in order to the amendment
prior to the vote. I further ask consent that there be 2 minutes
equally divided prior to each vote.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MOYNIHAN. Mr. President, the Senator from New York, on behalf of
the Finance Committee, is honored to yield to our distinguished friend
and long-time colleague, Senator Kennedy of Massachusetts. We welcome
him back to the debate.
The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
Mr. KENNEDY. Mr. President, I understand we now have a 1-hour time
limitation, am I correct, and the time is divided?
The PRESIDING OFFICER. Thirty minutes on each side.
Mr. KENNEDY. I yield myself 10 minutes, Mr. President.
The PRESIDING OFFICER. The Senator from Massachusetts is recognized
for 10 minutes.

Motion To Recommit

(Purpose: To modernize and improve the Medicare program by providing a
long-overdue prescription drug benefit, by reducing or deferring
certain new tax breaks)

Mr. KENNEDY. Mr. President, I send a motion to the desk.
The PRESIDING OFFICER. The clerk will report the motion.
The assistant legislative clerk read as follows:

The Senator from Massachusetts, Mr. Kennedy, moves to
recommit the bill to the Committee on Finance, with
instructions to report back within 3 days, with an amendment
to reserve amounts sufficient to provide a prescription drug
benefit to all Medicare recipients, in the context of
modernizing and strengthening Medicare, by reducing or
deferring certain new tax breaks in the bill, especially
those which disproportionately benefit the wealthy.

Mr. KENNEDY. Mr. President, as was indicated in the motion, senior
citizens deserve coverage of prescription drugs under Medicare, and it
is time for Congress to see that they get it. This amendment presents a
clear choice between prescription drug coverage for the elderly and
unnecessary new tax breaks for the wealthy.

This debate is about priorities. New tax breaks are a priority for
the Republicans. Prescription drugs for senior citizens are not. If
senior citizens were the priority, we would be debating a Medicare
prescription drug bill today--not a tax cut bill. If senior citizens
were the priority, we would be debating a tax bill after we had taken
care of Medicare and Social Security--not before.
These Republican tax bills have $230 billion in new tax breaks for
people with incomes over $300,000 a year. They reinstate the three-
martini lunch deduction.
There are sweetheart deals for the insurance industry, the timber
industry, the oil industry, and large multinational corporations. But
there is not one dime for Medicare prescription drugs for senior
citizens.
Medicare is a clear contract between workers and their government. It
says, ``Work hard, pay into the system when you are young, and you will
have health security in your retirement years.'' But that commitment is
being broken today and every day, because Medicare does not cover
prescription drugs.
When Medicare was enacted in 1965, coverage of prescription drugs in
private insurance policies was not the norm--and Medicare followed the
standard practice in the private market. Today, ninety-nine percent of
employment-based health insurance policies provide prescription drug
coverage--but Medicare is caught in a 34 year old time warp--and too
many seniors are suffering as a result.
Too many seniors today must choose between food on the table and the
medicine they need to stay healthy or to treat their illnesses.
Too many seniors take half the pills their doctor prescribes, or
don't even fill needed prescriptions--because they cannot afford the
high cost of prescription drugs. Too many seniors are paying twice as
much as they should for the drugs they need, because they are forced to
pay full price, while almost everyone with a private insurance policy
benefits from negotiated discounts. Too many seniors are ending up
hospitalized--at immense costs to Medicare--because they aren't
receiving the drugs they need at all, or cannot afford to take them
correctly. Pharmaceutical products are increasingly the source of
miracle cures for a host of dread diseases, but senior citizens will be
left out and left behind if we do not act.
The 21st century may well be the century of life sciences. With the
support of the American people, Congress is on its way to our goal of
doubling the budget of the National Institutes of Health. This
investment is seed money for the additional basic research that will
enable private and public sector scientists to develop new therapies
that will improve and extend the lives of people in the United States
and around the globe.
In 1998 alone, private industry spent more than $21 billion in
research on new medicines and to bring them to the public.
These miracle drugs save lives--and they save dollars too, by
preventing unnecessary hospitalization and expensive surgery. All
patients deserve affordable access to these medications. Yet, Medicare,
which is the nation's largest insurer, does not cover out-patient
prescription drugs, and senior citizens and persons with disabilities
pay a heavy price for this glaring omission.
Prescription drug bills eat up a large and disproportionate share of
the typical elderly household's income. Senior citizen spend three
times more of their income on health care than persons under 65, and
they account for one-third of all prescription drug expenditures. yet
they make up only 12 percent of the population.
The greatest gap in Medicare--and the greatest anachronism--is its
failure to cover prescription drugs. Ninety-nine percent of all
employment-based plans--ninety-nine percent--cover prescription drugs
today. But Medicare is still mired in the mid-1960s--when the private
plans on which Medicare was modeled did not provide this coverage.
Because of this gap and other gaps in Medicare, and the growing cost
of the Part B premium, Medicare now pays only 50% of the out-of-pocket
medical costs of the elderly. On average, senior citizens now spend
almost as much of their income on health care as they did before
Medicare was enacted. And Medicare was enacted because there was a
crisis in health care for the elderly in the 1960s. How can we fail to
act today, to deal with the health care crisis for the elderly in the
1990s?
Prescription drugs are the single largest out-of-pocket cost to the
elderly for health care. The average senior citizen fills an average of
eighteen prescriptions a year, and takes four to six prescriptions
daily. Many elderly Americans face monthly drug bills of $100, $200 or
even more.
America's senior citizens and disabled citizens deserve to benefit
from new discoveries in the same way that other families do. Yet,
without negotiating power, they receive the brunt of cost-shifting--
often with devastating results. In the words of a recent report by
Standard & Poor ``Drugmakers have historically raised prices to private
customers to compensate for the discounts they grant to managed care
consumers.'' The private customers referred to in this report are
largely the nation's mothers, fathers, aunts, uncles, grandmothers, and
grandfathers.
Despite--and to a large extent because of--Medicare's lack of
coverage for prescription drugs, the misuse of such drugs results in
preventable illnesses that cost Medicare $20 billion or more a year,
while imposing vast misery on senior citizens. It is in their best
interest, and in the best interest

[[Page S9673]]

of Medicare, to design a system that encourages the proper use, and
minimizes the improper use of prescription drugs. Substantial savings
can be found if physicians and pharmacists are educated on senior
citizen-prescription drug interactions and on ways to identify,
prevent, and correct prescription drug-related problems.
Beneficiaries, too, must follow instructions that are dispensed with
the medication itself. Too often, we hear stories of senior citizens
who skimp on medicine. They take half doses or otherwise try to stretch
their prescription, to make it last longer. That is not right, and it
doesn't have to happen. If senior citizens are confident that the drugs
they need will be covered, proper usage will improve, and so will the
quality of life for senior citizens.
During the course of this debate, we will hear many arguments from
the opponents of this amendment. Their arguments are as predictable as
they are wrong.
First, we will hear that the sponsors of this excessive tax cut are
all for a Medicare prescription drug benefit, too. They claim that even
after their tax cut, they still have $253 billion of surplus left. But
we all know that those estimates are as phony as a three dollar bill--
and about as valuable.
The only way that any money is left after the Republican tax cut is
because their budget pretends to cut national defense by $198 billion
below the President's request--a request that Republicans say is
inadequate. Their budget also pretends that there will never be another
emergency appropriation--even though emergencies will cost us $90
billion over the next 10 years if present trends continue. Their budget
pretends to cut domestic programs from Head Start to education to
highway construction to law enforcement by half a trillion dollars over
the next ten years, cuts that no one believes will ever happen.
Republicans hope they can continue to play ``let's pretend'' until
this reckless and irresponsible tax cut passes the Senate. But by then
it will be too late--too late for today's senior citizens, who need
prescription drug coverage--too late for tomorrow's senior citizens,
who need a solvent Medicare--too late to protect Social Security--too
late to meet pressing needs to educate the nation's children, support
biomedical research, fight crime, protect the environment, and meet all
the other pressing needs that are priorities for the American people.
This is an issue of priorities. Republicans may say that there is
enough money left over to protect seniors. Let them put their votes
where their mouth is. All this motion does is say set aside enough
money out of the tax cut to provide a prescription drug benefit before
we vote to pass a tax bill. This should be a simple vote for any
Senator who cares about senior citizens. Tax cuts are a priority for
the Republicans. Prescriptions drugs for senior citizens are not. If
senior citizens were the priority, we would be debating a prescription
drug coverage bill today--not a tax cut bill. If senior citizens were
the priority, we would be debating a tax bill after we had taken care
of Medicare and Social Security--not before. If senior citizens were
the priority, it would be tax breaks that would get the left-overs, not
the elderly.
Republicans also say that prescription drug coverage should not be
provided to all senior citizens--only to the poor or those who have no
current coverage. But we heard those same arguments when Medicare was
originally enacted. The American people didn't buy these arguments
then--and they won't buy them now.
Let's look at the numbers. Fourteen million elderly and disabled
Medicare beneficiaries--one-third of the total--do not have a dime of
prescription drug coverage today. Not a dime.
One-quarter of Medicare beneficiaries have coverage through an
employer--but retiree health benefits are on the chopping block as
companies seek to cut costs by trimming health care spending. In fact,
the proportion of firms offering coverage has dropped one-quarter in
just the last four years. No senior citizen--and certainly no 50-year-
old looking forward to retirement--can count on prescription drug
coverage being there for them when serious illness strikes.
Seven million Americans get prescription drug coverage through a
Medicare HMO. But that coverage is offered voluntarily--and it is often
being cut back or eliminated altogether. Three-quarters of Medicare
HMOs will impose caps on their benefits of less than $1,000 next year.
Almost one-third will impose caps of less than $500. The majority of
seniors have annual drug expenses well in excess of $500. More than
$325,000 beneficiaries will be dropped from their HMOs next year. There
is not a single senior citizens who joined an HMO because of the
promise of affordable prescription drug benefits who can count on that
promise being kept.

Four and a half million senior citizens get prescription drug
coverage through a Medigap plan. But that coverage is extraordinarily
expensive and inadequate. According to Consumer Reports, a seventy-four
year old senior citizen enrolled in the least generous Medigap plan
offering drug coverage would pay an average of close to $2,000 a year
more in premiums--on top of $1,4000 for the non-drug part of the
coverage--a total of more than $3,000 a year. And that is an average.
Some beneficiaries must pay more than $9,000 a year for drug coverage
through Medigap. Whatever the starting premium, it goes higher and
higher as senior citizens age and their need for medical care grows.
Anyone who misses the chance to enroll in a plan offering drug coverage
at age 65 never gets another chance if they have any health problems.
The only senior citizens who have stable, secure, affordable Medicare
drug coverage today are the very poor on Medicaid. The idea that only
the impoverished should qualify for needed hospital and doctor care was
popular with Republicans more than 30 years ago when they fought
against the enactment of Medicare. The American people rejected that
cruel doctrine--and Medicare for all was enacted. Today, it is time for
the Senate to reject the equally indefensible proposition that poverty
is the price that senior citizens should have to pay to get the
prescription drugs they need.
A couple of Marshfield, Massachusetts vividly demonstrates why we
need to act now. Their plight is representative of millions of other
senior citizens across the country. They live on a fixed income of
$30,000 a year from Social Security and a retirement pension. They are
not poor. Their income is not below 135% of poverty. In fact, it is not
even below 200% of poverty--but it is not enough for them to afford the
prescription drugs they need. Both have substantial medical needs, and
both belong to the Medicare HMO--but 19% of the couple's income is
still spent on prescription drugs.
By April, the couple had already exhausted their HMO's $150 quarterly
cap for prescription drug coverage. The $956 cost of the wife's
medications for May and June will come completely out of their pockets.
She has been rationing her medication--not taking it as prescribed, in
an attempt to stretch out the medicine to save money. She was a stroke
victim five years ago. Yet, she has to cut back considerably on her
most expensive prescriptions. She is having a difficult time with the
left side of her body, and cannot move her left arm.
She says, ``My muscles are really tight, and it is a result of not
taking my Methocarbamol, because I am trying to stretch my prescription
dollars. We don't go out, we can't afford gas, and we have had to cut
down on groceries.''
Every senior citizen in America could find themselves forced to
choose between a decent retirement and the medications they need to
survive. No person and no family should have to make that unfair
choice. This is what our amendment is all about.
Senior citizens need and deserve prescription drug coverage under
Medicare. Any senior citizen will tell you that--and so will their
children and grandchildren.
I would like to just reiterate an earlier point. The debate this week
is really about priorities, and there are many of us who believe that,
prior to moving toward any of these kinds of tax breaks, we ought to
secure Social Security, we ought to ensure the security of the Medicare
system, and include in the Medicare system a prescription drug benefit
program.
I have listened over the course of the past 2 days, as well as
earlier in the year, to those who say we can afford the kind of tax
breaks that are being recommended. They say that we will have
sufficient resources at the end of it in order to provide for a
prescription drug benefit. I don't believe that to be the case.
Even if it were the case, I am not going to take our limited time to
debate how much may be left over after we deal with the Republican tax
breaks. I don't think there will be much, if anything.
But what we are saying today is rather than wait to see if there is
anything left, let's go ahead today. We are saying that any proposal
that is going to

[[Page S9674]]

come out of this Senate dealing with tax breaks is also going to
include an important prescription drug benefit for the senior citizens
of this country. That is what we are saying.
We say send this legislation back to the Finance Committee, and then
we ask the Finance Committee to report back within a period of 3 days.
There are a number of acceptable proposals. The proposal by the
President of the United States is one that I favor. Senator Rockefeller
and I also have a proposal that I favor. But this motion simply
requires the Finance Committee to come back with funds sufficient to
provide prescription drug coverage to all Medicare beneficiaries. It
doesn't specify one proposal over another. That is, in effect, what
this amendment is really all about.
We believe that coverage of prescription drugs is necessary in order
to effectively upgrade Medicare to deal with modern realities. There
are other considerations in the Medicare program that the President and
others have outlined which deserve consideration. But today we should
say that before we pass significant tax breaks, we are going to make a
commitment that a prescription drug benefit program be put into place.
It is a matter of enormous importance. It makes an incredible
difference in the quality of life of the senior citizens of this
country.
Prescription drug benefits in the current system are completely
inadequate. Those who rise to oppose it will say: Let us just have a
partial program because there are only about one-third that have no
coverage. We went through those numbers earlier. Only the poorest
seniors have affordable, reliable and adequate coverage.
Those with retiree coverage cannot be certain it will continue. Those
in HMOs are being told that their coverage will be limited to $500 or
$1,000 a year. Others are being dropped because their plan is leaving
the program. Seniors who can get into medigap are shelling out
thousands of dollars a year for coverage that is inadequate.
Coverage of prescription drugs is an issue of life and death for our
senior citizens. Some would like to limit our assistance to only some
of the elderly. Are we going to say now on this important issue that we
should turn Medicare into a poverty program, a Medicaid program?
Clearly, we should not.
There are those who say, well, Mr. President, we only have a small
group that aren't covered. Let's target it at that. But every kind of
indicator shows that coverage is declining every year for those who are
fortunate enough to have some coverage now.
Our program is very clear and simple. Again, it says that this will
be a priority.
We said: Send this legislation back to the Committee. Have it come
back to the floor with funds reserved to have a prescription drug
program that is going to be worthy of its name. It says that before we
see the major kinds of tax breaks and tax cuts in this bill, we should
meet the needs of our senior citizens.
Every Member of this body can give chapter and verse about what is
happening in their communities, and about how important this is. I am
sure that others in this body have had the opportunity, as I have, of
visiting a nursing home or a senior citizen gathering and asking them:
How many of you are paying out of your pocket for prescription drugs
$25 or $50 or $75 a month? You see all the hands go up. You ask them:
How many are paying $75 a month? You will find about half to three-
quarters of them. How many are paying $50? Half or three-quarters of
them. How many are paying $100 or more? You will still see many of
those hands in the air.
We are finding that many of the senior citizens are skimping on their
prescription drugs--they take half of it or skip days--despite all of
the negative health implications that has.
It is interesting that for the five most common preventable
conditions or diseases in the elderly, just five preventable diseases
for which prescription drugs are available, the Medicare system pays
$30 billion a year in hospitalizations. Many of those hospitalizations
could have been avoided if those senior citizens had been able to
afford the prescription drugs recommended by their doctors.
That is what we are talking about. We are going to pay for it either
on the front end or the back end.
This motion makes sense because it is the right thing to do from a
health point of view. It is the right thing to do from a bottom line
point of view. It is necessary if we are going to meet our continuing
responsibilities to our senior citizens.
I would like to mention on the floor of the Senate a petition I just
received from Silver Spring, MD. It is from the Homecrest House
Resident Council in Silver Spring, MD. They wrote,

We are enclosing our petition signed by most of our 300
residents. We are sure that we voice a concern of our friends
around the Nation, seniors and disabled. We do without other
necessities in order to buy needed medications.

Here are the names from just one senior citizen center. Three hundred
senior citizens and disabled persons. They understand the importance of
this particular program.
Again, this debate is about priorities. Are we going to have tax
breaks for the wealthy and for special interests or are we going to
have the protection of our seniors?
Final point: I was listening with great interest to the debate on the
other side about whether we are going to accept the House proposal. The
fact is, that House proposal has a lot of tax goodies. There is the
restoration of the three-martini lunch.
Many Members thought we freed ourselves from the tax break for the
three-martini lunch back in 1993. It is back in the House bill.
This bill has all sorts of other tax goodies for special interests,
tax goodies for various industries, including the insurance industry,
the timber interests, the oil and gas industry, for foreign tax
credits, and others that I think are questionable.
Out of all those issue that are out there, I say prescription drugs
for the elderly people are more important than putting into place the
tax privileges in this bill.
This motion will put the Senate on record in favor of closing the
largest gap in Medicare. A vote to reject it is a vote to put a higher
priority on new tax breaks for the wealthy than on quality medical care
for senior citizens. I know where the American people stand. It is time
for the Senate to decide where it stands.
I hope this motion will be accepted.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. I yield myself 3 minutes. I want to comment on the
history that our distinguished friend, the senior Senator from
Massachusetts, makes about the origins of the Medicare program.
He was the Senator at the time. I was a member of the administration
at the time and was involved. A basic decision was made, and thank
goodness it was, that Medicare, medical assistance to the aging, would
not be a poverty program. It would not be dependent upon income. The
idea was that programs for the poor inevitably become poor programs. I
think this has been the case over the years.
The second point I make deals with 1965 and the years that led up to
it. The pharmaceutical revolution in ways began with the discovery of
penicillin in London in the 1920s, and medications of the kind we know
today have become a whole new phenomenon in medical care. There was a
time when hospitals were about all you could do for ill people. Now so
much more can be done, principally through pharmaceuticals.
Indeed, if you had to make some bizarre choice between providing
hospital care and providing the full range of pharmaceuticals, one
could very well choose the latter.
The Senator spoke of five lifesaving medications which are
unavailable to people who instead go to hospitals where they can
receive consolation, but no true treatment.
This is a very wise and necessary motion. This Senator, for sure,
will support it.
I yield the floor.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, I yield such time as I may consume.
Mr. President, no one in the Senate is more concerned about Medicare
and the program's beneficiaries than members of the Finance Committee.
This year alone, our committee has held a

[[Page S9675]]

dozen hearings looking into the needs and future of this important
program. We are firm in our commitment to strengthen and preserve
Medicare for the Americans who are now a part of the program, and for
those who will depend on it in the years ahead.
One of our areas of focus concerns prescription drug benefits, and we
appreciate the seriousness with which the senior Senator from
Massachusetts takes this issue. However, now is not the time and place
to address this issue.
The carefully crafted bipartisan Taxpayer Refund Act of 1999 leaves
over $500 billion of the surplus for Congress to carefully weigh and
meet the needs and long-term viability of Medicare. In September, we
will turn our attention to addressing this most important concern.
But we should not be pressured into simply accepting something that
requires our most careful and studied attention.
Testifying before the Finance Committee only last week, Comptroller
General David M. Walker made it clear that Congress must take great
care as we address Medicare reform. He reminded us that Congress has
learned some sobering lessons about moving forward, pressed by
political expediency to alter such an important program, without
benefiting from careful study and deliberation.
``Effectiveness,'' Comptroller Walker reminded our committee,
``involves collecting the data necessary to assess impact--separting
the transitory from the permanent, and the trivial from the
important.''
``Steadfastness is needed,'' Mr. Walker said, ``when particular
interests pit the primacy of needs against the more global interest of
making Medicare affordable, sustainable, and effective for current and
future generations of Americans.
This makes it all the more important that any new benefit expansion
be carefully designed to balance needs and affordability both now and
over the longer term.''
Mr. President, Congress cannot haphazardly paste one politically
motivated change after another on the Medicare program and call it
reform. We must be careful. We must be deliberate. To know how
important this is, we simply need to harken back to 1988, when
Congress--again out of politics, and in a rush--pasted together the
Medicare Catastrophic Coverage Act.
Within six months of enacting that legislation, Congress and the
people realized the debacle, and we were forced to repeal it within the
year.
So we've been down this road before, Mr. President. A rush to
legislation that not only failed to serve those whom we intended to
help, but that actually set back progress more than a decade.
There is no question that Medicare reform is necessary. And there is
agreement on both sides of the aisle that prescription drugs for the
elderly must be a critical component of the reform. But now is not the
time to address this issue. I can assure you that the committee will
continue to proceed with Medicare reform as a top priority. We look
forward to working with Senator Kennedy and others who are concerned
about this issue. Likewise, we will continue to give the President's
recent proposal careful consideration.
By proceeding methodically, but cautiously, Mr. President, Congress
will construct a reform package that is complete--one that meets the
pressing needs in the lives of the seniors who depend on the Medicare
program. The amendment Senator Kennedy offers--as well as the
President's prescription drug benefit, as it now stands--provides only
limited coverage to Medicare beneficiaries.
By waiting . . . by proceeding constructively . . . and by working in
a bipartisan effort to reform Medicare, Congress will--in the end--
provide a more complete and lasting reform--reform that will prepare
the Medicare program for the new millennium.
This effort does not have to wait long. The Finance Committee intends
to continue our work on Medicare reform following the August recess.
I fully intend to include a prescription drug option as part of the
plan we will offer. At that time, the Senate will be able to more fully
and carefully examine reform legislation. This will be in the long-term
interests of everyone.
I compliment Senator Kennedy on his continuing commitment in
addressing social needs, but now is not the time to move on it.
I ask my colleagues to vote against the Kennedy amendment.
I yield the floor.
Mr. KENNEDY. I yield to the Senator from Minnesota, 5 minutes.

Privilege Of The Floor

Mr. WELLSTONE. Mr. President, I ask unanimous consent the privilege
of the floor be granted to David Doleski, a fellow in my office.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. WELLSTONE. Mr. President, let me say to my colleague from
Delaware, he said about four or five times, ``in the long term.'' That
is not good enough. The long term is not good enough. When I am in
Minnesota, and I travel the State, no matter where I go, in town
meetings, there is a huge turnout of older citizens, of senior
citizens. In my State of Minnesota there are probably about 800,000
Medicare recipients, and only 35 percent have any kind of coverage at
all for prescription drugs --35 percent. Two-thirds of elderly
Minnesotans have no coverage; two-thirds in Minnesota have no coverage
at all. It is not uncommon to meet someone who is spending $300 a month
on a $1,000 monthly income. Mr. President, $300 a month on a $1,000
monthly income.
It is also not uncommon to meet with people who will tell you--
actually not in a public meeting. People are a little embarrassed to do
it. But if you get to meet with people individually--they cut their
pills in half. The problem is it doesn't give them half the benefit.
Actually, it can be quite dangerous. Or if they don't cut their pills
in half, there are people who just do not take them so they can put
food on the table, or if they go out and buy what they need, then they
do not put food on the table. I hear my colleagues on the other side
saying ``in the long run.'' In the long run? What are we waiting for?
What are we waiting for?
You are talking about tax cuts. I was on the floor earlier when we
were discussing the Gramm amendment, which I assume will be voted down.
But take that one amendment: 60 percent of the benefit goes to the top
10 percent. The average tax cut for the lowest income earners, the
lowest 60 percent, earning below $38,000, would be $99. But if you have
an income of over $300,000, it is a $20,000 tax cut. You are talking
about $700 billion, $800 billion of tax cuts in the Republican
proposal, crowding out any kind of investment like this; for example,
affordable prescription drug costs for the elderly.

We have another amendment, the Gramm amendment, which is class
warfare. That is what it is. The people in Minnesota are scratching
their heads saying: We would love to get some relief, us hard-pressed
working people, but that is not what the Republican plan is.
Now we have the Kennedy amendment on the floor, which I fully
support, that speaks directly to the concerns and circumstances of
older Americans. In my State of Minnesota, this is critically
important. Only one-third of senior citizens have any prescription drug
coverage at all. This is a burdensome cost. This is a health care
issue. This is a public health issue.
What made Medicare important--it was a huge step forward in 1965--is
that it was a universal coverage program. When we extend prescription
drug benefits to Medicare, we make it a universal care program. For my
father and my mother, neither of whom are alive today, both of whom had
Parkinson's disease, without Medicare they would have gone under. They
never made any money. The kind of drugs they needed, and seniors need,
for Parkinson's disease--I can talk about other diseases--they cannot
afford them.
I hear my good friend from Delaware say ``in the long run.'' The long
run is too long. We are confronted with the urgency of now. This is a
clear choice. You are either for the tax cuts, three-martini lunches,
egregious breaks for large corporations, the vast amount of the money
going to the highest income citizens, exploding the debt over the next
10 years and then the next 10 years it gets worse; or why don't we be
fiscally responsible? Why don't we pay the debt down, make sure we
support Social Security and Medicare, investment in our children, and
when we support Medicare, the best thing we could

[[Page S9676]]

do would be to make sure there is prescription drug coverage for
elderly Americans.
I hope there will be 99 or 100 votes for this amendment. There should
be.
I yield the floor.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. I yield 10 minutes to Senator Frist.
The PRESIDING OFFICER. The Senator from Tennessee is recognized.
Mr. FRIST. Mr. President, I rise to speak against the amendment
offered by my colleague, the Senator from Massachusetts. The Senator
from Massachusetts has introduced an amendment which suggests we set
aside this bill, recommitting it to the committee of jurisdiction, so
they will incorporate funding for a new prescription drug benefit in
the existing Medicare program.
I have several points to make. First of all, I think most important
is that the Senate, this very body, has already set aside funds for
Medicare modernization. This has now become a familiar chart on the
floor of the Senate, but I think it is very important. It goes right to
the heart of why this amendment should and hopefully will be defeated
today. This is the plan. The U.S. Congress' use of the surplus, the
almost $3.3 trillion surplus: Debt reduction, $1.9 trillion; tax cuts,
$792 billion. We talked about that. But what is most important for this
particular amendment is the $505 billion that is set aside over the
next 10 years to specifically address issues such as Medicare
modernization, including things such as the prescription drugs, which
I, as a physician, believe is very important that we address as we
modernize, strengthen, and bring Medicare up to date.
Let me repeat: The Senate, this very body, has already set aside
funds for Medicare modernization, including prescription drug coverage.
First, what have we done? How can I say that with such determination?
The congressional budget plan has $505 billion over 10 years. Very
specifically, we say it again and again and again; it is for domestic
priorities. That money is set aside, aside from the tax cuts, the tax
relief, and the debt reduction.
No. 2, the Senate has already specifically, in a reserve fund, set
aside $90 billion, in a reserve fund, for long-term Medicare reform.
Again, I refer people to April 15, the day we passed in this very body
the concurrent resolution for the year 2000, in section 203, reserve
fund for Medicare. We lay it out. The charts are in the back, in terms
of coming up with the $92.4 billion over 10 years.
No. 1, $505 billion is set aside for such things as Medicare
modernization; No. 2, we specifically set aside $90 billion for
Medicare modernization in a reserve fund, which I quoted from.
No. 3, in the President's very plan, which he introduced a couple of
weeks ago, the net cost of the coverage, he said, for prescription drug
coverage, was $46 billion for 10 years. That $46 billion is much less
than the $90 billion we have already put in our reserve fund and is
only a tenth of the $505 billion we set aside, but we do it right. We
have a real plan. We do not do it piecemeal. We modernize, update,
bring to life a system that was very good for 1965, 1970, 1980, 1990,
but it is not good for the year 2000, 20005, 2010, specifically when
the demographic shift hits, when we have a doubling of the number of
seniors when we go forward. That is the framework we set forward, and
it is what we need to address.
Our job, our challenge now that we have the money set aside --we do
not need to recommit it, send it back for more dollars and cents--is to
fix the system inside this framework, and we do it in three ways. We
need to modernize Medicare benefits, bring it up to date. The 1965 car
is not up to today's standards and we can modernize it. We
demonstrated, through a bipartisan plan, the Medicare Commission--I
will come back to what we actually said. We need to modernize. No. 2,
we need to strengthen our Medicare commitment, our commitment to the
seniors, the generation of today, the future generation--we need to
make sure we can fulfill that commitment. And No. 3, the issue of
prescription drugs.

Shortly after I came to the Senate, about 5 years ago, I had a
patient who was a transplant patient, somebody whom I transplanted.
When I was running for reelection, he was 64 years of age. When I
transplanted him, he was about 62. When I was elected in 1965, he had
Medicare. He had to give up his private plan. His private plan did
cover prescription drugs. When he got to be 65, because we do not have
a modern Medicare program there today, he had to give that up.
What we need is a system that doesn't only focus on prescription
drugs but modernizes the overall program to match individual patients
in a system which values choice, values freedom with those specific
needs. That is what we set out to do in the Bipartisan Commission.
We need to strengthen our Medicare program so it will be there. We
all know most young people today do not believe Medicare will be there
for them. We need to make sure that it is.
Prescription drugs for our seniors and individuals with
disabilities--again, somebody with diabetes is going to be on
prescription drugs later. Someone with chronic heart disease or
debilitating arthritis needs prescription drugs. It shows the
inadequacy of our Medicare system today in the fact we do reimburse for
hospital beds, we reimburse a little bit for preventive care, but not
enough, and not anything at all for those people who need prescription
drugs.
I say this because I am the strongest advocate, or as strong as
others, that we must make prescription drugs a part of our proposal.
The Bipartisan Medicare Commission--bipartisan, Democrat, Republican,
17 members--got together and came up with something that has
comprehensive Medicare modernization and reform, of which prescription
drugs is an integral part, to upgrade that machine which is going to be
serving all of us someday.
How did we do it?
No. 1, we provide full Federal funding for immediate prescription
drug coverage for low-income seniors; that is, up to 135 percent of
poverty.
No. 2, we require in the National Bipartisan Commission--I should
say, our recommendation was approved by a majority of the members, not
a supermajority, but a majority of members did vote for that--it
required all plans participating with the Medicare program to make an
enhanced benefit package available which includes prescription drug
coverage and protects seniors against unlimited out-of-pocket spending.

No. 3, in that National Bipartisan Commission, we require the medigap
programs--all plans--to include prescription drugs, to make those drugs
available in a policy. There are other prescription drug proposals out
there that need to be discussed and should be discussed.
President Clinton put a proposal on the table. That program, I
believe, is inadequate for a whole host of reasons which I hope we have
the opportunity to discuss as we go forward.
It is a little disingenuous to say--and I think in some ways this
amendment at least implies that--that hard-working families do not
deserve tax relief today, which we have shown we can give with the
priorities that have been laid out, until we set aside funds for
Medicare modernization by just adding prescription drug benefits,
because we have set that money aside; this body has done that.
The challenge before us, and the work before us, is to modernize
Medicare, to strengthen Medicare so that it will be there for the next
generation, with a focus on the patient, to make it less rigid, more
comprehensive, have more preventive care, have it be less costly to the
seniors. We should be able to do that. There are solid proposals before
us to do that.
Let me briefly talk about what this Medicare Commission came up with.
Again, remember that the majority of members supported this proposal.
We did not have a supermajority.
The four appointees by the President of the United States voted
against this proposal, but a majority of members, 10 of the 17, did
vote in favor of it. What it basically does is set up a Medicare board
to oversee a group of plans which could be, in many ways, individually
tailored to the needs of a heart transplant patient or chronic care
patient, but all having the same core benefits that we have today.
The prescription drug coverage we proposed and that a majority of
members of the Bipartisan Commission agreed to is as follows:

[[Page S9677]]

Basically, prescription drugs today are provided for about 28 million
people. Sixty-five percent of people in Medicare today have some
prescription drug coverage. How do they get it? Employer-sponsored
plans, with Medicaid and Medicare--we call for both; it is called dual
eligible--and medigap insurance.
The proposal we came up with, and hopefully we are ultimately going
to pass once we meet that challenge, is prescription drugs provided
through employer-sponsored plans today, dual eligible today, and
medigap today. This group provides about 65 percent of all Medicare
recipients, individuals with disabilities, and senior citizens with
some coverage. It can be strengthened with some coverage.
We basically say let's supplement that, let's direct our attention at
the 35 percent of people who do not, and we do that through focusing on
low income, up to 135 percent, No. 1, and, No. 2, saying anybody who is
going to come to the table and participates in a plan--Mr. President, I
ask for 2 more minutes to complete my remarks.
Mr. ROTH. I yield 2 more minutes.
Mr. FRIST. Thus, our proposal, which we have discussed, to fix the
system will supplement by offering people up to 135 percent complete
and full coverage, a high option plan for anybody who actually comes to
the table.

I present all this today to make the point that, No. 1, the money,
the budgetary framework, has been set, has been passed by the Senate.
We set aside the $505 billion specifically in the resolution; the $90
billion--the President's own plan costs only $46 billion, and we have
already addressed the problem of the money. The job of the Senate and
the Congress is to fix the system for the American people. A bipartisan
proposal that is on the table is the premium support plan.
Let's look at other plans. Let's not drop that issue. That is
unnecessary. Supporting the Kennedy amendment does not do that today.
We need to support freedom for seniors, give that freedom of choice,
that freedom to match specific needs with a plan. We need to address
Medicare. We have a plan to do that. We have already set aside the
resources to do that.
The political tactics we are witnessing do nothing to modernize
Medicare, do nothing to focus on that individual patient and the
quality of care they receive.
I close by saying that before 2 o'clock or in the next 2 to 3
minutes, I will be submitting an amendment which addresses the Medicare
issue.
The PRESIDING OFFICER. The Senator's time has expired.
Who yields time?
Mr. KENNEDY. I yield 6 minutes to the Senator from West Virginia.
The PRESIDING OFFICER (Mr. Voinovich). The Senator from West Virginia
is recognized.
Mr. ROCKEFELLER. Mr. President, I have several points to make. The
other side has talked constantly about we are going to fix the system.
We cannot do prescription drugs until we fix the system. It is a
question totally of priorities. I will put a little dose of reality
into this.
No matter what my colleagues on either side of the aisle might think,
we are not going to reform Medicare this year on a systemic basis. If
it happens the way the majority party wants, it is going to be vetoed
by the President. It is not going to happen.
The question before the Senate on this amendment is, Do we want to
take the tens of millions of Americans who have no prescription drugs
and give them the benefit of prescription drugs now through voting for
the Kennedy amendment, of which I am proud to be a cosponsor, or do we
want to say, oh, let's wait and fix the system, and then when we fix
the system, which may be 3, 4, 5, 6 years from now, we will do
prescription drugs because that is sort of neat and orderly?
The world does not work like that. The real world of the Congress and
the White House does not work like that. We are either going to do tax
cuts as they want to do it over there, or we are going to do
prescription drugs and maybe some modest tax cuts as we want to do it
over here. That is the choice that needs to be made.
The distinguished chairman of the Finance Committee, Senator Roth,
talked about catastrophic health care. He said beware of that
experience. My reaction is the opposite. Remember that experience as
the reason not to back off from making a hard choice. That was one of
the best bills on health care this Congress ever passed. The Senate did
not back off on catastrophic health insurance. Three times they tried
to repeal it in the Senate, and 3 times we had 73 votes to defeat
repeal because catastrophic health insurance was a good thing for
seniors. We did not get the message out to seniors. That was our fault.
But do not say beware of catastrophic health insurance. The House
backed off. We did not. It was good legislation.

We are here to do the right thing. The right thing is to pick between
the priorities. Do we want to wait 4, 5, 6, 8 years to fix Medicare
until we get a bipartisan consensus? People talk about a bipartisan
consensus for Medicare reform. It is not here. They talk about the
Breaux-Thomas commission, the Medicare Commission. Everybody talks
about the bipartisan thing. It was not bipartisan.
There were two Democrats who voted for it, yes, but it was not
bipartisan. There is not a bipartisan consensus on the floor of the
Senate today of what to do about Medicare, and there will not be one
until we have some more iterations which I cannot yet explain because I
am unable to.
Are we going to stand quietly by while the average senior in West
Virginia has a gross income, from all sources, of $10,600 a year, and
from which you then are to subtract $2,000, virtually all on
prescription drugs or on medical out-of-pocket expenses, leaving that
senior with $8,600 a year to live all of life? Are we going to let that
person hang until the Senate, in its ultimate wisdom, comes to a sense
of what is Medicare reform, and are we going to agree on it?
My priority is to do prescription drugs now. Pass the Kennedy
amendment. Do it now. They talk about having a $90 billion reserve. The
Senator from Tennessee said we have fixed the problem. I am very sorry
to say that that reserve talks about ``may be spent for,'' so it might
be prescription drugs, it might be disasters, it might be a whole
series of things, but there is no Medicare prescription drug benefit
that is in their plan.
In fact, if I could put it more boldly, under the Republican tax
plan, there is no money for Medicare reform. There is no money for
prescription drugs. It does not exist. I will hear arguments, and
numbers will be thrown back and forth, but that is the fact. It does
not exist. That is the reason for the Kennedy amendment--to make us
pick a priority: Tax cuts, for the most part for people who do not need
them or, in a very small measure, in a very small amount of money,
prescription drugs for people who desperately need them, who do not in
the form of a cliche but in the form of real life, have to pick each
week whether they are going to eat, have heat in their homes, or have
prescription drugs.

I say to the Presiding Officer, I say to my colleagues, try to live
on $8,600 a year, as our seniors do in West Virginia. You could not do
it. Prescription drugs are the reason the money gets so scarce for
them. We can solve that problem by passing the Kennedy amendment. I
think we have an absolute moral obligation to do so.
To wait for Medicare reform to be fully formed is a hoax upon those
people. They do not know that we do not have a consensus on how to
reform Medicare. They do know that they are hurting. They do know that
they do not have prescription drugs. And they do know that some of them
take up to 12 drugs a day, and they cost, and it is coming out of their
pockets.
Medicare has no prescription drug benefits. These seniors are not on
Medicaid; they are on Medicare. So they have nothing. So the money has
to come out of their pocket. That is wrong in America.
So the question is the priority. Are we for giving those people
prescription drugs--a modest amount of money--or are we for simply
going ahead with the $792 billion tax cut and then saying, well, we
will just wait until Medicare is reformed someday, and then perhaps we
will consider prescription drugs? I think the choice is clear.
I thank the Presiding Officer.
The PRESIDING OFFICER. Who yields time?
Mr. ROTH. I yield 2 minutes to the distinguished Senator from
Louisiana.

[[Page S9678]]

Mr. BREAUX. I thank the chairman of the Finance Committee.
I will be very brief and comment on the amendment of my good friend,
the senior Senator from Massachusetts.
I do not think there is any disagreement that we ought to have
prescription drugs in the Medicare program. But it is interesting that
the recommittal motion tells the Finance Committee to report it back in
3 days. I guess we could go over the weekend and, on Friday, Saturday,
and Sunday write a prescription drug program and modernize Medicare and
reform Medicare, but I doubt whether that is humanly possible, unless
the senior Senator from New York wants to spend the weekend doing all
of this and finishing it up by Monday morning.
There is no question that there is a need for prescription drugs in
the Medicare program. But I say to my colleagues, that is not the way
to fix Medicare. We have a program that is becoming insolvent. It is
going broke in the year 2015. Just adding more benefits to the program,
without reforming the structure of the program, is like having dessert
before you eat your spinach. It is easy to add more benefits to a
program. But bear in mind, we have a program that is structurally going
insolvent. We spend more money today than we take in. Just adding more
benefits, without taking the time to fundamentally reform the program,
is not the answer.
The distinguished chairman of the Finance Committee said he planned
to actually begin a markup in September on a comprehensive Medicare
reform bill which will include prescription drugs, doing it in a timely
fashion. I suggest that after that is reported out, that is the time to
look at how much money we need, and then pare down the tax cut, combine
the two, and have something that can be signed into law.

I think, obviously, we cannot do it in the next 3 days. I think the
chairman has outlined a program that makes more sense and that I think
is really doable.
I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. ROTH. I yield 8 minutes to Senator Domenici.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. Mr. Chairman, fellow Senators, I did not know that
Senator Breaux was going to come to the floor. I am delighted that he
has. I want to state how consistent he has been over the months by just
putting a quote from the distinguished Senator from Louisiana, a
Democrat, here for everybody to see:

Medicare must not be used as a wedge issue any longer. The
question before this Congress is not whether to cut taxes or
whether to save Medicare. That's not the choice we're facing.
I support a tax cut, targeted, and I'm dedicated to saving
Medicare. It's not an either/or position.

That is from a distinguished Senator who is on the committee that
will do both--will reform Medicare and will write the tax laws. I give
him a great deal of credit because he is a man of his word when it
comes to these issues.
Frankly, it is not correct that it is either Medicare, prescription
drugs, reform, or tax cuts. The truth of the matter is, Senator Bill
Frist has just showed you.
I hear Senator after Senator get up on that side and say there is no
money for Medicare in this budget, there is no room after the tax cut.
Let me repeat, I went back and asked the Congressional Budget Office
to do an analysis and assume that we froze discretionary spending. We
put in the tax cut, we put in the $1.9 trillion for Social Security,
and we asked them: How much money can be added to discretionary
spending and Medicare reform and still live within the estimated
surplus? And they told us--$505 billion.
I say to the seniors in this country, I believe you have witnessed
here on the floor, through the good work of Chairman Bill Roth and the
Finance Committee--I say to the seniors across America, I have seen
them produce a tax bill that I believe you will love because you care
about your sons and daughters; you care about the married members of
your family. This bill before us stops penalizing marriage for 22
million American families. I ask the seniors, isn't that a good piece
of work? It makes child care more available for your grandchildren.
Isn't that a good piece of work? It makes child care more accessible.
And guess what. The President plans to veto these--all in the name of
``we can't afford tax cuts.''
To be honest with you, the truth of the matter is, when you finish
with that Congressional Budget Office analysis, you are spending 23.4
percent of the surplus for tax cuts, you are putting the entire Social
Security surplus aside, and you still have $505 billion to be used over
the next decade for high-priority items. So for those who have come to
the floor and said there is no money, there is $505 billion over the
next decade. Do you want to use $100 billion of it for Medicare? Some
say that is too much. The President thought $46 billion was enough.
That is very interesting. We still have people talking about how much
money we are going to need to reform Medicare. I don't know how much. I
trust the Finance Committee, under the leadership of Bill Roth, to
produce a bipartisan bill. The President had proposed $46 billion as
the entire amount necessary. Remember, the chart my friend Bill Frist
put up said there is $505 billion over the next decade.

Mr. BAUCUS. Will the Senator yield?
Mr. DOMENICI. I will yield in a little bit. You want to ask about the
authenticity of my charts. I already explained it and you weren't here.
Mr. BAUCUS. I want to hear it.
Mr. DOMENICI. I heard your attack on it last night, but I was home so
I couldn't come down here.
Mr. BAUCUS. Well, you stayed away.
Mr. DOMENICI. Let me finish.
The President asked for $46 billion for the entire reform package on
Medicare. What are we talking about? Holding up a tax bill that takes
care of the married sons and daughters of our senior citizens across
America. They have children and need all these things that the Tax Code
provides? They say, we just want to do anything but give them help, so
we will even hold up their bill, claiming we are really holding it up
for you seniors because we want to take care of Medicare.
Frankly, I have nothing but compliments for the distinguished Senator
from Massachusetts, Mr. Kennedy, because he is one who is concerned
about this. But I am equally comfortable in saying I am. I think
Senator Bill Roth of Delaware is concerned about it. I think Senator
Breaux is concerned about it. Frankly, I believe we are going to have
plenty of money left over to fix that Medicare problem from that $505
billion.
Now, if the Senator wants me to explain this budget, I will explain
it right now.
Mr. BAUCUS. I have a question.
Mr. DOMENICI. That is a CBO number.
Mr. BAUCUS. The number on your chart that says CBO/Senate Budget
Committee, that is really a Senate Budget Committee number. That is not
a CBO number.
Mr. DOMENICI. Mr. President, the truth of the matter is, we can ask
the Congressional Budget Office any questions we would like. We asked
them how much is the surplus, if you freeze discretionary programs at
this year's level for 10 years. They said these are the numbers.
Mr. BAUCUS. That is correct. That is CBO.
Mr. DOMENICI. That is CBO numbers.
Mr. BAUCUS. If I might ask another question. Basically, the CBO
baseline we are all working under, House and Senate, is the baseline
which assumes that after the caps expire by 2002, spending under the
discretionary caps will proceed at inflation.
Mr. DOMENICI. That is not true.
Mr. BAUCUS. It is true. That is the assumption.
Mr. DOMENICI. That is not true, Senator. I did the budget resolution.
Mr. BAUCUS. What you have done is, you have gone back to CBO and
said, OK, let's assume that there is no inflationary increase.

Mr. DOMENICI. That is right.
Mr. BAUCUS. Which is not CBO's assumption. But what you have done is,
in order to show there may be, under your figures, there may be a $500-
, $400 billion in spending, the yellow mark, you went back to CBO and
said, I need to show a number, that yellow bunch there. What you did
was, you said, CBO----
Mr. DOMENICI. Is this off my time?
Mr. BAUCUS. Just a second. You said, OK, CBO, give me a baseline that

[[Page S9679]]

I want you to produce. What I want you to produce is a baseline that
shows no inflation after the year 2000 on spending caps up to the rest
of the 10-year period.
If you do that, of course, you get that chart. But that is not the
CBO numbers under which the Senate Finance Committee operated. That is
not the numbers under which the House operated. That is not the numbers
under which the rest of us operated. So that is why I am saying we are
not operating off the same numbers. You produced your own numbers by
telling CBO to produce them the way you wanted them produced.
Mr. DOMENICI. Mr. President, how much time do I have remaining?
The PRESIDING OFFICER. A minute of the time yielded.
Mr. DOMENICI. I ask Senator Roth, may I have 1 additional minute?
Mr. ROTH. One minute.
Mr. DOMENICI. Let me assure fellow Senators and explain what this is.
This is a true assessment of the surplus in total dollars, if you
assume that for the next 10 years discretionary spending is frozen. I
did that so we could find out how much new money is there, available to
spend, because the discretionary programs are not entitled to an
inflationary add-on. They are entitled to what we add on. If you want
to know where their numbers came from, they came from the budget
resolution we produced, which had $181 billion in discretionary
spending. That was something we came up with. I asked them to take that
out. And when they took it out, they said: Now you have this much to
spend. You have $505 billion.
If you would like to certify that and ask the Congressional Budget
Office, is this correct, they will tell you absolutely, because we got
it from them.
Mr. President, I am not going to answer questions now because I want
to finish my argument.
The PRESIDING OFFICER. There is a half minute left under the control
of the Senator from Delaware. The Senator from New York has 5 minutes
51 seconds.
Who yields time?
Mr. DOMENICI. He just yielded me a half minute.
The PRESIDING OFFICER. A half minute has been yielded by the Senator
from Delaware.
Mr. DOMENICI. Whatever baseline anybody wants to use, there is
roughly $405 billion above a freeze available to be spent on
discretionary spending and on Medicare reform. That is all we try to
show in this chart. Before you start the chart, you can spend however
much you want, but I decided to spend none so we could put in
perspective how much there is that we can spend out of this surplus,
and these are authentic numbers. They are correct, if you start with
that assumption.
I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. KENNEDY. How much time do I have?
The PRESIDING OFFICER. Five minutes 51 seconds.
Mr. KENNEDY. I yield a minute to the Senator from Montana.
Mr. BAUCUS. Mr. President, the point I am making is, those numbers
are accurate, if you believe the assumptions behind the chart. The
assumptions behind the chart are no increases, not even inflationary
adjustment, for discretionary spending over the next 10 years. I think
that is an unrealistic assumption. And it is, in effect, a reduction of
some $500 billion over 10 years. If you add in the $127 billion for
defense, that means, in effect, about a $775 billion reduction in
domestic spending. So again, he is right, if you make those
assumptions. I say those assumptions are unrealistic.
Mr. KENNEDY addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. Mr. President, to come back to a very basic and
fundamental concept, we believe it is as important to give assurances
to our senior citizens that there will be a prescription drug benefit
for them as it is to have significant tax breaks. That is what this is
about.
Those that oppose us say they have a different conclusion, a
different priority. They think tax breaks are preferable. Then they
make other assumptions in terms of what is going to be available at
some future time.
I am not going to spend the last few minutes on this dispute, because
this has been debated over the past few days, but the Wall Street
Journal, the CBO, and OMB have basically indicated that if we go
through with the kind of tax cut that is being proposed and advanced by
our Republican friends, there just won't be resources left to deal with
the elderly, the children and other priorities.
I say, why ask the senior citizens to wait? Why should they always be
the ones who have to wait? Why shouldn't we say that the Senate will
put aside the amount necessary to afford a good benefit program on
prescription drugs as part of this legislation?
We want to give them the assurance that they are going to be
protected. Why leave it iffy to the seniors? Why are they always the
ones left behind? That is the question. This is an issue of priority.
We say, if you are going to go down this road with regard to tax
breaks that benefit the wealthy, let's make sure we are going to
allocate some funds for a prescription drug benefit for the senior
citizens and disabled persons who are on Medicare.
My friend and colleague from Louisiana said we can't do that over
this period of time. Well, they are going to have a conference on the
two tax bills over the weekend. If they can have a conference on these
two bills over the weekend, they ought to be able to get together and
allocate sufficient funds for a prescription drug benefit in about half
an hour. In the Finance Committee, we know they can do that within an
hour. They can do it forthwith--introduce and report back with funds
reserved for a benefit program. But we wanted to leave this up to the
Finance Committee. This should not be a procedural issue, and it is
not. Those of us who are supporting it are telling every senior citizen
that we believe they are a priority, that their interests are
important, and that their health care needs will be met. This isn't
only an issue for the health care of the senior citizens; this matters
to their children and grandchildren. They have an interest in the
health care of their parents and grandparents.

We ought to be able to have a Finance Committee that can report back
allocations of resources and say a sufficient amount will be reserved
for prescription drugs. We will go ahead with the rest, but this is
reserved for prescription drugs for all of those in Medicare. Let the
Finance Committee work that process out, either as part of the Medicare
proposal or as a separate proposal.
This is what this is about--priorities. It is about priorities. Those
of us who are supporting it are giving the priorities to our senior
citizens.
Finally, how much time do I have remaining?
The PRESIDING OFFICER. One minute 50 seconds.
Mr. KENNEDY. Mr. President, I ask unanimous consent a group of
letters from various groups that support this motion be printed in the
Record.
There being no objection, the letters were ordered to be printed in
the Record, as follows:

The National Council

on the Aging,

Washington, DC, July 28, 1999.
Senator Edward Kennedy,
Russell Senate Office Building,
Washington, DC.
Dear Senator Kennedy: On behalf of the National Council on
the Aging--the nation's first organization formed to
represent older Americans and those who serve them--we write
to oppose the irresponsible tax cut proposal reported out of
the Senate Finance Committee and to support your amendment to
dedicate a portion of the tax cuts to a new prescription drug
benefit available to all Medicare beneficiaries.
We are deeply disappointed in the Finance Committee's
irresponsible decision to squander virtually the entire non-
Social Security surplus on a massive tax cut. If this
proposal were to become law, it would be impossible to
protect and strengthen Medicare for the future. Without
surplus or other new revenues, the Medicare program cannot
remain strong while adding a meaningful new prescription drug
benefit.
The Finance Committee tax cut proposal ignores the
impending retirement of a vast number of baby boomers. With
the Medicare population doubling by 2035 and a tax cut that
would balloon to almost $3 trillion in the second 10 years,
there would be no way to protect America's seniors, ensure
future solvency and provide adequate drug coverage. The
numbers simply do not add up.
We are also extremely concerned that such a tax cut would
lead to drastic cuts in domestic programs that vulnerable
seniors depend on. The cuts would undermine such

[[Page S9680]]

Older Americans Act programs as meals on wheels, protections
against abuse and neglect, and home care services. The
proposal clearly assumes that programs like these would be
cut significantly.
The Senate Finance Committee tax cut proposals would rob
Medicare of the funds needed for modernization and future
solvency and drastically cut programs frail seniors need to
remain independent. This massive tax cut is bad medicine for
older Americans.
We deeply appreciate your efforts to attempt to protect and
strengthen the Medicare program and its beneficiaries and to
add a meaningful new prescription drug benefit.
Sincerely,
James Firman,
President and CEO.
____

National Hispanic Council on Aging,

Washington, DC., July 28, 1999.
Hon. Edward M. Kennedy,
Russell Office Building,
Washington, DC.
Dear Senator Kennedy: The National Hispanic Council on
Aging (NHCoA), its chapters and affiliates, enthusiastically
support your amendment to the Budget Reconciliation Bill
S1429 that allows for medical prescription drugs for those in
need. Elderly, of every economic means, will greatly benefit
from this amendment.
It is our hope that the proposed cuts in taxes bill is not
approved. Rather, that these monies are used in a more
productive way benefiting those in need in general and
elderly in particular.
Sincerely,
Marta Sotomayor, Ph.D.,
President.
____

American Nurses Association,

Washington, DC, July 28, 1999.
Hon. Edward M. Kennedy,
U.S. Senate,
Washington, DC.
Dear Senator Kennedy: The American Nurses Association, the
only full-service professional organization representing the
nation's registered nurses through its 53 constituent
associations, strongly supports your amendment to S. 1429,
the Budget Reconciliation bill now being considered by the
Senate, that would direct the development and implementation
of a prescription drug benefit for Medicare.
ANA believes that enhancing the benefits package available
under Medicare, including a prescription drug benefit, would
enable beneficiaries to receive earlier, better, and more
comprehensive care. The use of part of the projected budget
surplus to pay for this benefit is an appropriate use of
those funds and is crucial to improving health and outcomes
for Medicare beneficiaries.
We appreciate your leadership on this issue and look
forward to continuing our work together to include this
amendment in the Budget Reconciliation bill.
Sincerely,
Marjorie Vanderbilt,
Director of Government Affairs.
____

National Council of Senior Citizens,

Silver Spring, MD, July 28, 1999.
Senator Edward M. Kennedy,
U.S. Senate,
Washington, DC.
Dear Senator Kennedy: The National Council of Senior
Citizens (NCSC) is following closely the debate on S. 1429,
the Finance Committee tax bill. It is important that any tax
bill this session allows for the use of some of the expected
on-budget surplus to bolster the Medicare program and create
a universal Medicare pharmaceutical benefit.
NCSC, therefore, strongly supports your motion to recommit
S. 1429 back to the Finance Committee and to enact a
pharmaceutical benefit for all Medicare beneficiaries. NCSC
believes that the Congress must use this historic fiscal
opportunity assure Medicare's solvency and to meet the
pharmaceutical needs of forty million Medicare beneficiaries.
We urge all members of the Senate to support your motion to
recommit.
Sincerely,
Steve Protulis,
Executive Director.
____

National Committee to Preserve Social Security and
Medicare,
Washington, DC, July 28, 1999.
Hon. Edward M. Kennedy,
U.S. Senate,
Washington, DC.
Dear Senator Kennedy: On behalf of about five million
members and supporters of the National Committee to Preserve
Social Security and Medicare, I am pleased to endorse your
amendment to the Taxpayer Refund Act of 1999, S. 1429. I
understand that your amendment would earmark a portion of
projected budget surpluses to establish a universal
prescription drug benefit under Medicare.
Medicare beneficiaries spend nearly three times as much on
out of pocket costs as the under 65 population, significantly
because of the absence of prescription drugs in the basic
benefits package. Three-fourths of Medicare beneficiaries
have some chronic health problems, which require ongoing
treatment with prescription drugs. Many seniors do not fill
prescriptions or skip required doses because of cost
considerations.
It is imperative that we do not squander the opportunity
presented by projected surpluses. Our first priority must be
to extend Social Security solvency, improve and strengthen
Medicare, and pay down the federal debt. Your amendment would
modernize Medicare benefits in a way that meets one of the
most pressing needs for current and future seniors. We
support your amendment and applaud your consistent leadership
on this issue.
Sincerely,
Martha A. McSteen,
President.
____

Epilepsy Foundation,

Landover, MD, July 28, 1999.
Hon. Edward M. Kennedy,
Russell Senate Office Building,
Washington, DC.
Dear Senator Kennedy: On behalf of the Epilepsy Foundation,
the national voluntary organization that works for people
affected by seizures through research, education, advocacy
and service, this is to support your efforts to provide
funding for a Medicare drug benefit program. As the Senate
considers S. 1429, The Budget Reconciliation Bill, it is
particularly important to assure that Medicare beneficiaries
with epilepsy, for whom out-of-pocket expenses for seizure
medications can be significant, have access to prescription
medications at an affordable price. We also commend your
support for other programs important to individuals with
epilepsy who may face limited financial resources, such as
Medicaid and Social Security.
As baby boomers age, there will be increasing numbers of
age-related seizure disorders. It is estimated that 61,000
new cases of epilepsy occur each year among elderly
Americans. By the year 2020, it is projected that one out of
every two people developing epilepsy will be over the age of
65.
In addition, many low-income, young, disabled individuals
with epilepsy are Medicare beneficiaries. For these
individuals, access to prescription drug coverage at an
affordable price is difficult.
I look forward to working with you to ensure that Medicare
beneficiaries with epilepsy can continue to afford to follow
their prescribed drug therapy.
Sincerely,
Eric R. Hargis,
President and Chief Executive Officer.
____

Consumers Union,

Washington, DC, July 28, 1999.
Hon. Edward M. Kennedy,
U.S. Senate,
Washington, DC.
Dear Senator Kennedy: Consumers Union supports your
prescription drug amendment which is consistent with our goal
of extending affordable prescription drug coverage to all
Medicare beneficiaries.
The need is great. The average Medicare beneficiary uses 18
prescriptions each year, and average prescription drug
spending is projected to be $1,100 in the year 2000. More
than half will spend over $500. Seniors and other Medicare
beneficiaries suffer financial hardship because of their out-
of-pocket prescription drug costs.
Private prescription drug coverage is inadequate, over-
priced, and not even available to many beneficiaries who can
be denied coverage. Only 24 percent of Medicare beneficiaries
have retiree drug coverage, and this number is expected to
decrease. Medicare HMO coverage for prescriptions is not
available in all geographic areas, and has proven unreliable
with many HMO's pulling out of the market. Some medigap
policies offer prescription drug coverage, but coverage is
very limited and the extra premium charged for a policy with
prescription drug coverage is likely to actually exceed the
maximum benefit. Our analysis of medigap policies on the
market during 1998 (for 75-year-olds) found that the average
premium for medigap plan I, which provides at most a $1,250
prescription drug benefit, was about $1,850 higher than the
average premium for medigap Plan C (which has nearly
identical benefits other than the prescription drug benefit).
This coverage represents extremely poor value for consumers.
The potential for prescription drugs to benefit those
covered by Medicare has increased substantially since
Medicare was enacted. Our nation's thriving economy and our
government's dramatically improved budget status make this
the right time to take this urgently needed step.
Sincerely,

Gail Shearer,

Director, Health Policy Analysis,
Washington Office.
____

The Gerontological

Society of America,

Washington, DC, July 28, 1999.
Hon. Edward M. Kennedy,
U.S. Senate,
Washington, DC.
Dear Senator Kennedy: This letter is written in support of
your amendment S. 1429 to the Budget Reconciliation Bill. The
Gerontological Society of America, an organization of 6,000
professionals in the field of aging, is vitally concerned
that the tax cuts as proposed in the current Budget
Reconciliation Bill will seriously jeopardize support for
prescription drug coverage under Medicare.
The cost of prescription drugs has increased at an average
of 6 percent annually and is the leading factor in today's
rising health care costs. This has particular impact on
elderly as they are more likely to be using, and even
dependent on, multiple prescription drugs.

[[Page S9681]]

I hope you are successful in convincing your colleagues to
support this important amendment.
Sincerely,
Carol A. Schutz,
Executive Director.
____

Consortium for Citizens

With Disabilities,

Washington, DC, July 28, 1999.
Re Kennedy amendment on prescription drugs.

Hon. Edward M. Kennedy,
U.S. Senate,
Washington, DC.
Dear Senator Kennedy: We are writing as Co-Chairs of the
Health Task Force of the Consortium for Citizens with
Disabilities to support your amendment to include and protect
sufficient funds within the pending Budger Reconciliation
Bill (and within the budget surplus) to allow for the design
of a new prescription drug benefit for Medicare
beneficiaries.
CCD is a Washington-based coalition of nearly 100 national
organizations representing the more than 54 million people
living with disabilities in the United States.
The five million Medicare beneficiaries with disabilities
are dependent on prescription drugs to maintain sufficient
function, control disease progression, and prevent secondary
medical conditions. It is imperative that Congress both
acknowledge the benefit need and implement appropriate
budgetary policies to begin to lessen the cost burden on the
nation's most vulnerable populations.
Sincerely,
Shelley McLane,
National Association of Protection and Advocacy Systems.
Jeff Crowley,
National Association of People with AIDS.
Bob Griss,
Center on Disability and Health.
Kathy McGinley,
The Arc of the United States.
____

National Association of

Area Agencies on Aging,

Washington, DC, July 28, 1999.
Hon. Ted Kennedy,
U.S. Senate,
Washington, DC.
Dear Senator Kennedy, The National Association of Area
Agencies on Aging (N4A) supports your amendment to the tax
legislation currently on the Senate floor which recognizes
the need for a universal prescription drug benefit for
Medicare recipients.
The largest out-of-pocket expenditure for Medicare
beneficiaries is for drug coverage. Many beneficiaries are
required to pay for their own prescriptions at a time when
the cost of medication is rising sharply. Medicare needs to
be modernized to recognize the remarkable advances in
preventing and treating illnesses through drugs since the
program's inception in 1965 and N4A applauds your efforts in
this direction.
N4A is the umbrella organization for the 655 area agencies
on aging (AAAs) and 230 Title VI Native American aging
programs in the U.S. Through its presence in Washington,
D.C., N4A advocates on behalf of the local aging agencies to
ensure that needed resources and support services are
available to older Americans. We look forward to continuing
to work with you on all endeavors that promote the dignity
and independence of older Americans.
Sincerely,
Janice Jackson,
Executive Director.
____

American Thoracic Society,

American Lung Association,

Washington, DC, July 28, 1999.
Hon. Edward M. Kennedy,
U.S. Senate, Washington, DC.
Dear Senator Kennedy; We have learned that during
consideration of the Senate tax bill, you intend to offer a
motion to recommit the bill to the Senate Finance Committee
with instructions for the committee to develop financing for
the establishment of a Medicare pharmaceutical benefit. The
American Lung Association and its medical section, the
American Thoracic Society, strongly support your efforts to
move the issue of a Medicare pharmaceutical benefit to
forefront of Congressional activity.
America's seniors need prescription drug coverage under the
medicare program. Far too often, Medicare beneficiaries are
forced to choose between purchasing the drugs they need or
paying for food and housing. This intolerable dilemma is not
just a problem for a few low-income seniors. It is a chronic
problem being faced by middle class senior citizens.
While there are a number of difficult issues that must be
resolved before Congress can move forward with the creation
of a much needed Medicare pharmaceutical benefit, no issue is
more difficult than determining how to pay for the new
benefit.
Congress now faces a wonderful opportunity. The expected
budget surpluses has created a rare opportunity for Congress
to address one of the most glaring inadequacies in the
Medicare program, the lack of a drug benefit. Before Congress
can responsibly consider any tax cut, Congress must first
ensure that federal resources exist to provide prescription
drugs to our nation's senior citizens. Recommitting the
Senate tax bill to the Senate Finance Committee is an
appropriate first step in this process.
Again, thank you for your leadership on this process.
Again, thank you for your leadership on this issue.
Sincerely,
Fran DuMelle,
Deputy Managing Director.
____

National Osteoporosis Foundation,

Washington, DC, July 28, 1999.
Hon. Edward Kennedy,
U.S. Senate, Washington, DC.
Dear Senator Kennedy: This is in support of your
prescription drug amendment to the tax bill.
The National Osteoporosis Foundation (NOF), the only non-
profit, voluntary health organization solely dedicated to
eradicating osteoporosis, represents 250,000 members. To NOF
it is far more important that seniors receive the protection
they need under Medicare than it is for Americans to receive
a tax cut. First we need to protect our senior citizens and
people with low incomes before we provide tax breaks for
people of means.
Sincerely,
Bente E. Cooney, MSW
Director of Public Policy.

Mr. KENNEDY. Mr. President, virtually every major organization that
represents senior citizens or persons with disabilities is in urgent
support of this particular motion.
They know what is happening. There isn't a Member who hasn't gone
home and met with seniors in the state that doesn't know what is
happening. It is not good enough to say we care about it and we will
handle it some time in the future. You have a chance to handle it now,
in the next 15 minutes.
We have a chance to put the Senate of the United States on record and
say: OK, we will work the details out now, but we are going to allocate
the resources for it. We don't have to do as my friend and colleague
from Tennessee says--that we can wait until after 10 years and see
where we are; or as our friend from Louisiana said, we can deal with
this some time in the future.
The seniors deserve better. They need an answer and they need it now.
They need a message from the Senate that says we hear you, we know what
is of concern to those who have made this the great country that it is.
They deserve this kind of a protection.
There is an enormous need and incredible consequences. It is a matter
of life and death for many senior citizens. Let us say that it is at
least--at least--as important to guarantee that there will be funding
for prescription drugs as it is for a tax benefit. Many of us believe
it is more important, but with this motion to recommit the bill we are
saying it is at least as important as the tax cut bill itself. I hope
this motion will be accepted.
Mr. ROTH. Mr. President, has all time on both sides expired?
The PRESIDING OFFICER. Yes.
Mr. ROTH. Mr. President, I make a point of order against the
amendment under section 305 of the Budget Act on the grounds that it is
not germane.
Mr. KENNEDY. Mr. President, pursuant to section 904 of the
Congressional Budget Act of 1974, I move to waive the applicable
section of that act for consideration of the pending motion.
I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.

Amendment No. 1405

The PRESIDING OFFICER. Under the previous order, the Senate will
return to the consideration of the amendment of Senator Gramm of Texas.
There will be 2 minutes of debate, to be equally divided.
Mr. ROTH. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. ROTH. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

Unanimous Consent Agreement

Mr. ROTH. Mr. President, I ask unanimous consent that,
notwithstanding the filing requirement, it be in order for the manager
to offer an amendment that has been cleared by both managers.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MOYNIHAN. Mr. President, it is not a matter of one side of the
aisle or the other on Senator Gramm's amendment. Now for the first
time, we find

[[Page S9682]]

ourselves in complete agreement with the chairman of the Finance
Committee, that the amendment is a disaster. We don't have to
characterize the existing proposal, but it is not everything we would
hope for. That is something even the chairman would dread, and he is
right to do so. I think we are right in a situation such as this to
overcome partisanship. It would be wicked, indeed, to join the Senator
from Texas, and then where would we be? But we won't. I hope on our
side we will support the chairman of the Finance Committee and show him
that we share his view of the unacceptable extravagance of the
proposal, the amendment of the Senator from Texas, which will soon be
voted on.

Mr. ROTH. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SARBANES. Mr. President, will the Senator yield for a question?
Mr. MOYNIHAN. Yes.
Mr. SARBANES. I ask the ranking member on the Finance Committee this
question with respect to the Gramm amendment. In the course of the
debate, was there any discussion on what this amendment would cost--not
in the first 10 years but in the next 10 years?
Mr. MOYNIHAN. I think there was not. Were there such a debate and
discussion, it would have been chilling.
Mr. SARBANES. This is the great exploding tax cut. I was looking at
the very document the Senator from Texas himself distributed. It is
clear that the marginal income tax rate cuts don't go fully into effect
until the year 2008. By his own figures, it would cost $73 billion in
the first 5 years, and $451 billion over 10 years; and it is not
getting into full effect until right near the end of the 10-year
period. So if you extrapolate out, you are going to have an incredible
increase in its cost.
The same thing is true with virtually every provision that is in this
amendment, with one exception. All of the others get phased in. They
don't take full effect until close to the end of the 10-year period.
Then you are given these cost figures which, of course, are over the
range of the period. So, obviously, in the next 10-year period, these
tax cuts are going to explode out of sight and put the Nation right
back into the deficit box. Is that not a reasonable analysis, I ask the
ranking member?
Mr. MOYNIHAN. The measure before us, which is moderate by the
standards of the proposal of the Senator from Texas, would cost in the
outyears, in the second decade, $3 trillion.
Mr. SARBANES. Not that of the Senator from Texas, but the other one.
Mr. MOYNIHAN. Start with the $3 trillion and think what that would
add.
Mr. SARBANES. That is right; exactly. It would literally explode out
of sight.
Mr. MOYNIHAN. Three trillion dollars is the Department of Treasury
figure.
Mr. SARBANES. I thank the Senator.
Mrs. BOXER. Mr. President, will my colleague yield for a question?
Will the Senator from New York yield for a question that has to do with
a parliamentary procedure?
I wonder if he could enlighten the Senator. Perhaps Senator Roth
could. I thought we were under a unanimous consent to go to a vote. Has
that been laid aside?
Mr. MOYNIHAN. We are delinquent and derelict and behind the times.
Mrs. BOXER. Is there any way to get us back on schedule and no longer
delinquent and behind the times?
Mr. MOYNIHAN. The Senator from California has made her point.
Mr. ROTH. Mr. President, I make a point of order that a quorum is not
present.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. ROTH. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. Mr. President, I yield the remainder of time on behalf of
Senator Gramm.
Mr. MOYNIHAN. Mr. President, I make a point of order against the
amendment that we are about to vote on under section 305 of the Budget
Act on the grounds that it is not germane.
Mrs. HUTCHISON. Mr. President, I move to waive the Budget Act for
consideration of the Gramm amendment and ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The question is on agreeing to the motion to
waive the Congressional Budget Act in relation to the Gramm amendment
No. 1405. The yeas and nays have been ordered, and the clerk will call
the roll.
The legislative clerk called the roll.
The yeas and nays resulted--yeas 46, nays 54, as follows:

[Rollcall Vote No. 230 Leg.]

YEAS--46

Abraham
Allard
Ashcroft
Bennett
Brownback
Bunning
Burns
Campbell
Cochran
Coverdell
Craig
Crapo
DeWine
Enzi
Fitzgerald
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Stevens
Thomas
Thompson
Thurmond
Warner

NAYS--54

Akaka
Baucus
Bayh
Biden
Bingaman
Bond
Boxer
Breaux
Bryan
Byrd
Chafee
Cleland
Collins
Conrad
Daschle
Dodd
Domenici
Dorgan
Durbin
Edwards
Feingold
Feinstein
Graham
Harkin
Hollings
Inouye
Jeffords
Johnson
Kennedy
Kerrey
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Mikulski
Moynihan
Murray
Reed
Reid
Robb
Rockefeller
Roth
Sarbanes
Schumer
Snowe
Specter
Torricelli
Voinovich
Wellstone
Wyden
The PRESIDING OFFICER. On this vote the yeas are 46, the nays are 54.
Three-fifths of the Senators duly chosen and sworn not having voted in
the affirmative, the motion is rejected.
The point of order is sustained and the amendment falls.
Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
Mr. NICKLES. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
Mr. MOYNIHAN. Mr. President, I do ask we might have order.
The PRESIDING OFFICER. The Senate will please be in order. The
Senator from New York.
Mr. MOYNIHAN. Mr. President, I believe another vote is scheduled.

Motion To Recommit

The PRESIDING OFFICER. The Senate will be in order. There are 2
minutes evenly divided for the motion submitted by the Senator from
Massachusetts. Who yields time?
The Senator from Massachusetts.
Mr. KENNEDY. Mr. President, can we have order? I will just take one
moment.
Mr. President, when the Medicare program was agreed to in 1965, it
was intended to provide health security for the seniors in this
country. Now it still is a vital force, but there is a major element
that is missing, and that is the prescription drug coverage.
There are no senior citizens, unless they are on Medicaid, who have a
prescription drug benefit that is reliable, dependable, and affordable.
This particular motion says we believe, those who support it, that as a
part of this tax cut there ought to be set aside funding for a
prescription drug benefit. We do not believe a tax cut has a higher
priority than providing a prescription drug benefit for our seniors.
But what we do say is the Finance Committee should set aside sufficient
funds, and that the program can be developed later in this term. The
motion ensures that funds will be earmarked to provide our senior
citizens with a reliable, dependable, affordable prescription drug
benefit.
Make such a fund part of this whole program. Do not take a chance
there will be some funds down the line. Do not ask our seniors to wait
any further.

[[Page S9683]]

They have waited long enough. They need this; they depend on it.
Prescription drugs are a lifeline for our senior citizens.
I hope this motion will be passed as part of a tax program, and that
there will be a designated fund available for a prescription drug
program for all Medicare beneficiaries.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. I yield the time to the distinguished Senator from
Tennessee.
The PRESIDING OFFICER. The Senator from Tennessee.
Mr. FRIST. Mr. President, I rise in opposition to the motion of the
Senator from Massachusetts for several reasons. First and foremost,
this very body has already set aside funds specifically for Medicare
modernization and specifically for inclusion of prescription drug
coverage. The congressional budget plan has given us the figure of $505
billion. In our resolution passed just 2 months ago, we have $90
billion set aside specifically. The President's own proposal, his own
proposal for Medicare prescription drug coverage, is $46 billion, much
less than the $90 billion we have already directed to this cause.
We need to focus on fundamental modernization, repair of the Medicare
system to include prescription drug coverage. That is something that is
before us, not this issue of money just for prescription drug coverage.
I urge its defeat.
The PRESIDING OFFICER (Mr. Fitzgerald). The question is on agreeing
to the motion to waive the Budget Act with respect to the Kennedy
motion to recommit S. 1429.
The yeas and nays have been ordered.
The clerk will call the roll.
The legislative assistant called the roll.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
who desire to vote?
The yeas and nays resulted--yeas 45, nays 55, as follows:

[Rollcall Vote No. 231 Leg.]

YEAS--45

NAYS--55

Abraham
Allard
Ashcroft
Bennett
Bond
Breaux
Brownback
Bunning
Burns
Campbell
Chafee
Cochran
Collins
Coverdell
Craig
Crapo
DeWine
Domenici
Enzi
Fitzgerald
Frist
Gorton
Gramm
Grams
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Kyl
Lott
Lugar
Mack
McCain
McConnell
Murkowski
Nickles
Roberts
Roth
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Stevens
Thomas
Thompson
Thurmond
Voinovich
Warner
The PRESIDING OFFICER. On this vote the yeas are 45, the nays are 55.
Three-fifths of the Senators duly chosen and sworn not having voted in
the affirmative, the motion is rejected. The point of order is
sustained and the motion falls.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, I yield time to the distinguished Senator
from Rhode Island.
Mr. STEVENS. Parliamentary inquiry.
The PRESIDING OFFICER. The Senator from Alaska.
Mr. CHAFEE addressed the Chair.
The PRESIDING OFFICER. The Senator from Rhode Island.

Amendment No. 1442

(Purpose: To make an amendment in the nature of a substitute)

Mr. CHAFEE. Mr. President, the time in favor of this amendment will
be controlled by Senator Breaux for both Democrats and Republicans.
I commend Chairman Roth for his hard work in crafting the Taxpayer
Refund Act. I was pleased to support that and defend it in the Finance
Committee. It is a carefully balanced, equitable bill that will provide
targeted tax relief to all Americans. It has several features that I
would like to point out.
First, it gives a generous tax deduction to millions of Americans
whose employers do not provide health insurance. In other words, those
who buy insurance through a company, but the company itself does not
pay for the insurance, this helps make that deductible.
Second it corrects a flaw in the alternative minimum tax which, if
left uncorrected, will result in the application of the alternative
minimum tax to millions of American families who currently don't pay
it.
Third, the bill contains some very important environmental and urban
renewal initiatives. Despite all the meritorious provisions in the bill
of Senator Roth, I believe $800 billion in tax cuts is too big. What if
the budget surpluses needed to pay for these reductions don't
materialize? Does any one of us believe that Congress can or should
hold discretionary spending to nearly $600 billion below current levels
over the next decade?
What about the fact that we are now in the middle of, or perhaps at
the end of, who knows, the longest burst of economic prosperity in our
peacetime history? Is that going to continue unabated? Nobody can tell.
Nobody has a crystal ball that will give an accurate answer.
So I am simply not comfortable with rebating more than half of the
projected non-Social Security surplus in tax cuts. That is why, along
with fellow members of the Finance Committee, Senators Breaux, Jeffords
and Kerrey, as well as a number of other moderate Senators from both
sides of the aisle, I have joined in sponsoring a $500 billion
bipartisan alternative tax cut amendment.
This bipartisan alternative is a good, solid package. It would
provide broad-based tax relief for middle income tax payers and
families. It would increase the standard deduction to $4,350 for joint
filers, $2,150 for heads of households, and $1,300 for single filers.
These increases in the standard deduction would have the effect of
simplifying tax preparation for some 9 million households. Our
bipartisan alternative contains the historic homeowner credit that I
mentioned earlier. That is an outstanding provision and certainly will
be of assistance in curbing urban sprawl.
If we are serious about passing a tax cut this year, I believe our
bipartisan alternative is the right way to go. It would provide
carefully targeted, well-deserved tax relief to the American people but
for $300 billion less than either the House or Senate bills. There is
no doubt in my mind that President Clinton will veto an $800 billion
tax cut package, particularly one that resembles the House-passed bill.
What is more, his veto will be sustained. All of that puts us right
back at square one. All of this maneuvering could be avoided by the
acceptance now of this sensible bipartisan alternative that is being
proposed. I hope my colleagues will support that bipartisan
alternative.
I thank the Chair, and I thank Senator Breaux and yield the remainder
of my time to Senator Breaux.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, I yield myself 5 minutes.
Senator Breaux and Senator Chafee have thoughtfully crafted an
amendment that offers a $500 billion tax cut. As with the alternative
introduced yesterday by my friend, the distinguished ranking member of
the Finance Committee, Senator Moynihan, Senator Breaux's amendment
demonstrates that there is agreement on both sides of the aisle
concerning the need to give individuals and families a well-deserved
tax refund from the $3.3 trillion surplus.
I appreciate the fact that Senator Breaux, with his amendment, offers
a deeper cut than the alternative introduced yesterday, but I am
concerned that it still does not go far enough. It does not go far
enough in providing the much needed relief Americans require to meet
the necessary and important priorities in their lives. It does not go
far enough to offer broad-based tax relief that will be necessary to
gain the bipartisan support needed to pass this bill in the Senate.
For example, Mr. President, the Breaux amendment does not lower the

[[Page S9684]]

15-percent tax bracket. Instead, it simply expands it by only $2,500
for individuals and $5,000 for joint returns. And this benefit is only
available for people who do not itemize. This means that if you take a
deduction for home mortgage interest you will not receive a tax rate
cut, under this bill. Additionally, because the 15-percent bracket is
not reduced, the tax relief is not felt by middle-income taxpayers in
that bracket, nor is there a reduction for those paying taxes in the
higher brackets.
The Taxpayer Refund Act of 1999 cuts the 15 percent rate to 14
percent and broadens the 14-percent bracket by twice as much as what
the Breaux amendment would do at the higher 15-percent rate.
The Breaux amendment also falls short when it comes to providing
family tax relief. For example, the Taxpayer Refund Act offers $222
billion for family tax relief. The Breaux bill only provides $43
billion. When it comes to providing families with the relief they both
need and deserve, the amendment offered by Senator Breaux is only 20
percent of the relief offered in our more complete package.
As with relief to families, this amendment also comes up short in
providing health care relief. Where the Taxpayer Refund Act offers $52
billion in health-related cuts, this amendment offers only $32 billion,
or roughly $20 billion less. The Shortfall can be seen in specific
areas such as long-term care, where this amendment would not allow an
employer to provide such long-term care coverage as part of its
employee benefits package.
Another important difference between the Taxpayer Refund Act and this
amendment is the area of estate tax relief. We have heard eloquent and
persuasive arguments these past two days concerning how important it is
that Congress provide American families with relief from death taxes.
And our legislation offers almost $63 billion in relief. This will help
countless families save the businesses, farms, and ranches that have
been built by parents and grandparents.
It is good for these families, and for America, as it protects their
work and sacrifice. Unfortunately, this amendment only contains a third
of the relief that these families would receive from our legislation.
Mr. President, I compliment Senator Breaux for the work he has done
on this amendment. It certainly offers more than the alternative that
the Senate voted against yesterday. Like yesterday's alternative, it
shows that there is bipartisan support for relief, but it does not go
far enough. It does not go far enough in the area of family tax relief.
It does not go far enough in the area of savings and investment. It
does not provide enough health care tax relief, nor does it provide
enough relief against death taxes.
As I said when I spoke against the Democratic alternative yesterday,
the Taxpayer Refund Act of 1999 is built on the proposition that the
income Americans earn belongs to them; that when government sets a
budget and receives revenues in taxes to meet the budget obligations,
government--by the will of the people--receives what it needs to pay
the bills; and that when the people have given government more than
what the budget calls for, well, then that money should be returned to
the people.
It's that simple, Mr. President. And with that understanding,
Congress passed a budget resolution authorizing the Finance Committee
to cut taxes by $792 billion over 10 years. The Finance Committee, with
bipartisan support, met that responsibility and, as a result, has
offered the Taxpayer Refund Act of 1999. What we have offered is a
broad-based tax relief plan that will benefit all Americans--one that
is fair, constructive, and empowering.
Our plan will help restore equity to the tax code and provide
American families with the relief and resources they need to meet
pressing concerns. It will help individuals and families save for self-
reliance in retirement. It will help parents prepare for educational
costs. It will give the self-employed and under-insured the boost they
need to pay for health insurance. It will begin to restore fairness to
the tax code by eliminating the marriage tax penalty.
These are all important goals. And, as with the Democratic
alternative, this amendment also falls far short of accomplishing all
that we do with our broad-based plan. This amendment will leave many
taxpayers without the relief they deserve. For that reason, I encourage
my colleagues to vote against it.
Mr. BREAUX addressed the Chair.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. BREAUX. How much time remains?
The PRESIDING OFFICER. The time does not begin to run on the
amendment until the amendment is actually called up.
Mr. BREAUX. Mr. President, I ask for the reporting of the amendment.
The PRESIDING OFFICER. The clerk will report.
The legislative clerk read as follows:

The Senator from Louisiana [Mr. Breaux], for himself, Mr.
Chafee, Mr. Kerrey, Mr. Jeffords, Mr. Torricelli, Mr.
Specter, Mr. Bayh, Ms. Snowe, Mrs. Lincoln, and Ms. Collins,
proposes an amendment numbered 1442.

Mr. BREAUX. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
(The text of the amendment is printed in today's Record under
``Amendments Submitted.'')
The PRESIDING OFFICER. There is 1 hour for the sponsor and 1 hour for
the opponents.
Mr. BREAUX. Mr. President, I yield myself 5 minutes.
Mr. President, I suggest it is time for a reality check by Members of
both parties as to where we are and what we are attempting to do.
We in the United States in this period of time are in a very unique,
and I would also say very unusual, position in the sense that other
countries around the world would love to have the problem that is
facing all of us in the Senate this afternoon: We are faced with a
country that has a $1 trillion surplus.
That is a problem that most countries would love to have. It is a
problem because we are now faced with the question of what we are going
to do with a $1 trillion surplus. Some have said all of it should be
used in the form of a tax cut and given back to the American people. We
can argue about how they do that. But, for the moment, let's just say
they have decided all of it should go for a tax cut. Some on my side of
the aisle say, no, we can't do that. It should be a very small tax cut,
and the rest should be reserved for other functions of Government.
I point out to my colleagues what I think the rest of the American
people already fully realize. They know if the proposal on that side of
the aisle--an $800 billion tax cut--should pass and get sent to the
President, it is clearly going to be vetoed, and nothing will result
from this other than a debate. We will end up with nothing more than a
political argument to make against each other. If we pass the
Republican bill, and it ultimately goes to the President, there will be
a big ceremony in the White House where he will veto that piece of
legislation. He will then have a powerful political argument to say the
Republican Party has wasted the trillion dollar surplus. There are some
on the Republican side of the aisle who will say that is a great
argument. The White House and administration will blame the Republicans
for wasting the trillion dollars and giving an unnecessary and
unrealistic tax cut that is targeted to the wealthiest people in this
country. That is a great argument for us.
While the political parties may have a short-term political gain, I
suggest that the real losers, if this is what is going to happen, are
the American people because they end up with nothing --no tax cut, no
decision on how to spend the surplus, with no money being allocated to
real Medicare reform, and no pressure to continue to work on a Medicare
reform program.
I suggest there is a different way we can look at this problem
instead of a political opportunity. We can look at it as a policy
opportunity to do something realistic, and that is what the amendment
before this body does.
It is a $500 billion tax cut that is targeted to people who really
need help in this country. There are some arguments that say the polls
tell us the people don't want any tax relief. If you explain it
properly when you go back, people do need help. People in the middle-
income brackets would like to have

[[Page S9685]]

a greater standard deduction than they have now. People on the edge of
being kicked up into the 28-percent bracket would like to stay in the
15-percent bracket and work harder and earn more for their family.
People would like to see more tax assistance for education and help for
the 43 million Americans who work every day and can't afford to buy
health insurance because they work for a company that doesn't provide
them health insurance. We have carefully tailored the $500 billion to
help those people.

Our legislation helps people buy health insurance. It helps people
avoid the ridiculous marriage penalty by eliminating it and increasing
the standard deduction. That is a tax policy that should have an
opportunity to become law, because while we spend $500 billion over the
next 10 years to help people who need help the most, we also reserve
$500 billion for other priorities of Government, to do something on
Medicare, which needs to be reformed. The chairman says we will do
something in September, and that is a very courageous position to take.
But there will be money to pay for what is needed for Medicare. There
will be a $500 billion pot of money to go to cover the very necessary
discretionary spending needs in this country.
So we are offering something, according to a reality check, that has
the potential to become law as opposed to being merely a political
statement on both sides of the aisle. Unfortunately, people in both
parties have taken the position: It is my way or no way.
We were sent here not to do political statements and take political
positions only, but to work together to resolve differences and come to
an agreement on public policy. I happen to think public policy is good
politics. But good politics is not necessarily good policy. We have a
choice today, in the next couple of hours, to determine whether we are
going to be interested in good politics in the short term, or whether
we are going to try to work together to reach an agreement that can
become law and become policy for the American people.
There are very few things in life that are either all one way or the
other way. Anybody who has been around for a short period of time knows
that. Certainly, when we are discussing what to do with $1 trillion,
there are a lot of good ideas. But we have to conclude that neither
side is completely right. There has to be a blend of different ideas
and philosophies in order to come together in a democracy and reach
something that can become law and, ultimately, good public policy. Then
the argument will be over success, as opposed to an argument over
failure. The track we are on now leads us to go back and tell our
people it was their fault that nothing was done. That is arguing over
failure as opposed to arguing about success and who was able to bring
that to the American people.
Mr. President, I reserve the remainder of my time.
The PRESIDING OFFICER. Who yields time?
Mr. ROTH. Mr. President, I yield 10 minutes to the distinguished
Senator from Minnesota.
The PRESIDING OFFICER. The Senator from Minnesota.
Mr. WELLSTONE. I thank the Senator from Delaware.
Mr. President, I was listening to my colleague, Senator Breaux from
Louisiana, and I want to respond to what he said because he said it--
like he says everything--very well, regarding the whole question of
reality tests and good politics versus good policy.
I speak against this amendment, not for the sake of good politics but
for the sake of good policy. I speak against this amendment
understanding that reality test, as I think about the lives of people
in our country. I want to say one more time on the floor of the
Senate--and I have said it a couple of times--that I do not understand
this kind of bidding war on tax cuts. I understand very targeted tax
cuts to those citizens who need it the most. I understand very targeted
tax cuts that speak to the concerns and circumstances of hard-pressed
working families. But I think the vast majority of people in the United
States of America--and I think this is the meaning of the poll about
tax cuts--are saying this: You all are sort of--I don't know what the
word is--trying to pander to us and you have this argument that you
have made for years--I am not saying all colleagues for this amendment
have made this argument for years, but it goes something such as this:
This money belongs to the people, and we are going to give it back to
you, whatever there is in surpluses, which, of course, is all based
upon assumptions we make. And, hopefully, these assumptions will be
borne out about economic performance.
I really think the vast majority of people in Minnesota and the vast
majority of people in the country are saying this belongs not to us but
to our children and grandchildren, and whatever you have by way of
surpluses--now we are focusing on the non-Social Security surplus--put
it into reducing the debt to get the debt off the backs of our
children. Make sure there will be Social Security and Medicare for our
children and our grandchildren as it has been there for us; and,
finally, make sure that our children and grandchildren are going to
have the same opportunities we have.
We can't do that. I came to the floor the other day and said about my
own party's proposal at $300 billion--$200 billion less than $500
billion--that we can't do all of that and have these tax cuts to the
tune of $500 billion at the same time. It doesn't add up.
To use the old Yiddish proverb, ``You can't dance at two weddings at
the same time.''
If you look at the non-Social Security surplus, three-quarters of it
is based upon cuts or the caps in domestic spending.
We say we are concerned about veterans' health care, we want to have
community policing, we want to have environmental cleanup, we certainly
want to make sure we deal with what is becoming a crisis of affordable
housing, and then all of us are forever and ever and ever talking about
children and education. We talk about all those people who do not have
any health insurance. We talk about prescription drug benefits for the
elderly. How are we going to do all of that at the same time that we
are going to have $500 billion of tax cuts? We are not.
With the Democratic proposal the other day on the floor with $300
billion of tax cuts, we were still several hundred billion dollars
under where the caps take us. In other words, we were several hundred
billion dollars--I think close to $300 billion--short of making up the
cuts in discretionary spending. With the $500 billion it is worse.
I want to know where the give is going to be.
In all due respect, as I look at the pattern of our powerlessness in
America today, it is a very distorted pattern of power. I know the
Pentagon will get its resources. I know we will make sure that we
invest in transportation.
I can just imagine with the squeeze on--that is exactly what you are
going to have, deep cuts in discretionary spending for a decade, and
then God knows where this takes us in the next decade--what is going to
be cut.
We are going to go from 1 percent Head Start funding--pre-3-year-
olds, Early Head Start funding--to less than 1 percent. We are going to
go from 40 percent, or a little over 40-percent funding for Head Start,
ages 2 to 5, to less than 40 percent. We are going to go from barely
covering 20 percent of affordable child care needs for low-income
families--much less moderate income and much less working families--to
less than 20 percent.
That is the problem with this amendment.
My colleague from Louisiana said it is a compromise. It is a reality
test. It is a compromise between the political center of gravity of
where Republicans are and where Democrats are, but it is not based upon
where I think the political center of gravity is in the country. I know
that sounds presumptuous. Maybe it even sounds arrogant. I swear that I
don't mean it to be. But I really believe the vast majority of people
in our country are for tax cuts that are very targeted, that speak to
the concerns and circumstances of really hard-pressed families, and
they want to see the rest of us deal with Medicare. They want to make
sure we have Social Security, and people want to see some investment in
our children. They want to see opportunities for children in this
country. We can't do it with this.

We have several hundred billion dollars more--well over $300 billion
more--of cuts in discretionary spending if we go for their $500 billion
package. Where are we going to cut? You mean to tell

[[Page S9686]]

me that now we are putting a straitjacket on ourselves and boxing
ourselves in such a way that we are not even going to be able to make
any of these kinds of investments in health, skills, intellect, and
character of our children? We are not going to be able to it.
I don't see this as being any kind of reality test amendment. I think
this is not at all based upon where most people in the country are. I
don't think it is based upon what we have to do as a nation.
I think in the next century we have to grow together. I think in the
next century, by the year 2030 or 2040 or 2050, we have to make sure
the next century belongs to our children and our grandchildren. We have
to make sure they get the best education. We have to make sure they
have the best skill development. We have to make sure they are healthy.
We have to make sure they are productive. We have to make sure there is
less violence in their lives; that they grow up to be independent,
resourceful, self-reliant, morally responsible and democratic citizens.
That is what we ought to be doing with whatever kind of surplus we
have.
We certainly shouldn't be supporting a proposal with $500 billion of
tax cuts that will crowd out all of that investment, especially when it
comes to the most vulnerable citizens in our country.
I hope this amendment will be voted down.
I yield the floor.
The PRESIDING OFFICER. The Senator from Delaware.
Mr. ROTH. Mr. President, I yield 6 minutes to the Senator from
Oklahoma.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. Mr. President, first I would like to thank my colleague,
Senator Roth, for his management of this bill and for bringing this
bill to the floor of the Senate. I am going to talk preliminarily about
the bill.
First, let me say to our colleagues who are offering the $500 billion
substitute that I compliment them for the fact that they are trying to
work to reduce taxes. I think that is important. There are several
provisions they have in their bill that I compliment them for.
Most of all, I want to talk about the bill that is before us, the
bill as reported out of the Finance Committee by a vote of 13-7. That
was a bipartisan vote. I think that is important.
Again, I think that happened in large part because of the Senator
from Delaware and because of the content of the bill. I think that
maybe we spent too much time talking about numbers. Maybe that is
partly my fault. I like talking about numbers. We have a $3 trillion
surplus. We are going to give a tax cut of $782 billion. That is about
25 cents on the dollar.
We are going to take two-thirds of the surplus and use that for debt
retirement. That is good.
Some people say: Wait a minute. You are not reducing the debt enough.
We reduced the debt more than Clinton's proposal. Maybe that is good. I
think that is probably good.
Concerning the tax cut and total of the estimated surplus: Some
people may say: Maybe the estimates aren't right. Maybe they are too
optimistic. And even though we are only taking one-fourth of the
surplus and allowing people to keep it, they don't want to give it back
to the taxpayers. They'd rather spend it.
Well, that is not what a tax cut is. A tax cut let's people keep more
of their money. They do not have to get it back from Washington, DC. Is
it their money, or is it Washington's money? It is their money. Is it
not a gift from us. We are taking it from them right now. In some cases
we are taking too much. In some cases the taxes we are taking from
people are unfair.
I am going to talk about that because the bill we have before us
alleviates some of those problems. It doesn't solve all the problems,
but it alleviates some of the problems. Is it the best bill imaginable
and perfect? No. But it does go a giant step toward eliminating
inequities and injustices in the tax bill. I say ``injustices.'' There
are some cases in the 1999 Tax Code where the taxes are unfair.
It is absolutely unfair for a married couple to have to pay more
taxes than if they were living together and unmarried. It is unfair to
have a tax penalty for being married--absolutely unfair. That is in the
Tax Code today.
The bill of the Senator from Delaware eliminates that. We want to get
rid of it.
Unfortunately, that doesn't happen under the Democrats' proposal. Let
me talk about that for a second.
Somebody says: Well, you eliminate the marriage penalty. What does
the House do? The House basically doubles the exemption for single
people and for couples. That is one way of taking care of the
exemption. But it doesn't eliminate the fact that a lot of people have
combined incomes that push them into higher income brackets.
For example, an individual with a taxable income of $25,000 is taxed
at 15 percent. Anything above that, they are taxed at 28 percent. That
is kind of simple.
Let's say you have two teachers who are married, and they have a
taxable income of $25,000. If they file as individuals, they are both
taxed at 15 percent. If they are married, their combined income pushes
them into a 28-percent tax bracket. They are penalized.
It just so happens, as it works out, that in this case they are
penalized $1,400.
Where did I get that?
They have a combined income of $50,000. A 28-percent tax bracket
actually kicks in at $42,000. They have $8,000 that is taxed at a 14-
percent rate. It is higher than what somebody is paying at the 14-
percent rate. Senator Roth's bill moves the bottom rate from 15 to 14.
The difference between 28 and 14 is 14 percent. Fourteen percent
times the number of thousands, if it is $10,000, that is $1,400.
This hypothetical couple pays an additional $1,400 more per year for
being married. We shouldn't penalize them for that.

In the bill each couple has the option of being taxed individually.
If one member of the couple is taxed at 28 percent, fine. It doesn't
mean the next spouse has to be taxed at that rate as well. Maybe the
income of that spouse, male or female, might be significantly lower. It
would be taxed at a lower rate. Why tax them at the highest rate? We
shouldn't do that. We eliminate that in this bill. That is not
insignificant.
The example I gave was a $1,400 differential. CBO says the average
marriage penalty is $1,400. We should be able to eliminate that, and we
do eliminate it in this bill. Who benefits? Nineteen million married
returns would have that inequity eliminated. That is in this bill.
Let me talk about the 14-percent bracket expansion. I wasn't
particularly fond of this idea. I thought, why move the 15-percent rate
to 14 percent? What does that mean? Somebody asked me the other day on
a radio show: What does that mean to me as a taxpayer? It means we have
a benefit for all taxpayers. Any taxpayer will benefit. How much do you
benefit? Individuals, up to $250; and a couple, $430.
Therefore, a couple who makes up to, I think, $48,000 receives a $430
benefit. Somebody said the tax benefit in the bill is only 50 cents a
day. Their numbers are not adding up. The benefit of that is $430 a
couple.
I will touch on the bracket expansion. I want to compliment our
colleagues on the pending amendment. They expand the 15-percent bracket
up. We have that in this bill, too, under the pending bill authored by
Chairman Roth. We expand the 15-percent bracket. That means a lot of
people who are paying 28 percent will pay 15 percent. We increase that
by $5,000 per couple or $2,500 for an individual. That means a couple
will save $700. If they have a combined income of $42,000, we save them
$700 by reducing the rate from 15 to 14. For a couple earning $40,000
or more will save $1,130 under the bill. That is almost $100 a month.
I use the test sometimes of my son and his wife. He sells cars, and
she is a schoolteacher. They have one child. How will this benefit
them? From those two provisions alone, they will save almost $100 a
month in taxes, and they are a middle-income, tax-paying family. I
think that is a good provision. When combined with marriage penalty
relief, the average married couple will realize significant savings
through this bill.

[[Page S9687]]

For instance, those items together come to $1,100 just in the rate
reduction and the expansion of the 15-percent rate. Then there is
$1,400 savings in eliminating the marriage penalty. Now we are talking
about $2,500 per year for a married couple making $40,000, $50,000, or
$60,000 a year. That is not insignificant. That is $200 a month.
We are helping a lot of people. The number of people who would
benefit from expanding the 15-percent rate upwards, so they don't have
to pay 28 percent, is a reduction of 13 or 14 percent --13 percent by
the substitute offered and 14 percent by Chairman Roth's proposal.
Chairman Roth's proposal says to individuals in that category, we are
going to cut their rate in half for that additional $5,000. That is a
significant savings. Add that all together, and we are talking about
$2,500 for a couple who make $40, $50, or $60,000. That is not
insignificant.
Mr. President, 98 million people will benefit from the reduction in
the 15 to 14 percent income bracket, 80 million who have incomes less
than $75,000. In other words, it is a tax cut for taxpayers, not
necessarily targeted the way as some others might like, but it is a tax
cut that is weighted on the lower end of the tax schedule.
Moving the 14-percent bracket up, 36 million middle-class people will
benefit from that provision; 19 million married returns will benefit
from elimination of the marriage penalties.
Then there is something else that hardly anybody is talking about. We
have a provision that eliminates the penalty called alternative minimum
tax that disallows a lot of the tax credits we have already passed. In
1997 we passed a tax credit, $500 per child. It was $400 last year,
$500 this year. That is law. I know a lot of the people arguing against
the Republican tax bill didn't like it when we passed that in 1997. I
had an appearance last night with Gene Sperling, and he said the
President supported the $500 tax credit for a child.
Maybe a little history would be in order. The President campaigned
for it in 1992, and he forgot about it in 1993 when he raised taxes on
all Americans. Not only did he forget about it, but he did a tax
increase rather than a tax cut. It wasn't until 1995 that the $500 tax
credit passed again. That was when Republicans took control. We passed
the bill, and the President vetoed it. We passed it again in 1997, and
he signed it. Now they are trying to take credit for it. They didn't
want a tax cut in 1995, they didn't want a tax cut in 1997, but we gave
it to him and he signed it. Now that is law.
Because of AMT, a lot of people are not able to take full advantage
of that tax credit or child care tax credit--13 million families, and I
tell my colleagues that number is growing every year. Senator Roth's
amendment has significant relief. My colleagues will be interested to
know that is $96 billion. Over one-tenth, about 12 percent, of the
entire tax bill is targeted toward AMT relief on American families. I
have not heard anybody talk about it. If anybody thinks that provision
is wrong, offer an amendment to strike it out.
If anybody thinks the marriage penalty provision, which is $112
billion--again, probably about 15 percent of this entire package--is
too generous, if Members don't think we should have marriage penalty
relief, offer an amendment and take it out. If Members don't think we
should cut the rate from 15 percent to 14 percent--which is $298
billion, which is the biggest provision in this entire bill, which is
three-eighths of the entire bill--if Members don't think it should be
in there, take it out. I would oppose any such amendments, because
these provisions are at the heart of this legislation and are what make
this bill a tax cut for taxpayers on the lowest end of the ladder.
A lot of people say the Republican package is a tax cut for the rich.
It is not. Those people have not read the bill. This bill reduces taxes
for all taxpayers, including people at the lowest end of the economic
ladder.
The provisions I discussed are $506 billion out of $792 billion. That
is over five-eighths of the bill I have already described. I haven't
heard anybody single out any of those sections and say: that is a bad
provision, we shouldn't have that provision.
Let me discuss a couple of other areas in this bill and why we should
pass the bill. Let me talk about estate taxes. A lot of people are not
aware of how the amendment of the Senator from Delaware works. It
replaces the unified credit with an exemption. Most people say: What in
the world are you talking about? Unified credit, under the existing
system, says we will credit you so much in taxes, and you don't have to
pay; but above that, you start paying taxes at whatever rate it is. It
means if you have a taxable estate, once you start paying taxes, you
start paying taxes at a 39-percent rate. If you have a taxable estate
of $1 million, 39 percent goes to the Government.
What we do by replacing the unified credit with an exemption is, once
you run out of the exemption, you start paying taxes at the lowest
rate, which is 18 percent. That is a big difference. That is a big
difference for estates that are barely taxable. So, if you are over the
exemption amount--the exemption amount today is $650,000--and you don't
have to have a lot of property or a lot of wealth to have an estate of
$650,000, if you get above that, your tax would be 18 percent instead
of 39 percent. That is a big difference, and I compliment the chairman
for doing it.
Frankly, I would like to eliminate the estate taxes and have the
taxable event not be death but when the property is sold. Senator Kyl
and others have been advancing that. I think that is an excellent idea.
You should not be taxing somebody because somebody dies. You should tax
them when that property is sold. If the people who receive the
property, the beneficiaries, the family, if they want to keep the
business and keep the business operating and running, great. If they
want to sell the business, tax it as a capital gain and tax it at the
old valuation, at whatever escalation has been in the market value.
That is the capital gain. That is what the taxable event should be,
when the property is sold--not because somebody dies.
Again, the chairman's provision, exchanging the unified credit for an
exemption, is a giant step towards, basically, bringing about some
relief in estate taxes which I think is critically important. If you
believe, as do I, in family-owned businesses, if you believe the
Government is not entitled to take over half of people's property just
because they pass away then you should support this bill. Somebody said
earlier this provision in the bill only benefits the wealthy. I
disagree strongly with that statement.
My father, unfortunately, passed away when I was pretty young and we
had a family-owned business, Nickles Machine Corporation, in Ponca
City, OK. We had a significant dispute with the IRS for 7 years about
the valuation of this company. The IRS said: We think it is worth a
whole lot more and we want you to pay a lot of taxes. My mother did not
pass away; my brothers and sisters did not pass away--just my father.
And he was second generation in this business. Yet the Government said:
We want a chunk of it.
The estate tax rate today says any estate over $3 million, they want
55 percent. Why in the world would the Federal Government be entitled
to take over half of what somebody worked his or her entire life for
because somebody passed away?
One of the changes we made in 1981, it has been seldom noticed, but
one of the great changes we made, we eliminated the inheritance tax
between spouses so surviving spouses do not have to pay a dime of
inheritance tax. That is a positive change. I was here and had a little
something to do with it, and I am very pleased we made that change.
But it isn't enough. Now, even though we have made that change, when
the surviving spouse passes away and you have a taxable estate of $3
million--maybe it is a manufacturing company, maybe it is a farm or
ranch, maybe it is a restaurant, and it happens to be worth $3
million--the Federal Government comes in and says: We want half. I
absolutely think that is wrong. That is one of the many reasons why I
think we need a tax cut today. That is one of the reasons why I think
we need a greater tax cut than the alternative proposed by our
colleagues that would provide $500 million. I note the estate tax
relief they have in their provision----
The PRESIDING OFFICER. The 15 minutes of the Senator has expired.
Mr. NICKLES. I ask an additional 10 minutes on the amendment.

[[Page S9688]]

The PRESIDING OFFICER. The Senator may proceed.
Mr. NICKLES. Looking at the provision offered by our colleagues, in
the substitute they have $19 billion of estate tax relief and the
estate tax relief offered by the underlying proposal is $63 billion. So
it does a lot more in estate tax relief in the chairman's bill than
what is offered in the substitute.

I happen to believe in estate tax reform very strongly, and not
because it benefits the wealthy. I happen to believe it is a matter of
fundamental fairness and freedom. People should be able to work their
entire life and be able to pass their property on to their kids without
Uncle Sam coming in and saying that we want half or even over half. The
chairman's amendment helps make that change.
Also in the underlying bill, we increase retirement savings.
Everybody in this room knows we do not save near enough. What we do
under the underlying bill is we increase IRAs over a 3-year period from
$2,000 to $5,000. We do that in both the IRAs that are tax exempt going
in and the Roth IRAs, into which you may put after-tax dollars. That
means we are allowing people to put in more money to save for their own
retirement.
The $2,000 limit goes back for years and has not been indexed for
inflation. Frankly, we in Congress should encourage savings. We want
people to be less dependent on Government, more dependent on
themselves, to be able to save for their retirement. Increasing this
amount from $2,000 to $5,000 is a giant step in the right direction.
Again, I compliment the chairman. This provision is in his bill. It is
not in most of the other bills. I do not believe it is in the
substitute as well.
Finally, I want to touch on one other thing, and that is the self-
employed health care deductibility. The chairman's bill says, for self-
employed persons, we are going to allow 100-percent deductibility. We
had this debate actually when we were debating the Patients' Bill of
Rights. It was included in the measure we passed on the floor of the
Senate. I argued then if we want to increase health care access, we
should at least make the Tax Code equitable, and it is not equitable.
Major corporations today get to deduct 100 percent of their health care
costs; self-employed deduct 45 percent. What is right about that? What
is right about a code that says: Self-employed person, you deduct 45
percent but GM or any corporation in America, you deduct 100 percent? I
am offended by that section in the Tax Code and I support this bill for
making that much needed change. I used to be self-employed. I used to
run a corporation. A corporation deducts 100 percent, but if you are
self employed tough luck, you only get to deduct 45 percent.
Then the chairman's package also has a major expansion for people who
do not get anything from their employer. If they pay over half their
health care cost, they get to have an above-the-line deduction for
their health care expense. Again, why in the world, if we are going to
use the Tax Code to encourage health care, why do we not let it apply
to everybody in America? We do not do that today. If you do not work
for a generous employer who subsidizes your health care, you are out of
luck. If you are not self-employed, you are out of luck. You have to
pay for your health care with after-tax dollars. You do not get any
deduction.
The chairman's bill changes that inequity and says, yes, you
eventually get a 100-percent deduction. It phases that in, but
eventually that person gets a 100-percent deduction for their health
care cost as well, and they do not have to itemize to get it. All
taxpayers would get it. Again, this is a giant step in the right
direction in bringing tax equity in health care costs.
When we allow people to buy homes and we say you can deduct your
interest, we do not say you have to work for a generous employer to be
able to deduct the interest. Everybody gets it. We are free to use the
Tax Code to encourage health care. It should apply to everybody, and
again, the chairman's package makes a giant step in that direction.
The chairman's package does many other things. It allows an extension
of time for people to be able to deduct their student loans; it allows
a continued deduction for companies that have educational plans and
benefits; it has a plan to help in education; it has a plan to help in
health care; it has a plan to help increase savings and retirement and
401(k)s; it has a plan to allow people to keep more of their own money;
it eliminates the marriage penalty.

I tell my colleagues that those are things we need which will help
American families. That is not just a tax cut for the wealthy. That is
not something my colleagues can demagog. They may want to, but if they
want to demagog, where do they want to cut? Do they want to eliminate
the permanent R&D tax credit? Do they want to eliminate the self-
employed deductibility? Do they want to eliminate the marriage penalty?
Do they want to eliminate the reduction in rate from 15 to 14? Do they
want to eliminate the expansion of the 15-percent tax bracket? I don't
think so.
I think the chairman has put together a good package and that
package, yes, costs $792 billion. I say costs. It is going to allow
people to keep $792 billion of their own money. They are going to be
sending in over $3 trillion more than the Federal Government needs in
the next 10 years. We are saying we are going to let them keep some of
that themselves. The chairman has crafted this in a way that is going
to help a lot of middle-income working Americans who are interested in
health care, who are interested in education, who want to not be
penalized because they happen to be married.
So I compliment him for his package. I urge my colleagues, with all
great respect for the amendment that is pending, I urge them to vote no
on that amendment because we can do more, and we should do more. The
American taxpayers deserve more, deserve better. I hope our colleagues
vote no on the pending amendment and vote yes on final passage,
hopefully tonight.
I will mention, as far as procedurally, I hope we can finish this
bill tonight. It is possible. It will not be easy, and our colleagues
will have to work together to make that happen, but I hope it will be
possible for us to have final passage on the underlying amendment later
tonight.
I yield the floor. I thank my colleague from Delaware.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. BREAUX. Mr. President, I yield 10 minutes to the distinguished
cosponsor of the amendment, the Senator from New Jersey.
The PRESIDING OFFICER. The Senator from New Jersey.
Mr. TORRICELLI. Mr. President, thank you very much.
The Senate has had before it three very distinct blueprints for the
American future, not a tax plan for the remainder of this year or next
year but blueprints that will dictate many priorities and decisions for
more than a decade. They are very distinctly different.
The Senate has before it a Republican tax reduction plan that will
never become law because the President will never sign it. The Senate
is considering a Democratic tax reduction plan that will never become
law because this Congress will never pass it. And there is a bipartisan
tax reduction plan of $500 billion now before the Senate.
It is termed a ``bipartisan tax reduction plan,'' but it should be
better known as the ``October plan,'' because we may spend July and
August debating our partisan proposals.
Members of the Senate may not endorse this proposal today, but I
suggest that by the time we reach October, it is a plan such as this
that will bring us together.
This plan, crafted by Senators Breaux, Kerrey, Chafee, Specter,
Collins, Snowe, Bayh, myself, and a group of others, is based on a
belief that the Nation should have returned to it as much of its tax
dollars as possible, while still being prudent to allow the development
of a surplus, protecting Social Security and other national priorities.
Reducing taxes is a national priority, but so is hiring 100,000
teachers, rebuilding American schools, providing for a pharmaceutical
benefit in Medicare, improving the national infrastructure, and
reducing the national debt.
Like any compromise, this plan is designed to accommodate many of
these objectives, and I think we have succeeded. But it is also based
on the belief that the American people, after 8 years of economic
expansion that was built on hard work, high taxes, and sacrifices,
deserve a dividend.
This $500 billion tax reduction plan is a fair and reasonable
dividend. This surplus developed for a reason. In 1993, appropriately
in response to burgeoning deficits, this Congress increased taxes by a
quarter of a trillion dollars. In the years that followed, American
businesses produced and American workers produced at unprecedented
levels. They have provided an economic expansion and also a Government
surplus, and they deserve now to have some of it returned. That is the
foundation of this plan. But we accomplish nothing by returning these
tax revenues if we only prestage a burgeoning deficit in the future or
we deny other needs in the country as well.
Tax reduction is an economic imperative, in my judgment, but so is
education and so is improvement of the national health care system, and
so is expansion of the national infrastructure. There is before this
Senate but one balanced plan that can achieve

[[Page S9689]]

these tax reduction goals while meeting these balanced national
objectives, and it is this plan, the ``October plan.''
This plan is also based on a recognition that even in good economic
times, it is important to recognize that these are not perfect economic
times. The United States today faces twin economic problems:
First, record levels of consumer debt. The current economic expansion
is threatened by mounting middle-class consumer debt more than any
other single indicator. Middle-income families with young children are
shouldering more debt in home mortgages, credit card bills, and
educational expenses than at any time in our national history.
This plan is designed to respond to that need by moving 4 million
Americans, people who earn $50,000, $60,000, $70,000 in family income,
with young children, and moving them from the 28-percent bracket to the
15-percent bracket where they belong.
This Government has no right to go to a family that earns $60,000 and
$70,000 and struggles every month to educate its children, provide
housing, clothing, and food, and take 28 percent of that income for the
Federal Government. I do not believe it was ever our intention.
Prosperity and inflation moved people into these tax brackets. For a
long time, some of us lived with the illusion that people who lived at
these modest incomes somehow had expendable income, as if they were
living lives of luxury. There is no luxury in American life today on an
income of $30,000 to $70,000 with children. This bill recognizes
that fact.

We also recognize that many senior citizens and many young families
supplement their incomes by modest savings--people who earn a few
thousand dollars in capital gains, put a little bit of money in the
bank, or they invest in the stock market for a little security to
participate in American growth. The Federal Government should not be
charging capital gains taxes on people who earn $2,000 and $3,000 a
year. We should be doing everything we can to encourage these people to
save for an emergency, prepare for the future, and this bill deals with
that reality, in response to the fact that the other crisis in American
economic life today, beyond high consumer debt, is a virtual collapse
in national savings. This year, the United States has a national
savings rate of minus 1.2 percent, the lowest rate since the second
year of the Great Depression. We are the only developed nation in the
world with a negative savings rate.
This legislation responds to that reality. We eliminate the capital
gains taxes on the first few thousand dollars of savings, which, in
part, takes 4 million taxpayers off the tax rolls entirely--young
families and probably largely senior citizens who want a little
security in life. They should pay nothing, and that is what this bill
provides.
Those are the twin objectives we have: Reduce consumer debt by
lowering taxes on the middle class by moving people from the 28-percent
bracket to the 15-percent bracket; and, second, by encouraging savings,
both as Senator Roth has done by an expansion of the IRA, and in our
case from $2,000 to $3,000.
This Government should be doing everything possible to encourage
Americans to save money, if not for our larger economic purposes, then
simply because 50 percent of Americans have no pensions; 60 percent of
Americans retire only on Social Security. My colleagues and I know why
there is such enormous pressure on this Congress to increase Social
Security and other Government benefits: Because people are not saving
money, and they do not save money because this Government has made it
economically irrational to do so, and the Tax Code is the answer to
changing that reality.
Our bill, I think, is easily defined and explained. It is simply $500
billion over the course of this next decade. It removes 3 million
people entirely from the tax rolls by increasing the standard deduction
and eliminating taxes on modest savings. Three million people, largely
senior citizens, will pay nothing.
Second, as I suggested, we move 4 million people from the 28-percent
tax bracket to the 15-percent tax bracket, meaning that a family of
four earning $71,000 will now have their taxes arguably reduced in half
and have money available for their own family needs. For a single
person earning $37,000, this translates into a $600 tax cut. A family
earning $71,000, as I suggested, receives a $1,300 tax cut.
We also do more. We eliminate the marriage penalty entirely in the
standard deduction. We increase and expand the child care tax credit to
remove American women from this dilemma where they have to choose
between going to work to pay the mortgage and knowing their children
are safe by allowing affordable child care.
The PRESIDING OFFICER. The time yielded to the Senator from New
Jersey has expired.
Mr. TORRICELLI. I close by urging my colleagues to join with me in
this bipartisan plan for reasonable and affordable tax relief. I yield
the floor.
The PRESIDING OFFICER. Who yields time?
Mr. BREAUX addressed the Chair.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. BREAUX. I yield 10 minutes to the Senator from Pennsylvania.
The PRESIDING OFFICER. The Senator from Pennsylvania is recognized
for 10 minutes.
Mr. SPECTER. I thank my colleague from Louisiana.
Mr. President, I join in cosponsoring this centrist approach. In my
view, the tax proposal to cut $792 billion over 10 years is too much.
It may be that the United States would be best served by not having any
tax cut at all, but it appears we are headed for some tax cut. And a
group of centrists, so-called moderates, have joined together on the
proposal which is now on the floor for a tax cut of some $500 billion.
This same group, in substantial measure, was assembled 2 weeks ago on
the so-called Patients' Bill of Rights, where the centrists had an
alternative proposal to the more extreme proposals on the right and on
the left.
We have rounded up the so-called ``usual suspects,'' but we have a
few more; and I think there is some chance that this bill, this
proposal, this amendment will be adopted, if not today, then perhaps
ultimately.
At the outset, I acknowledge the proposition which has been advanced
by the Chairman of the Federal Reserve, Alan Greenspan: that the
Government of the United States would be best served if there were to
be no tax cut at all.
The projections of the surpluses are highly speculative. If you
change the interest rate a bit, or if you change the unemployment rate
a bit, those surpluses would change very dramatically.
There is a strong argument for the proposition that we would be best
advised to pay down the national debt. The national debt now stands in
excess of $5.5 trillion. When the Presiding Officer and I came to the
Senate, after the 1980 election, the national debt was slightly under
$1 trillion. Notwithstanding the so-called ``Reaganomics'' of the
administration of President Reagan, by the time he had left office, the
national debt was in the range of $3 trillion, and it has gone up.
To reduce the national debt would reduce the carrying costs on the
interest, and there is a great deal to be said for that. But my sense
is the temper of the times is that we are going to be looking at a tax
cut to some extent. If we ameliorate, or reduce the tax cut from the
proposed $792 billion to $500 billion, then we have more assurances
that we can take care of other needs of America.
There is a consensus that the Social Security fund ought to remain
inviolate, ought to be preserved at all costs. I believe that it is
true that the Social Security fund will be secure under any of the
pending proposals. But you can't be entirely certain of that because
that significant measure depends on the economic forecasts, the
unemployment rate, and the interest rate.
Beyond Social Security, there is a commitment to preserve Medicare. A
lesser tax cut would provide a better guarantee that funds will be
available for Medicare.
Then we have the issue of prescription drugs where, again, there is a
growing sense that this is an issue which has to be taken into account.
Again, a lesser tax cut gives more flexibility for prescription drugs.
So when we look at the imponderables and the problems, there is much
to recommend a lesser tax cut,

[[Page S9690]]

so that a figure in the $500 billion range appears preeminently
reasonable.
Earlier today, about an hour ago, the Senator from Minnesota, Mr.
Wellstone, said he did not think the majority of the country favored
any tax cut. Well, it is hard to assess where the majority of the
country is. What is going to happen in the course of the next 6 weeks,
probably, presumably, likely, is that a tax cut will come out of the
Republican Congress. The plan is, if this tax cut is adopted, the
Senate and House will go to conference, and there will be a resolution
of the issue by the end of next week, before we start the August
recess.

Then there will be an opportunity for Americans to digest the
positions taken by the Republican Congress, contrasted with the
position taken by the President's Administration and what the Democrats
have in mind.
I believe if the Senate were to enact this amendment on the $500
billion tax cut, we would be in the position to have some realistic
negotiations. It is perfectly obvious, at this stage of the proceeding,
that the aura of politics is very heavy in this Chamber, very heavy in
the House Chamber, very heavy over all of America--less heavy, frankly,
outside the beltway.
During the August recess, as I undertake my open-house town meetings,
I am anxious to get guidance as to what the Congress ought to do from
the prevailing wisdom of Pennsylvanians and the wisdom of men and women
outside of the beltway.
But I think a tax bill coming out of the Senate at $500 billion would
set the stage for some serious discussions with the White House, and an
important aspect of those discussions will be what is going to happen
to the appropriations bills.
We are now operating under the 1997 Balanced Budget Act. Speaking for
my subcommittee, which has jurisdiction over three major Departments--
the Department of Education, the Department of Health and Human
Services, and the Department of Labor--the allocation of $80 billion is
totally insufficient when we look at what we had appropriated last
year, what the inflation rate has been--however small, it is a factor.
Looking at the financing of the National Institutes of Health, which
have made such dramatic achievements; the financing for Head Start,
Healthy Start, and worker safety; that is a matter which has to be
reconciled, has to be negotiated with the White House during September,
before we go into October where we have the highly publicized
possibility of the so-called train wreck.
But those are factors which have to be taken into account. There
again, an approach of $500 billion leaves greater flexibility to
accommodate other pressing needs of the Government.
Later during the consideration of this tax bill, I will have an
opportunity to speak about an amendment which I have pending, which is
the flat tax. That is a proposal to simplify taxes in America so they
could be filed on a single postcard.
I regret that this measure has not received greater attention,
notwithstanding the fact that it was introduced in the House of
Representatives by Majority Leader Armey in the fall of 1994, and I
introduced it--the first bill in the Senate--in March of 1995, which
really provides some very substantial relief on simplicity and breaks
for the American people. That is not to be, but I will have an
opportunity a little later to explain, in some detail, the flat tax
proposal.
Mr. President, inquiry as to how much time I have remaining of the 10
minutes allotted.
The PRESIDING OFFICER. One minute.
Mr. SPECTER. I thank the Chair.
In conclusion--the two most popular words of any speech--I believe
that America ought to be governed from the center; America needs to be
governed from the center; and America wants to be governed from the
center.
Where we have the competing proposals--the one which was defeated
yesterday, the Democratic proposal at $295 billion; the competing
proposal of $792 billion--the $500 billion figure will provide more
flexibility for other needs of America, will move to the center, will
give better assurances that adequate funding will be available to
protect Social Security, to provide Medicare reform, to provide
important programs such as prescription drugs, to provide for the kinds
of funding necessary for the National Institutes of Health, the other
important items yet to be resolved under an arrangement with the White
House on the pending appropriations bills.
I join my colleagues in urging adoption of the Chafee-Breaux
proposal.
The PRESIDING OFFICER. Who yields time?
Mr. ROTH. Mr. President, I yield 10 minutes to the Senator from
Alaska.
The PRESIDING OFFICER. The Senator from Alaska is recognized.
Mr. MURKOWSKI. I thank the Chair, and I shall not take the full 10
minutes.
Mr. BAUCUS. Mr. President, might I get some understanding of the
order. I wonder if there is some way we could go back and forth.
Mr. MURKOWSKI. I was under the impression we were talking on
different sides of the amendment.
Mr. BAUCUS. If we understand that the next speaker will be the
Senator from New Jersey, that would be helpful.
Mr. ROTH. That is correct.
Mr. BAUCUS. I thank the Chair.
Mr. MURKOWSKI. Mr. President, the issue before us today is whether we
should replace the Finance Committee's tax relief bill with a smaller
$500 billion tax relief bill. I commend the authors of the amendment
for their effort to provide tax relief to the American people, but I
believe very strongly that the Finance Committee bill is a better,
balanced approach.
Let's examine it for a moment. For example, middle-class families
would receive far less relief under the $500 billion amendment because
the 15-percent bracket is not reduced. Moreover, the marriage penalty
relief in this amendment will not affect the 30 percent of married
couples who itemize deductions.
The biggest flaw in the authors' approach is their belief that this
$500 billion tax cut would be approved by our President. He has stated
already he would not sign a tax bill, a $500 billion tax bill that cuts
taxes by more than $300 billion. And the Director of the OMB has
indicated that a $500 billion tax cut would be vetoed. So we have a
veto threat.
We also have a responsibility to the American taxpayer. As a member
of the Finance Committee, I rise in strong support of the Taxpayer
Refund Act as proposed by Finance Chairman Roth. I commend his
chairmanship, the professional staff, and the Joint Tax Committee staff
who have worked so hard in putting this together. It has been very
difficult, but it is fair, it is balanced, and it is growing in
support, as Americans and Members of this body recognize its
contribution from the standpoint of fairness and equity. Everybody
shares. Everybody benefits. It is a great opportunity for the American
people to share in this prosperity associated with the surplus.
The Roth bill gives the overtaxed American family a refund of the
taxes they are now overpaying to the Federal Government which has
resulted in the surplus. The Congressional Budget Office projects that
the total budget surplus over the next 10 years will be $2.9 trillion.
Nearly $1 trillion--that is, about $996 billion--of that surplus comes
from overpayments of income and estate taxes. The American people
should share. They know to whom this refund belongs. It is an
obligation of this body to give some of it back.

What Senator Roth and my colleagues on the Finance Committee have
done in this bill is to take about $791 billion of those tax
overpayments and return that money to the American people, the hard-
working American taxpayers. All of the $1.9 trillion Social Security
surplus will be used solely for preserving Social Security. As a result
of this bill, we will have more than $200 billion available for saving
Medicare and paying down part of the debt.
We have heard from the President that he will veto this bill because
the tax refund is too large, and the liberal Washington press
mindlessly parrot the President's statement and argue that we should
not provide such a large refund.
First of all, the President wasn't very supportive of any kind of a
refund. He is coming around now. Think of the media, the media that
parrot an argument that has no foundation, that

[[Page S9691]]

somehow it is wrong for the American people to have a tax refund. Think
about that for a moment. What is wrong with the American people sharing
in this surplus? After all, it belongs to them. What do you do if you
get a tax refund? What do you do if your taxes are reduced? Well, you
have a couple of alternatives. You can save it, or you can go out and
buy something, spend something. That is going to increase somebody's
inventory. Go out and buy a new bicycle; somebody has to put in more
bicycles.
The point is that it addresses an alternative for the American
people. We should save more. We are going to have an opportunity to
save more.
The Democrats automatically jump to a conclusion: Interest rates are
going to go up. There is no proof of that. There is no indication of
that. That is scare tactics, Mr. President. What is wrong with the
American people having more dollars in their jeans to spend or save if
they wish?
Mr. KERRY. Will the Senator yield for a question?
Mr. MURKOWSKI. I will yield at the end of my statement. I will be
happy to at that time.
We only have to go back to December of 1980, under the Carter
administration. Some people have forgotten. Do you remember what the
inflation rate was? The inflation rate was better than 11 percent.
Interest on the prime rate in this country was 20.5 percent. Imagine
that. What was that due to? Partially the oil shock. So here we have an
opportunity where we can have a significant refund, and the beneficiary
is the American people.
The fact is that what the President wants us to do is not to provide
a tax refund to the American people. Instead, he wants to take that
surplus to finance $1 trillion in new spending. Despite his claim that
he wants to cut taxes by $300 billion, CBO has scored the President's
budget as actually raising taxes by $100 billion over the next 10
years. In other words, at a time when we are running a real surplus in
the hundreds of billions of dollars, this President comes along and
wants to impose even more higher taxes on the American people so he can
finance a big and growing Government.
The bill before us should not be vetoed because it provides a tax
refund to every single American who pays taxes. The lion's share of the
tax cut, more than $410 billion, results from cutting the 15-percent
rate to the 14-percent rate and the almost total elimination of the
marriage penalty. Is that what President Clinton objects to--reducing
the tax rate paid by the lowest income taxpayer? Or does the President
object to elimination of the marriage penalty? That must be the case,
because if our President had his way and we cut taxes by $300 billion,
we could not eliminate the marriage penalty, we could not cut the rate
paid by the lowest income earners.
When the baby boomers are set to retire in 11 years, this bill
expands retirement incentives, allows increased competition by people
over 50 years of age.
I commend the chairman, Mr. Roth, for upping the limit on
contributions to IRAs to $5,000. It has been over 20 years since we
raised the $2,000 IRA limit. Upping the limit to $5,000 is long
overdue, and it is incentive for the American people to save for
retirement.
In recent months we have seen that America's savings rate is actually
a negative number. These incentives could well serve to increase our
savings rate. Is that what President Clinton objects to--retirement
savings incentives? Or does the President object to the health care
provisions in this bill, health care changes that bring a much-needed
level of equity to the Tax Code?
Allowing the self-employed to deduct 100 percent of the cost of
health insurance finally brings small businesses to parity with large
corporations. What is wrong with that? For the first time in our
history, under the bill, employees who pay for more than half of their
own health insurance will be able to take an above-the-line deduction
for those costs. It sounds fair to me. I thought the President was so
concerned about the uninsured. Why would he, if he was that concerned,
veto a tax bill that finally provides health equity to employees and
small business owners? I ask that question of the President.
Much overlooked in this bill are the more than $12 billion in
educational changes that will make it easier for graduates to pay for
their student loans. In addition, more than $1 billion of this bill
will help communities construct new schools. Does the President object
to that?
The PRESIDING OFFICER. The time of the Senator from Alaska has
expired.
Who yields time?
Mr. MURKOWSKI. I urge support of the Finance Committee chairman's
bill.
Mr. BREAUX. Mr. President, I yield 5 minutes to the distinguished
Senator from Vermont.
Mr. JEFFORDS. Mr. President, I thank the Senator for yielding the 5
minutes. We have worked closely together on this bill. I am here to
recommend passage of it.
First of all, I commend my chairman, Senator Roth. I support many of
the provisions in his bill. Many of the provisions in his bill are in
this bill. I express my sincere hopes that the bill's good provisions
will stand. I agree with much of what Senator Specter said about some
of the ramifications if we continue on our present course. This is
basically ``Roth lite'' as far as the bill goes.
It is very much modeled after it. It just cuts it back somewhat so we
can get sort of in the middle.
This $500 billion centrist alternative represents an attempt by some
of us to find a middle ground. The Senate finance Committee has
approved tax cuts of roughly $800 billion. The President has said he
will veto a bill of that size. The Senate Democrats have proposed tax
cuts of $300 billion, and the President has signaled his willingness to
sign a bill with that level of tax cuts.
The bad news in all this is that the parties are at an impasse. One
side is dug in at $800 billion; the other will not budge from $300
billion. The good news is that both sides agree that we can afford and
achieve some level of tax cut. I certainly do. And since both sides
agree that a tax cut is appropriate, sooner or later we will have one.
What those of us sponsoring his centrist amendment are saying is:
``Let's compromise. Let us take a step toward the middle. Let us settle
on a figure we can agree on. And let us get this tax cut done--sooner,
rather than later. If neither side can give ground, if we lock
ourselves into hard and fast positions, this whole process will come
grinding to a halt. How the process will ultimately play out is
anybody's guess. It could mean we have another government shut-down. Or
it could mean we end up with an omnibus bill like we had last year.
It does not have to be that way. This should not turn into a game of
``chicken'' between political parties. But both sides will have to give
a little.
In the end, I think we will ultimately end up with a tax bill that is
somewhere between $300 billion and $800 billion--in other words, around
$500 billion. I do not see why we can not settle on an acceptable mid-
point now.
You can get a lot of tax relief with $500 billion. The centrist
package will provide for broad-based tax relief for most taxpayers.
Taxpayers who do not itemize deductions will see a big increase in the
standard deduction. This increase is not just tax relief. It is also
tax simplification. With a larger standard deduction millions of
taxpayers will no longer have to itemize their deductions. Taxpayers
who itemize will also get a break, as the 15-percent bracket will be
expanded.
Up to $5,000 that was formerly taxed at 28 percent will now be taxed
at 15 percent. This 13 percent reduction in tax will mean savings up to
$650 for married couples.
Our centrist package also addresses the marriage penalty. It
eliminates the marriage penalty in the standard deduction, and
eliminates part of the marriage penalty in the earned income credit.
Our Tax Code should not punish marriage--especially among the working
poor. Right now two low-income people who marry often find themselves
with a smaller earned income credit than they would have had as single
taxpayers. That shouldn't be.
This alternative also encourages savings and investment. The first
$1,500 of capital gains would be tax tree. Again, this is not just tax
savings; it's also tax simplification. During the tax filing season,
the complex schedule D was one of the things Vermont taxpayers

[[Page S9692]]

complained about most often. Under our proposal, millions of people
with capital gains from mutual funds could avoid filing out schedule D.
Our alternative includes targeted provisions that serve important
national interests like retirement savings, education, and protection
of the environment. When people move between jobs it will be easier for
them to take their pension benefits with them. More people will be able
to claim the deduction for student loan interest. Long-term care
insurance would be deductible. The research and experimentation credit
would be permanent and the low-income housing tax credit would be
extended. These are but a few of many tax issues addressed in our
alternative package.
In the Finance Committee, I voted to move the bill out of committee
and keep the process going. I applaud Chairman Roth for the reasoned
approach he has taken in this bill.
With a projected surplus approaching a trillion dollars, I think we
can afford some tax relief. I must confess, however, I'm a little
uneasy with the level of tax cuts in the Finance Committee bill. An
$800 billion tax cut leaves little margin for error if the surplus
projections are not correct. An if these projections understate the
surplus, we can always come back and enact further tax cuts.
I'm also concerned that an $800 billion tax cut doesn't leave us a
cushion sufficient to fund a Medicare prescription drug benefit, to pay
down our national debt or to address other areas of concern, like
education. I think we should go slower, be a little more cautious. Some
would call this the conservative approach.
Still, I want tax cuts. Our $500 billion alternative allows for
meaningful tax relief, while also leaving a significant chunk of the
surplus intact for other national priorities.
Mr. President, the American people are tired of gridlock. They're
frustrated that compromise is becoming a lost art. We don't need to
wait for a veto before getting down to serious negotiations. We can get
this bill done today.
The PRESIDING OFFICER. Who yields time?
Mr. ROTH. Mr. President, I yield to the Senator from New Jersey for 5
minutes.
The PRESIDING OFFICER. The Senator from New Jersey is recognized.
Mr. LAUTENBERG. Mr. President, I thank the chairman of the Finance
Committee. I appreciate this opportunity to state my opposition to the
Chafee-Breaux amendment, which would provide a $500 billion tax cut.
The proposal is being put forward by some of the moderate Members of
this body, and I have tremendous respect for Senators Chafee, Breaux,
and the other cosponsors. Its sponsors may be moderate, but this
amendment is not. If you really look at the numbers, I would say it is
fiscally irresponsible.
It is always tempting to believe the best solution to a conflict is
to split the difference. But that is not true when one side is taking
an extreme position. That is what is happening.
In this case, splitting the difference would be terrible policy. It
would force either unreasonable cuts in education, defense, and other
priorities or, more likely, it would eventually force excessive cuts in
Medicare and Social Security.
Supporters of large tax cuts have been coming to the floor arguing
that we have a $3 trillion surplus to divide up. But that is wrong. I
have even heard the arguments being made about how well regarded the
original Finance Committee bill of $792 billion was, and claiming that
it is the only fair thing to do--to give it back to the people who paid
the bills in the first place. The fact of the matter is, we are all on
a mortgage; all of our citizens share a mortgage, all of us in this
room and outside in the countryside. It is our national debt.
I don't know any family that, given a chance to get a couple of bucks
in their pockets--less than $150 in the tax cut for modest-income
earners of $38,000--would not rather have their mortgage paid off for
them. That is the condition we ought to be in--paying off our mortgage
and paying off our national debt, not giving it back in forms that
produce most of the benefits for people in the highest share of the
income strata. We were talking about people who are wealthy, who make
$800,000 a year--by any judgment, they are pretty well off in this
country--getting $23,000 a year worth of tax cuts in the original bill.
Now we are in the compromise stage, and we are down at a level that
still, frankly, doesn't make economic sense.
It is expected that we are talking about a surplus. Well, first, I
want to point out it is a projected surplus. There is a big difference.
Hardly anybody who has looked at CBO's projections truly believes that
they are without question. To be fair to CBO, even they have
acknowledged their estimates are uncertain.
They depend not only on guesses about our economy, but they depend on
assumptions that the Congress will make drastic cuts in a broad range
of popular programs from veterans' health care, to education, to law
enforcement. If Congress merely maintains defense spending at the
levels requested by President Clinton, all of these other programs
would have to be cut about 40 percent.
Alan Greenspan, Chairman of the Federal Reserve, who is really the
most esteemed spokesman on the economic condition in our country, has
said: Hey, be careful. The Fed Chairman told the Banking Committee in
an article from the Washington Post this very day:

It would be unwise to cut taxes now altogether on the basis
of surplus forecasts that could be far off the mark. If
Congress goes ahead with a major tax cut, I think it also
has to be prepared to cut spending significantly in the
event that the forecasts on which they are based are
wrong.

The PRESIDING OFFICER. The time of the Senator has expired.
Mr. LAUTENBERG. I thought I had 10 minutes.
Mr. ROTH. I yield 2 minutes from the bill.
Mr. LAUTENBERG. Mr. President, it is less time than I thought I would
have to speak on this subject. I have waited patiently. I guess I will
try to wrap it up now.
The projected surplus is truly a mirage. If Congress were to maintain
basic Government functions at this year's level, it would be a $1
trillion non-Social Security surplus, yes, but it would be more like
one-tenth of that, or $100 billion, by the time we finish with this tax
cut.
We are slashing prospectively important domestic programs such as VA
and other programs, trying to find trick ways to satisfy our obligation
to the Veterans' Administration and to the Census, which is clearly
identified in our Constitution as an obligation, now calling it
``emergency'' spending.
What we are observing, I think, is some sleight-of-hand work. I hate
to use that term, but that is what I see, ``cooking the books,'' making
sure we take whatever forecasts suit the situation the best.
There is no way to do what we want to do, what we are obliged to do,
if we are going to give away $500 billion in tax cuts. There are better
ways to deal with our financial or fiscal condition. Alan Greenspan
confirms that.
I hope this Senate will respond to the American people's desire. Get
rid of the mortgage, pay down the debt, and then talk about tax cuts
that are targeted specifically to modest-income people.
Mr. BREAUX. I yield 5 minutes to the distinguished Senator from
Maine, Ms. Collins.
Ms. COLLINS. I thank my colleague from Louisiana.
Mr. President, I rise today in strong support and as a proud
cosponsor of the Chafee-Breaux bipartisan compromise plan. I commend
the Senator from Louisiana and the Senator from Rhode Island for their
leadership in bringing Members together to craft this important
proposal. This amendment represents a fair, prudent, and responsible
compromise between and among the competing proposals we have been
debating. It is a sensible bipartisan plan.
In crafting this proposal, our bipartisan coalition has been guided
by several principles. The first is perhaps best summed up by the
expression, ``Don't count your chickens until they are hatched.'' We
know, based on CBO estimates for the next 10 years, that we may have a
projected surplus of $3 trillion. However, $1.9 trillion of that
surplus is due to a surplus in the Social Security trust fund. I don't
think we should spend a penny of the Social Security trust fund surplus
for either tax cuts or for spending increases on non-

[[Page S9693]]

Social Security-related programs. That should be reserved for paying
Social Security benefits and for Social Security reform.
That leaves roughly $1 trillion to decide how we are going to
allocate. Our bipartisan coalition believes adopting a more prudent tax
relief goal of approximately $500 billion over the next 10 years will
provide millions of families in Maine and across the country with much-
needed tax relief, while at the same time guarding against the
possibility that the current surplus projections may not be fully
realized in the years to come. Our proposal allows for additional
amounts of the public debt to be paid down, as well as reserving extra
funds that could be used to preserve and protect Medicare, to
strengthen education, and for other priority programs.

Our second principle is to target the tax relief we are providing. In
this time of economic good fortune, we should focus our tax relief on
hard-working lower-income and middle-income families. Our proposal
would do just that. It allows for additional public debt to be paid off
while removing 3 million low-income taxpayers from the tax rolls
altogether. In addition, it slices the marginal tax rate nearly in half
for another 4 million Americans.
The third principle we have adhered to is quite simply pragmatism. In
order to craft, to pass, and actually enact into law a tax relief bill,
we must offer a plan that enjoys bipartisan support. Our proposal meets
this test and in the process offers a blueprint for reasonable tax
relief that should and could become law. Indeed, I predict that
ultimately what will be signed into law will be very close to the
proposal the bipartisan coalition has put forth today.
In addition to this broad-based tax relief, our proposal includes a
number of compelling tax relief measures. For example, the amendment
provides substantial relief for the unfair marriage tax penalty that
causes many married couples to pay more taxes together than they would
if they had remained separate. It also contains important health care-
related tax proposals that I, along with many other Senators, have
advocated for some time. That includes a 100-percent deduction for
self-employed individuals purchasing their own health insurance, as
well as the deduction for the purchase of long-term care insurance.
In addition, our amendment contains valuable estate tax relief
provisions to help our family businesses and our family farms stay in
the family. It includes provisions that I sponsored to help families
save for college education of their children as well as to encourage
the environmental benefits that come from biomass plants.
An astute, perhaps even a casual, observer might well notice that our
bipartisan coalition's plan bears a striking resemblance to the plan
put forth by the Finance Committee. It is, however, a slimmed down
version of the Finance Committee bill in that it trims about $300
billion from the Finance Committee legislation.
I urge the adoption of the Chafee-Breaux amendment. It seems a good
middle ground that best provides tax relief in a prudent way for
American families.
Mr. ROTH. I yield 6 minutes to the distinguished Senator from
Illinois.
The PRESIDING OFFICER. The Senator from Illinois is recognized for 6
minutes.
Mr. FITZGERALD. Mr. President, I thank Senator Roth for this time.
I am pleased to rise in support of the tax relief act that has been
proposed by Senator Roth and the Senate Finance Committee.
During this debate which has been going on some 15 hours and several
days before that, we heard many opponents of tax relief argue that we
ought to focus on paying down that external national debt, which now
stands at about $3.6 trillion. Many on the other side have said our
focus on paying down that national debt should encourage Members to
support the President's plan, which actually has very limited tax
relief in it. By the CBO's own estimates, it actually has a $95 billion
tax increase, and people believe that somehow going with no tax cut in
the President's plan will pay down more of the national debt. But, in
fact, if you look at the real numbers and look where the national debt
will be 10 years out, in the year 2009, you see that Senator Roth's
plan and the Finance Committee plan pays down more of the national
debt, the external national debt, than the President's plan which has a
net tax increase of $95 billion.

In fact, under the Senate plan that is now before us, the national
debt will be paid down, the external national debt, will be paid down
from $3.6 trillion to $l.5 trillion by the year 2009 versus only $1.8
trillion under the President's plan. In other words, even with the tax
cuts, we pay more of the external national debt, and we are in a better
position, therefore, in the future to take care of our ongoing
obligations for Social Security and Medicare.
But I want to encourage my colleagues to step back from this whole
debate. We have heard all sorts of arguments about how much the surplus
is projected to be--$3 trillion--and their plan will save that amount
and this plan will cut taxes by this amount. But let us step back from
that issue and just look at where overall levels of taxation are right
now in our Nation's history.
Going back to 1941--this is from the Congressional Research Service--
if you look at the levels of taxes in this country, Federal taxes as a
percentage of our gross domestic product, you will see that our taxes
right now are almost at an all-time high. Right now, Federal taxes as a
percentage of our gross domestic product are 20.6 percent of our
economy.
When President Clinton first took office, taxes were 17.8 percent. If
we were to give the entire $3 trillion surplus back in the form of tax
cuts, the tax burden would still be 18.8 percent of the gross domestic
product. You have to look back to 1944 and 1945, when we were in the
midst of World War II, to find such high levels of taxation on the
American people.
These are the seven heaviest tax burdens in U.S. history. Right now,
in the year 1999, our tax burden is up here. To get equivalent high tax
burdens, you have to look to the administration of Franklin Delano
Roosevelt in 1944, or Harry Truman in 1945 when we were attempting to
throw Hitler out of Europe, and when we were spending 38 percent of our
money on our Nation's defense. Today, we are only spending about 23
percent. By historic standards, our taxes are enormously high. In fact,
they are unprecedented in our peacetime history, and we ought,
therefore, to be thinking about tax relief.
Another thing I would like to point out to you is that right now the
average family in America is paying nearly 40 percent of its family
income in combined Federal, State, and local taxes. That 40-percent
burden means that in families in this country where you have two
parents who are working, one of them is working for the government. I
don't happen to think that is right. We need to do what we can to
alleviate that tax burden on our American families.
We talk all the time in Washington about government programs that can
help our families, help our children, improve their education, but all
too often we ignore the fact that the greatest single reform we could
have for our kids or for their futures would not be another government
program but, in fact, more parental involvement in their lives.
But when you have a confiscatory level of taxation that is taking
nearly 40 percent of the average family income where parents are
working two, and sometimes two and a half or even three jobs just to
pay the cut extracted by Uncle Sam----

The PRESIDING OFFICER. The time yielded to the Senator has expired.
Mr. FITZGERALD. Could I request 2 minutes taken from the bill?
The PRESIDING OFFICER. There are 2 additional minutes yielded by the
manager.
Mr. FITZGERALD. In short, families right now in America are spending
more on taxes than they are on food, housing, and clothing combined.
The actual tax levels have increased by 35 percent. The combined
Federal, State, and local tax burden has increased by 35 percent on
American families since the late 1950s. That tax burden is too high. We
need to alleviate it.
I compliment Chairman Roth for what he has done to structure a bill
that would eliminate that odious marriage tax penalty on 22 million
American married couples who are penalized

[[Page S9694]]

for being married. It would also give serious major tax relief to
people in the lowest tax bracket--that 15-percent tax bracket which
would be lowered to 14 percent. That bracket would also be expanded in
size so that more Americans could pay taxes at that lower level.
I appreciate the time. I yield the floor.
Mr. KERRY. Will the Senator yield for a question on the remaining
time?
The PRESIDING OFFICER. The Senator's time has expired.
Who yields time?
Mr. KERRY. I thought he had additional time.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. BREAUX. Mr. President, I yield 5 minutes to the distinguished
Senator from Indiana.
The PRESIDING OFFICER. The Senator from Indiana.
Mr. BAYH. Mr. President, thank you.
I am pleased to be on the floor of the Senate as a part of a
bipartisan group once again--this time to advocate a tax cut for the
American people that is fiscally responsible, that honors our values,
and that can actually be done.
I am disappointed we will not have an opportunity to vote on this
proposal today because I believe it is in the best interests of the
American people. Ultimately, I believe that if we are going to ever
span the partisan chasm that stretches before us, it will be on the
ground that I and others are staking out here today.
This proposal is fiscally responsible. It allows for paying down 94
percent of the publicly held Federal debt--94 percent of the publicly
held Federal debt. That is fiscally responsible. It, as the other
proposals would do, extends the life of Social Security to the year
2053--54 more years--by adding $1.8 trillion to Social Security. That,
too, is fiscally responsible. It extends the life of Medicare to the
year 2020, adding $210 billion--allowing for that to extend the life of
Medicare.
As my colleague from Louisiana, Senator Breaux, pointed out, on some
occasions none of the proposals that are before us permanently solve
every issue of Medicare. All of them simply postpone the day of
reckoning. Our proposal would do that and give us time for systemic
reform. But, in the meantime, adding $210 billion to extend the life of
Medicare is the fiscally responsible thing to do.
Finally, it allows for $500 billion of tax reductions for the men and
women of our country, completely removing from the tax rolls 3 million
hard-working Americans and moving 4 million people from the 28-percent
tax bracket to the 15-percent tax bracket.
I have listened to the eloquence of my colleagues, many of whom have
mentioned the important needs of our Government--and our Government
does have important needs--many of whom have mentioned the funding
priorities for Government spending programs which are important.
I remind all of us about the needs of the American people, of
families, working men and women. What about their needs too? Many
working families across my State, even in this time of plenty with a
strong economy, are having trouble paying the mortgage, putting
something away for retirement, affording a college education for their
children. These families--at a time when we are adding $1.8 trillion to
Social Security, $210 billion for Medicare, and the other for
discretionary spending--can very much use the $1,000 for an average
family across my State to help meet their pressing needs. It is the
right and appropriate thing to do.
This proposal honors our values--our most basic values--and
eliminates entirely the marriage penalty. No longer will people be
penalized by the Federal Tax Code simply because they choose to get
married. We should encourage marriage. We should not discourage
marriage.
This proposal makes child care, care for a sick parent, and health
insurance for those who are without it more affordable. These are the
right things to do.
I think it is important to recognize that we can cherish our values
and promote them by reducing taxes just as easily and sometimes better
than through increased public spending.
This proposal has room for a $45 billion drug benefit under Medicare,
the same amount of public spending required of the President's
proposal, and still we would have $180 billion for additional
discretionary spending over the next 10 years.
There has been a lot of talk and a good deal of disagreement about
the appropriate level for discretionary spending increases. I must say,
with all due respect, I cannot agree with my colleagues in the majority
because I find the assumptions and accounting upon which their proposal
is based are suspect at best. They ask us to believe they can hold to
spending caps over the next 10 years that they have already admitted
they cannot abide by in this very year. That simply is not possible.
Yesterday I listened to one of my colleagues on the Senate Banking
Committee have an amazing colloquy with the Chairman of the Federal
Reserve Board in which he essentially said, Mr. Chairman, the reason I
am supporting tax reductions is that I cannot keep from spending
irresponsibly. He looked at the Chairman of the Federal Reserve and
almost asked him: Mr. Chairman, stop me before I spend again.
Colleagues, we have been elected to this body to make tough choices
and set priorities. I believe we can and should. The prescription of
the majority is one for increased debt and deficit. This is a path I
choose not to travel. At the same time, I cannot find myself in
agreement with those who show charts and list figures basically arguing
for an inflationary increase for Federal spending as far as the eye can
see, basically putting Federal spending on autopilot. I do not know of
any working family in my State who has been guaranteed inflationary
increases in their family income for 10 years. Why should we treat the
Federal Government any better than ordinary citizens? Of course we
should not.
I asked the Chairman of the Federal Reserve yesterday about
productivity increases. We are seeing amazing productivity increases in
the private economy. Shouldn't the Government be asked to become more
efficient and productive as well, thereby decreasing the need for
annual increases in spending? Of course we need to set priorities and
make difficult decisions, allowing us to live within our means, just as
families across my State and country are asked to live within their
means.
This is a momentous debate. The consequences of our decisions will
last for many years to come. I believe we have set the right balance of
priorities, fiscal responsibility, honoring our values, doing right by
future generations in a bipartisan way. I appeal to the President and
my colleagues for support for this measure.
I yield the floor.
Mr. ROTH. Mr. President, I yield 5 minutes to Senator Lieberman.
Mr. LIEBERMAN. Mr. President, I rise to oppose the amendment before
the Senate introduced by my friends from Rhode Island and Louisiana.
But in doing so, I rise to oppose all of the amendments that have been
offered to cut taxes.
It is particularly difficult for me to rise and speak against this
amendment offered by this centrist group. It contains some of my
dearest friends and closest collaborators in the Senate. I have parted
company with them only after much consternation and consideration. I do
so because, if they will allow me to say so, I think the centrist
course we would best follow in this case is to stay right in the middle
of the road that has brought the American economy to the extraordinary
point of growth and strength it occupies today, and that is the road of
fiscal responsibility. It took a lot of hard work to get us to this
plentiful place that we are enjoying today, with high growth, low
unemployment, a surprisingly high stock market, and surprisingly low
inflation.
I think the Federal Government helped to begin it all by creating the
climate for sustained economic growth by exercising some real fiscal
discipline. Then most of the prosperity has come, as it always does in
America, from the private sector, from millions of businesses and
individuals, innovating, cooperating, and profiting. Now, as a result,
for the first time in a generation it looks as if the Federal
Government may actually go into surplus--if we let it.
Oscar Wilde once wrote, ``I can resist everything except
temptation.'' I fear the same may well be said of this Congress as it
giddily proceeds to spend a surplus that no one knows is really

[[Page S9695]]

there, that would take our Nation back into deficit and endanger the
critical economic gains we have made over the past several years.
So I ask, why not stay the course that has raised the standard of
living of millions of American families? Why not wait for at least
another year to see if the surplus projections are real, if the economy
will continue to grow, if Congress is prepared to exercise the required
spending discipline? That is the question Senator Levin and I will ask
later on a motion to strike the entire tax cut before us, which would
mean we would wait a year. It is the question that Senator Hollings
will ask in an amendment we will offer later which would recommit this
tax cut to committee.
I must say, as all of us here, I suppose my reflex is to propose tax
cuts, not to oppose them. I was very active in support of the tax cuts
we passed--just 2 years ago. I think sometimes we forget that in this
debate. Just 2 years ago, I cosponsored the cut in the capital gains
tax and supported so many of the incentives that the chairman of the
Finance Committee offered to increase savings in our country. I would
welcome the opportunity to vote for a balanced, thoughtfully crafted
tax reduction package such as the one the Senators from Rhode Island
and Louisiana have offered today if I were convinced we could afford
it, if I were convinced the money was there to support the tax cut, or,
in the alternative, if I thought, as Chairman Greenspan has suggested,
that the economy needed it, needed to be stimulated.
But the more I have looked at these protections of a $1 trillion
surplus over the next decade, the more it looks to me like a Potemkin
surplus--not a real one, a facade with nothing behind it because it is
based on projections of 2.4-percent growth over the next 10 years,
which may happen but would extend what is already the longest peacetime
expansion of our economy in history. It is possible, but I would not
bank on it, or at least I would not spend in tax cuts the profits of
such unprecedented projected growth until I knew they were in the bank.

Of course, both baselines, OMB's and CBO's, assume cuts in spending
that are massive and unsustainable. These are cuts that few in either
House would ever support and, in fact, are not supporting right now, as
Congress simply exceeds the budget almost every day, exceeds the caps
through transparent accounting gimmicks, calling excess spending
emergency spending and double counting when necessary.
In other words, we do not have to wonder whether Congress over the
next decade will be able to hold the spending line on which the
surplus, which would fund these tax cuts, is contingent because
Congress is already proving today that it cannot so control itself. The
result is that by passing a major tax cut, paid for by a surplus that
probably will not be there, we would likely incur sizable deficits for
years to come.
The PRESIDING OFFICER. The 5 minutes of the Senator have expired.
Mr. LIEBERMAN. I ask the Senator from Delaware if I might have 2 more
minutes off the bill.
Mr. ROTH. I yield 2 more minutes to the Senator.
Mr. LIEBERMAN. I thank the Senator.
On top of that, of course, we would leave little or no money
available for building the solvency of Medicare and Social Security,
for supporting our national security--defense--and we would thus raise
the specter of a major tax increase down the line to compensate for our
profligacy right now.
It seems quite clear from what Alan Greenspan is saying, if we cut
taxes now, the Fed will increase interest rates soon thereafter, which
would put a drag on the economy, slow down business investment, and
probably lower the stock market, and it would hit average working
Americans literally where they live, driving up the cost of their
mortgages, car payments, credit card bills, and student loans to the
point where it would dwarf any tax benefit most Americans would receive
from this bill.
In other words, we would be robbing Paul to pay--Paul, while
simultaneously robbing our economy of the dynamism we have labored so
hard to create. And to what purpose? None that I have heard, except to
return to the American people a surplus that is not going to be there.
What we need now, I argue, is a little more of the fiscal discipline
and responsibility that helped bring this economy to the point of great
growth it is at now.
I thank the Senator from Delaware, and I yield the floor.
The PRESIDING OFFICER. The Senator from Louisiana.
The PRESIDING OFFICER. The Senator from Louisiana.
Mr. BREAUX. I yield 5 minutes to the distinguished Senator from
Maine.
The PRESIDING OFFICER. The Senator from Maine.
Ms. SNOWE. I thank the Senator. Mr. President, I congratulate
Senators Breaux, Chafee, Jeffords, and Kerrey for reigniting the
centrists on an issue that certainly is important to the American
people.
It is interesting that we are here today confronted with a major
issue, and it is not surprising that various Members of this Senate,
the House, and the President have different positions on an issue of
such significance. What we have tried to do with the package that has
been offered by Senator Breaux and Senator Chafee is to bridge the gap
between what the President has offered, what the House has offered, and
the package that has been offered by Senator Roth and the Senate
Finance Committee. We are trying to bring the differences together to
preserve the viability of a tax cut for the American people.
Lyndon Johnson once said: The good news is, I see the light at the
end of the tunnel. The bad news is, it is the light of an oncoming
train.
That is the prospect we are facing in Congress with the tax cut
proposal because all the positions are different and everyone is taking
a very polarized position on this very important issue.
I hope our package will be one that can bridge the differences from
all sides. That is why we have tried to stake out this position so that
we can have a bipartisan proposal that will avoid that train wreck.
Over the last few days, we have heard comments from the
administration and from Members of this body saying there is no room
for compromise; there is zero room for a consensus. I think that kind
of intransigence is unacceptable because ultimately it will result in
no tax cut at all, and that is not in the best interest of the American
people. We should not reject out of hand the possibility of developing
a consensus on this issue, and that is what this proposal is all about.
This proposal is certainly similar to ones that have been offered on
the floor by the Senate Finance Committee and by Senator Moynihan. So
it is not a question of substance because if you look at the various
components of the tax cut package, they certainly exist in all of them.
It is a matter of size, and that is why we decided that instead of
the $792 billion package offered by the Senate Finance Committee or the
President's package of $300 billion, we would come in the middle with
$500 billion. That represents a consensus upon which I think we can all
agree. That represents less than 40 percent of the $1.1 trillion
projected on-budget surplus over the next 10 years, less than 40
percent.
It comes in the middle between the President's package and the
Finance Committee's package. I think that it is eminently sensible, it
is prudent, and we have to err on the side of economic caution when it
comes to how much we are going to spend of the projected surpluses over
the next 10 years because those surpluses are just that, they are
projections. Some have referred to them as the hypothetical jackpot.
We have to be particularly cautious about how much we intend to spend
over the next 10 years from projected surpluses. We want to save the
additional $300 billion so we can look at Medicare, so we can look at
prescription drug plans, so we can look at Social Security, and all the
other issues contained within discretionary spending that we think
happen to be a priority, or we can create a surplus reserve.
The PRESIDING OFFICER. The Senator's 5 minutes have expired.
Ms. SNOWE. I hope, Mr. President, that Members of this body will give
very careful consideration to the compromise proposal we are offering
because it keeps open the door of the tax cut for the American people.

[[Page S9696]]

The PRESIDING OFFICER. The Senator from Louisiana.
Mr. BREAUX. Mr. President, I inquire as to whether the distinguished
chairman has additional time. We can rotate.
Mr. ROTH. I yield back the remainder of my time.
Mr. BREAUX. I yield 5 minutes to my distinguished colleague, Senator
Landrieu.
The PRESIDING OFFICER. The Senator from Louisiana.
Ms. LANDRIEU. I thank the Chair. Mr. President, I rise to support my
senior colleague from Louisiana and thank him and Senator Chafee for
bringing us together and for bringing this measure before the Senate
and before the American people, a measure that, in my mind, is a very
good starting point for where we need to be and on what we need to be
focused.
It does a couple of things of which I am very proud and a couple of
things for which I believe I ran for the Senate to try to do. One, it
is very fiscally responsible. It pays down a significant portion of the
publicly held debt and gives tremendous benefits to the market and to
our economy because of that savings approach.
It also sets aside a prudent amount of money, and under the
leadership of my senior Senator, it enables us to not only throw more
money at Medicare, which we need to do for prescription drugs, but it
provides a floor or a framework for us to really put in some systemic
reforms if we could come to an agreement to strengthen a program that
is depended on by almost everyone in our Nation.
It also gives us a starting point and a proposal to reduce taxes, not
for the very rich, not for those who have already benefited from this
booming economy, but it gives us an opportunity, through strategic tax
cuts, to make it possible for more people to enjoy this new historic
economic boom that we are experiencing.
It does this in very strategic ways, and I will hit on a few in a
moment. Before I begin that point, I want to say that I have the
greatest respect for the Senators from Connecticut and particularly my
good friend, Senator Joe Lieberman, who just spoke. There is hardly a
time I ever disagree with him on an issue of this magnitude, but I have
also looked at the projections underlying the bipartisan plan of
Senator Breaux and Senator Chafee.
I have learned through that review that over the last 50 years, the
average rate of growth has been 3.3 percent. This plan is based on a
very conservative projection, I believe, of a 2.4-percent growth. I do
not concede the point that these projections are off. I will concede
that on the other side, in terms of the spending projections, we are
tight. But we have never, as Senator Bayh pointed out, spent the
inflationary standard.
There is room to pay down our debt, provide for reform of Medicare,
provide a new and very much needed prescription drug benefit, leave
room for some reasonable, responsible new spending for programs, and
give some strategic relief to hard-working American families, families
that are struggling every day to put their children through school,
families who are struggling to keep an elderly person at home with the
added expense so they do not have to live alone or live in a nursing
home that perhaps is not appropriate for them.
There are many important parts of this bipartisan plan that help
average, hard-working families begin to be a part of this new economy.
One of the things I want to mention that is actually interesting but
not a part of this plan, and I hope as it is massaged and improved and
perfected over the next weeks there can be some strategic tax relief to
encourage low-income families to begin saving, just as we have the Roth
IRA plan and the traditional IRA plan. Those have really helped a lot
of middle-income Americans.
But today there are many Americans who live in Louisiana who do not
make enough money to set aside $2,000 a year. So there is a
possibility, through this tax proposal, that we could structure some
tax relief to enable these lower-income, hard-working Americans, to
begin savings accounts that can promote their wealth, promote their
economic fortune, and help them to participate in the new economy.
The PRESIDING OFFICER. The Senator's 5 minutes have expired.
Ms. LANDRIEU. If I could have 30 seconds to wrap up.
So besides the program I have just described, there is family tax
relief, savings and investments, education--tax relief for small
businesses; their No. 1 request to us is for some tax relief so they
can continue to afford insurance for themselves and small businesses
throughout this country. There are many others--tax credits for the
renovation of historic homes, and some other things that create jobs,
stir investment, and give people the tools they need to participate in
this new economy.
I thank my senior Senator. I am proud to be a part of this bipartisan
effort. I ask unanimous consent to be added as a cosponsor of the
amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BREAUX. Mr. President, as a great political philosopher once
said: You have to know when to hold them and know when to fold them;
you have to know when to walk away and you have to know when to run.
I do not think this is the time to run or to walk away, but neither
do I think that either of the two parties at this time is supportive of
the concept that has been offered by our centrist coalition.
However, while I think that time does not arrive yet today, I think
some time before the year's end both sides will come to reach an
agreement that what we have offered on the floor is the right approach
and one which will allow us to get something done with regard to this
type of a tax cut and reservation of funds to do what we need to do as
a government.
I hereby ask that my amendment at the desk be withdrawn.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment (No. 1442) was withdrawn.
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New York.
Mr. MOYNIHAN. May I stress the admiration of this Senator, and I
think many, for the case that the Senator from Louisiana and the
Senator from Rhode Island have made and their colleagues in the
centrist coalition.
I note the trenchant counsel of that philosopher from Bourbon Street:
When to hold them, when to fold them. I say, it is very clear that
their time will come again, sooner perhaps than we know.
With that, I yield 10 minutes to the Senator from Massachusetts.
Mr. CHAFEE addressed the Chair.
Mr. MOYNIHAN. Forgive me, sir. I withhold that. I think the Senator
from Rhode Island wishes to speak.
The PRESIDING OFFICER. The Senator from Rhode Island.
Mr. CHAFEE. Just briefly, I congratulate my colleague, Senator
Breaux, from Louisiana, for his presentation and organization of this
whole effort that we have had. I believe there is going to come a
time--not tomorrow, not the day after but before long--in which this
proposal, which he and I and so many others have worked on, is going to
be accepted by this body. I certainly hope so.
I thank Senator Moynihan for the kind comments he made about the
efforts we have made.
I thank the Chair.
Mr. MOYNIHAN. Again, I emphasize that this was a bipartisan effort,
with Senator Chafee on the Republican side. And I say to him, semper
fi.
On that note, I yield to Senator John Kerry.
Mr. KERRY addressed the Chair.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. I thank the distinguished ranking member.
Mr. President, I appreciate the hard work and the thinking that went
into the so-called centrist approach. I would like to associate myself
with that thinking and with the reasonableness that I think guides most
of their actions.
But may I say, respectfully, that something is in the air in
Washington that I think is clouding people's thinking a little bit,
about where we are on this whole tax bill.
I am all for giving a tax cut when you have the money to give as a
tax cut. But everybody here understands

[[Page S9697]]

some plain truths. Notwithstanding those plain truths, the Senate has
in front of it a $792 billion tax cut.
A moment ago we were talking about a $500 billion tax cut. The fact
is that most of the analysis that is reasonable, dispassionate--and
certainly not pie-in-the-sky sort of dreaming about the future--
suggests we have nothing near a $1 trillion, let alone $3 trillion,
surplus.
Everyone here has accepted the fact that $2 trillion is going to go
to pay down the debt and protect Social Security, and, indeed, a little
bit for Medicare, hopefully. But that set aside, whatever prospect
there is for a surplus is outside of that $2 trillion. The problem is
that the hard reality already tells us an entirely different story from
that which Senators are acting on in voting on the size of the tax cut
on which we are voting.
We are already breaking the caps. There are appropriations bills that
everybody knows are being marked up in a fictitious manner with an
understanding that come September or October there is going to be an
agreement to change the caps because you cannot meet the appropriations
bills without changing the caps.
We are already $30 billion-some over the caps. We are doing it with
the fiction of emergency spending. We are calling the census an
emergency spending.
Everybody knows these games are being played right now. Nevertheless,
the Senate is poised to act on this fictitious surplus.
I do not know one Senator who has gone back to their constituents and
said: We're going to cut veterans' benefits. We're going to cut
highways. We're going to cut border guards. We're going to cut drug
fighting. We're going to cut the Coast Guard. Nobody is saying we are
going to cut these things. But the absolute inescapable reality of this
budget is that unless you increase the spending of discretionary by
something reflecting inflation, you are going to cut.
I heard the Senator from Indiana say: What is it that says we're
going to go out into the future increasing these budget accounts by
inflation? The fact is, we have done it every year. We do it. That is
what happens. It gets more expensive.
The Government isn't somehow exempt from the inflation figures and
factors to which the rest of the economy is subject. Prices go up.
Costs of contracts for the Government go up. Fuel costs go up.
Insurance--whatever it is. The fact is, we already know what is
happening to medical costs in the country. Yet everyone knows we are
not sufficiently laying out the amount of money that it is going to
cost the Government to do its business. Not withstanding that, we are
poised to carve out, to fix in concrete a measure of give-back that
predicates that if you go down that road and you freeze Government at
the level that the figures are based on, you are going to have a 38-
percent cut, or so, in all of the discretionary budget.
Tell me the year in which we have not increased defense spending.
Tell me the year, particularly, that the majority party has not set
out, as a goal, to increase defense spending. But they did not even
figure that into the level of spending that we have here.
This is the reality. If you keep the current accounts at their
current level, plus inflation--and no one here has said to America they
are going to reduce those accounts all across the board by X
percentage--you are going to spend an additional $595 billion. So you
have to subtract that $595 billion from the so-called $1 trillion that
has been set aside from the $3 trillion because we are protecting
Social Security with $2 trillion.
That leaves about $400 billion. But every year we have had an average
of $80 billion of emergencies. Are people suggesting there are going to
be no emergencies next year, even though every year we have had a
budget there has been an emergency expenditure? Just taking the average
of $80 billion, you will have an absolute, predictable additional $31
billion in Social Security Administration costs. Those aren't counted
into the Republican bill. You will have absolutely $178 billion of
additional interest rates because of the money you are not paying down
on the debt. You will have to pay that interest. That is not
calculated. That is an additional $178 billion. That leaves us
conceivably with this little red block, not a trillion dollars, but
this little red block, which might amount to $112 billion or so,
depending on what we do for prescription drugs, for Medicare, and a lot
of other issues facing America.
The real choice in front of the Senate is considerably different than
the fiction we are being fed. I heard the distinguished ranking member
yesterday talk about the reality that we lived through in the 1980s,
the creation of fiscal crisis as a means of achieving ideological and
political goals. I respectfully suggest that what we are looking at is
a form of Stockman 2. That is what is going on. This is Stockman 2. We
are going to come in with a tax cut that has no money, that isn't
predictable, and we are going to create a new crisis in our Government,
where we are going to face a whole set of choices that a lot of people
here will love because we know they hate those particular expenditures.
But they are expenditures that time and again, year in and year out,
our fellow citizens have said they want us to make. And time and again,
the Congress, when it has had that great clash with the President, has
capitulated and made them.
So this is a remarkable new kind of thinking, where if one big
mistake is a mistake, we are going to come in and say we will make it a
lesser mistake, but it is still somehow better thinking. So instead of
$791 billion, some people would argue we ought to do 500 or 300. The
fact is, all of those figures are out of sync with the reality of what
we have in front of us.
We don't even show a real budget surplus until the year 2006. In the
year 2006, assuming that you have spending plus some little measure of
inflation, the way we have traditionally, you have only $29 billion of
surplus by the year 2006. That is the hard reality.
I hear my colleagues come to the floor and say: We have the highest
measure of taxation against our gross domestic product that we have
ever had. What they don't tell you is the reason it is so high is
because so many people are cashing in on their capital gains. We
lowered the capital gains tax. They don't tell you the capital gains
tax isn't even counted in the measure of the gross domestic product. So
you have a completely artificial set of numbers, when they come in and
tell you the tax rate is up.
That is the way it is supposed to work. That is why we have a
progressive tax structure. When the economy does brilliantly, you are
supposed to get a little more money into the Government so that you
have the ability to do the things that are important for the long-term
of our country.
Recently, I had the pleasure of meeting with a number of high-tech
presidents. And to a person, these people, who are fueling the engine
of our productivity growth in America and creating the high value-added
jobs, will tell you they need an America that has a citizenry that is
educated and capable, that depends on investment. You don't measure the
debt of this country by the figures that show up on debt. You measure
the debt of this country by the people who can't access those high
value-added jobs, who don't have child care and the ability to live
with clean water and clean air and so forth.
Mr. President, I think we are measuring things backwards, wrong. I
think we are on a very dangerous track which will have long-term
implications for the full measure of the citizens of our country. I
express that concern as we come, sometime, to a vote on this issue.
Mr. MOYNIHAN. Mr. President, Senator Bingaman has an amendment he
will offer.

Amendment No. 1462

(Purpose: To express the sense of the Senate regarding investment in
education)

Mr. BINGAMAN. I appreciate the courtesy.
Mr. President, there is an amendment that I believe has been filed. I
send it to the desk.
The PRESIDING OFFICER. The clerk will report the amendment.
The legislative assistant read as follows.

The Senator from New Mexico [Mr. Bingaman] proposes an
amendment numbered 1462.

Mr. BINGAMAN. Mr. President, I ask unanimous consent that reading of
the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.

[[Page S9698]]

The amendment is as follows:

On page 371, between lines 16 and 17, insert the following:

SEC. ____. SENSE OF THE SENATE REGARDING INVESTMENT IN
EDUCATION.

(a) Findings.--The Senate finds the following:
(1) The Republican tax plan requires cuts in discretionary
spending of $775,000,000,000 over the next 10 years.
(2) If defense programs are funded at the level requested
by the President, funding for domestic programs, including
those providing funds for public schools, will have to be cut
by at least 38 percent by 2009.
(3) Such cuts in funding for public schools would deny--
(A) access to critical early education services to 430,000
of the 835,000 young children who would otherwise be served
by Head Start in fiscal year 2009;
(B) services to 5,900,000 children under the program for
disadvantaged children under title I of the Elementary and
Secondary Education Act of 1965, almost \1/2\ of those who
would otherwise be served;
(C) access to Reading Excellence programs to 480,000
children, making those children less likely to reach the goal
of being able to read by the end of the third grade; and
(D) the opportunity to learn in smaller classes in the
earlier grades to 1,000,000 children.
(4) If discretionary cuts are applied across the board,
funding under the Individuals With Disabilities Education Act
(IDEA) would be cut by $3,400,000,000 by the year 2009,
resulting in a reduction in the Federal share of funding,
rather than the increase in funding requested by school
boards and administrators across the Nation.
(5) If the Federal share under IDEA is increased from its
current level of 10 percent, then other education programs
would experience even deeper reductions, denying more
children access to services.
(6) The Pell grant, which benefits nearly 4,000,000
students, would have the maximum grant level reduced to
$2175, from the current level of $3850.
(7) Such a level in Pell grants would be the lowest level
since 1987, and would deny low and middle income students
critical financial aid, increasing the cost of attending
college.
(8) Nearly 500,000 students would be denied the opportunity
to work their way through college with the help of the work-
study program.
(9) Nearly 500,000 disadvantaged students would be denied
extra help in preparing for college through the TRIO and
Gear-up programs.
(b) Sense of the Senate.--It is the sense of the Senate
that $132 million should be shifted from tax breaks that
disproportionately benefit upper income taxpayers to sustain
our investment in public education and prepare children for
the 21st Century, including our investment in programs such
as IDEA special education, Pell grant, and Head Start, and to
fully fund the class size initiative.

Mr. BINGAMAN. Mr. President, this amendment has a very simple
purpose. The purpose is to protect the current investment that we are
making in education.
The amendment seeks to decrease the tax breaks that
disproportionately benefit upper-income taxpayers in order to sustain
the current level of funding for education with an increase, a small
increase for inflation. If the Republican tax bill we are considering
is accepted as written, Congress must cut discretionary spending by
more than $775 billion over the next 10 years. When we say
discretionary spending, of course, we are talking about domestic
discretionary spending, which includes education, but we are also
talking about national defense, what we spend on our military.
If we say the portion of discretionary spending that is spent on our
military is likely to be funded at the level requested by the Joint
Chiefs of Staff, which is very likely--in fact, we usually do better
than the Joint Chiefs' request--then domestic programs have to be cut
38 percent. By those ``domestic programs,'' in this amendment I am
talking about education. If these cuts are spread across the board, it
would result in very substantial reductions in current educational
programs.
Let me show to my colleagues a chart that tries to make the point. I
think it makes it pretty well.
It shows with this red line, starting in the year 2000 and going to
the year 2009, we are spending nearly $34 billion on education in the
Federal budget. That includes what we spend on education through the
Education Department but also Head Start. We have included Head Start
because we consider that a program that assists greatly in preparing
students for school. So we are spending a little below $34 billion this
year.
If you take the Republican plan, as I understand it, and take the
logical assumption that we are going to have the kind of cut in
domestic programs we have to have in order to get enough room for this
size tax cut, then you see that go from $34 billion down to a little
over $19 billion by the year 2009.
An education freeze, of course, would keep it right at 34 billion,
but that would not make any provision for inflation. What we are doing
in this amendment is saying that the Senate should go on record as
requesting that the tax cut be reduced by $132 billion so that we have
room not only to maintain Federal funding for education where it is
today but also to allow it to increase as inflation increases.
The Senator from Massachusetts made a very good point a few minutes
ago: The cost of buying services, of paying utility bills, of doing
everything goes up for the government as it does for everyone else. It
certainly goes up for the schools.
Now, we have not built into this amendment, I should point out, any
provision for the fact that we are going to have tens and hundreds of
thousands of new children coming into our school system in the next 10
years, and we are not proposing increases in education funding to
account for that. We should be, quite frankly, but we are not. We are
also not proposing increases for any new education programs. I have
been hearing Mr. Greenspan's testimony, as I am sure all of my
colleagues have, and he says: Start no new spending and cut no taxes.
That is his basic position, to let the surpluses run and let's get our
fiscal house in order.
I don't agree with that position. I believe there are some areas in
our Federal budget where we should increase spending. Education is the
first priority, as I see it. But if we were to take the Republican plan
as it is proposed, it would mean that 430,000 of the 835,000 children
who would otherwise be served by the Head Start program would lose
services by the time we get to the year 2009. It would mean that more
than 5.9 million of the 14.6 million children who live in high-poverty
communities would lose essential education services under title I. The
title I program is the largest education program we fund here in
Washington. It would mean that 480,000 of the 1 million students who
currently are served by the Reading Excellence Program would lose the
opportunity to learn and to have that additional help by the time they
complete the third grade. It also means that the chance of increasing
the Federal share of the cost of the Individuals With Disabilities
Education Act, IDEA--the line item that we try to fund each year--the
stated goal of many in this body has been that we should at least go to
40 percent of what it costs to implement IDEA. But that would be
clearly impossible under what I understand the Republican tax bill is
to provide. Instead, we would be forced to cut special education by
$3.4 billion by the time we get to the 10th year of the Tax Code.
Pell grants, which currently benefit nearly 4 million students--if we
assume we are going to continue to provide a grant to 4 million
students, then you have to slash that from $3,850 per year, which is
today's level, down to $2,175 by the year 2009. Nearly 500,000
disadvantaged students who need extra guidance and support through the
TRIO Program and the GEAR UP Program would also lose that extra help.
In my home State, these statistics could be brought down to a very
concrete level. One example would be Head Start. We have about 8,000
young people in our Head Start Program in my State today, which is
about half of what we should have; that is, half of those who are
eligible. We would have about 3,000 fewer if this tax bill were agreed
to.
I hope very much that we can get a strong vote of support. I believe
the American people do not want to see a tax cut adopted at the expense
of continued support for education as we go into this new century.
Everyone realizes that our future depends upon how well we can prepare
young people for the opportunities they will have in their lives. It is
not responsible for us to be proposing tax cuts that are going to
prevent us from at least maintaining the level of effort we have today
in education. That is the difference. That is what we are trying to fix
in this amendment. I hope very much that we will have a strong vote in
favor of it.
Before I yield the floor to my colleagues to speak in favor, I hope,
of

[[Page S9699]]

this amendment, let me also say a couple of words about another motion
I am going to propose and which will be voted on when we get into the
long list of motions. It is a motion to do something which is very
modest, as this amendment is very modest. This only involves $132
billion. We have been talking about trillions for the last 2 days. This
other motion would be to have the bill go back to the Finance Committee
with instructions to report back with an amendment providing that an
additional $100 billion be applied to debt reduction. That is a small
thing to ask. I think of it more as a tithe than anything else.

If we are talking about nearly $800 billion in tax reduction over the
10 years, we ought to say let's go back and at least take $100 billion
of that, which is surplus that we can anticipate, and commit that to
debt reduction. That will be another item that I believe is very
meritorious. I think all Senators should support it. I think it is the
responsible thing to do. I do it because, in my State, whereas there is
disagreement about new spending programs and whether we should fund
those, and where there is disagreement about a lot of other items we
are debating, there is a strong consensus that we need to make a
downpayment on debt reduction as part of this reconciliation bill. This
reconciliation bill is a blueprint for where we intend to go in the
next 10 years.
I hope the blueprint we finally adopt shows that we intend to
maintain funding for education, at least at current levels. I will be
arguing each year I serve in the Senate that we should be increasing
funding for education, not cutting. We should at least maintain the
current level. I also hope we will adopt a roadmap for the next 10
years that contemplates substantial debt reduction. And I will propose
this other motion, which we will vote on later in the debate, on that
subject.
I see I have some colleagues who wish to speak. I know the Senator
from Maryland does. Let me yield her 10 minutes to speak on this, or
the bill, whichever she prefers.
The PRESIDING OFFICER. The Senator from Maryland is recognized.
Ms. MIKULSKI. I thank the Chair, and I thank the Senator from New
Mexico.
Mr. REID. Will the Senator yield for a unanimous consent request?
Ms. MIKULSKI. Yes.
Mr. REID. Mr. President, it has been cleared, as I understand it, on
the Republican side and over here that all votes will occur when all
time has been used on whatever amendments have been offered up to that
time.
Mr. ROTH. Mr. President, it was brought up to me, but we haven't had
a chance to get it cleared.
Mr. REID. Mr President, perhaps we will offer the request in a few
minutes.
The PRESIDING OFFICER. The Senator from Maryland.
Ms. MIKULSKI. Mr. President, later today Senator John Kerry, Senator
Rockefeller and I will make a motion which protects our senior citizens
in the wake of the Balanced Budget Act of 1997. I would like to talk
about this but I also rise to support the amendment offered by the
Senator from New Mexico, Senator Bingaman. As usual, his amendment is
well thought out. It brings intellectual rigor, sound public policy,
and responsible fiscal policy to this debate, and really meets a
compelling human need.
How I wish the rest of this debate reflected the Bingaman amendment,
because I believe we have embarked upon a debate on these tax cuts
which are, indeed, reckless. I believe the other party is practicing
very reckless economics. First of all, we don't really have a surplus;
we have a promissory note of a surplus. No. 2, we are looking at an
area where we are not sure what the projections will be, and we need to
be prudent. Therefore, we should use the taxpayers' dollars to meet
compelling human needs, national security, and stay the course in terms
of our research and development.
While we are in the midst of debating bloated tax cuts, we have
marines who are on food stamps. I don't see how we can meet our
national security commitment, do a tax cut, and have marines on food
stamps. The marines say ``semper fi''--``always faithful.'' They are
faithful to the United States and we have to be always faithful to the
Marine Corps and to the military. Right over there in Quantico, they
are getting food stamps and they run consignment shops. That is not
right.
The Senator from New Mexico offers this excellent amendment that
says: Stay the course on education.
When I travel in my own State, people don't come up to me and say: I
have a marriage penalty. They say: I am married, I have children, and I
want them to have the same kind of good education I did. Barb, make
sure we have sound public schools, well-trained teachers, and
structured afterschool activities. That is what the Bingaman amendment
does--it lets reserve funds stay the course for our children.
While we are looking at Senator Bingaman's amendment, there is
another compelling human need that needs to be addressed. We have to
reserve certain funds to correct the draconian effects of the Balanced
Budget Act of 1997 on Medicare. The motion that I am cosponsoring will
provide $20 billion to fix many of the problems in Medicare
reimbursement. My colleagues might recall that in 1997 we passed a
Balanced Budget Act. We were going to save money on Medicare. But we
went too far in our cuts. HCFA went too far in its regulations. Guess
where we find ourselves? In my own home State, 34 home health care
agencies have closed. I have 10 public home health agencies, primarily
in rural counties, some who travel on snowmobiles to treat home-bound
patients, and eight have closed because of the budget cuts. There is a
terrible problem, and we need to go back and correct the draconian cuts
of the Balanced Budget Act of 1997.
We also have a situation where we have skilled nursing facilities
that are teeter-tottering on closing. Some might say: Oh, that is a
profit-making industry. Stella Morris isn't profit making. Hebrew Home
isn't profit making. But I will tell you they will now have to find
funds through private, philanthropic dollars even though the Government
should be providing funds.
We have people in my own home State who are being turned away from
nursing homes because they are so sick, they have such complicated
illnesses, that the nursing home can't take them because of the skimpy,
spartan reimbursement policies that are the result of the Balanced
Budget Act of 1997.
Some of those spartan reimbursements went to Medicare HMOs. I always
thought that Medicare HMOs for seniors were a risky proposition because
our old-timers are sick. They need complicated prescription drugs. I
thought that these HMOs that were essentially making a profit may have
some problems. However, these HMOs also provide seniors with extra
health benefits that they cannot get in regular Medicare, oftentimes
for no extra money.
Now, I will tell you that the nonprofit HMO in my own State--Blue
Cross Blue Shield--is pulling out of 17 rural counties in my State, as
of 3 weeks ago in 17 counties, and 18,000 people will lose their
Medicare + Choice HMO. Why? Because Blue Cross Blue Shield is losing $5
million, and they can't afford to provide services.
Dear colleagues, I ask you to reexamine the premise under which we
are operating.
No. 1, the surplus is not yet available. It is a promissory note. Let
us move with prudence. Let us meet compelling human needs. Let us meet
our national security responsibility and stay the course in research
and development.
Let's support the Bingaman amendment on education. Let's deal with
the issues that came from the Balanced Budget Act of 1997. Let's make
sure our marines aren't on food stamps.
Let's make sure that those on food stamps and their children have
access to public education so that in the next generation they won't
have to be on food stamps.
Then we truly have been responsible. We are then getting our country
ready for the millennium.
I would like to say one final word in closing. I thank the Senator
from New Mexico for his strong advocacy for veterans, and particularly
for veterans with disabilities. The Senator knows that we have an 18-
month backlog. He has spoken to me about this.
In his State, they have billboards complaining about the VA backlog.
I bring to the Senator's attention that in VA-HUD appropriations, we

[[Page S9700]]

have under this budget allocation a 10-percent cut. We will not be able
to deal with that backlog.
In fact, while we are opening tax loopholes, we might even be closing
veteran hospitals.
I yield the floor.
I thank the Senator.
Mr. BINGAMAN. Mr. President, I thank the Senator from Maryland for
her very insightful words and her kind comments about me but also for
her leadership on these key issues.

Privilege Of The Floor

I ask unanimous consent that Kathryn Olsen Senator and Gabe Mandujano
of my staff be granted floor privileges during the pendency of this
bill.
The PRESIDING OFFICER (Mr. Bennett). Without objection, it is so
ordered.
Mr. BINGAMAN. Mr. President, I yield 10 minutes to the Senator from
Rhode Island, Senator Reed.
The PRESIDING OFFICER. The Senator from Rhode Island.
Mr. REED. Thank you, Mr. President. I thank the Senator from New
Mexico for yielding the time but also for his farsightedness. He
recognizes, as the American people recognize, that the key to our
future is investing in education. His amendment would precisely do
that. It would sustain our education investment at least at the rate of
inflation.
We are here debating what to do with a surplus. This debate is a
direct result of some very difficult choices we made starting in 1993
and continuing for the last several years. We now have before us a
supposed $3 trillion surplus. But we all recognize and agree that $2
trillion of that is the Social Security account. We are in various ways
recognizing that we don't want to disturb those accounts. So we are
really talking about roughly $1 trillion, or $965 billion.
As the Senator from Massachusetts so eloquently pointed out and so
accurately pointed out, within that surplus we have already made
significant commitments.
One of the problems with the proposals that have been made by the
Republicans--the almost $800 billion tax cut, or the $500 billion tax
cut--is that the assumptions they are using have to be seriously
questioned. They are theoretical assumptions, first, that we will enjoy
the same kind of economic growth over the next 10 years that we have
enjoyed recently.
As Chairman Greenspan pointed out in his appearance both before the
Senate Banking Committee and the comparable committee in the other
body, the business cycle has not been repealed. We will run into,
particularly over a 10-year time span, situations in which projections
do not provide the resources that we think of today.
But the second assumption and the one that is of critical importance
to Senator Bingaman's amendment is the unrealistic assumption that we
will continue these caps on discretionary spending as we have proposed
in the 1997 balanced budget amendment.
These discretionary caps are already constraining what we do. In
fact, we have already violated these caps. As the Senator from
Massachusetts suggested, we will probably in October somehow formally
or informally avoid these caps.
But the premise of this supposed trillion-dollar surplus is that we
will live within these caps. You can see from Senator Bingaman's
presentation that if we do not do our investment, education will
collapse. We will find ourselves underinvesting in education as we have
in so many other programs.
The reality is, as was suggested before, that if we, in fact, simply
fund the President's proposal by the year 2009, we will be spending 38
percent in domestic discretionary spending. There is no way that we can
do that. Frankly, the political reality is that there is no way we will
do that.
We have to recognize that we will be investing in these programs. We
have to recognize, as Senator Bingaman has said, that one of our first
priorities is to continue to invest in education.
Looking at these Republican proposals, I am reminded of what happened
in the early 1980s. George Bush, when he was campaigning against
President Reagan, described his economics as ``voodoo economics.'' It
turned out to be that way. The supply side theories of cutting taxes
will stimulate the economy, pay for themselves, and lead to surpluses
proved dangerously in error during the 1980s.
Perhaps what we are talking about today when we look at these
Republican proposals is ``de ja voodoo economics.'' The theory is that
we will return to the same kind of deficits, the same kind of economic
instability that plagued us through the late 1980s and into the early
1990s until we did take some difficult votes in 1993.
What Senator Bingaman is saying is let's recognize the reality. Let's
recognize that we have to fund educational programs at least at the
level of inflation. If we do that, we will have to invest at least
about $132 billion.
That is what we should be doing. If we don't do that, we are going to
lose out tremendously in the title I programs--a Federal program that
provides assistance and support for low-income students. Frankly, we
understand the crisis in urban and rural education that this money is
so effective in dealing with. Without it, urban systems and rural
systems would be situated even worse. Without it, we would be fostering
and contributing to two separate and terribly unequal societies. We
have to keep our commitment to these young people.
We would also lose opportunities to reform education, for
professional development programs, for opportunities to have smaller
class sizes, for opportunities to go ahead and fix crumbling school
buildings throughout the country. We would do something that all
Members say we would never want to do, and that is renege once again on
our commitment to special education.
I don't know how many times I have been on the floor listening
particularly to my colleagues on the other side who have been talking
about how we have to put more money into IDEA, the Individuals with
Disability Education Act, how we have imposed programs on localities
promising robust spending, and we have never delivered. If we have not
delivered on IDEA yet, if these tax proposals pass, we will never have
a chance to deliver on our contribution to local school systems.
When we move to the area of higher education and Pell grants, work-
study programs, the new LEAP program, which is an outgrowth of the
State Student Center Grant Program, all of these provide opportunities
for Americans to educate themselves beyond high school. We all
recognize that might be the most critical issue we face as a nation--
educating our citizens to enable them to assume challenging roles in
the next century.
Yet we dramatically cut these programs, denying opportunities to
thousands and thousands of Americans. We say to them again: This is not
the land of opportunity; this is the land of advantage and affluence.
Anyone lucky enough to pay for college with their own resources can go
but don't look to the Government to provide the kind of help provided
in the last several years.
All of these cuts lead Members to ask a very simple question for the
working families of Rhode Island, for the working families of New
Mexico, for the working families across this country, when they lose
the Pell grants or see the urban school systems getting less and less
support and local property taxes going up: are they better off with
whatever tax cut they receive than these proposed programs? I think
not.
One other aspect of the Republican proposal is a terribly distorted
benefit that goes to the very wealthy at the expense of middle- and
low-income America. Our constituents know education is the most
important aspect facing our society. They want Congress to continue to
support families. They want precisely what the Bingaman education
amendment does. I believe if we listen to those people who sent us
here, they will say vote for this amendment. They will say reject this
deja voodoo economics that is underlying the proposals by the majority
party. In fact, I hope we respond to that clarion call from our
constituents.
I commend and thank the Senator from New Mexico for his efforts and
for his time.
I yield the floor.
Mr. WELLSTONE. Mr. President, I want to speak briefly about my
support for Senator Bingaman's amendment, which urges restoration of a
portion of the Republican cuts in several key education programs. There
is nothing more important to me than doing the absolute best I can--and
encouraging

[[Page S9701]]

my colleagues on both sides of the aisle to do the same--to push, push
as hard as we possibly can to re-order our spending priorities so that
they better reflect the real concerns and circumstances of the lives of
those whom we represent who are trying to raise and educate their kids,
or send them to college.
Our goal should to be approve a tax plan that will send a clear,
unmistakable message that this Congress cares about education, that
this Congress wants to ensure sure that children come to school
prepared to learn and are given every possible opportunity to grow, to
succeed, to excel. It is time to end photo op politics. It is easy for
all of us to get our pictures taken with young children at schools, but
the question is, have we done enough? The answer: we have not. I
believe my colleagues' proposal, modest as it is, moves us in the right
direction. I know there are technical reasons why we couldn't actually
directly transfer funding for this year in the amendment--an approach
which I wanted to take--but at least this amendment sends the right
signal regarding a re-ordering of our priorities.
I consider this a matter of national security issue, a national
priority. Making sure that the young are ready to learn is good for our
democracy, or economy, and our national defense. it is our
responsibility to make sure that teachers are qualified and equipped
with the right tools, and that the opportunities for learning will be
there in the afternoons long after the last class has been dismissed. I
cannot say forcefully enough: this must be accomplished not at the
expense or detriment of our children but to their collective advantage.
I'm behind the proposal to shift these excessive tax breaks to a plan
that would fully fund the initiative to hire 100,000 qualified teachers
to reduce class sizes. It's no mystery that smaller class sizes
translate into greater opportunities for children to get more
individualized attention.
We've heard that the size of the Republican tax bill is such that it
will require significant cuts in crucial education programs. We've
heard that if defense is funded at the level requested by the
president, we should anticipate at 38 percent ($180 billion) cut in
domestic discretionary spending. That is the worst possible news for
the millions of people who rely on vital initiatives like Title I, Head
Start, and the Reading Excellence program. Absolutely ludicrous.
For instance, under this proposal: Nearly 6 million disadvantaged
children would lose Title I services that help them meet basic academic
needs; 270,000 summer jobs and training opportunities would be
eliminated for low-income young people; 375,000 children would be
denied Head Start services that help them come to school ready-to-
learn; and 549,000 children would be cut from the Reading Excellence
program, denying them the extra help they need to read well by the 4th
grade.
Mr. President, allow me to share some examples from my own
experience. Minnesota, like most states, receives only a portion of the
Title I money it desperately needs as it is. Our current allocation is
about $88 million. If fully funded, we would receive approximately a
quarter-billion dollars and over a hundred million additional dollars
for concentration grants, according to the Minnesota Department of
Children, Families and Learning. Well, I suppose that's a start. A cut
of even half a percent on a program like Title I would be disastrous.
But I can see it coming.
One-fourth of Minnesota's Title I dollars goes to only two cities,
either to Minneapolis or St. Paul, because both cities have high
concentrations of poverty. How can we expect to eliminate the learning
gaps among our children when so many others are left without
opportunities or options?
Right now elementary and secondary education receive on average about
eight percent of its funding from the federal government. It is
imperative that we take bold steps to pass a tax measure that will, at
the absolute least, serve to move us closer to providing the resources
so badly needed in so many areas of education. But it seems clear we
will not do that here.
Another area that I believe is a vital component of our national
infrastructure is our schools. That is why I am an original cosponsor
of Senator Robb's school modernization effort that we will hear more
about later. I think it too is a step in the right direction and I
honestly believe it's another sure way to say to our kids, ``You
matter. Your schools matter. Your future matters.'' In Minnesota alone,
there is a one-point-five billion dollar unmet need for school
construction. Our average school is over 50 years old. Eighty-five
percent of Minnesota schools report a need to upgrade or rebuild their
building just to achieve ``good'' overall condition. Sixty-six percent
report at least one unsatisfactory environmental factor like air
quality, ventilation, acoustics, heating, or lighting.
My staff and I have visited nearly a hundred schools over the past
eight months and we've heard stories of pathetic conditions throughout
the state. I know many of you have heard these stories in your own
states. In my state, for example, Two Harbors High School, which is on
the north shore of Lake Superior is representative. Two Harbors is a
thriving community, but each day its students must enter a facility
that can't meet some of their most basic educational needs. Three
separate studies were conducted to assess Two Harbors' facilities. The
studies identified twenty-seven critical needs that are characteristic
of so many of our schools. The original facility is sixty years old.
The facility does not comply with the Americans with Disabilities Act.
There are no teacher offices. The school does not permit the separation
of middle level and senor high school level students. The list is
extensive. I know we've heard it all before--the crumbling schools, the
lousy physical environments, and the resulting distractions that once
again detract from our children's ability to learn. The question is
``When are we going to wake up and actually do something about it?''
Mr. President, I could go on but the time for talk is long past. The
time for pondering our next move is over. The time to move and to move
deftly is at hand. My colleagues' proposal urges a major transfer of
funding that goes straight to the heart of where our priorities ought
to be. It calls for a real investment in real people, people who truly
deserve it. Smaller class sizes. Access to quality education at an
early age. A fairer share for individuals with disabilities. Help for
low and middle income students who deserve every opportunity to attend
college.
These are some of the most fundamental elements in a strong education
system that values all its children, leaving none of them behind. What
is the Republican alternative? Denying our children access to the very
things that would prepare them for healthy, happy, productive lives in
the 21st century. I urge my colleagues to support this amendment.
Mr. KENNEDY. Mr. President, we should be doing all we can to help
improve public schools to ensure a brighter future for children and the
nation. We should help communities improve teacher training and teacher
recruitment; reduce class sizes, especially in the early grades; expand
after-school programs; build new schools, and modernize crumbling and
overcrowded schools; provide up-to-date-technologies in every
classroom; and make college more accessible and affordable to all
families across the country.
But, the Republicans insist on an excessive tax cut at the expense of
education and children. We should be making a strong investment in
education--not undermining education.
The Republican budget denies 5.9 million children in high-poverty
communities the extra support they need to meet basic academic
standards through the Title I program, including 81,547 children in
Massachusetts. It denies 480,000 children the assistance they need to
learn to read well by the 4th grade through the Reading Excellence Act.
It denies more than a million children the opportunity to learn in
smaller classes where they will get the individual attention they need
to succeed in school. It denies 430,000 children the Head Start
services that help them come to school ready to learn. It denies
215,000 students the after-school and summer school programs they need
to stay off the streets and out of trouble. It denies 500,000
disadvantaged students the extra guidance and support they need to
prepare for college through the TRIO and GEAR-UP programs. It cuts

[[Page S9702]]

IDEA by $3.4 billion, resulting in a reduction in the federal share of
the funding, rather than the increase requested by school boards and
administrators across the country.
The Republican assault on education doesn't stop with young
children--it affects college students, too. It makes college less
affordable for nearly 4 million low- and middle-income students--by
slashing the maximum Pell grant to $2,175, the lowest level since 1987.
It denies 500,000 students the opportunity to work their way through
college.
Education for the nation's children must be a higher priority than
tax breaks for the rich. The American people tell us that improving
public schools is one of their top priorities. They support reducing
class sizes. They support after-school programs to help children learn,
and to reduce juvenile crime. They agree that every classroom should
have a well-qualified teacher. They believe technology should be part
of the classroom. They believe that all children should have the
opportunity to meet high standards of achievement. They want us to make
college more accessible and affordable.
Instead of offering new tax breaks for the wealthy, Congress should
be addressing the priority education needs of children and families
across the country--and help all children get a good education.
Overcrowded classrooms undermine discipline and decrease student
morale. Students in small classes in the early grades make more rapid
progress than students in larger classes. The benefits are greatest for
low-achieving, minority, and low-income children. Smaller classes also
enable teachers to identify and work effectively with students who have
learning disabilities, and reduce the need for special education in
later grades.
The nation's students deserve modern schools with world-class
teachers. But too many students in too many schools in too many
communities across the country fail to achieve that standard. The
latest international survey of math and science achievement confirms
the urgent need to raise standards of performance for schools,
teachers, and students alike. It is shameful that America's twelfth
graders ranked among the lowest of the 22 nations participating in the
international survey of math and science.
The teacher shortage has forced many school districts to hire
uncertified teachers, or ask certified teachers to teach outside their
area of expertise. Each year, more than 50,000 under-prepared teachers
enter the classroom. One in four new teachers does not meet state
certification requirements. Twelve percent of new teachers have had no
teacher training at all. Students in inner-city schools have only a 50%
chance of being taught by a qualified science or math teacher. In
Massachusetts, 30% of teachers in high-poverty schools do not even have
a minor degree in their field.
Another high priority is to meet the need for more after-school
activities. Each day, 5 million children, many as young as 8 or 9 years
old, are left home alone after school. Juvenile delinquency peaks in
the hours between 3 p.m. and 8 p.m. Children left unsupervised are more
likely to be involved in anti-social activities and destructive
patterns of behavior.
We need to do more--not less--to meet workers' needs for additional
job training opportunities, and to meet families' needs for affordable
college education. The nation's workers require strong skills to
compete in the new global economy. According to the Bureau of Labor
Statistics, 42 percent of all jobs created between 1996-2006 will
require education beyond high school.
Education is the key to future earning power. A college graduate
earns almost twice as much as a high school graduate earns, and close
to three times what a high school dropout earns.
Those who complete a post-secondary vocational degree or certificate
are more likely to be employed than those who do not pursue post-
secondary education. But the average student debt is skyrocketing. In
1995-96, the average debt for undergraduates who borrowed was almost
$10,000, an increase of 24 percent just since 1992-93. For graduates of
four-year schools, the average debt was $12,000. In the 1990s, students
have borrowed more in student loans than in the three preceding decades
combined.
The time is now to do all we can to improve education across the
country.
The time is now to meet our commitment to help communities reduce
class size, so that students get the individual attention they need.
The time is now to expand after-school opportunities, so that
constructive alternatives are available to students.
The time is now to provide greater resources to modernize and expand
schools to meet the urgent need for up-to-date facilities.
The time is now to expand support for IDEA, so that more children
with disabilities receive a high-quality education.
The time is now to provide better training for current and new
teachers, so that they are well-prepared to teach to high standards.
The time is now to increase funding for critical programs to raise
academic standards for all children.
The time is now to make college and job training more accessible and
affordable for all students.
I urge my colleagues to support Senator Bingaman's Sense of the
Senate commitment to support increased funding for education. Now is
the time to do what it takes to give every child a good education.
Mr. ROTH. I yield to the Senator from Arkansas.
Mr. HUTCHINSON. Mr. President, I rise in strong opposition to the
Bingaman amendment. As I read the amendment, it suggests we shift $132
billion from tax breaks that disproportionately benefit upper-income
taxpayers to sustain our investment in public education and prepare
children for the 21st century, including our investment programs such
as IDEA, special education, Pell grant, Head Start, and to fully fund
the class size initiative.
I will comment on every aspect of that particular statement. This
amendment presents a false choice. It suggests to my colleagues and to
the American people Members either have to be for tax relief for the
American people or to be for public education, but Members can't be for
both. If Members really support public education, then they will want
to shift $132 billion out of the suggested tax relief and put it into
various aspects of public education. That is a false choice.
It proves one thing conclusively, the concern many Members have had
as we hear the arguments on the other side as they repeatedly say: We
shouldn't give tax relief to the American people because we need to pay
down the national debt.
We have suggested it won't ever go to pay down the national debt but
any left will immediately be used for more spending. Before the ink is
even dry from the passage of this tax relief bill, the proposals are
coming forth in a torrent as to how we should spend the $792 billion
proposed tax relief package for the American people.
If we do not pass the $792 billion tax relief, that money will not go
to paying down the national debt. It will, as already suggested in the
speeches on the other side in the last few minutes, immediately go into
more spending.
IDEA funding is an important issue for school districts across the
Nation. It is important in Arkansas but not an issue to be addressed by
reducing the amount of hard-earned dollars that are returned to
American taxpayers.
In addition, the Class Size Reduction Program is only in its first
year. It has not even been authorized. It was first included in last
year's omnibus appropriations bill and is being considered during this
year's reauthorization of the Elementary and Secondary Education Act.
That is where it should be considered. We should not be setting aside
funds for a program that has never been authorized and has, quite
frankly, done very little right now in reducing class size across the
country.
The Class Size Reduction Program already forces too many regulations
on to school districts. Many States have already implemented class size
reduction programs at a level of 19 or 20 students per year. The
Federal class size program mandates a ratio of 18 students for every
teacher. This forces States to slightly alter their State plan to
receive any Federal funding. Many school districts in my home State
have chosen not to participate in the Class Size Reduction Program
because of the excessive regulations that

[[Page S9703]]

govern the use of funds. Any school district that does not receive
enough funds to hire a new teacher must form a consortium in order to
do so.
Given the fact in my home State of Arkansas there are 311 school
districts, 167 school districts, 54 percent will be forced to form a
consortium even to hire a single teacher because their allocations are
less than $20,000. Some school districts, such as Randolph County,
report they cannot form a consortium and they share a teacher within
the consortium because of geographic reasons.

Class size reduction has not proven to be effective unless class size
is significantly reduced to 12 or 13 students, which is not even
envisioned in the President's Class Size Reduction Program.
Class size has been reduced significantly over the past 30 years,
from 27.4 students per classroom in 1955 to 17 students per classroom
in 1997, but the interesting thing is, as we have seen this dramatic
decrease in average class size across the country, we have not seen a
corresponding increase in academic achievement and standardized tests
across the country.
The State of Arkansas will receive about 1.15 new teachers per school
district, or half a teacher per elementary school. This program has not
been authorized, and to suggest we will take well-deserved tax relief
from the American people and put it into a program not yet authorized I
think fails to make a lot of sense.
Once again this year we are authorizing the Elementary and Secondary
Education Act. We have spent months conducting hearings to learn about
Federal elementary and secondary education policy. We will continue to
work on ESEA throughout the year. I believe that is the appropriate
place for class size reduction and many of these other education issues
to be addressed properly.
Before we set aside Federal funds that should be rightly returned to
the taxpayers, we should consider whether we even want this program
authorized and appropriated in this year's legislation. This is the
wrong way to do it.
As I think about the need for IDEA, I support increased funding for
IDEA. We have done a terrible job in appropriately funding IDEA. But if
we think about what is being suggested, taking it from tax relief for
the American people, it is the wrong way to go. In the $3 trillion
surplus, $13 to $14 billion can be found to fully fund IDEA without
taking it away from tax relief for the American people. IDEA is
currently funded at $4.3 billion, which is about 10 percent of the cost
of educating special education students. Therefore, about $17 billion
would be needed to meet the federally-authorized commitment of 40
percent. This works out to an appropriation of an additional $13
billion to fully fund IDEA. I suggest to my colleagues, that $13
billion can certainly be found in the projected $3 trillion surplus for
this obligation over the next 10 years.

This is a wrongheaded amendment, and it is the wrong place to do
this. But it certainly proves that this $792 billion will not go to
debt reduction. It will go to extensive additional spending programs.
I could not vote for this proposed amendment of the distinguished
Senator from New Mexico, apart from the $132 billion that it suggests
we take away from tax relief, because it improperly characterizes the
Republican tax relief package by saying it disproportionately benefits
upper-income taxpayers. I suggest this is one of the great myths being
perpetrated about Senator Roth's tax relief package that has been
produced by the Finance Committee.
This proposal will reduce the lowest personal income tax rate, the
lowest rate, from 15 percent to 14 percent, beginning in 2001 and then
would gradually expand the bracket so more people would pay that lowest
rate. It would benefit 70 million Americans; 55 percent of Americans
would benefit from that provision alone. That is not a tax break for
the wealthy, and I wish my honest and true colleagues on the other side
would quit characterizing it as such. This amendment should not be
voted for because it says it ``disproportionately benefits the
wealthy,'' and it does not.
In the State of Arkansas there will be 683,000 people, 61 percent of
the taxpayers in Arkansas, who will receive tax relief from this single
provision, apart from the marriage penalty, apart from the estate tax
relief. The single provision of lowering that rate from 15 percent to
14 percent and expanding the bracket will benefit 61 percent of the
poorest people in Arkansas.
So, in all honesty, let's tell the American people the truth. This is
not a tax break for the wealthy. It is a tax break for hard-working
Americans who are paying far more than they should be in taxes.
Under the Clinton administration, taxes have risen to the highest
level in peacetime, a level of 21 percent of GDP--21 percent. In my
home State of Arkansas, that amount translates into $7,352 in taxes per
capita in 1998. I plead with my colleagues, let us not agree to this
amendment. Let us not begin to dilute that which is already far too
little relief for hard-working Americans who have a difficult enough
time making ends meet each month.
Oh, we can talk about wonderful Federal programs to benefit people,
and they do. But if we start down that road, there is no stopping
point. Let's take more of the $800 billion tax cut and let's spend it
on this program and this program and this program because, after all,
don't we know best here in Washington? And we do not.
At the root and at the core of the debate going on in the Senate is
more than just a debate over a tax package. It is more than a debate
over how much relief we can provide the American people. It is a debate
over philosophy. It is a debate whether your faith is in Government and
your faith is in Washington and your faith is in more taxes and central
control, or whether your faith is in the people of this country. We
will do well to put our faith in the people and return that which
belongs to them in passing the Roth tax cut bill.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. HUTCHINSON. I thank the chairman for yielding me time.
Mr. BINGAMAN. Mr. President, I yield 10 minutes to the distinguished
Senator from Massachusetts.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KERRY. Mr. President, I rise also in support of the amendment of
the Senator from New Mexico. It is a smart amendment. It invests in the
future of our country by making certain that, at a time when our
schools all across the Nation do not have the resources necessary to
prepare students for the future, we will do so as a matter of priority.
I must say I was struck by the Senator from Arkansas a moment ago. He
said this benefits not the wealthy but, rather, it benefits 61 percent
of the people in his State. He was only pointing to one component of
the program; that is, the lowering of the tax bracket from I think 15
percent to 14 percent. That is about a $150 billion part of the $791
billion.
But when you add in the other parts of the $791 billion, here is
exactly what happens. In the whole tax package the Republicans are
giving, the lowest 20 percent of income earners in America will get
$22, the second 20 percent will get $120, the middle 20 percent will
get $276, and the top 1 percent gets $22,964. The next 4 percent gets
$3,400, and the next 15 percent gets $1,500. You have to be in the
upper-income brackets to get the larger amount.
The Republicans will always come to the floor and say, Gee, Democrat
Senator, did you just wake up to the fact that that is how it works? If
you earn more money, you get more money? If you are a bigger taxpayer,
you get more money back?
I understand that. I understand basic mathematics. But basic
fairness, basic decency, dictates if you are really trying to help the
lower-income person, you set the figures of the tax break so the person
with the smaller income gets the bigger amount.
Why is it that the lowest 20 percent doesn't get $100 and the top 1
percent gets maybe $1,000 back? It is because that is the way they
rigged the bill. That is the difference in approach and philosophy. It
is a difference that fundamentally divides us.
Let me speak for a moment, if I may, to an issue in one of the
amendments that will be coming up very shortly, but we will not have
time to do full measure on it, and that is the question

[[Page S9704]]

of where we are with respect to Medicare. There is an amendment
Senators Rockefeller, Mikulski, I, and others have introduced to ask
the Finance Committee to go back and set aside $20 billion, about 3
percent of the total size of the tax cut, in order to guarantee that we
will undo the damage the Balanced Budget Act is currently doing to
America's health care system. Today, despite the fact that we have a
remarkable economy, there are 43 million individuals in our Nation who
do not have health insurance--1 out of every 6 Americans. Experts
anticipate that is going to increase by 1.5 million per year.
For the uninsured, academic health centers, the teaching hospitals of
our country, have created an enormous safety net. Teaching hospitals
have stood by to ensure there is care available to everyone in our
country when it is absolutely needed. Today, at a time when teaching
hospitals are more important than ever before, the combination of cost
containment measures imposed by managed care and the effects of the
Balanced Budget Act in reducing Medicare payments has literally made
the future of our Nation's academic medical centers unclear.
I would like my colleagues to think about the impact of what is
happening today because of the reduction of Medicare reimbursements. At
the Medical College of Georgia in Augusta, the training facility for
the State university system's medical school, officials are now raising
room fees by an average of 28 percent and they are increasing the cost
of lab tests and other services by 10 percent.
In Tennessee, Vanderbilt University recently decided it can no longer
accept Medicare patients from outside the State.
In March, Massachusetts General Hospital eliminated 130 positions and
raised prices.
In New York City, which has the Nation's largest concentration of
teaching hospitals, city hospitals have cut their staffs by 10 percent
since 1993.
In California, Medicare cuts are largely to blame for the loss of
over 1,250 jobs at the USFF, Stanford Health Care Network.
In May, the University of Pennsylvania health system announced it was
going to lay off 450 people, 9 percent of its total health care
workforce. Detroit's hospitals have eliminated 4,500 jobs since
January, but as my colleagues will tell you, the problems associated
with the Balanced Budget Act are not unique to hospitals. In
Massachusetts, as of mid-June, 20 home health care agencies have closed
since late 1997.

The administration may be busy sort of brushing off some of this as
the simple corrections of market inefficiencies, but I could not
disagree more, and I think many of my colleagues would disagree with
that.
I do not direct my colleagues' attention to statistics to debate the
bottom line for health care providers. This has never been a debate
about the interest of hospitals or nursing homes. It is a debate about
the fact that if we do not act, we will further reduce the access to
quality care so critical for our Nation's elderly, our Nation's poor,
and our Nation's rural communities. It means something to real people.
In Massachusetts alone, in South Shore, in the last 2 years the South
Shore Hospital has had to lay off close to 50 of their visiting nurses.
They have had to close their satellite offices, and their budget is
more than 40 percent less than they require just to meet the needs of
elderly and disabled patients. Who suffers as a result of that?
Let me share with you a real elderly couple, a man and a woman with
heart disease, lung disease, asthma, and hypertension. The wife of this
gentleman has heart disease. They are 89 and 90 years old, and one of
their greatest hopes has been to live together in the home they saved
for years to buy, living as independently as they can in old age. They
have been able to do it with the help of a visiting nurse from the
South Shore Hospital. But now that is gone. Now, because the services
are being cut because the Medicare reimbursements are so low, the
impact is that those people can no longer continue to do it.
I recently received a letter from another constituent named Harlan
Smith. He says the following:

Dear Senator Kerry: My 80-year-old father was discharged
from my hospital to his home Friday afternoon, and we are
meeting with home health care nurses and physical therapists
today to plan a strategy for my 80-year-old mother and us to
manage him at home. This is ironic since the cuts from the
Balanced Budget Act have caused my hospital to cut services
to the point where my mother and family now have to hire the
required help privately.

They cannot afford it.
These days, that story is repeated in countless communities across
the country. When the Balanced Budget Act of 1997 passed, the
Congressional Budget Office projected the 335 provisions of the law
were going to cut Medicare payments by $103 billion over 5 years. But
today, CBO estimates that Medicare spending is going to drop $205
billion--a 100-percent increase above what the expectations were
supposed to be.
The projected net on-budget surplus for fiscal years 1998 through
2002 is $100 billion. You are seeing the surplus we will have in the
country is basically going to come out of the hides of elderly infirm
patients, people who cannot afford it, hospitals that are being forced
to close, and medical care that is being reduced.
When the Balanced Budget Act passed, total Medicare spending
inflation was expected to drop from almost 10 percent in 1997 to
approximately 5 percent in the outyears. But in April, the Treasury
Department reported that total Medicare spending in the first half of
the year had fallen by over 2 percent.
In 1999 alone, the BBA was projected to cut Medicare spending by less
than $16 billion. Instead, we anticipate Medicare spending is going to
fall by $38 billion in 1999--$22 billion more than was expected.
Medicare hospital spending is plummeting, and the quality of care is
plummeting with it.
When the Balanced Budget Act passed, CBO had projected a 2.5-percent
increase in part A spending, hospital insurance, for 1999. But
actually, spending fell almost 5 percent during the first half of the
year, and the impact on hospitals is clear.

Total hospital Medicare margins are expected to decline from 4.3
percent in 1997 to only 0.1 percent this year. We have a fundamental
crisis. I say to my colleagues on the other side of the aisle, as we
are busy giving back this tax money, we need to consider the impact on
our hospitals, on health care, on home health care, and rural
communities. I beg my colleagues to try to find the money that is going
to save us from the loss of the crown jewels of the American health
care system--our teaching hospitals.
Mr. ROTH. Mr. President, I yield 15 minutes off the bill to the
distinguished Senator from Pennsylvania.
The PRESIDING OFFICER. The Senator from Pennsylvania.

Flat Tax

Mr. SPECTER. I thank the Chairman.
Mr. President, I have sought recognition to talk about my flat tax
amendment which will be voted on by the Senate either this evening or
tomorrow.
The most dramatic way to show what the flat tax is, is to hold up a
postcard which is an income tax return on the flat tax. This postcard
will take 15 minutes to fill out. Here is an enlargement of the flat
tax which lists the identity of the taxpayer, the total compensation,
personal allowance, number of dependents, two deductions allowed,
mortgage interest up to $100,000, charitable contributions up to
$2,500, and then a flat 20-percent tax. It will take 15 minutes on tax
simplification to fill out this return.
Contrast that, if you will, with the fact that we have a Tax Code
with 7.5 million words; a Pledge of Allegiance which has 31 words; the
Gettysburg Address which has 267 words; the Declaration of
Independence, about 1,300 words; the Bible with 1,773,000 words; and
the U.S. Tax Code with 7.5 million words with the pending legislation,
which I have in my hand, which is another thick book of 443 pages to be
added.
In offering an amendment on the flat tax, I have no illusion about
its passing because the train is in operation to have a tax cut. The
flat tax would be a total substitute on a comprehensive tax bill which
would do great things for America.
First of all, the flat tax would eliminate double taxation so there
would be no tax on estates. They have already

[[Page S9705]]

been taxed; all the money is going into the estate. There would be no
tax on dividends; that has all been taxed before it gets into earned
surplus. There would be no tax on capital gains; that has already been
taxed.
This is a win-win situation for America because it lowers the tax
burden on the taxpayers in the lower brackets. For example in the 1998
tax year, the standard deduction is $4,250 for a single taxpayer,
$6,250 for a head of household and $7,100 for a married couple filing
jointly, while the personal exemption for individuals and dependents is
$2,700. Thus, under the current tax code, a family of four which does
not itemize deductions would pay taxes on all income over $17,900--that
is personal exemptions of $10,800 and a standard deduction of $7,100.
By contrast, under my flat tax bill, that same family would receive a
personal exemption of $27,500, and would pay tax on only income over
that amount.
A family of four with $35,000 in income would owe $2,569 in taxes
under current law, but would only owe $1,500 under this flat tax--that
is a savings of $1,065. A family of four with $50,000 would have a
saving of $752.
Why is this possible? It is possible because the tax loopholes enable
write-offs to save some $393 billion a year. What is eliminated under
the flat tax are the loopholes, the deductions in this complicated code
which can be deciphered, interpreted, and found really only by the
$500-an-hour lawyers. That money is lost to the taxpayers. $120 billion
would be saved by the elimination of fraud because of the simplicity of
the Tax Code, the taxpayer being able to find out exactly what they
owe.
This bill is modeled after legislation organized and written by two
very distinguished professors of law from Stanford University,
Professor Hall and Professor Rabushka. Their model was first introduced
in the Congress in the fall of 1994 by Majority Leader Richard Armey. I
introduced the flat tax bill--the first one in the Senate--on March 2,
1995, Senate bill 488. I reintroduced the bill in the 105th Congress,
and re-reintroduced the bill in this Congress on April 15, 1999--income
tax day--in a bill denominated S. 822.
So the bill has been well thought out, has been well documented, as
being revenue neutral by Professors Hall and Rabushka at 19 percent.
My bill has added two deductions--one for interest on home mortgages
for borrowing up to $100,000 for middle-income Americans and a
deduction for charitable contributions for up to $2,500. These two
deductions have been obtained because of the practical impossibility of
having a Tax Code which eliminates those two deductions which is really
the mainstay of America. But aside from those two modest deductions, it
is a flat tax.
One percent has been added on my bill to the Hall-Rabushka formula to
accommodate $35 billion in losses due to the home interest deduction
and $13 billion in tax losses due to the deduction on interest on
charitable contributions. So we have a system which is tax neutral.
Another major advantage of the flat tax is that it would vastly
increase productivity because people would no longer be looking to what
they could save on tax loopholes. Instead, Americans would be devising
their affairs on what would be most productive, because it would not do
one any good to construct a tax loophole, diverting a lot of energy to
try to save taxes, but, instead, the energies of productive Americans
would be devoted to what is productive and what can be accomplished.
This model, under Hall-Rabushka, projects that these savings --which
would be tremendously increased--would far outweigh for the individual
taxpayer any of the benefits that they would receive at the present
time.
Professors Hall and Rabushka project there would be an increase in
the gross national product of some $2 trillion within 7 years, which
would be an enormous boon to America.
As I say, this tax bill is well on the road. The train has left the
station; and it is not to be derailed by any substitute measure. But I
do ask my colleagues to seriously consider the flat tax and, if nothing
more, to cast a protest vote against the existing Tax Code which has 75
million pages, and the current bill which would add 443 pages to that
mountainous monstrosity.
The flat tax is enormously popular with the American people. The
polls show that 61 percent of Americans favor a flat tax.
I can personally attest to the fact that in my open house town
meetings, the reference to the flat tax and the display of this
postcard tax return is the only applause item in my speech. You might
attribute that to the dull balance of the speech, but the flat tax is
an applause producer.
When people think about the time they spend on their tax returns, and
the regulatory system, and the complexity of the tax returns, the fact
that Americans spend 5.4 billion hours filling out tax returns, this is
an enormously attractive matter.
I do not believe that the Senate has voted on a flat tax proposal
yet. We Senators always hear that this group or that group is going to
be watching a specific vote, and it is going to be a recorded vote on
the scorecard. I suggest that a vote on the flat tax is going to be a
vote on the big scorecard for America.

People do know what the flat tax is. They do have an idea about it.
It is overwhelmingly popular. 61 percent of the public favors it;
leaving only 39 percent, most of whom probably do not know about it.
Anybody who knows about the flat tax, that they could get their tax
return done on a postcard in 15 minutes, would be very proud to have
his or her Senator vote in favor of this flat tax.
In essence, the flat tax would vastly simplify the code. It would
eliminate most of the 117,000 IRS Internal Revenue Service employees,
would save most of the $7 billion now spent on the Internal Revenue
Service, and would be a very strong signal to the Finance Committee in
the Senate to take up the flat tax seriously. That has not been done.
It would be a strong signal to the Ways and Means Committee of the
House of Representatives to take a good look at the flat tax.
Because Americans will see that they could fill out their tax return
on a postcard, save the laborious hours and the complications and all
those letters from the IRA saying, you owe $19.14 cents--which
taxpayers like myself would rather pay but you can't do that; you have
to go back through all of your records--the release in productivity,
the elimination of the capital gains tax, the estate tax, the tax on
dividends, all of which has been paid.
Mr. SPECTER. Mr. President, I have sought recognition to introduce my
flat tax legislation as an amendment to S. 1429, the Tax Reconciliation
bill. I had reintroduced this legislation on April 15th, 1999 to
provide for a flat 20 percent tax on individuals and businesses. In the
104th Congress, I was the first Senator to introduce flat tax
legislation and the first Member of Congress to set forth a deficit-
neutral plan for dramatically reforming our nation's tax code and
replacing it with a flatter, fairer plan designed to stimulate economic
growth. My flat tax legislation was also the first plan to retain
limited deductions for home mortgage interest and charitable
contributions.
As I traveled around the country and held town hall meetings across
Pennsylvania and other states, the public support for fundamental tax
reform was overwhelming. I would point out in those speeches that I
never leave home without two key documents: (1) my copy of the
Constitution; and (2) a copy of my 10-line flat tax postcard. I soon
realized that I needed more than just one copy of my flat tax
postcard--many people wanted their own postcard so that they could see
what life in a flat tax world would be like, where tax returns only
take 15 minutes to fill out and individual taxpayers are no longer
burdened with double taxation on their dividends, interest, capital
gains and estates.
Support for the flat tax is growing as more and more Americans
embrace the simplicity, fairness and growth potential of flat tax
reform. An April 17, 1995, edition of Newsweek cited a poll showing
that 61 percent of Americans favor a flat tax over the current tax
code. Significantly, a majority of the respondents who favor the flat
tax preferred my flat tax plan with limited deductions for home
mortgage interest and charitable contributions. Well before he entered
the 1996 Republican presidential primary, publisher Steve

[[Page S9706]]

Forbes opined in a March 27, 1995, Forbes editorial about the
tremendous appeal and potency of my flat tax plan.
Congress was not immune to public demand for reform. Jack Kemp was
appointed to head up the National Commission on Economic Growth and Tax
Reform and the Commission soon came out with its report recognizing the
value of a fairer, flatter tax code. Mr. Forbes soon introduced a flat
tax plan of his own, and my fellow candidates in the 1996 Republican
presidential primary began to embrace similar versions of either a flat
tax or a consumption-based tax system.
Unfortunately, the politics of that Presidential campaign denied the
flat tax a fair hearing and momentum stalled. On October 27, 1995, I
introduced a Sense of the Senate Resolution calling on my colleagues to
expedite Congressional adoption of a flat tax. The Resolution, which
was introduced as an amendment to pending legislation, was not adopted.
I reintroduced this legislation in the 105th Congress with slight
modifications to reflect inflation-adjusted increases in the personal
allowances and dependent allowances. While my flat tax proposal was
favorably received at town hall meetings in Pennsylvania, Congress
failed to move forward on any tax reform during the 105th Congress. I
tried repeatedly to raise the issue with leadership and the Finance
Committee to no avail. I think the American people want this debate to
move forward and I think the issue of tax reform is ripe for
consideration.
In this period of opportunity as we commence the 106th Session of
Congress, I am optimistic that public support for tax reform will
enable us to move forward and adopt this critically important and
necessary legislation.
My flat tax legislation will fundamentally revise the present tax
code, with its myriad rates, deductions, and instructions. This
legislation would institute a simple, flat 20% tax rate for all
individuals and businesses. It will allow all taxpayers to file their
April 15 tax returns on a simple 10-line postcard. This proposal is
based on three key principles which are critical to an effective and
equitable taxation system: simplicity, fairness and economic growth.
Over the years and prior to my legislative efforts on behalf of flat
tax reform, I have devoted considerable time and attention to analyzing
our nation's tax code and the policies which underlie it. I began the
study of the complexities of the tax code 40 years ago as a law student
at Yale University. I included some tax law as part of my practice in
my early years as an attorney in Philadelphia. In the spring of 1962, I
published a law review article in the Villanova Law Review, ``Pension
and Profit Sharing Plans: Coverage and Operation for Closely Held
Corporations and Professional Associations,'' 7 Villanova L. Rev. 335,
which in part focused on the inequity in making tax-exempt retirement
benefits available to some kinds of businesses but not others. It was
apparent then, as it is now, that the very complexities of the Internal
Revenue Code could be used to give unfair advantage to some.
Before I introduced my flat tax bill early in the 104th Congress, I
had discussions with Congressman Richard Armey, the House Majority
Leader, about his flat tax proposal. In fact, I testified with House
Majority Leader Richard Armey before the Senate Finance and House Ways
& Means Committees, as well as the Joint Economic Committee and the
House Small Business Committee on the tremendous benefits of flat tax
reform. Since then, and both before and after introducing my original
flat tax bill, my staff and I have studied the flat tax at some length,
and have engaged in a host of discussions with economists and tax
experts, including the staff of the Joint Committee on Taxation, to
evaluate the economic impact and viability of a flat tax. Based on
those discussions, and on the revenue estimates supplied to us, I have
concluded that a simple flat tax at a rate of 20 percent on all
business and personal income can be enacted without reducing federal
revenues.
A flat tax will help reduce the size of government and allow ordinary
citizens to have more influence over how their money is spent because
they will spend it--not the government. By creating strong incentives
for savings and investment, the flat tax will have the beneficial
result of making available larger pools of capital for expansion of the
private sector of the economy--rather than more tax money for big
government. This will mean more jobs and, just as important, more
higher-paying jobs.
As a matter of federal tax policy, there has been considerable
controversy over whether tax breaks should be used to stimulate
particular kinds of economic activity, or whether tax policy should be
neutral, leaving people to do what they consider best from a purely
economic point of view. Our current tax code attempts to use tax policy
to direct economic activity. Yet actions under that code have
demonstrated that so-called tax breaks are inevitably used as the basis
for tax shelters which have no real relation to solid economic
purposes, or to the activities which the tax laws were meant to
promote. Even when the government responds to particular tax shelters
with new and often complex revisions of the regulations, clever tax
experts are able to stay one or two steps ahead of the IRS bureaucrats
by changing the structure of their business transactions and then
claiming some legal distinctions between the taxpayer's new approach
and the revised IRS regulations and precedents.
Under the massive complexity of the current IRS Code, the battle
between $500-an-hour tax lawyers and IRS bureaucrats to open and close
loopholes is a battle the government can never win. Under the flat tax
bill I offer today, there are no loopholes, and tax avoidance through
clever manipulations will become a thing of the past.
The basic model for this legislation comes from a plan created by
Professors Robert Hall and Alvin Rabushka of the Hoover Institute at
Stanford University. Their plan envisioned a flat tax with no
deductions whatever. After considerable reflection, I decided to
include in the legislation limited deductions for home mortgage
interest for up to $100,000 in borrowing and charitable contributions
up to $2,500. While these modifications undercut the pure principle of
the flat tax by continuing the use of tax policy to promote home buying
and charitable contributions, I believe that those two deductions are
so deeply ingrained in the financial planning of American families that
they should be retained as a matter of fairness and public policy--and
also political practicality. With those two deductions maintained,
passage of a modified flat tax will be difficult, but without them,
probably impossible.
In my judgment, an indispensable prerequisite to enactment of a
modified flat tax is revenue neutrality. Professor Hall advised that
the revenue neutrality of the Hall-Rabushka proposal, which uses a 19%
rate, is based on a well documented model founded on reliable
governmental statistics. My legislation raises that rate from 19% to
20% to accommodate retaining limited home mortgage interest and
charitable deductions. A preliminary estimate in the 104th Congress by
the Committee on Joint Taxation places the annual cost of the home
interest deduction at $35 billion, and the cost of the charitable
deduction at $13 billion. While the revenue calculation is complicated
because the Hall-Rabushka proposal encompasses significant revisions to
business taxes as well as personal income taxes, there is a sound basis
for concluding that the 1 percent increase in rate would pay for the
two deductions. Revenue estimates for tax code revisions are difficult
to obtain and are, at best, judgment calls based on projections from
fact situations with a myriad of assumed variables. It is possible that
some modification may be needed at a later date to guarantee revenue
neutrality.
This legislation offered today is quite similar to the bill
introduced in the House by Congressman Armey and in the Senate late in
1995 by Senator Richard Shelby, which were both in turn modeled after
the Hall-Rabushka proposal. The flat tax offers great potential for
enormous economic growth, in keeping with principles articulated so
well by Jack Kemp. This proposal taxes business revenues fully at their
source, so that there is no personal taxation on interest, dividends,
capital gains, gifts or estates. Restructured in this way, the tax code
can become a powerful incentive for savings and investment--which
translates into economic growth and expansion, more and

[[Page S9707]]

better jobs, and raising the standard of living for all Americans.
In the 104th Congress, we took some important steps toward reducing
the size and cost of government, and this work is ongoing and vitally
important. But the work of downsizing government is only one side of
the coin; what we must do at the same time, and with as much energy and
care, is to grow the private sector. As we reform the welfare programs
and government bureaucracies of past administrations, we must replace
those programs with a prosperity that extends to all segments of
American society through private investment and job creation--which can
have the additional benefit of producing even lower taxes for Americans
as economic expansion adds to federal revenues. Just as Americans need
a tax code that is fair and simple, they also are entitled to tax laws
designed to foster rather than retard economic growth. The bill I offer
today embodies those principles.
My plan, like the Armey-Shelby proposal, is based on the Hall-
Rabushka analysis. But my flat tax differs from the Armey-Shelby plan
in four key respects: First, my bill contains a 20 percent flat tax
rate. Second, this bill would retain modified deductions for mortgage
interest and charitable contributions (which will require a 1 percent
higher tax rate than otherwise). Third, my bill would maintain the
automatic withholding of taxes from an individual's paycheck. Lastly,
my bill is designed to be revenue neutral, and thus will not undermine
our vital efforts to balance the nation's budget.
The key advantages of this flat tax plan are three-fold: First, it
will dramatically simplify the payment of taxes. Second, it will remove
much of the IRS regulatory morass now imposed on individual and
corporate taxpayers, and allow those taxpayers to devote more of their
energies to productive pursuits. Third, since it is a plan which
rewards savings and investment, the flat tax will spur economic growth
in all sectors of the economy as more money flows into investments and
savings accounts, and as interest rates drop.
Under this tax plan, individuals would be taxed at a flat rate of 20
percent on all income they earn from wages, pensions and salaries.
Individuals would not be taxed on any capital gains, interest on
savings, or dividends--since those items will have already been taxed
as part of the flat tax on business revenue. The flat tax will also
eliminate all but two of the deductions and exemptions currently
contained within the tax code. Instead, taxpayers will be entitled to
``personal allowances'' for themselves and their children. The personal
allowances are: $10,000 for a single taxpayer; $15,000 for a single
head of household; $17,500 for a married couple filing jointly; and
$5,000 per child or dependent. These personal allowances would be
adjusted annually for inflation after 1999.
In order to ensure that this flat tax does not unfairly impact low
income families, the personal allowances contained in my proposal are
much higher than the standard deduction and personal exemptions allowed
under the current tax code. For example in the 1998 tax year, the
standard deduction is $4,250 for a single taxpayer, $6,250 for a head
of household and $7,100 for a married couple filing jointly, while the
personal exemption for individuals and dependents is $2,700. Thus,
under the current tax code, a family of four which does not itemize
deductions would pay tax on all income over $17,900 (personal
exemptions of $10,800 and a standard deduction of $7,100). By contrast,
under my flat tax bill, that same family would receive a personal
exemption of $27,500, and would pay tax only on income over that
amount.
My legislation retains the provisions for the deductibility of
charitable contributions up to a limit of $2,500 and home mortgage
interest on up to $100,000 of borrowing. Retention of these key
deductions will, I believe, enhance the political salability of this
legislation and allow the debate on the flat tax to move forward. If a
decision is made to eliminate these deductions, the revenue saved could
be used to reduce the overall flat tax rate below 20 percent.
With respect to businesses, the flat tax would also be a flat rate of
20 percent. My legislation would eliminate the intricate scheme of
complicated depreciation schedules, deductions, credits, and other
complexities that go into business taxation in favor of a much-
simplified system that taxes all business revenue less only wages,
direct expenses and purchases--a system with much less potential for
fraud, ``creative accounting'' and tax avoidance.
Businesses would be allowed to expense 100 percent of the cost of
capital formation, including purchases of capital equipment, structures
and land, and to do so in the year in which the investments are made.
The business tax would apply to all money not reinvested in the company
in the form of employment or capital formation--thus fully taxing
revenue at the business level and making it inappropriate to re-tax the
same monies when passed on to investors as dividends or capital gains.
Let me now turn to a more specific discussion of the advantages of
the flat tax legislation I am reintroducing today.
The first major advantage to this flat tax is simplicity. According
to the Tax Foundation, Americans spend approximately 5.3 billion hours
each year filling out tax forms. Much of this time is spent burrowing
through IRS laws and regulations which fill 17,000 pages and have grown
from 744,000 words in 1955 to 5.6 million words in 1995.
Whenever the government gets involved in any aspect of our lives, it
can convert the most simple goal or task into a tangled array of
complexity, frustration and inefficiency. By way of example, most
Americans have become familiar with the absurdities of the government's
military procurement programs. If these programs have taught us
anything, it is how a simple purchase order for a hammer or a toilet
seat can mushroom into thousands of words of regulations and
restrictions when the government gets involved. The Internal Revenue
Service is certainly no exception. Indeed, it has become a
distressingly common experience for taxpayers to receive computerized
print-outs claiming that additional taxes are due, which require
repeated exchanges of correspondence or personal visits before it is
determined, as it so often is, that the taxpayer was right in the first
place.
The plan offered today would eliminate these kinds of frustrations
for millions of taxpayers. This flat tax would enable us to scrap the
great majority of the IRS rules, regulations and instructions and
delete most of the five million words in the Internal Revenue Code.
Instead of tens of millions of hours of non-productive time spent in
compliance with, or avoidance of, the tax code, taxpayers would spend
only the small amount of time necessary to fill out a postcard-sized
form. Both business and individual taxpayers would thus find valuable
hours freed up to engage in productive business activity, or for more
time with their families, instead of poring over tax tables, schedules
and regulations.
The flat tax I have proposed can be calculated just by filling out a
small postcard which would require a taxpayer only to answer a few easy
questions. Filing a tax return would become a manageable chore, not a
seemingly endless nightmare, for most taxpayers.
Along with the advantage of simplicity, enactment of this flat tax
bill will help to remove the burden of costly and unnecessary
government regulation, bureaucracy and red tape from our everyday
lives. The heavy hand of government bureaucracy is particularly onerous
in the case of the Internal Revenue Service, which has been able to
extend its influence into so many aspects of our lives.
In 1995, the IRS employed 117,000 people, spread out over countless
offices across the United States. Its budget was in excess of $7
billion, with over $4 billion spent merely on enforcement. By
simplifying the tax code and eliminating most of the IRS' vast array of
rules and regulations, the flat tax would enable us to cut a
significant portion of the IRS budget, including the bulk of the
funding now needed for enforcement and administration.
In addition, a flat tax would allow taxpayers to redirect their time,
energies and money away from the yearly morass of tax compliance.
According to the Tax Foundation, in 1996, the private sector spent over
$150 billion complying with federal tax laws. According to a Tax
Foundation study, adoption of

[[Page S9708]]

flat tax reform would cut pre-filing compliance costs by over 90
percent.
Monies spent by businesses and investors in creating tax shelters and
finding loopholes could be instead directed to productive and job-
creating economic activity. With the adoption of a flat tax, the
opportunities for fraud and cheating would also be vastly reduced,
allowing the government to collect, according to some estimates, over
$120 billion annually.
The third major advantage to a flat tax is that it will be a
tremendous spur to economic growth. Harvard economist Dale Jorgenson
estimates adoption of a flat tax like the one offered today would
increase future national wealth by over $2 trillion, in present value
terms, over a seven year period. This translates into over $7,500 in
increased wealth for every man, woman and child in America. This growth
also means that there will be more jobs--it is estimated that the $2
trillion increase in wealth would lead to the creation of 6 million new
jobs.
The economic principles are fairly straightforward. Our current tax
system is inefficient; it is biased toward too little savings and too
much consumption. The flat tax creates substantial incentives for
savings and investment by eliminating taxation on interest, dividends
and capital gains--and tax policies which promote capital formation and
investment are the best vehicle for creation of new and high paying
jobs, and for a greater prosperity for all Americans.
It is well recognized that to promote future economic growth, we need
not only to eliminate the federal government's reliance on deficits and
borrowed money, but to restore and expand the base of private savings
and investment that has been the real engine driving American
prosperity throughout our history. These concepts are related--the
federal budget deficit soaks up much of what we have saved, leaving
less for businesses to borrow for investments.
It is the sum total of savings by all aspects of the U.S. economy
that represents the pool of all capital available for investment--in
training, education, research, machinery, physical plant, etc.--and
that constitutes the real seed of future prosperity. The statistics
here are daunting. In the 1960s, the net U.S. national savings rate was
8.2 percent, but it has fallen to a dismal 1.5 percent. Americans save
at only one-tenth the rate of the Japanese, and only one-fifth the rate
of the Germans. This is unacceptable and we must do something to
reverse the trend.
An analysis of the components of U.S. savings patterns shows that
although the federal budget deficit is the largest cause of
``dissavings,'' both personal and business savings rates have declined
significantly over the past three decades. Thus, to recreate the pool
of capital stock that is critical to future U.S. growth and prosperity,
we have to do more than just get rid of the deficit. We have to very
materially raise our levels of private savings and investment. And we
have to do so in a way that will not cause additional deficits.
The less money people save, the less money is available for business
investment and growth. The current tax system discourages savings and
investment, because it taxes the interest we earn from our savings
accounts, the dividends we make from investing in the stock market, and
the capital gains we make from successful investments in our homes and
the financial markets. Indeed, under the current law these rewards for
saving and investment are not only taxed, they are overtaxed--since
gains due solely to inflation, which represent no real increase in
value, are taxed as if they were profits to the taxpayer.
With the limited exceptions of retirement plans and tax free
municipal bonds, our current tax code does virtually nothing to
encourage personal savings and investment, or to reward it over
consumption. This bill will change this system, and address this
problem. The proposed legislation reverses the current skewed
incentives by promoting savings and investment by individuals and by
businesses. Individuals would be able to invest and save their money
tax-free and reap the benefits of the accumulated value of those
investments without paying a capital gains tax upon the sale of these
investments. Businesses would also invest more as the flat tax allowed
them to expense fully all sums invested in new equipment and technology
in the year the expense was incurred, rather than dragging out the tax
benefits for these investments through complicated depreciation
schedules. With greater investment and a larger pool of savings
available, interest rates and the costs of investment would also drop,
spurring even greater economic growth.
Critics of the flat tax have argued that we cannot afford the revenue
losses associated with the tremendous savings and investment incentives
the bill affords to businesses and individuals. Those critics are
wrong. Not only is this bill carefully crafted to be revenue neutral,
but historically we have seen that when taxes are cut, revenues
actually increase, as more taxpayers work harder for a larger share of
their take-home pay, and investors are more willing to take risks in
pursuit of rewards that will not get eaten up in taxes.
As one example, under President Kennedy when individual tax rates
were lowered, investment incentives including the investment tax credit
were created and then expanded and depreciation rates were accelerated.
Yet, between 1962 and 1967, gross annual federal tax receipts grew from
$99.7 billion to $148 billion--an increase of nearly 50 percent. More
recently after President Reagan's tax cuts in the early 1980's,
government tax revenues rose from just under $600 billion in 1981 to
nearly $1 trillion in 1989. In fact, the Reagan tax cut program helped
to bring about one of the longest peacetime expansion of the U.S.
economy in history. There is every reason to believe that the flat tax
proposed here can do the same--and by maintaining revenue neutrality in
this flat tax proposal, as we have, we can avoid any increases in
annual deficits and the national debt.
In addition to increasing federal revenues by fostering economic
growth, the flat tax can also add to federal revenues without
increasing taxes by closing tax loopholes. The Congressional Research
Service estimates that for fiscal year 1995, individuals sheltered more
than $393 billion in tax revenue in legal loopholes, and corporations
sheltered an additional $60 billion. There may well be additional
monies hidden in quasi-legal or even illegal ``tax shelters.'' Under a
flat tax system, all tax shelters will disappear and all income will be
subject to taxation.

The growth case for a flat tax is compelling. It is even more
compelling in the case of a tax revision that is simple and
demonstrably fair.
By substantially increasing the personal allowances for taxpayers and
their dependents, this flat tax proposal ensures that poorer taxpayers
will pay no tax and that taxes will not be regressive for lower and
middle income taxpayers. At the same time, by closing the hundreds of
tax loopholes which are currently used by wealthier taxpayers to
shelter their income and avoid taxes, this flat tax bill will also
ensure that all Americans pay their fair share.
The flat tax legislation that I am offering will retain the element
of progressivity that Americans view as essential to fairness in an
income tax system. Because of the lower end income exclusions, and the
capped deductions for home mortgage interest and charitable
contributions, the effective tax rates under my bill will range from 0%
for families with incomes under about $30,000 to roughly 20% for the
highest income groups.
My proposed legislation demonstrably retains the fairness that must
be an essential component of the American tax system.
The proposal that I make today is dramatic, but so are its
advantages: a taxation system that is simple, fair and designed to
maximize prosperity for all Americans. A summary of the key advantages
are:
Simplicity: A 10-line postcard filing would replace the myriad forms
and attachments currently required, thus saving Americans up to 5.3
billion hours they currently spend every year in tax compliance.
Cuts government: The flat tax would eliminate the lion's share of IRS
rules, regulations and requirements, which have grown from 744,000
words in 1955 to 5.6 million words and 12,000 pages currently. It would
also allow us to slash the mammoth IRS bureaucracy of 117,000
employees.

[[Page S9709]]

Promotes economic growth: Economists estimate a growth of over $2
trillion in national wealth over seven years, representing an increase
of approximately $7,500 in personal wealth for every man, woman and
child in America. This growth would also lead to the creation of 6
million new jobs.
Increases efficiency: Investment decisions would be made on the basis
of productivity rather than simply for tax avoidance, thus leading to
even greater economic expansion.
Reduces interest rates: Economic forecasts indicate that interest
rates would fall substantially, by as much as two points, as the flat
tax removes many of the current disincentives to savings.
Lowers compliance costs: Americans would be able to save up to $224
billion they currently spend every year in tax compliance.
Decreases fraud: as tax loopholes are eliminated and the tax code is
simplified, there will be far less opportunity for tax avoidance and
fraud, which now amounts to over $120 billion in uncollected revenue
annually.
Reduces IRS costs: Simplification of the tax code will allow us to
save significantly on the $7 billion annual budget currently allocated
to the Internal Revenue Service.
Professors Hall and Rabushka have projected that within seven years
of enactment, this type of a flat tax would produce a 6 percent
increase in output from increased total work in the U.S. economy and
increased capital formation. The economic growth would mean a $7,500
increase in the personal income of all Americans.
No one likes to pay taxes. But Americans will be much more willing to
pay their taxes under a system that they believe is fair, a system that
they can understand, and a system that they recognize promotes rather
than prevents growth and prosperity. The legislation I introduce today
will afford Americans such a tax system.
Mr. President, I ask unanimous consent that the charts and exhibits
be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

1999 Individual Tax Return

form 1--individual wage tax--1999

Your first name and initial (if joint return, also give
spouse's name and initial): ____________________
Your social security
number: ____________
Home address (number and street including apartment number
or rural route): ____________________
Spouse's social security
number: ____________
City, town, or post office, state, and ZIP code:
____________________

1. Wages, salary, pension and retirement benefits.................1____
2. Personal allowance (enter only one):
--$17,500 for married filing jointly
--$10,000 for single
--$15,000 for single head of household........................2____
3. Number of dependents, not including spouse, multiplied by $5,003____
4. Mortgage interest on debt up to $100,000 for owner-occupied hom4____
5. Cash or equivalent charitable contributions (up to $2,500).....5____
6. Total allowances and dedications (lines 2, 3, 4 and 5).........6____
7. Taxable compensation (line 1 less line 6, if positive; otherwise
zero)...........................................................7____
8. Tax (20% of line 7)............................................8____
9. Tax withheld by employer.......................................9____
10____or refund due (difference between lines 8 and 9)...............
____

ANNUAL TAXES UNDER 20% FLAT TAX FOR MARRIED COUPLE WITH TWO CHILDREN FILING JOINTLY
----------------------------------------------------------------------------------------------------------------
Personal Marginal tax
Income Income Deductible Charitable allowance (w/ Taxable rate Taxes owed
mortgage \1\ mtg interest contributions \1\ children) income (percent)
----------------------------------------------------------------------------------------------------------------
<27,500 ............ ............ ................. ............ ............ 0 None
30,000 60,000 5,400 600 27,500 0 0 None
40,000 80,000 7,200 800 27,500 4,500 2.3 900
50,000 100,000 9,000 1,000 27,500 12,500 5.0 2,500
60,000 120,000 9,000 1,200 27,500 22,300 7.4 4,460
70,000 140,000 9,000 1,400 27,500 31,200 9.2 6,420
80,000 160,000 9,000 1,600 27,500 41,900 10.5 8,380
90,000 180,000 9,000 1,800 27,500 51,700 11.5 10,340
100,000 200,000 9,000 2,000 27,500 61,500 12.3 12,300
125,000 250,000 9,000 2,500 27,500 86,000 13.8 17,200
150,000 300,000 9,000 2,500 27,500 111,000 14.8 22,200
200,000 400,000 9,000 2,500 27,500 161,000 16.1 32,200
250,000 500,000 9,000 2,500 27,500 211,000 16.8 42,200
500,000 1,000,000 9,000 2,500 27,500 461,000 18.4 92,200
1,000,000 2,000,000 9,000 2,500 27,500 961,000 19.2 192,200
----------------------------------------------------------------------------------------------------------------
\1\ Assumes home mortgage of twice annual income at a rate of 9% and charitable contributions up to 2% of annual
income.

____
Advantages of the 20 Percent Flat Tax

(By Senator Arlen Specter)

Simplicity: A 10-line postcard filing would replace the
myriad forms and attachments currently required, thus saving
Americans up to 5.3 billion hours they currently spend every
year in tax compliance.
Cuts government: The flat tax would eliminate the lion's
share of IRS rules, regulations and requirements, which have
grown from 744,000 words in 1955 to 5.6 million words and
12,000 pages currently. It would also allow us to slash the
mammoth IRS bureaucracy of 117,000 employees.
Promotes economic growth: Economists estimate a growth of
over $2 trillion in national wealth over seven years,
representing an increase of approximately $7,500 in personal
wealth for every man, woman and child in America. This growth
would also lead to the creation of 6 million new jobs.
Increases efficiency: Investment decisions would be made on
the basis of productivity rather than simply for tax
avoidance, thus leading to even greater economic expansion.
Reduces interest rates: Economic forecasts indicate that
interest rates would fall substantially, by as much as two
points, as the flat tax removes many of the current
disincentives to savings.
Lowers compliance costs: Americans would be able to save up
to $593 billion they currently spend every year in tax
compliance.
Decreases fraud: As tax loopholes are eliminated and the
tax code is simplified, there will be far less opportunity
for tax avoidance and fraud, which now amounts to over $120
billion in uncollected revenue annually.
Reduces IRS costs: Simplification of the tax code will
allow us to save significantly on the $7 billion annual
budget currently allocated to the Internal Revenue Service.

Investment Tax Credit For The Biotech Industry

Mr. SPECTER. In the balance of my allotted time, I will speak briefly
about another amendment which will be voted on, probably tomorrow. That
is an investment tax credit for the biotechnology equipment industry.
In my capacity as chairman of the Senate Subcommittee on Health and
Human Services, my distinguished ranking member, Senator Harkin, and I
have the job of allocating funds for the National Institutes of Health.
They are the crown jewel of the Federal Government--perhaps the only
jewel of the Federal Government.
We are facing an extraordinarily difficult time in allocating funding
because of the allocation for the subcommittee which is far under what
is necessary to provide the $2 billion which we allocated in increase
last year.
In consulting with the biotechnology industry, the one item which
could bridge the gap would be a 10 percent investment tax credit which
would stimulate Biotech and would do a tremendous amount for the health
of Americans.
In the course of the past few months, stem cells have been discovered
by Biotech which is a veritable fountain of youth, holding a promise
for a cure for cancer, Alzheimer's, Parkinson's, and other maladies.
So I urge my colleagues to take a close look at the investment tax
credit for the Biotech industry when it comes up.
I thank the Chair and thank the chairman for yielding me this time
from the bill and yield the floor.
Mr. REID. Mr. President, if the manager of the bill will yield for a
brief statement, as soon as the leaders arrive, I wonder if the next
speaker would mind being interrupted. We have a unanimous consent
request we would like to enter and not delay the leader

[[Page S9710]]

any more than necessary. The leader should be coming here soon.
Mr. ROTH. That is satisfactory. I yield 12 minutes to Senator Inhofe.
Mr. INHOFE. I thank the Senator.
Mr. President, I, like many of my colleagues, have been listening
intently to all of the debate. I certainly understand that the Senator
from New Mexico is very sincere when he talks about many of these
programs that need funding.
I do think that something has been completely lost in the debate that
has been taking place on the floor. It is this assumption that if we
are going to pass a tax reduction, it is going to automatically reduce
revenues. I think this is one of the fallacies that defies all history,
and it is one that needs to be talked about at this time.
I can remember when President Clinton was first elected in 1992. One
of the first appointments he made was his chief financial adviser,
Laura Tyson, who was quoted to have said--I believe this is an exact
quote; certainly the intent is the same--that there is no relationship
between the level of taxation the Nation pays and the amount of
economic performance. I think this is ludicrous. I think it defies all
logic. If you carried that to its logical conclusion, you would say
let's raise all marginal rates to 100 percent, and everyone is going to
work as hard as they would have otherwise. Certainly this is not what
history has shown us.
One of the interesting things that is so overlooked by many liberals
and others nowadays is that you can increase revenues by decreasing
taxes. You have to realize that for every 1-percent increase in
economic activity, that generates new revenues of $24 billion.
This was really discovered by accident back in the 1920s. Back in the
1920s, under two administrations, Warren Harding and Calvin Coolidge,
there was a guy named Andrew Mellon, who was the Secretary of the
Treasury under both administrations. It wasn't his understanding at
that time that he would be able to increase revenues by reducing taxes,
but this was right after World War I. In World War I, we had tax rates
that were just unconscionably high--73 percent. So they said, all
right, the war is over now. Let's reduce our tax rates, and they
reduced them in three steps during a 9-year period from 73 percent to
25 percent.

This chart shows the income tax rate at the time right after the war
and how they reduced it from 73 percent down to 25 percent. Look what
happens as the income started rising. It came up from about $700,000 to
over a billion dollars. It was almost doubled during that period of
time. I think this speaks for itself. It shocked a lot of people. This
wasn't some smart economist saying this is the way to increase revenue.
They weren't even trying to increase revenue. But that is what
happened.
Then again in the 1960s, of course, this was not a Republican
administration. This was the administration of President Kennedy, and
he made the statement, drawing upon the experience of the 1920s, that
we have to have more revenues to take care of the obligations that we
have incurred in Government. He said we need more revenues, and the
best way to increase revenues is to reduce taxes.
I say to the Senator from New York, this was not a Republican saying
this. This is someone whom he knew very well, President Kennedy, back
in the 1960s.
So he came along with his tax rate. At that time the highest rate had
been up at 91 percent, as you see on the chart represented by the green
line. He reduced them over that period of time down to 70 percent.
Now, if you make that kind of a reduction in the tax rate and you see
what has happened during that period of time, during the 1960s, it did
exactly what the President said it was going to do in anticipating what
was going to happen to the revenues. President Kennedy knew that, and I
think many of the people at that time felt this was something that
twice in history had been proven to be the case.
Then, of course, along came the 1980s. I can remember in the 1980s
because I was around at that time. I remember when Ronald Reagan--keep
in mind this was at a time when we had deficits, not surpluses as we
have today. He was advocating a sweeping tax relief reduction of about
$1.6 trillion. I happen to have known personally, as many of my
colleagues did at that time, Speaker Tip O'Neill. Speaker O'Neill at
that time was not considered to be one of the stalwarts of the
conservative movement, but Tip O'Neill said: No, I think that is too
much. I think to be fiscally responsible, we should reduce taxes only
by $1.3 trillion.
Now, keep in mind, this is Tip O'Neill, a Democrat, advocating the
reduction of taxes by $1.3 trillion. Now we are talking about merely
reducing them by some $790 billion.
Mr. President, to repeat, we learned lessons quite by accident during
the Harding and Coolidge administrations back in the twenties. The
lessons were that you can actually increase revenues by decreasing
taxes. We learned in the 1960s when President Kennedy did the same
thing; we dramatically increased revenues by decreasing taxes. This is
the most revealing one because there has never been a 10-year period in
the history of this country where we have had more tax reductions in
marginal rates than we did in the 1980s.
On this chart, the green line is the income tax revenues, starting in
1980, going up here and showing that they increase by two-thirds at a
time when the reductions in the rates were actually cut by two-thirds.
I think it needs to be pointed out that there is not a direct
relationship between the level of taxation and the amount of revenue.
In fact, the relationship is just the opposite. I think those who are
saying we don't want to reduce taxes are really saying we don't want to
reduce revenues. I can understand that. Some people believe Government
should have more spending power and more control of our everyday lives.
That is what defines a liberal versus a conservative. I think we are
trying to do something to really have dramatic cuts to enhance the
economy. Perhaps one of the benefits of that would be, as history has
shown, to increase revenues.
There is one thing you can do if you want to cut down the size of
Government, and that is to cut some of these programs. It has been my
experience--having worked at the local level, State level, and now in
both Houses of Congress--that once a problem exists out there, you form
a Government agency to deal with the problem. The problem goes away,
but the agency goes on. In a great speech made in 1965 which was called
``A Rendezvous With Destiny,'' Ronald Reagan said:

There is nothing closer to immortality on the face of this
earth than a Government agency once formed.

I believe we need to look at this and realize what has been
happening, where we are going from here, and what effect the tax cuts
we are advocating are going to actually have on the economy.
Another way of looking at it is, in 1993, Bill Clinton actually
passed, with the support of Congress, the largest single tax increase
in contemporary history--in the whole history of this country. He
raised taxes in that one increase by $241 billion over a 5-year period.
In 1995, 2 years later, President Clinton said:

People in this room are still mad at me about the budget
because you think I raised taxes too much. It might surprise
you to know that I think they raised them too much, too.

I think anybody at that time who was opposed to that largest tax
increase in the history of this Nation should realize that a way to
rectify that is to reverse and repeal some of the taxes that were
increased at that time. We have looked at different taxes that should
be reduced. I agree with the Senator from Texas that we should reduce
the marriage penalty. It doesn't make any sense in our society to
reward people who live together out of wedlock. It doesn't make any
sense at all, and it creates some of the other problems that we are so
concerned about.
I am very concerned about the marginal rate tax, and I think we can
probably have the effect of increasing revenues by reducing marginal
rates.
Thirdly--and this will be in one of the amendments that we vote on, I
guess, tomorrow; I hoped it would be tonight, but it will be tomorrow--
is the death tax. I suggest to you that I had occasion to be out in
western Oklahoma talking about the farm crisis and about all the things
that are happening, I know, in other States and in Oklahoma. I am sure
they have the

[[Page S9711]]

same problems out in New Mexico. When you talk about repealing the
estate tax or the death tax, all of a sudden they quit worrying about
crop insurance and these programs because that is the thing they
believe is most critical to the small businessman and woman and farmer
in America. If there is one thing we can do, in all fairness, it would
be to vote favorably on that when the appropriate time comes.
I yield the floor.
Mr. LOTT. Mr. President, we have a unanimous consent agreement that I
think will be constructive in getting our work completed. It has been
discussed thoroughly with the Democratic leadership, and I know it is
going to take some more time tonight and also an effort tomorrow, but I
think that all things considered, it is the best way to proceed.
I ask unanimous consent that the vote with respect to the pending
amendment No. 1462 occur tomorrow morning beginning at 9 a.m, with 15
minutes for concluding remarks to be equally divided beginning at 8:30
a.m. on Friday.
I further ask unanimous consent that the vote with respect to the
Hutchison amendment on the marriage penalty occur immediately following
the above-described vote and there also be 15 minutes for concluding
remarks to be equally divided beginning at 8:45.
I also ask consent that following the conclusion of debate this
evening, no further debate time be in order other than the concluding
time as outlined above.
I further ask unanimous consent that following the two described
votes above, the Senate begin the voting sequence with debate on any
amendment or motion properly filed in the consent agreement of July 29
limited to 2 minutes equally divided.
The PRESIDING OFFICER. Is there objection?
Mr. ROTH. Mr. President, I object.
Mr. LOTT. Mr. President, may I inquire, what is the problem?
So we can clarify this, I think just a temporary misunderstanding, I
suggest the absence of a quorum.
Mr. DOMENICI. Could I ask a question before you do that?
Mr. LOTT. I ask to withhold the suggestion of a quorum call.
Mr. DOMENICI. Might I ask a parliamentary inquiry? How much time
remains on the 20 hours allowed by law?
The PRESIDING OFFICER. Two hours 42 minutes.
Mr. DOMENICI. I thank the Chair.
Mr. LOTT. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. LOTT. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Sessions). Without objection, it is so
ordered.
Mr. LOTT. Mr. President, I renew my unanimous consent request as
earlier stated.
The PRESIDING OFFICER. Is there objection?
Without objection, it is so ordered.
Mr. LOTT. Mr. President, in light of this agreement, there will be no
further votes this evening. The first two votes of tomorrow will begin
at 9 a.m. A number of votes will occur following those two votes. I
hope Senators will work with the managers and work with the whips on
both sides of the aisle. Senator Nickles is here and prepared to work
with Senators to discuss the seriousness of their amendments. The
``Tasmanian junior'' here, Harry Reid, is going to be working on the
Democratic side. Talk with the whips. It is not a very seemly way to do
business to have repeated votes in the so-called vote-arama. A
reasonable number is understandable and can be explained sufficiently.
Senators will be asked not to leave the Chamber in the morning because
once we start on the series of votes, votes will occur every 10 to 15
minutes, so we can get at least four done in an hour.
Mr. REID. Will the Senator yield?
Mr. LOTT. Yes.
Mr. REID. I say to the leader and Members of the Senate, the staff
will be working all night trying to clear all of these amendments. In
addition, there is no rule that says if you call up your amendment, you
have to have a recorded vote. We can have voice votes on some
amendments. Also, on something such as this, people have to determine
whether they want to offer the amendment that has been filed. Just
because it was filed doesn't mean you have to offer it.

Mr. LOTT. You do have options: they can be accepted or taken by voice
vote or some insist on a recorded vote.
As I see things, tomorrow we can finish up at 2 or 3 o'clock, or we
can be here at 5 o'clock tomorrow afternoon. I hope Senators will weigh
carefully the need for their particular amendment. As far as amendments
that have not been thoroughly debated in committee, it is awfully hard
to change the Tax Code in that way. We will try to accommodate Senators
as best we can.
Mr. BINGAMAN addressed the Chair.
The PRESIDING OFFICER. The Senator from New Mexico is recognized.
Mr. BINGAMAN. Mr. President, I yield 8 minutes to the Senator from
New York.
Mr. SCHUMER. Mr. President, I thank the Senator from New Mexico. I
rise in support of his amendment. First, I thank him for his leadership
on educational issues before introducing this amendment. I would like
to speak for a couple of minutes and talk about another educational
amendment that will be before us tonight or tomorrow.
First, on the amendment of the Senator from New Mexico, I have
generally considered myself a balanced budget type of person and
Democrat. I backed up the President a few years ago when we had a split
in our party in the House as to whether to enact a balanced budget, and
I am glad I did. I am glad I did. That means that one has to be careful
about spending.
But if there is one place as we move into the 21st century that we
should be spending more--not just throwing money at the problem, being
careful, setting standards, but spending more money--it is the area of
education.
As we move into an ideas economy, an ideas-based economy, the most
important resource our country has is the minds of our young people. It
is more important than the wealth of the mine, or the fertility of the
fields, or even the output of the factory, because more and more and
more wealth is created, jobs are created, and happiness is created by
how well educated we are by the ideas that our people have.
To enact the budget plan posed by the other side, as the chart of the
Senator from New Mexico shows, and cut education funding or to even
simply freeze education funding, in my judgment, would be a mistake.
This resolution, which urges this Senate and this Congress and this
country to spend somewhat more on education, again wisely--I would not
spend much more on education without imposing standards on teachers and
standards on promotion, which makes a great deal of sense--I support
wholeheartedly.
There is another amendment in the area of education which I am
introducing along with Senator Snowe of Maine, Senator Bayh of Indiana,
Senator Smith of Oregon, Senator Wyden of Oregon, and Senator Kohl of
Wisconsin. It is a bipartisan amendment. We hope this amendment doesn't
became a football in the various views of reconciliation that we have.
But it is an amendment that is very simple. It is an amendment to make
up to $12,000 of college tuition tax deductible and to provide
tax credit to help those saddled with student loans.

We have introduced this amendment for two real purposes. The first
purpose relates to individual families.
We are talking about tax cuts. But when I talk to my constituents in
New York, and when I hear about constituents from around the country,
what is the average person worried about? It is not the exact amount of
taxes that they pay as much as it is the big financial nugget they have
to deal with--buying a home in early family life, paying for the kids'
college in middle life, and paying for health care in later life.
Tonight, as we all go to sleep, there will be millions of Americans
worrying about how they are going to pay for their kids' college
education. Tuition has gone up far more than the rate of inflation. In
fact, if you look at the prices of everything since 1980, tuition has
gone up more than anything else--even more than health care. I believe
the number is 250 percent between 1980 and 1995 for middle-income
families--families that do not really need much

[[Page S9712]]

other help, families that might make $50,000, or $60,000, or $70,000 a
year. It seems almost unfair, after they struggle to pay that tuition
bill, for Uncle Sam to take his cut. This bill says that won't happen.
This bill says that for anyone at the 28-percent bracket or lower. So
the numbers will go up fairly high--$90,000--for a single head of
household, and $105,000 for a two-family head of household. You can
deduct your tuition.
We rarely give relief to those in the middle class. Too often many
people in the middle class--the majority of Americans--think most of
what we do helps the very poor or the very rich. But this proposal is
aimed right at what bothers them, and with good reason. It is going to
be tremendously helpful to millions and millions of Americans who right
now think they are not getting much out of the tax proposal on either
side of the aisle.
There is a second reason to do this; that is, for the good of the
country. As we move into an ideas economy--as I mentioned in my remarks
about the amendment of the Senator from New Mexico--education is the
key. The better educated we are, the better we do as a country. In
fact, I worry when you look at some of the rankings in terms of
education when compared to other Western countries.
But every time a well-prepared, intelligent student isn't able to go
to the college of his or her choice because of that tuition bill, not
only does that individual lose, not only does their family lose but
America loses. Every time we don't use and fulfill the potential of a
young mind, not only does that person lose, not only does his or her
family lose but America loses.
It seems to me, as we move into the 21st century in an ideas-based
economy, it is almost imperative that we have as many students in as
good a college as they can academically achieve. Right now that is not
happening. But in this tax bill, if we were to make tuition deductible
up to $12,000, it would have a tremendous impetus.
A couple of other points on the proposal, a bipartisan proposal, made
by myself and Senators Bayh, Kohl, and Wyden on this side of the aisle,
and Senators Snowe and Smith on the other side of the aisle:
No. 1, it is completely offset. So we are not increasing the tax
bill. We mainly do this by delaying certain things in the existing bill
for a year.

No. 2, it does not cut off until, as I said, you move from the 28-
percent bracket and above that. So 90, 95 percent, a huge percentage of
America's families, would benefit--all but the extremely well-to-do.
No. 3, tuition is deductible up to $12,000 a year. That is full
tuition for over 80 percent of all Americans. Even for those who are
going to a more expensive school, it is a real help in terms of getting
them there.
I urge my colleagues to please look at this amendment. It is
bipartisan. It is not intended to be an amendment that scores political
points. It is an amendment intended to better this country and help
middle-class families struggling to send their children to college.
I urge its adoption by Members on both sides of the aisle.
I thank the Chair.
Mr. ROTH. Mr. President, I yield 5 minutes to the distinguished
Senator from New Mexico.
The PRESIDING OFFICER. The Senator from New Mexico is recognized.
Mr. DOMENICI. Thank you, Mr. President. I thank the chairman.
I say to Senator Bingaman that I would not rise in opposition to his
amendment if it was not, as I view it, an implication that what I
propose is going to hurt education.
Since that is the case, I must tell the Senator that I think he is
wrong. So I will proceed, as I must, to tell him what we did with
education and what we can do with education based upon the money that
is left over after the tax cut is effective.
I do not know where the chart comes from that the Senator has up
there. But I would assume it comes from somebody who assumes there is
no money left over after the tax cut and, therefore, everything will be
reduced, and over the next 10 years there will be no inflation added to
any function. If that is the case, it is wrong.
But if Senators want to look at the budget resolution we prepared, we
expect they will stand up and say no, there is not enough money in this
budget for education.
What we did in that budget resolution, which is not binding--just
like his resolution here is not binding; it does nothing for
education--it is a wish list and cuts taxes. It reduces the tax cuts
substantially. It would be nice if the Senator would tell us which $120
billion and some he would take out of the tax cut.
But having said that, let me first start by saying if you want to
look at a budget resolution that passed the Senate which had $181
billion in money over a baseline that was frozen for the next decade on
the discretionary side, and ask what did it provide for education--an
assumption just like the assumptions of the Senator from New Mexico--I
would like to tell you what it does.
In 1999, that function on education had $47 billion in it. By the
year 2009, it has $60 billion in it. It specifically provided that
education initiatives receive an added amount of $37 billion over 5
years, $101 billion over 10 years.
The Senator from New Mexico, my colleague and my friend, could ask,
how are you sure that will happen? I am not. Neither am I certain that
the Senator's sense-of-the-Senate resolution is anything but a wish
list. How do we know it would happen? If we reduce taxes by the amount
suggested, there is absolutely nothing to indicate there would be more
added to education in the appropriations process. It is what the
Senator thinks they should add; therefore, it is called a sense of the
Senate.
Over the decade under the budget resolution adopted, and I am not
certain it will be implemented because it is not binding, we actually
vote every year on the appropriated accounts. So all Members know, the
education function in that budget resolution has $570 billion, an
average of $57 billion a year, while we are spending $47 billion this
year.
I don't know where the other graphs came from that are talking about
what we are doing to education. Those numbers are from the budget
resolution.
Nobody knows at what level education will be funded on the
discretionary side of the budget of the United States of America
budget. They will not know any more if Senator Bingaman's sense of the
Senate passes. They will say we should not cut taxes by $120 billion,
because if we don't, we might put it in education.
Having said that, I merely want to look at the budget of the United
States and the surplus that is created and then start with a freeze on
everything, including education. And it may be the Senator is starting
with a freeze and assuming it continues. How much is the surplus? It is
$3.371 trillion. What do you do with it? We put $1.9 trillion in the
trust fund for Social Security because it is there. We then say: Let's
cut taxes in a gradual way over a decade at $792 billion. Then we ask
how much is left over to spend on discretionary programs and Medicare.
It turns out to be $505 billion.
I could not believe under any circumstance that the Congress of the
United States, be it Republican, Democrat, or whatever, would take that
$505 billion and spend it on education. I cannot believe that. There
may be a difference of opinion as to where it is to be spent, but there
is a whopping lot of money for high-priority items.
I don't know where the Senator got his numbers. If the numbers were
legitimate, I would be supporting him. I believe we ought to establish
a priority for education. If I thought we would not have enough money
for the education function to be appropriated by the appropriators, I
might even be saying don't cut taxes that much, but I don't think that
is the case. I don't think we need to do that. There will be money
around for education. It will grow dramatically because it is a high-
priority item, and there is $505 billion over a freeze to be allocated
for discretionary programs, and somewhere around 70, 80, or 90 for a
Medicare prescription drug reform fix.
I regret doing this, but I do not think I want New Mexicans to think
what I propose will destroy education in the manner that this sense of
the Senate implies. If it did not imply that, I would be for it and I
would not be speaking.
Mr. BINGAMAN. Mr. President, I yield myself 4 minutes off of the
amendment.

[[Page S9713]]

I want to respond to my colleague from New Mexico and indicate I do
not in any way question his motives, and I certainly do not question
his understanding of the budget. He is an expert in that. He has
demonstrated that repeatedly since I have been in the Senate.
I do think there is a genuine misunderstanding or disagreement about
what we are talking about in the size of this surplus. I hear my
colleague say we have, over the next 10 years, $33.371 billion in
surplus that we have to spend or we have to use for tax reductions.
That is substantially more than the CBO indicated we had. They said we
had $2.896 billion. There is a substantial difference there. Taking the
figure I was given, $2.896 billion, I understand we are using by far
the largest part of that for this proposed tax cut.
My colleague says that is not the case, that there is still $505
billion remaining for Medicare and discretionary programs. I am just
not clear in my mind where that money comes from. The figures I have
for the total of the surplus do not allow for that money to be
available for discretionary programs and Medicare. The figures I have
received lead me to conclude that there will be major cuts in
discretionary programs if we are going to adopt a tax cut of this size.
If there are cuts in discretionary programs, some of those, of course,
will be defense.
I believe, based on the time I have spent in the Senate, we will not
cut defense. I do not support the cuts in defense, and I do not believe
my colleagues do either. I think we will fund defense and we will fund
increases in defense in the next 10 years in many respects. That means
the discretionary domestic spending such as education has to be cut
even more. That is the concern that caused me to bring this amendment
to the floor.
The point was made that I have just put together a sense of the
Senate which is a wish list. That is in many ways true. I have said the
Senate should go on record as not wanting to cut the current level of
funding for education in this bill, and to the extent we need to reduce
the tax cut in order to ensure we do not cut current levels of funding
for education, then reduce the tax cut to that extent.
As I understand the figures, that means a $132 billion reduction in
the tax cut. That is what I have urged Senators to support.
Mr. BINGAMAN. I yield 5 minutes to the Senator from Virginia.
Mr. ROBB. Mr. President, first of all let me thank my distinguished
colleague from New Mexico for his continued leadership on virtually
every aspect of education and our public responsibility in that
particular area. I am pleased to join him on this amendment, and would
say that I agree completely with my colleague from New Mexico about the
need to make critical investments in our future. Not only does this tax
bill fail to ensure the solvency of Social Security and Medicare, it
provides an inadequate level of investment in education.
My own State of Virginia has long been proud of its history and
support of education. You may recall it was a Virginian who is widely
acknowledged as ``the father of free public schools in America.''
Thomas Jefferson's vision to provide a free public education to all
citizens was designed to preserve a fledgling democracy. But at the
dawn of a new millennium, a strong and vibrant system of public
education has many other benefits as well.
Education breeds opportunity. And it is opportunity that knows no
class, no gender, no race, no income level, no street address. Because
when we invest in education, we invest in our people, we invest in the
economic strength of our communities, and we invest in the
international competitiveness of our Nation.
That is why I have always believed that all three levels of
Government--local, state, and federal--should work together in the area
of education. That is why I believe that the Federal Government can be
a constructive partner in education. And that's why I believe this tax
bill falls short of our responsibility to our nation's children and to
our nation's future competitiveness. The stakes for our country, and
all who live here, couldn't be greater.
Despite these stakes, the tax bill we debate today still falls short
in its investment in education. In addition to the concerns expressed
by my friend from New Mexico, I am particularly concerned about the
inadequate level of school construction assistance provided in this
bill.
Mr. President, we know that 14 million children attend schools in
need of extensive repair or, in some cases, complete replacement. We
know that 7 million attend schools with safety code violations. And we
know there are thousands and thousands of trailers in use because of
school overcrowding--over 3,000 in Virginia alone. Loudon County,
Virginia, Mr. President will need to build 22 new schools to
accommodate its enormous growth in student population. My home county
of Fairfax, VA has capital needs of $1.2 billion over the next ten
years.
But it isn't just a Virginia phenomenon; it's a national crisis.
And we have known about this crisis since 1995, when the GAO informed
us that our national school repair needs total some $112 billion. We
have known that we need to build and repair over 6,000 schools across
the Nation. And yet we are considering a bill today which builds and
renovates only 200 schools.
Mr. President, later in our debate, I will offer a motion to recommit
the tax bill to the Finance Committee to force us to take another look
at our priorities. I have recently introduced legislation which
combines various bipartisan school construction proposals, and which I
hope brings us one step closer to the compromise I know we can reach on
this issue. I look forward to that debate, but for now I will simply
say that Senator Bingaman is right: we need to pay more than lip
service to our most critical societal investment--education. I thank
the chair and I yield back any time remaining to the Senator from New
Mexico.
Mr. BINGAMAN. Mr. President, how much time remains?
The PRESIDING OFFICER. There remains 5 minutes.
Mr. BINGAMAN. I yield the remainder of our time to the Senator from
New Jersey.
The PRESIDING OFFICER. The Senator from New Jersey.
Mr. LAUTENBERG. Mr. President, I thank my colleague from the class of
1982. You are looking at the entire class here, Senator Bingaman and
me. The Senator and I are the remainder of the class of 1982. We
thought we were a small class then, but we have gotten smaller and we
have hung on tenaciously.
One of the things we agree on is the need to provide the kinds of
services to our country that we are pledged to, not only morally but by
law, by laws established over a period of many years, including such
services as our commitments to the veterans who fought to keep this
country free, for the schoolchildren who need to get a start in life
and get on with their own opportunities.
What we see today in the discussion we have just had, frankly, comes
as a surprise to me, a surprise because I serve on the Budget Committee
as the senior Democrat. I looked at the figures. We worked together to
try to establish a plausible base, a parameter within which to work.
But what I have heard is we just discovered gold. We found $500 billion
just laying around. No one else knew it, but it was found.
Since arithmetic is a relatively pure science and everything has to
add up, one scratches one's head and says: How did we find roughly $500
billion more? The distinguished chairman, a very wise Member of the
Senate, an outstanding expert on the budget, found $500 billion that
could be used to support the tax cut that is proposed at some $790
billion. Then there are interest costs on that.
What I come up with, what the numbers say, is that we wind up with a
budget surplus of $32 billion--$32 billion. That is at the end of 10
years--$32 billion. The elderly, the baby boomers who are going to be
retiring at that time, ought to rest easy because they have $32 billion
that is going to go into helping Social Security stay a little more
solvent--$32 billion that can be used for other purposes.

Mr. SARBANES. Will the Senator yield for a question?
Mr. LAUTENBERG. I will be happy to yield for a question.
Mr. SARBANES. I would like to ask the Senator about his chart about
the GOP baseline, if I might.
Mr. LAUTENBERG. Please.

[[Page S9714]]

Mr. SARBANES. As I understand it, what the Republicans are now
proposing represents a cut of over $1 trillion below--below what?
Current spending levels?
Mr. LAUTENBERG. The baseline that was originally proposed by CBO was
to have the caps in place until the year 2002, 3 years hence. Then it
was assumed by the presentations that we have seen and that are here on
the chart, that now the baseline will decline by virtue of no inflation
allowable for those years after it--none, zero.
Mr. SARBANES. None whatever?
Mr. LAUTENBERG. That is right. If you do that, you take over $400
billion out of reality, out of the need to provide programs--$419
billion below CBO's capped baseline.
If you want to play with a figment of imagination, you can imagine
maybe it will be less than that. Maybe we will be able to cut out the
programs for veterans and the other programs that are necessary, just
cut them and play pretend.
Mr. SARBANES. As I understand it, it would take a cut of about 40 to
50 percent in the program levels in order to reach that figure on the
GOP baseline.
Mr. LAUTENBERG. The Senator is absolutely right. It would take a cut
of 50 percent. So that is how we get there. It is a poor way to do
business.
The PRESIDING OFFICER. The time of the Senator has expired. Who
yields time?
Mr. THOMPSON. With the committee chairman's approval, I yield myself
10 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. THOMPSON. Mr. President, on the amendment there are certain basic
things we can all agree with about education. I think most of us
realize the economic prosperity we have today has to do with our
productivity. Our productivity, in turn, has to do in large part with
the technological advances we have had, and that, in turn, is based
upon a well-qualified workforce. The needs for that kind of workforce,
that kind of background and training in the future, are going to be
even greater because we are exploding with information in an
information age for sure.
There is no question about that. Our economic stability and security
in the long term in large part is going to depend on the education
system we have. That, of course, does not necessarily equate to Federal
spending on education. Unfortunately, for some years now we have seen
that we have almost an inverse relationship between the amount of
Federal money spent on education and the quality of education we seem
to be getting. Nonetheless, we all agree there is a part of this effort
that should fall on our shoulders. This amendment suggests our budget
does not address this education problem sufficiently.
I think it has been a good discussion. I think it is one we ought to
have. Every time I begin thinking we can have good discussion about
this, I pick up something, such as the Daily Report for Executives of
July 29 that is entitled, ``GOP Tax Plan Would Hurt Schools, President
And Administration Aides Say.''

Clinton told representatives of Boys and Girls Nation at
the White House that the Republican tax plan would eliminate
funds to help 480,000 children learn to read.

On and on for other things. I know when I came to Washington, one of
the main things I wanted to do was keep children from reading. We spend
a lot of time, we stay up late at night, figuring out how we can keep
kids from learning to read. The President is just verifying this with
these young people.
I hope the President, as badly as he is misleading them, has more
credibility with the young people of this Nation than I think he has.
Now we hear about cuts. We have been hearing about cuts of 30
percent, cuts of 40 percent, and now cuts of 50 percent. People must
wonder what is going on. Senator Domenici says that is not accurate. He
points out that although we have a baseline freeze after the spending
caps are lifted, there is an additional $505 billion in our budget
proposal that can be used for whatever discretionary spending this
President and this Congress decide they want to spend it on.
How do we come up with these cuts? It is a Washington, DC, cut. A
Washington, DC, cut is when you project out what you want spending to
be, and then any spending that is less than that constitutes a cut. It
is not a real cut. It is an increase, but it is less than what the
projection would be.
If you are going by that kind of rationale, then the President is
proposing cuts up to 26 percent, if you figure in his Social Security
plan, because he does not really keep up with the projections that are
being argued.
Go back to 1991 and project increases from 1991 up to today. Look and
see what that is. It has been about 4.2 percent during that period of
time. What the other side is doing is projecting that out ad infinitum.
If we cut back any of those programs, even though the dollar is an
increase, it is less than what they projected it ought to be, so that
constitutes a cut.
The fact is, if we did what our colleagues on the other side suggest,
we would lock in basically the projected increases we would have--
inflation plus--we would lock those in, basically making them, I
suppose, mandatory programs instead of discretionary programs. We would
not do what Congress is supposed to do, and that is sit down and decide
what our priorities are, what programs should be cut, and what programs
should not be cut.
Obviously, many of us think some programs should be increased. We are
hearing a lot now about our hospital programs, our children's
hospitals, veterans, certainly military in some respects. Certainly,
there are going to have to be some increases as we go along, but I
think the primary point I want to make is that there are also going to
have to be some decreases. There are going to have to be some cuts.
Those are the kinds of things we are going to have to decide. We
cannot decide here in advance, because some projection is not reached,
that we are going to cut a particular program to keep kids from
reading--pick your own favorite program, the worst thing you can come
up with, and say that particular program is going to be cut. That is
not true. That is not accurate. That does not represent what the
situation is.
Again, we have to decide what is going to be cut. We have to decide
what is going to be increased, taking a baseline, taking a freeze, not
including inflation, and adding $505 billion to it over 10 years.
Why do I say that some things ought to be cut? One of the things--I
guess the primary thing--we are supposed to be doing in the
Governmental Affairs Committee is seeing how our Government is
operating. We spend an awful lot of time in oversight in that committee
which I chair. We see agencies, Departments of Government, year after
year come before us and they have been delineated by the GAO as prime
objects of waste, fraud, and abuse. They are on the list year after
year, but we keep funding these programs. We keep increasing the
funding for these programs, whether they are working or not. There are
billions of dollars of scarce resources diverted from their intended
purposes many times in waste, fraud, and abuse.

The President in his budget does not find one agency, that I can
determine, that he believes could be operated more efficiently or in
which money could be spent better. All of these programs deserve an
increase by definition. They are Federal Government programs. They
deserve an increase. If you want to reduce funding for a Department or
an agency, then you can pick the program on the other side they say you
are cutting.
The honest truth is that no one knows really how much the Federal
Government loses annually cumulatively to waste, fraud, abuse, and
error. One reason is that most agencies do not keep track of such
losses. We try to keep track for them, as best we can.
Here are a few things we have learned: The Health Care Financing
Administration made erroneous Medicare payments that siphoned off
between 7 and 14 percent of the overall Medicare budget, $12 billion to
$24 billion, depending on which year you are talking about. In 1997, it
was $24 billion. In 1998, they improved; it was only $12 billion.
The Supplemental Security Income Program--cumulative overpayments of
$3.3 billion, including newly detected overpayments of $1.2 billion
just last year.

[[Page S9715]]

The Department of Housing and Urban Development made overpayments in
its rent subsidy program of almost $1 billion.
The Department of Agriculture made overpayments in its Food Stamp
Program that amounted to about $1 billion, or 5 percent of the total
program.
I have others here. The Federal tax debt. We have Federal tax debt
and nontax debt delinquencies, money owed to the Government, not
collected, of $150 billion. I have other items. I mentioned the
Medicare payments.
The Department of Energy: Through 1980 to 1996, the Department of
Energy terminated before completion 31 major systems acquisition
projects after expenditures of over $10 billion. They spent $10 billion
and then terminated the projects; $10 billion was essentially wasted.
Defense contract overpayments: No one knows how much the Government
overpays each year in contracts for goods and services. However, during
the recent 5-year period, defense contractors returned $4.6 billion in
overpayments to the Department of Defense.
Earned income tax credit, $4.4 billion.
I mentioned SSI.
Student loan defaults, $3.3 billion.
Food stamp overpayments, rent subsidy.
A total of $196 billion.
I yield myself another 5 minutes.
Mr. President, $196 billion, and that is just on the waste, fraud,
and abuse side. This is what is going on with regard to our Government
now and these agencies across our Government.
Look at the cross-cutting and the duplication, the hundreds of
programs that are all designed to do the same thing. The left hand of
Government does not know what the right hand is doing. No one is taking
action to sort through this morass to find out which programs are
working and are not. They keep being refunded every year at the full
amount or an increased amount.
According to the GAO, in program area after program area, unfocused
and uncoordinated cross-cutting programs waste scarce funds, confuse
and frustrate taxpayers and other program customers, and limit overall
program effectiveness.
Last year Congress tried to address the number of education programs.
We are all for education. We are all for spending education money
wisely. We have $505 billion of discretionary spending set aside, some
of which we can spend on education. But we found out there were 39
Federal agencies running more than 760 education programs at a cost of
$100 billion a year. Is that effective use of taxpayers' money?
One example is homelessness where 50 Federal programs, run by eight
agencies, seek to provide services to homeless people. We have eight
agencies--the Departments of Agriculture, Health and Human Services,
Housing, Urban Development, Education, Labor, Veterans Affairs--and two
independent agencies--FEMA and the Social Security Administration--all
running these programs, overlapping, duplicating with $1.2 billion in
obligated funds addressing the homeless. GAO found these programs
provide many of the same services, such as housing, health care, job
training, and transportation, and more than 20 programs operated by
four different agencies, offsetting housing, such as emergency
shelters, transitional housing, and other housing assistance.
In another report, the GAO identified 26 Federal grants at a cost of
approximately $28 million that exist to help evaluate the effectiveness
of various school-based violence programs. I know that is something
that the Presiding Officer and I have talked about many times, as to
how we get our arms around this. But $28 million to evaluate these
violence programs in schools, to see which of them are doing any good?
At least three Federal Departments--Education, Health and Human
Services, and Justice --support school-based violence prevention
research and programs.
However, GAO found that these individual Departments have not mounted
a comprehensive strategy for addressing school violence. They are just
all kind of out there doing their own thing--getting some money, coming
to Congress, saying: My goodness, you can't cut back on this. You have
to give us some money. We fund these various programs that are all out
there doing their own things--uncoordinated--obviously, wasting a good
deal of money.

It is not that you do not want the effort made; it is that you want
to have the effort made with a little common sense and not take
people's hard-earned money and throw it down a rat hole.
We have a fragmented Federal approach to ensure the safety and
quality of the Nation's food. As many as 12 different agencies
administer over 35 inefficient programs, putting the American public at
greater danger of foodborne illnesses. But there have been virtually no
decreases for nonmilitary discretionary programs in the President's
budget.
This is supposed to be part of our job. That is why we passed the
Performance and Results Act. These agencies are now supposed to come to
us in Congress and tell us of the effectiveness of their programs. I
assume that because we want that information, we want to do something
with it, and what we want to do with that information is not use it to
continue to fund these Departments that are wasting money and
permitting fraud to be perpetrated upon us to the tune of billions and
billions of dollars.
Some of these programs are mandatory spending programs. Some of them
are discretionary spending programs. But it is all money that would
have been in those Departments had it not been siphoned off, had it not
been stolen, had it not been wasted. It would have been reflected in
the budgetary requests when they came before us. The requests would be
less, and we would be giving them less money if they were operating
halfway the way they are supposed to.
My point is, again, this idea that our friends on the other side of
the aisle have, that they want to have this projected rate of increase
that we can't deviate from at all, is a notion that would go against
every basic precept of efficiency and the proper functioning of
Government.
I yield myself another 3 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. THOMPSON. We need to, as we go along, take that $505 billion that
our budget sets aside for these programs and have every one of them
come up here and justify themselves. Some of them need increases. Some
of them need cuts. In my opinion, some of them need total elimination,
and I make no apologies for that.
But the idea that we are cutting this, and we are cutting that, and
we are going to keep people from reading, the President of the United
States telling these young boys and girls that we are going to cut
480,000 children from learning to read, that is kind of a new low. We
do not know really what to do any more with this stuff. The first thing
you do is get kind of angry, and then you are just kind of sad, shaking
your head, that that sort of stuff is coming out of the White House.
So let's get back to the facts. Let's get back to reality. We can
have a good debate as to how much money we ought to spend on these
programs. That is what we ought to do. But let's not try to convince
the American people that we have made a determination that somewhere in
our budget we are cutting kids off from learning to read or that we are
doing any of these other things--any of these other scare tactics that
are always used by people who think that the American people are not
quite as smart as they really are.
I yield the floor.
Several Senators addressed the Chair.
The PRESIDING OFFICER. Who yields time?
Several Senators addressed the Chair.
Mr. ROTH. I yield 10 minutes to the Senator from Pennsylvania.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SANTORUM. I thank the Chair and thank the chairman for yielding
me time.
I rise to talk about two amendments--not the Bingaman amendment--two
amendments that I have added to the list of 100-some amendments. I hope
that we can accept one of them. We are working very hard to get that
done. I have agreed to enter into a colloquy with the chairman on
another one. I would hope that we will work in conference.

[[Page S9716]]

The American Community Renewal Act

The amendment that I have agreed to enter into a colloquy with the
Senator from Delaware on is the American Community Renewal Act. The
American Community Renewal Act is part of the House bill. It was one of
the centerpieces of the House bill and one that I very strongly support
as chairman of the Renewal Alliance, which is a group of Senators and
Congressmen who have been advocating nongovernmental solutions to the
problems that face our inner cities and impoverished rural areas.
It is important for us, when we pass a tax bill that provides tax
relief to taxpayers, as we should, that we look to those who do not pay
taxes and see what we can do to help lift them into the sometimes
beleaguered status of taxpayers.
It is important for us to be able to reach down into those
communities that are struggling. I have many of them in my State. We
work very hard in communities, from Philadelphia to smaller towns like
Chester and McKeesport, and work with community groups, nonprofits that
are out there trying to make a difference, working with the local
officials in trying to provide economic opportunity, as well as
cultural renewal for the communities that are in blight.
The American Community Renewal Act, I believe, is the right message
for those communities, is the right direction, and that is through
empowerment and through working with the local faith-based and local
community development organizations, helping them pull themselves out
of the difficult situations they find themselves in.
The American Community Renewal Act has two parts. No. 1, it provides
for a charitable tax credit. This is a State-based tax credit. It
allows for Federal block grant funds to be used by States to provide a
tax credit to individual taxpayers who give money to nonprofits that
spend over 75 percent of their money helping low-income individuals. So
this is a way for the Government, instead of spending more money on
Federal or State programs, to take the money that the Federal
Government gives to run Federal programs and say: Let's give it
directly, unaltered, untainted, directly to those organizations--many
of them faith-based--that really are out there on the front line,
compassionate organizations that are out there across the table from
people who are in need, people who have problems.
They are not behind a bulletproof glass at a welfare office passing
out checks if you have the right number on your card. These are people
who are in the trenches who are making a difference, who are
transforming lives every single day, and doing it not because they get
paid to do it or because there is a Federal law they have to do it;
they do it because they love their neighbor.
Those organizations have been lifted up recently by the Vice
President, by Governor George Bush, and many others running for
President. They are lifted up because they found that--you know what?--
faith works. There is a very utilitarian reason to do this--it works
best; it is cheapest--but that is not the best reason. The best reason
to do this is because it transforms lives. It does not just give people
a better job or get them off drugs. It transforms their spirit, which
is the best thing needed in America's poorest communities.
What we do with the charitable tax credit is, I believe, the most
transformational thing we can do in this tax bill.
The second part of the American Community Renewal Act targets not the
soul but the economy. How do we create jobs so when we transform people
they can get into productive work, not taking a bus out to the suburbs
to work in a mall, but transform their own communities with home
ownership and economic opportunity and entrepreneurial investment.
We provide for 100 renewal communities, targeted with progrowth
incentives, tax benefits, regulatory relief, savings accounts,
brownfield cleanups, a comprehensive approach to inner cities. And at
least 20 percent of these communities have to be in rural areas. This
is in the House bill. This is where the House stepped up and said, yes,
we are for tax relief. We have overpaid, but we will not leave any
American behind. We are going to reach down and make sure every
American has the opportunity to be a taxpayer, to contribute to the
economic future of this country.
A renewal community must do some things. It is not just a handout to
the community. They have to commit to reduce local tax rates and reduce
fees within the zones. So yes, we are going to provide some incentives,
but they have to do the same. They have to partner with us. The States
have to eliminate State and local sales taxes, waive local and State
occupational licensing regulations and other barriers to entry for
entrepreneurs in these poor communities where it is so hard.
It is a lot harder to put up a store front in an area where crime is
high, where the services are not as good, than it to set up one in the
suburbs. It is a lot more expensive. It is harder to get employees,
harder to maintain security, harder to get people to come into your
establishment. So they need some help. This is the kind of help we want
to partner with. We will provide some incentives, the locals, the
State. It is a partnership. Let's really work together to make this
happen.
I fervently hope when we bring this bill out of conference that the
American Community Renewal Act will be a part of that so we show, as I
believe this bill does, show that we care about all Americans in
providing relief, yes, tax relief, but relief from the difficult times
that many Americans are going through in our inner cities and poor
rural areas.
The second bill I am going to be talking about, which we have
introduced and I hope we can get adopted, is a very simple provision.
Before I start, in this bill--I congratulate the chairman--is a
raising of the low-income housing tax credit allocation. The current
cap, $1.25 per capita per State, was established in 1986 and has never
been raised. Due to inflation, credits under the current allocation
have lost about 50 percent of their value. The chairman's bill raises
the allocation to $1.75 per capita over a 5-year period. The low-income
housing tax credit is the largest and, I think, most efficient housing
program because it marries public and private resources of production
in rehab of affordable housing, rental housing that we have in America.
It is a tremendous success.
My amendment to the chairman's bill is based on legislation which
raises the cap and indexes it for inflation. This legislation already
has 70 cosponsors in the Senate. The only piece left out of the
chaiman's bill is an indexing of that per capita allocation from the
year 2006 on. That costs a whopping $43 million, not a big ticket item.
And frankly, we pay for it. In fact, as the chairman will be delighted,
we more than pay for it in the amendment that we have. So there is
extra money around for other things that may be done. We think this is
a high priority.
We think, again, we have to provide affordable housing. This is a
program that works. This is a program that has bipartisan support and
something that can say to people, as we have in this bill already, say
to people who may not be big taxpayers and get big tax relief that we
are going to provide some relief in the form of better affordable
housing, more affordable housing for those who may not be taxpayers now
but hopefully, through the efforts here in reducing taxes, getting this
economy--not getting it but continuing this economy to grow in the
future, we will participate in that.
This is one of those step-ups, by providing quality, affordable
private housing, rental housing, which has, again, been an incredibly
successful program.
I hope, again, that we can include the amendment on the low-income
housing tax credit in this bill and go to conference with that here in
the Senate bill. Secondly, I implore the chairman that when we get to
conference to include the American Community Renewal Act to make sure
that every American has the opportunity to rise.
I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. BAUCUS. Mr. President, I yield 10 minutes off the bill to the
Senator from New Jersey.
The PRESIDING OFFICER. The Senator from New Jersey.
Mr. LAUTENBERG. I thank my friend and colleague from Montana.
Mr. President, tomorrow I will be offering an amendment on behalf of
myself and Senator Feingold. This

[[Page S9717]]

amendment is very simple. It directs the Finance Committee to change
the bill so that it does not raid Social Security surpluses in any year
to pay for tax breaks.
The motion stands for a very simple proposition. Social Security
surpluses should be used for Social Security, not for broad-scale tax
breaks that primarily benefit special interests and wealthy
individuals, not for tax breaks that disproportionately benefit the
wealthy, not for anything that would make it more difficult for baby
boomers and other Americans to enjoy a secure retirement.
This ought not to be a controversial proposition. After all, both
parties have been arguing along the same lines for most of this year.
Democrats created a lockbox to prevent Social Security surpluses from
being used for other purposes and to protect Medicare, and the
Republicans vowed to support that concept. But actually, the lockbox
proposal that was introduced by the Republicans has a huge loophole and
does nothing for Medicare.
Medicare is perhaps the most important program that exists in this
country. Medicare is for the elderly. Medicare is the one program that
people have to have standing by in case an illness strikes, which is an
occurrence that is not infrequent when one reaches 65 or retirement
age. Medicare can prevent a catastrophic illness, but also can prevent
a catastrophic financial problem. So we support extending Medicare for
as long as we possibly can, and the projection now is that though
Medicare would be insolvent in 2015, we see an opportunity to extend it
to 2027.
There did seem to be broad agreement from both parties that Social
Security surpluses should not be touched for any other purpose, that
they should be used only to reduce publicly held debt. I was surprised,
to put it mildly, to discover that the Republican tax bill before us
actually spends Social Security surpluses. Deny it they might--and one
need not be a mathematician; the arithmetic is pretty simple to see--
but, in fact, the bill before us spends Social Security surpluses in
each of the second 5 years after the bill's enactment. It starts in
2005.
This chart explains the problems. Consider, for example, what happens
beginning in 2005 under this legislation. The non-Social Security
surplus that year will be $88.6 billion. But this bill, the way it is
laid out, would cost $89.9 billion. In other words, this bill would use
$1.3 billion in Social Security surpluses that very year, 2005, not a
long way away. But the damage doesn't stop there.
This legislation would increase debt, and that would lead to higher
interest costs. In 2005 alone, these additional interest costs would
eat up another $10.9 billion of Social Security surpluses. So the raid
on Social Security that year would equal $12.3 billion. This is after
the promise that Social Security is sacred: Touch not a hair on that
Social Security reserve that we are saving for the elderly, which we
promised them would be theirs. When we finally have a chance to
guarantee its solvency, that promise, frankly, was an empty promise.
Look at the numbers. If you consider both the direct revenue losses
and the additional interest costs, this bill would raid Social Security
surpluses in each of the second 5 years after enactment. We are talking
about 10 years from now. The raid in 2006 would take $5.7 billion. That
would increase to $10.2 billion in 2007, to $24 billion in 2008, and
$23.4 billion in the year 2009.
This is inconsistent with the Republicans' own lockbox. It would
violate a principle that is meant to protect all Americans who are
depending on Social Security for their retirement. These are people who
spend their lives working hard, playing by the rules, contributing
their FICA taxes to the Social Security trust fund. In fact, millions
of seniors depend on Social Security just to make ends meet, no luxury
included there. Many of these people have high medical expenses. It is
a natural phenomenon. Thank goodness we are living longer, but in that
living illnesses do occur. Some have trouble getting around; they are
physically impaired. Many are really struggling. It is Social Security
that keeps them out of poverty. For these people, saving Social
Security is not just an abstract principle, a slogan; it is critical to
their very existence.
That is important to remember. It is important to remember that the
number of Social Security beneficiaries will grow by 37 percent between
now and 2015. By 2014, Social Security taxes will no longer be
sufficient to cover monthly expenses. So we need to prepare. At a
minimum, that means not using Social Security surpluses for anything
else.
I know how my friends on the Republican side will react to this. When
confronted with these numbers, they will have to admit that this bill
spends Social Security surpluses. But that is not really a problem,
they will say, because years and years down the road Congress will
somehow or other cut programs such as education and the environment to
make up the difference.
That is an empty promise, an empty lockbox, it is completely
unenforceable, and it has zero credibility. Consider how deep these
cuts would have to be. Let's assume the Republican Congress funds
defense programs only at the levels proposed by President Clinton.
After 10 years, domestic needs--everything from education, to
environmental protection, to the FBI--would have to be cut by roughly
40 percent. Is that credible? A 40-percent cut in student aid? A 40-
percent cut in health research? A 40-percent cut in veterans' programs?
That always gets to me because the promises made when they are
recruiting, when people sign up, are that we will make sure you have
medical care through the rest of your life--except they cut the
funding.
There may be a few Republicans who would support cuts such as that.
But there is no way cuts that size would ever win a majority. It would
be foolish to assume otherwise.
My motion is simple. It tells the Finance Committee to go back and
fix this bill so that it doesn't use Social Security surpluses in any
year, bring it back to the Senate within 3 days, and then let's
consider it. I don't think it is asking much. It is not going to hurt
anybody if the Senate waits another 3 days before resuming work on this
bill. But lots of people will be hurt if the Senate abandons its
principles and uses Social Security surpluses for tax breaks that
disproportionately benefit the wealthy and special interests. That
would be a serious mistake.
I urge my colleagues to support this motion when it is in front of
you. Let's fix this bill and protect Social Security surpluses. Let's
keep the promise we made to the baby boomers, those who will be
retiring, that Social Security will be extended as far as we are
physically able to do so.
I yield the floor.
Mr. ROTH. Mr. President, I yield the remaining 6 minutes we have on
the amendment to the Senator from New Mexico.
Mr. DOMENICI. Mr. President, there won't be time tomorrow to say what
I am saying tonight. That is why I came down. I congratulate the
Senator from Delaware, Senator Roth, and the Finance Committee for a
fine job.
First of all, I am kind of infuriated, but I will keep my emotions
down. The President of the United States has gone beyond what anybody
would believe when today, in front of a bunch of young people, he as
much as said the Republican plan will make sure you don't even learn
how to read. That is disgraceful because the truth of the matter is, if
the Congress wants to spend more money on education after this tax cut,
there is plenty of money to do it. If the President is persuasive
enough next year, he can get more money for education because there is
more money to spend.
The second thing is not at that level for me, but Senator Lautenberg
is just flat wrong. Do you know who was spending the Social Security
surplus? The President was. In fact, he even sent to us his first
proposal and said, only save 62 percent of it, spend the rest of it. He
said, we will save it over 15 years, so don't worry year by year about
putting it in the trust fund. We challenged him on that. He came back
in his midsession review and said: Republicans, you are right: Let's
put 100 percent in. So we put 100 percent in the lockbox, into
security. So I don't understand what Senator Lautenberg is talking
about.
Having said that, let me talk about this bill because it is a very
masterful bill, considering where we are. First, there is no question
that marriage,

[[Page S9718]]

saving for retirement, and dying should not be taxable events as we
enter the new century. If there is anything we have learned, it is that
we need to enhance and praise marriage, not punish it. We need to
encourage saving for retirement, and we should not tax the event of
dying. Isn't it wonderful that we have fixed all of those to a great
extent in this bill? What is the matter with that?
Mr. President, that is what you are going to be vetoing when you veto
this bill.
Alternative minimum tax. That is, the alternative minimum tax should
not turn the child care credit, education credit, HOPE education tax
credit, and foster care credits into phantom tax relief, not worth the
paper they were written on because an old alternative minimum tax,
adopted during the oil boom, would make these credits unusable, so when
you hear these funny words, ``Let's fix the alternative minimum tax,''
it is hundreds and hundreds of thousands of middle-income Americans who
thought we gave them an education credit, who thought we gave them a
child care credit, only to find that now the alternative minimum tax
takes it away. That has been fixed.
Taxes are too high if measured by what is needed to fund the
Government. They are too high if measured historically. The average
family is paying twice what they paid in 1985. The tax burden is 54
percent heavier when measured from President Bill Clinton's first day
in office to the end of 1999. He may take a lot of credit for other
things, but that is a fact. Despite these record increases, the
administration's 2000 budget proposes another $170 billion in new
taxes. Unbelievable.
Broad-based tax relief. The Senate bill starts off with broad-based
relief, lowering the bottom brackets for everyone in our families
across America, and then in the bill, after lowering the rate to 14,
they raise the brackets by $10,000. That means that millions more
Americans will be paying the lowest possible rate.

This bill provides significant family relief, although not as much as
my good friend from Texas would like on the marriage penalty.
I ask our seniors across America, as the President tries to frighten
them into thinking we are harming them on Medicare and Social Security
when that is not the truth, wouldn't you like it if your sons and
daughters who are paying a marriage penalty because they are married
are treated like other citizens instead of punished? I believe senior
citizens would be very grateful for that for their children--the
millions across America.
Child care: I think the seniors who they are trying to frighten to
death because they want an issue and not a solution would be thrilled
to know that Chairman Bill Roth and his Finance Committee made it
easier for their grandchildren to be taken care of under child care and
the enormous costs that it imposes on a family. We have made it more
accessible, and we have made more advantageous tax laws.
Their Tax Code is notorious for giving a tax break on the one hand
and then taking it away on the other. That is the alternative minimum
tax, and it works in that fashion. This bill that has been put before
the Senate protects the child credit, and it protects education
credits.
Mr. President, and fellow Senators, there is much more that can be
said about it. I suggest that this bill will do more for millions of
Americans.
Taxes are too high if measured by what is needed to fund government.
Taxes are too high if measured by historical benchmarks. The average
family is paying twice what they paid in 1985.
The tax burden is 54 percent heavier when measured from President
Clinton's first day in office to the end of 1999. Despite these record
increases, the Administration's 2000 budget proposes another $170
billion in new taxes.
The Senate bill starts out with broad-based tax relief. Lowering the
bottom bracket gives a tax cut to every taxpaying family. The bill
lowers the rate to 14 percent. I would have liked to see it go even
lower.
The bill also widens the lowest bracket so that more people can earn
more money without being forced into the 28 percent bracket. This
change will return 4 million Americans to the lowest bracket. It will
return 151,000 New Mexicans to the lowest bracket and at the same time
another 83,000 New Mexicans will see their taxes cut.
This bill also provides significant family tax relief.
Saying ``I do'' at the altar has meant paying on average $1,400 more
on April 15. Marriage shouldn't be a taxable event. This bill corrects
this inequity for 19 million American families.
As more and more women have entered the work force, one of the
fastest growing family expenses is child care. In New Mexico, the
annual cost can run from $3,133 to $5,200 per child. This bill
increases the child care credit from 30 to 50 percent for families
earning less than $30,000, and expands the eligibility for the credit
to all families. With the credit increase and the eligibility
expansion, as many as 68,000 New Mexico families will be eligible for
either a bigger credit or first-time eligibility.
The tax code is notorious for giving a tax break with one hand and
taking it way in the other. The Alternative Minimum Tax, AMT, works in
this fashion. This bill protects the child care credit, education
credits, day care and other norefundable tax credits from being
rendered unusable by the AMT. When the AMT was created in 1986, 140,000
people had to pay it. But by 2008:
There will be 40.6 million Families eligible for dependent child
credits but 24.8 million of those families would receive zero or less
than the full credit as a result of the AMT.
There will be 49 million familes with nonrefundable credits--all
credits except EITC--and 33.9 million of them will receive zero or less
than the full credits as a result of the AMT.
There will be 16 million families eligible for HOPE and lifetime
learning credits, but 11.3 million would receive zero or less than the
full credits as a result of the AMT.
The bill recognizes that all family expenditures are not equal. This
tax bill recognizes that education is important and provides $12
billion over ten years in tax relief. The bill includes education
savings accounts to help 14.3 million families. Seventy percent of
these education tax benefits goes to families with incomes less than
$75,000. It makes employer provided education assistance permanent. In
this ever changing technology-driven world, it is essential that
workers pursue life long learning and complete graduate degrees. The
bill also makes it easier and cheaper for school construction. There
are more than 1,700 schools in New Mexico that I hope will be helped by
this initiative.
In New Mexico there are 331,815 public school students. It would be
wonderful if New Mexican--parents and grandparents started as soon as
this bill is signed into law to open an account for each of these
331,815 children. There would be no better investment in America's
future and these education accounts should help families meet that
goal.
When it comes to health care, the Tax Code doesn't discriminate based
upon who you are, but rather upon who you work for. Families shouldn't
receive disparate tax treatment determined by who you work for. It
isn't fair that one worker has health care purchased with pre-tax
dollars; while the sole proprietor or the employee of a small business
has to pay for health care with after-tax dollars.

This bill provides 100 percent deductibility for health insurance for
the self-employed. It also provides an above-the-line deduction that
will phase in from 25 percent to 100 percent for every taxpaying
American family. There are 43.3 million uninsured people in America,
plus 10.2 million who have access to health insurance but decline to
participate because of the high cost. This is a big problem in New
Mexico. There are 340,000 uninsured New Mexicans where someone in the
family works.
The bill provides generational equity by providing a child care and a
long term care credit. One in four families care for an elderly
relative. This bill provides a tax credit and an extra exemption for
the in home care giver.
Expensing is the most efficient way of reducing the cost of capital
for new investment. The bill provides $5,000 worth of new efficiency
for every small business by increasing the amount that can be written
off in the year the investment is made. A tax policy that allows
capital investments to be deductible in the year they are made
maximizes productivity, economic growth and job creation. When a
company

[[Page S9719]]

doesn't have to calculate depreciation it saves 43 hours a year in tax
preparation. If we adopted a system of expensing we could save 106
million hours a year in tax and recordkeeping. We would also lower the
cost of capital by about one-third.
This bill takes significant steps to reduce the estate and gift tax .
The bill would lower the top rate to 50 percent, double the gift tax
exclusion and get rid of the generation skipping transfer tax which can
impose taxes as high as 80 percent when a gift is left to a grandchild.
Milton Friedman said and I agree, ``The estate tax sends a bad
message to savers, to wit: that it is o.k. to spend your money on wine,
women and song, but don't try to save it for your kids. The moral
absurdity of the tax is surpassed only by its economic irrationality.''
The death tax is also one of the most unpopular taxes. While most
Americans will never pay it, 70 percent believe it is one of the most
unfair taxes.
Its damage to the economy is worse than its unpopular reputation. The
Tax Foundation found that today's estate tax rates (ranging from 18 to
55 percent) have the same disincentive effect on entrepreneurs as
doubling the current income tax rates. NFIB called it the ``greatest
burden on our nation's most successful small businesses.''
This bill makes a major stride. It makes the R&E credit permanent.
With a $3.2 trillion surplus, the only responsible, legitimate course
of action is a tax cut.
Foolish are they who argue against tax cuts. They say to working
families, ``I know what to do with your money better than you do. Give
it to me so I can spend it for you.''
The tax burden is high. People work until May 11, of each year to pay
their taxes. It is the highest tax burden since WWII. People pay more
in taxes than they spend on food, shelter and education.
The Senate tax plan is an excellent plan that moves us toward lower,
flatter, simplier taxes. It moves our tax system toward taxing income
that is consumed and not income that is earned, saved and invested.
It's the same old debate: one party wants to give the money to
programs; we want to give the money to people.
A government big enough to give you everything is a government that
takes everything away with a big tax bite. I can't imagine anything
more frightening to the average taxpayer than the sight of grand
government schemer rushing towards a trillion dollar pile of extra tax
payer dollars.
Republicans say it is the best of times for a tax cut; the Democrats
say it is the worst. Everyone quotes Chairman Greenspan. When Greenspan
is deciphered the oracle is that a tax cut is better than spending all
the money.
If the surplus were a dollar 2 quarters would go for Social Security
reform; one quarter for high priority spending --education, research,
and defense.
With the first three quarters we can save social security, reform
medicare, provide adequate funding for domestic and defense spending
and pay down the national the debt.
The remaining quarter is for tax cuts.
The Taxpayer Refund Act before the Senate is the best of plans. It
lowers rates. It encourages savings. It eliminates the worst of a bad
tax code by eliminating the marriage penalty; killing the death tax and
ending the Alternative Minimum tax to rescue the full benefit of the
child care, foster care, education, and other needed tax credits for
families who otherwise unavoidably would end up in the AMT.
If not tax cuts now, then when? The Democrats say--not ever.
I say, If not tax cuts now, then what? The President's plan answers:
Spend it all. Grow government!
The Senate plan is synchronized to our business cycle and the
condition of the economy. Congress' budget allocates 75 percent of the
projected surpluses over the next 10 years for paying down the debt.
This ensures our long-term fiscal virility.
Even with our tax cut, our surpluses will climb steadily as a share
of GDP and our national debt will be paid off--falling dramatically
from 40 percent of GDP this year to only 12 percent by 2009. our plan
lowers the level of debt more than the President's plan, keeps
government from growing out of control and gives the American people
some of their hard earned money back in the form or a well-thought out
tax cut.
The PRESIDING OFFICER. All time has expired.
Mr. DOMENICI. I yield the floor.
Mr. ROTH. Mr. President, I ask that we temporarily set aside the
amendment before us.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. Mr. President, we are now opening up to the next amendment.
The PRESIDING OFFICER. The Senator from Texas.

Amendment No. 1472

(Purpose: To provide for the relief of the marriage tax penalty
beginning in the year 2001 and for other purposes)

Mrs. HUTCHISON. Mr. President, I call up amendment No. 1472.
The PRESIDING OFFICER. The clerk will report.
The legislative assistant read as follows:

The Senator from Texas (Mrs. Hutchison), for herself, Mr.
Ashcroft, and Mr. Brownback, proposes an amendment numbered
1472.

Mrs. HUTCHISON. Mr. President, I ask unanimous consent that reading
of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:

(1) On page 15, line 14, insert the following to paragraph
(c):
(A) Twice the dollar amount in effect under subparagraph
(C) in the case of--
(I) a joint return for married individuals not filing a
combined return under 6013A, or
(ii) a surviving spouse (as defined in section 2(a)),
On page 15, line 14, insert the following new paragraph (d)
and reorder the remaining paragraphs accordingly:
(d) Phase-In.--In the case of taxable years before January
1, 2004--
(A) paragraph (2)(A) shall be applied by substituting for
``twice''--
(I) ``1.778 times'' in the case of taxable years beginning
during 2001 and 2002
(ii) ``1.889 times'' in the case of the taxable year 2003.
(2) Alternative Minimum Tax: Modifications to Section 206:
On page 32, line 3--
Strike ``1998'' and insert ``2000.''
On page 32, line 14--
Strike ``2004'' and insert ``2006.''
(3) AGI Limitations on Contributions to the Roth IRA:
Modification to Sections 302:
On page 38, line 18, strike ``2000'' and insert ``2002''
(4) Gift Tax Exclusion: Modification to Section 721:
On page 236, line 11, strike all of Section 721 and insert
the following new section:

``SECTION 721. INCREASE IN ANNUAL GIFT EXCLUSION.

(a) In General.--Section 2503 (b) (relating to exclusions
from gifts) is amended--
(1) by striking ``$10,000'' and inserting ``$20,000.''
(b) Effective Date.--The amendments made by this section
shall apply to gifts made after December 31, 2004.''
(5) Charitable Contributions for Individuals Who Do Not
Itemize: Modifications to Section 808
On page 262, strike lines 15 through 17 and insert the
following new paragraph:
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001 and ending before January 1, 2004.
(6) International Tax Provisions: Modifications to Sections
901 and 902:
On page 275, line 12, strike ``2003'' and insert ``2004''.
On page 278, line 13, strike ``2002'' and insert ``2004''.

Mrs. HUTCHISON. Mr. President, this amendment is cosponsored by
Senator Ashcroft of Missouri and Senator Brownback of Kansas.
This is an amendment that, very simply, moves the marriage penalty
provisions from taking effect in 2005 to giving an early effect
starting in 2001. By beginning to phase in the doubling of the standard
deduction, we give married couples relief from the marriage tax penalty
that I have to say I think is the most unfair part of the Tax Code in
the Internal Revenue Code that we have in our country.
It isn't that anybody ever meant to have a marriage tax penalty.
Congress didn't enact one. But it was a consequence that was unintended
and unexpected when there were changes in the brackets in the Tax Code.
We are going to correct it with this amendment. We are going to do it
earlier than is in the bill.
I think Senator Roth and Senator Moynihan did a terrific job. They
had a very difficult time, particularly because they were quite
responsible in saying we were not going to have tax cuts except as we
have a surplus that comes from income tax deductions.

[[Page S9720]]

The first decision the Finance Committee made was to say: We are
setting aside Social Security. We are not going to touch it.
If we were to spend the Social Security surplus, we could have a lot
more tax cuts a lot faster. But they were right. They said: No, we are
not going to do that. Social Security was off the table.
We have smaller tax cuts in the early years because we are dealing
with income tax deductions that should go back to the people who earned
it. They sent too much to Washington and we want to return it to them.
The question is, What is the most important of the tax cuts and the
least we can give? Senator Ashcroft, Senator Brownback, and I believe
the marriage tax penalty is the highest priority for relief.
We are offering this amendment by delaying a few of the other tax
cuts until later. We don't change any of the tax cuts in this bill. We
do not eliminate any of them. I support all of them. But we say the
highest priority is the marriage tax penalty relief and everything else
can be delayed a little bit to give hard-working American families that
relief.
We are talking about a schoolteacher who makes $33,000 a year and a
football coach who makes $41,000 a year. They are paying taxes, when
they are single, in the 15-percent tax bracket. They get married. Guess
what. They go into the 28-percent tax bracket at a time when they need
their money the most.
We have almost doubled their tax bracket just because they have
gotten married. Not only that, we don't even give them double the
standard deduction. Instead of $4,300, and $4,300 when they were both
single, they now together get $7,200. All we are going to do is phase
in $8,600 in the standard deduction right up front. We are going to
delay a few other things to let that happen.
In 2005, the real marriage tax penalty kicks in because that is the
first time we have the money to let people file as singles when they
are married. That is the best marriage tax penalty reduction of all
because it eliminates it. That is simply what the amendment does.
I commend Senator Roth for all of the effort he took to be
responsible with this tax cut bill. This tax cut bill has across-the-
board rate reductions that help every taxpayer in America, expands the
tax brackets for middle-income taxpayers, and a number of positive
pension provisions that are particularly helpful for women.
I spoke to Senator Roth about the inequity for women in the
workplace, because women have children and they have to lay off a few
months. Some choose to lay off for six years until their children go to
school. Some choose to lay off 18 years.
Women live longer. They are in and out of the workplace more--that is
a fact--and they get penalized not only in their working years, but
they get penalized in their retirement years. That is not fair.
This bill attempts to give them catchup provisions for their
pensions. It is a great part of this bill. I support it totally.
We also have increases in charitable giving. This is a provision of
mine that was put in this bill by Senator Roth. It allows a person to
roll over IRA contributions to charities without tax consequences. If a
person has saved and done the right thing and sees that they are not
going to need their IRA money, they can give it to charity without tax
consequences. That is in this bill.
We are helping farmers with risk accounts in this bill, so that
farmers will be able to plan and put aside money tax free until they
need it in bad times. Heaven knows, the farmers of this country have
seen bad times. We have $12 billion in education tax relief.

Mr. President, this is a good bill. It is a balanced bill. It has
marriage tax penalty relief, but it is in 2005. That is my only real
concern about the fairness of this bill.
Senator Ashcroft, Senator Brownback, and I want to phase in some of
the other tax cuts a little bit further down the road and say to the 40
million American married couples who are being penalized because they
are married, we believe it is the highest priority to give relief. That
is what we are saying in our amendment.
How much time remains?
The PRESIDING OFFICER (Mr. Enzi). Thirty-four and a half minutes.
Mrs. HUTCHISON. Senator Brownback has been a leader in this effort.
We have been fighting for this for a long time. I am very pleased he is
with us on this amendment. We made some tough choices, but we think it
is the right priority to send.
I yield 12 minutes to Senator Brownback.
Mr. BROWNBACK. I thank the Senator from Texas. She has been the
leader on this issue. I am delighted to be working with her on such an
important issue. I also thank the chairman of the committee for
recognizing the importance of eliminating the marriage penalty. We
moved this up; this is the highest priority.
I want to tell Members why I think it is the highest priority in the
words of people who have been interviewed and who have paid the
marriage penalties. In the Wichita Eagle on Sunday, Kyle and Lynn
Schudy stated they rediscovered the cost of true love this April, April
15. Their total cost of true love came to $1,823. That is how much the
extra income tax was for this Prairie Village couple in their early
thirties. That is what they paid last year because they are married and
filed jointly instead of single and living together. They found that
was the cost of true love.
I don't know that we can make a much better case for eliminating the
marriage penalty than the voices across America who have stated what
they are paying in this marriage penalty.
Listen to this from Tennessee:

My wife and I got married on January 1, 1997. We were going
to have a Christmas wedding last year but after talking to my
accountant, who saw that instead of both of us getting money
back on our taxes we would have to pay in. So we postponed
it. Now after getting married we have to have more taken out
of our checks just to break even and not get a refund. We got
penalized for getting married and that is not right.

I don't know that it can be any clearer than what some of these
families have said.
From Maryland, Mark Patterson:

My wife and I decided to have a family and get married. All
we were concerned about was the love we had for each other.

That sounds like a pretty good start.

After 8 years of marriage and two children we found all we
worry about now is how to come up with enough money to put a
roof over our head, eat and have good day care for our
children. I am sick about the huge chunks of money taken out
of every pay check by Uncle Sam just because we are married.

Mr. SESSIONS. Will the Senator yield for a question?
Mr. BROWNBACK. If he will state his marriage penalty, I yield.
Mr. SESSIONS. I received a communication from an individual who was
divorced in January and found out, had they divorced in December, they
would have saved almost $2,000 in taxes.
My question to the Senator: Does that mean the Federal Government is
subsidizing divorce?
Mr. BROWNBACK. Some would draw that conclusion.
Clearly, we are taxing marriage. We are taxing the fundamental
institution around which we build values. That is not right, as the
people in the letters from across America state.
Here is another letter from Ohio:

No person who legitimately supports family values could be
against this bill of eliminating the marriage penalty. The
marriage penalty is but another example of how in the past 40
years the Federal Government has enacted policies that have
broken down the fundamental institutions that were the
strength of this country from the start.

A woman writes:

My boy friend, Darryl and I have been living together for
quite some time. We would very much like to get married. We
both work at Ford Electronics in Crothersville, IN, and make
less than $10 an hour, but work over time when available and
Darryl does farming on the side. I cannot tell you how
disgusted we both are over this tax issue. If we get married
not only would I forfeit my $900 refund check, we would be
writing a check for $2,800.
This was figured by an accountant at H&R Block at New
Castle. There is nothing right about this after we
continually hear the government preach to us about family
values. Nothing new about the hypocrites in Washington. Why
not do away with the current tax system?

These are voices from across America.
This is from Houston, TX:

If we are really interested in putting children first, why
would this country penalize

[[Page S9721]]

the very situation [marriage] where kids do best? When
parents are truly committed to each other through their
marriage vows, their children's outcomes are enhanced.

Yet we tax it and penalize it to the average of $1,400 per married
couple of the 21 million American married couples who pay this tax.
I am sure this evolved and nobody maliciously said we will tax
married couples. The fact remains, we tax marriage, and it must stop.
We have the chance now to actually do that.
Another point I want to make about this: The institution of marriage
in America is in serious trouble.
I ask unanimous consent to have printed in the Record the Washington
Post article of July 2 of this year titled ``For Better or Worse,
Marriage Hits a Low.''
There being no objection, the material was ordered to be printed in
the Record, as follows:

[From the Washington Post, July 2, 1999]

For Better or Worse, Marriage Hits a Low

(By Michael A. Fletcher)

Americans are less likely to marry than ever before,
according to a new study, and fewer people who do marry
report being ``very happy'' in their marriages.
The report, released yesterday by Rutgers University's
National Marriage Project and touted as a benchmark
compilation of statistics and surveys, found that the
nation's marriage rate has dipped by 43 percent in the past
four decades--from 87.5 marriages per 1,000 unmarried women
in 1960 to 49.7 marriages in 1996--leaving it at its lowest
point in recorded history.
The percentage of married people who reported being ``very
happy'' in their marriages fell from 53.5 in 1973-76 to 37.8
in 1996.
The historically low marriage rate, coupled with a soaring
divorce rate, has dramatically altered attitudes toward one
of society's most fundamental institutions. Although
Americans still cherish the ideal of marriage, increasing
numbers of young adults, particularly young women, are
pessimistic about finding a lasting marriage partner and are
far more accepting than in the past of alternatives to
marriage, including single parenthood and living together
with a partner outside of marriage, according to the report.
``Young people today want successful marriages, but they
are increasingly anxious and pessimistic about their chances
for achieving that goal,'' said Barbara Dafoe Whitehead, co-
director of the National Marriage Project.
Funded by Rutgers in conjunction with several private
foundations, the project is a research institute that tracks
social indicators related to marriage--an area of study its
directors contend is frequently overlooked.
``Nobody is focusing on marriage,'' said David Popenoe, the
project's other co-director. ``It is not in the national
debate.''
Rather than directly examining Americans' attitudes toward
marriage, researchers have tended to focus on the flip side
of the coin, tracking social trends such as the increases in
divorce, out-of-wedlock births and single-parent households
over the past two decades. In the immediate post-World War II
generation, 80 percent of children grew up in a family with
two biological parents. That number has dipped to 60 percent.
Before declining slightly in recent years, the divorce rate
had soared more than 30 percent since 1970. Today, nearly
half of U.S. marriages are projected to end in divorce or
permanent separation.
These changes have ignited a national grass-roots movement
to discourage divorce and promote marriage. Many states are
reexamining their no-fault divorce laws, and at least two
states, Louisiana and Arizona, have instituted ``covenant
marriages,'' which require marriage counseling if a
relationship falters and narrowly restrict grounds for
divorce. ``Marriage education,'' a term that entered the
national lexicon less than a decade ago, has become a growing
concern.
Last year in Florida, legislators passed a law requiring
marriage education skills to be taught in high schools. In
addition, adults preparing for marriage in Florida receive a
substantial discount on their marriage licenses if they
choose to take a marriage education course.
``People are so distressed about the state of marriage in
America,'' said Diane Sollee, founder of the Coalition for
Marriage, Family and Couples Education. Her District-based
group is hosting a conference in Arlington this week that is
being attended by 1,000 people seeking marriage education
training.
``We think about marriage counseling in terms of therapy,''
she added, ``But we realize that we can teach skills to
people to make their marriages strong. What distinguishes
marriages that go the distance from those that end in
divorce isn't whether couples disagree, but certain
behaviors between them.''
The National Marriage Project report blames the declining
marriage rate on people postponing marriage until later in
life and on more couples deciding to live together outside of
marriage. According to the report, nearly half of people ages
25 to 40 have at some point set up a joint household with a
member of the opposite sex outside of marriage.
As a result, the report's authors argued, marriage is no
longer the presumed route from adolescence to adulthood and
has lost much of its significance as a rite of passage.
Moreover, marriage is far less likely to be associated with
first sexual experiences, particularly for women, the report
said. Whereas 90 percent of women born between 1933 and 1942
were either virgins when they married or had premarital sex
only with their eventual husbands, now more than half of
girls have sexual intercourse by age 17, and on average they
are sexually active for about eight years before getting
married.
These changes in marriage patterns have contributed to new
attitudes toward the institution. Although the percentage of
teenagers who said that having a good marriage and family
life was ``extremely important'' to them has increased
modestly in the past two decades, the percentage who said
they expected to stay married to the same person for life has
decreased slightly. More dramatically, the percentage of
teenage girls who said having a child out of wedlock is a
``worthwhile lifestyle'' increased from 33 percent to 53
percent in the past two decades.
Whereas the report's findings led its authors to conclude
that ``the institution of marriage is in serious trouble,''
other researchers who track marriage trends said there also
was reason for optimism. For one, they note that demographers
predict that 85 percent of young people will marry at some
point in their lives, a substantial figure, even though it is
smaller than the 94 percent that pertained in 1960.
``There is some evidence that marriage is in trouble,''
said Kristin Moore, senior scholar for Child Trends, a
nonprofit research organization that tracks trends in family
and child well-being. ``But there is also much evidence that
marriage remains highly valued.''

Mr. BROWNBACK. It says:

Americans are less likely to marry than ever before,
according to a new study, and fewer people who do marry
report being ``very happy'' in their marriages.
This report, released yesterday by Rutger University's
National Marriage Project and touted as a benchmark
compilation of statistics and surveys, found that the
nation's marriage rate has dipped by 43 percent in the past
four decades. . . .

We have a chart of the result from the Rutger study. In 1960, per
1,000 women age 15 and over, between 85 and 90 percent per year were
getting married, and now it is below 50 percent, a 43-percent fall-off
in people getting married.
The writers of the study stated this about the institution of
marriage, the foundational unit upon which we build family values and
pass them on to the next generation:

Key social indicators suggest a substantial weakening of
the institution of marriage.

This is serious. I daresay that probably in this next Presidential
campaign, ``family values'' may be the two words said most often as we
worry, fret, and are concerned about what is happening to our children
and our society and in this culture.
Can anybody in this room, in this august body, therefore say it is OK
to tax the fundamental institution that helps most in building family
values, that we tax the U.S. institution of marriage, that we make 21
million American couples annually pay on average to the tune of $1,400
just for the privilege of being married when we are so worried about
the values in the country? How can we vote against this?
I am delighted the chairman has put this in the bill. I am happy we
are trying, and I hope we will be successful, in moving this up
earlier, so once and for all we can stop taxing the institution of
marriage. We have to stop doing that.
When marriage as an institution breaks down, children suffer. The
past few decades have seen a huge increase in out-of-wedlock births and
divorce, a combination which has substantially undermined the well-
being of children in virtually all areas, all places of life.
Some people can struggle heroically and help build up the families,
and certainly nobody is here to castigate others. We are saying this is
a tax that is wrong. It is wrong for virtually every reason. It taxes a
fundamental family-value-building institution. It penalizes people whom
we should be rewarding. Study after study has shown children do best
when they grow up in a stable home, raised by two parents who are
committed to each other.
Newlyweds face enough challenges without paying punitive damages in
the form of the marriage tax. The last thing the Federal Government
should do is penalize the institution that is the foundational unit of
passing on to the next generation morals and family values, and yet we
do it. We have done it for a number of years.

[[Page S9722]]

We must give the people back a tax cut. I will support the overall
effort to give back in tax cuts the nearly $800 billion. I think we
should do that. But clearly our top priority in this effort must be
eliminating this bad--this worst tax that we have, worst for its effect
on the institution of marriage. We must give the American people the
growth rebate they deserve and return this overpayment. The first tax
we must cut is this marriage penalty tax. It is going to be expensive.
It is important. It is expensive to couples who pay this tax all the
time, on average $1,400 per year per couple.
With that, I have a number of other things to share, but I think it
is simply time we do away with this tax. I am delighted to join the
Senator from Texas and the Senator from Missouri in their efforts, in
our efforts to do this. I applaud the chairman for building this into
the tax cut. I am hopeful we can do this earlier. I would like us to
even do income splitting. We are not going to be able to do it today.
With that, I yield back to the Senator from Texas.
Mrs. HUTCHISON. Mr. President, I say to the Senator from Kansas that
we can do income splitting down the road as well because, in fact, it
is very important that we give every married couple the best shake we
can give them; that treats them totally fair. Whether they are a two-
income-earner couple or a one-income-earner couple, we want them to
have the same treatment that they would have under any other
circumstance.
So I do support income splitting. I think after we get the money
accumulated in the surplus we will be able to give them much more
relief, real relief, in fact elimination of the penalty. That is the
goal of all of us.
I yield 12 minutes also to Senator Ashcroft. Senator Ashcroft has
been fighting along with Senator Brownback and myself, side by side, on
this issue. Ever since he came to the Senate it has been one of his
highest priorities. I am so appreciative that he has been the stalwart
soldier on the marriage tax penalty that he has because I think we are
going to win this victory in the end.
I yield 12 minutes to Senator Ashcroft.
The PRESIDING OFFICER. The Senator from Missouri.
Mr. ASHCROFT. Mr. President, I thank the Senator from Texas for her
leadership in this respect. She has understood the challenge, the
special challenge that comes to families as a result of this pernicious
discrimination in our Tax Code. She has fought long and hard for its
removal. I am honored to be a participant as a cosponsor of this
amendment with her and Senator Brownback.
I also thank the chairman of the Finance Committee, Senator Roth, who
understood the fundamental value that is expressed in neutralizing the
tax policy toward families. I say ``neutralizing.'' I really mean that,
in the sense that we have been at war with families in our Tax Code.
Mr. President, 21 million American couples, 42 million Americans, are
spending an average of $1,400 per year more, each couple, because of
the marriage penalty. It makes it tough for that couple to make choices
that they ought to be able to make to benefit their families. So I
thank the chairman of the Finance Committee, Senator Roth, for placing
this in the bill, for seeing to it that this category of remediation,
this effort to repair an injury to the very fabric of America's
culture, is included in this tax measure.
We would not be here this evening with the capacity to say we want to
accelerate that remedy, that we want to provide this antidote to a
malady which has been afflicting the American culture, we could not
move it up in the bill had it not been there in the first place. I
commend him.
I would like to just take us, for a minute, back to some very
substantial fundamentals about America. I think the first of those
fundamentals is that this is a culture where the most important things
are not in Government. The most important things are not in the
institutions of Government, not in the corporate responsibility of
Government. The most important things are with individuals. This is a
society that honors great freedom and expects great responsibility.
America has prospered. America is distinguished from, different from,
differentiated from, we are different from other countries, other
cultures. We have gone farther, we have soared father, for that reason.
We expect individuals to do things for themselves; not to be reliant,
always, on Government, but, where possible, to build the sense of
independence, responsibility, judgment, self-reliance that makes
Americans unique in the community we call the world.
When you believe the future of America is dependent upon that spirit,
you have to ask yourself what are we going to fund in America? Are we
going to fund the bureaucracy and the institution or are we going to
fund the family and individuals? Are we going to give families the
opportunity to take care of themselves or are we going to give all the
resources to the sort of second best alternative?
I do not think there is a Member of this Chamber who would say it is
ever better to have a vast Government program than it is to have a good
family. I just do not think we have anyone who believes that because we
know the family is the best Department of Education, it is the best
Department of Health, it is the best teacher of responsibility and
character, which is as important as anything else. It is where it
really must happen.
Yet our Tax Code has been sweeping the resources away from this
essential institution of the culture, the family, into the coffers of
the Government, and plan B, the second priority, the sort of safety
net, has gotten all the resources. We have left in an anemic place the
family, which ought to be doing the front-line defense. It would be
similar to giving all the guns and weapons to the rear guard and not
having the guys on the front line with any bullets. It is time to load
the resources into the families, at least to give them a fair shake. It
is just a fundamental part of America. We believe families are
important. If we really get our job done in the families of America,
Government will not really have much responsibility and much problem.

If we destroy the families of America, there is no amount of
Government that will solve our problems.
So here we have a choice. Are we going to endow families with the
resources they create, they earn? Are we going to let them keep some of
those resources or, when they form these durable, lasting, persistent
bonds and a relationship that teaches people how to rely on each other,
to live with each other, how to be individually responsible and self-
reliant, are we going to take that institution and continue to punish
it? Or are we going to wake up and say: Hello, it is time for us to say
about families we are going to let the families have some of the
resources which they earn and they should keep.
I do not think it is a hard question. It is pretty simple. The
proverbial rocket scientist is not needed here. It is an anomaly of our
tax law. It is unfair to say the Congress at some point went forward to
try to hurt families. But in this topsy-turvy tax environment that has
grown by just a snippet here and a little piece there and a few hundred
thousand words there--this Tax Code was, what, 750,000 words in 1955
and it is 5 million words now. You would have a hard time reading it if
you started at birth and read as fast as Evelyn Woods to get through
the thing before the end of your life.
So we have a situation where this code has grown up and it
discriminates against families. It hurts families, and we have a great
opportunity now, thanks to the chairman of the committee who placed
this concept of remediating this pathology right here in this bill.
I predict Members on both sides of the aisle are going to say: We
want to vote in favor of marriages; it is time to correct this
inadvertent, but very damaging, prejudice against marriage in the Tax
Code.
That is where we ought to be. No one in this Chamber believes that
Government is more important than families. No one believes that our
front line, in terms of developing this culture, is so unimportant that
we ought to load all the resources to the guys at the back of the
operation. We ought to put some of our ammunition in the hands of the
front line.
Let's let families, let's let parents, who make these kinds of
lasting commitments to each other and to their children, build an
America tomorrow

[[Page S9723]]

which has all the promise of the America you and I inherited.
I will add that it is not a great tradition in America to
discriminate against marriage. This has happened in the Tax Code as our
tax bite on the American family has accelerated with the growth of
social programs. It was not until the sixties that we had anything of a
marriage penalty, and it began to get worse and worse until now, as I
have indicated, $29 billion a year is what Government takes from
families as it robs 21 million families of about $1,400 per couple, and
it sweeps that money away from the families into the Government, into
the bureaucracy, into the plan B, the second best, yes, important
safety net. Yes, we need it, but let's not deprive the first line of
this culture's conditions for greatness--the families--let's not
deprive them of the resources they ought to have.
I thank Senator Roth, chairman of the Finance Committee, for placing
this concept in the bill. I thank Senator Hutchison from Texas for
having been alert to this since before I came to the Senate. She was
working hard in this respect. I am always delighted to be a part of any
measure with Senator Brownback whose sensitivity to the values and the
need for character in this culture is unsurpassed.
I do not think Government should be dictating our culture and
pounding in values, but, on the other hand, our Government should not
be at war with our values, and it is time for us to call a peace
conference around the kitchen table of America and say to husbands and
wives: You have a very important job to do, and we want you to have the
resources to do that job. We must eliminate the marriage penalty, and
this bill, with the Hutchison-Brownback-Ashcroft amendment, can get
that down.
I reserve the remainder of the time and yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. ROTH. I am happy to yield 5 minutes to the Senator from Montana.
Mr. BAUCUS. Mr. President, I congratulate the Senator from Texas for
her amendment. It is a good amendment. It does deal with an inequity in
the code clearly, simply. I congratulate her, too, because she is
taking the course that we in the Democratic alternative took in trying
to address this problem when we proposed to raise the standard
deduction as well to address essentially the marriage tax penalty.
It is interesting; there is a marriage tax penalty today, but there
is also a marriage tax bonus. Basically, the rule of thumb is 70-30.
That is, if there is more than a 70-30 percent differential between the
income of each spouse, then there is a marriage bonus; that is, you get
a tax bonus for marriages as opposed to a penalty.
The penalty situation arises roughly when the 70-30 starts to narrow
down, is less of a differential, and when both spouses are earning a
similar income. That is what we are addressing here, the penalty side,
because more couples have both spouses working. It is interesting to
note, there is a bonus for getting married today if the differential is
roughly between 70-30.
The amendment the Senator from Texas is offering goes part way to
eliminate the marriage tax penalty. Our Democratic alternative actually
went a lot further. She raises the standard deduction by about $1,400,
and the Democratic alternative raised the standard deduction for
married couples by about $4,300.
In addition, in our proposal we began to eliminate the marriage tax
penalty for itemizers; that is, for couples who itemize. The amendment
before us deals only with couples who use the standard deduction. There
are some couples who still itemize in the Tax Code, and it is our hope
that we could address, eliminate, as you would, the marriage tax
penalty not only for couples who use the standard deduction but also
for couples who itemize.
Also, we in the Democratic alternative raised the standard deduction
not only for married couples but also for singles. We thought the
standard deduction should go up quite a bit higher than it now is for
singles.
The long and short of it is, this amendment goes part way in raising
the standard deduction. We proposed to go a lot further in raising the
standard deduction, but the net effect is to help begin to eliminate
the marriage tax penalty by raising the standard deduction for married
couples. It is our hope that maybe a little bit later the Senator from
Texas would, since she sees the wisdom in our proposal, go a little
further and agree to other provisions that we in the Democratic
alternative have suggested.
I do not think this really is a matter that requires a lot of debate.
I believe most Senators agree this is a good amendment. It begins to
eliminate the penalty married couples pay. It is our suggestion we also
address the marriage tax penalty for couples who itemize because that
would begin to complete the elimination of the marriage tax penalty.
Again, I hope that occurs at some reasonable future date.
I reserve the remainder of my time.
The PRESIDING OFFICER. Who yields time?
The Senator from Delaware.
Mr. ROTH. Mr. President, I yield myself such time as I may use.
First of all, I congratulate the distinguished Senator from Texas for
her leadership in this most important matter. I know that as I return
to my State of Delaware and talk to people there, it is a matter of
real unhappiness and dissatisfaction that there is this marriage
penalty. Obviously, for that reason, it is very desirable that we
correct it as quickly as possible.
Mrs. HUTCHISON. Will the Senator yield?
Mr. ROTH. I will be happy to yield.
Mrs. HUTCHISON. I appreciate the fact that the committee made a
priority of the marriage tax penalty. The real marriage tax relief is
in the bill in the year 2005 in the responsible timeframe. That was
actually the first year you could do it because you cannot phase that
in. I appreciate the effort that was made.
My amendment just doubles the standard deduction earlier. The Senator
from Delaware has been working with me on the floor, as has Senator
Baucus. I very much appreciate their helping me work through this so
that we are going to have the early relief on the standard deduction
now in the year 2001, starting the phase-in to 2005 when we are going
to give the real relief, which the chairman had in the bill originally.
I give him the credit for that, and I appreciate his remarks very much.
Mr. ROTH. I appreciate the remarks of the Senator from Texas.
One of the frustrating things of putting a bill together, although I
have to admit it is a very interesting challenge that I much enjoy, is
the fact that there are so many things I believe should be done for the
American family. It is frustrating that there are limitations as to
what we can do. I agree with the distinguished Senator that nothing is
more important than eliminating this marriage penalty. Obviously, the
sooner we can do it, the better off we are. I thank her for her
leadership.
For the information of all Senators, I do want to make clear that my
concern with the pending amendment had been that it would put us out of
compliance with our reconciliation instructions. I was also concerned
that the earlier version of the amendment would have relied heavily on
delaying the AMT relief. And this delay would hit middle-income
Americans very hard.

But now we understand, of course, that the Senator from Texas will
offer a modification to the filed amendment which will alleviate this
offset problem. For that I am very grateful. With these changes, I just
say, I look forward to working with the Senator from Texas on having
this amendment enacted.
Mr. President, I yield the floor.
Would the Senator like some more time?
Mrs. HUTCHISON. Mr. President, I would just like to reserve the
remainder of my time for the modification when it is ready, which I
understand will be in the next 15 to 30 minutes.
So I yield now and will reclaim that time when we have the corrected
amendment.
Mr. ROTH. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.

[[Page S9724]]

The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. Mr. President, I yield 5 minutes to the Senator from
Montana.
The PRESIDING OFFICER. The Senator from Montana is recognized.
Mr. BAUCUS. Mr. President, I think there is another dimension to this
tax bill which I think is important for us to address. It is not only
tax reduction in the amount of the reduction and not only the
composition of the reduction, it is also whether we are making this Tax
Code even more complex.
If there is anything we hear from our people at home, it is that this
Tax Code is much too complex; it is just a mess. I see the Presiding
Officer, who has deep experience in this, is nodding his head in
agreement. We all know that he is right.
Regrettably, when Congress passes tax legislation, we tend not to pay
much attention to whether this adds further complexity to the code. We
rarely pay any attention to that.
Frankly, I take some pride in that I pushed for the provision of the
law last year that directs the IRS, in conjunction with the Joint Tax
Committee, to come up with a complexity analysis of new provisions that
the Congress enacts. We did not get this analysis until after the
Finance Committee reported out its bill, but we did get it, finally.
I have with me a letter from Charles Rossotti, the Commissioner of
the IRS, to Ms. Lindy Paull, who is the Chief of Staff of the Joint
Committee on Taxation, which is a brief analysis of the additional
complexity that the bill before us would cost.
Just by way of example, we are here today trying to correct a problem
by providing relief for the marriage tax penalty. This marriage tax
penalty is where a couple pays a higher net tax when both couples earn
about the same amount of money. The underlying bill before us today
attempts to address that problem, but in a way which is very complex.
The amendment offered by the Senator from Texas is a much more crude
way to deal with alleviating the marriage tax penalty by raising the
standard deduction by a significant amount, an approach that we took in
our Democratic alternative bill, too, where we would raise the standard
deduction even more. But to give you an example of the additional
complexity that this bill would cause in trying to resolve the marriage
tax penalty, let me just state the following items which I hope we will
get worked out as this bill progresses.
Essentially, taxpayers would have to fill out two forms or the 1040
would have to have more columns and many more items, because
essentially couples would have to fill out their 1040 in many ways
twice--one as if married, and then separate, as if joint filers,
attempting to determine which is less in that tax, and so forth.
Then there is the question of allocation of personal exemptions: When
you file separately, who gets the personal exemptions, the additional
personal exemption for children, and so forth, and who doesn't.
Then there is the question of large medical payments, the medical
deduction, which, as the Presiding Officer knows better than anybody
else in the Chamber, is about 700 percent of adjusted gross income. And
then the question is, How is that allocated--one spouse or do both
spouses get it or whatnot?
There is a lot of additional complexity that couples would face under
the underlying bill. All of this is not glamorous stuff. It doesn't get
headlines. It is not in the evening news. It is my hope that as we
undertake the work in this body, as well as in the other body, to
reduce taxes, and we try to do it in a fair way, we also do it in a way
that is less complex, not more complex.
As this bill stands tonight, with respect to the marriage tax penalty
relief, it is going to be much more complex for taxpayers, for
individual taxpayers, whether they file separately, particularly for
married taxpayers trying to determine how to deal with the solution we
have so far drafted with respect to the marriage tax penalty.
I ask unanimous consent to have printed in the Record a letter and a
short document from Commissioner Rossotti to the Joint Tax Committee
which begins to outline some of the additional complexities this bill
will cause.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Department of the Treasury,

Internal Revenue Service,

Washington, DC, July 22, 1999.
Ms. Lindy L. Paull,
Chief of Staff, Joint Committee on Taxation, Washington, DC.
Dear Ms. Paull: Attached are the Internal Revenue Service's
(IRS) comments on the eight provisions from the Senate
Committee on Finance markup of the ``Taxpayer Refund Act of
1999'' that you identified for complexity analysis in your
letter of July 20, 1999. The comments are based on the Joint
Committee on Taxation staff description (JCX-46-99) of the
provisions and, in the case of marriage penalty relief, the
statutory language for a similar item provided in H.R. 2656,
introduced by Mr. Weller in the 105th Congress.
Due to the short turnaround time, our comments are
provisional and subject to change upon a more complete and
in-depth analysis of the provisions.
Sincerely,
Charles O. Rossotti.
Attachment

IRS Comments on Eight Tax Provisions of the Tax Refund Act of 1999
Identified for Complexity Analysis

Reduce 15 Percent Income Tax Rate to 14 Percent Beginning in 2001

The tax rate change mandated by this provision would be
incorporated in the tax tables and tax rate schedules during
IRS' annual update of these items. The provision would
require changes to the tax rates shown in the 2001
instructions for Forms 1040, 1040A, 1040EZ, 1040NR, 1040NR-
EZ, and 1041, and on Forms 1040-ES, W-4V, and 8814 for 2001.
No new forms would be required. Programming changes would be
required to reflect the 14 percent rate.

increase width of 14 percent bracket by $2,000 beginning in 2005.

The increase in the width of the 14 percent bracket would
be incorporated in the tax tables and tax rate scheduling
during IRS' annual update of these items. The provision would
require changes to the rates shown in the 2005 instructions
for Forms 1040, 1040A, 1040EZ, 1040NR, 1040NR-EZ, and 1041,
and on the Forms 1040-ES for 2005. No new forms would be
required. Programming changes would be required to reflect
the expanded 14 percent bracket.

marriage penalty relief for joint filers beginning in 2005

forms

The following form changes would be necessary to implement
this provision. The changes noted for Form 1040EZ could
affect the scannability of the form.
1. A new line and check box would be added to the 2005
Forms 1040, 1040A, and 1040EZ for married taxpayers to
indicate they are filing single returns on a combined form.
2. Three new schedules would be developed (for 1040 filers,
1040 filers, and 1040EZ filers) with columns for each spouse
to separately report the information required to determine
his or her total income, adjusted gross income (AGI), taxable
income, and tax before nonrefundable credits. This
information is shown on the following lines of the 1999
forms: Form 1040, lines 7 through 40; Form 1040A, lines 7
through 25; and Form 1040EZ, lines 1 through 6, and line 10.
The new schedules would also show the couple's combined AGI
and combined tax before nonrefundable credits. The combined
tax would also be entered on the appropriate line of the
couple's 1040 return and the rest of that return would be
completed as if a joint return has been filed.
Based on the 1999 forms, the new schedule for Form 1040
filers would have a total of 82 entry spaces. The schedule
for Form 1040A filers would have a total of 46 entry spaces,
and the one for 1040EZ filers would have a total of 16 entry
spaces. The new schedules would contain calculations
involving multiplication. The instructions for the new
schedules would be between 2 and 5 pages.
If credits are to be determined as if the spouses had filed
a joint return (as indicated in JCX-46-99), a third
computation of AGI and tax before nonrefundable credits would
be necessary. The AGI and tax would be computed as if a joint
return had been filed. The reason for this additional
computation is because some credits are affected by AGI and
may also be limited by the regular tax liability. These items
would not necessarily be the same as the two spouse's
combined AGIs and tax. To eliminate this third computation,
the provision relating to credits should be changed to
specify that the couples' combined AGI and tax are to be used
in figuring the amount of any credit.
3. A new four-line, two-column worksheet would be developed
for each spouse to compute his or her applicable percentage
for purposes of determining the deductions, such as the
deduction for exemptions, that are required to be allocated
based on each spouse's share of the combined AGIs. This
worksheet would be included in the instructions for the new
schedules.
4. The 2005 TeleFile Record would be revised to permit its
use by married taxpayers choosing the combined filing status.
Based on the 1999 TeleFile Tax Record, this would require the
addition of 10 entry spaces.
5. The provision would require many electing taxpayers to
complete two separate

[[Page S9725]]

Schedules A, B, D, and E, or Forms 4797 (and possibly other
schedules/forms) to determine the amounts to enter on the new
schedule. In general, two separate schedules/forms will be
required where both spouses have items that affect the
schedule/forms.
IRS understands that rules clarifying the application of
the election for AMT purposes will be forthcoming. The above
does not reflect the additional form changes that would be
needed to integrate the election with the alternative minimum
tax.

processing, programming, compliance

The marriage penalty election would impact most aspects of
IRS operations.
The form changes needed to implement the provision would
increase the time it takes the IRS to process a 1040 on which
the election is made and issue a refund, as well as increase
the cost of processing the return. Devoting additional time
and resources to the processing of electing returns could
delay the processing of other returns and the issuance of
other refunds.
The complexity of this provision would likely cause an
increase in the number of taxpayers who use a paid preparer
and discourage the use by taxpayers of e-file programs such
as Telefile and On-Line Filing. The error rate among those
who do prepare their own returns would also increase. During
processing, these returns would have to be sent to Error
Resolution for correction. This could result in additional
taxpayer contacts, delays in the issuing of refunds, and
additional costs to the IRS. The provision would also
increase the number of amended returns which would have to be
examined and processed.
The IRS would have to make substantial changes to its IRM
procedures for processing marriage penalty election returns
and train the service center in those procedures.
The added complexity would also increase the number of
taxpayers who would seek assistance either over the toll-free
lines or at the walk-in sites. The number of taxpayers
seeking assistance about the marriage penalty election could
reduce the opportunity for other taxpayers to get assistance.
The IRS would have to make substantial changes to the
customer service IRM and would have to train the Customer
Service Representatives to enable them to assist taxpayers in
these complex provisions.
The rules for allocating income and deductions between
spouses, which are in part based on state property law, would
cause confusion and errors by taxpayers. In many instances,
mis-allocations could only be detected on examination. The
IRS would have to develop new examination procedures and
train its examiners in the law and the new procedures. The
marriage penalty election could also affect the resolution of
examination cases involving the innocent spouse provisions.
This provision would require major systemic programming
changes to IRS' computation process. This provision would
affect many of our tax systems including Integrated
Submission and Remittance Processing (ISRP), Error Resolution
System (ERS), Generalized Unpostable Framework (GUF),
Generalized Mainline Framework (GMF), Federal Tax Deposits
(FTDs), SCRIPS, MasterFile, Electronic Filing, and TeleFile.
It is estimated that at least 50 staff years and
approximately $5,000,000 in contractor costs would be needed
to make the necessary programming changes.

alternative minimum tax

Since the provision regarding personal credits and the AMT
is the same as that applicable to 1998 tax years, and
reflected in the 1988 tax forms, no form or programming
changes would be needed to implement the provision provided
it is enacted in the near future. If enactment is delayed,
the IRS will have to begin taking steps to re-institute the
pre-1998 rules for 1999 tax years. It is critical that this
provision be enacted as soon as possible to avoid costly and
unnecessary programming changes and to minimize the impact on
timely distribution of the 1999 tax packages. In addition, a
return to pre-1998 law would significantly increase the
complexity of these credits.
The provision relating to the deduction for personal
exemptions would eliminate the nine line AMT worksheet in the
Form 1040A instructions for 2005. This provision would not
affect the number of lines on the 2005 Form 6251 or the AMT
worksheet in the 2005 Form 1040 instructions.

individual retirement arrangements

This provision would require a change to the dollar limit
specified in the Form 1040, Form 1040A, Form 8606, and Form
5329 instructions for 2001 through 2005 and possibly in
future years. The change would also be reflected in the Form
1040-ES for all applicable years. No new forms or additional
lines would be required. Programming changes would be needed
to reflect the increased contribution limits.
IRS would need to provide guidance to financial
institutions that sponsor IRAs on how to take into account
the higher contribution limits (currently all sponsors
utilize IRS approved documents). In addition, the following
model IRA and Roth IRA documents that are issued by the
Assistant Commissioner (EPEO) would need to be modified to
take into account the increased contribution limits:
Form 5305, Individual Retirement Trust Account.
Form 5305-A, Individual Retirement Custodial Account.
Form 5305-R, Roth Individual Retirement Account.
Form 5305-RA, Roth Individual Retirement Custodial Account.
Form 5305-RB, Roth Individual Retirement Annuity
Endorsement.

increase deduction for self-employed to 100 percent

This provision would eliminate one line from the self-
employed health insurance deduction worksheet contained in
the 2000 instructions for Forms 1040 and 1040NR. This
worksheet is currently four lines. The Form 1040-ES for 2000
would also reflect the provision. No new forms would be
required.

repeal futa surtax after december 31, 2004

The provision would require a change to the FUTA tax rate
on Forms 940, 940-EZ, 940-PR and Schedule H of Form 1040 for
2005. The rate would be reduced from 6.2 percent to 6.0
percent. No new forms would be required. Programming changes
would be necessary to reflect the reduced FUTA rate.

allow non-itemizers to deduct up to $50 ($100 for joint returns) of
charitable contributions for 2000 and 2001

Assuming the deduction is allowed in determining adjusted
gross income (unlike the 1982-86 deduction for non-
itemizers), the following changes would be necessary to
implement this provision:
1. One line would be added to the adjustments section of
Forms 1040, 1040A, 1040NR, and 1040NR-EZ for 2000 and 2001.
2. Two new lines would be added to Form 1040EZ for 2000 and
2001 (one for the deduction and one to subtract the deduction
from total income to arrive at adjusted gross income). This
change could affect the scanability of the form.
Ensuring compliance with the above-the-line charitable
deduction would be difficult. The only means of verifying
amounts deducted would be through examination, which is not
practical because of the small amounts involved.
No new forms would be required.

Mr. President, I yield 10 minutes to the Senator from Iowa.
The PRESIDING OFFICER. The Senator from Iowa is recognized for 10
minutes.
Mr. HARKIN. I thank the Senator from Montana for yielding.
Mr. President, I will talk about the bill itself, but I also want to
talk about an amendment that I intend to offer tomorrow, sponsored by
myself, Senator Leahy, Senator Reid of Nevada, Senator Kennedy, and
Senator Wellstone. It has to do with pensions.
Current law prevents companies from reducing pension benefits which a
worker has already earned. However, there is a new phenomenon going on.
Companies are now changing to so-called cash balance plans which can
save the companies millions of dollars in pension costs each year by
allowing them to take a substantial cut out of their employees'
pensions.
Employees generally receive three kinds of benefits from working.
They get direct wages, health benefits, and pensions. So reducing an
employee's pension years after it is earned should be no more legal
than denying a worker wages after the work has been performed.
Under traditional defined benefit plans, the worker gets a pension
based on the length of employment and the average pay of the last few
years of service. The pension is based on a preset formula using those
key factors rather than on the amount in an employee's pension account.
Under some cash balance plans, payments to workers do not start until
the value of their pension has reduced to the lower level of the cash
balance plan. This is a term of art that they call wearaway. In fact,
under a number of cash balance plans, some older workers receive no
pension benefit contributions for as long as 5 or more years, while
younger workers, workmates working right alongside them who started
under the cash balance plan, receive regular contributions during those
years.
So what does this really mean to real people in the real world? Well,
two Chase Manhattan banking employees hired an actuary to calculate
their future pensions after Chase Manhattan's predecessor, Chemical
Bank, converted to a cash balance plan. The actuary estimated that
their future pensions had been cut by 45 percent. John Healy, one of
the workers, said, ``I would have had to work about 10 more years
before I broke even.''
In another case, Ispat Inland, Inc., a Chicago steel company,
converted to a cash balance plan on January 1. Paul Schroeder, a 44-
year-old engineer who has worked for Ispat for 19 years, calculated it
would take him as long as 13 years of additional work to acquire
additional pension benefits. So this practice stands to hurt millions
of older workers.

[[Page S9726]]

Frankly, I consider it age discrimination. After all, a new employee,
usually younger, effectively receives greater pay for the same work in
the form of money put into the pension plan. In other words, you have
two people working side by side. As I said, they get their wages. They
also get their pensions. But if one is not getting any pensions, he is
basically getting less pay.
The amendment we are offering tomorrow would prevent the wearaway. It
would require a company to add to the pension benefits of older workers
in the same way that they add to the benefits of younger workers.
I will make it clear that my amendment does not stop companies from
modifying their plans. It does not stop them from converting to cash
balance plans, and it doesn't stop them from improving the portability.
It simply prevents employers from cutting the benefits of older workers
by thousands of dollars a year, compared to what happens to a younger
worker.

My amendment just says that a company cannot discriminate against
long-time workers by not putting money into their pension account just
because they earn pension benefits under a prior plan. Workers would
get whatever they are entitled to receive under the terms of their old
pension plan as well as all they are entitled to under the new plan for
the period that their pension fell under that plan. The total benefit
would be the sum of the two.
In closing, my amendment is supported by the National Council of
Senior Citizens, the National Committee to Preserve Social Security,
the AARP, the AFL-CIO, the Pension Rights Center, Business and
Professional Women USA, the Older Women's League, and the Women's
Pension Project.
Older workers across America have been paying into pension plans
throughout their working years anticipating the secure retirement which
is their due. Now, as more Americans than ever before in history
approach retirement, we are seeing a disturbing trend by employers to
cut their pension benefits.
I urge the Senate to support our amendment.
Let me shift for just a second, in whatever time I have remaining, to
say that I am going to vote against this tax bill for three reasons: It
is fiscally irresponsible, it widens the gap between the rich and the
poor, and it really robs our children.
My friends on the Republican side make it sound so simple. They say:
Look, we have this enormous surplus. It means people are paying too
much in taxes. Let's give it all back in a tax cut.
Well, if only it were that easy. First of all, we don't have those
surpluses yet. They are anticipated, but they are not here. Again, I
remember back in 1981 when we were told by some that we could cut taxes
and increase military spending and we wouldn't have a deficit. Well,
the deficit almost quadrupled during the 1980s. The public debt more
than quadrupled. We simply put the American people on a credit card.
Finally, in 1993, Congress got serious. We took the lead in stopping
the hemorrhaging. So now we have turned it around. We have gone from an
annual deficit of $290 billion to a surplus of about $120 billion,
created 18.9 million new jobs. Unemployment is at 29-year lows. The
rate of inflation is the lowest it has been since the Kennedy
administration. Our GNP is growing at a great rate. We are beginning to
pay down the $5.6 trillion debt saddled on our kids.
My friends on the Republican side rejected that deficit reduction
bill in 1993. Not one single Republican voted for it.
I remember when Senator Gramm of Texas said:

. . . if we adopt this bill, the American economy is going
to get weaker, not stronger. The deficit, 4 years from today,
will be higher than it is today and not lower. . .. When all
is said and done, people will pay more taxes, the economy
will create fewer jobs, Government will spend more money, and
the American people will be worse off.

That was in 1993. Obviously, my friend from Texas could not have been
more wrong in his assessment.
But now we have this big tax cut before us based on paper
projections. But we also find the gap between the rich and poor is
growing even wider. At a time when we need to ensure the future for our
children, we are going to take it away from them.
This is the way I look at it. We built up this huge debt in the
1980s. Who made out from that? Look at all the statistics. Upper-income
people made a lot of money in the 1980s and secured more wealth. More
assets went to fewer and fewer people in this country and, thus, the
gap between the rich and poor widened. We have slain the dragon of
deficits and we are now going to have some surpluses. It seems to me it
is our responsibility to take that money and lift the heavy debt burden
off of our kids and grandkids--$5.5 trillion of debt. We owe it to our
children and grandchildren.
I keep hearing a lot of my friends on the Republican side say: Well,
this isn't our money; it is your money; we should give it back to you,
the people today that are paying taxes; give it back. Of course, most
of it goes back to the upper 5 percent of income earners in America.
But I look upon it in a different way. The huge debt we ran up in the
1980s is going to be a burden on our kids and grandkids. The very
wealthy people who made out in the 1980s are now going to get a big tax
cut. It seems to me that what we need to do is take that money and say,
no, you know who this money belongs to? It belongs to our kids and
grandkids. We better be paying off our debts so they are not saddled
with it when they grow up.
Let's secure Social Security. We keep hearing the hue and cry all the
time that young people don't think Social Security is going to be there
for them. Well, this is our chance to make sure they know it is going
to be there for them, and also that we secure Medicare. We then can
take and reduce the debt on our kids, invest in education, so that our
kids will have a growing economy and be more productive in the future.
That is what we ought to be doing with this--not giving it back to
people who already have too much.
I must tell you, I have a lot of friends and I know a lot of people
who have a lot of money. We all have rich friends, people who have made
a lot of money. I have yet to have any one of them ever tell me that
they desperately need a tax break. Mostly, what they tell me is: Pay
down the debt, invest in education, save Social Security for our kids.
That is what we ought to be doing. The top 1 percent of the taxpayers
are the ones that make out the most in the tax cut by the Republicans.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. HARKIN. I ask unanimous consent for 2 more minutes.
Mr. BAUCUS. I yield 2 more minutes to the Senator.
Mr. HARKIN. Since 1980, the average after-tax income of the top 1
percent of American families has increased by 72 percent. The income of
the poorest fifth of American families has declined by 16 percent. If
the Republican tax bill becomes law, corporate limousines will line up
in front of the Capitol with their trunks open. The top 1 percent will
haul the money away in the trunks of their limousines.

I have always said there is nothing wrong with making money in
America. There is nothing wrong with being rich. There is nothing wrong
with having a nicer house, a bigger car, and all the better amenities
of life. That is a big part of the American dream. But I believe when
you make it to the top, and others make it to the top, and I make it to
the top, it is the responsibility of Government to make sure we leave
the ladder down there for others to climb, too. The Republican tax
bill, basically, says to the wealthy in this country: You have it made.
Don't worry about anybody else. You made it to the top. Now you can
pull up the ladder behind you and we are going to help you. The
Government will help you pull the ladder up behind you.
President Clinton has talked often about the bridge to the 21st
century, and we have a good construct of it: Unemployment is low, GNP
is going up, debt is going down. But if only a few people cross that
bridge, it will become a dividing line. That is why we don't need this
tax bill. We need to bring people together, not divide us even more, as
this tax bill would do.
The PRESIDING OFFICER. The time of the Senator has expired.
Who yields time?
Mr. ROTH. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.

[[Page S9727]]

The legislative clerk proceeded to call the roll.
Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BAUCUS. Mr. President, I yield 10 minutes to the Senator from
Iowa.
The PRESIDING OFFICER. Only 7 minutes 20 seconds remain.
Mr. BAUCUS. I yield 7 minutes 20 seconds to the Senator from Iowa.
Mr. HARKIN. I will not talk that long. I thank the manager.
Mr. President, I will talk about another motion I will have to
recommit the bill with instructions tomorrow when it comes up. This has
to do with funding for the National Institutes of Health.
Just 2\1/2\ years ago, the Senate went on record, 98-0, committing to
double the budget of the National Institutes of Health over 5 years.
But this tax bill shortchanges America's health and reneges on the
Senate's promise, by forcing cuts of up to 38 percent in discretionary
health programs.
Earlier this evening, my friend and colleague from Pennsylvania,
Senator Specter, talked about NIH being the ``crown jewel'' of our
Government. Indeed, I agree with him. It is. But we said we were going
to double the budget. Yet now, because of this tax bill, we are going
to be faced with huge cuts. We can't even get our appropriations bill
on the floor because we are $8 billion to $10 billion below what we had
last year, and yet we are going to give a big tax break to the
wealthiest in our society.
We have to invest in this medical research--Alzheimer's and arthritis
to cancer, diabetes, and spinal cord injury. We are on the verge of
breakthroughs in all of these areas. Now is not the time to back off;
now is the time to invest in biomedical research.
If we were able to just simply delay the onset of Alzheimer's in
individuals by 5 years, the savings would be $50 billion a year. We
would have no problems in Medicare if we just delayed the onset of
Alzheimer's by 5 years.
My amendment is going to be very simple. It makes good on the promise
the Senator made, 89-0, to double the NIH budget over 5 years. The
amendment returns the tax bill to the Committee on Finance, with
instructions that the committee report back to the full Senate within 3
days with an amendment to provide an additional $13 billion for the NIH
over 5 years. Funding for this would be provided by reducing or
delaying specific tax cuts in the bill, so long as those tax cuts that
benefit moderate- or middle-income taxpayers are not reduced.
Again, I commend this amendment. It is sponsored, again, by myself,
Senator Kennedy, Senator Mikulski, and Senator Murray to again make
good on our promise to make sure we put the necessary funding in
biomedical research at the NIH.
I yield to the manager, if the manager would like to have the time
back. I will be glad to yield back whatever time I have remaining.
Mr. BAUCUS. Mr. President, how much time remains on our side?
The PRESIDING OFFICER. Four minutes.
Mr. BAUCUS. Thank you, Mr. President.
I would like to emphasize a point that I made earlier about
complexity. The tax bill passed by the other body reduces capital
gains. Without getting into whether they should or should not be
reduced, the effective date is July 1, 1999, which adds tremendous
additional complexities to the code--to accountants, who have to add in
more lines, and for programmers in their computers to adjust to the
IRS.
The preliminary analysis is that there are many more pages for the
capital gains increase schedule than currently is required. It is
immense. Add to that Y2K. This provision goes into law on July 1. I am
just addressing the complexity. I am not talking about the merits.
Then the IRS--who knows? It may well have to go back and retest their
Y2K program to see if it works again with these additional items that
are plugged in.
I very much hope the conferees on their tax bill, in working with the
President when this bill is finally put together, pay much more
attention to the complexity than they have in the past. Just bear down
on that because if we hear anything from the taxpayers, it is the
additional complexity of the code. We have an obligation not to add
additional complexity.
In my experience in all of the debate on all of the tax bills, we
have to cut a little bit here and raise some more revenue. We are going
to add a little bit over here, with not one second of attention to
whether or not this adds additional complexity to the taxpayers.
We have had IRS hearings on the problems the IRS has caused the
taxpayers. There is some truth to that. The IRS has been a little bit
too draconian in some ways in some of the proceedings that it has
brought against taxpayers. They have been a bit rough.
But mark my words. Most of the complexity is caused by Congress. Most
of it is caused by Congress. We are a little two-faced around here. We
like to say: Oh boy, we are helping taxpayers reducing taxes--and at
the same time we are increasing complexity. We don't talk about that.
But we have an obligation to address both tax reduction as well as
complexity.
I very much hope we live up to our responsibility and address that
because it is a huge problem. No wonder Americans want a flat tax. It
is the complexity.
On the other hand, I might ask myself and each of you, how do you
address the marriage tax penalty with a national tax? Americans want
both simplicity and equity. We all want both simplicity and equity. Of
course, those are enemies of each other. The more something is simple,
the more someone else claims it is inequitable and applies to them. The
more we try to deal with them to make it more equitable, the less
simple the code becomes. But nevertheless we have an obligation. I very
much hope we address it and solve it.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. FRIST. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. FRIST. I ask unanimous consent to speak for 10 minutes as in
morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. BAUCUS. Mr. President, I will not object. But there comes a point
when we have to wrap things up tonight. In the earlier conversation
with the Senator it was a different amount of time we agreed to.
Mr. FRIST. Mr. President, I thought we were waiting for legislative
language. I will be happy to speak for however many minutes I can. I
was under the understanding it would be about 10 minutes before we had
legislative language to close, but I will be happy to be more brief.
Mr. BAUCUS. I will not object.
Mr. FRIST. Mr. President, I will speak for 5 minutes by unanimous
consent?
The PRESIDING OFFICER. Without objection, it is so ordered.

THE MEDICARE PROGRAM

Mr. FRIST. Mr. President, we have not discussed an amendment which we
will be voting on tomorrow. It has not been discussed yet at all. It
has to do with the very important issue that we voted on today, in
terms of another amendment. That is what we are going to do in this
body to address a fundamental problem. It has to do with Medicare, the
fact that we have a Medicare system which is not going to be solvent
long-term. It is a very costly system where, if you are a senior, and
you have health care expenses, only about 48 percent of those are paid
by the Medicare Program. It is a very costly system for seniors and
individuals with disabilities. It is a very rigid system. It is a
system that is not comprehensive. Much preventive care is not covered,
prescription drugs are not covered at all--outpatient prescription
drugs. It needs to be modernized. We talked a bit about that today.
The real question is why we cannot take a new benefit and just add it
to the overall Medicare system. The gist of the amendment tomorrow is
that, yes, we need prescription drug coverage, but we must incorporate
that new benefit, which needs to be there, in an overall modernization
plan for Medicare.

[[Page S9728]]

The question is, why? Let me focus on this one chart. On the right
half of this chart, the red bar takes an average over the last 5 or 6
years, an average annual increase in all health care. The red bar is in
drug expenditures. They have gone up 11 percent every year. The green
bar is the annual growth in all health care expenditures in our health
care system.
The real point of this graph is that every year overall drug
expenditures, in the aggregate, go up about twice as fast as other
health care costs. Thus if we are going to add a new benefit onto
overall health care costs, something that is growing at 5 percent, we
need to be very sure we do not run into the same problem we have in
certain fields such as home health care. Home health care was a benefit
in Medicare that was growing 17 percent a year. It could not be
tolerated in the overall Medicare system because of cost.

Then we, with the heavy hand of Government, came in and slashed home
health care 2 years ago. In many ways that was devastating to patients,
to the quality of health care, to people who were depending on
venipuncture to have blood drawn on a regular basis. Therefore, I think
it is very important we recognize, because drugs are a different
entity, if we are going to add that benefit, we need to do it in the
realm of overall reform of Medicare and modernization.
This shows prescription drug expenditures in the aggregate since 1965
have increased--not quite exponentially, but you can see in 1993, 1995,
1996, from about $55 billion up to about $80 billion. So before we take
this entity and put it in Medicare, because Medicare is already going
bankrupt, we need to look at the overall picture. It includes
hospitals, includes doctors, prescription drugs, chronic care and acute
care.
There is a proposal that has been put forth by the National
Bipartisan Medicare Commission appointed by the President of the United
States, appointed by our leadership in the Senate and in the House. We
came up with the proposal that is essentially this: The premium support
model, the Breaux-Thomas bill. This proposal did look at overall
Medicare, hospitals, physician reimbursement, and prescription drugs,
and came up with this model. The details of the model do not matter,
but I do want to stress that 10 of the 17 Members, in a bipartisan way,
did put this forward as a proposal--again, to show Medicare can be
modernized.
The point with prescription drugs in Medicare--remember, as an
outpatient, prescription drugs are not covered in Medicare at all. You
have to go outside the system. But of the about 36 million people
enrolled in Medicare, two-thirds do have some coverage, one-third do
not have coverage. Therefore, in that Bipartisan Commission, which we
put forward and worked out over the course of the year, we said let's
first focus right now as we modernize and strengthen Medicare, improve
its solvency, make it less costly, less rigid, let's at least address
this 35 percent as a first step. The 65 percent who are covered are
covered in lots of different ways.
Since my time is up, I will yield the floor and simply close with
this point. We will be offering an amendment tomorrow which says: Yes,
prescription drugs, but let's do it in the context of overall Medicare
reform.
I yield the floor.
Mr. BAUCUS. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative assistant proceeded to call the roll.
Mrs. HUTCHISON. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.

Amendment No. 1472, As Modified

Mrs. HUTCHISON. Mr. President, I ask unanimous consent that amendment
No. 1472 be modified with the changes that are now at the desk.
The PRESIDING OFFICER. Without objection, it is so ordered. The
amendment is so modified.
The amendment (No. 1472), as modified, is as follows:
On page 10, line 6, strike ``2004'' and insert ``2005''.
On page 10, strike the matter between lines 19 and 20, and
insert:

Applicable
``Calendar year: dollar amount:
2006 or 2007..............................................$4,000 ....

2008 and thereafter......................................$5,000. ....

On page 11, strike the matter before line 1, and insert:

Applicable
``Calendar year: dollar amount:
2006 or 2007..............................................$2,000 ....

2008 and thereafter......................................$2,500. ....

On page 11, line 3, strike ``2007'' and insert ``2008''.
On page 11, line 11, strike ``2006'' and insert ``2007''.
On page 32, between lines 14 and 15, insert:

SEC. ____. ELIMINATION OF MARRIAGE PENALTY IN STANDARD
DEDUCTION.

(a) In General.--Paragraph (2) of section 63(c) (relating
to standard deduction) is amended--
(1) by striking ``$5,000'' in subparagraph (A) and
inserting ``twice the dollar amount in effect under
subparagraph (C) for the taxable year'',
(2) by adding ``or'' at the end of subparagraph (B),
(3) by striking ``in the case of'' and all that follows in
subparagraph (C) and inserting ``in any other case.'', and
(4) by striking subparagraph (D).
(b) Phase-in.--Subsection (c) of section 63 is amended by
adding at the end the following new paragraph:
``(7) Phase-in of increase in basic standard deduction.--In
the case of taxable years beginning before January 1, 2008--
``(A) paragraph (2)(A) shall be applied by substituting for
`twice'--
``(i) `1.702 times' in the case of taxable years beginning
during 2001,
``(ii) `1.75 times' in the case of taxable years beginning
during 2002,
``(iii) `1.796 times' in the case of taxable years
beginning during 2003,
``(iv) `1.837 times' in the case of taxable years beginning
during 2004,
``(v) `1.88 times' in the case of taxable years beginning
during 2005,
``(vi) `1.917 times' in the case of taxable years beginning
during 2006, and
``(vii) `1.959 times' in the case of taxable years
beginning during 2007, and
``(B) the basic standard deduction for a married individual
filing a separate return shall be one-half of the amount
applicable under paragraph (2)(A).
If any amount determined under subparagraph (A) is not a
multiple of $50, such amount shall be rounded to the next
lowest multiple of $50.''.
(c) Technical Amendments.--
(1) Subparagraph (B) of section 1(f)(6) is amended by
striking ``(other than with'' and all that follows through
``shall be applied'' and inserting ``(other than with respect
to sections 63(c)(4) and 151(d)(4)(A)) shall be applied''.
(2) Paragraph (4) of section 63(c) is amended by adding at
the end the following flush sentence:

``The preceding sentence shall not apply to the amount
referred to in paragraph (2)(A).''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.
On page 38, line 18, strike ``2000'' and insert ``2002''.
On page 236, strike line 12 through the matter following
line 21, and insert:
(a) In General.--Section 2503(b) (relating to exclusions
from gifts) is amended--
(1) by striking the following:
``(b) Exclusions From Gifts.--
``(1) In general.--In the case of gifts'',
(2) by inserting the following:
``(b) Exclusions From Gifts.--In the case of gifts'',
(3) by striking paragraph (2), and
(4) by striking ``$10,000'' and inserting ``$20,000''.
On page 237, line 3, strike ``2000'' and insert ``2004''.
On page 270, line 18, strike ``2003'' and insert ``2004''.
On page 273, line 21, strike ``2003'' and insert ``2004''.
On page 275, line 12, strike ``2003'' and insert ``2004''.
On page 277, line 13, strike ``2003'' and insert ``2005''.
On page 278, line 13, strike ``2002'' and insert ``2004''.

Mrs. HUTCHISON. I thank the Chair.
Mr. President, I will not delay because I believe we are about to
wrap up, and I will have 15 minutes equally divided tomorrow. This is a
significant victory. I appreciate so much Chairman Roth and Senator
Baucus, who is here on behalf of Senator Moynihan, working with me on
this amendment.
The bottom line is, by delaying a few other very important tax cuts,
we have been able to put at the top of our priority list $6 billion
more in marriage tax penalty relief for the 43 million people in this
country who are suffering just because they are married. That is not
right. We have been needing to correct this for years. You should not
have to choose between love or money in America, and yet 22 million
American couples are doing just that.
This amendment will take part of the marriage tax relief and put it
up, starting in 2001, so there will be immediate relief phased in to
give couples that opportunity to save more of the money they earn to
spend as they choose because, in fact, if they were not married,

[[Page S9729]]

they would be paying that much less in taxes. But they are married. We
want to encourage them to do that, if that is what they want to do, and
we certainly should not be penalizing them.
Tomorrow I will talk about what is in the amendment, what it does,
but tonight I want to say thank you to Senator Roth and to Senator
Baucus for working with us. This is a significant improvement in the
bill because it will give married couples throughout our country the
relief they deserve.
I thank the Chair. I yield the floor.
Mr. BAUCUS. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative assistant proceeded to call the roll.
Mr. ROTH. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. Mr. President, I ask unanimous consent that prior to the
vote on or in relation to amendment No. 1472 it be in order for Senator
Hutchison to further modify her amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.

Amendment Nos. 1388, 1411, 1412, 1446 and 1455, En Bloc

Mr. ROTH. Mr. President, I have a series of five amendments which
have been cleared on both sides. I ask unanimous consent that these
amendments be agreed to, en bloc, the motion to reconsider be laid upon
the table, and that any statements relating to these amendments be
printed in the Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendments (Nos. 1388, 1411, 1412, 1446 and 1455) were agreed to,
en bloc, as follows:

AMENDMENT NO. 1388

(Purpose: Making technical corrections to the Saver Act)

At the end of title XIV, insert:

SEC. ____. TECHNICAL CORRECTIONS TO SAVER ACT.

Section 517 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1147) is amended--
(1) in subsection (a), by striking ``2001 and 2005 on or
after September 1 of each year involved'' and inserting
``2001, 2005, and 2009 in the month of September of each year
involved'';
(2) in subsection (b), by adding at the end the following
new sentence: ``To effectuate the purposes of this paragraph,
the Secretary may enter into a cooperative agreement,
pursuant to the Federal Grant and Cooperative Agreement Act
of 1977 (31 U.S.C. 6301 et seq.), with the American Savings
Education Council.'';
(3) in subsection (e)(2)--
(A) by striking ``Committee on Labor and Human Resources''
in subparagraph (B) and inserting ``Committee on Health,
Education, Labor, and Pensions'';
(B) by striking subparagraph (D) and inserting the
following:
``(D) the Chairman and Ranking Member of the Subcommittee
on Labor, Health and Human Services, and Education of the
Committee on Appropriations of the House of Representatives
and the Chairman and Ranking Member of the Subcommittee on
Labor, Health and Human Services, and Education of the
Committee on Appropriations of the Senate;'';
(C) by redesignating subparagraph (G) as subparagraph (J);
and
(D) by inserting after subparagraph (F) the following new
subparagraphs:
``(G) the Chairman and Ranking Member of the Committee on
Finance of the Senate;
``(H) the Chairman and Ranking Member of the Committee on
Ways and Means of the House of Representatives;
``(I) the Chairman and Ranking Member of the Subcommittee
on Employer-Employee Relations of the Committee on Education
and the Workforce of the House of Representatives; and'';
(4) in subsection (e)(3)(A)--
(A) by striking ``There shall be no more than 200
additional participants.'' and inserting ``The participants
in the National Summit shall also include additional
participants appointed under this subparagraph.'';
(B) by striking ``one-half shall be appointed by the
President,'' in clause (i) and inserting ``not more than 100
participants shall be appointed under this clause by the
President,'', and by striking ``and'' at the end of clause
(i);
(C) by striking ``one-half shall be appointed by the
elected leaders of Congress'' in clause (ii) and inserting
``not more than 100 participants shall be appointed under
this clause by the elected leaders of Congress'', and by
striking the period at the end of clause (ii) and inserting
``; and''; and
(D) by adding at the end the following new clause:
``(iii) The President, in consultation with the elected
leaders of Congress referred to in subsection (a), may
appoint under this clause additional participants to the
National Summit. The number of such additional participants
appointed under this clause may not exceed the lesser of 3
percent of the total number of all additional participants
appointed under this paragraph, or 10. Such additional
participants shall be appointed from persons nominated by the
organization referred to in subsection (b)(2) which is made
up of private sector businesses and associations partnered
with Government entities to promote long term financial
security in retirement through savings and with which the
Secretary is required thereunder to consult and cooperate and
shall not be Federal, State, or local government
employees.'';
(5) in subsection (e)(3)(B), by striking ``January 31,
1998'' in subparagraph (B) and inserting ``May 1, 2001, May
1, 2005, and May 1, 2009, for each of the subsequent summits,
respectively'';
(6) in subsection (f)(1)(C), by inserting ``, no later than
90 days prior to the date of the commencement of the National
Summit,'' after ``comment'' in paragraph (1)(C);
(7) in subsection (g), by inserting ``, in consultation
with the congressional leaders specified in subsection
(e)(2),'' after ``report'';
(8) in subsection (i)--
(A) by striking ``beginning on or after October 1, 1997''
in paragraph (1) and inserting ``2001, 2005, and 2009''; and
(B) by adding at the end the following new paragraph:
``(3) Reception and representation authority.--The
Secretary is hereby granted reception and representation
authority limited specifically to the events at the National
Summit. The Secretary shall use any private contributions
received in connection with the National Summit prior to
using funds appropriated for purposes of the National Summit
pursuant to this paragraph.''; and
(9) in subsection (k)--
(A) by striking ``shall enter into a contract on a sole-
source basis'' and inserting ``may enter into a contract on a
sole-source basis''; and
(B) by striking ``fiscal year 1998'' and inserting ``fiscal
years 2001, 2005, and 2009''.
____

AMENDMENT NO. 1411

(Purpose: To provide that no Federal income tax shall be imposed on
amounts received, and lands recovered, by Holocaust victims or their
heirs)

At the end of title XI, insert the following:

SEC. ____. NO FEDERAL INCOME TAX ON AMOUNTS AND LANDS
RECEIVED BY HOLOCAUST VICTIMS OR THEIR HEIRS.

(a) In General.--For purposes of the Internal Revenue Code
of 1986, gross income shall not include--
(1) any amount received by an individual (or any heir of
the individual)--
(A) from the Swiss Humanitarian Fund established by the
Government of Switzerland or from any similar fund
established by any foreign country, or
(B) as a result of the settlement of the action entitled
``In re Holocaust Victims' Asset Litigation'', (E.D. NY),
C.A. No. 96-4849, or as a result of any similar action; and
(2) the value of any land (including structures thereon)
recovered by an individual (or any heir of the individual)
from a government of a foreign country as a result of a
settlement of a claim arising out of the confiscation of such
land in connection with the Holocaust.
(b) Effective Date.--This section shall apply to any amount
received before, on, or after the date of the enactment of
this Act.
____

AMENDMENT NO. 1412

(Purpose: To add a short title)

On page 193, after line 23, add:
(h) Short Title.--This section may be cited as the
``Collegiate Learning and Student Savings (CLASS) Act''.
____

AMENDMENT NO. 1466, AS MODIFIED

(Purpose: To eliminate the 2-percent floor on miscellaneous itemized
deductions for qualified professional development expenses and
incidental expenses of elementary and secondary school teachers, and
for other purposes)

On page 371, between lines 16 and 17, insert the following:

SEC. ____. 2-PERCENT FLOOR ON MISCELLANEOUS ITEMIZED
DEDUCTIONS NOT TO APPLY TO QUALIFIED
PROFESSIONAL DEVELOPMENT EXPENSES AND QUALIFIED
INCIDENTAL EXPENSES OF ELEMENTARY AND SECONDARY
SCHOOL TEACHERS.

(a) Qualified Professional Development Expenses
Deduction.--
(1) In general.--Section 67(b) (defining miscellaneous
itemized deductions) is amended by striking ``and'' at the
end of paragraph (11), by striking the period at the end of
paragraph (12) and inserting ``, and'', and by adding at the
end the following new paragraph:
``(13) any deduction allowable for the qualified
professional development expenses of an eligible teacher.''
(2) Definitions.--Section 67 (relating to 2-percent floor
on miscellaneous itemized deductions) is amended by adding at
the end the following new subsection:
``(g) Qualified Professional Development Expenses of
Eligible Teachers.--For purposes of subsection (b)(13)--
``(1) Qualified professional development expenses.--
``(A) In general.--The term `qualified professional
development expenses' means expenses--

[[Page S9730]]

``(i) for tuition, fees, books, supplies, equipment, and
transportation required for the enrollment or attendance of
an individual in a qualified course of instruction, and
``(ii) with respect to which a deduction is allowable under
section 162 (determined without regard to this section).
``(B) Qualified course of instruction.--The term `qualified
course of instruction' means a course of instruction which--
``(i) is--

``(I) at an institution of higher education (as defined in
section 481 of the Higher Education Act of 1965 (20 U.S.C.
1088), as in effect on the date of the enactment of this
subsection), or
``(II) a professional conference, and

``(ii) is part of a program of professional development
which is approved and certified by the appropriate local
educational agency as furthering the individual's teaching
skills.
``(C) Local educational agency.--The term `local
educational agency' has the meaning given such term by
section 14101 of the Elementary and Secondary Education Act
of 1965, as so in effect.
``(2) Eligible teacher.--
``(A) In general.--The term `eligible teacher' means an
individual who is a kindergarten through grade 12 classroom
teacher, instructor, counselor, aide, or principal in an
elementary or secondary school.
``(B) Elementary or secondary school.--The terms
`elementary school' and `secondary school' have the meanings
given such terms by section 14101 of the Elementary and
Secondary Education Act of 1965 (20 U.S.C. 8801), as so in
effect.''
(3) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000, and ending before December 31, 2004.
(b) Qualified Incidental Expenses.--
(1) In general.--Section 67(g)(1)(A), as added by
subsection (a)(2), is amended by striking ``and'' at the end
of clause (i), by redesignating clause (ii) as clause (iii),
and by inserting after clause (i) the following new clause:
``(ii) for qualified incidental expenses, and''.
(2) Definition.--Section 67(g), as added by subsection
(a)(2), is amended by adding at the end the following new
paragraph:
``(3) Qualified incidental expenses.--
``(A) In general.--The term `qualified incidental expenses'
means expenses paid or incurred by an eligible teacher in an
amount not to exceed $125 for any taxable year for books,
supplies, and equipment related to instruction, teaching, or
other educational job-related activities of such eligible
teacher.
``(B) Special rule for homeschooling.--Such term shall
include expenses described in subparagraph (A) in connection
with education provided by homeschooling if the requirements
of any applicable State or local law are met with respect to
such education.''
(3) Effective date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000, and ending before December 31, 2004.
____

AMENDMENT NO. 1455

(Purpose: To amend the Internal Revenue Code of 1986 to expand the
deduction for computer donations to schools and to allow a tax credit
for donated computers, and for other purposes)

On page 371, between lines 16 and 17, insert:

SEC. ____. EXPANSION OF DEDUCTION FOR COMPUTER DONATIONS TO
SCHOOLS.

(a) Extension of Age of Eligible Computers.--Section
170(e)(6)(B)(ii) (defining qualified elementary or secondary
educational contribution) is amended--
(1) by striking ``2 years'' and inserting ``3 years'', and
(2) by inserting ``for the taxpayer's own use'' after
``constructed by the taxpayer''.
(b) Reacquired Computers Eligible for Donation.--
(1) In general.--Section 170(e)(6)(B)(iii) (defining
qualified elementary or secondary educational contribution)
is amended by inserting ``, the person from whom the donor
reacquires the property,'' after ``the donor''.
(2) Conforming amendment.--Section 170(e)(6)(B)(ii) is
amended by inserting ``or reaquired'' after ``acquired''.
(c) Effective Date.--The amendments made by this section
shall apply to contributions made in taxable years ending
after the date of the enactment of this Act.

SEC. ____. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS AND
SENIOR CENTERS.

(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits), as amended
by this Act, is amended by adding at the end the following:

``SEC. 45E. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS AND
SENIOR CENTERS.

``(a) General Rule.--For purposes of section 38, the
computer donation credit determined under this section is an
amount equal to 30 percent of the qualified computer
contributions made by the taxpayer during the taxable year.
``(b) Qualified Computer Contribution.--For purposes of
this section, the term `qualified computer contribution' has
the meaning given the term `qualified elementary or secondary
educational contribution' by section 170(e)(6)(B), except
that--
``(1) such term shall include the contribution of a
computer (as defined in section 168(i)(2)(B)(ii)) only if
computer software (as defined in section 197(e)(3)(B)) that
serves as a computer operating system has been lawfully
installed in such computer, and
``(2) for purposes of clauses (i) and (iv) of section
170(e)(6)(B), such term shall include the contribution of
computer technology or equipment to multipurpose senior
centers (as defined in section 102(35) of the Older Americans
Act of 1965 (42 U.S.C. 3002(35)) to be used by individuals
who have attained 60 years of age to improve job skills in
computers.
``(c) Increased Percentage for Contributions to Entities in
Empowerment Zones, Enterprise Communities, and Indian
Reservations.--In the case of a qualified computer
contribution to an entity located in an empowerment zone or
enterprise community designated under section 1391 or an
Indian reservation (as defined in section 168(j)(6)),
subsection (a) shall be applied by substituting `50 percent'
for `30 percent'.
``(d) Certain Rules Made Applicable.--For purposes of this
section, rules similar to the rules of paragraphs (1) and (2)
of section 41(f) and of section 170(e)(6)(A) shall apply.
``(e) Termination.--This section shall not apply to taxable
years beginning on or after the date which is 3 years after
the date of the enactment of the New Millennium Classrooms
Act.''
(b) Current Year Business Credit Calculation.--Section
38(b) (relating to current year business credit), as amended
by this Act, is amended by striking ``plus'' at the end of
paragraph (12), by striking the period at the end of
paragraph (13) and inserting ``, plus'', and by adding at the
end the following:
``(14) the computer donation credit determined under
section 45E(a).''
(c) Disallowance of Deduction by Amount of Credit.--Section
280C (relating to certain expenses for which credits are
allowable) is amended by adding at the end the following:
``(d) Credit for Computer Donations.--No deduction shall be
allowed for that portion of the qualified computer
contributions (as defined in section 45E(b)) made during the
taxable year that is equal to the amount of credit determined
for the taxable year under section 45E(a). In the case of a
corporation which is a member of a controlled group of
corporations (within the meaning of section 52(a)) or a trade
or business which is treated as being under common control
with other trades or businesses (within the meaning of
section 52(b)), this subsection shall be applied under rules
prescribed by the Secretary similar to the rules applicable
under subsections (a) and (b) of section 52.''
(d) Limitation on Carryback.--Subsection (d) of section 39
(relating to carryback and carryforward of unused credits) is
amended by adding at the end the following:
``(9) No carryback of computer donation credit before
effective date.--No amount of unused business credit
available under section 45E may be carried back to a taxable
year beginning on or before the date of the enactment of this
paragraph.''
(e) Clerical Amendment.--The table of sections for subpart
D of part IV of subchapter A of chapter 1, as amended by this
Act, is amended by inserting after the item relating to
section 45D the following:

``Sec. 45E. Credit for computer donations to schools and senior
centers.''

(f) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to contributions
made in taxable years beginning after the date of the
enactment of this Act.
(2) Certain contributions.--The amendments made by this
section shall apply to contributions made to an organization
or entity not described in section 45E(c) of the Internal
Revenue Code of 1986, as added by subsection (a), in taxable
years beginning after the date that is one year after the
date of the enactment of this Act.

Mr. COVERDELL. Mr. President, I would like to discuss an amendment
that Senators Torricelli, McCain, Craig, and I would like to offer--
expansion of education savings accounts. Under our provision, parents,
relatives, friends--anyone--would be allowed to contribute up to $2,000
per year, after tax, into an account where the proceeds could be
withdrawn tax-free to pay for a child's K-12 education expenses.
Right now, the law allows parents to contribute up to $500 per year
for a child's college education. We increase that amount to $2,000 per
year and allow for tax-free withdrawals for K-12 educational expenses,
as well.
Last Congress, this legislation passed the Senate with bipartisan
majorities on two separate occasions. The bill passed with a vote of 56
to 43; while the conference report passed with a vote of 59 to 36.
On each occasion, the chairman of the Finance Committee supported the
measure, and was in large part responsible for its successful passage.
Unfortunately, despite the bipartisan support for the bill, the
opponents of this legislation ultimately prevailed and it was vetoed by
President Clinton.
Because the House-passed tax-relief measure contains this provision,
I would like to withdraw our amendment and ask the chairman of the
Finance Committee, Senator Roth, to support

[[Page S9731]]

the House position on this issue during the upcoming House-Senate
conference negotiations.
Mr. ROTH. Thank you, Senator Coverdell. As you are aware, I have been
a supporter of this legislation in the past, and I will continue to
support this legislation in the future.
This bipartisan proposal is an outstanding example of our ability to
use the tax code, to help millions of middle class American families
across the country. By using the tax code to encourage families to save
for their children's education needs and expenses, we all benefit. The
expansion of the education IRA will result in greater opportunities for
every American child and their families. With education savings
accounts, 14 million families--over 20 million kids--will take
advantage of the expanded education IRAs, generating billions of
dollars in education savings that might otherwise not exist. It is an
outstanding way to provide families new and innovative options in
education.
Because this legislation has the support of a bipartisan majority of
the Senate and is contained in the House-passed bill, I believe it
should be given every consideration by the conferees during the
negotiations of the conference report.
Mr. SARBANES. Mr. President, I rise in opposition to the Budget
Reconciliation bill that is before us today. This bill would spend
nearly all of the on-budget surplus projected by the Congressional
Budget Office over the next ten years and would use none of this
projected surplus to protect the Social Security system, shore up
Medicare, or give senior citizens the prescription drug benefits they
so desperately need. Instead of taking this opportunity to invest in
the future of America at the threshold of the 21st century, Republicans
want to enact deep and unreasonable tax cuts that largely benefit the
wealthy.
One major problem with basing a decade's worth of budgetary decisions
on a projected surplus is that we have no way of knowing what will
happen in the next ten years to affect these projections. Consider that
just three years ago, when we enacted the Balanced Budget Act of 1997,
there were forecasts of large deficits stretching into the future. This
year, both the Congressional Budget Office and the Office of Management
and Budget are projecting large surpluses over the same period. This
turnabout should illustrate clearly that there is a large element of
uncertainty in any economic projection, and that large scale shifts in
tax policy that would tie our hands in the event of an economic
downturn are, at the very least, unwise.
Furthermore, the surplus estimates are based on the assumption that
the Federal government will adhere to the spending caps enacted in the
Balanced Budget Act of 1997. The Leadership in both Houses has admitted
that this is not a realistic assumption: a number of appropriations
bills will not be able to pass unless their funding is restored to pre-
cap levels. Already this year, appropriators are eyeing the projected
budget surpluses to help fund large appropriations bills. And, as
difficult as these spending caps have been for appropriators this year,
the spending caps in future years call for even more drastic cuts.
We are in the midst of the longest peacetime economic expansion in
history. This remarkable turnaround has come about in large part
because of deficit reduction efforts which began with legislation
proposed by the Administration and enacted by the Congress in 1993 -
without a single Republican vote. Thanks to these efforts, we have been
able to achieve record low levels of unemployment while at the same
time maintaining dramatically low levels of inflation. Tax cuts of the
magnitude put forward by the Majority would be unwise and potentially
destabilizing in an economy that has strong growth, low unemployment
and dramatically low levels of inflation.
The real question before us today is whether we are going to take
advantage of this opportunity to exercise responsible fiscal policy. If
we begin to stimulate the economy with a tax cut at the very time that
unemployment is at unprecedented low levels, we run the risk of
reigniting inflation. If we start over-stimulating the economy, the
Federal Reserve will surely raise interest rates to keep inflation in
check and we will be right back in the box we faced prior to this
recovery.
It is my strongly held view that any surplus realized over the next
ten years should be seen as an opportunity to pay down the Nation's
debt, invest in our Nation's future, and shore up vital programs. The
Republican tax plan would squander this unprecedented opportunity to
ensure that the Federal government will meet its obligations after the
baby boomers retire and beyond.
The Republican plan does nothing to preserve the integrity of the
Social Security trust fund. The Social Security program is one of this
Nation's greatest achievements. For more than 60 years, we have ensured
that our senior citizens have a means of support in retirement after a
lifetime of hard work. We must honor this commitment and ensure that
seniors who count on Social Security receive their benefits.
The Republican tax plan would set aside no new resources for the
Medicare program--the plan does nothing to extend the solvency of the
Medicare trust fund or provide prescription drug benefits. The
President's proposal to enact a modest prescription drug benefit for
Medicare would cost $46 billion over the next ten years--less than 6
percent of the total cost of the Republican tax proposal.
Beyond Social Security and Medicare, this projected budget surplus
could allow us to invest in the country's infrastructure. We should
invest in schools to provide our children with the best possible
education; we should improve our Nation's highways and infrastructure;
we should invest in America's workers to train them for the 21st
century; we should continue to put more police officers on the streets
and give them the resources they need to bring crime rates down; and we
should protect our environment and natural resources.
While I am not opposed to passing legislation that uses a portion of
the projected surplus to cut taxes, such cuts must be responsible, and
we should ensure that America's hard-working families who are
struggling to take part in the Nation's prosperity benefit first.
Mr. President, we are embarking on an extremely important decision in
terms of the future course of the Nation. If we make it responsibly, we
can continue on the path of prosperity. We can continue to invest in
the future strength of our country through education, research and
development, and infrastructure. We can shore up Social Security,
address the problems in the Medicare program, and bring down the
Federal debt. We can also implement targeted tax cuts that help
strengthen our families.
All of these things are possible, but we cannot, for the sake of our
future economic prosperity, go to extremes. The Republican proposal is
an extreme proposal. Subjected to analysis, it does not stand up. I
strongly oppose this proposal and I urge my colleagues to reject it.
Mr. KENNEDY. Mr. President, I am in strong support of Senator Robb's
amendment to recommit the tax bill to instruct the Finance Committee to
make a $5.7 billion investment in rebuilding and modernizing the
nation's schools. I commend Senator Robb for his leadership on this
issue and I urge my colleagues to support this sensible legislation
that is necessary to help the nation meet the critical need to
modernize and rebuild crumbling and overcrowded schools.
Schools, communities, and governments at every level have to do more
to improve student achievement. Schools need smaller classes,
particularly in the early grades. They need stronger parent
involvement. They need well-trained teachers in the classroom who keep
up with current developments in their field and the best teaching
practices. They need after-school instruction for students who need
extra help, and after-school programs to engage students in
construction activities. They need safe, modern facilities with up-to-
date technology.
But, this investment can't succeed when roofs are crumbling and
children are in overcrowded classrooms. Sending children to
dilapidated, overcrowded facilities sends a message to these children.
It tells them they don't matter. No CEO would tolerate a leaky ceiling
in the board room, and no teacher should have to tolerate it in the
classroom. We need to do all we can

[[Page S9732]]

to ensure that children are learning in safe, modern school buildings.
Renovation, rehabilitation, and modernization will allow schools to
correct problems that prevent them from offering an environment
conducive to learning. Researchers have documented a clear link between
school building conditions and student learning. A study by Virginia
Polytechnic Institute and State University in 1996 compared test scores
of students in substandard and above-standard buildings, and found that
students in better buildings with access to modern technology do better
in their academic work then those without these problems.
Nearly one third of all public schools are more than 50 years old. 14
million children in a third of the nation's schools are learning in
substandard buildings, and half of the schools have at least one
unsatisfactory environmental condition. The problems with ailing school
buildings aren't the problems of the inner city alone. They exist in
almost every community, whether urban, rural, or suburban.
In addition to modernizing and renovating dilapidated schools,
communities need to build new schools in order to keep pace with rising
enrollments and to reduce class sizes. Elementary and secondary school
enrollment has reached an all-time high again this year of 53 million
students, and will continue to grow.
The Department of Education estimates that 2,400 new public schools
will be needed by 2003, to accommodate rising enrollments. The General
Accounting Office estimates that it will cost communities $112 billion
to repair and modernize the nation's schools. Congress should lend a
helping hand and do all we can to help schools and communities across
the country meet this challenge.
In Massachusetts, 41 percent of schools report that at least one
building needs extensive repairs or should be replaced. 80 percent of
schools report at least one unsatisfactory environmental factor. 48
percent have inadequate heating, ventilation, or air conditioning. And
36 percent report inadequate plumbing systems.
This past year, I visited Everett Elementary School in Dorchester,
Massachusetts. The school is experiencing serious overcrowding. The
average class size is 28 students. The principal of the school gave up
her office and moved into a closet in the hall in order to accommodate
the rising enrollment. When the school needs the multi-purpose
auditorium/library, the rolling bookcases are moved to the basement,
and the library has to close for the rest of the day.
In Fitchburg, Massachusetts, enrollments are rising by 200 students a
year. Educators there would like to reduce class size, extend special
education and bilingual education programs, and hire new teachers, but
the school system does not have the facilities or resources to
accomplish these important goals. Instead, Fitchburg has been forced to
construct four portable facilities--and a fifth is under construction--
to deal with overcrowding.
Forrest Grove Middle School in Worcester, Massachusetts, is at full
capacity with 750 students. As enrollments rise, they expect an
additional 150 students, forcing them to rent rooms at a local church
to alleviate overcrowding. The schools in Olathe, Kansas are growing at
a rate of 500-1,000 students a year, which is equivalent to about one
new school per year.
Two cafeterias at Bladensburg High School in Prince Georges County,
Virginia were recently closed because they were infested with mice and
roaches. A teacher commented, ``It's disgusting. It causes chaos when
the mice run around the room.'' At an elementary school in Montgomery,
Alabama, a ceiling which had been damaged by leaking water collapsed
only 40 minutes after the children had left for the day.
In Ramona, California, where overcrowding is a serious problem, one
elementary school is composed entirely of portable buildings. It has
neither a cafeteria nor an auditorium, and a single relocatable room is
used as a library, computer lab, music room, and art room.
In Silver Spring, Maryland, a second-grade reading class has to
squeeze through a narrow corridor with a sink on one side into a space
about 14 feet wide by 15 feet long.
Schools are trying to meet their needs, but they can't do it alone.
The federal government should join with state and local governments and
community organizations to ensure that all children have the
opportunity to get a good education in a safe and up-to-date school
building.
Children need and deserve a good education in order to succeed in
life. But they cannot obtain that education if school roofs are falling
down around them, sewage is backing up through faulty plumbing,
asbestos is flaking off the walls and ceilings, schools lack computers
and modern technology, and classrooms are overcrowded. We need to
invest more to help states and communities rebuild crumbling schools,
modernize old buildings, and expand facilities to accommodate reduced
class sizes.
Senator Robb's bill offers school districts the necessary flexibility
and assistance to get the job done. Under this proposal, states will be
able to put together a school financing package which best meets their
needs. It offers states and school districts five choices from a menu
of school construction financing components. It gives states and
communities the authority to offer zero-interest school modernization
bonds. It also offers other tax incentives to enhance the ability of
communities to rebuild their schools, including private activity bonds,
advance refunding, elimination of arbitrage rebates for small issuers,
and Federal Home Loan Bank guarantees on school construction bonds.
I urge my colleagues to support Senator Robb's amendment. The time is
now to do all we can to help rebuild and modernize public schools, so
that all children can succeed in safe, technologically-equipped
schools.
Mr. ROCKEFELLER. Mr. President, I rise today to discuss the Balanced
Budget Act of 1997 and its impact on providers and beneficiaries'
access to health care services. Congress has a responsibility to
address problems with the BBA for providers, especially those in rural
areas. I believe it is important that we keep one thought in mind
during the course of this debate--we debated all these changes to help
our seniors. They are, and should remain, at the forefront of these
discussions.
The BBA made the most significant modifications to Medicare in the
history of the program. It signified a change in policy designed to pay
more reasonable prices and increase overall efficiency. There is no
doubt that these were needed reforms enacted to protect and preserve
the program for future generations. However, in light of the magnitude
of the changes, we need to make some adjustments to compensate for
unforeseen consequences.
It is clear that in rural areas like West Virginia, the impact of the
BBA on beneficiaries and providers is much more dramatic than in many
other parts of the country. Medicare payments make up a larger
proportion of rural hospitals' revenues and rural hospitals have lower
hospital margins in general. Thus, West Virginia hospitals, like many
other rural hospitals, have little to fall back on when federal
Medicare payments are cut.
Since rural hospitals are often local safety net providers with low,
and sometimes negative, margins, payment reductions may mean financial
jeopardy for rural hospitals and consequently, reduced access to care
for rural beneficiaries.
It is not yet clear whether Medicare payment rates will take into
account the severity or complexity of patients' illnesses. Under the
current law, caring for the chronically ill or those with complex
medical conditions can push these health care facilities closer to the
brink of bankruptcy. Rural facilities are especially concerned because
they do not treat a large enough volume of patents to counterbalance
the costs of a few very sick ones.
We cannot afford to lose providers without endangering the well-being
of our citizens. Therefore, it is imperative that we take action to
make sure that the problems we're facing today do not become a crisis
that we'll have to face in the near future.
I would like to note that this body has voted on one facet of this
issue earlier this year. The Senate budget resolution included an
amendment, which was passed by voice-vote, that directed attention to
the impact of the BBA on hospital care. Specifically, the amendment
expressed the sense of the Senate that we should consider the extent to

[[Page S9733]]

which the BBA has had adverse effects on access to hospital care and
provided additional budget authority to address the unintended
consequences.
Today, I am offering an amendment with my colleagues from
Massachusetts and Maryland, Senators Kerry and Mikulski, that takes the
next step in providing for the additional needs of our health care
delivery system, especially in rural areas. The ``Medicare Quality
Assurance and Continued Access'' amendment would amend a small portion
of the tax cut for a comprehensive package of assistance to Medicare
providers.
Mr. President, I am not advocating that we undo the BBA. However, we
must address the inequities that resulted from its enactment,
particularly when it comes to making certain our seniors get the care
they need.
We have commitment to those who came before us and sacrificed so much
to make this nation what it is today. Today, we have the opportunity to
honor that commitment, and I urge my colleagues to do so by supporting
changes to the Balanced Budget Act.
Mrs. FEINSTEIN. Mr. President, I rise to address the amendment on
low-income housing tax credit to be offered by my colleague from
Pennsylvania, of which I am a cosponsor.
This issue--affordable housing--is of great importance in my state of
California, as it is for much of the nation. Low income families in San
Francisco, San Diego, and cities across the country are finding it
harder and harder to find affordable housing for rent.
The low-income housing tax credit is a great help. Since 1987, state
agencies have allocated over $3 billion in housing credits to help
finance nearly one million apartments for low income families.
The current housing credit cap--$1.25 for each resident of a state--
has not been adjusted since the program's inception. Annual cap growth
is limited to the increase in state population, which has been less
than five percent nationwide over the past decade. During the same time
period, inflation has eroded the housing credit's purchasing power by
nearly 50 percent, as measured by the Consumer Price Index.
The budget reconciliation bill increase the credit cap to $1.75 over
five years. This is an important step, but it's not enough. Senator
Santorum and I have proposed this amendment to index the low-income
housing tax credit cap for inflation.
The estimated cost to index the cap for inflation is $43 million over
ten years. It is my understanding the cost has been fully offset. It is
important to see that the housing tax credit will not depreciate over
time.
By not indexing the credit for inflation over the past 13 years, it
has eroded by between 40 and 45 percent. Costs to build and
rehabilitate affordable housing developments have continued to climb,
requiring more credit per project in order to achieve economic
feasibility. As a result, less and less affordable housing is made
available under the credit.
Assuming an inflation factor of just three percent, California would
have an additional $1.23 million in the first year of indexing. This
would produce approximately 150 more affordable apartments in
California annually.
Nationwide, demand for housing credits outstrips supply by more than
three to one. In California, it's four to one. According to the Center
on Budget and Policy Priorities, 90 percent of renters in Los Angeles
pay more than 30 percent of their monthly income on rent. Seventy-three
percent spend more than 50 percent of their income on rent.
In the city of San Diego, the affordable housing situation is not
much better. There, 106,000 families spend more than 30 percent of
their income on rent, and 57,000 families spend more than 50 percent on
rental housing.
In the San Francisco Bay Area, the situation is even worse. The
average family pays roughly 58 percent of its monthly income on rent.
We need to aggressively work to fix this shortage. We need to ensure
the tax credit will remain a workable incentive for home builders
nationwide. I urge my colleagues to join me in support of this
amendment.
Mr. BURNS. Mr. President, I will offer an amendment that will help to
keep our Nation's air clean and healthy. This amendment will provide a
tax credit for our Nation's energy producers to produce an
environmentally-friendly and energy-efficient alternative fuel using
otherwise unusable waste products and natural resources.
This proposal would provide for a biomass coal tax credit and offer
an incentive for the Nation's energy producers to construct facilities
that would process low-grade, high-moisture, coal. We have large
supplies of this type of coal in our nation.
This proposal provides half of the credit that is being allowed to
produce electricity using biomass and wind power. This is a production
tax credit you can only claim the credit if you produce the qualified
product.
However, it has been determined that in order for companies to use
this credit, they need to have an idea that the credit is going to be
available for an extended number of years. Otherwise the costs of
building the facilities to provide this environmentally-friendly and
energy-efficient fuels would be cost prohibitive.
The marketplace demands a premium, low pollutant coal, to meet the
nations needs and in response to the Clean Air Act and the Kyoto
Protocol. We cannot jeopardize America's competitiveness by complying
with Kyoto's costs on our consumers and markets.
Providing this tax credit marks the beginning of a new industry.
Based on current market pressures resulting from deregulation and
environmental regulations, numerous companies are interested in
constructing these facilities. This is a tax credit that will help to
clean our Nation's air and keep our skies blue.
I yield the floor.
Mr. KENNEDY. Mr. President, members on both sides of the aisle have
spent a great deal of time over the past two years talking about child
care. We've introduced dozens of bills. We've held extensive hearings.
We know the difficulties facing countless families across the nation in
obtaining affordable, quality care for their children.
We've emphasized the scientific research that confirms again and
again that quality early childhood support is necessary for proper
brain development of infants and toddlers. We've called for significant
additional investments in the nation's children when they are very
young, so that all children can benefit from healthy growth and
development. The alternative is unacceptable because it means far
higher costs in the long run, and because it denies many thousands of
children the opportunity to enter school ready to learn.
For all the talk, there has been far too little action. We have
severely underfunded the Child Care and Development Block Grants to the
states. Only one in ten children who qualify for federal assistance
actually receives it. When states run out of funds, they place many of
the remaining children on waiting lists. Today, over two hundred
thousands children who need a safe and stimulating environment while
their parents work are on waiting lists instead. At a hearing held this
week, Senators from both parties called this a national disgrace, and I
could not agree more.
Many of those who have taken jobs under welfare reform are parents
who can only find minimum wage employment. At today's low minimum wage,
full time work pays only $10,712 in wages a year. Yet child care for
one child costs thousands of dollars a year. Without adequate child
care assistance, it is irresponsible to demand that parents leave their
infants and toddlers without adequate care. Yet that is the consequence
of our refusal to fully fund the Child Care and Development Block
Grant.
With the amendment of Senator Dodd and Senator Jeffords, we can begin
to deal more effectively with this serious problem. The amendment
represents concrete progress in fulfilling the nation's commitment to
children. It would give states the additional resources they need to
support quality child care in their communities. In this time of
enormous prosperity, it is not only the right thing to do--it is a wise
investment for this nation's future.
Mrs. MURRAY. Mr. President, I join with the Senator from Florida in
urging my colleagues to do the right thing. Our priorities are out of
order. We must remember that we have all committed to saving Social
Security and Medicare. These should be our priorities. We should be
debating reforms

[[Page S9734]]

that save these essential income security programs instead of deciding
how to squander a protected surplus that may never materialize.
This tax bill is a serious threat to women. By ignoring the looming
crisis facing both Social Security and Medicare, we are jeopardizing
the financial security of older women. If we fail to reform both Social
Security and Medicare, we will force more older women into poverty. The
progressive structure of both programs guarantees that for millions of
older women, their golden years are not spent living far below the
poverty level.
The bottom line is that Social Security and Medicare are women's
issues. They are the most important domestic programs for women. By
failing to allocate part of the projected surplus to saving these
programs and instead acting for short term gratification, we place the
issues important to women and families behind the special interests of
DC lobbyists.
Why am I here today fighting for an amendment that simply says we
will not squander the projected surplus until we have reformed Social
Security and Medicare for the long term? Because I am here fighting for
families and fighting for some economic peace of mind for older women.
Without Social Security benefits, the elderly poverty rate among women
would be 52.2 percent and among widows would be 60.6 percent. Instead
12 percent of all Social Security recipients live in poverty. While I
still cannot accept even 12 percent, I do not want to be part of
pushing more than 50 percent of older women into poverty.
Women are far more dependent on Social Security for their retirement
income than are men. Three-quarters of unmarried and widowed elderly
women rely on Social Security for more than half of their income.
Fifty-eight percent of all Social Security recipients are women. Tell
me women do not have a vital stake in this debate.
I am not saying we cannot have tax relief targeted to working
families. We could have tax relief targeted to help more Americans save
for retirement. However, we cannot jeopardize or gamble with the future
economic security of millions of women. We have to tackle Social
Security and Medicare reform first.
I know such reform will require heavy lifting. It will require us to
invest potential surplus funds in the well-being of older Americans. I
am committed to this reform. I am willing to sit down and tackle these
tough assignments. What I am not willing to do is to watch my
colleagues ignore the economic importance of both Social Security and
Medicare for women.
A tax cut is not what most women are looking for. They want pay
equity, economic opportunity, and retirement security. Women currently
start out several economic steps behind men. We know that women today
earn 74 cents for every dollar men earn. We know that women, on
average, take a total of 11.5 years out of the work force to care for
their families. We know that women often outlive their retirement
savings. And, we know that more women live with chronic and disabling
illnesses. This in part explains why women are more than twice as
likely as men to live in poverty at age 65.
This amendment does not kill a tax cut. It will force us to make the
tough decisions and to tackle the difficult job of reforming Social
Security and Medicare. But, more important, it will provide greater
economic security to women than any instant gratification tax cut ever
would. Please do not force elderly women to pay the price for our
misguided priorities.
Mr. BUNNING. Mr. President, I rise in support of the Taxpayer Refund
Act and urge my colleagues to vote for it.
I actually prefer the tax bill that was considered and approved in
the House of Representatives and I support the conservative substitute
tax bill that was offered earlier today.
I prefer these alternatives because they cut taxes across the Board
which I think is appropriate. They reduce the marriage penalty more
adequately which I think is essential.
They make further reductions in the capital gains tax which I think
is good for the economy. They totally phase out the death tax instead
of just reducing it which I think is just a matter of fairness.
However, even though I think that the Taxpayer Refund Act could be
improved--and I hope that it is improved during conference--it is
vitally important that we keep the process moving and send a tax cut
bill to conference.
During this debate, we've seen a great many charts and graphs
outlining all the figures and projections under the Sun. It's almost
like watching a Ross Perot commercial.
But when we get to the bottom line in this debate, we aren't talking
about figures and projections at all. We are talking about two
different philosophies of government.
We are talking about two different philosophies of who the money
really belongs to.
Does the money that is generated by the income tax and the payroll
tax belong to the people--or does it belong to the Federal Government.
That's the argument today.
And the differences here are very clear cut and distinct.
The President and his supporters believe that the money paid into the
Federal treasury belongs to the Government.
We are told that over the next 10 years we will have $1.1 trillion
more than we need in general revenues to fund the Federal Government. A
trillion dollars is a lot of money.
But the President and his supporters say that all that money belongs
to the Government and that we should hold onto it just in case Congress
or the President can find new ways to spend it.
I can guarantee that if we let the Government hold onto that money--
somebody will find a way to spend it.
On the other side of the coin, Republicans say that if taxes
are bringing in more money than we need to run the Government, we
should give it back to the people so they can determine how to spend
it.

That's what this debate is all about. Whose money is it?
The President and the Democrat leadership say that tax cuts are
irresponsible and risky--that they would jeopardize Social Security,
Medicare and essential government services.
But our budget and our tax bill and our Social Security lockbox
proposal which the Democrats here in the Senate keep rejecting all
guarantee that the Government cannot touch the Social Security
surpluses over the next 10 years.
The Republican proposals all clearly protect Social Security--we lock
up that money so it can't be spent--so that it reduces the public debt.
But the Democrats in this body keep voting against the lock box which
would guarantee that Social Security surpluses cannot be spend. So, it
is not the Republican tax bill that threatens Social Security. It is
Democrat reluctance to make a binding commitment not to spend Social
Security surpluses.
Yes, something needs to be done to strengthen and protect Medicae--
but it is not the Republican tax bill which threatens this important
program.
Medicare needs systemic reform--we all know that--and it was the
President--not the Republicans or the Republican tax bill--who killed
the bipartisan commission recommendations which were designed to give
us a starting point for real Medicare reform.
So, no, this debate is not about Social Security--it is not about
Medicare. It is about who the money belongs to.
I believe that it belongs to the working Americans who pay the
freight. When the projections tell us that we are going to take in over
a trillion dollars more than we need, it means that the taxpayers are
paying too much and we should give it back.
It's that simple.
That's what this debate is all about.
We have an opportunity today to return some tax money to the
taxpayers of this Nation. It is a matter of fairness--it is a matter of
honesty--and it is a simple matter of respect.
We can protect Social Security and Medicare and we can reduce the
public debt and, yes, we can cut taxes at the same time.
And we should cut taxes--because, Mr. President, I'm one of those who
believe that the money belongs to the people--not the Government.
Mr. BINGAMAN. Mr. President, I'm not going to take a lot of the
Senate's time, but I want to speak briefly about an amendment I have
filed to this tax bill. My amendment, number 1391, promotes the use of
small, efficient distributed electronic power generation

[[Page S9735]]

systems in residential, industrial and commercial applications.
I believe distruted generating technologies are the future of our
electric power industry. Already, the first microturbines and fuel
cells are being installed in homes and businesses. Renewable
technologies, like wind and solar, are bringing power to isolated areas
that are not connected to the electrical power grid. These remote
applications are very common in my state of New Mexico.
Mr. President, my amendment has two parts. The first part provides a
much needed tax clarification concerning small, distributed electric
power technologies, such as high-efficiency microturbines and fuel
cells. The current tax law discourages the use of these technologies in
commerical buildings by requiring a straight-lined depreciation over a
39-year lifetime. However, the same technology, if used in different
application, has a shorter depreciation schedule. My amendment would
make clear that these advanced electric power systems would have a 15-
year depreciation schedule when used for power generation.
The second part of my amendment provides an 8-percent investment tax
credit for systems that produce both heat energy and electrical power.
The tax credit would apply only to systems that meet a strict 60-
percent overall energy efficient requirement. This provision will help
increase the Nation's energy efficiency by encouraging investment in
these highly efficient systems.
Last month the Energy and Natural Resources Committee held a hearing
on distributed power generation. The hearing made clear that
technologies such as microturbines, fuel cells, and the various
renewable resources can provide many practical benefits, including
reduced dependence on high-tension power transmission lines, higher
energy efficiency, lower costs, increased reliability, and reduced
emissions. Moreover, by combining the production of heat and electric
power in one package, overall efficiencies of up to 90 percent can be
achieved.
Though I believe my amendment is important and would provide
significant economic, reliability, and environmental benefits, I am not
going to call it up for one very simple reason: This tax bill isn't
going anywhere. The Senate will soon pass this bill, but the President
is not going to sign it. In a few weeks, when the Senate comes back
with a more sensible package of tax legislation, I hope my amendment
will be incorporated in a bill that we can pass and send to the
President for his signature.
The incentives for distributed generating technologies in my
amendment will go a long way to realizing the best future for electric
power generation and efficient use of energy. I hope we can pass them
in the next tax bill.
Mr. MACK. Mr. President, I would like to talk a few minutes about one
particular provision in the tax bill we are debating, the extension of
the Research & Development tax credit. Last week the Finance Committee
took an historic step, and reported a bill which would have made the
R&D tax credit a permanent feature of our tax code. Yesterday,
unfortunately, every single member of the minority voted to sunset the
provisions of the tax bill, so instead of a permanent R&D tax credit,
we have a ten-year extension.
Though the actions of our colleagues across the aisle prevented us
from having a permanent R&D tax credit, I am pleased that the on-again,
off-again nature of the credit will not undermine America's innovators
for the next decade. I have long supported federal policies to increase
the nation's R&D investment because of the central importance of
scientific research to the health and well-being of our people, its
positive contribution to our economic growth and our higher standard of
living, and the improvements which add to our quality of life.
Both business and government play important and complementary roles
in making sure that America continues to lead the world in research and
innovation. The federal role in R&D is focused on investment in long-
term basic research. I will continue to do my best to increase federal
R&D spending on basic research, particularly on biomedical research
which leads to huge benefits to all Americans.
Today, private industry plays the largest role in the nation's
research effort, funding 65% of all R&D. Industry's role makes it clear
. . . that if overall R&D is to increase, we must pursue policies which
create a good business climate for firms to pursue long-term increases
in their R&D budgets. We want America's leading-edge companies to hire
new scientists, invest in new technologies and new research
facilities--and the R&D tax credit provides that crucial incentive.
To see the benefits of R&D, look no further than America's economic
performance today. We are in the eighth consecutive year of non-
inflationary growth, and technology industries deserve a large share of
the credit. In fact, high-tech industries have accounted for about one-
third of real GDP growth in recent years.
Advancements from R&D lead to a huge number of improvements to our
quality of life. The most dramatic impact of R&D on our quality of life
is evident in biomedical research and health care. Here are some
examples of the payoff to medical R&D:
It used to be that patients with kidney failure had to undergo
frequent transfusions, which are expensive, carry substantial risks,
and leave many patients anemic. Many kidney patients had to cut back on
work or quit their jobs, or go on public assistance. Through extensive
R&D, one of America's top biotech companies created a new drug that
allows the body to create red blood cells again and enables people to
restore their energy. In the past decade, this drug has helped millions
to remain productive. It has reduced transfusions in the United States
by nearly one-fifth, and fewer people have contracted blood-born
disease.
Another example of the real-life benefits from R&D is the new class
of drugs, developed in the late 1980s, which are giving millions of
people who suffer from depression a new lease on life. Because of these
new depression drugs, the cost of treating depression in the United
States has plummeted--expensive psychiatric care and in-patient stays,
which many could not afford, are now disappearing in favor of these new
treatments.
There are two telecommunications companies which invested in R&D to
create new technologies to bring state-of-the-art medicine to
previously underserved and remote locations. These new technologies
allow transfer of high-resolution photographs, radiological images,
sounds, and medical records from leading medical centers to physicians
and patients in remote locations.
These are just a few of hundreds of great success stories coming out
of America's medical research labs--successes coming from companies
responding to the R&D tax credit incentive. These examples make clear
that R&D is not simply a dollars and cents issue. Federal R&D policy
makes improvements to the quality of life across-the-board for all
Americans.
The R&D tax credit has proven its effectiveness. Numerous studies
during the past decade have found that each dollar of tax credits
generates between $1 and $2 of additional R&D. Therefore, taxpayers are
getting a solid return on their investment in terms of greater economic
growth, a higher standard of living, and in numerous cases--a longer
and healthier life span.
As chairman of the Joint Economic Committee, last month, along with
Senator Bennett, I hosted a high-tech summit which brought together
business leaders from all across the high technology industries. One
issue everyone seemed to agree on was that a permanent R&D tax credit
would advance the development of new technologies, leading to
breakthroughs which benefit the environment, increase transportation
safety, treat serious illnesses and save lives. And on top of all this,
a Coopers & Lybrand study found that a permanent extension to the
credit would raise American incomes due to higher productivity growth
and contribute substantially to our economic growth.
The R&D tax credit has proven its worth many times over. Mr.
President, though I am pleased we have extended R&D for 10 years, it is
my hope that the R&D tax credit will one day be a permanent fixture in
our Tax Code so it can spur innovation and economic growth throughout
the next millennium.
Mrs. FEINSTEIN. Mr. President, although I have a great deal of
respect

[[Page S9736]]

for the chairman of the Senate Finance Committee, close examination of
the Taxpayer Refund Act of 1999 has led me to conclude that the $792
billion Republican tax bill passed out of the Finance Committee is too
much too soon and could well have serious adverse effects on federal
priorities and the national economy.
The Republican tax plan would devote virtually the entire projected
non-Social Security surplus over the next ten years--some $932 billion
out of $964 billion, according to the CBO--to tax cuts. That would
leave just $32 billion for everything else--Medicare needs, defense,
health care, education, combating crime, everything else that the
government does. Clearly, that is not sustainable.
In fact, the Republican plan may well lead to substantial deficits
unless the Congress and the President are willing to not only keep the
present caps, but to tighten them even further.
By devoting 97 percent of a surplus that has not yet been generated
to tax cuts and to the additional interest costs of not reducing the
debt--$932 billion--the Republican plan creates a great risk that we
will return to the era of deficits and rising debt.
When I first came to the Senate in 1993, the Federal budget deficit
was $290 billion, and expected to continue for the foreseeable future.
Through the imposition of tough fiscal discipline--and by making
tough budgetary choices--we have now managed to bring the federal
budget back in balance. We should not now precipitously put these gains
at risk.
If we abandon the fiscal discipline and responsibility that have
allowed us to get to where we are today--our economy growing and our
budget in balance--we will once again find ourselves running up annual
deficits in the tens of billions of dollars.

The bottom line is that the Republican plan is too much, too soon,
too fast. It:
Spends money which Congress does not yet have. This surplus has not
yet materialized and will not until next year--assuming projections are
correct, which they may not be. What happens if there is a military
need? What happens if there are large national disasters? What happens
if the economy slows down? Answer: All surplus projections are in the
wastebasket.
In fact, the projected surpluses which have set off the tax-relief
movement may never materialize. It will only come about if the economy
continues to grow and if Congress cuts spending even more deeply.
The Republican plan does nothing to protect Medicare. No budget
resources are set aside for Medicare solvency. And by giving nearly all
the surplus outside of Social Security's need to tax cuts, the
Republican plan does nothing to extend the solvency of Medicare trust
fund, which will be bankrupt by 2015.
Nor does it provide coverage for prescription drug benefits to be
added. As a matter of fact, they are made impossible.
The Republican plan endangers virtually all domestic program
priorities, forcing cuts of close to 40 percent in domestic spending
over the next decade. The Republican plan would commit the nation to
major cuts in military readiness, education, healthcare, and crime-
fighting, just to name a few areas.
In fact, under this plan, to avoid deficits, domestic spending will
have to be cut an additional 23 percent by 2009. But if defense
programs are to be funded at the level recommended by the Joint
Chiefs--as I believe they should be--then domestic spending will have
to be cut by 38 percent. Cuts of this magnitude would:
Reduce Head Start services over one-third, from the 835,000 children
who would otherwise be served to 460,000.
It would slash Title I, Education for the Disadvantaged, programs,
denying 4 million children in high poverty communities throughout this
nation (from the 14.6 million projected) access to key educational
services necessary to improve their future prospects.
It would cut the National Institutes of Health budget by $8.6 billion
from the current baseline, which would endanger NIH's ability to fund
new research grants. It would gut the cancer program and certainly
prevent the doubling of funding for cancer research as this body has
supported by a vote of 98-0 in 1997 in a Sense of the Senate.
It would cut Superfund cleanup funds by $870 million, eliminating all
new federally-led clean-ups due to begin in 2009, and making it
difficult, if not impossible, to meet the EPA's 900-site cleanup goal
in 2002.
There are 96 Superfund sites in California on the National Priority
Cleanup List, including Iron Mountain near Redding and the San Gabriel
Valley site in Los Angeles county. Construction is underway at just 38
percent of these sites. The Republican tax plan may put continued work
on these sites in jeopardy.
The Republican plan cuts to the Immigration and Naturalization
Service could result in a reduction of over 6,000 Border Patrol Agents
(from the number projected); cuts to the FBI could result in a
reduction of over 6,000 FBI agents (from the number projected).
Does not eliminate publicly held debt. Today, public debt stands at
$3.6 trillion. We have an opportunity to eliminate this public debt
entirely by 2015--critical if we wish to keep interest rates low--if we
stick with a fiscally responsible approach.
I represent the most populous state in the union. Most important
issues before the Senate produce letters and e-mail in excess of 10,000
a week, and often 20,000 or 30,000. Yet, I have received remarkably few
letters urging tax cuts. And those letters that I have received--109
last week--have been equally split. In fact, only one person has
written to me saying that it is vital for their survival that the
massive Republican tax package be passed.

I would like to read from some of the letters that I have received,
to give my colleagues a sense of what the people of California are
thinking about this issue.
A letter I received from a woman in Berkeley sums up much of this
debate quite well, and is reflective of much of the mail I have
received. And it is further testament to the fact that the American
people are often more wise then many of their elected leaders. This
letter reads:

I am very concerned about proposed tax cuts and urge you to
be cautious!
First, we really do not know if the proposed surplus will
be there in the next 15 years.
Second, we have enormous debt, and, in my mind, the major
portion of the surplus should be used to pay down our debt.
This would be a boom to baby boomers, etc since their
``invested'' surplus Social Security taxes are already spent.
Talk about ``family value''--pay your debt first.
Third, Social Security, Medicare, and child services all
need financial attention.
Please do not vote for a large tax cut. It is not the right
thing for our national financial future.

For those of my colleagues who may be quick to dismiss a letter
coming from Berkeley, I also received a note from a couple in Sonoma
which read: ``We are two registered Republicans who would prefer no tax
cut. Pay off the national debt and lower interest rates thereby. Also
secure Social Security and improve healthcare for everyone.''
A man in San Diego wrote:

I want the national debt payed down. I want Social Security
and Medicare shored up. I don't want more government
spending. If we can do that and get a tax cut fine. If we
can't fine. I don't want to depend on your economist's
estimates of overages, since we know their abilities are
mediocre at best!

And from an e-mail from Aptos:

I am opposed to the recent large tax break legislation in
the House. We need instead to be paying down the debt and
saving tax cuts for when they are truly needed. The more we
pay off our national debt, the more of our hard earned tax
dollars will actually go to programs, not debt repayment, and
the more we will be able to afford true tax cuts in the
future. Lets not spend our future away.

In fact, I believe that if our colleagues on the other side of the
aisle were willing to put partisan posturing behind them, a responsible
tax cut would be possible within the context of the budget plan
proposed by the President.
I support the Administration in setting aside 62 percent of the
surplus for Social Security, some $3.5 trillion over 15 years. It
extends the program's solvency to 2053, and eliminates publically held
debt by 2015. This means that the ``baby boomer'' generation's Social
Security is protected.
I support extending the solvency of Medicare from 2015 to 2027 by
dedicating 13.5 percent of the surplus, some $794 billion over 15 years
to Medicare. This is vital if there is to be a solvent

[[Page S9737]]

system. It is mandatory if addressing a change in benefits is
contemplated.
Finally, I strongly support itemizing 2.5 percent of the surplus, or
$156 billion over 15 years for education, and 6 percent of the surplus
or $366 billion over ten years for various discretionary programs such
as defense, veterans affairs, research, agriculture, and environmental
protection.
That would leave $271 billion over the next ten years which could be
utilized as a tax cut.
Indeed, that is why I worked with my colleague from Iowa, Senator
Grassley, to put together and introduce earlier this year a moderate
bill that provides needed tax relief for working families while fitting
within the budget framework set out by the President to protect Social
Security and Medicare.
The Grassley-Feinstein plan would cost $271 billion over ten years.
It provides a $61.4 billion cut in the marriage penalty; a 100 percent
deduction for health insurance expenses and a tax credit for long-term
care ($117 billion over ten years); an increase in the low-income
housing credit ($6.6 billion over ten years); tax credits for child
care and education, including help for stay at home parents, with the
HOPE college credit, and with student loan interest payments ($32.3
billion over ten years); and it helps our economy continue to grow by
making permanent the R&D tax credit ($27.4 billion over ten years).
In fact, it is much like the Democratic plan. It is a common sense,
bipartisan approach.
Of all the tax cuts that have been proposed, I believe the one that
would be of the most help to the American people would be marriage
penalty relief.
It makes sense for social reasons: It reinforces the important
institutions of family and marriage.
And it makes sense for economic reasons: It eliminates what many of
us see as a vast inconsistency in our tax law, that two people could
find that they pay more in taxes if they are married then if they stay
single. It makes no sense.
Another approach to this tax relief question would be to simply
eliminate the marriage penalty outright, starting in 2002, and allow
married couples to file either individually or jointly at their option.
This would cost some $234 billion for the eight years.
A tax relief plan which starts with a $234 billion cut in the
marriage penalty would also allow us to include other important
provisions. I would support including an immediate increase in the low-
income housing tax credit, indexing that credit to inflation, which
would cost $6 billion over ten years. The low-income housing tax credit
is critical for financing housing for low income families. I would also
support the permanent extension of the R&D tax credit,which costs some
$27.4 billion over ten years, and provides an important incentive for
U.S. companies to continue to develop the cutting-edge technologies of
the 21st century.
So, the complete elimination of the marriage tax, the low-income
housing credit, and the R&D credit would total some $269 billion over
the next years, well within the $271 billion cap.
Unfortunately, the Republican plan passed by the Finance Committee is
neither common sense nor bipartisan.
It is a tax plan which will endanger the federal budget, places
Medicare at risk, force deep and unnecessary cuts in important domestic
priorities, and may undermine the long-term health of the U.S. economy.
It is unwise, and I urge my colleagues to think long and hard before
plunging headlong and heedless down this path of fiscal
irresponsibility.
Congress has an unprecedented opportunity to put our fiscal house in
order. We can protect Social Security and Medicare, meet other domestic
and international priorities, and eliminate the federal debt. And we
can provide the American people with significant and much needed tax
relief. This is not some pie in the sky scenario, but a realistic
appraisal of what we can do if we are willing to move beyond partisan
posturing and politics as usual, and do what is right for the American
people.

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