[Congressional Record Volume 145, Number 114 (Thursday, August 5, 1999)]
[Senate]
[Pages S10290-S10303]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       TAXPAYER REFUND AND RELIEF ACT OF 1999--CONFERENCE REPORT

  Mr. ROTH. Mr. President, I submit a report of the committee of 
conference on the bill (H.R. 2488) to provide for reconciliation 
pursuant to sections 105 and 211 of the concurrent resolution on the 
budget for fiscal year 2000, and ask for its immediate consideration.
  The PRESIDING OFFICER. The report will be stated.
  The Legislative clerk read as follows:


[[Page S10291]]


       The committee on conference on the disagreeing votes of the 
     two Houses on the amendment of the Senate to the bill (H.R. 
     2488), have agreed to recommend and do recommend to their 
     respective Houses this report, signed by a majority of the 
     conferees.

  The PRESIDING OFFICER. Without objection, the Senate will proceed to 
the consideration of the conference report. (The conference report is 
printed in the House proceedings of the Record of August 4, 1999.)
  Mr. ROTH. Mr. President, the fundamental question before Congress 
these past few weeks, as we have debated the Taxpayer Refund Act of 
1999, is quite simple: Is it right for Washington to take from the 
taxpayer more money than is necessary to run the Government?
  The issue of tax relief is not any more complicated than that, and 
the outcome of the conference between the Senate and House makes it 
clear that we believe Government is not automatically entitled to the 
surplus that is, in large part, due to the hard work, thrift, and risk-
taking of the American people.
  Individuals and families are due a refund, and that is exactly what 
we do with this legislation. We give the people a refund. We do it in a 
way that is fair, broad based, and empowering. We do it in a way that 
will benefit nearly every working American, a way that will help 
restore equity to the Tax Code, and provide American families with the 
relief and resources they need to meet pressing concerns.
  This tax refund legislation 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 underinsured the 
boost they need to pay for health insurance, and it will begin to 
restore fairness to the Tax Code by addressing the marriage tax 
penalty.
  How do we accomplish all of this? We begin by reducing our marginal 
income tax rates by a point. In other words, the 15-percent tax bracket 
will drop to 14 percent, and the 39.6-percent top rate will drop to 
38.6 percent. The new 14-percent bracket will be extended upward to 
include millions of Americans who are now paying taxes in the 28-
percent bracket.
  These changes will benefit individuals and families across the 
economic spectrum. For example, an individual with $40,000 of income 
will save over $700. An individual earning $50,000 will save over $800. 
Under this bill, a taxpayer with $70,000 of income will save over 
$1,000.
  This is significant tax relief. When fully phased in, a middle-class 
family of four with an adjusted gross income of $80,000 will save 
almost $3,000 a year. This is real savings, money that can be used by 
individuals and families to meet their pressing needs and objectives.
  To restore equity to the Tax Code, this legislation also meets a 
bipartisan objective by providing relief for the marriage tax penalty, 
and it does this by doubling the standard deduction and the 15-percent 
tax bracket for married couples filing jointly.
  We can all agree on how important this is. For too long, husbands and 
wives who have worked and paid taxes have been penalized by their dual 
incomes. This plan will address that inequity by giving working 
American couples greater relief.
  Let me give an example. Two individuals, each making $35,000 a year, 
face a penalty of almost $1,500 when they marry. Under this 
legislation, that penalty will be addressed in two ways: first, by 
doubling the standard deduction and, second, by doubling the 15-percent 
tax bracket to include their combined income.
  The marriage penalty relief offered in this bill retains the Senate 
position on the amount of relief received, and it even provides relief 
for people receiving the earned income tax credit.
  To help families with their education expenses, the legislation 
before us allows taxpayers to increase their contributions to education 
IRAs, or what will--under the provisions of this bill--be called 
education savings accounts. Allowable contributions will rise from $500 
to $2,000 annually.
  And these funds will be available to meet expenses for all students, 
from kindergarten through college. Beyond increasing the level a family 
can save for education, this Tax Relief Act also makes interest earned 
on qualified State and private school higher education tuition plans 
tax free--a most important development, in my judgment. It also extends 
employer-provided educational assistance for undergraduate studies, and 
it repeals the 60-month rule on student loan interest deductions. This 
will allow individuals to claim tax deductions on interest that they 
pay on their student loan, without the imposition of a time limit.
  To help families meet health care and long-term care needs, this 
legislation provides a 100 percent above-the-line deduction for those 
who pay more than 50 percent of their health insurance premiums. This, 
of course, includes the self-employed. The plan also provides an 
additional personal exemption for those who care for an elderly 
relative in their home.
  As you can see, this legislation is, indeed, empowering; it addresses 
concerns that are vitally important in the lives of our families, coast 
to coast. It provides across-the-board tax relief. It addresses the 
marriage tax penalty.
  It makes education more affordable for all students--kindergarten 
through college. And it helps our families meet their health care and 
long-term care needs. But it doesn't stop here; it does much more.
  The legislation before us phases out the alternative minimum tax. It 
provides capital gains tax relief, simplifying the rate structure, and 
reducing the individual capital gains tax rate from 20 percent to 18 
percent, beginning with the current 1999 tax year. For those 
individuals taxed at the lowest individual rate, their capital gains 
tax rate is reduced from 10 percent to 8 percent.
  In addition, the tax basis of certain assets may be increased by an 
``inflation adjustment,'' so that any capital gain attributable to 
inflation is not subjected to tax. Also, we have maintained the 2 
percent capital gains rate differential that is imposed on long-term 
capital gains from depreciable real estate, by reducing that rate from 
25 percent to 23 percent.
  Another very important measure is the treatment of estate taxes. This 
legislation completely phases out and ultimately repeals the Federal 
estate, gift, and generation skipping taxes. It also corrects technical 
problems in the House provision.
  Each of these will be a powerful tool in the hands of taxpayers and 
families who will use these changes--their relief--to meet the needs 
that are unique to their situation. However, a couple of major 
provisions in this bill that I would like to outline in some detail 
will--like the across-the-board tax rate cut--benefit everyone, 
enabling individuals and families to prepare for self-reliance and 
success in retirement. These, of course, include the expansion of 
individual retirement accounts and pension programs.
  Under the bill, IRA contribution limits will be increased over the 
next 7 years until they reach $5,000. And taxpayers who are close to 
retiring will be allowed to make catchup payments in their plans. These 
changes will in my judgment, be incredibly beneficial. For example, an 
individual without an employer-provided pension plan, who contributes 
the maximum amount allowable, as it increases over the next 7 years--
with the magic of compounding interest--will be able to put away over 
$31,000 for retirement. In year 7 and beyond, he or she will be able to 
put away the full $5,000 annually.
  With the catchup provision--applicable for people over the age of 
50--if those 7 years pass just prior to the taxpayer's retirement, the 
amount, for example, he or she could save in those 7 years under this 
bill would be over $44,000. This bill also increases the income 
threshold for those who can take full advantage of Roth IRA accounts up 
to $200,000 for a couple filing jointly.
  For employer-provided plans, this bill increases the maximum amount 
an individual can contribute to a 401(k) plan, a 403(b) plan or a 457 
plan. Starting next year, an employee may contribute up to $11,000 to 
his employer's 401(k) plan In each year thereafter, he could contribute 
increasing amounts to his 401(k), and in 2005, he will be able to 
contribute a full $15,000. To show you how empowering this is, if John, 
a 35-year-old, contributes the maximum amount allowable over the next 
30 years, his 401(k) plan benefit at retirement would increase by over 
$1.2 million.

[[Page S10292]]

  In addition, if John's employer established a newly added Plus 
Account program under its 401(k) plan, that amount would be nontaxable 
when John receives it at retirement. The Plus Account program--as 
addressed in this bill--lets an employer establish an account which has 
the same tax treatment as a Roth IRA. That means that John would have 
over $1.2 million in nontaxable income.
  Finally, this bill gives small businesses a new incentive to 
establish a retirement plan for their employees. The contribution 
limits for a SIMPLE plan--a defined contribution plan only for small 
businesses--have been increased in this bill to encourage small 
business owners to establish such plans. The incentive to establish a 
SIMPLE plan is easy to understand. Small business owners who offer 
SIMPLE plans will be able to save up to $10,000 in the plans they 
establish.
  This will be a great benefit to them, but in order to save their own 
money--as part of the SIMPLE plan--they will have to provide their 
employees with a contribution to their own plans of up to 2 percent of 
their salary.
  At the same time, under this plan the employees could also receive a 
matching contribution from their employer of up to 3 percent of 
compensation if they decide to contribute to the SIMPLE plan.
  Now, I believe this is good policy. It will encourage Americans to 
take advantage of these opportunities and provide for their retirement 
future. As with almost every provision in this Taxpayer Refund Act, the 
catalyst is the individual and the family, using tax relief to meet 
their needs. Every measure I have outlined as part of the Taxpayer 
Refund Act of 1999 is important, as each rightfully returns resources 
that Americans can use to meet their current needs, and the refund 
being offered comes from surplus funds. In other words, this broad-
based tax relief package can be passed, signed into law, and, indeed, 
still leave sufficient resources in Washington to take care of Social 
Security, Medicare reform, and other necessary Government obligations.
  Let me repeat that: This broad-based tax relief package can be 
passed, signed into law, and still leave sufficient non-Social Security 
funds available to address comprehensive Medicare reform, including a 
prescription drug benefit. We can offer this relief and still pay down 
the debt and keep the budget balanced. We can do all of this for one 
very simple reason: The work, the investment in job creation achieved 
by Americans everywhere, has succeeded in creating long-term economic 
growth. As I have said before, it is not right that the reward for this 
success is that today our taxes are the highest percent of our gross 
national product of any time in postwar history.
  After paying for the Government programs for which Congress has 
planned and budgeted, a refund from the surplus must now be returned to 
the American taxpayer.
  I know there is wide agreement that Americans deserve relief. This is 
the bill that will give them relief. We must and should support it.
  We must keep in mind that major tax cuts must be done through the 
reconciliation process. This is, indeed, a lengthy, time-intensive 
process. We have successfully completed it. I am proud to say that this 
conference report, as it stands today, carries no provision that was 
not in either the House or Senate bill. In other words, nothing 
extraneous was added in conference. It is clean and representative of 
the direction received by those who crafted the Senate and House bills.
  Frankly, this is a first in tax history. It represents a tremendous 
amount of work by our colleagues, Members of the House, and the staff 
in both Chambers. Those who believe we may be coming back to do this 
again in September are mistaken. This is the tax bill for this year. We 
won't have a second chance on this. When we come back after recess, our 
time and attention will be focused on Medicare reform, a vital issue 
that concerns us all.
  For those who are concerned that this major relief package may be too 
big, please be reminded that there are important trigger mechanisms 
included in this bill. If we don't continue to reduce the payment on 
the interest on the national debt--let me repeat that--if we don't 
continue to reduce the payment on the interest on the national debt, 
then the tax relief included here will be reduced to compensate 
accordingly.
  Well, the bottom line is that this is tax relief in which we can have 
confidence. It meets the criteria we established before we began. It is 
fair. It restores equity to the Tax Code and makes education more 
affordable. It helps taxpayers prepare for self-reliance and 
retirement. This legislation will help families keep their homes, their 
farms, and businesses safe from death taxes. It makes health care more 
affordable.

  I believe these are objectives that are shared by everyone. They are 
objectives that can be embraced by Senators and Congressmen on both 
sides of the political aisle.
  Mr. President, I encourage my colleagues to vote for passage, and I 
yield the floor.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. Mr. President, might I begin on a general point with 
which our revered chairman has just concluded, which is the reservation 
of the Social Security surpluses of the next decade for purposes of 
retiring the debt. This is a fact easily unobserved because we are not 
arguing about it. There is agreement here. What we will do, we will cut 
the national debt by more than half, the publicly held debt, and the 
interest costs accordingly.
  Just a few years ago interest costs had become the third highest item 
in our budget. It is not noticed because we don't debate it. We don't 
decide how much we will pay in interest costs; it is automatic. But 
this has now happened. There has been a great recovery of American 
Government finances from a grim moment in 1992 when we had a fiscal 
year with a $290 billion deficit.
  I will point simply to this morning's New York Times and the lead 
story, sir. I will just read the headline, ``Government Plans to Buy 
Back Bonds and Save Interest: Would retire some debt using the surplus 
to replace high-interest securities at lower rates''--a complex 
proposal being worked out in Treasury under Secretary Summers. Also, in 
the business section of this morning's New York Times, there is another 
story, ``The Dwindling Market in U.S. Treasury Bonds,'' discussing how 
the market is going to respond to the bond buy back. And there is this:

       ``This is a sea change,'' said James M. Keller, senior vice 
     president and portfolio manager for Treasury securities at 
     Pimco Advisors, an asset management firm. ``I was struck by 
     the Treasury's observation that the last time there were two 
     back-to-back years of budget surpluses was in 1956 and 1957. 
     I wasn't alive then, so this is a new thing for me.''

  Indeed, it is a new thing and hugely to be welcomed.
  I might also say that the chairman stated that this bill, which we 
will vote on at 7:06 this evening, is a clean bill; there is no 
provision in it that was not in either the House or the Senate 
proposals. But now I have to say to the Senate, with the utmost 
deference to my friend--I say to the Senators from Nebraska, Florida, 
Minnesota, Senator Bingaman--we have the word of the chairman, and his 
word is absolutely bondable in this body. If he says it, it is so. But 
that is the only way you would know it is so because we just received a 
copy of the bill this morning, and certainly have not been able to 
review all 589 pages.
  This is not the way to handle the second largest tax decrease in 
history. There was no conference on this matter. We met formally for 20 
minutes, and the negotiation was entirely between party leaders of the 
majority. It is an age-old practice of the Congress to, at the end of a 
conference, distribute the signature papers that the conferees sign or 
do not sign. I was the conferee for this side of the aisle; no 
signature paper came to me.
  There was no participation of any kind from this side of the aisle. I 
think that would be true in the House as well as in the Senate. That is 
something we have to watch in terms of our procedures. It was not the 
way the Senate conducted itself in such a matter when I first came here 
and became a member of the Finance Committee.
  During the debate last week on the Senate version of the 
reconciliation bill, I attempted to put the debate in a ``doctrinal 
perspective,'' as I put it. I traced the development from the 1960s of 
an intellectual movement which holds that the only way to restrain the

[[Page S10293]]

growth of Government is to deliberately create a protracted fiscal 
crisis. This was disarmingly put by then President-elect Reagan. It was 
just 16 days before his inauguration in 1981. He said:

       There were always those who told us that taxes couldn't be 
     cut until spending was reduced. Well, you know, we can 
     lecture our children about extravagance until we run out of 
     voice and breath. Or we can cut their extravagance by simply 
     reducing their allowance.

  So in 1981 to 1983, the allowance of the Federal Government was 
reduced. While other intervening events--a sharp recession in 1981-82--
impacted on revenues, nonetheless, there was a precipitous drop in 
revenues from 19.0 percent of GDP in 1980 to 17.5 percent of GDP in 
1983. Simultaneously, the recession and defense buildup conspired to 
increase outlays from 20.2 percent of GDP in 1979 to 23.6 in 1983. The 
result, a huge gap--6 percent of GDP--between revenues and outlays, and 
deficits of $200 billion or more ``as far as the eye could see,'' to 
quote the former Director of OMB, David Stockman, and with this huge 
gap, the national debt quadrupled from under $1 trillion to $4 trillion 
between 1980 and 1992.
  In August of 1993, with a deficit of $290 billion, we chose to 
confront that, to raise taxes and reduce outlays by a little more than 
a half trillion dollars. More recently, the Office of Management and 
Budget estimated that ``the total deficit reduction has been more than 
twice this--$1.2 trillion.'' In 1997, a bipartisan measure was passed. 
We are now in a situation of reasonable surplus, reasonable 
expectation. But there is no reason to act on a surplus that does not 
yet exist.
  Here we are, with unemployment at 4.3 percent, near zero inflation, 
real economic growth at 4 percent, and an economy in the ninth year of 
an expansion. All the economists--the ones we care much about--are 
saying: Not now. Alan Greenspan suggested, speaking before the Senate 
and House Banking Committees just last month, the most effective means 
that we can have to regenerate the economy and keep the long-term 
growth path moving higher is if we hold tax cuts until we need a 
stimulus. Contrariwise, to stimulate when you don't need it is to 
invite inflation--inflation, which is a tax on anyone when interest 
rates go up. Anybody who pays a car loan and has a credit card or a 
mortgage pays it.
  Dale Jorgenson described this persistent interest in cutting down the 
size of Government by reducing revenue ``fiscal disaster'' in his 1995 
testimony before the Finance Committee. Yet it persists as a 
conviction. There is very little testing of the proposition.
  I won't go on too long in this doctrinal discourse, but back in 1973, 
Herbert Kaufman of the Brookings Institution published a small book 
called ``Are Government Organizations Immortal?'' He reported that of 
175 organizations he could identify in the Federal Government in 1923, 
no less than 148 were still there a half century later, and of the 
others, most of their functions had just been moved to different 
organizations.
  Recently, the Cato Institute, a conservative group here in 
Washington, looked at the half dozen organizations which the 1995 House 
Contract With America targeted for extinction--$75 billion worth of 
programs, out. Sir, not one of them is out. Indeed, the appropriations 
for them have gone up by $2 billion.
  Mr. President, I ask unanimous consent that a table prepared by the 
Cato Institute and printed in the Washington Post be printed in the 
Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the Washington Post, Aug. 3, 1999]

                              Growing Back

       In 1995, the House GOP's ``Contract With America'' targeted 
     $75.3 billion worth of programs for extinction. Now the 
     government spends $77 billion on those programs. Here are 
     some of the targeted agencies and programs for which spending 
     has risen, in millions of dollars.

------------------------------------------------------------------------
                      Program                          1995       1999
------------------------------------------------------------------------
Department of Commerce............................     $3,401     $4,767
Department of Education...........................     31,205     34,360
School-to-work grants.............................         82        503
Goals 2000........................................        231        507
Manufacturing Extension Partnerships..............         40        128
Aid to East Europe and Baltic states..............        332        450
Economic Development Administration...............        350        438
Adult education...................................        299        400
Star Schools......................................         25         45
Summer youth employment and training..............        867        871
Bilingual and immigrant education.................        225        386
Trade adjustment assistance.......................        268        307
Intelligent transportation system.................        143        185
------------------------------------------------------------------------
Source: Cato Institute analysis of federal budget.

  Mr. MOYNIHAN. Somehow we have to come to terms with this whole 
assumption. Perhaps something like the Hoover Commission on the 
organization of the executive branch needs to be done. Some of us have 
the assumption that we really aren't that serious. As that brief 
ceremonial meeting of our conferees this week opened, our respected 
friend--and we have known each other for a quarter century--Bill Archer 
said in his opening remarks:

       We don't need full-time Government and part-time families; 
     we need part-time Government and full-time families.

  In no way to cast any suggestion that he is anything but absolutely 
sincere, I don't think the proposition would survive close inquiry. I 
asked him: Sir, do you think we could settle for ``a part-time Marine 
Corps, or a part-time Federal Bureau of Investigation?'' No, you don't 
mean that.
  I, for one, very much share the view that the Federal Government has 
taken on too many matters and needs to be cleared out a very great 
deal. Our Federal system makes that possible, and the world situation 
in which we now find ourselves makes it necessary but not through the 
illusion that it will happen simply by reducing revenues.
  I wish to make the point that we can't afford this tax cut. We may 
want one in 5 years time or in 3 years, but not at this time. That is 
why the fate of this measure has already been settled.
  According to the Joint Committee on Taxation, tax expenditures are 
projected to cost about $672 billion in 2003. While we have not yet had 
time to adequately scour the conference report for all of its 
provisions, a cursory review indicates that, the bill we are asked to 
vote on today would increase annual tax expenditures by about $19 
billion in 2003.
  Under the Congressional Budget and Impoundment Control Act of 1974, a 
tax expenditure is a revenue loss:

       . . . attributable to provisions of the Federal tax laws 
     which allow a special exclusion, exemption or deduction from 
     gross income or which provide a special tax credit, a 
     preferential rate of tax, or a deferral of tax liability.

  The problem is that we continue to use tax expenditures as a way of 
funding programs that we do not seem to have the will to finance with 
outlays--a problem made all the more severe by the caps on 
discretionary spending alluded to earlier.
  On a more global scale, 40 years ago Walter Heller, Chairman of the 
Council of Economic Advisers in the Kennedy-Johnson Administration 
spelled out the criteria for evaluating tax expenditures--criteria 
which most tax expenditures fail to meet. In testimony before the House 
Ways and Means Committee Heller stated that Federal fiscal policy 
relies on income taxes for three central roles: (1) Placing resources 
at the Government's disposal in a non-inflationary way; (2) Offsetting 
fluctuations in the private economy; and (3) Bringing the distribution 
of income more closely into line with public preferences.
  Heller then argued that the use of the tax code to promote other 
objectives should be subject to stern tests, which can be summarized as 
follows:
  Is the tax preference for a legitimate public purpose?
  Is the tax preference the most effective way to achieve that purpose?
  Is the preference targeted?
  In Heller's view most tax preferences fail the test. Yet, he noted we 
persist in expanding tax preference because:

       The back door to Government subsidies marked ``Tax Relief'' 
     is easier to push open than the front door marked 
     ``Expenditures. . . .''

  Besides, tax expenditures need not be reviewed annually through the 
appropriations process.
  This bill also adds to the complexity of the tax code. I have long 
been concerned that today's tax system is so complex that ordinary 
taxpayers have difficulty following the rules. For example, under the 
bill capital gains are indexed. The Senate Finance Committee held 
hearings on February 16, 1995 regarding the enormous new record keeping 
burdens that would be required to calculate the gain or loss on common 
transactions. The New York State Bar Association stated that:


[[Page S10294]]



       Congress should reject any proposal to adjust or ``index'' 
     the basis of capital assets for inflation. [A]n indexation 
     regime would create intolerable administrative burdens for 
     taxpayers and administrators as well as offer numerous tax 
     arbitrage and avoidance opportunities for aggressive tax 
     planners.

  The Joint Committee on Taxation wrote at that time that ``[i]ndexing 
would involve a significant amount of record keeping'' and that it 
``would substantially increase the number of calculations necessary to 
calculate taxable gain for many common transactions.''
  Even if this bill did not risk a return to protracted fiscal crisis, 
and even if its 589 pages did not add to the complexity of the code, it 
should be rejected because most of the benefits accrue to those already 
well-off.
  My colleagues on the other side of the aisle argue that the bill 
justifiably provides most of the tax relief to those who pay most of 
the taxes. But their analysis is incomplete since it is based solely on 
the distribution of income taxes. For example, taxpayers earning less 
than $50,000 pay 36 percent of payroll taxes; while those earning over 
$200,000 pay only 7 percent of payroll taxes.
  The conclusion is very different if the analysis is based on the 
distribution of all federal taxes--income, excise, and payroll. Those 
earning less than $50,000 pay almost a quarter of the taxes, which is 
the same percentage as those earning over $200,000. So, why is it that 
the Republican tax bill before us today only provides 14 percent of the 
tax cut to those earning less than $50,000 while providing 78 percent 
of the tax cut to those earning over $80,000? Even worse, why does 45 
percent of the tax cut go to the top 5 percent of income earners, those 
earning over $155,000? Should we not provide a more equitable tax cut?
  We might also consider heeding the advice of Herbert Stein, Chairman 
of the Council of Economic Advisers in a Republican Administration. In 
an op-ed in yesterday's Wall Street Journal Mr. Stein had this to say:

       . . .I [have] come to the conclusion that we should not 
     make a large tax cut at this time. But my purpose here is not 
     to sell that conclusion. What I am trying to do is to sell 
     the idea that we need a more systematic, explicit and 
     thorough public discussion of the tax vs. debt reduction 
     issue and to illustrate what some of the elements of such a 
     discussion would be.

  We have not had that debate.
  I see that my learned friend, the gallant Senator from Nebraska, is 
here, and I think he would like to speak.
  The PRESIDING OFFICER (Mr. Voinovich). The Senator from Nebraska.
  Mr. MOYNIHAN. Mr. President, I yield such time as he may require to 
Senator Kerrey.
  Mr. KERREY. I thank the Senator from New York very much.
  I am sorry I didn't wear the same necktie that he did. Other than 
that, we are deeply matched.
  Mr. President, first I want to compliment Chairman Roth. I believe 
all through the Finance Committee deliberations and last week on the 
Senate floor he held true to two ideas that I share.
  The first is that we can cut taxes. The second is we must do so 
fairly. Indeed, the net effect of cutting taxes by nearly $800 billion 
over ten years is to give the American people an $800 billion increase 
in their after-tax income. I believe we can do it safely. We have $3 
trillion in surpluses forecast over the next ten years. And I don't 
believe that cutting taxes will generate inflation if done correctly.
  In his original package, the Chairman held true to the idea that some 
standard of fairness need be applied in how the income tax cuts would 
be distributed. He attempted to do that. Doing that caused him a little 
grief on his side of the aisle. I appreciate very much what the 
chairman attempted to do with his original tax cut package.
  Accordingly, I voted for the package enthusiastically on the floor. I 
believe it was a good proposal. I may have written it a little 
differently if I were the one who was doing the writing. But I thought 
it was a balanced proposal and a good proposal, and I was fully 
supportive of it. I was one of four Democrats to do so.
  Thus, I come to the floor with some regret. I say to my friends on 
the other side of the aisle that you should know that people like me 
took a position that said we were prepared to vote for a tax cut of 
$800 billion. The Chairman's original package received 57 votes on this 
floor. I understand the other side has been working all night to get 
the votes to pass the package we have before us and I suspect the most 
votes this package will receive is 52. So I say to my friends on the 
other side of the aisle, if you are trying to get a piece of 
legislation passed to try to change the law and give Americans an 
income tax cut, you are going in the wrong direction. With the 
President threatening to veto the bill, it seems to me that a better 
approach would have been to try to get more votes, not fewer.
  I am here, regrettably, to say that I will not only change my vote 
from an enthusiastic ``aye,'' but I will now change and be voting 
enthusiastically ``no.'' Let me tell my colleagues why.
  First of all, I want to identify some things that are in this package 
that I think would be good. I appreciated very much the chairman 
fighting for them and getting them into the bill, and I am fully 
supportive of them.
  Eliminating the marriage penalty is terribly important. There are new 
provisions in here which will make it more likely that Americans will 
save and will have the resources they need for retirement. There are 
provisions in here which will make it more likely that Americans will 
have health insurance, and that will make it more likely that Americans 
will be able to afford the cost of higher education.
  I do not object at all to eliminating the inheritance tax. I 
cosponsored legislation to do that. I am not going to take a great deal 
of time explaining why, as a Democrat, I reached that conclusion. I am 
prepared, if anybody is interested, in debating it at a later time.
  I am not ideologically opposed to lowering the capital gains tax.
  There are many things in this proposal that I, in short, like or 
don't have strong objections to. It is this test of fairness which I 
believe was applied to the Senate version that I find lacking in the 
conference report.

  Let me take the one provision that is the most important provision in 
the Senate version.
  The provision that cut the lowest tax rate on income from 15 to 14 
percent that was in the Senate finance bill would have cut taxes for 
families in Nebraska with an income of $46,000, for a family of four, 
by $440. It would have cut taxes on a U.S. Senator with a spouse and 
two kids by $440 as well. That was the idea.
  I am not interested in engaging in class warfare. I have no quarrel 
with upper-income Americans or upper-income Nebraskans. Quite the 
contrary. In Nebraska, there were 775,000 federal income tax returns in 
1996. Of that, 6,500 had adjusted gross incomes of over $200,000. That 
is a relatively small number. But they paid almost a third of all the 
$3.6 billion in federal taxes paid by Nebraskans.
  So I am not here to say that upper-income people don't deserve a tax 
break. I think it is very important for us to take a look at America 
and try to discern which taxpayers are most in need of help. It is, it 
seems to me, a fair question for us to ask. And to try to apply a 
standard of fairness, it seems to me, is something we ought to be 
doing.
  Under last week's proposal, a single Member of Congress, I would have 
gotten a $260 tax rate cut, just as a single person with $26,000 of 
income. But under this proposal, by decreasing the taxes for everyone 
at higher rates as well, a Member of Congress, a single Member such as 
myself, I am going to get a tax cut of $1,185. I get over $900 more 
under this proposal. And if I got married, I would do even better.
  I can make an argument that because I am paying more taxes I ought to 
get more of a tax cut. But look at households. A family of four with 
$46,000 worth of income probably ought to have a larger tax cut than I 
do. At the very least, I should not receive more than they do. That is 
what I mean when I say that this bill, when it passed here last week, 
met the minimal standard of fairness.
  I say to my friends on the other side of the aisle that if you are 
trying to figure out how to get more votes and not fewer, you have now 
figured out how to get fewer. You had 57 votes on this side last week. 
The high water mark today, in my view, is likely to be 52. I understand 
that the conference report had to be reopened in the later

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hours of yesterday evening and some provisions had to be put in to woo 
some votes for a bare majority. I know there were some concerns that 
the Vice President might be sitting up there at the end of business 
today and there might be no more than 50 votes for this legislation. 
All of that should be a sign. You had 57 votes. Yesterday you did not 
have 50. Something is going in the wrong direction.
  I believe a majority of Democrats and Republicans in chamber, want to 
apply a standard of fairness. The distinguished junior Senator from 
Texas, offered an amendment on this floor last week that would increase 
the standard deduction for a married couple. Why did she want to 
eliminate the marriage penalty for people who are using the standard 
deduction? It got a lot of Democratic votes and a lot of Republicans 
votes. Indeed, I think it was the only amendment that actually broke 
the 60-vote requirement. That is a clue. That was a fairness issue and 
the junior Senator wanted that fairness applied to married people who 
take the standard deduction, people who do not itemize, people who are 
generally not in the upper reaches of income in this country.
  I'm not talking about crafting a social engineering package. What I 
am talking about is applying a standard of fairness.
  As I said, I have great respect for the chairman of the Finance 
Committee. I believe he attempted to apply a standard of fairness, and, 
in my judgment, his package of last week passed that test. I voted for 
it enthusiastically. But the conference committee report does not pass 
that test. It does not pass the test of fairness.

  So I enthusiastically and confidently will vote ``no'' on it. I do so 
regrettably because I believe there was an opportunity this year not 
just to do this but to get a bipartisan solution on Medicare and to get 
a bipartisan solution on Social Security. The package before us today 
does not bode well for future bipartisan efforts to come up with those 
solutions.
  This bill had 57 votes last week. As I said, were it not for the sort 
of last-minute work to try to have some changes to get some additional 
votes, it might not have even 50 votes later today when we will have a 
vote on final passage.
  I say to my Republican friends, if you want to cut Americans' taxes, 
listen not just to what Democrats are saying but also listen to what 
Republicans are saying. They want a standard of fairness applied. It is 
a legitimate concern.
  I don't know how many Members of the Senate believe that $800 billion 
is too much. I believe the distinguished occupant of the Chair does. He 
fought very hard as mayor and Governor, and I think he is coming to 
this Congress saying we ought to be careful not to spend the surplus 
and lose all the progress that we have made. Fine. Make that argument.
  But for the majority of us who believe that $800 billion is not too 
much, if we want to persuade our reluctant colleagues to support 
cutting taxes for American families, then you have to apply a standard 
of fairness, a test of fairness. You may not like doing it. You may 
believe your ideology tells you that you should do something else. But 
if you want to change the law and get this done, you had darned sure 
better do it, because not only will you not get the strong majority you 
will need but you will never, in my judgment, get the President of 
United States to sign a piece of legislation that doesn't attempt to 
measure and apply some test of fairness.
  Again, I appreciate very much the work that the distinguished 
chairman did, Senator Roth of Delaware, as well as the ranking 
Democrat, Senator Moynihan. I appreciate very much the leadership of 
both of them. Senator Moynihan led the Democrats in the committee to 
come up with a $300 billion tax cut proposal. It had a very key 
component in there, which was to increase the standard deduction for 
individuals. That takes a number of people off the income tax rolls, 
reduces the top tax rate for many and simplifies tax filing for 
millions.
  I suggest to my Republican colleagues on the other side of the aisle 
that if you want to get a bill, that is the kind of proposal that you 
should have included in this package and it is unfortunate that you did 
not. It is unfortunate that the centerpiece of the tax proposal that we 
voted for last week--the reduction of the 15 percent tax rate to 14 
percent--was not left alone. If there is a second chance to consider a 
tax bill this year, I hope we will work harder to pass a bill that will 
get significant support from this side of the aisle and the way to do 
that is to ensure a bill meets a basic standard of fairness.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. I thank the Chair.
  Mr. ROTH. I yield 10 minutes on behalf of the minority to the 
distinguished Senator from Minnesota.
  Mr. WELLSTONE. I thank the Senator from Delaware. Let me start out by 
saying I also appreciate the work of Senator Roth as the chair of the 
Finance Committee. However, I am in profound disagreement with this 
reconciliation bill, this tax cut bill, that comes before the Senate--
$792 billion in tax cuts, aggregate amount.
  According to Citizens for Tax Justice, the top 1 percent of taxpayers 
would receive 42 percent of the benefits, while the bottom 60 percent 
would receive only 7.5 percent of the benefits. Regarding 
distributional effect, my colleague from Nebraska talked about a 
standard of fairness: 60 percent of all taxpayers would get an average 
tax cut of $65; the wealthiest 10 percent would get an average tax cut 
of $1,322; the wealthiest 1 percent would get an average tax cut of 
$5,281.
  This tax cut bill that the Republicans bring to the floor of the 
Senate is ``Robin Hood in reverse'' economics. Even worse, I think it 
represents a politics of illusion.
  Not that long ago others, I think former President Bush, talked about 
voodoo economics. He was referring to a set of proposals in the early 
1980s that said we could have massive tax cuts, increase Pentagon 
spending, make the investments we needed to make as a nation, and 
continue to reduce the deficit. That is not what happened.
  It is pretty simple, I say to the people in Minnesota, and to the the 
people in the Nation. We are in agreement, I hope, that of the $3 
trillion of surplus, $2 trillion is Social Security. It is not touched. 
It is to make sure that system will be solvent. Of the other $1 
trillion, three-quarters of it is in assumed cuts--assuming we have the 
economic growth in discretionary domestic spending.
  With this proposal before the Senate that the Republicans bring to 
the floor of the Senate, not only do we have tax cuts and benefits to 
people in inverse relationship to need, a ``Robin Hood in reverse'' 
economics, but we have a politics and an economics of illusion. We are 
going to explode the debt. We are going to build the debt up again. In 
addition, we are not going to be making the investments that we in our 
speeches on the floor of the Senate say that we are for.
  I heard my colleague from Delaware talk about health care, talk about 
education, talk about children, talk about tax cuts. One more time, to 
use the old Yiddish proverb: ``You can't dance at two weddings at the 
same time.''
  We are not going to be able to have this amount of tax cuts, $792 
billion in tax cuts, and at the same time continue to pay down the debt 
and make the kind of investments we need to make. We are going to see, 
America, is cuts in Head Start, cuts in low-income energy assistance, 
cuts in community policing, cuts in environmental protection, cuts in 
veterans' health care, and cuts in Pell grant programs. We are not 
going to make any of the investments to which we say we are committed.
  I think this tax cut legislation before the Senate is in many ways 
more serious than bad economics. And it is bad economics. It is bad 
economics because it will build up the debt rather than pay down the 
debt. It is bad economics because it could very well lead to higher 
interest rates. It is bad economics because it is the last thing we 
ought to do in an expanding economy. In addition, it is bad economics 
because we are not going to be able to make the investments that my 
colleague from Delaware says we are committed to at the same time we 
are doing all these tax cuts.

  It is also an illusion. It will put this country in a straitjacket 
where we are not going to be able to do one positive

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thing to make sure we have equal opportunities for every child in this 
country. We are not going to increase Head Start benefits; we are going 
to cut them. We are not going to increase health care benefits for our 
citizens; we are going to cut them. We are not going to do anything 
about the acute shortage of affordable housing; we are going to cut 
housing programs. We are not going to get it right for veterans in 
health care; we are going to cut. We are not going to do anything about 
the shameful statistic of right now providing benefits for only 1 
percent of the kids who would benefit from Early Head Start in our 
country; we are going to cut.
  There is not one Senator who can come to the floor of the Senate and 
debate me on the argument I have just made. That is exactly what we are 
going to do.
  This is also an ideological debate. If Members believe--and maybe 
this is what my colleagues now believe, let me now give credit--when it 
comes to the most pressing issues of people's lives in the United 
States of America, or Minnesota, that there is nothing that the 
government can or should do, if you don't think we should be making any 
of these kinds of investments in Pell grants, or affordable child care, 
or Head Start, or community policing, or veterans' health care, or 
health care, or affordable housing, then you would be for this 
conference report. What this will do is put this country in a 
straitjacket where any kind of an investment that any Senator will talk 
about to expand opportunities for our citizens will be, by definition, 
fiscally irresponsible because we won't have any of the revenue.
  I conclude this way. The political argument behind these tax cuts is 
a pretty effective argument if you listen to it only up to a point. The 
argument is that we built up the surpluses--maybe, assuming the economy 
continues to perform. Let's give it back to the citizens; it is your 
money. People in Minnesota, it belongs to you.
  I maintain, as a Senator from Minnesota, it doesn't belong to me; it 
doesn't belong to adults. It belongs to our children, and it belongs to 
our grandchildren. Whatever surplus there is ought to be used to pay 
down the debt. We put it on their shoulders. Whatever surplus there is 
ought to be used to make sure their Social Security and Medicare is 
there, just as it will be there for us. It ought to be used to make 
sure there are opportunities for children so that our children and our 
grandchildren have the same opportunities that we have had.
  The Presiding Officer, the Senator from Ohio, is committed to early 
childhood development. The Presiding Officer, the Senator from Ohio, 
came to the Senate with a commitment to children. I know that. That is 
his passion, and he will make an enormous difference. I don't care 
whether he is Republican or not. I know what he cares about, and I know 
he is an effective Senator.
  With this measure of tax cuts, if this legislation passes, we will 
not only not be making any additional investments in the way we should 
in early childhood development, such as Early Head Start or Head Start, 
much less what we really should be doing for child care, much less 
nutrition programs, much less affordable housing programs, we will be 
cutting those programs.
  That is shameful. That is unconscionable. That is exactly what we 
will be doing. I say to the President of the United States of America, 
Mr. President, you should veto this legislation. Let's not get into 
Washington, DC, bargaining where we say $500 billion or $600 billion is 
a reasonable compromise. If that is what we do, we still will not be in 
a position to make any of these investments. We still will see cuts in 
discretionary spending to the tune of hundreds of billions of 
dollars. Let's pay down the debt. Let's make sure we make a commitment 
to Medicare and Social Security. More than anything else, I would 
rather see more of the emphasis on an investment in children. I believe 
when we pay down our debts, the most important debt we can pay off is 
the debt we would leave our children.

  What we owe our children is to make sure that every child in the 
United States of America--regardless of color of skin, regardless urban 
or rural, regardless high income or low income or middle income--has 
the same chance to reach his and her full potential. These tax cuts 
will make that impossible.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, just so the record is clear, we have 6 
hours, 3 hours to a side. The two managers have agreed we will go back 
and forth from one side to the other when people are present. But that 
is not the case now. So I yield 15 minutes on behalf of the minority to 
the distinguished Senator from North Dakota.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. CONRAD. Mr. President, this is an editorial that appeared in the 
New York Times on August 2. It says: ``Here we go again.'' That is 
exactly what this tax bill is all about. Here we go again.

       Back in 1980 Ronald Reagan assured one and all that he 
     could cut taxes sharply, increase defense spending 
     substantially and balance the Federal budget.

  That is the promise he made. It did not work out that way. The 
deficits exploded. George Bush at the time:

       . . . famously derided Mr. Reagan's supply side fantasies 
     as ``voodoo economics.''

  We all remember that. The veteran Washington Post reporter Lou 
Cannon, in his book ``President Reagan, the Role of a Lifetime'' 
described the reaction of James Baker, Mr. Reagan's own chief of staff, 
to the transformation of economic fantasy into national policy. He 
wrote:

       Though not particularly well-versed in economics, Baker 
     suspected there was something screwy about the idea that 
     massive tax cuts would increase government revenues. Later, 
     he would privately express regrets that the deficits had 
     `gotten away' from the administration and wished he had paid 
     more attention to the consequences of the tax cuts.

  Here we go again. Again, we have the fantasy being held out to the 
American people that somehow you can have a massive tax cut, you can 
have a big defense buildup, domestic needs will not be hurt, and 
somehow it is all going to add up. The problem with it is it is highly 
unlikely to happen. Let's just check the record. It shows very clearly 
what happened in the Reagan administration when they had this fantasy 
that they were going to cut taxes dramatically, have a big defense 
buildup. Somehow it was all going to add up. It did not add up and this 
plan does not add up.

  This is what happened back then. President Reagan inherited a deficit 
of just under $80 billion and he promptly shot it to $200 billion. That 
is what happens when we just put our head in the sand and get wedded to 
an ideology and do not care about the economic results, or the economic 
fallout. This plan is a disaster. I do not know how else to say it. It 
is risky; it is radical; it is reckless. We would make a profound 
mistake to pass it today.
  We then went into the Bush administration and the deficits went up, 
up, and away again. It went up to $290 billion in 1990.
  In 1993, President Clinton came into office and we passed a 5-year 
budget plan to cut spending and, yes, raise income taxes on the 
wealthiest 1 percent. That plan worked. Each and every year of that 5-
year plan the deficit came down until finally we have achieved a 
balanced budget. Why would we ever want to go back? Why would we ever 
want to repeat the incredible mistakes this country made in the 1980s 
that threatened the economic security of this country, that put this 
country's economy in a ditch, that led to recession, that led to job 
loss, that led to an extinguishment of economic growth? Why would we 
want to repeat that tragic mistake? Yet here we are. ``Here we go 
again.'' Goodness knows, don't we have more common sense than this?
  This is not just my view. This is the view of economist after 
economist who has looked at this proposal. Mr. Samuelson, the 
columnist, wrote:

       The wonder is that the Republicans are so wedded to a 
     program that is dubious as to both policy and politics.

  He went on to say:

       As Federal Reserve Chairman Alan Greenspan noted the other 
     day, tax cuts might someday be justified to revive the 
     economy from a recession or to improve the prospects of a 
     sweeping program of tax simplification. But there is no case 
     for big tax cuts based merely on paper projections of budget 
     surpluses.

  That is what this is. These are plans based on projections of what 
might

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happen over the next 10 years. What a risky way to run the economy. 
What a reckless way to run economic policy, to run out here and shovel 
$800 billion out the door before the money is collected. That puts this 
entire economy at risk. That puts this entire period of bringing down 
the deficit at risk. That puts this entire successful economic policy 
of improving economic growth, reducing unemployment, reducing inflation 
at risk. It is a mistake we should not make.
  This columnist points out:

       Suppose that spending exceeds projections by one percentage 
     point of national income and that tax revenues fall below 
     projections by the same amount. In today's dollars, these 
     errors . . . not out of line with past mistakes . . . would 
     total $170 billion annually. Most of the future surpluses 
     would vanish.

  That is the reality. We are betting the farm on projections of what 
is going to happen over the next 10 years. Does anybody believe these 
projections are going to come true?
  I used to be responsible for projecting the income of the State of 
North Dakota. That was my job. I can tell you, projecting 5 years out 
is very risky. Frankly, it is hard to project 1 year out. Projecting 10 
years out is a total crapshoot and we are basing the economic security 
of this country on a 10-year projection? Are we really going to do 
that?
  I ask my colleagues, are we really going to do that? Is this what you 
are seriously proposing for the United States, after the economic 
success we have enjoyed by reducing the deficits, by reducing debt?
  Some of the very same people who said the 1993 plan would not work 
are here today, advocating this risky scheme. The 1993 plan, as I 
showed, worked. That 5-year deficit reduction plan, in fact, reduced 
the deficit each and every year. But when we passed it in 1993, the 
other side said it would crater the economy; it would ruin us.
  This is what Senator Gramm, who is on the Budget Committee and on the 
Finance Committee, said back in 1993:

       I want to predict tonight that if we adopt this bill the 
     American economy is going to get weaker and not stronger, the 
     deficit 4 years from now 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 is Senator Gramm in 1993 when we passed the plan that did just 
the opposite. Let's look at the record. We passed that plan in 1993, 
and here is what happened: Unemployment went down to the lowest level 
in 41 years.
  Senator Gramm and the advocates of opposition to the 1993 plan, who 
are the very ones who are the advocates of this plan today, were wrong. 
They said it was going to increase unemployment. They were wrong. We 
have the lowest unemployment in 41 years. They said that that economic 
plan would increase inflation. They were wrong. That plan reduced 
inflation to the lowest level in 33 years.
  Mr. President, it does not stop there. Look at the economic growth. 
They said the 1993 plan would retard economic growth. They were wrong. 
Look at the record. We have the strongest economic growth during the 
last 6 years of any administration going back to the administration of 
Lyndon Johnson.
  Friends, people who are listening across the country, let's think a 
minute: Is the economy in good shape or is the economy in bad shape? I 
think every one of us knows we have the strongest economy in anyone's 
memory. That was built on a plan of reducing the deficits, relieving 
pressure on interest rates, making America more competitive, reducing 
home interest loans, reducing car loans, reducing student loans, 
because there was less deficit, less debt. Now we are on the brink of 
completely changing that policy and going back to the bad old days of 
deficits and debt and decline. Are we really going to turn back the 
clock to those days? I hope not. I hope we do not make as foolish a 
mistake as that.
  Because of the 5-year plan put in place in 1993, not only have we 
gotten the lowest unemployment, the lowest inflation in decades, the 
strongest economic growth in decades, we have also seen welfare 
caseloads decline dramatically. That is the record. That is the fact.
  The other side says: Oh, but wait a minute. Taxes are the highest 
they have been in 20 years.
  They are not telling the whole story. Here is what has happened. 
Remember when we had deficits, we had a gap between the revenue of the 
United States and the spending of the United States. The blue line is 
the spending; the red line is the revenue.
  Go back to 1993. There was the gap. That was the deficit, $290 
billion. We cut the spending line, and we raised the revenue line. That 
is how we balanced the budget. We cut spending; we raised the revenue 
line.
  When they say the taxes are the highest they have ever been, again, 
they are not telling the whole story. Revenues are strong because the 
economy is strong, but individual taxpayers are not paying more in 
taxes; most are paying less. That is not the Senator from North Dakota 
speaking, that is the respected accounting firm of Deloitte & Touche. 
They analyzed the tax burden, including payroll taxes and income taxes, 
of a family earning just under $20,000 a year. They looked at 1979, and 
they looked at 1999.
  In 1979, that family was paying 8.6 percent of their income in 
taxes--payroll taxes and income taxes. That burden has been reduced to 
5 percent. Why? Because when we raised taxes on the wealthiest 1 
percent in the 1993 plan, we also cut taxes on 28 million Americans by 
increasing the earned income tax credit. So we reduced taxes for 
individuals.
  The same is true for a family of four earning $35,000 in 1999. Again, 
the respected accounting firm of Deloitte & Touche went out and looked 
at their tax burden: 1979, 11.2 percent. That has been reduced to 10.5 
percent in 1999. It is also true of a family earning $85,000 a year. In 
1979, they had a total tax burden of 17 percent; in 1999, 16.3 percent.

  Does that mean there should not be any tax relief? No. We should have 
tax relief, but we ought to have a responsible package of tax relief, 
not one that threatens to put us back in the economic ditch of deficits 
and debt. Unfortunately, that is what the Republican plan does.
  On the question of the fairness of this proposal, if this is fair, I 
do not understand fairness. They are going to give to the top 1 percent 
in this country with an average income of $837,000 a $46,000 tax cut. 
They are going to give to the bottom 60 percent of the income earners 
in this country, the vast majority of people on average, a tax 
reduction of $138. That does not strike me as very fair.
  Let's check their math. We have heard over and over they are just 
giving 25 percent of the money that is available in surplus back in a 
tax cut. That is interesting math they are using. Let's check it.
  The total surplus is $2.9 trillion. That is the CBO estimate.
  I ask for 3 additional minutes.
  Mr. ROTH. I yield 3 minutes on behalf of the minority.
  The PRESIDING OFFICER. The Senator has 3 more minutes.
  Mr. CONRAD. Look at what CBO is projecting--and I emphasize 
projecting--as the surplus over the next 10 years, $2.9 trillion. But 
$1.9 trillion of that is Social Security. If you take that out, you 
have $1 trillion left. Republicans are proposing nearly $800 billion of 
tax cuts. When you do that, you add interest costs of $141 billion. 
That only leaves $63 billion left for debt reduction, for strengthening 
Medicare, for domestic needs. They are using not 25 percent of what is 
available; they are using 94 percent of what is available, because we 
have all agreed that none of the Social Security money is available.
  The only way they get this number of 25 percent being used for a tax 
cut is when they include Social Security in the base. Are they 
proposing we are going to use 25 percent of the Social Security money 
for a tax cut? No. So they are using phony statistics. They are 
applying this 25 percent to two-thirds of the money that is Social 
Security money. They are taking 94 percent of the money that is truly 
available for this risky tax cut.
  Here are the choices: Republicans say $800 billion of tax cuts; 
nothing to strengthen Medicare; nothing for domestic needs; they have 
$63 billion unallocated.
  Our proposal in the Senate was balanced. We said save every penny of 
Social Security for Social Security and

[[Page S10298]]

then one-third for tax relief; one-third to strengthen Medicare--and, 
by the way, this money is not needed immediately so it can be used for 
the next 15 years to pay down debt--and one-third of the money for 
high-priority domestic needs, such as education, defense, and 
agriculture.
  That leads our friends on the other side to say: There go the 
Democrats again; they just want to spend money.
  Let's examine that notion. This blue line shows constant buying power 
of what we do with Federal spending now for domestic needs. That is 
what would happen if we had constant buying power. The Democratic plan 
is represented by this red line. It is a cut from current buying power. 
Here is the Republican plan down here. They have a massive cut, $770 
billion over the next 10 years from what current buying power would 
permit.
  They do not want anybody to talk about this, but the reality is, they 
are advocating deep cuts in education, in defense, in agriculture, and 
in all the rest--parks, law enforcement--because there is no way to 
avoid this mathematical reality. They came to this Chamber with a chart 
that said, yes, you could accommodate this tax cut if you froze all 
domestic spending for 10 years. It has never been done. What is amazing 
about it is that it is not what they are doing in the Appropriations 
Committees that meet every day. They are spending additional money.

  I ask for 1 additional minute.
  Mr. ROTH. On behalf of the minority, I yield 1 minute.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
Senator is yielded 1 minute.
  Mr. CONRAD. I thank the Chair.
  Mr. President, let's be honest with the American people. This plan 
does not add up. It threatens to take us back to a period of growing 
debts. It fails to meet high-priority domestic needs such as education 
and agriculture and defense. It does not do anything to secure Medicare 
for the future. It is not real. It is not balanced. It is not 
responsible. This plan is not conservative.
  It is radical; it is risky; it is reckless. It ought to be rejected.
  Mr. DORGAN. Mr. President, I ask unanimous consent that the Senator 
from North Dakota be granted 2 additional minutes from the minority 
time so he might be able to respond to a question.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. Mr. President, I think Senator Conrad makes the most 
compelling presentation in the Senate on these budget matters. The 
charts he has used today have been extraordinary in their description 
of the folly here with respect to this plan.
  I want to ask the Senator to go back to a couple charts with respect 
to those who made predictions some years ago because I thought that was 
very telling. The practice of augury in old Roman times was that the 
high priest would read the flights of birds and the entrails of cattle 
in order to evaluate the future.
  We have some folks who are practicing augury in the Senate. They are 
the prophets who have described to us how wonderful this plan is. I 
know the Senator used, a bit ago, the same kind of descriptions from 
these same prophets 7, 8 years ago.
  Could the Senator refer to that again, because I think that is most 
telling who brings this plan to the Senate, and what were their 
predictions previously?
  Mr. CONRAD. I remember so well. I remember being on the floor of the 
Senate the day we passed the 5-year plan that got us back on track. I 
remember Republican leaders saying if we passed the plan, it would 
crater the economy. I remember Republican leaders telling us if we 
passed the plan it would increase unemployment, it would increase 
inflation, that it would cost jobs, that it would wreck the economy. 
They were wrong, and they were wrong on every single count. They said: 
If you raise taxes on the wealthiest 1 percent, and you cut spending, 
it is going to create a nightmare. They were wrong. They were 
absolutely wrong.
  Maybe we are not reminding people enough. Maybe we are not learning 
the lessons of the past, but we have to because we should not go back 
to the days of deficits and debt that put this economy in the ditch.
  So I am very hopeful we will learn from the past and we will 
recognize that to come out here, based on a projection over the next 10 
years, to justify a massive tax-scheme giveaway that blows a hole in 
the budget, blows a hole in the deficit, leads us back to the path of 
debt and is a profound mistake.

  It makes us all feel good. I would love to have a tax cut. I have two 
kids in college, and it is expensive. But I care more about their long-
term future. I care about them inheriting a world that is less debt-
laden than what we have done to them so far. Because our generation--
and here it is--has taken the debt from 1980, and here we are today. 
This is what we have done with the national debt. We have run up the 
debt from less than $1 trillion to nearly $4 trillion.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. CONRAD. I ask unanimous consent for 1 final minute.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CONRAD. That is what we have done in our generation. We have 
taken this national debt of less than $1 trillion and run it up to 
nearly $4 trillion. That is the publicly held debt. Gross debt is even 
higher. But this is publicly held debt.
  Is that the legacy we want to leave, that we ran up the debt on our 
watch? I do not think so. This is what could happen if we stay the 
course. This is what the Congressional Budget Office tells us could 
happen if we stay the course. We could actually eliminate publicly held 
debt over the next 15 years. But it will not happen with this plan 
because we apparently all have our hand out. We want to take care of 
ourselves first and forget about the future. I hope that is not the 
legacy we leave.
  I thank the Chair, and I thank my colleagues, and I yield the floor.
  Mr. ROTH. On behalf of the minority, I yield 20 minutes to the 
distinguished Senator from Florida.
  The PRESIDING OFFICER. The Senator from Florida.
  Mr. GRAHAM. I thank the Chair and thank my colleague, the chairman.
  Mr. President, last year we learned a very satisfying and important 
lesson. That is that there are rewards for fiscal discipline. After 
almost three decades of deficits and mounting national debt, we finally 
were able to eke out a small surplus. The very prospect of that small 
surplus has been a major contribution to one of the longest and most 
expansive periods of economic growth in our Nation's history. This 
fiscal discipline helped us to create favorable economic and fiscal 
conditions to address our long-term national challenges, especially our 
long-term commitments in Social Security and Medicare.
  This, frankly, is a time of national celebration. The question is, 
What kind of celebration? Will it be a prudent and patriotic 
celebration of our success where we will channel our justified 
enthusiasm for our accomplishment into positive national family and 
individual goals or will it be a wanton and reckless celebration? 
Because our success, our opportunity to celebrate, did not give us 
license to return to the free spending, free period of increased 
indebtedness of the recent past. No. We owe it to our children and our 
grandchildren to save this money, to save this money until we have 
dealt with our future obligations to them.
  Unfortunately, several major legislative actions in the 105th, now 
the 106th, Congress have made a mockery of our promise to maintain 
fiscal discipline. As an example, in February of this year, the Senate 
passed a military pay bill, with great enthusiasm and with great 
acclamations among those who would be particularly benefited and who 
hoped that it would strengthen our national security. The problem is, 
we did not provide a means of paying for it. So we were, in essence, 
saying we will pay for it out of our surplus.
  If last February's legislation was just an aberration, a momentary 
lack of judgment, an inadvertent haste to turn from impeachment to 
legislation, it might have been forgiven. Sadly, it cannot be so 
characterized. It, in fact, was part of a pattern of a continued lack 
of fiscal discipline. It was the second time, in fact, within 8 months 
that we had proven ourselves unwilling to

[[Page S10299]]

take the hard decisions and too willing to sacrifice the well-being of 
future generations on the altar of expediency.
  It was in October of 1998, in the waning hours of last fall's budget 
negotiations, that we passed a $532 billion omnibus appropriations 
bill. Included in that bill was $21.4 billion in so-called emergency 
spending. Since that $21.4 billion of emergency spending could be 
approved without the necessity of finding any way to pay for it, that 
funding came right out of the surplus. It took $3 billion out of the 
fiscal 1998 surplus. It took $13 billion out of the 1999 surplus. It 
will take $5 billion out of this year's surplus.
  The action would have been even mildly palatable had all of the 
supposed emergency funds been allocated to true emergencies. But, in 
fact, many of the items that were funded out of the $21.4 billion were 
items which had in the past been considered normal, regular obligations 
of the Federal Government, not the necessary, sudden, urgent, 
unforeseen, temporary needs that are supposed to be the hallmarks of 
real emergencies.
  In June, we made our third raid on the Social Security surplus, a 
supplemental appropriations bill that again cloaked many nonemergency 
spending items in emergency designation under the title of Kosovo. With 
all the negative public attention that had been focused on our previous 
raids, one would have thought that we might have at least been 
embarrassed back into fiscal responsibility. But, again, I am sorry 
that was not the case. So another $4 billion was taken out of the 
surplus through emergency spending for 1999 and $7 billion will be 
taken out in the year 2000.
  What have we done thus far? We started with a total surplus for 1999 
of $137 billion, of which $124 billion was Social Security. But after 
we had taken $13 billion for the emergency of 1998 and $4 billion for 
the emergency of 1999, we have reduced our surplus down to $120 
billion. So we have spent every penny of the off-budget surplus, and we 
have spent $4 billion of the Social Security surplus to fund these 
emergencies.
  Now, what is the chart for the year 2000? We started out with a total 
surplus of $173 billion, of which $147 billion was Social Security. We 
have the $5 billion from 1998, we have the $7 billion bloated Kosovo 
emergency expenditure, and just last night, we voted yet another 
emergency expenditure of $8 billion for agriculture. Today we have on 
the floor a tax bill that will cut the revenue for the year 2000 by $5 
billion. So what started off as a $173 billion surplus has already 
shrunk to $148 billion. Every dollar of that surplus is Social Security 
save $1 billion, which, as I will point out in subsequent remarks, is 
highly in danger.
  The action yesterday relative to agriculture represents the 
difficulty of the dilemma. Certainly American farmers are facing 
distressful circumstances. I happen to be an American farmer. I think I 
understand something of their plight. But the way to deal with this 
problem is not by temporary emergency fixes. The way to deal with this 
problem is to look at the underlying causes, which might be that we 
haven't been adequately dealing with fundamental issues such as crop 
insurance reform or that we have not been sufficiently aggressive in 
our trade policy in order to ensure there are open markets for American 
agricultural goods. Those are some of the ways in which we ought to be 
directing our attention, not through emergency spending to deplete our 
surplus.
  The budget resolution says that emergency spending must meet five 
criteria. It must be necessary, sudden, urgent, unforeseen, and it must 
not be permanent. I suggest that many of these expenditures we have 
made over the last 2 years fail to meet those standards of emergency.
  Our fiscal irresponsibility, however, is not limited just to 
emergency appropriations. We have defined the surplus as the difference 
between estimated revenue and estimated expenditures. Yet in arriving 
at those estimated expenditures, we have used unrealistic standards. We 
have created expenditure expectations that no one in this Congress 
believes are, in fact, going to be met; thus, the necessity to resort 
to these kinds of emergency measures. While we are doing that, we are 
also fundamentally deceiving the American people as to what our Federal 
Government's policies will be.

  Let me use one example.
  I ask unanimous consent at the end of my remarks to have printed in 
the Record an article from the New York Times of July 25, ``National 
Parks, Strained by Record Crowd, Face a Crisis.''
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 1.)
  Mr. GRAHAM. There is no better time than in early August to talk 
about the state of our national parks, because this is a time of the 
year when hundreds of thousands of our fellow citizens are taking 
advantage of one of America's great treasures--its national park 
system. But it is a treasure which we have been systematically looting 
through indifference. It is stated in this article that in an 
assessment made last year, the Park Service estimated it would cost 
$3.54 billion to repair maintenance problems at national parks, 
monuments, and wilderness areas, maintenance that has been put off for 
decades, in some cases, because of lack of money.
  Mr. President, while we may deceive ourselves into the statement that 
we have this significant surplus, it is a surplus which is being 
derived by a systematic underfunding of important national priorities, 
priorities which we know eventually are going to be met, but which we 
are now deceiving ourselves into the false illusion that there is an 
unrealistic surplus, a surplus which we can now use to fund these 
massive tax cuts.
  The time is now to provide some honest leadership for the American 
people, not hollow statements and false promises. I am afraid that that 
leadership and honesty are not to be found in the tax bill before us 
today.
  What I think we need to do is to put first things first. As 
Ecclesiastes says: There is a time for all things. There is a season to 
plant and there is a season to harvest.
  What is the season today, in this time of national celebration of the 
results of fiscal discipline? I suggest the season for today is to deal 
with the challenges of our children and our grandchildren, starting 
with two critical national programs.
  We should provide for the solvency of Social Security for our 
children and our grandchildren, and we should strengthen Medicare and 
bring it into the 21st century by providing it with the tools 
necessary, not just to deal with illness but to do what Americans 
want--to provide for their health and well-being. We should be funding 
those medical services that will prevent disease and illness, that will 
maintain our American people in their highest state of health. 
Unfortunately, when we have spent the resources that would be necessary 
to fund this tax cut before having dealt with Social Security and 
Medicare, there will be no money left to deal with Social Security and 
Medicare.
  The statement will be made that Social Security is off the table; we 
have already dealt with it; that by placing all of the Social Security 
surplus into a lockbox to protect it for Social Security, we have 
discharged that responsibility. Well, first, I say that we have a very 
leaky lockbox. Willie Sutton was once asked: Why do you rob banks? The 
answer was: That is where the money is. Well, the lockbox assumes the 
money has already gotten to the bank. But Jesse James figured out that 
if he could rob the train before the box got to the bank, he could get 
the money before it could be placed in the vault. That is essentially 
what this emergency spending loophole is allowing us to do. We are 
looting the lockbox before the money arrives.
  Even if we put the full amount of the Social Security surplus into 
the Social Security program, we would only have extended its solvency 
for our children to the year 2034.
  The Greenspan Commission of the early 1980s had recommended that we 
ought to fund Social Security on a three-generational program, which 
would mean through the year 2075. We have not completed our task if the 
only thing we have done is to secure the solvency of Social Security to 
the year 2034.
  Mr. President, we have an opportunity to lead the Nation in the way 
in which I believe thoughtful Americans wish to go. They wish to be 
prudent at

[[Page S10300]]

this time. They wish to celebrate the successes of fiscal discipline 
and to continue those successes. They want to take care of today's 
season of business first. They do not want us to embark upon a reckless 
course which would dissipate our ability to deal with our future needs 
and place us in the precarious position of depending upon unrealistic 
estimates of future revenues and a totally unrealistic expectation of 
future national needs.
  So the issue is not the details of this tax proposal, although I 
believe an examination of that detail would indicate this plan is 
woefully lacking in basic principles of fairness and equity to all 
Americans. But the fundamental deficiency of this tax bill is its lack 
of timeliness. We should not be considering any tax cut until we have 
taken care of priority business--protecting Social Security for three 
generations and strengthening Medicare. We should not be considering 
any tax measures until we are certain the projections of revenue and 
the estimates of future needs are based on realistic, not political, 
assessments.
  After we have carried out those first tasks, then if there are funds 
left available--and I suggest there probably will be --then we could 
consider what would be an appropriate form of returning that measure 
back to the American people through a tax cut. But, for today, the 
answer must be no to the measure that is before us. I hope that soon we 
will be answering yes to the responsibility we have to do America's 
first business first.
  Thank you, Mr. President.

                               Exhibit 1

                [From the New York Times, July 25, 1999]

        National Parks, Strained by Record Crowds, Face a Crisis

                         (By Michael Janofsky)

       YELLOWSTONE NATIONAL PARK, WY--In growing numbers that now 
     exceed 3.1 million a year, visitors travel here to America's 
     oldest national park to marvel at wildlife, towering 
     mountains, pristine rivers and geological curiosities like 
     geysers, hot springs and volcanic mudpots.
       Yet many things tourists may not see on a typical trip 
     through Yellowstone's 2.2 million acres spread across parts 
     of Idaho, Montana and Wyoming could have a greater impact on 
     the park's future than the growl of a grizzly or spew of Old 
     Faithful.
       For all its beauty, Yellowstone is broken. Hordes of summer 
     tourists and the increasing numbers now visiting in the 
     spring, fall ad winter are overwhelming the park's ability to 
     accommodate them properly.
       In recent years, the park's popularity has created such 
     enormous demands on water lines, roads and personnel that 
     park management has been forced to spend most of 
     Yellowstone's annual operating budget, about $30 million, on 
     immediate problems rather than investing in long-term 
     solutions that would eliminate the troublesome areas.
       Yellowstone is not the only national park suffering. With 
     the nation's 378 national park areas expected to attract 
     almost 300 million visitors this year, after a record 286 
     million in 1998, many parks are deferring urgently needed 
     capital improvements.
       For instance, damaged sewage pipes at Yellowstone have let 
     so much ground water from spring thaws into the system that 
     crews have had to siphon off millions of gallons of treated 
     water into meadows each of the last four years.
       And with budget restraints forcing personnel cutbacks in 
     every department, even the number of park rangers with law-
     enforcement authority has dropped, contributing to a steady 
     increase in crime throughout Yellowstone.
       ``It's so frustrating,'' Michael V. Finley, Yellowstone's 
     superintendent, said. ``As the park continues to deteriorate, 
     the service level continues to decline. You see how many 
     Americans enjoy this park. They deserve better.''
       Over the last decade the annual budget of the National Park 
     Service, an agency of the Interior Department, has nearly 
     doubled, to $1.9 billion for the fiscal year 1999 from $1.13 
     billion in 1990, an increase that narrowly outpaced 
     inflation.
       But in an assessment made last year, the park service 
     estimated that it would cost $3.54 billion to repair 
     maintenance problems at national parks, monuments and 
     wilderness areas that have been put off--for decades, in some 
     cases--because of a lack of money.
       The cost of needed repairs at Yellowstone was put at $46 
     million, the most of any park area in the system. But the 
     park service report shows that budget limits have forced 
     virtually all national parks to set aside big maintenance 
     projects, delays that many park officials say compromise 
     visitor enjoyment and occasionally threaten their health and 
     safety.
       Senator Craig Thomas, a Wyoming Republican who is chairman 
     of the Subcommittee on National Parks, and Bob Stanton, 
     director of the park service, negotiated a deal this week to 
     spend $12 million over the next three years for Yellowstone 
     repairs.
       Other parks may have to wait longer. The Grand Canyon 
     National Park depends on a water treatment system that has 
     not been upgraded in 30 years, a $20 million problem, park 
     officials say. Parts of the Chesapeake and Ohio Canal 
     National Historical Park along the Potomac River are 
     crumbling, another $10 million expense. The Everglades 
     National Park in South Florida needs a $15 million water 
     treatment plant.
       Even with a heightened awareness of need among Federal 
     lawmakers and Clinton Administration officials, money to 
     repair those problems may be hard to find at a time when 
     Congress is wrestling over the true size of a projected 
     budget surplus and how much of it will pay for tax cuts. If 
     billions were to become available for new spending, the park 
     service would still have to slug it out with every other 
     Federal agency, and few predict that parks would emerge a big 
     winner.
       It is a disturbing prospect to conservationists, parks 
     officials and those lawmakers who support increased spending 
     to help the parks address their backlog of maintenance 
     problems.
       ``It's kind of like a decayed tooth,'' said Dave Simon, the 
     Southwest regional director for the National Parks and 
     Conservation Association, a citizens' group that is working 
     with Yellowstone to solve some of the long-term needs. ``If 
     you don't take care of it, one day you'll wake up with a 
     mouthful of cavities.''
       The parks' supporters like Representative Ralph S. Regula, 
     an Ohio Republican who is chairman of Appropriations 
     Subcommittee on the Interior, concede that budgetary 
     increases as well as revenue from new programs that allow 
     parks to keep a greater share of entrance fees and concession 
     sales have been offset by inflation, rising costs and daily 
     operational demands that now accommodate 8.9 percent more 
     people than those who visited national parks a decade ago.
       With few dollars available for maintenance programs, the 
     parks suffered ``benign neglect,'' Mr. Regula said, adding: 
     ``It's not very sexy to fix a sewer system or maintain a 
     trail. You don't get headlines for that. It would be nice to 
     get them more money, but we're constrained.''
       Denis P. Galvin, the deputy director of the National Park 
     service, noted that only twice this century, in the 1930's 
     and in 1966, has the Federal Government authorized money for 
     systemwide capital improvements, and he said he was not 
     expecting another windfall soon.
       ``Generally,'' Mr. Galvin said, ``domestic programs come at 
     the back of the line when they're formulating the Federal 
     budget, and I just don't think parks are a priority.''
       Perhaps no park in America reflects the array of hidden 
     problems more than Yellowstone, which opened in 1872, years 
     before Idaho, Montana and Wyoming became states.
       Park officials here say that the longer problems go 
     unattended, the more expensive and threatening they become.
       The budget restraints have meant reducing the number of 
     rangers who carry guns and have the authority to make 
     arrests.
       Rick Obernesser, Yellowstone's chief ranger, said the 
     roster had dwindled to 112 from 144 over the last 10 years, 
     which often means leaving the park without any of these 
     rangers from 2 A.M. to 6 A.M.
       Next year, Mr. Obernesser said, the park will have only 93 
     of these rangers, about 1 for every 23,000 acres compared 
     with 1 for every 15,000 acres when his staff was at peak 
     strength.
       That has not only led to slower response times to 
     emergencies, like auto accidents and heart attacks, he said, 
     but also to an increase in crime. Since the peak staffing 
     year of 1989, he said, the park has experienced significant 
     increases in the killing of wildlife, thefts, weapons charges 
     against visitors and violations by snowmobile drivers.

                           *   *   *   *   *

  Mr. NICKLES addressed the Chair.
  The PRESIDING OFFICER. The Senator from Oklahoma is recognized.
  Mr. NICKLES. Mr. President, I ask the Senator from Delaware to yield 
me 20 minutes.
  Mr. ROTH. I am happy to yield 20 minutes to the distinguished Senator 
from Oklahoma.
  Mr. NICKLES. Mr. President, first, I wish to compliment my colleague, 
the chairman of the Finance Committee, Senator Roth, for his leadership 
in bringing the bill to the floor. In addition, I compliment Senator 
Lott and Senator Domenici because they helped make this happen.
  The Senate, earlier this year, passed a budget resolution that says 
let's use most of the surplus that is projected to pay down the 
national debt. As a matter of fact, let's use over two-thirds of it to 
pay down the national debt. I have heard complaints from colleagues on 
the Democrat side saying we don't do enough. Frankly, we pay down the 
national debt more than the Democrats have proposed and more than the 
President has proposed. Maybe that is not enough for them, but it is 
more than they have proposed.
  I compliment Senator Domenici and Senator Lott, as well as Senator 
Roth, for laying the groundwork to say let's

[[Page S10301]]

take at least one-fourth of the surplus projected and let the people 
keep it. Some people say give it back to them. Well, I don't think they 
should ever have to send it to Washington, DC, in the first place; it 
is their money.
  That is the issue. Are we going to allow the taxpayers to keep one-
fourth of the surplus, or are we going to insist on that money going to 
Washington, DC, and Washington spending it? Obviously, there is no 
limit on the number of demands we have on spending other people's 
money. We can spend it all just like that. It is quite easy, in fact it 
is the easiest thing to do. Now, we finally have an opportunity, as a 
result of the significant surplus, to allow people to keep more of it.
  We do that in this bill. We have come up with a bill that I believe 
is fair, balanced, and I think is a good tax bill, a tax bill for 
taxpayers. I will go into some of the benefits. First, I want to 
repudiate some of the comments that were made against it. One Senator 
said it was too much. It is one-fourth of the surplus.
  I don't think that is too much. We have given tax cuts in the past 
when we didn't even have a surplus. I happen to have supported those. 
We passed a tax cut in 1997--a strong majority of Congress passed it. 
We didn't have a surplus then. I think it was the right thing to do. We 
gave a tax cut because, in some cases, rates were too high. We said if 
we have a tax cut, it will stimulate the economy and raise more money. 
Guess what. That is what happened.
  We cut the capital gains tax both in 1995 and in 1997. The President 
vetoed it in 1995. He signed it in 1997. When I say ``we,'' I am 
talking about Republicans because we didn't have any support in 1995 
from our Democrat colleagues--maybe with one or two exceptions. We 
passed it in 1997. We cut capital gains from 28 to 20 percent. It 
helped the economy and raised a lot of money. It beat the expectations 
by the CBO and the Treasury Department. Why? We reduced the tax on 
transactions by about 230 percent and ended up having more financial 
transactions. As a result, you have more income and more taxes. It 
helped the economy. Many of us said that would happen, that it would 
have a very positive impact.
  Let me touch on one other thing. A couple of colleagues said you 
can't have this tax cut because it benefits high-income people. Heaven 
forbid, somebody making $500,000 is going to get a greater benefit than 
somebody making $10,000. Let me just step back a little bit. Is this 
tax cut too high, too generous for high-income people? I don't think 
so.
  Let me talk about rates. I believe marginal rates impact on whether 
or not somebody is going to do extra work. I have been in the private 
sector. I used to have a janitorial service, and marginal rates kept me 
from doing more work. I had a situation where I was making enough money 
to combine income and Social Security taxes. I was working about 40 
percent of the time for the Government, and I said that is enough. I am 
not going to work more if the Government is going to take almost half 
of everything I make. It denied the advancement and expansion of my 
business--a small business.

  I might mention, that small business is where most additional new 
employees are starting. Somebody says, wait a minute, this tax cut is 
unfair, it benefits the high income bracket. Look at what we do for 
high income. We reduce every single income bracket by 1 percentage 
point. The low end is 15 percent and we reduced it to 14 percent. The 
high income is 39.6 percent, and we reduced it to 38.6 percent, and so 
on. There is a 28 percent bracket; we move that to 27.
  Somebody says, that benefits the high income. Wait a minute. We 
reduce it in every single bracket by 1 percentage point. It so happens 
that for the 15-percent bracket, to move down 1 point, that is a 7-
percent reduction. If you move a 39.6 percent down to 38.6, that is a 
2.6-percent reduction--less than half of a percentage reduction of the 
15-percent taxpayer, or the lower income taxpayer. So I don't think 
this is tilted in any way. If anything, if one really looks at this, it 
makes the system more progressive.
  So the argument that this benefits upper income doesn't fly, and it 
doesn't fly with history. Look at what the tax cut rates were when 
President Clinton was sworn into office. The maximum rate in 1992 was 
31 percent. After the Clinton tax increase--or maybe I should say the 
Democrat tax increase because it only passed by Democrats, with the 
Vice President breaking the tie vote twice in this Chamber--it 
increased the maximum rate from 31 to 39.6 percent. Actually, it went 
higher than that because they also took the cap off the Medicare tax 
and said you have to pay Medicare tax on all income, all salary, and 
all wages. So you have payroll taxes and Federal income taxes and 
Social Security taxes, and no limit, no base, no cap on Medicare taxes.
  Medicare tax is 1.45 percent of payroll, plus your employer's 
contribution; that is 2.9 percent. So a person in the maximum bracket 
pays actually 39.6, plus 2.9 percent Medicare. That is a total of 42.5 
percent. When Bill Clinton was sworn in, the maximum rate was 31 
percent. One year later, it was 42.5 percent on all income, all wages, 
on everybody in the country.
  That is a massive tax increase. That is a 37-percent increase.
  What are we doing in this bill? We are reducing that by one point. We 
reduce it from 39.6 to 38.6; 38.6 is a whole lot more than 31.
  So, the tax cut that we are proposing is just a small fraction of the 
tax increase President Clinton and the Democrats passed in 1993--a 
small fraction. Yet some of my colleagues are saying we can't do that. 
It might deny us the ability to spend more money. We have a whole 
laundry list of people parading to Washington, DC, saying: Give me some 
more money because we want to spend it. We want more of your money 
because we can spend it better than you can.
  Finally, I want to address the comments of one of our colleagues who 
says we favor a tax cut, but we don't believe now is the time to do it. 
Wait a minute. When are you going to do it, if not now?
  We have estimates of a $3 trillion surplus over the next 10 years. 
And we are not going to do it now? Will we only give you a tax cut if 
it is $4 trillion, or $5 trillion? At what point would our colleagues 
say it is time to let people keep more of their own money? We are 
taking too much from them. If my colleagues are not going to agree to a 
tax cut that is only one-fourth of the surplus, they will never agree 
to one.
  It absolutely amazes me how our Democrat colleagues all marched in 
step in 1993 and said: We are going to support this tax increase 
because Bill Clinton wants it.
  You might remember that Bill Clinton shortly after that said, Oops, 
surprise, I agree with the business community. We increased taxes too 
much. He actually admitted to that. A lot of Democrats were mad, but he 
admitted to it anyway and then he went ahead and vetoed our tax cut in 
1995.
  Then in 1997, he eventually agreed to a tax cut and everybody seemed 
to favor it. I guess whatever Bill Clinton says the Democrats march in 
line to.
  I don't know. But we cut taxes in 1997. We reduced capital gains from 
28 to 20 percent--very positive things. They might think that was a bad 
thing to do. No one offered an amendment saying let's bring capital 
gains back up to 28 percent saying that it was terrible. A lot of 
people debated against it in 1997. But it was the right thing to do.
  We cut taxes for families in 1997. We passed a $500 tax credit for 
each child in 1997. Bill Clinton campaigned for it in 1992. He didn't 
deliver in 1993. As a matter of fact, in 1993 he increased taxes. That 
tax cut didn't happen until 1997. Republicans passed it. The President 
vetoed it. We passed it in 1997 and he eventually signed it.
  A family of four with an income of less than $80,000 has $2,000 per 
year that they can keep. A family with four kids gets to keep $2,000 
more per year because Republicans in Congress said we are going to pass 
it. We promised to and we did.
  We established the Roth IRA.
  We did some good things in 1997. Guess what? We didn't have the 
projected surplus in 1997 that we have in 1999. Now we have trillions 
of dollars of anticipated surplus. Let's give one-fourth of it back to 
the American people. Let's let them keep it. They shouldn't have to 
send that much to

[[Page S10302]]

Washington, DC. Their taxes are too high.
  I will go through a couple of examples that we correct in this bill 
to show why their taxes are too high and what we do about it. There are 
too many people who send too much to Washington DC. Let me address a 
couple of those examples.
  I mentioned a self-employed person. A self-employed person, an 
individual, makes $25,000. They are taxed at the marginal bracket of 15 
percent on everything they make up to $25,000. Above that they are 
taxed at 28 percent. If somebody has a painting service in rural 
Delaware, and paints houses and works for himself, that individual has 
a taxable income of $25,000, and probably is not considered wealthy by 
most people's standards. Any additional contract that person makes, any 
additional income that person makes, is taxed at 28 percent. He also 
has to pay Social Security and Medicare tax. That is 15.3 percent on 
top of the 28 percent. Add those two together, and it is 43.3 percent. 
He has to pay State income tax. In my State that is 6 or 7 percent. For 
any additional dollar that individual makes painting houses, fifteen 
cents of it goes to the government.

  That is too high. That is far too much.
  For a married couple right now that makes $43,000, it is the same 
thing. For any additional dollar they make, half of it goes to the 
government, if they are self-employed.
  That is too high. So we cut that.
  We provide marriage penalty relief and several other positive things. 
Let me go through some more of the changes.
  I mentioned that we cut all brackets by one percent. That benefits 
the lower more than the upper brackets. The lower brackets get a seven-
percent reduction and the upper brackets get a 2.8 percent reduction. 
That is not stacked towards the higher income people. It is a tax cut 
for all taxpayers, and it benefits, percentage-wise, the lowest income 
taxpayers first. The lowest income taxpayer gets the break first.
  Again, for somebody who says this is weighted towards the wealthy, it 
is absolutely totally and completely false.
  We widen the 15 percent bracket. We make it 14 percent. Then we widen 
it. We ship $3,000 more of income into the 14-percent bracket instead 
of the 28-percent bracket.
  That is a very positive change for an individual with an income up to 
$25,750. That means they get to save $390. That is fairly significant. 
I think that is very significant.
  For a couple you are talking about double that amount. So they get to 
save a significant amount as well.
  Marriage penalty relief: What did we do? Some people do not 
understand what we did. We said we would double the bracket by 
increasing the standard deduction--basically doubling the standard 
deduction for an individual. If you look at the income tax forms, and 
say you are filing as individuals, or joint. If you file as married, 
you don't get twice the individual deduction. So, frankly, it would be 
better off if a married couple filed as individuals. They are penalized 
for filing jointly.
  Does it make any sense for our Tax Code to penalize people for being 
married to the tune of $1,400 per family? That is wrong. This bill 
eliminates that for most couples.
  What do we do? We said, Let's double the standard deduction. It 
should be twice as much for those who are married as it is for 
individuals.
  We do that with this legislation because the biggest hit is on 
married couples, and the marriage penalty is that individually they are 
taxed at 15 percent. For joint income tax they are taxed at 28 
percent--almost twice as high. We move those rates to 14 and to 27 
percent. We are saying for all of the income that is taxed up to 14 
percent they should have twice that bracket amount for a couple. That 
is not the way the tax code is right now.
  Let me explain it.
  Individuals today are taxed at 15 percent up to $25,000. You say, OK. 
That is for an individual, and it would make sense for a couple then to 
be taxed at 15 percent up to $50,000. But that is not the present law. 
The present law says above $43,000 they are taxed at 28 percent. So 
they have $7,000 that they are taxed at a higher rate, twice the rate 
as what they should be. We eliminate that. We double the 15 percent 
bracket for married couples.
  So if it is $25,000 at 15 percent for an individual, it would be 
$50,000 for a couple.
  What does that mean in savings to a couple that makes $50,000? It 
means $980 a year that they will be able to keep. We are not going to 
penalize couples because they happen to be married and because they 
happen to file joint returns.

  I want to compliment the chairman, because he has worked very hard in 
supporting this.
  We have $100 billion in tax relief for married couples by eliminating 
the marriage penalty in this legislation--that is one eighth of this 
bill.
  When we debated this legislation on the floor of the Senate last 
week, no one said take out the marriage penalty.
  The marriage penalty tax elimination is one of the most important 
aspects of this bill and we are going to make it happen.
  The upper rate reductions that I mentioned move one percent down.
  That may not happen, because we have a trigger mechanism that says if 
we don't meet the deficit reduction targets the tax cut doesn't happen.
  That is not the case for marriage penalty relief.
  I encourage my colleagues. If you believe in getting rid of the 
marriage penalty, you had better vote for this bill. It is one of the 
most significant reforms that we have in this legislation.
  What else did we do? Why should somebody be in favor of this?
  We eliminate the death tax.
  We changed the current unified credit into an exemption.
  What does that mean? Right now everybody knows that we have a unified 
credit that says if you have a taxable estate above $650,000, you don't 
have to pay a death tax. If you pass away, your survivors and kids 
won't have to pay any death tax.
  We changed that unified credit into an exemption.
  What does that mean? Once you have to pay the tax, you start paying 
at 39 percent.
  By making an exemption, you start out at a lower rate. So any taxable 
estate will be taxed at an 18 percent rate.
  The beginning rate of a taxable estate will be 18 percent instead of 
39 percent. We will be helping out estates that are just over the 
threshold, estates that are $1 million or $1.5 million. That is a very 
positive change.
  Eventually, in 9 years, by the year 2009, we eliminate the death tax. 
At that point, estates should be taxed when the property is sold--not 
in the event of death but when the property is sold. If your kids 
inherit a business or ranch, they don't have to pay inheritance tax 
until they sell it; if they sell it, then they are taxed capital gains. 
And they have to pay tax on the base, going back to the original base. 
That is how it should be. If they sell, they should pay capital gains; 
if they don't sell, they shouldn't be hit.
  I learned the hard way. This inheritance tax makes people sell 
businesses all the time. It makes people sell farms, ranches, homes--
just name it--to cover estate taxes. That is wrong. If they should 
choose to sell it, then let them pay the tax on the gain. That is what 
we do here and that is a very significant provision in this bill.
  What else do we do in this bill? We reduce capital gains taxes. We 
have proven time and time again, going back to the time of John F. 
Kennedy, reduce taxes and we generate more money to Government, 
particularly with marginal rates and capital gains rates. We reduced 
the capital gains rate in 1997 from 28 to 20 percent, and it raised a 
lot of money for the Federal Government. In this bill, immediately 
going back to January 1 of this year, we reduce the capital gains rate 
from 20 percent to 18 percent.
  Beginning January 1 of next year we index capital gains. What does 
that mean? It means we will quit taxing inflation. If someone has a 
home and that home is escalating in price through inflation, they won't 
have to pay taxes on that inflated gain because the home really hasn't 
increased in value, it is just staying up. That is a very positive 
provision and I compliment the authors of the bill for their hard work.
  We increase IRA deductions from $2,000 to $5,000. We haven't 
increased it

[[Page S10303]]

since we passed IRAs many years ago. That is another significant 
provision, so people are saving and are not so dependent on an employer 
or the Federal Government.
  We allow self-employed persons to deduct 100 percent of their health 
care costs. Right now they can deduct 45 percent. This measure affects 
nearly 16 million taxpayers. It is a very positive provision. We allow 
100-percent deductibility of health insurance for workers without 
generous employers. If you do not work for a generous employer, you can 
deduct your health care costs.
  We increase child care tax credits.
  We have AMT reforms so people don't get stuck paying an alternative 
minimum tax just because they are taking tax credits that Congress has 
already passed.
  We allow small businesses to be able to expense up to $30,000 a year. 
We increase that from $19,000. This is a provision that will benefit 
thousands and thousands of businesses, small businesses, all across the 
country.
  I say to my colleagues, this bill is a good tax bill, it is a fair 
tax relief bill. It allows small business, individuals, and married 
couples an opportunity to keep more of their own money instead of 
sending it to Washington, DC.
  I urge my colleagues on behalf of the taxpayers all across America to 
vote ``yes'' on this bill later this evening.
  Mr. President, I ask unanimous consent to have printed in the Record 
a couple of tables showing the distributional effects. Changes that we 
are making will show the greatest percentage of reductions are 
certainly pushed towards the lower income. For example, on married 
filing jointly, the rate reduction is 7 percent but the biggest 
reduction actually is for incomes of $40,000 to $60,000, receiving 
significant reductions, up to 17 and 22 percent, because of the 
marriage penalty relief that we have added.
  I ask unanimous consent to have these tables printed in the Record.
  There being no objection, the material ordered to be printed in the 
Record, as follows:

                                                                                              IMPACT OF RATE REDUCTION & BRACKET EXPANSION
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Current law                                                                                   GOP tax cut                                                    Change
               -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Taxable Income                                                                     Taxable @                                                                                    Taxable @                     Amount of     Change as %
                 Taxable @ 15%   Taxable @ 28%   Taxable @ 31%   Taxable @ 36%       39.6%         Total tax     Taxable @ 14%   Taxable @ 27%  Taxable @ 30%  Taxable @ 35%      38.6%        Total tax        change        of taxes
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                                                                                                         MARRIED FILING JOINTLY
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
       10,000          10,000               0               0               0               0           1,500          10,000               0              0              0              0          1,400          (100)             -7
       20,000          20,000               0               0               0               0           3,000          20,000               0              0              0              0          2,800          (200)             -7
       30,000          30,000               0               0               0               0           4,500          30,000               0              0              0              0          4,200          (300)             -7
       40,000          40,000               0               0               0               0           6,000          40,000               0              0              0              0          5,600          (400)             -7
       50,000          43,050           6,950               0               0               0           8,404          50,000               0              0              0              0          7,000        (1,404)            -17
       60,000          43,050          16,950               0               0               0          11,204          57,500           2,500              0              0              0          8,725        (2,479)            -22
       70,000          43,050          26,950               0               0               0          14,004          57,500          12,500              0              0              0         11,425        (2,579)            -18
       80,000          43,050          36,950               0               0               0          16,804          57,500          22,500              0              0              0         14,125        (2,679)            -16
       90,000          43,050          46,950               0               0               0          19,604          57,500          32,500              0              0              0         16,825        (2,779)            -14
      100,000          43,050          56,950               0               0               0          22,404          57,500          42,500              0              0              0         19,525        (2,879)            -13
      110,000          43,050          61,000           5,960               0               0          25,382          57,500          46,500          5,950              0              0         22,404        (2,979)            -12
      120,000          43,050          61,000          15,950               0               0          28,482          57,500          46,550         15,950              0              0         25,404        (3,079)            -11
      130,000          43,050          61,000          25,950               0               0          31,582          57,500          46,550         25,950              0              0         28,404        (3,179)            -10
      140,000          43,050          61,000          35,950               0               0          34,682          57,500          46,550         35,950              0              0         31,404        (3,279)             -9
      150,000          43,050          61,000          45,950               0               0          37,782          57,500          46,550         45,950              0              0         34,404        (3,379)             -9
      160,000          43,050          61,000          54,500           1,450               0          40,955          57,500          46,500         54,500          1,450              0         37,476        (3,479)             -8
      170,000          43,050          61,000          54,500          11,450               0          44,555          57,500          46,550         54,500         11,450              0         40,976        (3,579)             -8
      180,000          43,050          61,000          54,500          21,450               0          48,155          57,500          46,550         54,500         21,450              0         44,476        (3,679)             -8
      190,000          43,050          61,000          54,500          31,450               0          51,755          57,500          46,550         54,500         31,450              0         47,976        (3,779)             -7
      200,000          43,050          61,000          54,500          41,450               0          55,355          57,500          46,550         54,500         41,450              0         51,476        (3,879)             -7
      250,000          43,050          61,000          54,500          91,450               0          73,355          57,500          46,550         54,500         91,450              0         68,976        (4,379)             -6
      300,000          43,050          61,000          54,500         124,600          16,850          91,961          57,500          46,550         54,500        124,600         16,850         87,083        (4,879)             -5
      350,000          43,050          61,000          54,500         124,600          66,850         111,761          57,500          46,550         54,500        124,600         66,850        106,383        (5,379)             -5
      400,000          43,050          61,000          54,500         124,600         116,850         131,561          57,500          46,550         54,500        124,600        116,850        125,683        (5,878)             -4
      450,000          43,050          61,000          54,500         124,600         166,850         151,361          57,500          46,550         54,500        124,600        166,850        144,983        (6,379)             -4
      500,000          43,050          61,000          54,500         124,600         216,850         171,161          57,500          46,550         54,500        124,600        216,850        164,283        (6,879)             -4
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
       10,000          10,000               0               0               0               0           1,500          10,000               0              0              0              0          1,400          (100)             -7
       20,000          20,000               0               0               0               0           3,000          20,000               0              0              0              0          2,800          (200)             -7
       30,000          25,750           4,250               0               0               0           5,053          28,750           1,250              0              0              0          4,363          (690)            -14
       40,000          25,750          14,250               0               0               0           7,853          28,750          11,250              0              0              0          7,063          (790)            -10
       50,000          25,750          24,250               0               0               0          10,653          28,750          21,250              0              0              0          9,763          (890)             -8
       60,000          25,750          34,250               0               0               0          13,453          28,750          31,250              0              0              0         12,463          (990)             -7
       70,000          25,750          36,700           7,550               0               0          16,479          28,750          33,700          7,550              0              0         15,389        (1,090)             -7
       80,000          25,750          36,700          17,550               0               0          19,579          28,750          33,700         17,550              0              0         18,389        (1,190)             -6
       90,000          25,750          36,700          27,550               0               0          22,679          28,750          33,700         27,550              0              0         21,389        (1,290)             -6
      100,000          25,750          36,700          37,550               0               0          25,779          28,750          33,700         37,550              0              0         24,389        (1,390)             -5
      110,000          25,750          36,700          47,550               0               0          28,879          28,750          33,700         47,550              0              0         27,389        (1,490)             -5
      120,000          25,750          36,700          57,550               0               0          31,979          28,750          33,700         57,550              0              0         30,389        (1,590)             -5
      130,000          25,750          36,700          67,550               0               0          35,079          28,750          33,700         67,550              0              0         33,389        (1,690)             -5
      140,000          25,750          36,700          67,800           9,750               0          38,667          28,750          33,700         67,800          9,750              0         36,877        (1,790)             -5
      150,000          25,750          36,700          67,800          19,750               0          42,267          28,750          33,700         67,800         19,750              0         40,377        (1,890)             -4
      160,000          25,750          36,700          67,800          29,750               0          45,867          28,750          33,700         67,800         29,750              0         43,877        (1,990)             -4
      170,000          25,750          36,700          67,800          39,750               0          49,467          28,750          33,700         67,800         39,750              0         47,377        (2,090)             -4
      180,000          25,750          36,700          67,800          49,750               0          53,067          28,750          33,700         67,800         49,750              0         50,877        (2,190)             -4
      190,000          25,750          36,700          67,800          59,750               0          56,667          28,750          33,700         67,800         59,750              0         54,377        (2,290)             -4
      200,000          25,750          36,700          67,800          69,750               0          60,267          28,750          33,700         67,800         69,750              0         57,877        (2,390)             -4
      250,000          25,750          36,700          67,800         119,750               0          78,267          28,750          33,700         67,800        119,750              0         75,377        (2,890)             -4
      300,000          25,750          36,700          67,800         152,900          16,850          96,873          28,750          33,700         67,800        152,900         16,850         93,483        (3,390)             -3
      350,000          25,750          36,700          67,800         152,900          66,850         116,673          28,750          33,700         67,800        152,900         66,850        112,783        (3,890)             -3
      400,000          25,750          36,700          67,800         152,900         116,850         136,473          28,750          33,700         67,800        152,900        116,850        132,083        (4,390)             -3
      450,000          25,750          36,700          67,800         152,900         166,850         156,273          28,750          33,700         67,800        152,900        166,850        171,383        (4,890)             -3
      500,000          25,750          36,700          67,800         152,900         216,850         176,073          28,750          33,700         67,800        152,900        216,850        170,683        (5,390)             -3
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Policies as fully phased in applied to 1999 tax brackets.
Provided by Senator Don Nickles, 08/05/99