[Congressional Record Volume 146, Number 35 (Monday, March 27, 2000)]
[Senate]
[Pages S1696-S1698]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                               THE BUDGET

  Mr. REID. Mr. President, last year we spent a great deal of time 
talking about whether or not we should have an $800 billion tax cut. We 
spent an inordinate amount of time working on that. The minority, the 
Democrats, thought we should not do that, that it was too much; that 
instead of having this large tax cut, we should have some targeted tax 
cut, much, much, much smaller. This debate went on for months. The sad 
part about it is, when we came to the appropriations bills, the 13 
appropriations bills, suddenly there was no money. Even though there 
had been $800 billion set aside, supposedly for tax cuts, there was no 
money to take care of the expenses that were necessary in the funding 
of this country.
  Day after day we were talked to--some say talked down to--by our 
friends on the other side of the aisle, that the economy would come to 
a grinding halt if we did not pass this $800 billion tax bill. Of 
course, that has not happened. Not only did the minority not buy the 
plan of the majority, but the American people did not buy the plan. In 
any poll taken, the American people decided there were more important 
priorities.
  What were those priorities?
  Education--when you have 3,000 children dropping out of high school 
every day, you would think that would be a priority.
  Social Security is a priority. We have to make sure in the outyears 
Social Security is as good to people as it is today. Social Security is 
going to be doing just fine until the year 2035, maybe 2036. But after 
that period of time, people will only be able to draw 75 percent or 80 
percent of their benefits. We need to make sure after that time they 
can draw all their benefits.
  We have to make sure Medicare is taken care of, that we do something 
on this program that has been in existence for 35 years to take care of 
people who need prescription drugs; that is, all seniors. The average 
senior over age 65 fills 18 prescriptions a year. So we have to make 
sure Medicare, a very important program that has done a great deal to 
help the American senior population, that has allowed them to live 
longer and live more productive lives--we have to make sure that as a 
component of that there are some benefits for prescription drugs.

  We have to make sure the debt is paid down. During the Bush-Reagan 
years, we accumulated a huge debt of some $5 trillion. It is time we 
started paying down that debt. We are not going to have the rosy 
economic scenario we now have forever. We are in the longest economic 
growth period in the history of this country. We are now in the 108th 
or 109th month, but that does not mean it will go on forever. It will 
not. I hope when the economic downturn comes, we will have paid down 
that debt and not have voted for irresponsible tax cuts.
  It is interesting that the demagoguery and rhetoric has not stopped. 
It is at full blast--again, talking about tax cuts. Governor George W. 
Bush has recently proposed tax cuts which would add up to $1 trillion 
over 10 years. House Majority Whip DeLay from Texas--Congressman 
DeLay--last week, when asked about this, said let's do that and even 
more. He wants even larger tax cuts than George W. Bush has called for. 
I think there could be no better example of ignoring the wishes of the 
American people and ignoring what the economy needs.
  As justification for this $1 trillion worth of tax cuts over programs 
such as saving Social Security, doing something about education, 
Medicare, and of course doing something about the national debt, the 
Governor and others in the majority continually point to the 
overwhelming tax burden on the American people. I imagine there were a 
few people around America this past Sunday wondering why have we been 
talking about that after reading newspapers all over America.
  A column in the Washington Post from the front page reads: ``Federal 
Tax Level Falls for Most; Studies Show Burden Now Less Than 10%.''
  This was not a partisan poll put out by the Democrats or some liberal 
think tank. This information is from a series of studies by liberal and 
conservative tax experts. It shows that taxes are at their lowest point 
in more than 40 years; Federal income taxes are at their lowest point 
in more than 40 years.
  I ask unanimous consent the article that appeared in the Washington 
Post and other newspapers around the country be printed in the Record.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

               [From the Washington Post, March 26, 2000]

Federal Tax Level Falls For Most; Studies Show Burden Now Less than 10%

                           (By Glenn Kessler)

       For all but the wealthiest Americans, the federal income 
     tax burden has shrunk to the lowest level in four decades, 
     according to a series of studies by liberal and conservative 
     tax experts, the Clinton administration and two arms of the 
     Republican-controlled Congress.
       Each of the studies slices the data in different ways, but 
     the bottom line is the same: Most Americans this year will 
     have to fork over less than 10 percent of their income to the 
     federal government when they file federal income taxes.
       The Congressional Budget Office estimates the middle fifth 
     of American families, with an average income of $39,100, paid 
     5.4 percent in income tax in 1999, compared with 8.3 percent 
     in 1981. The Treasury Department estimates a four-person 
     family, with the median income of $54,900, paid 7.46 percent 
     of that in income tax, the lowest since 1965. And the 
     conservative Tax Foundation figures that the median two-
     earner family, making $68,605, paid 8.8 percent in 1998, 
     about the same as 1955.
       Federal income taxes are so low for so many Americans that 
     it is little wonder many voters place tax cuts near the 
     bottom of their priorities in many opinion polls.
       ``It's a shocker,'' said Bill Ahern, spokesman of the Tax 
     Foundation, of the group's calculation that families paid 
     just 8.8 percent of their income in federal tax. Low federal 
     taxes make it harder to make a case for tax cuts, he added. 
     ``With the lower- to middle-income taxpayers paying so little 
     . . . there won't be pressure'' for change.
       George Velasquez agrees. ``I don't have any complaints on 
     the federal side,'' said the 29-year-old network engineer as 
     he left an H&R Block office in Falls Church last week. 
     Velasquez, who says he makes about $50,000, said he got hit 
     with unexpected state taxes

[[Page S1697]]

     when he moved recently, but thinks his federal taxes are 
     fair.
       The low effective rates are the result of years of 
     tinkering with the tax code by Congress and various 
     administrations--rates were cut in the 1980s, millions of 
     Americans were removed from the tax rolls in 1990s by an 
     expansion of a tax credit for the working poor, and a bevy of 
     tax credits for children and education was added in 1997. 
     More than one-third of eligible taxpayers pay no income 
     taxes, according to the congressional Joint Committee on 
     Taxation.
       These effective tax rates don't include payroll taxes to 
     fund Social Security and Medicare, which have risen since the 
     1970s, now taking on average about 9 percent of income, the 
     CBO says. Most Americans, however, now receive far more in 
     benefits after retirement than they paid while working. 
     Federal excise taxes for such items as alcohol, gasoline and 
     cigarettes--on average 1 percent of income--also aren't 
     included; neither are state and local taxes.
       But federal income taxes are a key point of contention 
     between Texas Gov. George W. Bush and Vice President Gore in 
     the presidential race. Bush has proposed a tax cut estimated 
     to cost from $1.1 trillion to $1.7 trillion over 10 years as 
     the centerpiece of his economic plan, much of it aimed at 
     cutting tax rates for all taxpayers.
       Gore has countered with what is now $350 billion in tax 
     cuts targeted at middle-income Americans. The size of Gore's 
     package has grown in recent months as the vice president has 
     added tax breaks aimed at what a spokesman describes as other 
     burdens, such as the rising cost of college.
       Neither man has suggested changing payroll taxes or 
     significantly altering excise taxes. Bush has called for 
     repealing 23 percent--4.3 cents--of the 18.4 cent federal gas 
     tax.
       ``I look at the data all the time,'' said Bruce Bartlett, 
     senior policy analyst at the Dallas-based National Center for 
     Policy Analysis, a conservative group. ``Taxes are never 
     showing up as a major factor. As far as people wanting a big 
     Reaganesque tax cut, I just don't see it. People are 
     satisfied with their economic situation.''
       In the latest Battleground 2000 poll, conducted March 10-13 
     by the Tarrance Group and Lake, Snell Perry & Associates, 
     only 6 percent of respondents listed reducing taxes as a very 
     important issue--behind restoring moral values, improving 
     education, strengthening Social Security and improving health 
     care.
       Celinda Lake, a Democratic pollster, conducted a series of 
     focus groups earlier this year that in part looked at 
     attitudes toward taxes. She said that in contrast to previous 
     years, ``there was a lot less energy'' to the tax issue, in 
     part because people are cynical about whether they will 
     personally ever get much from a tax cut.
       People appear more interested in government benefits that 
     would put money in their pocket--such as for prescription 
     drugs or college loans. Interestingly, Lake said, blue-collar 
     workers were more interested in tax breaks than more 
     affluent, college-educated workers who pay the bulk of taxes.
       There now are five tax brackets that range from 15 percent 
     to 39.6 percent, depending on income level. But deductions, 
     exemptions and tax credits help to dramatically reduce the 
     effective rate for many taxpayers. Bush has proposed 
     replacing the current brackets with four ranging from 10 
     percent to 33 percent because, as he put it earlier this 
     month, ``after eight years of Clinton-Gore, we have the 
     highest tax burden since World War II.''
       Bush acknowledged that polls show little support for tax 
     cuts, but said: ``I'm not proposing tax relief because it's 
     the popular thing to do; I'm proposing it because it's the 
     right thing to do.''
       Bush's assertion that the tax burden is so high is based on 
     dividing tax revenue into the nation's gross domestic 
     product. According to the Clinton administration's latest 
     budget, anticipated federal tax revenue from both corporate 
     and personal taxes will represent 20.4 percent of gross 
     domestic product this year, which is the highest since 1945.
       The booming economy has added millions of jobs to the work 
     force, boosting tax revenue, and many economists also 
     attribute the surge in tax revenue in part to increased 
     capital gains revenue from the booming stock market.
       But the gross domestic product, the broadest measure of the 
     economy, does not include capital gains income, thus 
     overstating the impact of increased capital-gains revenue. 
     And taxpayers making more than $200,000 pay more than three-
     quarters of all capital gains taxes, according to 
     calculations by the Institute on Taxation and Economic 
     Policy, which uses a computer model to calculate the impact 
     of tax policy for Citizens for Tax Justice, a progressive 
     organization.
       John Cogan, senior fellow at the Hoover Institution and a 
     Bush economic adviser, said the ratio of taxes to the 
     nation's goods and services is an accurate way to measure the 
     nation's tax burden. But he acknowledged that taxes have 
     declined for many low- and middle-income Americans.
       ``That's a point worth talking about,'' Cogan said. The 
     burden of paying taxes has mostly shifted to high-income 
     Americans while taxes have decreased for others, he said.
       The CBO estimates the wealthiest 20 percent of families 
     (with average income of $132,000) paid 16.1 percent of their 
     income in federal taxes in 1999--about the same as the late 
     1970s, before the Reagan tax cuts took effect. The top 1 
     percent (with average income of $719,000) paid more, 22.2 
     percent--but still far from the 39.5 percent top rate.
       Sen. William V. Roth Jr. (R-Del.), chairman of the Senate 
     Finance Committee, acknowledged that federal taxes have 
     declined for many working Americans. ``We made some progress 
     because of the Republican Congress,'' he said, ``and we are 
     very proud of that fact.'' But he said taxes are still too 
     high, citing the ratio of tax revenue to the gross domestic 
     product.
       In many of Bush's speeches, he expresses concern for the 
     tax burden of ordinary Americans, such as a waitress trying 
     to raise two children on $22,000 a year, as their incomes 
     increase. Larry Lindsey, Bush's chief economic adviser, 
     agrees that tax credits and the like have reduced effective 
     tax rates. But Lindsey said there is ``an egregious problem'' 
     of higher marginal rates--how much of additional income goes 
     to taxes--as the credits begin to phase out.
       Bush's World Wide Web site (www.georgewbush.com) includes a 
     ``Bush Tax Calculator,'' which also demonstrates how low 
     taxes are for most Americans. A family of four making $56,000 
     pays 8.3 percent of its income in federal tax, according to 
     the Bush online site, which Cogan said is based on the tax 
     code.
       The online site's calculator also says a single parent with 
     two children making $22,000 a year pays $110 in federal 
     income taxes, or 0.05 percent of her wages. But the Bush 
     calculator doesn't include the impact of the earned-income 
     tax credit, which results in a rebate of $1,700 for this 
     wage-earner. A single parent with two children actually 
     doesn't owe federal tax until her income reaches nearly 
     $27,000.
       Bush's plan would take many Americans who already pay 
     relatively low taxes off the tax rolls. But because Bush has 
     focused on cutting tax rates, the largest share of the tax 
     savings would go to Americans who pay most of the taxes.
       The institute on Taxation and Economic Policy estimated 
     that the wealthiest 10 percent of taxpayers would receive 
     more than 60 percent of the tax cuts in the Bush plan. 
     Someone making $31,100 would receive a tax cut of $501, about 
     1.6 percent of income, while a taxpayer making $915,000 would 
     receive a tax cut of $50,166--5.5 percent of income.
       The Bush online calculator doesn't calculate taxes--or tax 
     cuts--for people making more than $100,000.

  Mr. REID. I draw my colleagues' attention to this front-page story 
and a few of the statistics the article discusses.
  The middle fifth of American families with average incomes of $39,100 
paid 5.4 percent in income tax in 1999, down from 8.3 percent in 1981. 
Families with an income of $54,900 paid 7.46 percent in income tax, the 
lowest level since 1965. Even the median two-earner families making 
$68,605 a year were at 8.8 percent, paying their lowest level of income 
tax in 50 years.
  According to the Washington Post and other newspapers around America, 
even conservative think tanks see the writing on the wall. A 
spokesperson for the Conservative Tax Foundation said:

       It's a shocker.

  That was referring to the 8.8-percent income tax level.

       Low Federal taxes make it harder to make a case for tax 
     cuts. With the lower- to middle-income tax payers paying so 
     little there won't be pressure [for change].

  Bruce Bartlett, senior policy analyst at the Dallas-based National 
Center for Policy Analysis, another conservative group:

       Taxes are never showing up as a major factor. As far as 
     people wanting a big Reaganesque tax cut, I just don't see 
     it. People are satisfied with their economic situation.

  It is time we start addressing the real problems facing this country. 
Sure, we would all like less taxes, but let's look where the taxes are 
coming from. They are coming from State and local government, not from 
the Federal Government. Take a look at payroll taxes, but get off the 
income tax kick. The taxes are the lowest they have been in some 40 to 
50 years, according to your tax category. Even a Bush adviser 
acknowledges that taxes have declined for many low- and middle-income 
Americans. I don't know if this adviser for Governor Bush will continue 
working for him.
  The problem, which is what we have been saying, as quoted in the 
article:

       Federal income taxes are so low for so many Americans that 
     it is little wonder many voters place taxes near the bottom 
     of their priorities in many opinion polls.

  Why are our friends on the other side of the aisle not listening to 
the American people? The public continues to demand first things first. 
What are they? Save Social Security, especially when we have the budget 
surpluses which allow extending Social Security's long-term solvency. 
The fact

[[Page S1698]]

can't be ignored. We must do something about Social Security in the 
outyears. Republicans basically want to ignore Social Security, ignore 
the debt of $5 trillion, and squander this surplus with rhetoric which 
champions more than $1 trillion worth of tax cuts.
  Remember, we have the lowest taxes in some 40 to 50 years, according 
to your tax category, yet most of the rhetoric on that side of the 
aisle has been: Lower Federal income taxes.
  As I said on numerous occasions, paying down the debt is a tax cut 
for everyone. If we cut down the $5 trillion debt, which means we pay 
less interest every year as the Federal Government's biggest 
obligation, other than military, we would save billions and billions of 
dollars every month. It seems to me that is where we should put our 
priorities. Paying down the debt is a tax cut for everyone. Interest 
saved from paying down the debt could be credited to the Social 
Security and Medicare trust funds, which would extend their solvency 
and give us flexibility to target tax cuts. In other words, let's do 
tax cuts we can afford.
  Certainly, there are some tax cuts that are necessary. We can 
increase the standard deduction for both single and married filers. We 
can provide tax relief to married couples who suffer as a result of 
their having been married. We can offer a long-term tax credit, 
providing a deduction for long-term-care insurance premiums. In America 
today, people are living longer, more productive lives. As a result, 
there are a lot of people going to extended-care facilities. It has 
become a tremendous burden for people placed in these institutions. We 
need to provide some tax credits for people who buy insurance for their 
golden years. This tax cut makes it easier not only for the people who 
buy the insurance but for families who care for their elderly family 
members.
  We need to increase deductions to make health insurance more 
affordable and accessible, especially for self-employed Americans. We 
need to increase the maximum amount of child care expenses eligible for 
tax credit. These are targeted, reasonable tax cuts that would more 
evenly distribute the load.
  I think it is remarkable we can pick up the paper Sunday and get the 
good news. The good news is, Federal income taxes are the lowest they 
have been in America for 40 to 50 years. I think that says a lot for 
the 1993 Budget Deficit Reduction Act that passed without a single 
Republican vote; we passed it. The Vice President came to the Senate 
and broke the tie. As a result of that, America has been put on a long-
term economic upturn. Not only has there been great economic news in 
that the economy is doing well for a record amount of time but, in 
addition to that, taxes are lower than they have been in 40 to 50 
years.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, I understand we have 45 minutes in morning 
business set aside.
  The PRESIDING OFFICER. That is correct.
  Mr. DORGAN. Mr. President, if I could be notified after 12 minutes.

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