[Congressional Record Volume 146, Number 36 (Tuesday, March 28, 2000)]
[House]
[Pages H1455-H1461]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       EDUCATION SAVINGS ACCOUNTS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 1999, the gentlewoman from New Mexico (Mrs. Wilson) is 
recognized for 60 minutes as the designee of the majority leader.
  Mrs. WILSON. Mr. Speaker, I am the gentlewoman from Albuquerque, New 
Mexico; and I have been asked to lead a discussion this evening about a 
bill that will be coming to the floor of the House this week. The bill 
is H.R. 7, and it is about education savings accounts.
  What I would like to do tonight is talk a little bit what about they 
are, how the current law is set up with respect to education savings 
accounts, and what the proposed changes are that we are going to be 
considering on Thursday. Because there is quite a bit of misperception 
about what these changes will do. But before I do that, I would like to 
try to set this in the context of where we need to go in America with 
respect to public education.
  In 1900 in this country, at the turn of the last century, 15 percent 
of American adults had a high school degree. When we turned this 
century into the 21st century last New Year's Eve, 85 percent of 
American adults had a high school degree.
  The big difference, though, was that, back in 1900, a third of 
Americans still lived on the farm. They could get a good job and 
support a family without having a high school degree.
  My grandparents did not graduate from high school. My parents 
graduated from high school but did not go on to college. Like many 
Americans, I was the first generation in my family to go to college and 
get a college degree.
  But what was good enough for us and what was good enough for our 
parents or our grandparents is not going to be good enough for our 
kids. And the reason is that Americans do not work on the farm anymore, 
except for about 2 percent of us; and the jobs that will be available 
for our children who graduate in 2010, 2012 and beyond are going to be 
profoundly different than they were for us when we graduated from high 
school, in my case, over 20 years ago.
  They are going to require more education, more technical training, 
the ability to read and understand and solve problems, which means 
that, if we are going to make the 21st century just as much an American 
century as the 20th century was, we need to recommit ourselves as a 
Nation to public education.
  In my hometown of Albuquerque, New Mexico, a third of our students do 
not graduate from high school. We have one of the highest drop-out 
rates in the Nation. We can no longer afford to let any child lag 
behind; and so we have to recommit ourselves as individuals, as 
parents, as teachers, as administrators, as communities, and as a 
Nation to make sure that, by the end of the next decade, 95 percent of 
our children graduate from high school and three-quarters of them go on 
to college or technical training or into the military. We need to 
commit ourselves to a decade of dreams for public education.
  The bill that we are going to consider on Thursday is really only one 
little piece of that dream, but it is designed to encourage private 
investment in education and savings by parents and families and even 
corporations to invest in public schools and public education.
  What does this do? It is called H.R. 7, and it is the Education 
Savings and School Excellence Act. But it builds on something that is 
already in public law.
  Back in 1997, which was before I was elected to Congress, the 
Congress passed a law to establish education savings accounts.
  So what is an education savings account? About 110 million Americans 
now have IRAs. To put it in its simplest terms, an education savings 
account is an IRA for our kids' college education. The way that the law 
works now is that we can put money into an education savings accounts, 
into one of

[[Page H1456]]

these education IRAs, every year, up to $500, we can put into this 
account for each child that we have up to the age of 18.
  When that child turns 18, they cannot keep contributing into that 
account, but then the child can use that money that has been saved 
while he has been growing up to go to college.
  Now, they can use the money for a private college or a public college 
or even a technical school as long as they use the money before they 
turn 30. So a parent can put $500 a year, a kind of annual Christmas 
present to put in the education savings account to save for college. 
And the money that goes into it, they have to pay the taxes on the 
money that they earn to put in in the first place, but as the money 
sits there in that education IRA, they do not have to pay taxes on the 
interest that it earns. So the interest accrues tax free.
  Now, the money that is saved up in that education savings account can 
be used for tuition or fees or books or supplies or equipment and, in 
some cases, for room and board, as long as it qualifies under the 
rules, but only for post-secondary education, post-high school. It can 
be used for college. And it does not matter if it is a public 
university or a private university or religious school, as long as it 
is for post-secondary education, public, private or vocational.

  So that is what education savings accounts are. They have been in 
place as part of public law since 1997 in this country.
  There have been two previous attempts to expand education savings 
accounts in important ways. Both of the attempts were bipartisan 
efforts. In both cases, they were vetoed by the President.
  We are going to go back at it again. The principal sponsors of this 
piece of legislation on the Senate side are Senator Torricelli and 
Senator Coverdell of Georgia. Those two men have really led this effort 
to try to encourage savings and expand education savings accounts for 
more Americans.
  So what are the problems with the current bill and where do we want 
to go with this bill that we are going to be considering on the floor 
of the House this Thursday?
  Right now, a family can only put $500 a year per child into an 
education savings account in order for it to get the tax benefits, to 
not have to pay taxes on the interest in that account. $500 a year is 
not a lot of money when we consider how much college costs have 
escalated over the last 20 years.
  Indeed, if a family puts $500 a year starting when a child is born 
and does that every year until they are 18, even if they get 7\1/2\ 
percent interest or so, they really are going to only have about 
$15,000 in that account by the time the child turns 18 and is likely to 
go to college.
  Well, unless they are going to a State university where they get 
State subsidized tuition, that is not going to go very far when it 
comes to tuition and room and board and books and fees to pay for 
college.
  So the first thing that the bill will do that we are going to take up 
on the floor here on Thursday is to change that from allowing $500 per 
child in savings every year to allowing $2,000 per child, the same that 
we do now for regular IRAs.
  Now, what will that mean in terms of the amount that a family can 
save? Well, there have been some folks who have done some analysis on 
this and have gotten out their stubby pencils and computers to do 
interest rates, which I do not do very well. But if a family started 
saving $2,000 a year from when a child is born, by the time that child 
is in first grade there will be over $14,000 in that account. By the 
time that child reaches middle school, there will be $36,000 in that 
account. By the time they get to high school, assuming that they had 
not used it already in elementary and middle school, there would be 
$46,000 in that account.
  If that family put in $2,000 a year and did not withdraw any of it, 
by the time that that child graduated from high school and turned 18 
years old, was a college freshman, they would have almost $72,000 in 
college savings; and that would all have accrued with the interest tax 
free. $72,000 is a pretty good chunk of change to save for college and 
is something that I think most Americans would like to have when their 
son or daughter gets that important acceptance letter to go to the 
school of their choice.
  So it would expand the ability to save, and it would allow that 
savings to accrue at a higher rate so that it is more reasonable by the 
time that somebody finishes high school and gets ready to go to college 
from an expanded $500 per year per child to $2,000 a year per child.
  Now, the second thing that this bill will do on Thursday that we are 
considering and probably the most controversial aspect of it is that it 
would allow these education savings accounts to be used not just for 
college tuition but for tuition and fees and expenses associated with 
education for kindergartners through 12th-graders. That is a big 
change, but it is also I think an important change.
  The reality is that most parents contribute to their child's 
education around the edges, whether it is tutoring or summer school or 
buying books for the classroom or participating in the fund-raiser to 
buy new equipment for the playground.
  Encouraging that kind of savings and investment in schools and giving 
people a tax break for doing that is a good thing, and we should expand 
that ability to save and invest in public education from kindergarten 
through 12th grade.
  I see one of my colleagues, the gentleman from Missouri (Mr. 
Hulshof), has joined me here and is one of the principal supporters and 
sponsors of this piece of legislation, and I yield some time to him 
since he has worked so hard on it.
  Mr. HULSHOF. Mr. Speaker, I appreciate my friend from New Mexico 
yielding and especially for taking the initiative to really focus on 
what I believe should be a national dialogue, and that is the education 
of our kids.
  I am not embarrassed to admit that I am a 5-month-old parent. And, of 
course, as a new parent, one's attention begins to focus maybe on 
different priorities. I know in our household we have, and we have 
begun to think about the education of our daughter Casey Elizabeth.
  Here in Washington, as my friend knows, too often I think we begin to 
focus on or define our Nation's educational success by how many dollars 
that we put toward public education. If that were the yardstick, then I 
think the Republicans here in the House deserve great credit. Since 
1995, public funding education has been increased by 27 percent over 
those several years.
  But that is not how I think we should define educational success. To 
me, it is much simpler than that; that success is defined by how much 
our children learn. And, of course, I think key in that is trying to 
get parents to become more involved in the education of their kids.
  Now, as my colleague knows, as a mother, we cannot pass a law in this 
body that mandates parents' attendance at PTA meetings. Some wish maybe 
we could force that mandate on families, but that is not the role of 
the Government. But I think there are things that we can do. And as my 
friend has talked about, the bill that we have on the floor on Thursday 
this week, H.R. 7, I think is a key component. It is not the answer to 
all of our educational problems; but I think as far as parental 
control, we do provide some incentives, yes, through the Tax Code.
  Our idea of this bill is very simple. We think that the Federal tax 
should be eliminated if they are saving for education. As my colleague 
was pointing out just a few minutes ago, current law that this 
President signed into law, this education savings account, says that up 
to $500 a year can be contributed by a family member into an account.

                              {time}  1945

  But as you also very ably pointed out that even if, let us say, over 
the course of the lifetime of your child, from the moment they were 
born every year until they go to college, the money they would have 
saved for college is about $15,000 and that is assuming compound 
interest at about 7\1/2\ percent. So I think first and foremost, we 
have to sort of take that limit off to really encourage parents to be 
saving even more for the education of their kids.
  To me, the perfect bill that the President should sign into law would 
be,

[[Page H1457]]

number one, an elimination of the marriage penalty tax; and since most 
of that is about $1,400 more per couple, then that family with children 
can plug that money into an expanded education savings account. As you 
pointed out, the point is saving for higher education is important.
  And yes, perhaps the controversy in this bill as we are probably 
going to hear in less measured tones as we debate this bill in the next 
couple of days is, we think that elementary and secondary education 
expenses should qualify. If your first grader is having a tough time 
reading, why not use the proceeds of an education savings account to 
maybe purchase Hooked on Phonics to help bring your child up to the 
reading level that he or she should be in a particular grade. If you 
are having trouble with math, maybe a home computer or a computer 
program that might help a child learn math better, or maybe a foreign 
language. It could even be expenses like car pooling or transportation 
expenses. The beauty of an expanded savings account is, it is not the 
government saying how money should be spent. It is the parents. I think 
what a powerful ally that a parent can be working with a teacher in 
addressing the special needs of that particular child.
  Mrs. WILSON. I was just sitting here thinking about the tremendous 
opportunities and possibilities that this brings for more parents who 
are trying to work with a teacher, whether that teacher is in public 
school or private school or parochial school or wherever, to meet the 
individual needs of that child. It is not unusual for a teacher to say, 
well, we think this is what your child needs and he is not a special ed 
kid but there are some additional materials or some additional help 
that might be available and to be able to use tax-free money to do that 
so that you are reinforcing what the teacher and the school are trying 
to do with your child so that they can learn and achieve, whether that 
is kids who are gifted or kids who are having a little bit of trouble 
or even if your school does not have a foreign language program and 
your child is particularly interested in it, or there is not music 
available at the elementary school level and you can bring music into 
the schools, whether it is parents getting together to do it or a 
parent doing that individually alongside the school and wrapping 
educational experiences around a child.
  All of us have looked at, what are we going to do this summer. What 
besides Little League or AYSO soccer or swim lessons are we going to do 
this summer. There are tremendous opportunities for summer school for 
kids, whether your child needs some extra help or whether it is that 
enrichment opportunity that you have really just been working for and 
saving for. If parents are willing to work and save for that 
opportunity, we should not be penalizing them by taxing them before 
they do so.
  So this change that we are looking at Thursday is going to do a 
couple of things: Will go from $500 to $2,000 for the amount you can 
save per child per year. Will expand it, not just college expenses but 
kindergarten through 12th grade as well. Expenses so that if it is 
tuition or fees or materials or supplies or computers, whether they are 
in a public school, private school, home school, it does not matter. It 
would be kindergarten on up.
  The other interesting change, I think this is an important one when 
we talk about investing in education beyond what the government does at 
State, Federal and local levels, is that it will allow corporations to 
contribute to education savings accounts. The current law says that 
parents or family members can put money in a child's name in an 
education savings account. But this bill will expand that and say that 
if your employer wants to make an annual contribution to the education 
savings accounts for the children of its employees, it would be 
allowed.
  You can very easily see where that will become a potential corporate 
benefit that employees will look for, just as they look for health 
benefits and other kinds of things when they decide who they are going 
to be working for. I think that that provision could encourage 
corporations to really make those contributions, and that is 
particularly important for families that may not be able to save that 
full $2,000 a year, but their employer is going to help to make up the 
difference.
  Mr. HULSHOF. If the gentlewoman will yield on that point, not just 
businesses and corporations but not-for-profits would also be allowed 
under this expanded savings account to provide a contribution as you 
have suggested, perhaps for that low-income child. It could be a church 
who might establish on behalf of a parishioner an expanded education 
savings account to really provide an incentive for that child to 
continue to go on.

  One of the arguments that I hear and probably that we will hear more 
over the course of the debate on this bill is that allowing, and again 
we are talking about the interest buildup or the earnings, first of all 
these are after-tax dollars going into an education savings account and 
then the power of compound interest being used to create additional 
earnings, we are talking about allowing those earnings to accumulate 
tax-free if used for a qualified education expense.
  Now, one of the arguments against elementary and secondary education 
expenses is that only the affluent, or we are taking money away from 
public education. I think as my friend from New Mexico has the chart 
right next to her, it speaks volumes. The reductions that we would see 
in Federal education spending would be zero. No money would be diverted 
away from public education.
  In fact, the official scorekeeper that we work under, the 
Congressional Budget Office along with the Committee on Joint Taxation, 
says that we will have additional resources committed to the education 
of our kids coming from the private sector, that is, coming from 
families that we do not see now. In fact, they tell us some of these 
numbers. Fourteen million families would benefit from this expanded 
savings account, and about 11 million of those families have kids going 
to public school. So, in other words, we are committing even additional 
resources from the private sector, from the families for education 
expenses at the elementary and secondary education level.
  The other point I would make, current law restricts education savings 
accounts to be used just for public college, obviously a worthy goal, 
higher education, but that means education savings accounts are useless 
in addressing problems that are being experienced in elementary school 
or in high school. And so while you may try to get to college, it might 
be that if we could have parents working with teachers as allies in the 
lower grades, then children will be more prepared to enter college. So 
I think it is a little bit of a myth as far as the argument on the 
other side that somehow we are taking money out of the Federal 
education system. Just the contrary. We are committing more private 
funds, that is, private savings funds committed to the education of our 
kids, both primarily in public education and yes, perhaps private 
education or even home schooling. The idea is simple. We do not think 
any child should be discriminated against based on where he or she 
chooses to attend school.
  Mrs. WILSON. This issue of, well, would it be draining resources from 
the public schools in some ways. There are some people who disagree 
with this, but we have for many years in this country used the Tax Code 
to encourage people to do things, to encourage people to make choices, 
to encourage people to save for their retirement, to encourage people 
to invest and buy a home.
  What we are doing in this bill with the Tax Code is encouraging them 
to invest in the education of their children. While some people 
disagree with using our Tax Code that way, I have to say that I think 
it is a noble goal. The folks who work at the Joint Committee on 
Taxation have estimated that this kind of a program based on what is 
happening in other similar kinds of tax changes would result in $12 
billion of investment in our schools that is not there now. $12 billion 
nationwide, 70 percent of which would go to kids who are in public 
school to wrap those additional things around them that maybe the 
public school just could not directly afford but parents working 
together with teachers might be able to do. I think that that is a 
noble goal.
  There is one other change in the bill that I think is worth 
discussing a little

[[Page H1458]]

bit. Right now, many States have prepaid tuition accounts for State 
colleges. New Mexico has that kind of a system where you can decide to 
save pretax and prepay your tuition if you are sending your child to 
UNM or New Mexico State. There are probably 20 or so States that have 
similar things set up under State law.
  Under the current Federal law, you are not allowed to take advantage 
of the education savings account if in the same year you are taking 
advantage of the prepaid tuition account that your State may offer. In 
other words, you cannot do both for the same child in the same year.
  The piece of legislation that we will be voting on on Thursday 
eliminates that restriction. So if in New Mexico I have a child that I 
am determined is going to be a Lobo when he is 18 years old and go to 
the University of New Mexico, I can make a prepaid tuition contribution 
but I could also be saving money in the education savings account in 
that same year. It allows parents who are committed to making those 
contributions up-front and making those savings up-front to do both 
under Federal law for one and under the State tax law for the other.

  Mr. HULSHOF. In addition, and that is so critically important, what a 
popular idea that is in place in your State and in other States as far 
as prepaid State tuition plans, to be used again as a tool focusing on 
higher education.
  Here are a couple of other perhaps noncontroversial measures in H.R. 
7 that I think deserve some mention in addition to the prepaid tuition 
plans, ending that taxation on both public and private plans. We also 
help those that are saddled with heavy student loans. How many of us in 
this body perhaps have used student loans to invest in ourselves in 
education to maybe go on to higher education or to postgraduate 
studies. What we do to try to give some relief to those under that 
heavy burden of student loans is that we continue, we expand the 
student deduction, the loan interest deduction under current law, we 
expand that, allow more time for that deduction to be made possible.
  In addition, there is a lot of discussion about school construction. 
Interestingly as we debated this bill in our committee, in the 
Committee on Ways and Means last week, we had a representative from the 
U.S. Treasury, obviously from the administration, and I pointed out in 
a document that was printed in 1996 that the statement of the 
administration was they believed the construction of schools is a local 
initiative. Yet I guess over the course of the last couple of years, we 
have suddenly changed or at least the White House has changed into 
thinking that suddenly school construction and modernization should be 
a Federal initiative. Without getting into the merits of whether it is 
a State, and I happen to think it is a State and local initiative, in 
fact in my home county, Boone County, Missouri in the Ninth 
Congressional District on the April ballot, we will be going to the 
polls to decide a bond issue as it appropriately should be done at the 
local level.
  But what we also do is provide in this bill relief from some of the 
complicated rules called bond arbitrage rules that both States and 
localities use when they make that decision, when they go to the local 
voters and decide whether to renovate or to build or modernize their 
school structures, we provide some relief for them. That is also in 
this bill. Finally, we encourage the private sector to donate computers 
to schools. And so we have that provision in H.R. 7, as well. Probably 
not as controversial as some of the other things we have discussed.
  As a final point, and I see we have got one of our other classmates 
here, then I will yield to the two of you. You mentioned the policy, 
and I want to talk about the policy, about using the Tax Code for 
certain incentives. Let me tell you why I think that it is just good 
policy generally to encourage savings. Right now, and for those, Mr. 
Speaker, that may be wrestling with their 1040 forms and maybe have C-
SPAN on in the background, if you look at your 1040 form on line 8A and 
line 8B, you plug into, as far as part of your taxable income, your 
adjusted gross income, any interest you may have earned, whether on a 
certificate of deposit, whether it is on a savings account, the old 
traditional savings account or any dividends you receive, you have to 
add that obviously to your taxable income according to current law and 
Uncle Sam wants his share.

                              {time}  2000

  There is no wonder that we are the lowest savings Nation among 
industrialized countries. We have already precedent in existing law. We 
encourage people to put aside money after tax dollars for their 
retirement, with the Roth IRA, a very popular idea. That is, one puts 
aside one's after-tax dollars, it accumulates interest or earnings, and 
then it is not taxed when used for retirement.
  We had a provision that we sent to the President called the SAFE Act 
that would shield about the first $500 of interest or dividend income 
again, to help the small or moderate investor, not the Wall Street 
types that make a living at investment, but really trying to help 
middle-class families.
  Along that line, this education savings account, I think, falls right 
in that good tax policy, and that is trying to provide this incentive 
to encourage people, especially families, to plug away more money, 
whether it is putting nickels and dimes or a monthly set-aside from 
their paycheck into an education savings account for their child or 
children. Again, what could be more of a worthy exercise than to invest 
in your own children's future, not rely upon the Federal Government?
  Again, I commend the gentlewoman for bringing this issue to the 
attention of the full House. I look forward to the debate. I hope we 
can have the debate on policy; and I hope the rhetoric does not get too 
harsh or hot, although that may be asking for a lot; but nonetheless, I 
urge, Mr. Speaker, my colleagues to support H.R. 7 when it gets to the 
floor. I thank my friend for yielding me time this evening.
  Mrs. WILSON. Mr. Speaker, I thank the gentleman from Missouri for his 
leadership on the Committee on Ways and Means, the tax committee that 
deals with these bills. I also congratulate him on being a new father. 
I know that that brings a real focus to his commitment to a great 
education for all kids in this country.
  Now we are joined here tonight by one of my other colleagues, the 
gentleman from Pennsylvania, and I would be happy to yield him some 
time to talk about this issue.
  Mr. PETERSON of Pennsylvania. Mr. Speaker, I thank the gentlewoman 
from New Mexico, and I congratulate her on her efforts tonight to talk 
about this issue. I have been listening to both the gentlewoman and the 
gentleman from Missouri discuss this issue and my first thought is, how 
could anybody be against this. Why would anybody oppose this? The 
gentlewoman has talked about all of the new changes, expanding the 
limits, the usability, and tying it into the State prepaid programs 
that are already out there. All of that makes sense.
  But I think we ought to talk a little bit about why the President and 
the Vice President are opposed to this legislation and why they have 
vetoed this legislation twice. It just seems incredible to me that 
anyone could be opposed to this legislation.
  The interesting part, I find, is that when it comes down to the 
parents and the families who have accumulated this money to prepare for 
their children's future, someone in government wants to tell them what 
they can purchase and what they cannot purchase. It just seems so 
incredible.
  I am a product of public education; my children and grandchildren are 
going to public education, I think as the vast majority of Americans 
do. But it seems so farsighted to think that if parents would choose on 
how to spend the money they have saved, their families have put 
together, would be some threat to public education. But we know, 
because twice the President and the Vice President have vetoed this 
legislation because of that fear.

  I would use the example of maybe a young lady or a young gentleman 
that is in high school preparing to go to a certain college, and they 
find out they need to strengthen their English and so they want to take 
honors English, and maybe nobody in their family is really good in 
English so they go down the street and hire a tutor so that they can 
get into the college, get into the program they want. I am constantly 
talking to parents who are dismayed because their kids have good 
grades, but

[[Page H1459]]

some weakness that prevented them from getting the courses at the 
competitive university that they wanted to go to, and why they could 
not use a little bit of their savings account to hire a tutor down the 
street who might not have been in the public school system, might have 
been a university professor down the street who would be glad to 
assist. It just seems incredible to me that anyone would fear people 
saving their money to be able to use it for how they want to educate 
their child in some small way, other than the public system.
  Mr. Speaker, I know that when we debate this bill in a day or two, 
that will be the big issue, that this bill will be destructive to 
public education. Nothing could be further from the truth, because as 
parents plan and families save, sacred to education is family 
involvement. And if we have families involved, putting a little away 
for their grandchildren, their nieces and nephews, or an employer who 
is very futuristic and says I would like to help with your children's 
education, I mean these are all the sorts of things, helping Americans 
to be self-sufficient.
  Middle-class America can only get loans. If you have a decent income, 
you only get loans; you do not get grants, and college education is 
becoming more and more expensive. Young people and families are 
indebted for years. I have staff people who have been out of school for 
a long time and still have big education loans, paying on them monthly, 
because they made the effort to get a good education, grants were not 
available, they had to borrow all of the money, did not come from a 
family with cash, did not have the money in the bank. This will enable 
a lot more Americans to participate in the higher education system. It 
also will help them in the elementary years if they need some extra 
help, or if they need to go to a special school to strengthen art or 
strengthen music so that they can get into the famous program at some 
university that they want to get into. It will help them.
  To take away the options of parents like the President and Vice 
President want to do, in my view, is the basic argument. This whole 
thought concept is getting people to save for their future and the 
future of their children. I just find it incredible that anyone would 
think that we should then control how parents spend that money. Yes, 
they should spend it for educational efforts, but whether they would 
hire a private tutor or whether they would go to a private school for a 
short period of time or in the summertime take some summer classes and 
not be able to use money out of their educational savings accounts if 
they did not have the cash available just seems incredible to me. I 
will never understand the fear of giving Americans a choice once they 
have had the foresight to save for their children's education.
  Mrs. WILSON. Mr. Speaker, I thank the gentleman, and I appreciate his 
comments here tonight.
  We are talking about education savings accounts and a bill that is 
going to be on the floor this Thursday. It is called H.R. 7, and it 
would expand current law which allows education savings accounts only 
for college expenses and only allows a 500 per-ear, per-child 
contribution. The bill we are going to consider on Thursday has already 
passed the Senate; a very similar bill has passed the Senate. It passed 
the first week of March, so now this is our opportunity in the House to 
do the right thing with respect to allowing families to save for 
education.
  I would like to talk a little bit about some of the myths and some of 
the attacks that this legislation has been subjected to. I think we are 
probably going to hear more of it over the next couple of days here in 
the House. But the thing that bothers me about it is that it is like 
throwing chaff, it is just trying to throw any argument out there, even 
if it is not valid at all, just to try to block the legislation, when 
really a lot of it just is not true. I want to talk about it a little 
bit.
  One of the major attacks on this piece of legislation is that it is 
just another tax break for the rich. I think that that sentence is 
etched in marble somewhere around Washington. Whatever we want to do, 
it is just another tax break for the rich. The reality is that one 
cannot even qualify for an education savings account if one's family 
income, it starts to phase out at $150,000 a year. So this is for that 
section of folks who are middle-income Americans, the ones who do not 
qualify for the grants, the ones who are looking at huge college loans 
or incredible expenditures, particularly when one gets more than one 
kid in college at the same time, who want to plan for that in advance.
  So the Joint Committee on Taxation looked at this and their estimates 
are that 70 percent of the people who benefit from this have a family 
income of less than $75,000 a year. This is about saving for middle-
class kids. It does not affect the wealthy kids at all, really.
  The other interesting thing about that analysis is that three-
quarters of the kids are going to be going to public school. It is 
about giving families the incentive to save and wrap things around kids 
that the public schools may not offer.
  It is science fair season in New Mexico. I do not know how that is in 
Pennsylvania, but it is a really big deal in New Mexico. My son is in 
kindergarten in a public school in Albuquerque, and he is doing his 
first science fair project. It is not that big a deal in kindergarten, 
but for some of these kids who are in middle school and high school, 
some of these science fair projects are both a huge commitment of their 
time, but also a fair commitment in resources too. Would it not be nice 
to be able to use tax-free dollars that one had been saving for those 
kinds of expenses, or when one's kid gets to be in middle school and 
high school and joins the band and really gets committed to music and 
wants to take private lessons in addition to playing in the band or the 
orchestra. It seems to me that if one is willing to support that, one 
should have the option to use tax-free money to do that in an education 
savings account.
  So that is one myth, that it is for the rich. It is not. The rich do 
not even qualify, and 70 percent of the folks who are going to benefit 
from this make less than $75,000 a year, hardly rich in America.
  The second myth is that we are going to deplete money from the public 
schools, that this will all be taken away in some way for the public 
schools. That is just absolutely flat out not true. Frankly, I got 
involved in public life because of a commitment to public education and 
a belief that we have to improve public education and make sure that 
all of our kids are benefiting from public education.

  The idea that doing something like this would take away from the 
public schools really bothers me. I find that myth to be personally 
offensive, particularly given that we just passed a budget last week 
that will increase, yet again, the Federal commitment to education. Mr. 
Speaker, almost 10 percent this year in increased funds to education. 
Now, that is more than our State government has been able to do for the 
last several years, and we will continue our commitment to funding 
schools. But we should also do things that encourage corporations and 
nonprofits and parents to save and invest in public education too. That 
is, I think, good public policy.
  The quote here that I have up next to me is from United States 
Senator Bob Torricelli, who is one of the principal sponsors in the 
Senate. He makes it very clear: this is using private money. It is 
using a family's own resources. By our estimation, after 5 years, $12 
billion in private money will be used to educate children kindergarten 
to 12.
  This cannot be a bad thing. Yet, critics argue it is a diversion of 
money from public schools. Not one dime of money that is now going to a 
public school goes anywhere else but to that same school on that same 
basis. This is new money, private money, a net increase of $12 billion 
in education. That has to be a positive thing and it does not take a 
dime away from the school in your neighborhood.
  Mr. PETERSON of Pennsylvania. Mr. Speaker, if the gentlewoman would 
yield, if my math is still good, 75 percent of $12 billion would be 
those who oppose this legislation for the reasons we have talked about, 
their fear, are saying no to $9 billion that would flow into the public 
educational system from private families, not government money, but 
private money would say no to that because they could not be guaranteed 
every dime of it.
  Mr. Speaker, I had a father yesterday just really upset because his 
son was

[[Page H1460]]

unable to attend a Pennsylvania college that he and all of his family 
had graduated from. He had very high grades, but he was weak in art and 
music. And if he would have known that, he would have had him tutored, 
but he had taken all the art and music that was available to him. But 
for some reason, he, being unaware of that, was unable to enter the 
program at the school of his choice. His grades were just under 4.0, so 
it was not the total, it was the lack of some special needs. Here is a 
situation where they could have used some of the money they had put 
away for their children's future to prepare him so that he could enter 
the field.
  I do not think that is uncommon. I hear a lot of parents talking 
about how their children are doing wonderfully, but there is something 
missing in their local school program to allow them to be prepared for 
some very competitive national programs where they may only take 30 a 
year from across the country, and to enter that select rank, they have 
to have all of the credentials that that university requires. In those 
situations, they talk about again taxing the rich. The middle class, 
many of them are so dedicated about preparing their children for their 
future and really sacrificing.

                              {time}  2015

  I have had friends who really were poor for a decade, and yet they 
had a good income because they had two and three children in college at 
the same time. By the time they wrote those tuition checks year after 
year after year, they were driving a much older car than they used to, 
they were going without any new furniture, they were taking smaller and 
shorter vacations, but their priorities were to educate their 
youngsters. They can call them rich because they have a good income, 
but by the time they pay three college tuitions, they are poor when it 
comes to spending dollars for other things.
  So I guess I still go back to the turning away of $9 billion of 
investment in public education because $3 billion might go to private 
education. That seems to me to be very shortsighted and just not having 
one's eyes on the ball and not looking at this in the big picture. 
Because we all know that public education, probably in our lifetime, 
will continue to provide the education for most of our youngsters.
  Mrs. WILSON. I thank the gentleman for his comments.
  There are some other myths I think we are going to hear some more 
about. There is one that the gentleman started to touch on. That is the 
issue of, well, this will just mean that money is going to private 
schools and it is going to go to parochial schools, and not only is 
this wrong as a matter of public policy, but it might be 
unconstitutional. That is also, I think, kind of a red herring. This 
passes all of the constitutional tests because the benefit accrues to 
the family and the child. They decide what to use that money for.
  I find it amusing that we could say that the current law, which 
allows education savings accounts to be used in saving, and a child can 
go to Notre Dame, but it would be unconstitutional to use that same 
money to send that child to St. Pious High School, which is a Catholic 
high school in my district. It is fully constitutional and complies 
with all of the constitutional mandates for use of public funds.
  This is not about vouchers, though some people are going to argue 
that, as well. If we are allowed to take money after we have paid taxes 
on it and put it in an account so it can accrue interest without paying 
taxes on that interest, that is our money. We use that money. The only 
thing that is different about it is that they are not going to take the 
taxes on it if we say we are going to use that money to invest in our 
child's education.
  That is the only thing that is going on here. This is not about 
taking public money and funding private or parochial schools. So I 
think that that is an important myth that we are going to need to deal 
with over the next couple of days.
  I think there is another myth, too. It is really kind of the one that 
is not spoken. We might as well just come right out and say it.
  There are folks who believe that there is a desire to fund these 
kinds of things and not public schools; that what this really is about 
is about changing the debate and changing the flow of funds and 
abandoning public education.
  Nothing could be further from the truth. I think this Congress over 
the last 4 or 5 years has reaffirmed its commitment to great education 
in this country and great public schools in this country, because every 
one of us in this room, no matter what party we belong to, benefited 
from public education, for the most part. There are some folks here on 
both sides of the aisle who went to Catholic schools, but we all know 
that America would not be the great Nation it is today without a strong 
public school system. We have known that in this country, that 
democracy cannot thrive without a great system of public schools.

  The biggest chunk of Federal funding for education here goes into 
special ed, the IDEA funds. I think it is important to talk about a few 
facts here on the commitment to education.
  The brown bar here is what the President has requested since 1996. In 
every single year, Congress has appropriated more funds for special 
education than has been requested in the President's budget. We will do 
that again this year. In the budget resolution we passed last week, we 
will increase special education funding this year by $2.2 billion, and 
$20 billion over the next 5 years. We are committed to a great system 
of education.
  But that also means doing things with the Tax Code to encourage 
others to be equally committed, whether they are corporations or 
whether they are parents trying to plan for the future of their 
children.
  The final myth is that what this really is about is encouraging folks 
to leave the public schools; that this will somehow make it possible 
for a kid who is in third grade in Albuquerque to go to St. Mary's, 
rather than to the local public school. That may happen on the margins, 
but frankly, it is really probably not enough to make that happen in a 
large sense. If that is what works for that kid, I am not sure that 
that bothers me at all.
  We are not going to see, no matter what we do, a huge exodus from the 
public schools. The reason is that parents want a great school in their 
neighborhood. They want to be able to have their kid walk to a school 
that is safe, that will educate them for the 21st century. They do not 
want to abandon the public school system any more than we do in this 
body. But what they do want to do is be able to spend some money on 
their child's education without being penalized for it under the Tax 
Code.
  Mr. PETERSON of Pennsylvania. Mr. Speaker, if the gentlewoman will 
yield, she mentioned the IDEA funding, special education funding. I 
think Congress has really stepped up to the plate there.
  When this legislation was passed, special education is a mandate that 
every child receives the same kind of education, the same quality of 
education. Some people with serious problems are a lot more expensive 
to educate than those who do not have those difficulties.
  Yet, just back in 1996, if I look at this correctly, we were only 
paying 3.5 percent of special education costs. If my memory is correct, 
the legislation that was passed by this Congress before that some years 
said we would pay 40 percent of the costs of special education. We were 
at 3.5, and I think we are up to, looking at that chart it is a little 
hard to tell, it is over 6. So we have almost doubled the Federal 
commitment.
  These are dollars that follow the student and go to all of our 
schools. That is not true of all Federal money. Much of the Federal 
education dollar is not spread equally across this country. Some large 
urban districts do pretty well. There are a few suburban districts 
which do pretty well. I have lots of districts that get 1 percent of 
their funding. Yet, we say we are funding 6.8 percent of education.
  So the biggest frustration I have had with Federal programs is the 
complexity. To reach them, you have to have consultants or you have to 
have specialists on your staff. My rural school districts often do not 
have an assistant superintendent, let alone a grantsman. They do not 
have educational consultants nearby, because it is rural. So many of my 
districts have no idea how to apply to the hundreds of Federal programs 
that are available, and do not have the expertise to do that.

[[Page H1461]]

  I will find an occasional anomaly where you will have a school 
superintendent who worked in a suburban district who was very good at 
getting Federal money and he brought that expertise to the school with 
him, but that is the rarity. That is not common.
  With the IDEA, when we fund that instead of another Federal program 
such as construction of schools, which would have only gone to a few 
schools in this country, the average school never would have seen it, 
which would have complicated the process, which would have made 
building of schools more costly, we need to free up those Federal 
education dollars and get them into the classroom, and get away from 
all the bureaucratic mumbo-jumbo that is there.
  But back to the issue that we were talking about, the education 
savings accounts, again, it is our chance to give people a chance to 
prepare for their children's education and have some money set aside 
that can grow tax-free. They have paid the tax on it first, but it can 
grow tax-free. Then they can choose to use it when they feel it is 
necessary and they cannot afford it out of their general income.
  Under the President's and the Vice President's plans, we might have 
someone who is a senior. The parents do not have the money for a 
special needed program so their daughter or son could go to a certain 
school of their choice, and they would miss that opportunity, because 
it would be somehow wrong for them to choose to pay for that program 
that would prepare them for their college education.
  Again, as I said when I had listened to the earlier discussion, as 
the gentlewoman began this evening, how anybody could really oppose 
this bill, how anybody could be fearful that this is going to crush 
public education or harm public education when it has the potential of 
contributing $9 billion to public education is just not being honest.
  I think when we have this debate on Thursday, I hope that people will 
be honest, because if they are honest they will not be making those 
kinds of statements. Allowing parents to save their money and let it 
grow and then spend it on their child for educational purposes that 
they think is appropriate is exactly how America should function. To 
oppose this legislation, I think they are saying, parents, you do not 
know how to spend your money that you have saved for your children, and 
just because we did not charge you taxes on the increase in value, you 
cannot spend it where you think it ought to be spent.
  That is taking control from our families and putting it in Washington 
bureaucracy, in a Washington educational establishment that in my view 
is afraid of something that they should not be afraid of at all.
  Mrs. WILSON. I thank the gentleman from Pennsylvania. I thank him for 
joining us here tonight.
  Just to sum up before the hour ends here, we have been talking about 
the education savings accounts. We are going to be having a bill on the 
floor of the House on Thursday about education savings accounts. They 
exist under current law, but they are limited to only $500 a year per 
child. They can only be used for college expenses.
  We would like to make some changes to that. The Senate has already 
passed a bill, and we are going to work on it and hopefully pass it 
here on the floor of the House on Thursday, that would do a couple of 
things. It would allow you to save not $500 a year per child but to put 
$2,000 per year per child into that account and allow it to grow, allow 
the interest to accrue without paying taxes on that interest.

  We are going to try to extend it from college expenses down to 
kindergarten through 12th grade and college expenses, so it can cover 
tuition or tutoring or supplies or computers or books, whether that is 
for a child in public school or private school or parochial school or 
home school.
  The estimates are that 70 percent of the kids who are going to 
benefit from that at the elementary and secondary level are going to be 
in public school, and that parents will use those funds to wrap things 
around a child that they may not be getting, or they may be having 
trouble with in public school.
  The third change that the law is going to try to make on Thursday is 
to let corporations or nonprofits contribute to education savings 
accounts set up for low-income kids. One of the criticisms is that 
there is really no advantage to this if you are low-income or low 
enough income that you are not paying taxes.
  Of course, those generally are the kids who qualify for the grants to 
go to college in the first place. It is middle-income families that are 
really strapped when it comes to paying for education expenses.
  The other thing that the change will do is for those States and for 
those families who are making pre-paid college tuition payments who 
have set up an account to go to State school, as many States already 
have, they would be able to contribute to their educational savings 
account for that child, also. They would not have to choose either one 
or the other. That change will be in the law that we hope to pass on 
Thursday.
  They still will not be able to qualify for this if they are rich. 
They will still have to save and pay interest on the savings if they 
are making over $150,000 a year as a family. But this is really 
targeted towards middle-class Americans, to the kids who are wondering 
when they are in high school how they are ever going to pay for 
college, and to the parents who are despairing about the same thing. 
Those are the families that need the help and the encouragement through 
the Tax Code to invest in education.
  I started out talking this evening almost an hour ago now about our 
commitment to public education and our commitment to our kids in the 
21st century. What was good enough for us and what was good enough for 
our parents and for our grandparents is not going to be good enough for 
our kids. We need to redouble our efforts and redouble our commitment 
to education for our children.
  Ten years from now, I hope that we are standing here able to 
celebrate the reality that 95 percent of our kids are graduating from 
high school and three-quarters of them are going on to college or 
technical school or into the military.
  We are not there yet, but we cannot afford to leave any child behind. 
No child must be left behind. We have to narrow the gap between rich 
and poor and black and white and brown, because in America, we will not 
have a 21st century that is an American century, just as much as the 
20th was, unless we do.

                              {time}  2030

  I want to thank my colleagues for joining me here this evening.

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