[Congressional Record Volume 146, Number 46 (Wednesday, April 12, 2000)]
[Senate]
[Pages S2568-S2575]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      WAIVING THE MARRIAGE PENALTY

  Mr. GRAMS. Mr. President, I want to take a few minutes to follow the 
Senator from Texas and talk about one of the most important issues we 
are going

[[Page S2569]]

to be considering this week. Especially for young families, this could 
be one of the most important issues we are going to vote on maybe this 
year. That is the question of waiving the marriage tax penalty.
  The Senator from Texas has done an excellent job in laying out some 
of the concerns, some of the questions, and some of the boundaries of 
how this is imposed and who is paying this tax.
  Is it a fair tax? When you make a commitment to somebody to get 
married, should you also have to somehow make a commitment to Uncle 
Sam? And that commitment is to pay higher taxes. That is not fair. It 
would be like going into a store and buying a suit. The suit is $100. 
And they ask: Are you married? You say yes. They say: Well, that will 
be $150.
  Why would we pay more? Why would we penalize someone just because 
they are married or if they are single?
  I also want to give a lot of credit to Senator Kay Bailey Hutchison, 
the other Senator from Texas, for all the work over these last couple 
of weeks--working with her and others to highlight the problems with 
the marriage penalty, whom it affects, and how much money it really 
means to those couples.
  We just held a news conference outside the Capitol. Among those 
speaking were, of course, representatives of a number of groups that 
represent working families across this country that are there 
supporting it, along with the Senators who were there to support it; 
but I think most importantly there were three couples who also came to 
tell their story, why they thought getting rid of this marriage tax 
penalty was so important, how they urged Congress to pass this bill, 
and not only urged the Congress to pass it but urged President Clinton 
to sign this into law.
  Their stories were about young couples with one child and expecting 
another and how, after they are married, they look at the tax forms and 
find because they are married--young families not making a lot of 
money--their tax this year is going to be about $1,100 more because 
they are married--nearly $100 in penalty every month for this young 
couple.
  Another couple from Maryland talked about the penalty they have--well 
over $1,400 a year. Again, why? Because they are married.
  Go to the Tax Code, to the page referring to you, and look down the 
lines, and if you are married, there is a penalty.
  As one man said, at many weddings across the country today there is 
an uninvited guest. That uninvited guest is the tax man. He says: Good, 
you are getting married; when you fill out your tax forms this year, 
you will pay more to Washington in taxes.
  Some in the Senate who say we don't need to repeal this marriage tax 
penalty. As Senator Gramm of Texas says, some say they are rich people; 
they can afford to pay this tax. Don't give them this break. They are 
rich.
  They are the ones who are advocating somehow Washington needs these 
dollars more than the couples.
  There are over 21 million couples across the country penalized at an 
average of $1,400 a year just because they are married. A young couple 
Senator Craig and I will talk about, when Senator Craig comes back to 
the floor, has a story I have heard a number of times; that is, the 
couple planned on marrying toward the end of the year, but after 
filling out their taxes and comparing it to what they would pay in 
taxes next year because they were married, they have decided to put the 
wedding off at least for a couple of weeks beyond the December 31 date 
so as a couple they will not be penalized because they are getting 
married. This is a young couple who have made a decision based on 
economics that because Uncle Sam wants to take a bigger bite out of 
their wallet, they are going to have to put off their plans to get 
married for at least several weeks just to get around the corner.
  We have heard stories of friendly divorces where people have actually 
decided to have a friendly divorce so they save some money. Or the 
story of the 78-year-old man who called his wife of over 50 years and 
said: Do you want a divorce? She said: What are you talking? He said: I 
am at the tax man's office and if we get a divorce we could save a lot 
of money.
  They didn't do it, but it is unfair that the couple is having to pay 
more dollars in taxes because they are married.
  There are going to be stories during this debate, as the Senator from 
Texas pointed out, that somehow there is a marriage bonus, many people 
on one side are getting this bonus because they are married; or the 
couple on this side who is being penalized. Somehow that is supposed to 
wash out and be fair and even. I don't think that is true. These 
families should not be overtaxed, incur a tax penalty, only because 
they have decided they are going to get married.
  I hope, when we consider this legislation this week, we consider 
these millions of families across the country who are paying on average 
about $1,400 a year. Nearly $30 billion will be collected for 
Washington this year from these families. There is a belief that 
Washington needs this money more than the families do to raise their 
kids, to buy the clothes, to buy the food, to pay for the mortgage, to 
put away money for the education of their children. All this is so 
important, but Washington needs it more.
  Several years ago, President Clinton was asked at a news conference 
if he thought the marriage tax penalty was fair. He said, no, it is not 
really fair, or something to that effect. But the underlying message 
from the President was, even if it is not fair, Washington can use this 
money a lot more than the families can. Washington needs these dollars 
more than the families need these dollars.
  I hope, when we get a chance to vote on this, we remember these 
families struggling to make ends meet, families looking for that extra 
dollar they can put into a savings account for their child's education, 
or just maybe buying something extra, maybe putting money away for a 
vacation or a night out for pizza, whatever is important to them. I 
think $1,400 a year speaks loudly for them.
  As I said, Washington might believe it needs the money more than 
these families. However, if we have the families on the floor of the 
Senate, and one by one ask them if this is an important bill, are these 
dollars important to your family, could these dollars help out in your 
budget decisions, or should we give the money to Washington and hope 
and pray that Washington will give a few of the dollars back? I think 
if we leave the dollars in the pockets of the families to begin with, 
they will make the best decisions and they will not have to look to 
Washington or ask Washington or beg Washington for a few of the dollars 
to help them raise their families.
  I defer to my colleague from Idaho.
  Mr. CRAIG. Mr. President, I will be brief. I see our colleague from 
Illinois on the floor. I stepped back to do this colloquy with my 
colleague from Minnesota.
  I ask the Senator from Minnesota, hasn't the marriage penalty earned 
a special contempt in our eyes from a firsthand experience involving 
our two offices?
  Mr. GRAMS. The Senator from Idaho is correct. Two young people who we 
care deeply about, one a dedicated employee in my office and one an 
employee in the office of the Senator from Idaho, are among the latest 
victims of this insidious provision of the Tax Code.
  One of my legislative assistants is a young man from Minnesota. He 
worked for me in Minnesota and also here in Washington, DC, for over 5 
years. He is engaged to be married to a young woman in the office of 
the Senator from Idaho, a native of Idaho who has worked in my 
colleague's office for almost 3 years.
  This young couple, very much similar to other couples all around the 
Nation, is moved by faithful affections, shared values, common life 
goals to become a family. But the Federal Tax Code is saying something 
different to this young couple.
  Mr. CRAIG. Mr. President, this couple are about the same ages as my 
own children. I say to everyone of my generation, they are a lot like 
all of our children and we want to see them succeed. They are like many 
young couples ready to start a new life together, as we have seen 
generation after generation.
  They originally planned their wedding date for late this autumn this 
year, but then friends actually started asking them, ``What about 
taxes?'' So they did an interesting thing; they sat

[[Page S2570]]

down and computed their marriage penalty. Guess what. They found out 
their combined incomes together as a married couple would cause them to 
have to pay out of their pockets an additional $1,400 more than they 
are currently paying as single people working on our two staffs.
  We are talking about average earners. In fact, the marriage penalty 
for our young Idaho-Minnesota couple is just about exactly the average-
sized marriage penalty American couples are paying across the country, 
about $1,400. That could be the cost of a honeymoon or a wedding gown 
or part of a college education, if properly saved and invested for 
children who might come as a result of this union.
  It is critically important we deal with this issue. Yes, they have 
delayed their wedding only a few weeks, but I asked my friend from 
Minnesota, does the Federal Government have any business forcing any 
kind of a decision such as this on families and couples?
  Mr. GRAMS. I answer the Senator from Idaho by saying it does not. 
Again, if there are those in the Senate who believe this is one of 
those rich families who can afford to pay this tax, believe me, these 
are not rich young people. They are a hard-working young couple but by 
no means rich. They will work hard and probably will get there someday 
but right now they are not.
  It is the furthest thing from fairness. That is the Federal Tax Code. 
Even if this couple escapes the marriage tax penalty this year, they 
will still have to pay next year and the next year and the year after, 
for most of the rest of their lives, unless we change that, as we are 
trying to do this week with the legislation before the Senate.
  We are not talking about abstract tax policy. We are not talking 
about economic theory. We are talking about average families, real 
families, who are hurt every year by the marriage tax penalty. In many 
cases, we are not talking about a delay of a wedding. We are talking 
about a Tax Code that says do not get married if your family may need 
that second income because the IRS has first claim on that income.
  I asked that member of my staff why they felt they needed to postpone 
their wedding a few weeks. He told me it did not make any sense for him 
and his fiance to fork over another $1,400 to the Federal Government.
  Some might think that is cheating the Government, but he didn't think 
so. He said they already pay too much in taxes, and they simply cannot 
afford to give the Government even more of what is rightfully theirs. 
My staff member said they can use that money for their wedding, they 
can use it to help take a trip, or to plan for their family's future, 
rather than giving it to the Federal Government at a time when the 
Government simply does not need it. I think he made an excellent point.
  Washington is taking this money from young couples at a time when it 
doesn't need the money and these young couples do. I think it is not 
only wrong but a disgrace that Washington has the large appetite for 
the hard-earned money of people across America who simply want to get 
married, start a family, and to begin their lives together.
  Mr. CRAIG. Mr. President, I do not think either my colleague from 
Minnesota or I could ever put romance in the Tax Code. But I hope we 
can stop the Tax Code from punishing folks such as the two young folks 
on our staffs we have talked about who are having to change their plans 
by postponing a wedding date by more than a month, contrary to their 
hearts, but because of the dictates of a heartless tax code.
  Mr. GRAMS. Mr. President, I fully agree with Senator Craig. I ask for 
an additional 3 minutes.
  Mr. DURBIN. Mr. President, I will not object, but I believe time is 
being taken from the Democratic time; is that correct? The Republicans 
have used all their time in morning business?
  The PRESIDING OFFICER. That is correct.
  Mr. DURBIN. In a spirit of fairness, I will yield because I do want 
to respond to some of these wonderful assertions, 3 minutes.
  Mr. GRAMS. Mr. President, to wrap up, our staff's story is not 
uncommon. There are many young couples who are forced to make similar 
decisions.
  The marriage penalty tax has discouraged women from marriage. It even 
has led some married couples to get friendly divorces. They continue to 
live together, but save on their taxes.
  Dr. Gray Burtless of the Brookings Institution recently found that 
the decline in marriage may be a major reason why income inequality has 
increased across families. He believes that many poor unmarried workers 
suffer because they do not have a spouse's income to help support their 
family.
  The Economist magazine offered a possible implication of this 
finding:

       Mr. Burtless's research suggests that the Clinton 
     administration, rather than fretting about skills and trade, 
     would do better to encourage the poor to marry and make sure 
     their spouses work.

  The family has been, and will continue to be, the bedrock of our 
society. Strong families make strong communities; strong communities 
make for a strong America. We all agree that this marriage penalty tax 
treats married couples unfairly. Even President Clinton agrees that the 
marriage penalty is unfair.
  Contrary to these American values, the Federal tax code contains 66 
provisions that can penalize married couples and force them to give 
more of their income to Washington. The Government's own study shows 
that 21 million American couples or 42 percent of couples incurred 
marriage penalties in 1996. This means 42 million individuals pay 
$1,400 more in tax than if they were divorced, or were living together, 
or simply remained single--more taxes than they should have.
  This was not the intention of Congress when it created the marriage 
penalty tax in the 1960s by separating tax schedules for married and 
unmarried people.
  If we do not get rid of this bad tax policy that discourages 
marriage, millions of married couples will be forced to pay more taxes 
simply for choosing to commit to a family through marriage.
  The marriage penalty is most unfair to married couples who are both 
working, it discriminates against low-income families and is biased 
against working women. As more and more women go to work today, their 
added incomes drive their households into higher tax brackets. In fact, 
women who return to the work force after raising their kids face a 50-
percent tax rate--not much of an incentive to work.
  The good news is, Congress is working hard to provide marriage 
penalty relief to married couples. American couples may finally get a 
congressional blessing this year to eliminate the unfair marriage 
penalty taxes if our colleagues from the other side cooperate and join 
in our effort.
  The marriage penalty repeal legislation which we currently debate 
would eliminate the marriage penalty in the standard deduction; provide 
broad-based marriage tax penalty relief by widening the 15-percent and 
28-percent tax brackets; allow more low-income married couples to 
qualify for the earned income credit; and preserve the family tax 
credits from the bite of the alternative minimum tax which allow 
American families to claim full tax credits such as the $500 per child 
tax credit, which I authored.
  Millions of American families are still struggling to make their ends 
meet. Repealing the marriage penalty will allow American families to 
keep an average of $1,400 more each year of their own money to pay for 
health insurance, groceries, child care, or other family necessities.
  Elimination of the marriage penalty tax brings American families one 
step closer to the major tax relief they deserve. It is particularly 
important to note that this repeal will primarily benefit minority, 
low- and middle-class families.
  Studies suggest the marriage penalty hits African-Americans and 
lower-income working families hardest. Repeal the penalty, and those 
low-income families will immediately have an 8-percent increase in 
their income.
  It is unfair to continue the marriage penalty tax. There is no reason 
to delay the passage of the legislation. I urge my colleagues in the 
Senate pass the marriage penalty relief legislation.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, what an interesting world we live in that 
a Republican Senator and a Democratic

[[Page S2571]]

Senator can look at a similar issue and see it in so many different 
ways. I sit here incredulous at times when I hear Republicans on the 
floor describe their view of the world. They live in a world where a 
young man and young woman fall in love and contemplate marriage and 
start to make plans for their future but stop cold in their tracks and 
say: Before we go a step further, we better go see an accountant.
  I can barely remember my courtship with my wife. It was a long time 
ago. But it never crossed my mind to go see a bookkeeper or accountant 
before I decided to propose marriage. We thought there was something 
more to it. We knew there would be good times and bad, and we were 
prepared to make whatever sacrifice it took to live a life together. 
When I listen to my Republican colleagues, it sounds as if they want to 
change the marriage vows from ``love, honor and obey, in sickness and 
in health'' to ``love, honor and obey, in sickness and in health, so 
long as there is no income tax disadvantage.''
  I do not think that is the real world of real people. Nor do I think 
we can amend the Tax Code in a way that is going to create a great 
incentive for people to run out and get married. I think there are more 
basic human emotions at stake. I think it trivializes a very sacred 
decision by two people making an important decision in their lives to 
suggest this is all about money and it is all about how many tax 
dollars you have to pay.
  I will readily concede there is unfairness in the Tax Code. Yes, I 
will concede it is fundamentally unfair for us to increase the taxes on 
two people because they are being married. But if you would listen to 
the Republican logic, they grab this hook and take off and run out of 
town with it.
  Their proposal on the marriage tax penalty is so far afield from the 
argument you have heard on the floor, you just cannot recognize it. In 
fact, let's describe the situation. If two people are about to be 
married and their combined income, when they file a joint return, puts 
them in a higher tax bracket, that is called a marriage tax penalty. 
However, if two people are married and their combined income puts them 
in a lower tax bracket, some would call that a marriage bonus. How does 
that happen? Perhaps one person in the marriage is not working and the 
other one is; the combined income on a joint return merits a lower tax 
rate. If both of them are working, their combined income raises them to 
a higher tax rate, a penalty.
  We, on the Democratic side, believe we should eliminate the penalty, 
eliminate the unfairness, eliminate the discrimination against married 
people under the Tax Code. You would think from their arguments on the 
floor that is where the Republicans are. But that is not what their 
bill says, not at all. In fact, when you look closely at their bill, 
you find two amazing things: First, on the whole question of the 
marriage tax penalty, there are about 65 provisions in the Tax Code 
that could be associated with a marriage tax penalty. The Republicans, 
who have given speeches all morning about the marriage tax penalty, 
address how many of the 65 provisions? In the most generous definition: 
three, leaving some 62 discriminations in the Tax Code against married 
people untouched in the Republican bill.
  The Democratic alternative addresses all 65.
  So after all these pronouncements about ending Tax 
Code discrimination, the Republican bill falls flat on its face when it 
comes to addressing the 65 different provisions in the Tax Code that 
apply. The Democratic bill applies it to all 65.

  The second thing that strikes you right off the bat is that the 
Republican bill goes further than eliminating the marriage tax penalty. 
It, in fact, creates an additional tax bonus for those not suffering 
the penalty. We are not talking about couples who are calculating how 
many days they have to wait to avoid paying taxes before they decide to 
get married. We are talking about couples who really benefit from 
marriage, and their taxes go down--the Republicans add more tax cuts 
for them.
  Everybody loves a tax cut. If we could give a tax cut to every 
American, that would be the dream of every politician. But the voting 
public in America, the people watching this debate, have the right to 
step back and say: How many of these tax cuts can we afford, as a 
nation, to give away? I think that is a legitimate point. The Finance 
Committee in the Senate writes the tax laws, the committee that sent us 
this bill that is pending. If you look at the minority views, from the 
Democratic side, you find many Democratic Members believe the best 
thing we can do with our surplus is to pay down the Federal debt. That 
is my position. That is the position of the President and most 
Democrats. Why is that important? Because today in America we will 
collect $1 billion in taxes from individuals, families, and businesses, 
and that money will be used not to educate a child, to pay a soldier, 
or to build a highway; it will be used to pay interest on old debt of 
the United States.
  If we do not change that, it means my grandchild, who is now about 4 
years old, will continue to pay taxes, to pay interest on debt incurred 
by my generation to build our roads and educate our kids.
  Some of us think the fairest thing we can do for future generations 
is to reduce the public debt with our surplus so that perhaps that $1 
billion tax bill each day will be reduced for future generations. 
Relieving this burden is a good gift to give our children and 
grandchildren.
  If one listens to the other side of the aisle, they do not want to 
take the surplus and pay down the debt. They want to dream up more and 
more tax cuts. The George W. Bush tax cut is so big, so massive, and so 
risky that last week not a single Republican would vote for it on the 
Senate floor when I called for a vote.
  He wants to spend--I hope I get these figures right--$1.3 trillion. I 
believe it was $400 billion or $500 billion more than the surplus. He 
obviously wants to reach deep into the Social Security trust funds to 
pay for his tax cuts or to cut spending on basic services for 
education, protection of the environment, and defense. Not a single 
Republican would stand up for that, and I am glad they did not. Most 
Americans know better.
  The Senate Republicans now have a George W. Bush tax cut; they want 
to come in and keep hacking away at the surplus instead of putting it 
to reducing the national debt, which on the Democratic side we consider 
to be the highest priority.
  The expected 10-year budget surplus, according to the Finance 
Committee, is $893 billion. It is amazing that in a short period of 
time, we can talk about those surpluses.
  If this bill passes, the Republicans will have already spent over 
half that in this session on tax cuts. Instead of lowering the national 
debt, reducing the tax burden on future generations, preserving Social 
Security and Medicare, they would have us continue on with tax cuts.
  Take a close look at the Republican marriage tax penalty bill. First, 
the tax cuts they offer are piecemeal rather than comprehensive. They 
are not fiscally responsible because we are not putting money away for 
reducing the national debt. More than half the taxpayer benefits in 
their bill go to people already receiving a tax bonus. These are not 
people discriminated against; these are people doing well under the Tax 
Code, and they want to give them an additional tax cut.
  They do not eliminate the marriage penalty, some 65 provisions; at 
best, they only address 3. Here is the kicker about which they do not 
want to talk. They have drawn their bill up in a way so that 5 million 
Americans will actually pay higher taxes. Their intent was to reduce 
the tax burden for married people. They went further than they had to. 
On the bottom, the last page, take a look around the corner. Five 
million Americans end up paying higher taxes under the alternative 
minimum tax.
  Isn't that something? Take a look at this on a pie chart to get an 
idea, from the Republican plan, how much is being spent on the actual 
marriage tax penalty relief: 40 percent. Of the amount of money they 
have put on the table--$248 billion roughly over 10 years in tax cuts--
40 percent of it goes to marriage penalty relief; 60 percent goes to 
people already receiving a bonus under the Tax Code for being married; 
and, of course, they raise taxes on 5 million Americans by increasing 
the alternative minimum tax.

[[Page S2572]]

  On the Democratic side, we think there is a better alternative. In 
the Finance Committee proposal, the one that will be before us, married 
couples will be allowed to file separately or jointly, whatever 
benefits them from a tax point of view. We fully eliminate all marriage 
penalties in the Tax Code --all of the 65 provisions. It is fiscally 
responsible. The price tag is about $150 billion over 10 years, a 
little over half of what the Republican proposal costs. It does not 
expand marriage bonuses, and it does not exacerbate the singles 
penalty.
  Why do we want to reduce this idea of tax cuts? First, we think we 
should be reducing the national debt, paying it down, which is good for 
the economy, as Chairman Alan Greenspan of the Federal Reserve tells 
us. In so doing, we strengthen Social Security; most Americans agree 
that is a pretty high priority for all families, married or not.
  We also believe strengthening Medicare, which is something the 
Republicans never want to talk about, is good for the future of this 
country, for the elderly and disabled. It is an absolute lifeline. We 
believe if we are careful and target tax cuts, there are some things we 
can achieve which are good for this Nation.
  One is a proposal which, in my State of Illinois, is very popular, 
which is the idea of the deductibility of college education expenses up 
to $10,000. It means if parents are helping their son or daughter 
through college and pay $10,000 of the tuition bill, they can deduct 
it, which means a $2,800 benefit to the family paying college expenses. 
That is going to help a lot of families in my home State. I certainly 
think that makes more sense than the Republican approach in the 
marriage tax penalty bill which provides a bonus to people already 
receiving the tax bonus.

  The other item we think should be the prime focus when we talk about 
targeting tax benefits relates to the prescription drug benefit which 
has been talked about for years on Capitol Hill. The Medicare plan, 
conceived by President Lyndon Johnson and passed in the early sixties, 
was a health insurance plan for the elderly and disabled which made a 
significant difference in America. Seniors live longer; they are 
healthier; they have better and more independent lives. I have seen it 
in my family; most have seen it in theirs. We want it to continue.
  There is a noted gap in that Medicare policy, and that noted gap is 
prescription drug coverage. Virtually every health insurance policy in 
America now covers prescription drugs but not Medicare. The Republicans 
have come in with all sorts of ideas for tax cuts, but they cannot come 
up with the money to pay for a prescription drug benefit under 
Medicare.
  We on the Democratic side think this should be the first priority, 
not the last. In fact, we put a provision in our budget resolution, 
with a contentious vote, I might add, to raise that to $40 billion to 
pay for it. It has already been cut in half in the budget conference 
committee. There is no will on the Republican side for a prescription 
drug benefit.
  They want to talk about a marriage penalty benefit for those who are 
not suffering a penalty. We want to talk about a prescription drug 
benefit for the elderly and disabled who are penalized every day when 
they cannot afford to pay for their prescriptions.
  Perhaps my friends on the other side of the aisle do not understand 
the depth of this problem. We have seniors in some States who are 
literally getting on buses and riding to Canada to buy prescription 
drugs because they cost half as much in Canada as they do in border 
States such as North Dakota, Minnesota, and Montana. They understand 
this. They want us to do something about it, but the first tax cut bill 
that comes before us since we passed our budget resolution is not about 
prescription drugs, it is about a marriage penalty bonus for people who 
are not facing a marriage penalty.
  I will tell you how bad this drug crisis is for seniors. Their 
coverage is going down. About a third of seniors have great coverage on 
prescription drugs, a third mediocre, and a third none at all. At the 
same time, the cost of these drugs is going up. There was a time when 
drug prices went up once a year. Then the drug companies realized they 
could hike their prices twice a year, then once a month, and then every 
other week. If my colleagues talk with pharmacists or doctors or 
seniors themselves, they will tell you exactly what I am talking about: 
Prescription drug costs are going up; coverage is going down.
  Take a look at the type of bills seniors are facing. Prescription 
drugs are a burden on moderate income beneficiaries: typical drug costs 
versus income. For a patient with heart trouble and osteoporosis, 
typical drugs cost $2,400, 20 percent of pretax income--20 percent if 
they are living at 150 percent of poverty. That is an income of about 
$12,000 a year.
  High blood pressure--one can see the percentages go up: 20 percent, 
26 percent; arthritis and osteoporosis, 31 percent; high blood 
pressure, heart disease, 40 percent. Heart disease and severe anemia, 
more than a person's income.
  In the city of Chicago, we had a hearing on prescription drug 
benefits. Some of the stories that were told were memorable. I can 
recall several organ recipients, transplant recipients, who came to us 
facing monthly prescription bills of $1,000 or $2,000. These people, on 
a fixed income, could not handle it. Medicare only covered it for 3 
years. They knew what the cost of prescription drugs meant because for 
them it was a matter of life or death. Without their drugs, after 
transplant surgery, they could not survive.
  There were some who were not in a serious condition but they could 
tell me about $200, $400, and $500 a month in prescription drug costs. 
Many times, seniors then make a choice: Will they take the medicine or 
not? Will they take half the prescription or the full prescription? 
Will they choose between food or medicine? That is a real world choice.
  We on the Democratic side think a prescription drug benefit should be 
the first priority out of the box. We believe we can pass marriage 
penalty relief that addresses the problem, solves it for the vast 
majority of couples affected by it, and leaves enough money for a 
prescription drug benefit. That is our alternative to the Republican 
proposal.
  The Republicans want it all to be on the side of marriage tax penalty 
relief and marriage bonus. We think prescription drug benefits should 
be part of it. That will be the choice on the floor for Democrats and 
Republicans.
  Let's hear your priorities, whether or not you think a prescription 
drug benefit should be a high priority. We certainly do.
  Look at how drug costs are growing each year. I mentioned earlier, 
they go up almost on a weekly basis: 9.7 percent in 1995; continuing to 
grow to 16 percent in 1999.
  Of course, drug companies are in business to make a profit. They need 
to make a profit for research to find new drugs. That is a given. I 
accept that. A company such as Schering-Plough, that sells Claritin, 
that spends a third of its revenue on advertising--how many times have 
you seen the Claritin ads on television, in magazines, in newspapers?--
Spends only 11 percent of their revenue on research. We realize the 
costs are going up for the advertising more than for the research.
  We believe that as these costs continue to rise, seniors will 
continue to be disadvantaged. As I have mentioned, seniors --most of 
them--are on a fixed income and really have nowhere to turn to pay for 
these drugs.
  Mr. President, 57 percent of seniors make under $15,000 a year; 21 
percent make above that but under $25,000. You get to the categories of 
seniors who make over $25,000, and that is about one out of five 
seniors; four out of five make less. So as the prescription drug costs 
go up, their ability to pay is being stretched.
  We think this prescription drug benefit then will have a great 
advantage for seniors. It will give them some peace of mind. The 
doctors who prescribe these drugs will understand that their patients 
will be able to afford them and take them.
  What is the alternative? If an elderly person goes to see a doctor, 
and the doctor prescribes a drug, and the elderly person goes to the 
pharmacy and finds out they cannot afford the drug, and they then do 
not take the drug, and they get sick enough to go to the hospital, who 
pays for the hospitalization under Medicare? Raise your hands, 
taxpayers. We all do.

[[Page S2573]]

  When someone gets sick and goes to the hospital, under Medicare, 
taxpayers pay for it. Yet we do not pay for the prescription drugs to 
keep people well and out of the hospital. That does not make any sense. 
It does not make sense medically. No doctor, no senior, would believe 
that is the best way to deal with this.

  So we are talking about changing this system for the prevention of 
illness and disease, for the prevention of hospital stays, and for 
reductions in the costs to the Medicare program. It is a real cost 
savings.
  It isn't just enough, as I have shown from these charts, for us to 
provide the benefit for seniors so they can pay for prescription drugs. 
We have to deal with the whole question of pricing, the cost of these 
drugs.
  How will we keep these costs under control? People in my part of the 
world, probably all across the United States, get a little nervous when 
you talk about the Government being involved in pricing. They say: I am 
not quite sure the Government should be doing that.
  They have a right to be skeptical. But let's step back and take an 
honest look at this. Is there price fixing now when it comes to the 
cost of drugs? Yes.
  Insurance companies contact drug companies and say: If you want the 
doctors under our insurance policy to prescribe your drugs, we will pay 
you no more than the following cost. That is a fact of life. The 
bargaining is going on.
  If these same drug companies take their drugs up to Canada to sell 
them, the Canadian Government says: You cannot sell them in Canada 
unless we can establish the ceiling for your prices.
  That is why the same prescription drugs--made by American companies, 
in American laboratories, by American technicians, approved by the Food 
and Drug Administration of the United States of America--when they 
cross that border, in a matter of minutes, they become a Canadian 
product sold at half the cost. That is why American seniors get on 
buses and go up there, to buy those drugs at half the cost.
  The Canadians speak out when it comes to the price of drugs, as do 
the Mexicans and the Europeans and every other industrialized country 
in the world.
  Oh, the Veterans' Administration here in the United States bargains 
for drugs, too. We want to get the best deal for our veterans. We tell 
the pharmaceutical companies: This is the maximum we will pay. They 
sell it to us.
  The only group that does not have bargaining power is the seniors and 
disabled under Medicare. They are the ones who pay top dollar for the 
drugs in America. Is that fair? Is it fair that the people of moderate 
income, of limited resources, are the ones who pay the highest price?
  That is why we on the Democratic side believe a prescription drug 
benefit should be the first tax cut that we consider, if you want to 
call it that, because it affects a program such as Medicare.
  But on the Republican side, no, it isn't a high priority. It isn't in 
this bill. There is no money set aside for it. There isn't a sufficient 
amount of money set aside for it in the budget resolution presently in 
conference.
  That is the difference. It is a significant difference.
  If you take a look at the prescription drug coverage by income level, 
here is what you find. Those who are below the poverty level, 35 
percent of them have no prescription drug coverage. For those barely at 
poverty and above, it is 44 percent. You will see that as you make more 
and more money, you have more and more likelihood that you will have 
drug coverage.

  The lower income Americans, the lower income seniors, and the 
disabled are the ones who do not have prescription drugs protection.
  We think the prescription drug benefit should really hit several 
principles. Any plan that does not is a phony plan. The plan should 
cover all. There should be universal coverage. Do not pick and choose. 
Every American should be allowed to be covered under this plan. No. 2, 
it should have basic and catastrophic coverage. No. 3, it should be 
affordable.
  We think if you put these together, you can come up with a 
prescription drug benefit the President has asked for, which the 
Democrats in Congress support, and which the Republican bill before us 
does not even consider.
  We will come back with an alternative, a Democratic substitute, to 
give this Chamber a choice. You can take the Republican approach and 
give tax cuts to those who do not need them or you can take the 
Democratic approach and eliminate the marriage tax penalty for the vast 
majority of young people who want to be married--all 65 provisions in 
the Tax Code--and have enough money remaining to deal with a valid 
prescription drug benefit.
  The difference is this. We buy the premise of what the President said 
in his State of the Union Address, that we happen to be living in good 
times but we should be careful about our future. If we are going to 
have surpluses, let us invest them in things that count. Let us pay 
down the national debt. Let us strengthen Social Security. Let us 
strengthen Medicare and target the tax cuts where they are needed the 
most.
  Some of the Republicans are running around Capitol Hill like folks 
with hot credit cards. They cannot wait to come up with a new tax cut--
needed or not needed. We think we have to be more careful. If we are 
more careful, if we show some fiscal discipline, we can not only avoid 
the deficits of the past, heaping them on the national debt, but we can 
be prepared for any downturn in this economy as well. I think that is 
fiscally conservative--a term Democrats aren't usually allowed to use 
but certainly applies in this situation--and it is fiscally prudent. It 
is the way a family deals with its situation. Before you run out and 
pay for that big vacation, you might think about paying off some of the 
credit card debt. I think a lot of families think that way. The 
Republican leadership in the Senate does not.

  Instead of paying down the debt of this country, they want to give 
away the tax revenues in a surplus, give it back to the people. They 
can give it back, but still we will collect $1 billion a day in 
interest on old debt.
  The provision we will be bringing before the Senate during the course 
of this debate will offer those who are truly fiscally conservative on 
both sides of the aisle a viable option. We are going to address all 65 
provisions in the Tax Code that have a marriage tax penalty effect. The 
Republican bill goes after the standard deduction and partially 
addresses two others: Rate brackets and earned-income tax credits.
  Among the 62 provisions the Republican bill does not address on the 
marriage tax penalty but the Democratic optional, single-filing 
alternative does are adoption expenses. Doesn't that make sense, that 
we wouldn't want to discriminate against couples who may want to adopt?
  Child tax credits, think about that for a second. A couple wants to 
get married. They may have some children. We want to give them the 
child care tax credit. The Republican bill doesn't protect them against 
the discrimination that might be part of it.
  Taxation of Social Security benefits, savings bonds for education, 
none of these is covered by the Republican bill; IRA deductions, 
student loan interest deductions, elderly credits--the list goes on.
  After their pronouncements and speeches about what a serious problem 
this is, their bill really comes up short. It doesn't address the basic 
problem. It provides tax cuts that are not asked for or needed. It 
shortchanges the opportunity to put money into a prescription drug 
benefit.
  We think it is far better to take an approach which is fiscally 
prudent, conservative, sensible, and straightforward.
  We also believe that during the course of this session we will be 
considering other targeted tax benefits. We can only have limited 
amounts and still bring down this national debt, so let's spend the 
money where it will be the most effective: A prescription drug benefit, 
No. 1; the deductibility of college education expenses, No. 2. If you 
send a son or daughter to college, you will have a helping hand from 
the Tax Code to pay for those growing expenses.
  A third, which the President has proposed and which I think makes 
sense, is a long-term care credit. How many

[[Page S2574]]

people have parents and grandparents who are growing older and need 
additional care? We know it is expensive. Because of that additional 
expense, we want to provide a tax credit to help defray some of those 
costs. Those are very real and serious family challenges.
  As much has been said on the floor about the marriage penalty and the 
reverence for families, which I agree is the backbone of this country, 
let's take a look at families in a little different context, not just 
on wedding day but when those families are raising their children and 
sending them to college, when those families are caring about their 
parents and grandparents who meant so much to them. Our targeted tax 
cuts go after all of those elements because, on the Republican side, 
they heap tax cuts on those who, frankly, do not need them, those who 
are not facing a marriage penalty. They cannot have enough money left 
to pay down our debt and have the resources for a targeted tax cut 
along the lines I have suggested.
  I see my colleague from Wisconsin has come to the floor. I know my 
time is limited. I ask the Chair how much time I have remaining.
  The PRESIDING OFFICER (Mr. Grams). The Senator has 16 minutes 
remaining.
  Mr. DURBIN. I thank the Chair and yield the floor to my colleague 
from Wisconsin, Senator Feingold.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. FEINGOLD. Mr. President, one thing observers of the Senate are 
not likely to see today is anyone defending the marriage penalty. The 
tax code should not discourage the act of getting married, and it 
should not encourage divorce.
  There is widespread agreement that Congress should pass marriage 
penalty relief. The President's budget included a proposal to address 
the marriage penalty. And last week, the Senate voted 99-1 in favor of 
sense of the Senate language calling on us to ``pass marriage penalty 
tax relief legislation that begins a phase down of this penalty in 
2001.''
  The marriage penalty is particularly burdensome for lower-income 
couples--and many young couples don't have much to spare. For some of 
these couples, the amount of their taxes could actually affect their 
decision whether or not to marry. Luckily, in the vast majority of 
cases, in the words of a recent law review article, love triumphs over 
money.
  But in this debate that the majority has scheduled for the week 
before the April 15 tax deadline, one can be forgiven for harboring the 
suspicion that more than marriage penalty relief is involved.
  For one thing, on this subject on which there is a broad consensus, 
the majority appears unwilling to work out a compromise with the 
President or with Democrats. Rather, the majority seems driven more to 
create election-year campaign talking points than real tax relief.
  For another thing, on this bill, for the third time this year 
already, the majority seems willing to plow ahead on major tax cut 
legislation before even adopting its own fiscal plan in the form of a 
budget resolution. To recount, in early February, the Senate passed a 
$103 billion tax cut as part of the bankruptcy bill. Then, in early 
March, the Senate passed another $21 billion tax cut for education 
savings accounts. And now in April, the Senate is considering another 
$248 billion in tax cuts labeled as marriage penalty relief. So the 
majority this year has already moved $372 billion in tax cuts--at an 
average rate of $124 billion a month--before it has even adopted its 
budget resolution.
  And you need to add to that the approximately $80 billion in debt 
services that tax cuts of such a size would require. That yields 
roughly $450 billion of the surplus that this Senate will have spent in 
just three months--an average of $150 billion a month. And that doesn't 
even count the health tax cut provisions that we can expect in the 
Patients Bill of Rights bill. And that also doesn't count the other 
multi-billion-dollar reconciliation tax cut that the budget resolution 
calls for no later than September 22.
  Some said that the majority brought up the amendment to the 
Constitution to prevent flag burning when they did because the American 
Legion was having a convention that week. Now, it seems that they are 
bringing up the marriage penalty because tax day is coming. What the 
majority chooses to call up seem more driven by the calendar than by 
legislative sense.
  Moving so many tax bills so early in the year raises another 
suspicion as well--that if we waited, we would find that there is not 
enough money to do everything that the majority wants.
  The Senate's consideration of a tax cut this size is also premature 
because the majority continues to push tax cuts before doing anything 
to extend the life of Social Security, before doing anything to extend 
the life of Medicare, or before doing anything to make prescription 
drugs available to seniors who need them.
  Yes, Social Security is projected to run cash surpluses on the order 
of $100 billion a year for the next decade, but beginning in 2015, it 
is projected to pay out more in benefits than it takes in in payroll 
taxes. Medicare Hospital Insurance benefit payments will exceed payroll 
tax revenues as early as 2007.
  The tax cuts that the Senate has passed and that we debate today 
would phase in so that their full impact would come just as the Nation 
begins to need surpluses in the non-Social Security budget to help 
address these Social Security and Medicare commitments.
  In 2010, the marriage penalty bill before us today alone will cost 
$40 billion a year. Rather than pay down our debt to free up resources 
for our coming needs, these tax cuts would add to our future 
obligations. To commit resources of this magnitude without addressing 
the long-term solvency of Social Security and Medicare is simply 
irresponsible.
  The size of the tax cut before us today flows in large part from its 
scatter-shot approach. According to the Center on Budget and Policy 
Priorities, it delivers a comparable amount of benefits to those who 
enjoy marriage bonuses as to those who suffer from marriage penalties. 
And according to Citizens for Tax Justice, more than two-thirds of this 
tax bill's benefits would go to the fewer than one-third of couples 
with incomes of more than $75,000. Are tax cuts for the well-off really 
our most pressing national need? A more targeted approach could save 
money and leave us better prepared to address our coming fiscal 
commitments.
  Our economy is strong and has benefitted from sound fiscal policy. 
Monday's papers reported that unemployment has remained below 4\1/2\ 
percent for fully two years now. The Nation continues to enjoy the 
longest economic expansion in its history. And home ownership is at its 
highest rate on record.
  We have this strong economy in no small part because of the 
responsible fiscal policy we have had since 1993. That responsible 
policy has meant that the government has borrowed less from the public 
than it otherwise would have, and indeed is projected to have paid down 
nearly $300 billion in publicly-held debt by October. No longer does 
the government crowd out private borrowers from the credit market. No 
longer does the government bid up the price of borrowing--interest 
rates--to finance its huge debt. Our fiscal policy has thus allowed 
interest rates to remain lower than they otherwise would be, and 
businesses large and small have found it easier to invest and spur new 
growth.
  Passing large tax cuts like the one before us today without 
addressing the long-run needs of Social Security and Medicare risks 
returning to the budgets of 1992, when the government ran a unified 
budget deficit of $290 billion and a non-Social Security deficit of 
$340 billion. It risks returning to the Congressional Budget Office's 
1993 projection of a unified budget deficit that would climb to $513 
billion in 2001, instead of the unified budget surplus of $181 billion 
and non-Social Security surplus of $15 billion that we now enjoy.
  Any young couple would be well-advised to do a little financial 
planning before entering into a marriage. We can ask the Senate to do 
no less.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana is recognized.
  Mr. BAUCUS. Mr. President, I know there will be a lot of time for 
debate

[[Page S2575]]

later today and tomorrow, and perhaps in the future, on the so-called 
marriage penalty. I want to respond to two points that several of our 
Republican colleagues have made with respect to the Finance Committee 
bill, the majority bill.
  The first claim is that the Finance Committee bill, the majority 
bill, eliminates the marriage penalty. Not true. It does reduce the 
marriage penalty for some people, to some extent, but it does not 
eliminate the marriage penalty.
  Why do I say that? Well, first, let me show you this chart. This 
chart basically shows, in the main, that there are 65 provisions in the 
Tax Code that create a marriage tax penalty; 65 different provisions in 
the code create the so-called marriage tax penalty, the inequity that 
married people pay. The Republican bill, the Finance Committee bill, 
addresses some of them. How many? Out of the total of 65, how many do 
you suppose the Finance Committee addresses? A grand total of three. So 
62 of the provisions in the Internal Revenue Code that cause a marriage 
tax penalty are not addressed by the Finance Committee bill.
  Let me give you an example. One is the deduction for interest on 
student loans. The phaseout for this begins at $40,000 for unmarried 
individuals and about $60,000 for joint return filers. So if two young 
people each earn $35,000 and they marry, they get hit harder by the 
phaseout. In other words, they pay a marriage tax penalty. It is not 
covered by the Finance Committee bill. It is covered by the alternative 
to be offered by Senator Moynihan.
  Another example in the Finance Committee bill is not covered. A 
marriage tax penalty that is not taken care of is Social Security for 
seniors. The tax threshold for Social Security for seniors is $25,000 
for individuals and $32,000 for couples. Again, a marriage tax penalty. 
What does the Republican bill, the Finance Committee bill, do about 
these provisions? Nothing. They are not among the three penalties the 
Republican bill addresses. The Democratic proposal, in contrast, 
addresses all 65 marriage tax penalty provisions--all of them. Not 3, 
not 4, not 5, but all of them, all 65.
  So, again, the Finance Committee bill does not eliminate the marriage 
tax penalty. The Democratic alternative does.
  There is a second point made on the floor today that I would like to 
address. About half of the relief in the Finance Committee bill goes to 
people who don't pay a marriage tax penalty today. They get a so-called 
bonus, or they get neither a penalty nor a bonus. That is this chart. 
This chart shows that less than half of the relief in the majority bill 
goes to the marriage tax penalty; that is, more than half goes to 
people who don't have a marriage tax penalty, who are already in a 
bonus situation.
  Some argue, well, gee, we should not penalize couples, such as those 
with a stay-at-home spouse, by denying them the same tax cut we provide 
to couples who face a marriage tax penalty. Frankly, that is a red 
herring, as lawyers say. That is totally beside the point. Obviously, 
we have nothing against people who receive a tax bonus. Nobody wants to 
penalize them. But let's be honest. If we are providing half the relief 
to people who don't pay a marriage tax penalty, it is simply not a 
marriage tax penalty bill anymore; it is a tax cut bill, and we should 
evaluate the bill on that basis.
  Let's talk about singles, for example. The marriage tax penalty 
relief bill that we are talking about is going to proportionally put 
more burden on individuals, single taxpayers, on widows who are not 
heads of households, widowers. They are going to be hit indirectly 
because of the action that will probably be taken at a later date on 
this floor. In the main, this is not a marriage tax penalty bill out of 
the Finance Committee; it is primarily a tax cut bill.

  That kind of tax cut compared with other priorities may or may not 
make sense. What about prescription drugs, long-term care, retirement 
security? I don't think we have addressed those issues enough on this 
floor; that is, trying to determine what our priorities should be, 
given the limited number of dollars we have in the budget surplus.
  Another thing. Viewed as a tax cut, the majority bill is completely 
arbitrary. There is no particular rhyme or reason to it. If you are 
married and pay a marriage tax penalty, you get a tax cut. If you are 
married and pay no marriage tax penalty, you get a tax cut. That is 
what the Finance Committee bill does, in the main. If you are married 
and get a tax bonus, you still get a tax cut. That is what the 
committee bill does.
  If you are single, you get no tax cut. In fact, the disparity between 
married and single taxpayers widens to where it was before 1969.
  Think about this for a moment. If you are married, have no children, 
you are receiving the so-called marriage bonus, you get a tax cut. If, 
on the other hand, you are a single mom and you have three kids, you 
get zero tax cut. Is that what we want to do?
  So the Finance Committee bill doesn't eliminate the marriage penalty. 
It simply does not. Sixty-two of the marriage penalties in the code are 
not addressed by the Finance Committee bill. Only three are.
  There are many others I have not mentioned which are very big and 
have a very big effect.
  In addition, the majority committee bill provides a large tax cut 
unrelated to the marriage tax penalty. It is a large tax cut which has 
nothing to do with the marriage tax penalty.
  I am saying briefly, because my time is about to expire, that there 
are some major flaws in the majority bill. I have only touched on a 
couple of them. There are many more which will be brought out later in 
the debate.
  I urge my colleagues, people around the country watching this on C-
SPAN, other offices, and the press to take a good look at the majority 
bill because there are some real problems with it. I hope we can 
straighten them out and fix them very soon.
  I yield the floor.

                          ____________________