[Congressional Record Volume 146, Number 140 (Monday, October 30, 2000)]
[Senate]
[Pages S11360-S11365]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ECONOMIC ISSUES
Mr. DOMENICI. Mr. President, I open by saying if I have heard it once
in the last 2 months, I have heard it 40 times as the other side of the
aisle tries to convince us and the American people that what really has
made the American economy so strong, with its 22 million new jobs, is
the fact that they voted on a tax increase bill in the year 1993 that
amounted to $247 billion over 5 years, and it is called the Clinton-
Gore plan, in quotation marks; sometimes referred to on the floor as
``the plan.''
Before we are through this evening, we hope we can convince our
colleagues that that plan had very little to do with the state of
economic well-being, jobs, and confidence of the American people today.
However, there are several subjects I want to touch on quickly,
because the other side cannot come to the floor for 15, 20, or 30
minutes without talking about them. The first one is what the plan of
the Governor of Texas on Social Security is going to do to our senior
citizens. They proceed as if they know, and they don't know.
The distinguished Governor from Texas has given us an idea. The idea
is to let every senior who is on Social Security keep their check and
the program remain totally intact while we let younger Americans invest
a little piece of their Social Security money in a preferred or
protected account in the stock market.
They come down here and do some arithmetic gymnastics, which is hard
for any one to understand. They support their statements by citing the
Secretary of the Treasury, a genius I believe they called him. We all
know Secretary Summers. We all know he is rather bright. We all know he
was a very young Harvard Ph.D. faculty member. But for him to take to
the streets telling Americans he knows what that Bush plan is going to
do to senior citizens is absolutely deplorable. I have seen Secretaries
of the Treasury come and go. We had a great one before this one. Never
have I seen anybody attempt to do this.
I want to tell the American people the truth about the Vice
President's plan on Social Security. I would almost say there is no
plan because, in fact, the plan he is talking about is accepted by so
few in the Congress, despite the fact that it has been around since
1999, in case anybody is interested.
You know, we voted on it a couple times in the Budget Committee. I
think perhaps that there was one time when a Democrat voted for it--one
member. I think we might have forced a vote on the floor that included
that and nobody voted for it.
So what is the Vice President's plan? I will tell you plain and
simple. He wants to put some new IOUs in the trust account for senior
citizens, and the IOU says we, the American people, promise to pay to
the trust fund the face value of these IOUs. He says let's put about
$10 billion worth in there. Guess what happens. He puts them in there a
few years from now and indicates that that helps make Social Security
solvent.
So that the American people might understand an IOU in the parlance
of your checkbook, it is a postdated check. Have you ever postdated a
check? It used to be illegal. It may still be if you do it with the
intent to cheat. But some people postdate a check and say, I won't have
the money for 2 months, so will you take my check and it will be good
then. That is what an IOU is--except the Congressional Budget Office
says 50 years from now, when the IOUs all come due, the total amount
that the taxpayers of America will owe to that fund will be $40
trillion--not billion but trillion, $40 trillion.
Who will owe it? Well, of course, the Vice President is not worried
about that today; right? It is our children who are going to pay it, I
say to the occupant of the chair. Some day down the line, we are going
to have to raise taxes generally or raise the Social Security
withholding tax so high that it probably will make the program
inoperative and ineffective.
It is amazing that the Secretary of the Treasury and the people on
that side of the aisle--my friends, the Democrats of the Senate--would
talk about the plan of the Governor of
[[Page S11361]]
Texas when their candidate has a plan before us that would eventually
require that we raise taxes--and I left out an option--or dramatically
cut programs. They would have to cut American programs to the tune of
$40 trillion over this period, or raise new taxes.
Now you would think if you had a plan that was that embarrassing, you
would not have the courage to get up and critique other programs that
actually do try to reform Social Security. Democratic Senator Pat
Moynihan and Senator Bob Kerrey of Nebraska have both stressed the need
to reform Social Security, which is just what Governor Bush is trying
to do.
Now my Democratic colleagues also have another line of argument. They
say that what we really should do is pay down the debt. They then say,
why are Republicans against that? Well, they know we aren't. We have
already paid down $360 billion of debt over the last three years. The
greatest threat to debt reduction is the Vice President of the United
States' spending proposals. He has asked for 200 new programs and has a
complicated tax code proposal. Let me address this latter point
briefly. My Democratic colleagues have attacked Governor Bush's tax
plan tonight, however, it is based on the very sound principle that
everybody who pays income tax should get a break. That's not the case
under the Gore plan, where 50 million American taxpayers get no break
at all. Why? Because taxpaying Americans don't get a tax break. It is
Americans who are selected by the Vice President's plan. If you meet
their criterion--if you're the ``right'' kind of person--you get a tax
break. But that doesn't mean everybody paying income taxes gets a tax
break.
Now let's get back to the size of the Government that Vice President
Gore would fund. Let me give you an example of the charades he plays in
order to say he is not spending very much money. See, I have estimated
the plan, and it spends a lot of money. I ask Senator Gramm if he knows
that the Vice President's Retirement Savings Plus (RSP) plan, the one
that is going to help low income Americans save money, which he talks
about so much--i.e. if someone saves $500, the government will match
this contribution 3:1, thus giving this person an additional $1500 of
taxpayer money for deposit to their savings account--do you know when
that plan would be fully implemented under his proposal? Nine years
from today, assuming he wins. So the centerpiece of his ``tax'' plan
would not fully phase-in until after two full Presidential terms and 1
year. If you assume such an unrealistic phase-in, of course, it won't
cost very much. But neither should anybody kid themselves that his
budget isn't full of those timing gimmicks, in order to give the
appearance that he does not spend the Social Security surplus.
There are all kinds of strange dates such as the RSP one. In fact,
this major one he speaks about being such a good plan for low-income
Americans to save money, I repeat, won't go fully phase-in until 9
years after he is elected, if he is elected. The Vice President has not
provided enough information to tell when all of his 200 programs phase-
in. But I can tell you that if you just look at the overall programs
and add them up cumulatively in your mind, there has not been a bigger
increase in American programs since Lyndon Baines Johnson invented the
Great Society.
Now what actually happens under the plan of the Governor of Texas is
very simple. Of the surplus, he says 50 percent will be saved for
Social Security and debt reduction. If you want to go add that up, it
looks as though he would pay off the debt entirely by the middle of the
next decade. Frankly, if that could happen, what a marvelous thing it
would be. If Democrats keep pushing for more spending, we might not do
it that fast, although I can tell you the money is there barring that.
50 percent of the projected surpluses is for Social Security and debt
reduction under the plan of the Governor of Texas, 25 percent is to be
given back to the American people since it is their money to begin
with, with every taxpayer getting a tax cut of some type, and 25
percent goes toward new priorities, new things such as increased
defense or money we may need to add to the Medicare program to pay for
prescription drugs. The ratio is 50, 25, 25.
The other side of the aisle likes to get up and brag about how they
are paying down the debt. I submit to you that if you took the litany
of Gore programs and what he wants to do in every area to increase
things such as prescription drugs for everyone, as he suggests, in the
manner he suggests, debt reduction will suffer. His new programs are
very costly and we expect the cost estimates to rise the more that
people look at them. Let's look at prescription drugs. When that
program was first submitted to the Congress by President Clinton, we
thought it would cost $120 billion. The last reference we have from the
Congressional Budget Office says that plan would cost $430 billion.
So you see, there is no question that there is not going to be very
much money left over if you put all those programs the Vice President
has in mind into effect and give them to the American people in a
reasonable period of time. If you want to delay them incessantly,
obviously they won't cost much; but will the American people think they
have been fooled if that is the case and he is to get elected? I
believe they will wonder, what in the world were they talking about
when they told us they were going to give us that?
I want to also say that when it comes to reducing the size of
Government--I want to repeat one more time, our friends on the other
side always cite the total number of reductions in employees that have
occurred since Bill Clinton took office. What they don't tell you is
that 96 percent--and I just put it in the Record 2 days ago, and it
comes from the Office of Management and Budget, not Domenici's staff--
OMB says 96 percent of all employee reductions, described as stripping
down Government, came from civilians in the Department of Defense. In
other words, we started drawing down that Department of Defense so
quickly and rapidly, and continued it, so 96 percent of the employee
reduction comes from the Department of Defense, and 4 percent comes
from all the other civilian programs, which they would lead you to
believe have been seriously restrained and many employees have been
taken from their ranks. Not true.
I will shortly yield to my friend from Texas for about 20 minutes.
However, before I do, I want to point something out. When my Democratic
colleagues speak of the Clinton plan for the recovery of the United
States, which caused America to have all these 22 million new jobs, new
high technology, and breakthroughs in communications--and I say that
facetiously--, they ignore the fact that the first plan the President
sent to us was a $26 billion stimulus package for American economy,
even though the economy had already begun posting strong growth before
he took office. Does my friend from Texas recall that?
Standing right back over there was the Senator from the State of
Colorado, who is now retired. He came to the floor and told us what was
in that $26 billion that we were supposed to spend. He found all kinds
of things that were promised to mayors during the election and to all
kinds of groups in America by the Governor of Arkansas as he
campaigned. I can't remember. Some of them were igloos, and all kinds
of strange things--skating rinks for some communities.
The first thing we did was to say we aren't going to do that. The
first phase of the recovery plan was a $26 billion stimulus which never
occurred. That would have caused more money to be spent, not less.
To lead into what is being said on the other side of the aisle, and
by our President and by our Vice President about this plan--the 1993
tax increase of $243 billion--, I would like to hearken back to Alan
Greenspan, who coined a phrase. Perhaps my friend from Texas remembers
it. He used two words, ``irrational exuberance.'' Do you recall that,
Senator Gramm? Irrational exuberance?
I am going to borrow that phrase today--not to describe the
speculative activities in the stock market, as Dr. Greenspan did, but
rather to describe my colleagues who have been attributing the 1993
Clinton/Gore tax increase budget plan as the genesis of this long boom
we have been experiencing.
I want to talk shortly about what really caused the boom. But I
understand my friend from Texas would like
[[Page S11362]]
to speak for 20 minutes. I yield that off my time, reserving the
remainder for myself.
I want to say just before I yield that I have looked at some polls
that somebody presented--maybe even some polls that were published.
I am thrilled with the American people because you know they don't
believe the irrational exuberance of the other side. They do not
believe it.
They come down here and keep on saying it, but the American people
just do not believe it.
The primary reason for this boom has been the evenhandedness of the
Federal Reserve Board in making sure we do not let inflation go
rampant, and controlling interest rates where they could so that the
American economy would always grow, and if it was coming down, to have
a safe landing.
They put that No. 1.
In terms of who did it, Dr. Alan Greenspan and the Federal Reserve
deserve much of the credit.
The American people, no matter how many times the plan is discussed
about the 22 million jobs and all the other things, they do not believe
it. And they shouldn't.
Who do they put in second position as responsible for this? I didn't
think it was going to be the case because we don't do a very good job
of talking about it. But they said the Republican Congress which puts
some real controls on spending.
When we are finished tonight, we will show you that actually happened
when we took over the U.S. Congress.
In third place, in terms of who did it, who brought it, they put the
President's plan.
I yield to my friend from Texas.
Mr. GRAMM. Mr. President, first of all, I want to thank Senator
Domenici. I want to try to add a few things to what he said, and then
go on and say what I was going to say.
I want to begin with the Secretary of Treasury, Larry Summers. Let me
say that we are both good friends as well as economists. We both used
to teach economics.
Yet, I think a lot of people are unhappy in that the Secretary of
Treasury injected himself into politics--something that the Secretary
of Treasury, the Secretary of State, and the Secretary of Defense have
not done in the past. I think that made people unhappy.
But let me say this with regard to Al Gore's plan, a plan which
simply adds IOUs to the Social Security trust fund. I believe Larry
Summers would have given an ``F'' to any freshman economics student in
his class who thought that you could strengthen Social Security by
simply printing paper--IOUs; I have a copy of one here--and putting
them into a filing cabinet in West Virginia.
Let me give a high authority on this issue, the President of the
United States.
Our Vice President said if we would simply print more of these IOUs--
you notice, Senator Domenici, that they say ``nontransferable''--if we
printed more of these IOUs and put them in a metal filing cabinet in
West Virginia, which is all the Social Security trust fund is, we could
pay benefits with these IOUs.
But let me quote from the economic report of the President. This is
President Clinton speaking. This is the Fiscal Year 2000 Budget of the
President, and on page 337, here is what he says about these paper
IOUs. He says:
These [Social Security trust fund] balances are available
to finance future benefit payments and other trust fund
expenditures--but only in a bookkeeping sense. These funds
are not set up to be pension funds, like the fund of private
pension plans. They do not consist of real economic assets
that can be drawn down in the future to fund benefits.
Instead, they are claims on the Treasury that, when redeemed,
will have to be financed by raising taxes, borrowing from the
public, or reducing benefits or other expenditures. The
existence of large trust fund balances, therefore, does not,
by itself, have any impact on the government's ability to pay
benefits.
That is Bill Clinton.
So Al Gore's proposal to simply print more IOUs and put them in a
file cabinet is deemed as phony--not by Pete Domenici, not by Phil
Gramm, not by the Republican Congress, but by the President of the
United States, Bill Clinton. The President's own budget says it very
clearly. This is a bookkeeping entry. No benefits can be paid from
these IOUs.
The Gore plan means, in essence, raising taxes.
Just one other point to amplify what Senator Domenici said. A picture
is worth 1,000 words.
This is page D11 of the Washington Post of this past Tuesday. This is
a want-ad page. You have used want-ads yourself. So have I when looking
for a job.
These are jobs that range from pet groomers, to painters, to data
entry, to day labor, to dispatchers, to retail sales jobs, and
everything in between.
You might look at this want-ad page in Tuesday's Washington Post and
ask yourself, how many people who took these jobs would get an Al Gore
tax cut where they could keep part of what they earned and spend it on
what they chose to spend it on?
Here are all the jobs from pet groomer, to custodian, and the list
goes on and on.
You see all the jobs. They are the people who, if they took those
jobs and were married, could get marriage penalty tax relief from
Republicans.
I am tempted to go through and read the jobs. But I am not going to
denigrate good jobs in America.
But the point is that all of the jobs listed on page D11 in Tuesday's
Washington Post want-ad page for jobs, for every one of those jobs, if
you took it, you would be to rich to get Al Gore's marriage penalty tax
relief.
This is what would be left.
Mr. DOMENICI. The Senator is assuming that each one of those took the
job, and they are getting paid and earning income pursuant to the job.
Mr. GRAMM. The question is, if married couples took these jobs, are
they too rich for Al Gore's tax cut? All of them are, except that
handful--about 89 percent of the jobs on that page are too rich.
Let me get to what I wanted to say.
Some people at home probably wonder why we are talking about the
Presidential campaign on the floor of the Senate. I think it is a good
question. We weren't doing it. Our colleagues have come out here every
day and talked about the Presidential campaign, I guess, because they
are losing it in America. They think they might win it on the floor of
the Senate.
One of the wonderful stories that has been told is that Bill Clinton
was elected President, and he courageously proposed the largest tax
increase in American history.
They did everything from proposing to tax your utility bill, to
taxing gasoline, to taxing 75 percent of Social Security benefits if
you made over $25,000.
Courageously, the Vice President, sitting in that very chair, and
Senator Domenici was here along with me, when it came down to a tie
vote, the Vice President courageously broke the tie in voting to tax
gasoline and tax Social Security benefits. And then as if the sky
opened and God spoke, interest rates came down, the stock market went
up, the economy prospered, and, therefore, our Vice President and the
Democrats deserve credit.
Senator Domenici, myself, and every other Republican were too
ignorant to understand that by taxing gasoline and taxing Social
Security and having the largest tax increase in American history, we
could produce prosperity.
Mr. DOMENICI. If the Senator will yield, I suggest to the Senator,
and I wonder if the Senator concurs, six Democrats voted with
Republicans. That is why it was 49-49.
Mr. GRAMM. That is right. They had a majority in both Houses of
Congress when Bill Clinton became President, and when they voted they
had a substantial majority here, I think 54 or 55 Democrats. Six of
them voted with us against this largest tax increase in American
history, but there was a tie and Al Gore broke the tie. It was then
that the sky opened, interest rates came down, the stock market
spiraled, and prosperity ensued.
There are only a couple of problems with that. One, it is totally
unbelievable. It makes absolutely no sense. Finally, it is verifiably
false.
This is the rest of the story. This is the budget that included this
largest tax cut in American history. In this budget, ``A Vision of
Change for America,'' Bill Clinton tells us on page 22 that if we raise
taxes with the largest tax increase in American history, and 6 years
later, if we implement the largest tax increase in American history, 6
years later he states the deficit will be $241 billion. Nowhere in this
budget is
[[Page S11363]]
Bill Clinton promising to balance the Federal budget. His promise is,
if you have the largest tax cut in American history--and then they
forget or our Democrat colleagues want us to forget the rest of the
story--if you spend $26 billion on a new stimulus package, they were
going to stimulate the economy. Remember they had ice skating huts in
Connecticut, they had Alpine slides, these water slides in Puerto Rico.
This was their economic plan. We killed that.
The final part of their proposal that Senator Domenici will not have
forgotten but our Democrat colleagues want to forget was having the
Government take over and run the health care system. That was part of
this vision, too. But we killed it deader than Elvis. It never came
into reality.
Here is my point: we didn't adopt the Clinton plan. They raised
taxes, they taxed Social Security benefits, they taxed gasoline. But we
killed their $26 billion spending program, and we killed the Government
takeover of health care.
Now, their first budget, with the largest tax increase in American
history, promised $241 billion of deficits 6 years later. Then, in
their midsession review in September of 1993, they discovered we hadn't
done the stimulus package. So with their tax increase, we were headed
for a $181 billion deficit in 6 years.
Then, in 1995, the President proposed another budget. But in 1995,
President Clinton, who now has courageously raised taxes on Social
Security and gasoline and most other things, is asked, well, Mr.
President, when are you going to balance the budget? Remember that,
Senator Domenici? This is what he said: In 9 years, 10 years, 8 years,
9 years, 7 years, 7 to 9 years, 7 years, 9 years, 10 years. In other
words, 2 years after his tax increase went into effect, our colleagues
were asking Bill Clinton when he wants to balance the budget. Two years
after his tax hike, he was still saying we are 9, 10, 7 years away from
ever balancing the Federal budget.
Now, what happened in 1994? Our colleagues joshed around yesterday
saying when they proposed to have the Government take over the health
care system, when they proposed this $26 billion of stimulus package,
and when they adopted the largest tax increase in American history, I
said this is going to cost people their jobs. So they josh around
saying: Well, where did it cost jobs?
Let me state what happened: In 1994, 52 Democrats in the House of
Representatives lost their jobs. The Speaker of the House lost his job;
the first time in 132 years that it ever happened. Three powerful
committee chairmen--Rostenkowski, Brooks, and Glickman--lost their
jobs. Not one Republican incumbent in Congress was defeated.
Now, supposedly the sky had opened. Everything was wonderful with
this tax increase. But guess what. When the new Republican Congress
came to Washington, this is the first thing that landed on our desk,
and this is Bill Clinton's budget. He is still President. He sends us a
new budget. He says that by the end of 1999, if we will adopt his
budget, the deficit will be $181 billion.
Now, his tax increase has been the law of the land now for 2 years.
Yet he is still saying virtually $200 billion deficits as far as the
eye can see.
Let me make a final point that I think takes the cake. In his
midsession review, this is in September of 1995, we have a Republican
Congress. Bill Clinton says: If you will forget what these Republicans
are saying and adopt my budget, if you are willing to cut $927 billion
of programs over the next 10 years, then we might have a surplus in 10
years.
We didn't adopt Bill Clinton's budget. His budget said we were going
to have a $200 billion deficit from 1994 to the year 2000. Instead, we
adopted our own budget. We reformed welfare. Bill Clinton now says the
greatest achievement of his administration is welfare reform. He not
only had nothing to do with it, he fought it every step of the way. He
vetoed it once, then twice, and he has tried to repeal it every day
since it has passed.
Republicans reformed welfare and it set into motion--and I have to
say as Democrats accused us of not knowing what was going on that I
never dreamed it would be as successful as it has been--a 40-percent
decline in welfare rolls as people have begun to work and America has
prospered.
What happened under the Republican Congress? We started it at a $200
billion deficit, but under the Republican Congress the deficit started
to decline. By 1997, we balanced the budget and we have a surplus.
When Bill Clinton signed this heroic tax increase, and this is from
his official documents, he gave a statement in signing the bill.
How many times do you think he mentioned balancing the budget when he
signed that tax increase? None. How many times do you think he talked
about saving and reforming Social Security and Medicare? None. Those
things were the furthest thing from his mind.
If you listen to the mythology that we have been forced to listen to
here, the mythology runs as follows. They raised taxes, and then
interest rates declined and the stock market boomed--right?
The problem is that is wrong. If you look at their numbers, when Bill
Clinton became President, 10-year Treasury interest rates were 5.87
percent. He raised taxes, and what do you think happened to interest
rates? They went up to 7.9 percent. And if you look at the chart on
interest, the big turning point in interest occurred in November of
1994. Why? Because help was on the way. Help was on the way. We elected
a Republican Congress, interest rates went down, and that interest
rate, which had risen to 7.9 percent on 10-year Treasury bonds is,
today, 5.71 percent.
What about this booming stock market? By raising taxes on gasoline
and Social Security and the largest tax increase in American history,
their mythology is that Bill Clinton set off this boom in the stock
market. There is only one problem: It ain't so. When you look at the
Dow Jones Industrial Average between 1993 and 1994, over that 2-year
period when Bill Clinton's tax increase went into effect, the Dow went
up by 13 points, about 6.5 or 7 percent a year--around there. I don't
have the exact day of the tax and the day Clinton became President--
just looking at the numbers.
What do you think happened when we elected a Republican Congress?
What happened was the Dow Jones Industrial Average rose from 4,493 to
10,836, today.
So the problem with their story which they are trying to tell the
American people is that it is not believable, it does not make sense,
and it is verifiably false. When they raised taxes, none of their
budgets showed these tax increases ever balancing the Federal budget.
When they raised taxes, there was no decline in interest rates.
Interest rates went up, not down. When they raised taxes, the stock
market was relatively flat. All of that changed when we elected a
Republican Congress in 1994. All of that changed.
So basically the point I want to make--how much time have I left in
the 20 minutes?
The PRESIDING OFFICER. The Senator has 2 minutes 15 seconds.
Mr. GRAMM. The point I want to make is: Look, there is plenty of
credit to go around for the good things that have happened in America.
I am not trying to deny the President some of the credit. I do believe
a lot of credit goes to the Federal Reserve Bank. But the idea that by
imposing the largest tax increase in American history, by taxing
gasoline, by taxing Social Security benefits, and that somehow this
produced a balanced budget and set off this economic boom is laughable
from a logical point of view. It is not borne out by the facts. The
truth is, these good things that started happening largely started
happening in November of 1994.
It was a good story. Maybe somebody believes it, but they should not.
If they look at the facts, they will see that basically that story is
not true.
The final point I want to make: We are now coming to the end of this
session. In the waning hours of this Congress, the President is saying:
If you don't spend more money, I am not going to let the Congress go
home. If you do not further inflate an already inflated budget, I am
going to veto these bills and not allow us to go home. He is saying to
us: If you do not grant amnesty to people who violated the laws of
America by coming to the country illegally, I am going to veto the
Commerce-Justice-State bill and
[[Page S11364]]
potentially shut down the FBI, the DEA, the criminal justice system,
and the courts.
We are at the end of the Clinton administration, not at
the beginning. President Clinton had his opportunity. He raised taxes.
He tried to implement a $26 billion stimulus package. He tried to have
the Government take over and run the health care business. He had his
chance.
We ought to have this election and let people decide. Do they want to
spend this surplus? If they do, they will know how to vote. If they do
not----
The PRESIDING OFFICER. The time yielded the Senator from Texas has
expired.
Mr. GRAMM. We ought to let them vote before we do.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. If the Senator will hold up the health care plan again,
I say to Senator Gramm, I want to make a statement about it. I made a
mistake. If you look at the President's FY 1995 budget and health plan,
it would have increased outlays by $1.4 trillion--I said billion.
Billions are gone; they are not in our vocabulary. The $1.4 trillion is
the additional outlays that the President's budget and health plan
would have generated if we'd adopted his plan versus the outlays that
the government actually recorded over the five years covered by his
budget.
You heard Senator Gramm describe one of the most significant
indicators of prosperity--the 30-year Treasury bond yield. Here is the
chart that describes precisely what he spoke of. Here is 1993. You see
shortly after that, yields drop a little bit. But then look at what
happens in the middle of 1993. It goes to its highest rate on this
chart. Yields only begin to fall again after 1995 and the election of a
Republican Congress. After that, yields come back down on a sustained
basis.
I want to just insert a comment, since there is so much talk about us
doing nothing here. This is sort of extraneous, but I think it is
terribly relevant to our discussion. This is a late-this-evening quote
from the President of the United States:
Again, we have accomplished so much in this session of
Congress in a bipartisan fashion. It has been one of the most
productive sessions.
He goes on and asks for more. But for all those who have been
listening, again, to the ``mythology,'' to borrow one of Senator
Gramm's words, that we have not had a very productive Congress, let me
say the President of the United States spoke today and that is what he
said.
Let me say to the American people, to all the investors who took
risks, to all of the people who invested in new technology since 1993--
we will just use that date--to all the millions of Americans who get up
every day and work hard and raise their standard of living: You know
that it was not ``the plan'' that caused America to achieve again and
grow again. Let me suggest we have had one of the most remarkable
productivity increases during the last five years of this recovery that
we have had ever in American history. We had a period right after the
Second World War that rivaled this in productivity.
Did the productivity of the investors, risk takers, American workers,
the banks with new technology, the new computers--did all that happen
because we had a plan to raise taxes $243 billion? Of course not. Of
course not. Did that $243 billion tax increase reduce inflation and
cause it to stay down? Of course not. Productivity did, and
international trade did, and the Federal Reserve Board did. That is the
kind of thing that made America's prosperity so significant in the past
decade.
Did that tax increase reduce regulatory burden, which all American
companies will tell you started falling under Ronald Reagan, and has
continued up to the recent telecommunications deregulation? That was
not a result of the ``plan,'' that $243 billion tax increase.
Deregulation was part of giving American business more freedom to
achieve, expand, and to do things in the most efficient way rather than
the most burdensome way.
Did it help business become more efficient in managing its
inventories? Of course not. The 1993 budget plan had nothing to do with
it. Just-in-time inventory management had a lot to do with it, making
firms' profits go up and their efficiency increase.
We could go on. Did global trade, which essentially kept inflation
under control and opened new horizons to American business--was that
impacted by the $243 billion ``plan'' which we hear regularly? No. It
is only ``irrational exuberance'' that would cause my Democratic
colleagues to claim that the 1993 tax hike generated today's marvelous
economy.
I am not sure that ``irrational exuberance'' is even an adequate word
with which to describe the day-after-day trek to the floor of the
Senate Democrats to remind us that all good things came from that day,
that day when a difficult vote was taken to increase taxes
dramatically. I think the American people understand that the 1993
budget plan had little to do with where we are and where we are going
to end up. It is because we have a free economy and we have made it
freer.
Frankly, let the people judge whether we are more apt to keep this
economy going if we have a tax reform measure that gives everybody some
of their money back to spend as they see fit. I believe they will say
that that gives this economy a much better chance than 200 new programs
that the Government is going to run which we do not have today, and we
estimate--and I think this is a modest estimate--that we could not
administer with less than 20,000 new employees.
Americans understand their prosperity does not come from the size of
our National Government. Maybe it is inverse to the size of our
National Government. I believe that might be a fairer estimate of
America and the world. Maybe the smaller our National Government gets,
the better we will compete and that is very important in the global
economy.
I do say the President of the United States deserves credit on trade.
Had some Democrats said that votes to further free trade were an
important reason behind our strong growth, I would have agreed with
them on that point. Trade has been an important positive in the chain
of things that have happened to make economic life better in these
United States.
I have time remaining. If there are any Senators on our side who want
to speak----
Mr. SESSIONS. Will the distinguished Senator yield for a question?
Mr. DOMENICI. I will be pleased to yield.
Mr. SESSIONS. Looking at the chart, I joined this body in 1997, and
at that time we had a very tough battle on this side to produce a
modest tax reduction, the $500-per-child tax credit and reduce capital
gains from 28 to 20 percent and even lower for lower income people.
They told us that was going to run up the debt; we were going to have
more debt. Looking at that chart, interest rates appear to have gone
down and, in fact, our surpluses have occurred since then; is that
correct?
Mr. DOMENICI. I say to my good friend from Alabama, that is
absolutely true, and he probably heard me on the floor today. I
mentioned enough subjects, but capital gains was also on my list
because we've gotten some very unexpected returns to the Treasury from
this source. Clearly, the 1997 capital gains reduction--which we
accomplished and the President signed although it wasn't high on his
list--has been one important factor behind this surplus that is now
carrying us into this better period with a lot more flexibility on what
we can do in the future.
Mr. SESSIONS. Actually reducing tax rates on capital gains increased
income to the Government; is that fair to say?
Mr. DOMENICI. All indications are that it did. There are several
things which have combined to get these tremendous new revenue
increases. One of them clearly is capital gains. Another is that real
incomes have increased for all Americans in all income quintiles. They
are paying a lot more taxes, and when you have more Americans paying
income taxes because they are working, obviously you collect more
revenue and you make Social Security more solid. All of those are
positive things that occur when the American economy is flourishing,
when it is booming, when more and more people are working.
Capital gains is very instrumental in that regard. I think there are
many in this body who think in the near future
[[Page S11365]]
we ought to think seriously about reducing capital gains further. In my
opinion, it is very helpful for the stock market, government fiscal
position and the economy. Higher stock values--particularly in the
Nasdaq have greatly contributed to investment in new technology,
everything from computers to telecommunications, and everything in
between. This is good for the economy, since it boosts productivity and
keeps inflation down. The higher the productivity, even when you get
less and less unemployment, you do not get inflation. Americans do not
appreciate low inflation yet. Most all other things can be cured in the
American economy if you keep inflation low.
Does the Senator have a further observation?
Mr. SESSIONS. I have remarks which I will give if the Senator is
finished. I enjoyed so much hearing his analysis.
Mr. DOMENICI. I yield those 5 minutes to Senator Sessions. I yield
the floor.
Mr. SESSIONS. Mr. President, to follow up on the marvelous remarks
that have gone before, I remember the first hearings I attended of the
Joint Economic Committee. I tell this story about who gets the credit
for the economy. Alan Greenspan was the witness that day. I am not a
trained economist. I have been interested in these issues, but I am not
a trained economist.
We started the discussion, and the chairman made a joke about who
deserved credit for the economy: Was it Mr. Greenspan or was it
President Clinton? Members on both sides joked about that and laughed a
little bit, and we went on with the hearing.
I had an article from USA Today, not a great economic journal, but it
was an interesting article, and it interviewed businessmen from
Germany, Japan and England, asking them why the U.S. economy was doing
so much better than theirs. They had double-digit unemployment of 12
and 13 percent, higher inflation, and less growth than we were having.
They asked them why. They all agreed. They said it was because the
United States, even though our taxes are high, had less taxes, less
regulation, and a greater commitment to the free market.
I asked Mr. Greenspan if he agreed with that. He looked up at me and
said: ``I absolutely agree with that.'' Less taxes, less regulation,
and a greater commitment to the free market. ``Absolutely,'' he said,
that is the basis for the sound American economy.
I think our taxes are still too high, but they are less than Europe.
Our regulations are less, and we are more committed to letting free
market forces allocate our resources than having the Government do it
as they do in the European countries. I believe that is the basis for
being successful.
I thought later what I really should have said at that time was that
Ronald Reagan deserves credit for this economy because that is what he
fought for and that is the direction we moved.
We have had substantial increases in taxes that have burdened
Americans substantially.
There is one thing that troubles me about this economy, and that is
the rising cost of fuel in America. If there is one thing that
threatens our economic growth, it is the increase in energy prices. I
have been talking with businessmen in my State. They tell me their
concerns. Their profits are down.
I traveled with a truck driver from Birmingham to Clinton to
Montgomery. He told me he is paying $800 more a month for fuel. I
talked to businesspeople about their fuel costs. Families that were
paying $100 a month this time last year for gasoline for their clunkers
and all that they have their families driving around in, are now paying
$160 a month for that fuel. That is $60 a month taken out of their
family's budget that they could be spending for things in the
marketplace. They will not be spending it in the marketplace because it
is going to pay for energy costs. That is a threat to us. We need to
break that cycle.
It occurred not so much because of economic forces but because of
political actions by the OPEC nations when they got together and
withheld supplies and drove up energy prices and sat there and
collected billions of dollars from America. The OPEC politicians beat
our politicians. They outsmarted us. They took advantage of our lack of
production of American industry. We got even more and more indebted to
them for our energy, and they drove up the price. We had no choice but
to pay it.
We are paying 20 cents more, 60 cents more per gallon of gasoline and
most of that is going straight to those countries. If we tax gasoline
in America 50 cents a gallon, which is not too far from what we do, at
least that money goes to the State of Alabama or to the Federal
Government and is spent in the United States. In effect, OPEC has taxed
us. Every time you go to the gas pump and pay for that gasoline, much
of it is going straight out of our country. It is a huge transfer of
American wealth. It has the potential to not only damage the family
budget but to damage our economy. I think we have to do something about
it.
The long-term solution is to get serious and start increasing
production. We have the capacity to increase production in the United
States.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. SESSIONS. Mr. President, I ask unanimous consent to have 1
additional minute.
Mr. LOTT addressed the Chair.
Mr. SESSIONS. I yield to the majority leader.
Mr. LOTT. Go ahead.
Mr. President, I will withhold.
Mr. SESSIONS. I will simply say this. In this election--since we are
talking about elections here on the other side--the American people
have a choice: Will they elect a President who, with his deepest core
beliefs, would be a no-growth, no-production kind of President or will
we elect a President who understands America's critical need for energy
and who will help create policies that are environmentally sound, that
will allow us to remove ourselves from under this yoke of the OPEC
cartel?
Mr. President, I yield the floor.
____________________