[Congressional Record Volume 147, Number 13 (Wednesday, January 31, 2001)]
[Senate]
[Pages S838-S839]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    TAX CUTS AND THE BUDGET SURPLUS

  Mr. DURBIN. Mr. President, it is opportune I am here following my 
friend and colleague from Kansas, Senator Brownback, to talk about the 
same issue because I think we both agree on several things, but we may 
have a little difference of opinion on several others.
  Senator Brownback and I came to the House of Representatives at about 
the same time. We lived through the era of red ink--the terrible 
deficits and mounting national debt. Many times it appeared we would 
never get out from under that burden.
  I can recall when I first came to the Senate, Senator Orrin Hatch was 
at this desk right over here and had stacked up next to the desk all of 
the budget books for the previous 20 or 30 years, which all showed a 
deficit. He said: It is time to amend the Constitution for a balanced 
budget amendment. It is the only way to get Congress to stop its 
profligate ways and to finally bring balance to our books.
  I resisted that amendment. I thought it was overkill and unnecessary. 
It failed by one vote, and thank goodness it did because the ink had 
hardly dried in the Congressional Record than we started turning the 
corner. The economy started getting stronger, and we started leaving 
the deficit era, going into the surplus era. And what a change it has 
brought about with all of the Americans who are currently working, 
though there clearly is some downturn in the economy now. Those working 
Americans, and their families, and their businesses have brought 
success not only to them personally but also to our Nation's economy. 
It certainly is reflected in the fact that we now are talking about 
surpluses.

  The obvious question the American people ask of us in the Senate is: 
If we have more money than we need in Washington, why do you keep it? 
Why don't you do something good with it? And one of the good things you 
can do with it is to reduce the tax burden on families.
  Senator Brownback suggested that. I agree with him. It is President 
Bush's plan. It is a democratic plan. If I had to put my money on one 
thing that is likely to happen this year, there would be some form of a 
tax cut; and there should be. I think we are at a point in history 
where it is not only the right thing to do, because there is a surplus, 
it is the right thing to do for the economy.
  Chairman Greenspan at the Federal Reserve appeared before the Senate 
Budget Committee just a few days ago and basically said he thinks we 
are at a point where there is no growth in our economy. If you have 
that situation, basic economics tells you that you try to put some 
stimulus in the economy to get it moving again. And that would be a 
lowering of interest rates, which helps everyone who has an adjustable 
mortgage rate or is paying off a car loan or some credit card loan that 
is reflective of those interest rates, or you find a fiscal approach; 
that is, a tax cut that also generates more strength, more activity in 
the economy.
  But I think where there may be a difference between Senator Brownback 
and myself is on the question of how much we have to spend on the tax 
cut. What can we afford to put into a tax cut? I am going to use the 
maximum amount that is reasonable, but let's look at some of the 
figures that are being used.
  This chart shows the projected budget surplus for the next 10 years: 
$5.7 trillion in a unified surplus. But when we take out the Social 
Security trust fund--which, incidentally, both parties were very clear 
in saying: We are not going to raid Social Security to spend or for 
anybody's tax cut--that takes away $2.7 trillion, so we have a net of 
$3 trillion in our surplus. Then we take away the Medicare trust fund, 
which I am sure all of us agree we would not want to raid for spending 
on other programs, to protect it, and we are now down to a net 
projected budget surplus for the next 10 years of $2.6 trillion.
  Projecting a budget surplus means assuming certain things will 
happen. There are as many economists in Washington as there are 
opinions about what might happen to our economy, but most of these 
projections about a surplus assume certain growth in the economy. They 
say if we continue to grow, we will continue to generate surplus. If 
they are wrong, if the economy takes a downturn, there will be less 
money available, less money for whatever purposes we might consider on 
the floor of the Senate or in the Federal Government.
  Let's take a look at President Bush's proposed tax cut. His proposal 
is $1.6 trillion, which reflects a 10-year tax cut plan. There is also 
an element in the tax law known as the alternative minimum tax. All of 
us are concerned that the alternative minimum tax has been written in a 
way that is starting to penalize a lot of families and businesses we 
never intended to penalize in any way. So reform of the alternative 
minimum tax appears to be agreed by almost everyone as something we 
should do. That would cost us another $200 billion over a 10-year 
period of time.
  In addition, if we take money and, instead of buying down the debt of 
the country, put it into something such as a tax cut, it increases the 
interest costs that have to be paid on that debt by $400 billion over 
the same period of time. The true net cost of the Bush tax plan, 
considering these two scenarios, is $2.2 trillion.
  Recall earlier I said that our actual surplus by these estimates will 
be $2.6 trillion. To put it into some perspective, look at the tax cuts 
assuming a $2.6 trillion surplus. If we put $2.2 trillion into tax 
cuts, as President Bush has recommended, literally 85 percent of the 
surplus will be going exclusively to tax cuts. The remaining $400 
billion, 15 percent, would be there and could be used. However, look at 
all of the things we frankly have to consider out of this $400 billion 
over 10 years: As to debt reduction--I will get back to that in a 
moment--we have a $5.7 trillion national debt. I will talk about what 
it costs us to maintain that debt. The prescription drug benefit under 
Medicare is going to cost us some money; some suggest $300 billion over 
10 years. We are taking this slice of $400 billion and all the things 
in which we want to invest.
  The President has called for more money for education. I like that 
idea. I think it is a good thing to do. Again, it is coming out of this 
slice, this 15-percent slice.
  He has also asked for more money for defense; we anticipate a need 
for agriculture as we have in the past; Medicare reform, Social 
Security reform, and some have even suggested the creation of a rainy 
day fund to protect our economy and our budget in bad times.
  The reason I like to reflect for a moment on the national debt is 
that we have to consider this as the mortgage that we are leaving our 
kids. The best thing we can do for our children and grandchildren is to 
make that debt, that mortgage, as little as possible so

[[Page S839]]

they are not burdened with the responsibility and debt of the 
obligations of our generation.
  What does a national debt of $5.7 trillion cost us? Literally, we 
collect $1 billion a day in Federal taxes from individuals, families, 
and businesses to pay interest on old debt. That is $1 billion a day 
that isn't being spent to put a computer in a classroom or to make 
America's national defense any stronger. It is $1 billion a day which 
instead is being spent for interest on old debt.
  Many of us believe if we truly are at a time of surplus, this is the 
moment we should seize to pay down that national debt, bring it down as 
low as we can conceivably bring it so that future generations and our 
kids and grandkids won't be burdened with this debt and responsibility.

  As you pay down the national debt, the competition for money in the 
marketplace is reduced. The Federal Government is not out there 
borrowing and servicing debt. Therefore, interest rates tend to come 
down. Now not only will we be taking the burden off of families who pay 
$1 billion a day for interest on the old debt, we will also be reducing 
the interest rates they pay on their homes and their cars and their 
credit cards. Families win both ways.
  Ultimately, this is as good, if not better, in many respects, as a 
tax cut. It reduces the cost of living for real families facing real 
difficulties.
  Let me speak for a moment about the tax cut itself. There are a 
variety of ways we can approach this tax cut. Some have suggested 
cutting marginal rates. That is a shorthand approach to a tax cut which 
would, in fact, benefit some of the wealthiest people in this country 
more than working families and middle-income families. That is where I 
have some difficulty.
  I know what is going on in my home State of Illinois now. I know 
because my wife called me a few weeks ago and said: I just got the 
first gas bill for the winter. You will never guess what happened. It 
is up to $400 a month in Springfield, IL. It is about a 40-percent 
increase in my hometown. I hear this story all over Illinois, all over 
the country--energy bills up 50 percent, natural gas bills up 70 
percent. If we talk about tax cuts, we ought to be thinking about 
families who are literally struggling with these day-to-day bills. 
Whether it is the need to heat your home or to pay for a child's 
college education or perhaps for tuition in a school, should we not 
focus tax cuts on the working families who struggle to get by every 
single day?
  I always express concern on the Senate floor that we seem to have 
more sympathy for the wealthiest people in this country than for those 
who are really struggling every single day to build their families and 
make them strong. If we are going to have a tax cut--and we should--
let's make sure the tax cut benefits those families.
  I also want to make certain we protect Social Security and Medicare. 
If as an outcome of this debate we end up jeopardizing Social Security 
or Medicare, then we have not met our moral and social obligation to 
the millions of Americans who have paid into these systems and depend 
on them to survive.
  I believe the good news about the surplus should be realistic news. 
We should understand that surpluses are not guaranteed. We ought to 
make certain that any tax cut we are talking about is not at the 
expense of Social Security and Medicare. We should focus the tax cuts 
on working families to make sure they are the beneficiaries so that 
they have the funds they need to make their lives easier. That should 
be the bottom line in this debate.
  As I said at the outset, Democrats and Republicans alike believe 
these tax cuts are going to happen. I believe it is a good thing to do. 
Let us pay down this national debt. Let us provide a tax cut for the 
families who need it. Let's make sure we protect Social Security and 
Medicare in the process.
  I yield back my time.

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