[Congressional Record Volume 147, Number 16 (Tuesday, February 6, 2001)]
[Senate]
[Pages S1031-S1038]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                TAX CUTS

  Mr. DORGAN. Mr. President, last Friday morning we had an issues 
conference with the Democratic caucus at the Library of Congress, just 
across the street from this building. Those of us in the Democratic 
caucus in the Senate--and there are 50 of us in a 100-person Senate--
spent the day talking about the issues we want to raise during this 
Congress.
  We invited President Bush to come by this issues conference, which I 
believe was unprecedented. As chairman of the Democratic Policy 
Committee, I recommended we invite the new President. He came and made 
a very short presentation to us--very general and very cordial. We 
asked a series of questions, and then he departed. We were very pleased 
he did come by to our issues conference.
  One of the things he said in discussing issues with the Democratic 
caucus was that when he campaigned for the Presidency, he campaigned on 
certain issues, and he said: I intend to pursue those issues as 
President, and there will be time when we disagree, but we should be 
able to do that without being personal and without being disagreeable. 
He understands that there are times we will disagree as a matter of 
public policy, and that is the way democracy works.
  There is an old saying that when everyone in the room is thinking the 
same thing, no one is really thinking very much. That is certainly true 
in public policy. The ability in this kind of a setting to have a good 
aggressive debate on public policy issues, especially controversial 
issues, benefits the American people. Then we get the best of what 
everyone has to offer. So let's begin this debate.
  The President has proposed that we have a $1.6 trillion tax cut in 
this country over the next 10 years. That was not a surprise to us. He 
campaigned on that throughout this country. That election ended in a 
dead-even tie, but the members of the electoral college cast their 
votes, and he is now President. There is not necessarily a mandate for 
this tax cut, at least one for $1.6 trillion.
  I make the point that this President campaigned on it and yesterday 
he announced it, and we will in this Congress now begin to discuss and 
debate the advantages or disadvantages of that particular plan.
  There are a lot of reasons for us to say that now is the time to 
offer a tax cut to the American people. We do have a budget that is now 
in surplus, and that surplus exists in a measure that will allow some 
of that money to be sent back to the American taxpayers. That is the 
way it should happen. There are other uses for that money as well, and 
we ought to include them.
  We ought to pay down the Federal debt with part of it. If during 
tough times we run up the Federal debt, during good times we ought to 
pay it down. Not all of that surplus ought to go to tax cuts; some 
ought to go to reduce the Federal debt. Yes, some ought to go to tax 
cuts, and then some ought to be used to improve life in this country--
invest in education, invest in health care, prepare for the needs of 
Social Security and Medicare in the future. There is a range of needs 
and a range of priorities, and that is what I want to talk about today.
  Twenty years ago, we had a new President come to this office, 
President Ronald Reagan. He proposed in 1981 a very large tax cut. In 
fact, one of the contestants for the Presidency was Republican Senator 
Howard Baker who called the economic plan that President Reagan brought 
in 1981 a ``riverboat gamble.''
  President Reagan said we should cut taxes substantially and double 
the defense budget, and the concurrence of those two policies--cutting 
taxes and doubling the spending on defense--would result in a balanced 
budget. In fact, the plan backfired. It did not result in a balanced 
budget. It resulted in long-term, abiding, deep Federal budget deficits 
that kept growing and growing. And $3 trillion was added to the Federal 
debt in a very short period of time because the plan did not add up--
with annual budget deficits of hundreds of billions of dollars.

  I make that point only because it has taken years of struggle to try 
to deal with those annual budget deficits that kept growing like a 
cancer in our budget. But we did deal with it. Through a

[[Page S1032]]

series of public policies and private initiatives, those budget 
deficits are gone and replaced now by surpluses.
  How did they disappear? One, we changed the direction of fiscal 
policy early in the last decade. We cut some spending and increased 
some taxes. Some did not like it. It was very controversial. Some of my 
colleagues said, if we do this, it will throw the country into a 
recession and throw people out of work. Of course, it did not. It gave 
the American people confidence that we were going to be on the right 
track and that finally Washington was serious about getting rid of 
Federal budget deficits. The result: We had unprecedented economic 
growth. We then had, as well, diminishing Federal budget deficits to 
the point where deficits turned into surpluses.
  So finally, after 20 years, the accumulated deficits are gone. But we 
still have a substantial amount of Federal debt that resulted from 
those annual deficits.
  President Bush says, let us decide to cut the Federal tax load by 
$1.6 trillion over the coming 10 years. What is wrong with that? Aren't 
tax cuts always good? Don't the American people always want tax cuts--
the bigger the better?
  Let me read something written by Allan Sloan, who is a thinker and a 
journalist that I really respect. This was in today's paper. He 
describes what is wrong with it, from my perspective. I am quoting 
Allan Sloan:

       There are weeks when you have to wonder whether the 
     American economic attention span is longer than a sand 
     flea's. Consider last week's two big economic stories: The 
     Congressional Budget Office increased the projected 10-year 
     budget surplus by $1 trillion, and the Federal Reserve Board 
     cut short-term interest rates another half-percentage point 
     to try to keep the economy from tanking.
       To me, the real story isn't either of these events; it is 
     their connection. The Fed is cutting rates like a doctor 
     trying to revive a cardiac patient because as recently as 
     last fall, Fed Chairman Alan Greenspan didn't foresee what 
     today's economy would be like. Meanwhile, although it is now 
     clear that even the smart, savvy, data-inhaling Greenspan 
     couldn't see 4 months ahead, people are treating the 10-year 
     numbers from the Congressional Budget Office as holy writ.
       Hello? If Greenspan missed a 4-month forecast, how can you 
     treat 10-year numbers as anything other than educated 
     guesswork? Especially when the CBO has for years devoted a 
     chapter in its reports to ``The Uncertainty of Budget 
     Projections''?

  Should we really be talking about 10 years, $1.6 trillion?
  Abe Lincoln once gave a speech, and he said that an Eastern monarch 
once charged his wise men to invent for him a sentence to ever be in 
view and which would be true and appropriate in all times and 
situations. Working on the problem, they finally presented the 
following words: ``This, too, shall pass away.'' Abe Lincoln said: 
``How much that expresses. How chastening in the hour of pride and how 
consoling in the depths of affliction, this, too, shall pass away.''

  Because we have turned deficits into surpluses, what has happened in 
this town is that we have people who believe that this kind of economic 
growth and opportunity will continue for 10 years unabated.
  I thought the definition of a conservative was to be reasonably 
cautious about things. That, apparently, is not the case. Let's lock in 
very large tax cuts that have the danger of throwing us right back into 
the same deficit ditch we were in for so very long.
  Let me say this. I believe there is room for a tax cut. I do not 
believe we ought to lock in large tax cuts for the next 10 years. I do 
not happen to believe the kind of tax cuts proposed by this President 
are the kind of tax cuts that we should lock in, in any event. I do not 
happen to believe that you ought to just say, the tax burden in this 
country represents the income tax burden people pay, and whatever else 
they pay is irrelevant. The fact is taxpayers paid over $600 billion in 
payroll taxes in this country last year, and that is relevant because 
three-fourths of the American people pay more in payroll taxes than in 
income taxes.
  But this plan proposed by President Bush says: Ignore that. That is 
not a tax burden that counts. All we are concerned about is giving back 
some income tax. And, by the way, we will give it back on the basis of 
who paid it, and so our giveback plan is that the largest payers get 
back the largest refunds.
  I do not think that is good policy. I do not think it is 
conservative. I do not think it is good for this country.
  Let me go through just a couple of charts that describe the choices 
we are going to make.
  These are budget choices and tax choices: Should we risk slipping 
back into big deficits or should we move forward and build on recent 
economic successes? I think almost everyone would say that is a choice 
which is very simple: Let's build on these economic successes.
  If that is the case, then what are the risks of the fiscal policy we 
choose? What are the risks of deciding that we can see 10 years out? 
Everyone here knows that is not the case. That is foolhardy. We cannot 
see 6 months, 2 years, 3 years, 5 years, or 7 years out. We can't see 
that far. We do not know what is going to happen.
  Does anyone in their own family budget think they have the 
opportunity to understand what is going to happen 7 years or 10 years 
from now? They don't. Yet that is exactly what we are being told by the 
President and his economic advisers: Lock in a $1.6 trillion tax cut 
because we know what is going to happen for the next 10 years. That is, 
in my judgment, very risky for this country.
  The Congressional Budget Office does an analysis of what might or 
might not happen.
  Let's look at the difference in optimistic versus pessimistic 
presumptions. If you want to take an optimistic view of things, if you 
want to always look for a pony in a manure pile--you always think there 
is good news just around the corner--you can ride on this top line. But 
what if it is wrong? What if it is this bottom line? What does that 
mean for the country? What does it mean for kids going to schools in 
disrepair? What does it mean for kids going to school in classrooms 
where there are 32, 34 kids in a classroom? What does it mean for a 
woman who has diabetes or heart trouble and can't pay for her medicine 
because Medicare does not cover it?
  If you make the wrong choice--and we have a huge tax cut that lasts 
10 years, when the economy is soft, and we are back into deficits, it 
means there is no money for education, no money for prescription drugs 
in Medicare, and no money for health care.
  The President proposes that we can see 10 years out, and with the 
surplus that we expect for 10 years out we can propose massive tax 
cuts. Eighty-five percent this is the $2.2 trillion that people say 
really is the cost of what the President says his tax cut is--and there 
is very little money left for debt reduction, which, in my judgment, 
ought to be a priority. It seems to me, one of the things that ought to 
rank high here is reducing the Federal debt during better times. If you 
run it up during tough times, reduce it during good times.
  Prescription drugs in Medicare, we ought to do something in that. We 
know of the challenges in education. They say that defense is going to 
need more money. This administration has talked about substantially 
more money for defense. You also have agriculture, Medicare reform, 
Social Security reform. And how about a rainy day fund. Should there be 
something set aside in case something goes wrong with our economy? Yes, 
I believe so.
  Those are some of the considerations. And President Bush's plan is a 
tax cut that has a relatively small cut in the first year but 
permanently is backloaded with huge tax cuts in the 10th year. What 
that does is, it puts us right back in the same circumstances that we 
found ourselves in in to the 1980s, in my judgment.
  Some say, this public debt is all coming down. Let me take a look at 
this chart. We have a long way to go to reduce public indebtedness, and 
it ought to be a priority. What better gift to America's children, to 
remove that yoke of indebtedness around their shoulders. It ought to be 
a priority. It is, in my judgment, a conservative ethic to decide one 
of the priorities is to reduce debt.
  Finally, let me make the point that we are going to discuss this at a 
time following the longest economic expansion in this country's 
history, when we see a weakening of the economy.
  Let me hasten to add, this is not a surprise. Seven months ago, Alan 
Greenspan decided the American economy was too strong. He and his 
brethren at the Federal Reserve Board

[[Page S1033]]

locked their door because they are the last place in town that locks 
their door to keep the public out. It is the last American dinosaur in 
our Government. They locked their door. They make secret decisions. And 
7 months ago they said: Our economy is too strong. It is growing too 
fast. We have to slow it down. We are going to increase interests 
rates.
  Seven to eight months later, where are we? Planned job cuts at 
Montgomery Ward, Daimler Chrysler, Lucent Technologies, Sara Lee, and 
General Electric--potentially 80,000. This morning EToys is broke. This 
economy is softening far beyond the imagination or expectation of the 
Federal Reserve Board. But no one should be surprised by that. The Fed 
insisted that the economy was growing too rapidly, and they wanted to 
slow it down some. Don't call this economic slowdown anything other 
than Federal Reserve Board strategy.
  Having both studied economics and taught economics in college, it is 
useful to ask the question, notwithstanding the Federal Reserve Board 
action, has anyone really repealed the business cycle, that cycle in 
which you have economic expansion and contraction? It is inevitable. We 
have economic stabilizers to try to even it out a bit more, but has 
anyone been able to repeal the business cycle? The answer is no. As a 
result of that, we have economic contractions, notwithstanding what the 
Fed does. When those contractions exist, we will hope they are minor.
  But the point of all of that is, we should not decide to lock in very 
large tax cuts for a 10-year period when we can't see out 2 years. The 
Fed can't see out 7 months. It is risky for this country, risky for our 
economy and our children, to do that.
  Some, I suppose, can't help it; it is just habit forming. There is a 
story about how elephants with circuses are able to be tied to the 
little metal posts. If you ever to go to a circus, you see the 
elephants. They have a metal cuff around their leg and a chain. The 
chain goes to a little metal stake pounded into the ground. You wonder, 
how can that stake hold an elephant that weighs thousands and thousands 
of pounds?
  The answer is that in Thailand, when they catch the elephants, what 
they do is they put that cuff around the elephant's back leg with a 
chain, and they tie the other end to a big banyan tree. That elephant, 
for a week or two or more, will pull with all of his might and all of 
his energy to get away. But he can't shake that banyan tree. Finally, 
the elephant simply discovers: With that cuff on my leg and that chain, 
I can't move. They take the other end off the banyan tree and put a 
little stake in the ground, and the elephant never moves. He is chained 
by his habit. He can't move, so he doesn't move.
  There is a lot of that in this policy we see these days. This is a 
policy born of habit. The minute you have some good economic news, you 
decide you are going to offer a very big tax cut and it doesn't matter 
what the consequences are.
  I mentioned when I started that there are a lot of ways to provide a 
tax cut. I happen to believe there is room to have a tax cut in this 
country now. But people pay income taxes, and they pay payroll taxes. 
They pay a range of taxes, income and payroll being the two largest. 
The President's proposal, like a lot of others, says the only taxes 
that really count are the income taxes and we will give you a portion 
of them back.
  What about the people at the bottom of the economic ladder who pay 
payroll taxes? Three-fourths of the American people pay more in payroll 
taxes than in income taxes. Yet no one ever talks about giving them 
something back. Why not? How about those who work at the bottom rung of 
the economic ladder, many of whom pay no income taxes because they 
don't earn enough income? How about giving them something back in terms 
of the heavy payroll taxes they pay? How about making sure that when 
you provide a tax cut, the tax cut is fair across the board, not just 
provide very large tax cuts to the people making three, four, five 
hundred thousand, and more, millions a year, and then just small crumbs 
to the people at the bottom, if any at all.
  This economic engine of ours works because a lot of people are out 
there working, some at the top, some at the bottom. Don't diminish the 
efforts of those at the bottom. They pay taxes, too. They get up in the 
morning. They work hard all day. They pay taxes. They pay the same rate 
of payroll taxes as the richest Americans pay on their salaried income. 
So how about some help for those folks.
  What I would prefer we do in a tax cut plan would be to propose a 2-
year tax cut plan for this country, and, at the end of 2 years, to 
evaluate: Do we have continuing surpluses? Is our economy good and 
strong? And if so, then we should continue those tax cuts. What I would 
suggest is that we provide a tax cut over the next 2 years that 
represents a percentage cut in income taxes paid, plus payroll taxes 
paid. Add those burdens together and take a percentage of that and 
provide a tax cut for 2 years based on that. That recognizes then that 
people at the bottom who are paying payroll taxes also ought to get a 
percentage of that back.
  I am not saying we should eliminate money from the trust fund. Let 
that go into the trust funds. I am saying that when you measure the 
burden of taxes, measure the Federal income taxes paid and the payroll 
taxes paid and provide a percentage of that and give it back. And I 
would have a maximum of perhaps $1,000. That is a way to give a tax cut 
in a manner that is fair and in a manner that makes sense.
  Second, as we talk about taxes, there is one other thing we ought to 
do. I have been working on this for a couple years. I have introduced 
it with a couple of my colleagues. It is called the FASST plan--the 
Fair and Simple Shortcut Tax plan. Over 70 million Americans can pay 
income taxes in the future, if we adopt this plan, without ever having 
to file an income tax return. Your withholding at work is your actual 
tax liability. Check a few additional boxes on your W-4, one of which 
says I am a homeowner, yes or no, and your actual withholding becomes 
your actual tax liability. No waiting in line on April 15 at the post 
office. No more audits. Over thirty countries have return-free tax 
filing systems for most of their taxpayers. We could, and we should.
  Seventy million Americans can avoid having to file income tax returns 
in the future if we pass the Fair and Simple Shortcut Tax plan I 
propose. That also can be done in a way that reduces taxes, because in 
order to do that, you would eliminate taxes on the first increment of 
interest, dividend and other investment income that families have.
  I won't go into all of the details of my plan, but it makes sense, if 
we are talking about substantial changes in our Tax Code, to consider 
simplifying the Tax Code at the same time. Those are a couple of things 
I think we should do. We ought to recognize that payroll taxes count as 
well. That is part of the tax burden. We ought to do something that 
recognizes that.
  Finally, let me talk for a moment about the alternatives. If we 
decide to lock in a 10-year tax cut, a very sizable proportion, there 
will not be any money left to pay down the Federal debt, which, as I 
said, I think ought to be a priority, and, second, to make needed 
investments which we know are necessary.
  I have talked before about a couple of people. I will do it again. We 
know it is a priority to provide a prescription drug benefit in 
Medicare.
  I was in Michigan, ND, one evening. A woman came up to me after a 
town meeting, and she grabbed hold of my arm. She was perhaps in her 
late seventies, early eighties. She began to speak to me about the 
prescription drug medicine she had to purchase. Then her chin began to 
quiver, her eyes filled with tears, and she said: I can't afford to buy 
these prescription drugs. I don't have the money. I know I need them. 
The doctor says I must take them, but I don't have the money. Her eyes 
were filled with tears, and she turned away from me. That goes on all 
across this country, people who need prescription drugs, living on 
Medicare, but they don't have the money.
  Do we have needs to respond to in those areas? You bet your life we 
do. That ought to be a priority.
  I have talked about Rosie Two Bears, a third grader in a school that 
is dilapidated, in a school where kids sit at desks 1 inch apart in 
crowded classrooms in a school, part of which has been condemned, in a 
school that has

[[Page S1034]]

classrooms where they have to evacuate because the sewer gas comes up a 
couple times a week. And little Rosie Two Bears says to me: Mr. 
Senator, are you going to build me a new school?
  I can't build her a new school. I don't have the money to build her a 
new school. She and so many others around this country need a school 
that is renovated and modern and capable. When she walks through that 
classroom door, we do her and others a disservice by not having a 
first-class facility for her to be educated in. Is that a need for us? 
Yes, that is a need.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. DORGAN. I ask unanimous consent to proceed for an additional 
minute.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DORGAN. We have many needs and many priorities, one of which is, 
yes, let's provide a tax cut. Let's make it fairer.
  Second, let's not have a 10-year tax cut locked in so that we put 
this country's economy at risk and throw us back into Federal deficits.
  Third, let's also pay down the Federal debt while we have some 
surpluses. What better gift to our children than paying down the 
Federal indebtedness we ran up during tougher times.
  Fourth, let's not provide a tax cut that is so large, the bulk of it 
will go to the upper income people, in a way that would prohibit us 
from having the resources we need for education, health care, and other 
areas that we know need additional investment in this country. Those 
ought to be our priorities.
  I say to the new President, I am interested in working with him and 
others. Having an aggressive, good debate about fiscal policy is not 
personal, and it shall never become personal. We have different ideas 
about the priorities in this country. We need to debate that in the 
coming months. I intend to talk about that because I believe so 
strongly that we ought to do all of the things I have described in 
order to give us an economy that will continue to grow, prosper, and 
provide opportunities for all Americans.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER (Mr. Enzi). The Chair recognizes the Senator 
from Idaho.
  Mr. CRAPO. Mr. President, I have been here on the floor listening to 
the debate. I am very pleased that we are engaging in a real debate 
about the possibility of meaningful tax relief. I have worked since I 
was elected to Congress, about 8\1/2\ years ago, to try to reform the 
Tax Code. I hope our debate over reducing taxes does not cause us to 
lose sight of the fact that we have to ultimately reform our Tax Code. 
Taxes are not only too high but too complicated, and the cost of simply 
complying with the Tax Code is a burden the people must see removed.
  Tax relief. Why are we debating so much about tax relief right now? 
What is the thing that caused us to come together? It is the fact that 
President Bush has been elected and has followed through on his 
campaign commitment to propose a $1.6 trillion tax cut to the American 
people.
  I want to go through what it is President Bush has proposed. We have 
had a lot of debate about whether it is good or bad to have a tax cut, 
but not a lot of details about what President Bush is proposing we do. 
The President's tax relief proposal is fair and responsible. It 
provides a typical American family at least $1,600 in relief. They get 
to keep at least $1,600 of their own money that they are now sending to 
Washington with these skyrocketing surpluses, which I will talk about 
in a moment, which are growing. The typical American family is defined 
in this context as a family of four with one wage earner who earns 
$50,000 annually. I will give you more statistics about what this means 
for other types of situations.
  For example, the President's proposal gives a tax cut to every single 
family in America who pays income taxes. What does it do? It reduces 
the current five-rate tax structure to a four-rate tax structure and 
reduces every tax rate. Every taxpayer who is in any tax rate--in any 
tax bracket--will receive relief. Right now, he is proposing that we 
move to a 10-percent, a 15-percent, a 25-percent, and a 33-percent tax 
bracket.

  For those of you who don't follow tax brackets, currently the lowest 
is 15. So if you are in the lowest income category, paying the lowest 
rates of income taxes, you will see your tax rates go from 15 percent 
to 10 percent--a 33-percent reduction for that tax bracket alone. The 
tax reductions are lower as the rates go higher, in terms of percentage 
of income.
  It doubles the child tax credit to $1,000. It reduces the marriage 
tax penalty.
  I think we ought to eliminate the marriage tax penalty. I have 
cosponsored legislation which does that. Many of us will be trying to 
see if that total elimination of the marriage tax penalty can be worked 
into this package.
  It eliminates the death tax and expands the charitable tax deduction.
  What does this mean? It means that one in five families with children 
now who are paying taxes will no longer pay any tax at all. Six million 
families, those at the lower income levels, will be totally eliminated 
from the tax rolls. A family of four making $35,000 would get a 100-
percent tax cut. A family of four making $50,000 would receive about a 
50-percent tax cut. A family of four making $75,000 would receive about 
a 75-percent tax cut. The marginal income tax rate on low-income 
families will fall by over 40 percent.
  The current Tax Code is unfair to a single mom paying $25,000 a year. 
She pays a higher marginal tax than somebody making $250,000 a year. 
That will be changed under this tax proposal. Federal taxes today are 
the highest they have ever been in peacetime America. Americans pay 
more now for taxes than they spend on food, clothing, and housing 
combined. Americans work more than 4 months out of every year just to 
pay their tax bills. The current high tax rates are keeping low-income 
taxpayers out of the middle class.
  Recent business layoffs show that the economy needs a boost quickly. 
Those layoffs are not a reason not to have tax relief; they are a 
reason we need tax relief.
  The critics--and there are always critics--are throwing everything 
they can at this tax relief proposal. I am in my ninth year in 
Congress, with 6 years in the House and almost 3 years in the Senate. 
During the entire time I have served in Congress, we have fought for 
tax relief. We have put forward bill after bill. We have put forward 
every kind of idea you can think of to get the President and the 
administration and those who oppose tax relief in this city to support 
something.
  Every time in the last 8\1/2\ years, whatever we have proposed, 
whatever it is, has been attacked as a ``tax cut for the wealthy.'' I 
start to wonder if anybody who pays taxes is defined as wealthy. When 
we get a proposal such as this one that benefits everybody in America 
and gives higher percentages of relief for those at the lower income 
level, it is attacked as what? A tax cut for the wealthy.
  It seems there is not ever going to be a tax cut that is acceptable 
to those in this country who want to keep taxes high so they can keep 
spending high. That is what this debate is about. Make no mistake about 
it; We are now seeing that the record levels of spending by this 
Federal Government are not enough to those who want to see spending 
increased even more. We have projections of $5.6 trillion of surplus in 
the next 10 years, and that is not enough.

  We have to say that a $1.6 trillion tax cut is going to threaten our 
country. The reason it is a threat is that there are those who believe 
that from cradle to grave this Federal Government must take care of 
you. In order to do so, it has to have your tax dollars. Spending at 
the Federal level is the ultimate objective.
  Let's talk about that surplus. The latest projections are for a $5.6 
trillion surplus. One of the battles we have won in the last 8 years 
since I have been in Congress is that we have stopped the Federal 
Government from robbing the Social Security surplus and spending Social 
Security dollars, masking excess spending. We don't allow that to 
happen anymore, and we won't here.
  If you take out the Social Security part of the surplus and the other 
off-budget portions of the surplus, that is about $2.5 trillion, 
leaving somewhere in the neighborhood of $3.1 trillion of non-Social 
Security on budget surplus

[[Page S1035]]

over the next decade. President Bush is proposing that we give tax 
relief for $1.6 trillion of that.
  You have heard the argument made that it is risky; we can't project 
10 years and be accurate. That is true. In the 8 or 9 years I have been 
here, I can't remember a year when we got it exactly right. But I can 
remember that every year we got it low. We used conservative estimates. 
We have built in downturns in the economy. Frankly, if we find that 
even these conservative estimates are not too low--and I will note that 
they are upgraded every month now, showing that they are low--we can 
adjust things as we move along. To scare people out of a tax cut by 
saying we don't know for sure is simply another argument by those who 
never want to see taxes cut.
  We have an opportunity to reduce taxes in a significant way, and we 
ought to take it.
  Let's talk a little bit about what the positive effect of tax relief 
will be. Tax relief is going to have the immediate effect of helping 
families, businesses, and communities save and invest more while moving 
in a direction toward reforming the Tax Code. Prompt action will also 
improve the economic environment and strengthen consumer confidence.
  By the way, those projections we use are what we call static 
projections. As we project, we are not allowed to assume reduced taxes 
will stimulate economic activity. We have to assume that every dollar 
of taxes that we cut is a dollar of lost revenue to the Federal 
Government.
  Experience shows us that in many of the areas where we reduce taxes 
the increased stimulation to the economics of the country actually 
generate increased revenues. Every time so far that we have cut the 
capital gains tax, the revenues from the capital gains tax have gone 
up--not down--because it has allowed more capital transactions to take 
place in this country. We are not allowed to take any of that into 
consideration. But tax relief will--mark my words--allow for more 
investment, will allow for more safety, will strengthen consumer 
confidence, and will stimulate and strengthen our economy.
  Recently Alan Greenspan was emphatic about the superiority of tax 
cuts to spending increases. He said: If long-term fiscal stability is 
the criterion, it is far better, in my judgment, that the surpluses be 
lowered by tax reductions than by spending increases.
  That is what the debate is about. This debate is not about whether to 
pay down the debt or to reduce taxes. This debate is about whether to 
keep taxes high so this Government can continue its increasing appetite 
to spend Federal dollars and pull control over the economy and over 
people into Washington. The argument is made that we should reduce the 
Federal debt first. Frankly, I agree with that.
  I strongly believe that our highest priority should be to pay down 
the Federal debt. Alan Greenspan pointed out that with the surpluses we 
are seeing now we are paying down the Federal debt at a rate about as 
fast as we can.
  There are certain instruments out there that go beyond the 10-year 
timeframe with which we are dealing--public debt instruments--and if we 
buy those down early, we will actually have to pay a premium in order 
to do so.
  His point was that if we continue our current rate of paying down the 
national debt, we can do so and have this tax relief.
  We have already reduced the national debt by $360 billion. We reduced 
it last year by $224 billion. Even assuming this tax relief package 
goes into place, in 5 years we will have paid off more than half the 
Federal debt, and in 10 years we can pay off most of it--still working 
on both areas where we have debt instruments that are out there beyond 
the 10-year time cycle.
  Make no mistake about this either. We are committed to paying down 
the national debt, and we will pay down the national debt. But stopping 
a tax relief package is not going to accelerate that process. Stopping 
the tax relief package is simply going to accelerate the opportunity 
for Federal spending sprees as we go into our appropriations cycles in 
this Congress.
  I think it is important that we get this debate in its proper 
perspective. Our goal here is to improve the quality of life for all 
Americans. The argument has been made about this tax package that, 
well, it is going to stop us from being able to make needed investments 
in areas that we have to invest.

  Remember those budget surplus numbers I talked to you about earlier. 
Even if they are not adjusted up anymore, we are going to have 
somewhere in the neighborhood of $1.5 trillion over the next 10 years 
after the tax relief package; after saving all the Social Security 
surplus and other off-budget surplus dollars to use for strengthening 
things where we have legitimate needs for Federal spending.
  For example, America's failing schools still fail to deliver a world-
class education; and President Bush has proposed to make sure not one 
student is left behind.
  Our national security needs some strengthening. We can assure that we 
have an effective defense against ballistic missile attacks; that our 
military's aging equipment and personnel shortages are addressed; Our 
health services and programs for the elderly are out of date and need 
reform and strengthening.
  Those things can happen. We can address the needs of this country 
without being caused, by the politics of fear, to think we don't have 
an opportunity for tax relief right now. That is what it ultimately 
gets down to.
  This time, as well as every time in the last 8 years, we will try to 
talk America out of a tax cut. They will use what I call the politics 
of fear. They will say we can't protect you if you do not let us have 
these tax dollars; that we can't do what is needed to make sure that 
your life is made safe; and that if you allow this tax relief package 
to go through, then all kinds of terrible things are going to happen to 
the economy.
  The truth is, this is a modest tax relief proposal given the 
potential surpluses we see growing; and as we move forward this country 
will be strengthened--not weakened--by a resolve to reduce the tax 
burden paid by the American families.
  Again, we pay the highest rates of taxes today than we have paid in 
peacetime America. We have some of the highest surpluses ever. We can 
protect Social Security and strengthen our country, and we can do so if 
we will properly address the issue of tax relief.
  I encourage us to move forward quickly to pass this tax package.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Iowa is recognized.
  Mr. GRASSLEY. Mr. President, I yield myself such time as I might 
consume up to 15 minutes. I may not use all 15 minutes, if there are 
other speakers waiting to come to the floor.
  I have been asked by the manager of this bill to accommodate Senator 
Durbin by adding 11 minutes at the end of the time of morning business 
for Senator Durbin, and in the process of my doing that for Senator 
Thomas, I need to apologize to the Senator from Louisiana, Ms. 
Landrieu, because she asked to do the same thing. I guess we weren't at 
that point so accommodating because I said I would accommodate her at 3 
o'clock this afternoon. I apologize to Senator Landrieu.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. GRASSLEY. Mr. President, this morning, and a lot of times during 
this debate over the next 4 or 5 months on tax legislation, we will 
hear a lot of economic arguments. I don't want to detract from those 
economic arguments as not being good arguments, but I think they are 
tailored to fit the pattern of people who have a political philosophy 
that believes more money running through the Federal budget, and 
through the Federal Treasury, as a percent of our gross domestic 
product is a better thing to do.
  They believe that a political decision made by Senators and 
Congressmen and a President on the distribution of goods and services 
within our country is better than leaving the money in the pockets of 
the men and women who are working in America to pay those taxes to 
decide how that money should be spent. We may not talk about it enough, 
but our philosophy for those of us who are fighting for tax relief for 
every taxpayer in America is that we believe there is more economic 
good done for America--and creating jobs in America and having a better 
life in America--if the money does not come through the Federal 
Treasury; or at least if less of it comes through the

[[Page S1036]]

Federal Treasury and more is spent and invested by individual working 
men and women, entrepreneurs, and people who create jobs; or even if 
the money is spent by consumers. We believe that by having the 
marketplace and willing buyers and sellers make that determination of 
how the money should be divided creates more jobs, and turns over many 
more times in the economy than if the money comes through the Federal 
Treasury, and there is a political decision on how it should be 
distributed.
  Those are honest political and philosophical differences between our 
political parties. They are honest differences, but one has great faith 
in government to make decisions; the other one, mine, has great faith 
in individuals to make decisions. My philosophy will create more jobs. 
Since government does not create wealth, government distributes wealth 
or expends wealth, there aren't as many jobs created in the process. 
When the government actually creates a job, it is a job that consumes 
taxpayers' money, not creating wealth.

  These economic arguments are very good, but I feel more comfortable 
applying a little basic common sense to the whole argument of a tax 
cut; a little common sense to offset a lot of Washington nonsense. It 
is common sense that we have a tax surplus. We haven't had a tax 
surplus except in the last 4 or 5 years. Before that, I have to admit, 
Congress was very fiscally irresponsible with budget deficits. We had 
some tax surplus in the Social Security account, and we still have it, 
but it was meant to cover up irresponsible spending on the other side. 
That is behind us now that we have had a new Congress for the last 6 
years, going on 7. We have not only budget surpluses, but surpluses 
beyond budget surpluses; those are tax surpluses.
  It has reached a point, because of automatic bracket creep, where 
people earn more and they are put in higher brackets. That money is 
coming in at historically high levels of taxation. Automatic bracket 
creep comes because people get put in a higher bracket and there isn't 
enough reduction in the tax brackets through the inflationary 
adjustment to offset that. Consequently, we have automatic tax 
increases on people without a vote of Congress. As a result of bracket 
creep as well as other enacted tax increases, taxes are now at 20.6 
percent of gross domestic product, whereas over a 50-year period of 
time it was somewhere between 18.5 and 19.5. Historically, the economy 
has adjusted itself to that level of taxes. I think the people have 
accepted it as a reasonable rate of taxation. But they don't accept 
this historical high of 20.6 percent. That is why we are having the 
demand for tax relief for every taxpayer.
  Common sense dictates if we are going to keep this level of taxation 
up, that it is going to be burning holes in the pockets of Senators, 
Congressmen, and even Presidents to get spent. Those expenditures are 
generally on a continuing basis and an obligation always on the Federal 
Treasury. We want to discourage the level of expenditures growing as it 
did over the last 3 years, an average of 6 percent, twice the rate of 
inflation; or last year, 11.9 percent, three times the rate of 
inflation. That is not sustainable because taxes aren't coming in at 
that level. Even if they were coming in at that level, we would not 
want to have the level of expenditures that high because sometime there 
will be a downturn in the economy, and when that income goes down, 
expenditures don't go down to adjust to the income of the Federal 
Treasury.
  Common sense dictates we have to take some money out of Washington, 
DC, and leave it in the pockets of the taxpayers of America so we 
aren't the overtaxed nation that we are, that we are more where the 
historical level of taxation has been for 50 years.
  Now is the time to do that, to make up for the real bracket creep we 
have had, these automatic tax increases we have had, where we have 
reached the point where the average taxpayer is spending more on food, 
clothing, and shelter than they are spending on taxes. We will give tax 
relief to working men and women, to taxpayers in America, because of 
this high level of taxation, because we don't want money burned up in 
Washington, DC. We want to keep the money out of Washington, DC, 
leaving it in the taxpayers' pockets.

  There is 50 years of common sense behind that because that has been 
the level of taxation, 18 to 19 percent of the gross national product.
  We need to understand the taxpayers trust themselves with the money 
more than they trust the Internal Revenue Service. We will hear the tax 
relief that I am talking about is labeled a risky scheme. The only 
scheme is Washington's insatiable appetite for more and more of the 
working men and women's hard-earned tax dollars.
  There is a threat, we are told, that we can't continue to pay down 
the national debt. We can continue to pay down the national debt. We 
will continue to pay down the national debt. We are going to continue 
to pay down the national debt until we get to that point where Chairman 
Greenspan has advised that you can't pay down any more national debt 
because there is about $1 trillion of the national debt that is held by 
individuals who want the security of the Federal Treasury for their 
savings. They have bought 30- year Treasury bonds, and about $1 
trillion of those are not callable. In about 6 or 7 years, we are going 
to reach the point where there is money coming into the Federal 
Treasury, that if these bonds are not callable, you don't pay down the 
national debt anymore, you start having the Federal Government invest 
in the stock market, buying other bonds, buying other stock, or at the 
very least, as the law requires now, to invest in federally insured 
financial institutions and then have an inordinate political impact 
upon the economy when that enormous transfer of billions and billions 
of dollars is put into the private banking system. That caution is not 
urged by Senator Grassley. That caution is urged by Chairman Greenspan.
  I assure people we are going to continue to pay down on the national 
debt. Taxes are so high we have reached the point where a two-wage-
earner family, particularly if they are middle-income or below, one-
wage earner is working to put food on the table and a roof over the 
head and just to provide for the family; the other one is working to 
pay for the Washington bureaucracy. That isn't how a family gets ahead.
  For a family with a $50,000-a-year income--this will probably be a 
two-wage-earner family; it wouldn't have to be but it could be--but for 
a $50,000 income family of four, their taxes now are about $4,000, on 
average. Under the President's proposal they drop down to $2,000. 
Consequently, that will leave in the pockets of those working men and 
women income for them to decide on their own how that money can be 
better used, whether it is saved for college education, pay more down 
on credit card debt, pay more down on the house mortgage. They may want 
to spend it, but that family making a determination of how to spend it 
is going to do more good for the entire U.S. economy than anything 
else.

  We have also been urged this morning: Don't get locked into a tax 
cut--this is where the trigger mechanism comes in--and that maybe we 
ought to have automatic increases in taxes for 4 or 5 years down the 
road in case something unpredictable happens.
  We do not need to worry about that. Common sense tells me that it is 
easier for Congress to increase taxes than to decrease taxes. We do not 
have to have an automatic trigger. It is not good for the economy to 
have it anyway because working men and women are going to perform 
according to the predictability of the Tax Code, and we should make 
sure it is predictable.
  My time is up. I assure my colleagues, we do not have to worry about 
triggers because we have only had two tax decreases in 20 years, but we 
have had Congress vote tax increases in 1982, 1984, 1986, 1990, and the 
biggest tax increase in the history of the country under President 
Clinton in 1993. So we do not need an automatic trigger. If we need to 
increase taxes, Congress can do it, and common sense tells me that we 
will do it. I yield the floor.
  The PRESIDING OFFICER (Mr. Thomas). The Senator from Wyoming.
  Mr. ENZI. I thank the Chair. Mr. President, it is always an exciting 
day when an accountant gets to talk about taxes.
  The American people have had some concerns over taxes for a long 
time. If you were to throw that into a list of things about which they 
are concerned,

[[Page S1037]]

it would probably come out at the top. Do they think there is going to 
be tax relief?
  I ran into a song written by a guy named Roger Miller that sums up 
the trust people have in the Federal Government giving them some tax 
relief, and it goes something like this:

     Well, you dad-gum gov'ment
     You sorry so 'n' so's
     You got your hands in every pocket of my clothes
     Well, you dad-gum, dad-gum, dad-gum gov'ment.
     Well, you dad-gum gov'ment
     You sorry rackafratchits
     You got yourself an itcha
     And you want me to scratch it
     Well, you dad-gum, dad-gum, dad-gum gov'ment.

  The President is coming through with relief on the burden of every 
taxpayer--every taxpayer. I am in support of President Bush's relief 
proposal. It is time to ax the tax and cut the burden down to size.
  I applaud President Bush in acknowledging that surplus revenue is a 
tax overcharge. It is time to stop the overcharge. It is time to return 
the money to the American people. It is time to relieve the burden on 
all the taxpayers.
  Americans deserve tax relief. Right now Federal taxes are the highest 
they have been in America during peacetime. Americans pay more in taxes 
than they spend on food, clothing, and housing combined. Most people 
work more than 4 months each year just to fund their government. It is 
time for the Federal Government to get its hands out of the pockets and 
allow them to keep more of their own money.

  President Bush has proposed tax relief for every taxpayer. That is 
right; if you pay taxes now, you will receive tax relief under 
President Bush's proposal. As an example, a family of four who earns 
$50,000 a year will receive tax relief of $1,600. That is a 50-percent 
reduction for those families.
  Right now I can tell you $1,600 will go quite far in my home State of 
Wyoming. For most folks, that will pay for 1 or even 2 months of 
mortgage payments. It will cover a year's worth of gasoline for two 
cars. It will cover the cost of a year's tuition at many of the 
community colleges. It will cover the cost of groceries for 4 months 
for many people in my State.
  Most importantly, President Bush and the Republican Congress trust 
the American people themselves to spend their own money as they see 
fit.
  President Bush's tax relief will simplify the code while providing 
relief for all Americans. That is another place where we have a huge 
burden: The amount of time that it takes to get the information 
together to see if you owe or if the country is going to give you back 
some of what you paid.
  This plan replaces the current five rates with four lower rates of 
10, 15, 25, and 33 percent. As such, this tax rebate legislation takes 
an important step in simplifying our terribly complex code, while 
allowing all taxpayers to keep more of their own money.
  Instead of attempting to pick winners and losers--beware of the tax 
plan that starts out with: Don't give any money to the rich; just give 
it to the poor. You will find that under the definition of ``rich,'' 
anyone who pays taxes is considered rich and will not get money back. 
Watch the wording. Watch the details.
  We cannot have a bill that attempts to pick winners and losers and 
makes tax relief a lottery, particularly including those who do not 
pay.
  The President's tax plan honors the contribution of all Americans and 
recognizes they can spend their own money better than the Federal 
Government.
  In addition to a simplified lower tax structure, President Bush's tax 
proposal will benefit families by doubling the child credit from $500 
per year to $1,000 a year. It lowers the marriage penalty. It kills the 
death tax.
  This is a tax policy that puts its money where its mouth is. The 
current Tax Code punishes marriages and savings. The Bush proposal 
rewards marriage, rewards parents, rewards savings. This plan 
recognizes the enormous burdens that many parents are under and 
provides some hard-earned relief for each and every taxpaying family in 
the United States by returning to them part of the tax overcharge that 
has made this historical surplus possible.
  While this tax relief proposal will benefit all taxpaying Americans, 
it especially helps middle-class families who are the backbone of our 
economy. Those receiving the largest percentage reduction in their 
Federal income taxes will be those in the middle class.
  For example, a family of four earning $75,000 a year will see their 
Federal taxes reduced by 25 percent. The same family of four earning 
$50,000 a year will benefit from a 50-percent reduction. If a family of 
four earns $35,000 a year, they will pay no Federal income taxes under 
President Bush's proposal.
  This tax proposal is part of a three-prong strategy to save Social 
Security, pay down the debt, and return a portion of the tax 
overpayment to the people responsible for it: the American taxpayers.
  For decades, the Democrat-controlled Congress spent the Social 
Security surplus on a variety of programs. Under a Republican-
controlled Congress, the Social Security surplus is being protected so 
that it will be there for present and future retirees. It is now time 
to return a portion of the non-Social Security tax overcharge to the 
American people.
  There are those on the Democratic side of the aisle who say we cannot 
afford tax relief for Americans because we need to spend the money to 
pay down the Federal debt. If I really thought they were serious about 
this, I would be more inclined to listen. The problem is, in the 4 
years I have been here, I have not seen their actions back up this 
rhetoric.
  I have been working with my colleagues, primarily Senator Allard and 
Senator Voinovich, to actually implement a policy that ensures we pay 
off the entire publicly held debt regardless of whether all the budget 
surplus numbers materialize. We have tried at least six different 
approaches. Guess how many Democratic cosponsors we have had on any of 
those proposals? Zero.
  Our Democratic friends love to talk about debt reduction, but when it 
comes time to vote on a tax cut, when it comes time to vote on debt 
reduction, their enthusiasm disappears as soon as the next 
appropriations bill hits this floor; and they envision 1,000 ways to 
spend that same surplus. They say: Don't lock us into $1.6 trillion of 
tax relief. Don't lock us into that.
  Do you know what spending does? Spending locks the American taxpayer 
into an eternal debt. Do you ever see us stop a program? Do you ever 
see us hold a program at the same level? Every program continues; every 
program gets an increase.
  We talk about how the cost of living is going up, and we better spend 
more on that program to cover the additional costs of that program for 
the cost of living. Then we expect to increase it on the basis of 
whether it is a good program. The evaluation isn't whether it is good 
or bad. We lock things in. Every time a dime of the American taxpayer's 
money is spent on a new program, that dime is obligated, year in and 
year out, for their generation and generations to come.
  Tax relief isn't locked in quite that well, as people have noticed 
when they have had their taxes raised in previous years.
  A tax raise can happen. Tax raises happen more often than spending 
cuts. So don't talk about locking in a tax cut, particularly with the 
hope of being able to put it into new programs.
  There is also talk about the need to reduce payroll taxes. The Bush 
plan reduces payroll taxes. It reduces that portion of the payroll 
taxes that are income taxes. It does not yet deal with that portion of 
the payroll tax that is Social Security or Medicare. Those are two 
programs funded separate from the Federal income tax. Those are two 
programs that must be reformed. To make statements on the floor that we 
are going to reduce those payroll taxes without putting reform in place 
says that we do not care about the future of Social Security and 
Medicare. We do. We need the reform. The payroll taxes that are 
involved with Medicare and Social Security have to be taken into 
consideration as part of that reform.
  And the rich versus poor: That is an attempt to start class warfare. 
The idea is to relieve the tax burden of every taxpayer.
  You will see things thrown into the rhetoric that will give tax 
relief to those who do not pay taxes. To me, the surplus is a tax 
overcharge. That is like going to the store and buying something and 
being overcharged.

[[Page S1038]]

 When that happens--and somebody discovers it, and somebody is honest 
enough to pay that back--I kind of expect them to pay it back to me. I 
do not expect them to pay it back to somebody who just happened to walk 
through the store. That is what we are talking about with some of the 
proposals that are being put out there.
  We need to remember that the surplus is not some magical pot of money 
created by those in Washington. It is an overpayment of taxes by the 
American people. It is only fair that we return a portion of that 
overcharge to those who gave us this surplus in the first place.
  My experience has been that if we do not give a large portion of this 
surplus back, we will see it disappear in the waning days of this 
Congress, as we feed the unquenchable appetite of the ravenous 
appropriations bills. How does that affect you? When we are voting on 
appropriations, we are spending a very small part of the American 
taxpayer's money on each and every proposal. I think the American 
taxpayer realizes, if you spend enough quarters, you have used all of 
their tax money. That is about what they put into a program--25 cents. 
Some people are more than willing to put 25 cents into a new program. 
But they ought to be able to pick which programs themselves and not 
rely on the beneficence or the unique knowledge that 100 of us have 
here and 435 have on the other end of the building. If they want to 
give, they should be able to give. They should get credit for giving, 
but they should be able to select what they want to give. They should 
be able to select what they want to buy. That is what the tax package 
does.

  We also have a unique opportunity to simplify. Complexity is a tax 
burden. It is a tax burden for individuals. That is the No. 1 thing the 
National Taxpayer Advocates have pointed out: Complexity is the No. 1 
problem. The No. 2 problem is complexity for small business, where a 
lot of individuals are trying to earn a living out there.
  It is time to ax the tax and cut the burden down to size. We do need 
tax relief, and we need it now. President Bush's tax proposal is fair, 
responsible, and will benefit all American taxpayers. This tax plan 
will create jobs, it will spur economic growth, it will mean jobs for 
us and our kids, and it will support families in the essential task of 
raising children.
  Let's return the tax overcharge and give the American people tax 
relief now.
  I yield the floor.
  Mr. HUTCHINSON addressed the Chair.
  The PRESIDING OFFICER (Mr. Enzi). The Senator from Arkansas.
  Mr. HUTCHINSON. Mr. President, I commend my colleague from Wyoming 
for his very strong, clear, and forceful statement supporting tax 
relief for the American people. It was well reasoned. I applaud him for 
making his statement and associate myself with it.

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