[Congressional Record Volume 147, Number 17 (Wednesday, February 7, 2001)]
[Senate]
[Pages S1098-S1104]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TAX CUTS INCREASE REVENUE
Mr. INHOFE. Mr. President, as a lot of people have been doing, I have
been watching and listening with a great deal of interest to the debate
and the brilliant things that have been said about the proposed tax
cut.
I think there are three significant things that have not come across
in this debate, and I think we need to talk about that and concentrate
on it.
One is the myth that if we cut rates, somehow that is going to have
the result of cutting revenues. I do not know what we have to do in
history to show that is not correct.
The first time that the whole idea--some call it supply side--came
out was way back, following the First World War. At that time, it was
the Harding administration and the Coolidge administration. They raised
money in order to fight the war. And, of course, that was successful.
But after the war, they decided that with the war effort gone, they
could reduce the taxes. They reduced the top rate from 73 percent to 25
percent. They thought that would have a dramatic reduction in the
revenues that were produced around our country. But they were willing
to do it. To their surprise--this is the first time they had learned
this--the economy, as a result of that reduction from the top rate of
73 percent down to 25 percent, actually grew the economy 59 percent
between 1921 and 1929. And the revenues during that time grew from $719
million in 1921 to $1.16 billion in 1928.
Then along came the Kennedy administration. This is the one where I
don't understand how liberal Democrats can stand here and ignore the
lesson that we learned during the Kennedy administration. Yes. Kennedy
wanted more money spent on social programs. And he said on this floor
that we needed more money to raise more revenues to pay for all the
domestic programs we were getting into, and the best way to increase
revenue was to reduce taxes. At that time, the top tax rate was 91
percent.
So he reduced the taxes with the help of Congress from 91 percent
down to 70 percent, and exactly the same thing with exactly the same
percentages that took place after World War I took place. Tax revenues
grew during that period of time, 1961 through 1968, by 62 percent.
I know there are a lot of people who don't want to believe this. I
don't want to unfairly attribute a quote to Laura Tyson, but I remember
in 1993 she made a statement I interpreted to be: There is no
relationship between the taxes that a country pays and its economic
performance. Theoretically, if that is true, you could tax Americans
100 percent and they would have the same motivation to stimulate the
economy as if they were taxed 50 percent. We knew that is not right.
[[Page S1099]]
We had gone through that during the 1960s. For some reason, Democrats
today will not acknowledge that. This is a lesson we learned from
Democrats. Of course, the 1980s came. In 1980, the total amount of
revenue raised to run the United States of America was $517 billion. In
1990, that was $1 trillion. It almost doubled in that 10-year-period.
Those are the 10 years we had the most dramatic marginal rate
reductions in the history of America. If you take just the marginal
rates, it was $244 billion raised in 1980 and $446 billion raised in
1990. In that 10-year period it almost doubled, and that was dropping
the rate from the 70-percent top bracket we inherited from President
Kennedy when he brought it from 91 percent to 28 percent.
History has shown it will happen. Never once in the debate do we talk
at all about the fact that it will not reduce revenues; it will
increase revenues. I have watched this happen over my short lifespan in
politics and have been surprised to find this is true. If the money is
there, the politicians will spend it.
One of the best political speeches I heard in my life was the first
one that Ronald Reagan made, ``A Rendezvous With Destiny.'' I bet some
don't remember it at all. In the speech he said, the closest thing to
immortality on the face of this Earth is a government program once
started. That means if there is a problem, form a government program to
take care of it; the problem goes away but the program remains there.
This is a fact of life. It has repeated itself over and over again.
The second item--a lot of the liberals say this because it sounds
good to conservatives--let's go ahead and not have tax cuts until we
pay down the debt.
The Wall Street Journal had an article entitled, ``Where Do We Put
the Surplus?'' A couple of professors say we have a serious problem
because if we wanted to take the surpluses projected, which is $5.5
trillion in the next 10 years--upgraded by OMB to $6 trillion in that
same timeframe we would have to find someplace to put the money. If you
don't return it to the taxpayers, it will get spent. There aren't
enough places you can put money like that because you can't pay down
the debt immediately. Some things have not matured. You can't force a
debt repayment in the publicly held portion, and the debt is $3
trillion. You have to find a place to put it.
You can go into the equity market. If you go into the equity market,
that will create a problem. According to Greenspan, by the year 2020,
if we take this course, the Government will own one-fifth of all
domestic equities. If there is anything we don't want to happen, it is
to have Government owning 50 percent of the private equities in this
country.
The last point is how modest this cut is. I would like to have it
much greater than $1.6 trillion because I believe we can afford to do
that. During the Reagan administration, it was $1.6 trillion, but in
today's dollars that would equal $6 trillion that we would actually
have as tax cuts. If you look at it another way, taking it as a
percentage of the gross domestic product, what we are suggesting is
somewhere between a 0.9 and 1.2 percent cut in the gross domestic
product. In the Kennedy years, it was 2.2 percent; during Reagan it was
3.3 percent. This is far less than those tax cuts would have been.
I conclude by saying we have a decision to make--and it is a very
difficult decision--as to what to do with that amount of surplus.
I ask unanimous consent the Wall Street Journal article I referred to
be printed in the Record at the conclusion of my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
(See Exhibit 1)
Mr. INHOFE. I don't think there is any question, if we are honest, we
would deny that if we leave this money, it will be spent. Parkinson's
law is: Government expands to consume the resources allocated to it,
plus 10 percent. This has proven to be true over and over again.
I can argue as to the fairness of where this cut takes place. I could
talk about the fact that the top 5 percent of the income makers in this
country actually pay 54 percent of the taxes; the bottom 50 percent
only pay 4.2 percent of the taxes. That begs the question. There is no
reason to talk about the fairness of this because it is too logical.
Obviously, what we are going through now is an overpayment. We have
taxed the American people, and anyone out there right now--and there
are millions of people who have paid any type of taxes--is entitled to
a refund. To redistribute that wealth would be as unfair as it would be
if you went down to an auto dealership, bought a new car, paid the
sticker price, got home and said: Wait, I paid $2,000 too much. And you
get in the car and drive to the auto dealer and say: You overcharged me
$2,000, and he says: I just gave it to my mother-in-law.
This is an overpayment of taxes we have made and I think people are
entitled to have the overpayment back. If you do that, it will have the
effect of increasing revenue, and stimulating the economy, which we
desperately need. We are on the brink right now of a recession.
I yield the floor.
Exhibit 1
[From the Wall Street Journal, Jan. 29, 2001]
Where Do We Put the Surplus?
(By Kevin A. Hassett and R. Glenn Hubbard)
When historians look back on Alan Greenspan's tenure as
chairman of the Federal Reserve and attempt to identify the
source of his enormous success, last Thursday's Congressional
testimony--in which he advanced the course of tax reform--
will likely provide one answer. Mr. Greenspan raised a
pressing public-policy question that has been overlooked by
most, a question that will likely become the focal point of
political and economic debate during President Bush's first
four-year term.
If the U.S. government starts accumulating big surpluses,
where should it put the money?
That might not seem so tricky. After all, the government
already occasionally places deposits in private banks. But
this time we aren't talking nickels and dimes. Current
surplus estimates are so large that the government's passbook
savings account, if nothing changes, will soon become the
Mount Everest of cash hoards.
Let's look at the numbers. The latest Office of Management
and Budget forecast is for the surplus to reach about $5.5
trillion over the next 10 years. Rumor has it that the soon-
to-be-released Congressional Budget Office forecast will peg
it at $6 trillion, with almost $1 trillion arriving in 2011
alone. (Note: actual CBO numbers are $5.61 trillion, of which
$3.12 trillion will be the non-Social Security surplus)
Why not just pay down the debt? Put simply, there's not
that much debt to pay. According to the Treasury Department,
total government debt held by the public is only about $3
trillion. With no change in tax policy, projected surpluses
would pay down the debt by around 2008. Government will
subsequently have to decide in what it will invest the
massive surpluses.
But that is far in the future. Many opponents of tax
reduction have suggested that we wait until the uncertain
surpluses arrive, and the $3 trillion of existing government
debt is retired, before considering tax cuts. Mr. Greenspan
had an answer for that as well: ``Private asset accumulation
may be forced upon us well short of reaching zero debt.''
Indeed, by some estimates, as much as half of existing
government debt will be almost impossible to retire, since
savings bonds and state and local government series bonds
often aren't redeemed until maturity, and because many
holders of long-term treasury bills will be unwilling to sell
them back to the government. Factor in that surplus estimates
keep getting revised upward, and government may well be
forced to invest in private assets in just three or four
years.
How big could the hoard get? Investing that much public
money would likely mean the government purchase of stocks,
because only equity markets are large enough to absorb such
inflows and still remain liquid. Assuming the Treasury begins
to invest surpluses in the stock market as soon as it has
retired all the debt that it can, and that these investments
earn a 10 percent annual return, our government will be
sitting on a stock-market portfolio worth $20 trillion by
2020. To put that in perspective, the current market value of
all equities in the U.S. is about $17 trillion, according to
the Federal Reserve. Projecting forward, the U.S. government
could own about one-fifth of all domestic equities by 2020.
Allowing the government to own that much of the
private economy is an invitation to unbounded mischief.
Firms will lobby to be put on the list of acceptable
investments; those firms or assets left off will suffer
hardship. Calls to sell firms that aren't ``green'' or
that fail to pass litmus tests will become the latest in
political lobbying. Which is why Mr. Greenspan stated
flatly: ``The federal government should eschew private
asset accumulation because it would be exceptionally
difficult to insulate the government's investment
decisions from political pressures.'' The risks are just
too great.
His argument on Thursday caught Democrats flat-footed. Sen.
Ernest Hollings of South Carolina told Mr. Greenspan that
``in all candor, you shock me with your statement.'' An
apoplectic Sen. Charles Schumer
[[Page S1100]]
of New York dubbed Mr. Greenspan's analysis a mistake.'' Such
venom is reserved for truly decisive arguments. Indeed, word
is out that economists at President Clinton's Council of
Economic Advisers prepared an analysis of this issue that
wasn't allowed to see the light of day.
Perhaps the Democratic senators had not previously
recognized that their opposition to tax cuts would require
the government to buy a massive share of private America. Mr.
Hollings later warned Mr. Greenspan that he was ``going to
start a stampede.'' It is not a stampede we will observe, but
a wholesale retreat by poll-conscious opponents of tax
reform, who will have little stomach to defend such a massive
government intrusion into private life. A large tax cut is
virtually a sure thing.
Which doesn't mean we've seen the last of this important
question. First, if supply-side arguments are correct, then
the marginal-rate reductions proposed by Mr. Bush will
eventually increase tax revenues and surpluses, presenting us
once again with the quandary of what to buy. Second, Social
Security continues to be on very weak footing in the long
run, and something must be done to stave off fiscal disaster.
This puts Democrats in a tough position. For if they reject
the option of allowing the government to hoard private assets
in anticipation of retiring baby boomers, there is--as Mr.
Greenspan highlighted elsewhere in his remarks--one
inevitable alternative: individual accounts.
In taking a stand on such important issues in such a public
forum, Mr. Greenspan has fundamentally altered the debate on
the surplus, taxes and government investment. From now on,
opponents of privatization will have to reveal just where it
is they intend to put our money, and convince us that those
investments will be economically benign.
The PRESIDING OFFICER. The Senator from Kansas.
Mr. BROWNBACK. Mr. President, I rise to speak about the tax cuts
proposed this week by President Bush and to join my colleagues in this
discussion. As I listened to my colleague from Oklahoma, Senator
Inhofe, a number of the points he was making are the ones that I think
are most germane to this discussion. He spoke eloquently; I have some
charts that support what he said.
He was talking about the one law that Government spending expands to
reach the amount of Government resources we have available, plus 10
percent. I had not heard of that law, but it sounds as if it is fairly
accurate.
I have a chart that shows that the surpluses lead to higher spending.
We can see that is what has taken place as we have had surpluses coming
on line in 1995 through the year 2002. We had an enormous growth in
discretionary spending during the same period of time. This is a time
period when we had a Democrat President and a Republican Congress.
There were supposed to be some restraints in spending, but the ironclad
rule of Government is if there is a dollar left on the table anywhere,
it will be spent. We now see that is, indeed, what has taken place
where the discretionary spending has increased. If you leave the money
on the table, it will get spent.
I want to talk about another thing that my colleague addressed, as
have others, and that is tax freedom day, the day we finally start
working for ourselves and stop working for the Government. This day,
unfortunately, has continued to grow longer in the career. We have less
freedom from taxation in this country right now than at any time since
World War II.
I will first show the size of the overall tax cuts President Bush has
put forward. They are pretty modest. My colleague from Oklahoma was
discussing the relatively small size of the tax cuts in proportion to
the economy. This is the percentage of Gross Domestic Product. The Bush
tax cut is 1.2 percent of GDP which is quite small, in my estimation.
We should be talking about a larger tax cut given the difficulty our
economy is starting to show. We are seeing some slowness in the
economy. We need to stimulate it both in fiscal and in monetary policy.
The Fed is coming forward with monetary policy, and we need to come
forward with fiscal policy.
You can see Ronald Reagan had a 3.3-percent cut in percentage of GDP,
and President Kennedy had a 2-percent cut. I think we ought to be
getting up to this 2-percent category and talking more along the lines
of a $2 trillion tax cut. This will stimulate the economy, keeping it
from going into recession. That is the best thing to do to ensure that
we maintain a surplus; with people doing well in this country, we can
avoid an economic recession. That is what we are starting to face.
This is a modest tax cut, particularly given the times and situation.
We need to do so to help stimulate the overall economy. I think a 2-
percent cut overall, a $2 trillion tax cut, would be more in keeping
with traditional sizes of major tax cuts and would keep our economy
from slipping into an actual recession.
You can see what has happened to tax freedom day. This is the day you
stop working for the Government and start working for yourself. It
extended until May 3 in the year 2000. People are working for
government at all levels of the government until May 3.
I just bought a used car from an individual. He asked me what I did,
and I told him I worked in the Senate. He said: If you guys can, do
anything to cut taxes, I have a paycheck that comes in, and I never
look at the gross number because it just depresses me. I just basically
cut my gross wage in half, and that is how much I get to take home.
Just cut it in half, was his statement.
We ask people why they are having difficulties with the situation at
home, with their families. They don't have enough money to take care of
their kids, buy braces, pay for education, and take care of the normal
expenses. They need to have at least two jobs in this family, maybe
more.
Why is that? We look at this chart and see one of the big cost
drivers in that situation. It is the tax burden.
Look at what happened in the 1990s. In this time period, it has gone
up precipitously. That shows how much people work for the Government
rather than working for themselves. Is it any wonder people experience
stress or have difficulty in their family situation, when they are
working for somebody else, who gets close to half the year?
How does this break down? I want to break down this tax freedom day
issue. These are the minutes in an 8-hour day that you are working for
government, or other taxes that you are paying. Look at how many
minutes of an 8-hour day you are working for Federal taxes: 112
minutes. It is getting close to 2 hours a day that you are working for
the Federal Government. I appreciate you working for us that much. I am
glad people are doing that.
My point in highlighting this is that it is too much. It is too long.
You should not be working for the Government that amount of time.
Look at the Federal Government, but also look at State and local
taxes. You add another 50 minutes to that. We are getting close to 3
hours of your workday to pay for Federal taxes and State and local
taxes. That is before you ever pay for housing, health care, food,
recreation, transportation, clothing, and put money away in savings.
What happens to savings when you take this big of a bite out of it?
This chart puts a graphic on it, and it shows that if you start
working at 9 a.m., you are basically working in the morning for the
Government, and then the rest of the day you are working for other
things. The morning is basically given to the Government.
It is nice that people are willing to do that, but my point is that
it is too long, it is too much, it is taking too much from them, and it
is hurting our families and individuals. This is just to point out how
much it is, how it breaks down. This is from the Tax Foundation.
How much per dollar of a median family income goes to taxes,
comparing 1955 to 1998? In 1955--Federal income tax was 9 cents.
Federal payroll tax, other Federal tax, State and local taxes, were 3
cents. In 1955, we had a pretty good size Government. In 1998, after-
tax income was 61 cents; we are nearly at 40 percent today.
Look at the size of this Federal payroll tax. When I go to high
school senior classes, two-thirds of the groups with which I speak are
paying taxes. The tax that they are paying is Federal payroll tax,
which for most people in this country is larger than any other single
tax they pay. This is one tax about which we are going to have a lot of
discussion.
This chart shows other Federal taxes and State and local taxes, which
have increased a great deal as well. This breaks it down on the dollar.
Finally, this is tax freedom day by type of tax. Many people don't
realize all of the taxes that they pay. Basically, on anything you do,
you are paying a tax. If you turn on a water faucet
[[Page S1101]]
in the morning, there is going to be a tax on the water that comes
through. If you use the phone, there is a phone tax. If you die, there
is going to be a death tax, and if you get married, there is a marriage
penalty tax--both of which I think we need to address and eliminate.
We have a system where we have figured out how to tax virtually
everything you do or that happens to you. It creates these type of
burdens.
To pay individual income taxes, we are working 50 days a year. You
can look at the others. Business taxes, corporate taxes, property
taxes, estate and excise taxes, social insurance taxes are also on this
chart. It is a big overall burden.
One person has suggested, instead of having payroll taxes, that we
require a person to each month write a check out to the Government for
their level of taxes rather than taking it out of the account. If we
really wanted to cut taxes, we should do that so people could see that
each month when they wrote that check out. It is a heavy burden.
I wanted to put that forward to put some context on this. When we
talk about a $1.6 trillion tax cut--which I think actually should be at
the $2 trillion category--we are overburdening people on taxes now.
This is clear. We need help in stimulating the economy. This is clear.
We should not be taxing things such as marriage when it is the
foundational unit for the family. We need to get rid of the marriage
penalty tax.
I want my colleagues, particularly from Texas and Georgia, who put
this tax plan forward, to know I am going to be aggressively pushing to
get rid of the full marriage penalty tax rather than a portion of it,
which is in this current bill. I think we have to do much better
towards our working families, particularly getting rid of the marriage
penalty tax. I also hope that we can make these tax cuts retroactive to
stimulate the economy.
I point out to my colleagues as well about the surplus--we have been
paying down the debt, and we will continue to do so. We have paid down
the debt by about $360 billion over the last 3 years. We will continue
to pay the debt down. However, those surpluses have led to increased
government spending as well. So we need to get some of the tax dollars
out of the system and back into people's individual pockets.
Finally, we have the wherewithal to do this and to protect Social
Security. We can do a $2 trillion tax cut and we can still pay the debt
down at the current rate (if not more than what we are currently doing)
and provide for substantial Federal Government needs that we have
identified. That is all doable because the projection on our own
receipts is substantial enough that we can get that accommodated--
roughly in the $5.6 trillion surplus over the next 10 years.
We need to do this. American working families need this to take
place. It is the right thing to do. It is the right time to do it. I
hope we do not waste much more time before we actually get these tax
cuts in place.
Mr. President, I thank my colleague from Wyoming for hosting this
dialog and I yield the floor.
The PRESIDING OFFICER. The Senator from Wyoming.
Mr. THOMAS. Mr. President, this, obviously, is the week and the time
to be talking about taxes, tax relief, and tax reductions.
It is an appropriate time to deal with all of the involved issues.
Certainly, the President has talked a great deal about his tax plan not
only in the campaign but certainly now as he is prepared to reveal and
unveil this plan of relieving the tax burden on all taxpayers.
The plan, of course, is oriented toward stimulating economic growth,
reducing family tax burdens, and saving family estates from the auction
block, and hopefully making this Tax Code simpler and more fair. That
is an important aspect of it. We talk all the time about the Tax Code
being so detailed and complex, and yet we do not do much about it.
I hope we do not start seeking to have directed tax reductions here,
there, and other places, aimed more at behavior than at tax reductions.
This is designed to make it simpler, and that is important.
The case for the President's relief package is strong. First, there
is a record surplus of taxes coming in. It is really a tax overpayment.
That makes possible a policy of paying down the debt and reducing taxes
on working families.
Second, the slowing down of the economy has many people concerned and
properly so. Absent some kind of fiscal stimulus, our record economic
expansion may turn downward and into a recession.
The third argument is the one my friends have talked about this
morning, but I think it is really the issue for most of us, and that is
the burgeoning tax burden on American families.
No matter how one looks at it as a proportion of national income, the
burden persists as compared to other family expenses. Actual time spent
working just to fund the Federal Government is taking more of a typical
family's income than at any other time in history. Isn't that
interesting? Almost any time in history.
Federal revenues for fiscal year 2000 pulled more than $2 trillion
out of the economy for the first time in American history. Along with
that being the highest level ever, the Federal tax burden is also the
highest rate of gross domestic product since World War II. In 1944,
revenues reached 20.9 percent of GDP. Today, revenues have returned to
that extraordinary level. They are at 20.6 percent, well above the
historical norm.
Interestingly enough, since 1935, the average tax burden has been
17.2 percent. Never during the Korean war, the Vietnam war, or the cold
war did it ever reach 20 percent. Yet the Federal tax burden continues
to take more financial power out of the economy without a particular
cause.
In the last few years, the American people have had to pay 20 percent
of what they earned. The impact on the economy, on families, and the
taxpayers has been extraordinary. We have an opportunity to do some
things differently, and I hope we do that.
The current tax system, I believe, is a mess. Just think how
difficult it is for all of us as we prepare our tax returns. We often
say if anyone cannot make out their own return, it must be too complex.
Seldom are people able to make out their own.
After 80 years of lawmakers, lobbyists, and special interests working
on it--which will continue--it is unfair; it is complex; it is costly.
Those are the kinds of things of which I hope, as we move forward, we
can take advantage. Someone suggested taxpayers devote almost 5.5
billion hours a year to the preparation of tax returns. The other
thing--and it depends, I suppose, on your point of view and philosophy
with respect to Government; if one believes Government ought to be
contained in its growth, that there are limits to in what the
Government ought to be involved--the Federal Government in particular--
why, this has something to do with that.
When there is a surplus, it is more difficult to maintain limits on
the growth of Government than it is when there is not a surplus.
Obviously, we want to fund the essentials such as health care,
education, and Social Security. There also ought to be a limit on the
growth of Government, the involvement of Government.
We are saying all the time that the Federal Government is involved in
too many things; we ought to give more emphasis to State and local
governments; we ought to evaluate what is the legitimate role of the
Federal Government. I believe that is true, but that depends on your
philosophy of government.
We are going to hear arguments during the course of this discussion
that there needs to be more Government, more Government spending. If
one believes that is the direction we ought to go, there is no end to
the programs. It is very difficult, once a Federal Government program
is in place and builds a constituency around it, to change it, to
eliminate it, to reduce it.
It comes down to a philosophy of government. When you have, as in
this case, a surplus of dollars, what do you do with it? You can spend
it and increase the size of Government. That is a philosophy we hear
quite often in this Chamber. Another is we ought to limit the role of
the Federal Government; we ought to use our best judgment to determine
which of those
[[Page S1102]]
things are most important, which of those things are essential, which
of those things can only be done by the Federal Government as opposed
to local and State governments, which of those things should be done in
the private sector as opposed to the Federal Government. All those
things have a play in what you do in the future.
I happen to believe we ought to be paying down the debt. It is unfair
for us to have gone into debt over the last number of years to finance
programs young people will have to pay for. We can do that.
I am persuaded that under the President's program we can pay down the
debt over this period of time. I am persuaded that we will have
adequate money to spend on essential programs.
At the same time, we can substantially reduce the tax burden on
American families, and that is very much what we want to do.
I do believe one of the elements of taxes ought to be fairness. One
of the issues we have talked about for some time and passed last year,
only to be vetoed by the President, was the marriage tax penalty. It
really does not make sense from a fairness standpoint that a single man
and woman earning this amount of money pays x amount of dollars; if
they are married, making the same amount of money, they pay more. That
is a fairness issue and one that needs to be decided.
Of course, the estate tax also is one that many argue is a fairness
issue. People, particularly on farms, ranches, and in small businesses,
work their whole lives to create some capital and assets, and if they
own property, as many ranchers and farmers do, they have to pay this
55-percent estate tax. They have to dispose of the property to do that
and that seems unfair. There are some legislative ideas, and I do not
know which one will prevail. There can be expansion of exemptions, and
there can be elimination, which I favor. There can also be some efforts
made to pass these on without taxes and allow then for a tax to be
placed on their growth.
There are many things we can do. The President has put forth a
package that is very useful, one that deals with the issues as we see
them, one which will bring fairness, one which will bring a reduction
in costs, one which will pay down the debt, one which will allow us to
go ahead and fund those programs that we deem to be essential and of a
high priority.
We have an opportunity to do that now. I am hopeful we will move
forward and do it quickly, to the benefit of this country, its economy,
its taxpayers, and all of its families.
Mr. President, I yield the floor.
The PRESIDING OFFICER. The Senator from Texas.
Mrs. HUTCHISON. Mr. President, I am very pleased to be working with
my colleague, Senator Thomas, today, and all of this week, to talk
about the tax cuts we have tried to provide for hard-working American
families.
We have been trying to give tax relief to working Americans for the
last 3 years, but we had a President who did not agree with us. Every
time we sent him a tax relief bill, it got vetoed.
But today we have a President who agrees with us that hard-working
Americans deserve to keep more of the money they earn. Because we
believe it is their money, not ours, we want them to have the choices.
So we do have a proposal that Congress and the President are going to
work together, hopefully, on a very bipartisan basis, to produce for
the American people something they can realize, not something that is
so complicated and minuscule and fractionated that nobody is ever going
to know they got a tax cut. What we want is real tax relief for hard-
working Americans.
It is pretty simple. The basic part of this tax relief plan would
replace the current five-rate tax structure--which is 15 percent, 28
percent, 31 percent, 36 percent, and 39.6 percent--with four lower tax
brackets: 10 percent, not 15 percent, would be the lower bracket; then
15 percent; then 25 percent; and then 33 percent.
That is the bulk of the tax relief plan that we will send to
President Bush if we can get the support of our colleagues on the other
side of the aisle.
For a couple with two children, making $35,000 they will have their
taxes eliminated. For a couple with two children, making $50,000, their
taxes will be cut by 50 percent. For a couple with two children, making
$75,000 their taxes will be cut by 25 percent.
This is tax relief that people will be able to experience. We also
hope that people will feel so good that they will buy the car they have
been waiting to buy or that they will know then that they will be able
to make the downpayment on the house they have been saving for--
something that will spur the economy because there is no question our
economy is not growing right now. It is stagnant.
But we think it can be revived if there is consumer confidence.
Consumer confidence would come if people feel good about their jobs and
their prospects and if they have more money in their pockets. So this
is a very important staple of the tax cut plan.
The part that I have been working on personally for so many years is
the marriage penalty tax cut. Why, in America, would we have to ask
people to choose between love and money? The fact is, most couples in
America, indeed, have to pay an average of $1,400 more in taxes just
because they got married.
Who does this hit the hardest? It hits the policeman and the
schoolteacher who get married and all of a sudden find they have $1,000
more that they owe to Uncle Sam--$1,000 they could certainly use. So we
want to help married couples not have to pay any penalty whatsoever.
Why should you pay a penalty just because you got married? It does
not make sense. So we want to eliminate the marriage tax penalty. In
fact, I am going to be working with others to make the marriage penalty
tax cut part of our tax plan significant. We believe we should double
the standard deduction, that you should not have to pay more in a
standard deduction because you are married than you would if you had
two single income-earning people. So we are going to try to change
that.
We are going to encourage charitable contributions by allowing people
who have saved and put money in their IRAs through the years--if they
find out they do not need that money because they are doing OK, and
their kids are doing OK--to give some of that money to charity if they
want. But there is a big bar to doing that today, and that is the tax
consequence. You cannot just take the money out and give it to the
charity; You have to pay the taxes.
So we want to eliminate that tax, if it is going to go straight to
charity. This will encourage people to do things that will enhance our
communities, and that is to give to the charity of their choice.
We want to try to help parents by doubling the child tax credit.
President Bush has made this a priority. He wants to make sure that we
have a $1,000 per child tax credit rather than the $500 per child tax
credit that we are working toward today because we know it costs a lot
of money to raise a family. Children grow. They grow out of their
clothes; they eat a lot; they need to be healthy; and they need to be
well fed and well dressed.
The occupant of the Chair is smiling because he has nine children. He
knows. He has been there. He has fed and clothed them. He knows this is
something that parents need the help to do.
Mr. President, I am very pleased to be here and be a part of the
group that is talking about the Bush tax cuts. We are talking about the
Bush tax cuts for hard-working American families. We are talking about
Congress working with the President on a bipartisan basis for a lot of
reasons to let people keep more of the money they earn. That is the
bottom line.
We want people to be able to keep the money they earn because we
believe it belongs to them, not to us. We believe families, especially,
should get the break they so badly need.
We are being taxed at a higher rate today than ever in peacetime. I
am very pleased that we have this tax relief plan. We know it is going
to pass. That is what pleases me. Before, when we had been working on
tax cuts, we had a President who would threaten to veto them every time
we sent them to him. Today, we have a tax cut plan with a President who
says he is going to sign it.
So we feel very good about that. We are going to be talking about it
and hope the people of this country realize
[[Page S1103]]
we are going to do something significant for every taxpaying American.
Those in the lowest brackets will get the most relief; those in the
upper brackets will get the least relief, but they will get some
relief. We think it is fair to target it to middle-income and low-
income people. We want them to get the most benefit. They are the ones
who pay the most per capita, per income dollar. We want to relieve
that, but we want every working American who pays taxes to get relief.
Mr. President, I am very proud to be here with my colleague, Senator
Pete Domenici. Senator Domenici is, of course, the person who heads our
Budget Committee. He knows, in the final analysis, it is his committee
that is going to give us a budget that is balanced, that pays down the
debt, that takes care of the increases in spending that we know we are
going to need in places such as education, national defense, Medicare
reform, prescription drug benefits and options, and give back to hard-
working Americans some of their tax money.
I cannot think of anyone that I would trust to be able to do that
than my colleague from New Mexico. I will now turn the floor over to
him.
The PRESIDING OFFICER. The Senator from New Mexico.
Mr. DOMENICI. I thank my good friend from Texas.
Mr. President, I know that by some strange coincidence the occupant
of the Chair seems to occupy the Chair quite frequently when the
Senator from New Mexico speaks. I do not know what that bodes for the
distinguished Senator, but I will try to make it interesting today,
again, perhaps.
First, I am here because I want to share with the American people,
and my constituents in New Mexico, the fact that this fiscal situation
of our Nation is about as good as any generation could expect. This is
a good situation. I have been here during times when we were going into
debt almost as fast as we were gaining surpluses each year.
We had accumulated enormous annual debts that we called the
``deficit,'' and the first good news is that by the time this year
ends, we will have reduced the debt of our Nation by $600 billion. That
is for real. That is not a graph. That is not a projection. We have
already paid it down substantially. Unless something very dramatic
happens in the next few months, that total number will be $600 billion
in reduction.
Interestingly enough, a few weeks ago, probably the most
distinguished American on matters economic, and probably the most
distinguished American in terms of impact for the positive on the
American economy, Dr. Alan Greenspan, appeared before the Budget
Committee of the Senate. For some people, it was a bombshell when he
said in the course of his discussion, just as deficits can get too big
and hurt the economy, so can surpluses get too big and, if not handled
right, can hurt the economy. He came to that conclusion on the basis of
his own assessment of where we are going. And without saying it, he
certainly lent great credence to a big fact: surpluses are generating
on the inside of the American budget at rates and levels never expected
or understood in America.
He at least implicitly acknowledged that the Congressional Budget
Office was on the right track in estimating that the surpluses were
growing and growing, and we were told a few days later by the
Congressional Budget Office--and when we say that, we mean the whole
paraphernalia that goes with estimating the American economy groups of
economists, economists within the Congressional Budget Office,
comparing their results with all kinds of outside estimators whose job
it is, because of the businesses they work for or the funds they
control, to be as right as they can--that the Congressional Budget
Office which Dr. Greenspan was looking at was giving us their best
estimate.
There are some who say it is only an estimate. They could give us an
estimate that is not their best estimate that would say the surplus is
going to be $9 trillion. They could give us another estimate which
would not be their best estimate that the surplus in the next decade is
going to be $1 trillion. But when they were asked, which one should we
build our policy on, the answer was, the modest growth path, the modest
path in terms of increases in productivity, nonetheless sustained
productivity increases and sustained and very large over the next
decade. Use the one we gave you, they said.
There are some people down here talking about all the possibilities
and all the probabilities. When we are told about Social Security 40
years from now, Medicare 30, 40, or 50 years from now, we are using the
best we can in giving those notions of costs and liabilities.
We have $5.6 trillion. Let's just start right off and say, it is our
responsibility to take a good look, with our fellow Senators, at what
we ought to do with it. Let me start by saying, we want to pay the debt
down as soon as practicable. It is no longer as soon as possible
because we have been told now by both the Congressional Budget Office,
our experts, and Dr. Alan Greenspan, that there is a limit as to how
fast we pay it down.
First, there is a limit because there is certain of our indebtedness
that we cannot buy up; it is just not viable, such as savings bonds and
the like; they are going to be there.
There is other long-term debt that is too expensive to try to
persuade the holders of those debts to cash them in now; it costs too
much money. So close to $1 trillion cannot be paid off as soon as we
have the surplus.
We were told by Dr. Greenspan to use a glidepath for the reduction of
the debt, and we will use one in whatever proposals we make to the
committee--I will as chairman--and whatever we make to the Senate and
to the people. The debt will be coming down rather fast, but not as
fast as the money is accruing in the surplus because we are being told
it won't work. We are also being told that is probably not good for the
future of the American economy.
Let me talk about the future of the American economy. There is a lot
being discussed today about Social Security 20, 30, 40 years from now,
and Medicare during the same time interval. Those who work very hard at
demographics, telling us how many people are going to be collecting
from these two major beneficiaries programs, how many are going to be
paying in, and how much money we are going to have sitting around, are
all suggesting, from what I hear, that the very best thing that can
happen is that the American economy has very prolonged intervals of
sustained growth with high productivity, much like the last 9 or 10
years. If we want the best outcome for the seniors of America, the baby
boom population, in terms of their health care that we can pay for and
their Social Security being payable, just have, during the next 40
years, three 9-year growth patterns, or four, like the immediate past
ones we have had. That will put us closer to being able to meet our
obligations than any other policy we can undertake in the Congress.
In fact, another thing that has been discussed is a rainy day fund.
The best rainy day fund is sustained economic growth over a prolonged
period of time. That is the best rainy day fund.
Why do I raise this right in the middle of a discussion about
surpluses and what should we do with them? Because we are in a slowdown
right now. We have different versions of how severe this slowdown is in
the economy. Again, he has been correct most of the time. Dr. Greenspan
says it is short lived and it is not too deep, and he is correcting it
in terms of the short term by substantially lowering the interest,
which is within the Federal Reserve Board's power. They have done that
in a rather dramatic fashion the last couple months, and I surmise they
will do some more.
The question becomes, what policy could we adopt up here that would
fit in with these interest reductions and produce long-term growth at
sustained rates with low rates of inflation and probably high
productivity?
The best thing we can do is, one, pay down the debt on a glide path
which says we will get it down but not abruptly. We will get it down
within 2 or 3 years of the time that we would get it down if we put all
of it on there, or tried to. Then we would take all of the Social
Security trust fund money, put it in a lockbox; Medicare. And then we
could still provide for very high priority items, both in
appropriations and elsewhere. And what is left could, indeed, be $1.6
trillion that we ought to
[[Page S1104]]
give back to the American people rather than keep up here to be spent.
If we do not give some of this back to the American people, and start
soon giving it back a little bit each year, I think the highest
probability is that the pressure that will be responded to will be to
spend it. There is already some evidence that in the last 6 months we
have spent over the baseline, over the amount that would have been
expected, $561 billion over the next decade. That is what we have done
in appropriations. That is what we have done in entitlements. That is
what we have done for veterans and a whole list of them. Surplus was
here in abundance. Spending occurred in abundance, and I believe the
American people would not like to see a much larger Government because
of these surpluses. I think they would like to see Government at the
most efficient level possible.
They would clearly like us to give some of this money back to them. I
will leave for others on another day whose tax plan is best. I already
hear Democrats saying they want a tax cut but not as large as the
President does, and they want different shapes and models of it. So,
from my standpoint, I am not going to discuss the details of the plan,
other than to say one thing: That same Dr. Alan Greenspan who came upon
these facts and suggested to us that if we didn't give some of this
money back to the people, there would be an accumulation of money in
the hands of the Federal Government--and he saw no alternative other
than the Federal Government would start investing it in assets of
America--contends that would be a negative factor on the growth,
prosperity, and efficiency of the American economy, which is what we
need for the future of Social Security and Medicare and for our people
to have sustained, increasing paychecks.
When you add all this together, you would then say if you are going
to give part of it back to the American people--and I want everybody to
understand that after you take all the Social Security money and put it
where it belongs, you have $3.1 trillion that is sitting there over the
next decade if you believe, or at least have sufficient trust in the
estimating, as I do, to act upon it. It is $3.1 trillion. That is
almost unfathomable to people listening, and probably to most Senators
and their staffs and my staff and me--$3.1 trillion. I could give you a
number. Our whole budget for everything, including entitlements,
appropriations, and the like is somewhere around $1.6 trillion to $1.8
trillion per year. So here we have a surplus that is almost twice as
big as the total outlays of the Federal Government for a full year.
That is at least a comparable.
That same Dr. Greenspan has consistently told us, if you have a
surplus, the best thing you can do is pay down the debt. He has
qualified that now and said, yes, pay it down under a glidepath that is
best for America. Don't pay it down abruptly because you are apt to
create money in the pockets and drawers of the American Government that
will invest it in less efficient Government by acquiring assets, owning
things.
Having said that, what else has he said repeatedly and reconfirmed?
If you are going to have a positive impact on the prosperity level of
Americans and have the economy grow, the best tax medicine is marginal
rate reductions. Cut everybody's marginal taxes some. He says it will
increase savings, it will increase investment, and it is the best way
to use tax dollars. He says the third and worst way to have a positive
impact on our future is to spend the surplus.
I believe we are moving in the right direction. Debate is good and
the President is leading well. I think before we are finished, we will
have a significant tax cut of the right kind and still do the marriage
penalty and death taxes, and we will have a very formidable expenditure
budget. Everything can grow substantially, especially priority items. I
think if we work together and work with the President, we can give the
American people something very good by the end of this year.
I yield the floor.
The PRESIDING OFFICER (Mr. Burns). Under the previous order, the time
from 12 noon to 1 p.m. is under the control of the Senator from West
Virginia, Mr. Byrd.
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