Congressional Record, Volume 147 Issue 30 (Thursday, March 8, 2001)

[Congressional Record Volume 147, Number 30 (Thursday, March 8, 2001)]
[House]
[Pages H761-H809]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

ECONOMIC GROWTH AND TAX RELIEF ACT OF 2001

Mr. THOMAS. Mr. Speaker, pursuant to House Resolution 83, I call up
the bill (H.R. 3) to amend the Internal Revenue Code of 1986 to reduce
individual income tax rates, and ask for its immediate consideration.
The Clerk read the title of the bill.
The SPEAKER pro tempore. Pursuant to House Resolution 83, the bill is
considered read for amendment.
The text of H.R. 3 is as follows:

H.R. 3

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; ETC.

(a) Short Title.--This Act may be cited as the ``Economic
Growth and Tax Relief Act of 2001''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c) Section 15 Not To Apply.--No amendment made by section
2 shall be treated as a change in a rate of tax for purposes
of section 15 of the Internal Revenue Code of 1986.

SEC. 2. REDUCTION IN INCOME TAX RATES FOR INDIVIDUALS.

(a) In General.--Section 1 is amended by adding at the end
the following new subsection:
``(i) Rate Reductions After 2000.--
``(1) New lowest rate bracket.--
``(A) In general.--In the case of taxable years beginning
after December 31, 2000--
``(i) the rate of tax under subsections (a), (b), (c), and
(d) on taxable income not over the initial bracket amount
shall be 12 percent (as modified by paragraph (2)), and
``(ii) the 15 percent rate of tax shall apply only to
taxable income over the initial bracket amount.
``(B) Initial bracket amount.--For purposes of this
subsection, the initial bracket amount is--
``(i) $12,000 in the case of subsection (a),
``(ii) $10,000 in the case of subsection (b), and
``(iii) \1/2\ the amount applicable under clause (i) in the
case of subsections (c) and (d).
``(C) Inflation adjustment.--In prescribing the tables
under subsection (f) which apply with respect to taxable
years beginning in calendar years after 2001--
``(i) the Secretary shall make no adjustment to the initial
bracket amount for any taxable year beginning before January
1, 2007,
``(ii) the cost-of-living adjustment used in making
adjustments to the initial bracket

[[Page H762]]

amount for any taxable year beginning after December 31,
2006, shall be determined under subsection (f)(3) by
substituting `2005' for `1992' in subparagraph (B) thereof,
and
``(iii) such adjustment shall not apply to the amount
referred to in subparagraph (B)(iii).

If any amount after adjustment under the preceding sentence
is not a multiple of $50, such amount shall be rounded to the
next lowest multiple of $50.
``(2) Reductions in rates after 2001.--In the case of
taxable years beginning in a calendar year after 2001, the
corresponding percentage specified for such calendar year in
the following table shall be substituted for the otherwise
applicable tax rate in the tables under subsections (a), (b),
(c), (d), and, to the extent applicable, (e).

------------------------------------------------------------------------
The corresponding percentages shall be
substituted for the following
``In the case of taxable years percentages:
beginning during calendar year: ---------------------------------------
12% 28% 31% 36% 39.6%
------------------------------------------------------------------------
2002............................ 12% 27% 30% 35% 38%
2003............................ 11% 27% 29% 35% 37%
2004............................ 11% 26% 28% 34% 36%
2005............................ 11% 26% 27% 34% 35%
2006 and thereafter............. 10% 25% 25% 33% 33%
------------------------------------------------------------------------

``(3) Adjustment of tables.--The Secretary shall adjust the
tables prescribed under subsection (f) to carry out this
subsection.''
(b) Repeal of Reduction of Refundable Tax Credits.--
(1) Subsection (d) of section 24 is amended by striking
paragraph (2) and redesignating paragraph (3) as paragraph
(2).
(2) Section 32 is amended by striking subsection (h).
(c) Conforming Amendments.--
(1) Subparagraph (B) of section 1(g)(7) is amended--
(A) by striking ``15 percent'' in clause (ii)(II) and
inserting ``the first bracket percentage'', and
(B) by adding at the end the following flush sentence:

``For purposes of clause (ii), the first bracket percentage
is the percentage applicable to the lowest income bracket in
the table under subsection (c).''
(2) Section 1(h) is amended--
(A) by striking ``28 percent'' both places it appears in
paragraphs (1)(A)(ii)(I) and (1)(B)(i) and inserting ``25
percent'', and
(B) by striking paragraph (13).
(3) Section 15 is amended by adding at the end the
following new subsection:
``(f) Rate Reductions Enacted by Economic Growth and Tax
Relief Act of 2001.--This section shall not apply to any
change in rates under subsection (i) of section 1 (relating
to rate reductions after 2000).''
(4) Section 531 is amended by striking ``equal to'' and all
that follows and inserting ``equal to the product of the
highest rate of tax under section 1(c) and the accumulated
taxable income.''.
(5) Section 541 of such Code is amended by striking ``equal
to'' and all that follows and inserting ``equal to the
product of the highest rate of tax under section 1(c) and the
undistributed personal holding company income.''.
(6) Section 3402(p)(1)(B) is amended by striking ``7, 15,
28, or 31 percent'' and inserting ``7 percent, any percentage
applicable to any of the 3 lowest income brackets in the
table under section 1(c),''.
(7) Section 3402(p)(2) is amended by striking ``equal to 15
percent of such payment'' and inserting ``equal to the
product of the lowest rate of tax under section 1(c) and such
payment.''.
(8) Section 3402(q)(1) is amended by striking ``equal to 28
percent of such payment'' and inserting ``equal to the
product of the third to the lowest rate of tax under section
1(c) and such payment.''
(9) Section 3402(r)(3) is amended by striking ``31
percent'' and inserting ``the third to the lowest rate of tax
under section 1(c)''.
(10) Section 3406(a)(1) is amended by striking ``equal to
31 percent of such payment'' and inserting ``equal to the
product of the third to the lowest rate of tax under section
1(c) and such payment.''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2000.
(2) Amendments to withholding provisions.--The amendments
made by paragraphs (6), (7), (8), (9), and (10) of subsection
(c) shall apply to amounts paid after the date of the
enactment of this Act.

The SPEAKER pro tempore. The amendment printed in the bill is
adopted.
The text of H.R. 3, as amended, is as follows:

H.R. 3

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; ETC.

SEC. 2. REDUCTION IN INCOME TAX RATES FOR INDIVIDUALS.

------------------------------------------------------------------------
``In the case of The corresponding percentages shall be
taxable years substituted for the following percentages:
beginning during --------------------------------------------
calendar year: 12% 28% 31% 36% 39.6%
------------------------------------------------------------------------
2002............... 12% 27% 30% 35% 38%
2003............... 11% 27% 29% 35% 37%
2004............... 11% 26% 28% 34% 36%
2005............... 11% 26% 27% 34% 35%
2006 and thereafter 10% 25% 25% 33% 33%
------------------------------------------------------------------------

[[Page H763]]

(5) Section 541 is amended by striking ``equal to'' and all
that follows and inserting ``equal to the product of the
highest rate of tax under section 1(c) and the undistributed
personal holding company income.''.
(6) Section 3402(p)(1)(B) is amended by striking ``7, 15,
28, or 31 percent'' and inserting ``7 percent, any percentage
applicable to any of the 3 lowest income brackets in the
table under section 1(c),''.
(7) Section 3402(p)(2) is amended by striking ``equal to 15
percent of such payment'' and inserting ``equal to the
product of the lowest rate of tax under section 1(c) and such
payment''.
(8) Section 3402(q)(1) is amended by striking ``equal to 28
percent of such payment'' and inserting ``equal to the
product of the third to the lowest rate of tax under section
1(c) and such payment''.
(9) Section 3402(r)(3) is amended by striking ``31
percent'' and inserting ``the third to the lowest rate of tax
under section 1(c)''.
(10) Section 3406(a)(1) is amended by striking ``equal to
31 percent of such payment'' and inserting ``equal to the
product of the third to the lowest rate of tax under section
1(c) and such payment''.
(11) Section 13273 of the Revenue Reconciliation Act of
1993 is amended by striking ``28 percent'' and inserting
``the third to the lowest rate of tax under section 1(c) of
the Internal Revenue Code of 1986''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2000.
(2) Amendments to withholding provisions.--The amendments
made by paragraphs (6), (7), (8), (9), (10), and (11) of
subsection (c) shall apply to amounts paid after the 60th day
after the date of the enactment of this Act.

SEC. 3. PROTECTION OF SOCIAL SECURITY AND MEDICARE.

The amounts transferred to any trust fund under the Social
Security Act shall be determined as if this Act had not been
enacted.

The SPEAKER pro tempore. After 1 hour of debate on the bill, as
amended, it shall be in order to consider a further amendment printed
in House Report 107-12, if offered by the gentleman from New York (Mr.
Rangel) or his designee, which shall be considered read, and shall be
debated for 60 minutes, equally divided and controlled by a proponent
and an opponent.
The gentleman from California (Mr. Thomas) and the gentleman from New
York (Mr. Rangel) each will control 30 minutes of debate on the bill,
as amended.
The Chair recognizes the gentleman from California (Mr. Thomas).
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
Mr. and Mrs. America, help is on the way, H.R. 3. This bill is only
seven pages long. How ironic. The usual complaint about congressional
bills is that they are about as long as War and Peace or they weigh
between 10 or 12 pounds. Seven pages. What is inside these seven pages?
Before a Joint Session of Congress, President Bush asked Congress to
make sure no hard-working income tax payer pays more than one-third of
their income in taxes. It is here. It is in these seven pages.
President Bush said he wanted immediate relief for small business.
Seventeen million individual returns are actually small businesses. It
is here. It is in these seven pages. Small businesses will have more
money this year to pay workers, buy inventory or pay heating or
lighting bills.
President Bush said more low income workers should not have to pay
any income tax. It is here in these seven pages. More than 4 million
low-income workers are freed from their income tax burden. President
Bush said the economy is faltering. In fact, a number of economists and
all of the leading economic indicators say the economy is faltering.
President Bush said every hard-working American taxpayer should have
some of their money returned. It is here. It is in these seven pages.
Money so these hard-working Americans can pay their bills with more of
their own money.
Mr. Speaker, today we offer the heart of President Bush's tax plan,
lower taxes, permanently for all, H.R. 3. It is about time.
Mr. Speaker, I reserve the balance of my time.
Mr. RANGEL. Mr. Speaker, I yield myself 2 minutes.
Mr. Speaker, I agree with the gentleman from California (Mr. Thomas),
the chairman of the Committee on Ways and Means, it is only seven
pages, but what is in those seven pages?
This is not the tax bill that we hear the President talking about.
This does not give relief to people who are married and suffer the
marriage penalty. It does not take care of the estate tax. Who it takes
care of politically are the top rollers in the United States.
Mr. Speaker, 60 percent of the relief that is in this part of the
bill and the other parts that they will bring in tomorrow will go to
the top 10 percent of the people in America, 43 percent of it goes to
the top 1 percent. Yet they do not even have a budget.
They would have us to believe that they are working under last year's
budget, and technically it is this year's budget. But one thing is
clear that they waived all rules that would prevent them from having to
say that there is a budget on the floor today.
We do hope that those of us who are concerned about Social Security,
about Medicare, about prescription drugs, about improving the quality
of education, about making certain our farmers and those young men and
women who serve in the military that they are protected. How would we
ever know without a budget, but we can take a riverboat gamble that
perhaps the CBO at one time is right and maybe the $5.6 trillion is
going to be there, but all of this money that we will be saying that we
are giving back to the people, we do not give them back their
obligations for the $3.4 trillion of debt that we got in before because
of reckless fiscal policy.
What we had hoped is that we could have a budget of measure and be
able to make decisions in a framework of what our responsibilities are,
but, unfortunately, the other side believes that the faster they go,
the better it is and so, therefore, we hope to slow down this train so
the American people could take a good look at the fraud that is being
perpetrated.
Mr. Speaker, I reserve the balance of my time.
Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 1 minute the
gentleman from Illinois (Mr. Weller), a member of the Committee on Ways
and Means.
(Mr. WELLER asked and was given permission to revise and extend
remarks.)
Mr. WELLER. Mr. Speaker, I rise to support this legislation. It is
vitally important legislation. In representing the Chicago area, we are
seeing tens of thousands of layoffs.
I have families every day that tell me about their needs, their
struggle to pay their high energy home heating bills. They are
struggling to pay off their credit card bills. They are seeing their
neighbors lose their jobs. And President Bush, as we know, inherited a
weakening economy, and he is proposing that we move quickly to fix it
and put some money back into the economy and protect jobs and help
people pay off their bills.
This legislation will provide real money for real people. I am
pleased to point out and thank the leadership of the gentleman from
California (Mr. Thomas). This tax relief is retroactive, which means it
will be effective this year, giving taxpayers, every taxpayer who pays
taxes, the opportunity to have some extra money. That is a fine point
about this bill.
It is not targeted so that people are excluded or divided. It means
if you pay taxes this rate reduction benefits everyone. It provides
real money for real people.
Mr. Speaker, I would note for a married couple with two kids, a
combined income of $75,000, a machinist and schoolteacher, it will
provide $1,600 in tax relief once fully phased in, $400 this year.
Mr. RANGEL. Mr. Speaker, I yield such time as he may consume to the
gentleman from Michigan (Mr. Dingell).
(Mr. DINGELL asked and was given permission to revise and extend his
remarks.)
Mr. DINGELL. Mr. Speaker, I rise in opposition to this outrageous
piece of legislation on which none of my Republican colleagues have the
vaguest idea of what they are doing.
Mr. RANGEL. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from
California (Mr. Matsui), a senior member of the Committee on Ways and
Means.
Mr. MATSUI. Mr. Speaker, I thank the gentleman from New York (Mr.
Rangel) for yielding the time to me.
Mr. Speaker, the whole basis of this Bush tax cut which ultimately
will be $1.6 trillion, maybe $2 trillion or $3 trillion, when it is
finished, no one knows

[[Page H764]]

what the total amount will be, the whole basis of this tax cut is based
upon surplus projections over the next 10 years from the Congressional
Surplus Budget Office that does estimates. In the document that said
that we will have $5.6 trillion, the Congressional Budget Office also
said that there is only a 50 percent probability that the 5-year
projections will be correct, and they say in the 10-year projections
they cannot even assess whether or not they will occur because they
have no experience at it.
If you take away the fact that these projections are kind of
guesswork, like whether the weather, in fact, will have snow next week
or last week, and maybe it did not, then if you take away that, the
whole basis of this tax cut then becomes illusionary, and that means if
it does not happen, we are going to have to cut health care benefits.
We are not going to be able to get prescription drug treatment to our
senior citizens.
Mr. Speaker, I will guarantee that we will have to make significant
cuts in Social Security, if, in fact, this tax cut occurs and these
numbers do not come up, and we know these numbers are just based upon
nothing but guesswork, and it is my hope that the Members will come to
their senses and be very, very cautious, because the Democrats have a
tax cut that basically is modest.
It is about $600 billion, which is a lot of money, but at the same
time that tax cut is well within a budget framework and obviously will
stay within these guesswork numbers.
Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 2 minutes to the
gentleman from Arizona (Mr. Hayworth), a member of the Committee on
Ways and Means.
Mr. HAYWORTH. Mr. Speaker, I thank the gentleman from California (Mr.
Thomas), the chairman of the Committee on Ways and Means for yielding
me the time.
Mr. Speaker, I listened with great interest to my friend from
California (Mr. Matsui) on the other side of the aisle acknowledging
what we all know, none of us here have the gift of clairvoyance.
Indeed, the other side did not have the gift of clairvoyance when they
disregarded budget rules, waived budget rules and spent and spent and
spent and spent more of your hard earned money.
Now to hear my friends on the other side with this born-again
devotion to passing a budget first, I simply say, Mr. Speaker, what
about the family budget? What about your constituents working hard to
make ends meet? What about your constituents sending up to 40 percent
of their income in taxation to some form of government? What about your
constituents paying more in for taxes than for food, clothing and
shelter combined? What about your constituents who you have asked time
and time and time again to sacrifice so that Washington can do more?
Mr. Speaker, I would suggest that is exactly backwards. Washington
should live within its means so that American families can have more in
this year. For a married couple, an extra $400 this year, I know to big
spenders it does not sound like much, but it helps pay down credit card
debt. It helps buy new clothes for the kids or a new set of tires.
In short, it is real money for real people, and it is money that
belongs to the people, not to the government.
Mr. Speaker, what we see here in this debate this afternoon is really
a conflict in philosophy. Some folks here honestly believe Washington
needs the people's money more than the people do. We respectfully
submit that is exactly backwards.
The American people need more of their hard earned money especially
in these times of economic uncertainty, and joining together with the
passage of H.R. 3 this afternoon, we take this important step.
Mr. Speaker, I urge my colleagues to vote in the affirmative.
Mr. RANGEL. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from
Washington (Mr. McDermott), a senior member of the Committee on Ways
and Means.
(Mr. McDERMOTT asked and was given permission to revise and extend
his remarks.)
Mr. McDERMOTT. Mr. Speaker, I am here to oppose any tax cut until we
get a budget.
Now, the last speaker, the gentleman from Arizona (Mr. Hayworth) said
we do not need a budget. Let me tell you why we do. I sit on the Budget
Committee, as well as on the Ways and Means Committee, and we had the
wizard from Wisconsin appear before the Budget Committee.
That was former Governor Thompson who is now head of HHS. He did not
answer a single question that comes from the budget book ``A Blueprint
For New Beginnings which the President sent to us and told us about.
On page 15, this book says that Medicare is going to be $645 billion
in the hole over the next 10 years. On page 51, the President says we
will put $153 billion into Medicare. Now that is $400 billion that will
not be there for Medicare.
Better yet, the wizard says I am going to give you a prescription
drug benefit. In that $153 billion they are sticking in, somewhere they
are going to come up with $159 billion for the prescription drug
benefit this House passed in the last session. Those numbers do not add
up, and that is just one part of this budget.
I was in Seattle the other day listening about whether I should come
back from the earthquake which nobody predicted. The projections on
earthquakes are kind of bad. They said there was going to be 2 feet of
snow here, so I got on the plane in Seattle, and I arrived here and
walked off and there were two flakes.
Anybody who votes for this tax budget is reckless.
I will not support a tax cut without a budget.

i. need budget first argument

I went to the Budget Committee hearing yesterday where Secretary
Thompson testified. He could not answer a single question about how we
are going to meet our financial obligations for Medicare.
The President allocates $153 billion to modernize Medicare--this
includes a prescription drug benefit and his Immediate Helping Hand
program. This ``modernization'' effort will not give the Medicare
program the infusion of dollars it so desperately needs. This amount
will not even be enough to fund a prescription drug benefit, let alone
have any success in so-called modernization. Last year's House
Republican plan alone carried a 10-year price tag of $159 billion. But
according to many health care analysts, even this amount is inadequate.
The administration puts Part A HI surplus into a $842 billion
contingency fund. This fund must be the same ``one trillion additional
reasons'' to which the President referred in his speech last week as to
why we should feel comfortable with his budget.
But the administration promises the HI fund will be used only for
Medicare. So really, this fund is worth only about half of that amount.
The administration combines Part A and B and tells us we are really
in a deficit. Using the administration's own numbers, I asked the
Secretary, how are we going to meet these obligations--is it through
increasing the payroll tax, decreasing benefits, decreasing payments to
providers? He could not answer the question.
The program needs an infusion of money, but the Secretary does not
know how to achieve that. Of course not--the administration is trying
to ram a tax cut down our throats before considering the budget.
Where is the allocation of money for the President's tax credit
proposal to help the uninsured? I suppose that is one of the trillion
reasons why I should feel comfortable with his budget.

ii. economic stimulus argument

We are told that the reason that this tax bill was rushed through the
Ways and Means Committee, and rushed to the floor is because our
economy is in dire need of a tax cut. We must stimulate the economy--we
are told. But this tax cut was proposed in 1999. It had nothing to do
with the economy then. Furthermore, the principle reason CBO's budget
projections show larger surpluses in their latest estimates is that CBO
now believes the economy generally will be stronger over the next 10
years than previously thought. This completely undermines the argument
that a large, permanent, and growing tax cut is needed to help ward off
the impending arrival of a weak economy.
His tax cut will give $360 to families in the first year--this is a
dollar a day. If you're lucky, you can buy a cup of coffee. How can we
expect one dollar a day to stimulate the economy?
Supporters claim that knowing your marginal rates will be increased
will cause people to spend which will in turn stimulate the economy.
All that will increase is their personal debt!
Not to mention, this tax bill is dead-on-arrival in the Senate, where
they will wait until after they've passed their budget.

[[Page H765]]

iii. government spending is good argument

There has been much focus on Chairman Greenspan's testimony and the
peril of reaching zero debt. There is a misconception that government
spending is a bad idea. Republicans ask--who needs the money more--the
American people or Washington, DC. But this is a completely misleading
question and not the choice with which we are faced.
Government spending is money spent for the people--for the welfare of
our citizens and includes social goods that individuals independently
would not have otherwise purchased.
Take for example the latest disaster in my district, in Seattle. We
just experienced an earthquake registered at 6.8.--6.8 in India leveled
buildings and caused massive loss of life--thousands of people. But in
Seattle, we were extremely lucky. There was no loss of life.
I was just there. I saw the extent of the damage with my own eyes.
While there was an estimated $2 billion worth of damage, it could have
easily been so much worse--had we not prepared.
But we did prepare--with the help of a government program called
Project Impact. Seattle was one of seven cities chosen for $1 million
pilot programs in 1998. This forward-looking program linked community
leaders to corporations interested in blunting the economic fallout
from natural disasters.
The government provides the initial seed money and suggestions to get
various stakeholders involved and invested in prevention and investment
efforts.
Project Impact began with seven pilot communities and quickly became
a nationwide initiative as more communities began to see the value in
disaster planning. Today there are nearly 250 Project Impact
communities as well as more than 2500 businesses that have joined
Project Impact as partners.
As I surveyed the damage myself, I said--``This initiative worked!''
This is a prime example of government spending for the public good.
But unfortunately, this administration wants to abolish it to save $25
million, as they try and find the funds to pay for their $2 trillion
tax cut.
This is also a perfect example of why government spending is good,
and why I will not vote for a tax cut before I know the budget.

iv. tax cut is biased and unfair argument

The tax cut proposal from President Bush is biased and unfair, giving
disproportionately less money to working poor families.
Bush supporters talk in terms of marginal tax rates and percentages,
but not dollars. They will tell us that the poor receive a large
reduction in marginal tax rates in order to help them obtain access to
the middle class. But they do not tell us that one in three families
receive no benefits.
Twelve million families with children would not receive any tax cut.
One-third of all children and more than one-half of black and Hispanic
children live in excluded families. But 80% of these families have
workers. In other words, they pay taxes, payroll taxes. They have
contributed to the very surplus President Bush is trying to raid.
Why shouldn't all Americans benefit from the economic growth and
prosperity that has resulted in our surpluses?
Yes, I believe in a lockbox for both Social Security and Medicare,
but there are ways to give breaks to lower income families with no tax
liabilities.
If President Bush really wants to help hard-working individuals
obtain access to the middle class, why does he reduce rates across only
the first 25% of income within the 15% bracket income tax rates--to
10%, while all other income amounts within all other tax brackets
experience the rate reduction. Why am I not surprised?
Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 2 minutes to the
gentlewoman from Washington (Ms. Dunn), a member of the Committee on
Ways and Means.

{time} 1415

Ms. DUNN. Mr. Speaker, there are two reasons for the tax relief bill
that we are considering on the floor this afternoon. First, as the
Federal Government continues to amass surpluses, we must share this
reward with the people who produced it. The longer we delay providing
tax relief, the less likely it will materialize. Because we know that
it is a fundamental fact that, if that money stays in Washington, D.C.,
it will be spent.
Under this bill alone, a typical family of four with an income of
$55,000 a year would see a tax cut of nearly $400 this year; and under
the entire bill, which we will be addressing later on, $2,000 once the
plan is fully implemented.
Second is, as the economy softens, tax relief will provide critical
stimulus to prevent this country from going into a prolonged recession.
Wait for the budget. Sure, we could do that. But H.R. 3 would
increase family income. It will boost economic activity, and it will
contribute to job growth. We need to get this tax relief moving now.
Why wait?
The critics and doomsayers claim that H.R. 3 is too large, it is
reckless, it is unfair. I respectfully disagree on all counts. The
bracket reduction represents 25 percent of the projected budget
surplus. It is also fair. Under H.R. 3, every taxpayer will receive
relief, every taxpayer. It targets no one in and no one out.
Indeed, those in the lowest bracket will garner immediate benefit
retroactive to the beginning of this year. Mr. Speaker, I urge my
colleagues to support this bill.

Announcement By The Speaker Pro Tempore

The SPEAKER pro tempore (Mr. LaHood). The Chair asks Members not to
have signs posted when they are not standing at the podium. The Chair
would prefer that when Members come to the podium, they can put their
exhibit up, but not before beginning their remarks.
Mr. RANGEL. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from
New York (Mr. McNulty), the gentleman in the well who has the sign up
there.
Mr. McNULTY. Mr. Speaker, the American people have seen so many
numbers recently. I know their eyes are glazing over. They do not know
who to believe.
This is going to be the simplest chart my colleagues are going to see
in this debate today. I am going to use all the President's numbers.
You will see no McNulty numbers no Rangel numbers, no Gephardt numbers;
all the President's numbers.
He says we are going to have a $5.6 trillion surplus in the next 10
years. We think it is like a weather forecast. But let us assume it
happens. We get the $5.6 trillion. He pledged at the podium behind me
very recently that we were going to reduce the national debt by $2
trillion. I like that. I support the President in that regard. That
takes us down to $3.6 trillion.
He also pledged to protect Social Security and Medicare. Every person
I am looking at on this floor voted to do that with the lockbox
legislation just a couple of weeks ago. That is $2.9 trillion. All his
numbers. That takes us down to less than 1 trillion, 700 billion
dollars.
If one subtracts from that, not the 1.6, not the Rangel 2 trillion,
not the Gephardt 2.2 trillion, just what we are doing today, just $900
billion. And subtract that from what is left, you have a deficit of
$200 billion. All the President's numbers. Even if this projection
comes true.
Mr. Speaker, we should not go back to the days of deficit spending.
We owe more to our children and grandchildren than to drown them in a
sea of red ink.
I urge my colleagues to reject this proposal, to support the Rangel
substitute.
Mr. THOMAS. Mr. Speaker, those numbers are very bright, they are very
bold, they are nicely drawn, they are absolutely wrong.
Mr. Speaker, I yield 15 seconds to the gentleman from Louisiana (Mr.
McCrery) on how wrong the numbers are.
Mr. McCRERY. Mr. Speaker, the numbers of the gentleman from New York
(Mr. McNulty) are incorrect. They are not the President's numbers. He
double-counts $2 trillion of the $2.9 trillion of Social Security
surplus.
Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 2 minutes to the
gentleman from Texas (Mr. Sam Johnson), a member of the Committee on
Ways and Means.
Mr. SAM JOHNSON of Texas. Mr. Speaker, it is $363 billion over 5
years. So when one is talking in bigger numbers like that, one is
absolutely wrong.
Do my colleagues know what? This is a great day for every American
who pays taxes, because today we are going to give each and every
American some of their own money back.
Unlike the Democrats, Republicans know that the surplus is the
people's money, not the government's money. It is a tax surplus. With a
slowing economy and public confidence slipping, we have got to act now
because our failure to act could just make matters worse. That is
irresponsible.
We do represent the people of the United States. That is why every
Member of Congress should vote to approve

[[Page H766]]

this fair and responsible tax relief bill. It returns money to those
who need it the most, low- and middle-income families. Do not deny them
their own money. They worked hard to earn it, and we ought to work just
as hard to give it back.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from
Tennessee (Mr. Tanner).
Mr. TANNER. Mr. Speaker, I am one of the Blue Dog members on the
Committee on Ways and Means, and I tell you, we want as large a tax cut
as is responsible and consistent with protecting Social Security and
Medicare and retiring the national debt, not to mention the needs of
military, education and agriculture. The way you do that is you get a
budget. I know of no prudent business person in this land who would
make a critical operating decision in his company without a budget.
And, you know, people are overtaxed. Let me give my colleagues one
reason why. Look at the debt of this country. Every person in this
country is responsible for $20,300 of debt. For a family of four, that
is $82,000 worth of debt that they have on them.
Retiring the debt is one of the priorities of the Blue Dogs. We think
there is room to do both. But the way you do that and to make sure that
you are in a position to do both is to have a budget first and then you
get to where we want to go with the tax cut.
Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 2 minutes to the
gentleman from Minnesota (Mr. Ramstad), a member of the Committee on
Ways and Means.
Mr. RAMSTAD. Mr. Speaker, I thank the chairman for yielding me this
time.
Mr. Speaker, for the life of me, I cannot understand how those
opposed to tax relief can make spending decisions based on projected
revenues. You can spend the taxpayers' money based on projected
revenues, but you cannot provide tax relief based on those same
revenues?
All we are talking about, Mr. Speaker, is returning 1 of 4 surplus
dollars back to the taxpayers. It is their overpayments that are
creating the surplus. It is the taxpayers' money, not the government's
money.
Let us put this into context. All we are talking about, those of us
who support this much-needed tax relief, we are talking about returning
6 percent of the $28 trillion in government revenues over the next 10
years, 6 percent of $28 trillion in revenues. That is hardly a risky
tax scheme or overgenerous to return 1 of 4 surplus dollars based on
the same projections that you are spending money, that we are all
spending money.
Our economy needs the stimulus of a tax cut. Every day in Minnesota,
my constituents are telling me sales are slow, orders are slow,
inventories are up, consumer confidence is down. More layoffs.
This tax relief will bring immediate relief to families who are
pinched financially. It will lift consumer confidence and boost our
sputtering economy. Our families need this tax relief, our overtaxed
taxpayers deserve it, and economic growth in America depends on it.
People want to pay off credit-card debt. They want to make car and
mortgage payments, pay energy bills. That is why we need to get this
tax relief to them, as the President says, as soon as possible.
American people are paying the highest level of taxes in peacetime
history. We need to return the surplus, the taxpayers' overpayments to
them in the form of these marginal rate reductions. This tax cut will
not threaten fiscal discipline, but it will mean real relief for
American families and for our sinking economy. The taxpayers of America
deserve this tax relief now.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from
Mississippi (Mr. Taylor).
Mr. TAYLOR of Mississippi. Mr. Speaker, to the gentleman from
Minnesota (Mr. Ramstad) and every single Member of this House who has
talked about a surplus today, this is reality. I have challenged every
one of you to say it is not true.
Our Nation is 5 trillion 700 billion dollars in debt. What the
gentleman from California (Mr. Thomas) will not tell us is that the
people who benefit the most from this tax break are the same people who
own this debt and the same people who are on the receiving end of $1
billion a day from the taxpayers in interest payments. They benefit the
most.
What he will not tell us is that the people who benefit the most do
not really care if we do not pay back the trillion dollars to Social
Security, because they are not counting on that check. They do not need
it. But the folks I represent do. They paid into that fund. We owe them
a trillion bucks. I say we pay them back.
What the gentleman from California (Mr. Thomas) will not tell us is
that the folks who owe 228 billion to the Medicare Trust fund do not
care if we do not pay it back, because they can afford private
insurance. My folks cannot. They paid into this fund. I say let us pay
it back. What the gentleman from California will not tell you is the
folks who benefit the most on this tax bill do not care if we do not
repay $165 million to military retirees because that is not what they
are counting on to live. But the folks I represent did earn that money.
I say let us pay them back.
Mr. THOMAS. Mr. Speaker, I yield 1 minute to the gentleman from North
Carolina (Mr. Coble).
Mr. COBLE. Mr. Speaker, what have the Republicans done for Americans.
We reformed welfare, reduced capital gains tax. We have removed the
earnings cap that penalized working seniors. We tried to repeal the
estate tax and the marriage penalty; President Clinton rejected those
proposals, however.
Mr. Speaker, today we say to American taxpayers, you earned it, you
will get to keep more of it. Fairness and equity at work. Many of my
Democrat colleagues, and I do not say this critically, promote a big,
bloated Federal Government. Many of my Republican colleagues,
conversely, encourage the maintenance of a small, lean Federal
Government thereby freeing up more money for taxpayers. Yes, the debt
has stopped being ignored. The debt will continue to be paid down
gradually, but we are not turning a deaf ear or a blind eye to the
American taxpayer who earned it in the first place. American taxpayers,
this is a good day for you. This is a victory for you.
Mr. RANGEL. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from
Maryland (Mr. Cardin).
Mr. CARDIN. Mr. Speaker, there are many reasons to vote against this
bill. First, the numbers do not add up. The bill is much more expensive
than advertised. I hear my colleagues say that all taxpayers will
benefit. We know unless we fix the alternative minimum tax, that is not
true, the bill is going to cost more money. It is based upon 10-year
projected surpluses. CBO has never been able to project a surplus 2
years accurately let alone 10 years accurately. The surplus could be
$2.5 trillion less than we are advertising.
We know that the passage of this bill will make it much more
difficult for us to deal with Social Security, Medicare, prescription
drugs, paying down our national debt and investing in education.
This bill violates our own budget rules. Section 303 of the Budget
Act says we are supposed to have a budget before we bring up any
revenue bill. The Committee on Rules waived that budget violation.
Section 311 of the Budget Act says all tax bills have to be within the
existing budget. This violates that budget rule.
Then we are trying to work in a bipartisan way. I heard the President
over and over again say let us work together. One would think the first
thing we would want to do is work out a bipartisan budget instead of
bringing forward piecemeal tax bills. This is not a good sign for us
working together in a productive way. This bill is reckless. This bill
is wrong, and I encourage my colleagues to vote against it.
Mr. THOMAS. Mr. Speaker, I think a good sign to the American taxpayer
would be voting tax relief.
Mr. Speaker, I yield 2 minutes to the gentleman from California (Mr.
Herger), a member of the Committee on Ways and Means.
Mr. HERGER. Mr. Speaker, I rise in support of H.R. 3, the Economic
Growth and Tax Relief Act of 2001. This legislation will provide real
tax relief for American families at a time when it is urgently needed.
Simply put, Americans are overtaxed considering

[[Page H767]]

that Americans today face a higher tax burden than they have at any
other time since World War II. In fact, on average families today pay
more in taxes than they spend on food, clothing and shelter combined.
Once fully phased in, President Bush's plan will enable the typical
family of four to keep at least $1,600 more of their own money. This is
real help for families trying to make ends meet. $1,600 will pay the
average mortgage for almost 2 months. This relief will pay for a year's
tuition at a community college or the cost of gasoline for two cars for
a year.
In my home State of California, families will be able to use their
tax refund to help cope with our State's high energy costs.
Let us be clear. If we leave the tax surplus in Washington, it will
be spent on bigger government. Americans have been overcharged, and it
is time to give them their refund.

{time} 1430

The legislation before us is a critical first step in this process. I
urge my colleagues to support this legislation.
Mr. RANGEL. Mr. Speaker, I yield 1\1/2\ minutes to the gentlewoman
from New York (Ms. Velazquez), the senior Democrat on the Committee on
Small Business.
Ms. VELAZQUEZ. Mr. Speaker, I rise today in strong opposition to the
President's tax plan.
My colleagues, we are here today to talk about tax cuts, but let us
spend a little time examining how the President is going to pay for
this tax cut. The President says his budget will increase access to
capital and expand opportunities for small businesses throughout
America. But let us be clear. This tax proposal is paid for on the
backs of this Nation's small businesses.
To pay for what we are voting on today, the President's budget tacks
on exorbitant fees for SBA loans that increase the costs on small
business owners by up to $2,400 for each loan and $7,000 over the life
of the average loan. Ask any small business owner and they will tell
you that ``fee'' is code word for ``tax.''
But small businesses needing access to capital are not only the only
ones being taxed. To add insult to injury, the President's budget
proposal goes after those small businesses that have their businesses
destroyed through a natural disaster. Many of the Members of this body
have seen the effects of natural disasters. The assistance provided
through disaster loans gives hope for small businesses. But the
President's budget effectively kicks them when they are down by forcing
them to pay an additional $7,000, making it impossible for them to ever
rebuild their businesses.
I ask and I urge the Members to vote ``no'' on this ill-conceived tax
plan.
Mr. THOMAS. Mr. Speaker, may I inquire about the time remaining on
each side.
The SPEAKER pro tempore (Mr. LaHood). The gentleman from California
(Mr. Thomas) has 17 minutes remaining, and the gentleman from New York
(Mr. Rangel) has 18\1/2\ minutes remaining.
Mr. RANGEL. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from
Wisconsin (Mr. Kleczka), a senior member of the Committee on Ways and
Means.
Mr. KLECZKA. Mr. Speaker, the question before the House today is not
whether or not we should have a tax cut; the question is what size
should a tax cut be.
This meager little 7-page bill before us has a price tag of almost $1
trillion. Well, that is fine, but I ask my colleagues, is the $1
trillion here today? And the answer is no. That is a 10-year
projection. So what we are in essence doing is committing money today
that we think and hope and pray will come to Washington in the years
2006, 2009, 2011.
How many of my colleagues would plan a vacation based on a 10-year
weather forecast? Would they reserve the hotel room? Would they buy the
airplane ticket because they were told that on a particular week or day
in the year 2009 it is going to be good weather? We would all think
that is sheer nonsense. Well, my friends, that is what we are doing
today.
So the Democrats are saying, let us go slower, and if in the year
2006 the surpluses, the projectors, the crystal ball is right, we will
cut taxes again. We did this only 20 years ago. A similar Congress with
a Republican President cut taxes. And what happened to the country? We
ballooned the national debt from $1 trillion to almost $4 trillion. So
what I see happening today is deja vu.
We have not paid off the old national debt. In fact, I saw a friend
of mine at the airport and he said, Jerry, vote to send my money. I
want my money back. And, I said, I am going to do that. But, my friend,
what should I do about your national debt, totaling $12,500?
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume to
merely respond that someone once said that everyone talks about the
weather, but no one can do anything about it. This is tax reduction. We
can do something about it. We can vote aye on H.R. 3.
Mr. Speaker, I yield 2 minutes to the gentlewoman from Connecticut
(Mrs. Johnson), a member of the committee.
Mrs. JOHNSON of Connecticut. Mr. Speaker, I thank the gentleman for
yielding me this time, and I rise in strong support of H.R. 3.
The time is right. The time is now to give hard-working Americans
substantial tax relief. It simply amazes me that Americans spend more
in taxes than they spend on food, clothing, and housing combined. The
tax burden on ordinary working people in today's America is higher than
it has been at any time since World War II, and the average household
pays two and a half times more in taxes than it paid in 1985. This is
unacceptable. It is unfair. It is just plain outright wrong.
Let us look at what is happening to those tax dollars that they are
pouring into Washington. For one thing, they are building up a surplus
faster than at any time in our history. Just yesterday, our Secretary
of the Treasury said that right now, this month of March, our surplus
is $75 billion. A year ago, in that economic year, at the same time, it
was only $40 billion. So in spite of the leveling off of the economy,
the surplus is growing more rapidly now than it was a year ago. The
surplus dollars are our taxes. They are just the fruit of the hard
labor of the American people.
We can reduce the debt; pay it right down. We can spend on our
priorities like education and health care; and, yes, we can and must
reduce people's taxes. It is their money. They deserve a portion of it
back, and they deserve that today.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from Texas
(Mr. Green).
(Mr. GREEN of Texas asked and was given permission to revise and
extend his remarks.)
Mr. GREEN of Texas. Mr. Speaker, I thank the gentleman for yielding
me this time.
Despite our President's promises to end the partisan tenor in
Washington, our congressional Republicans continue to use the same old
tactics. This does not match the procedure the President stated as his
goal. For the last 2 days, Congress has debated two extremely divisive
issues. Yesterday, after 1 hour, we undid job-safety standards we had
been working on for 10 years; and today we are considering a tax bill
that could wipe out the current surplus and our effort to reduce our $5
trillion national debt.
What is worse, we are doing this without a budget. We do not know
what else we are doing with the people's money. We do not have any
contingency funds. We are just racing around this process with the hope
that when we are finished we will still have some money left over.
We should have a budget in place before we start either spending or
cutting revenue. We need to protect Medicare, Social Security, we need
to pay down the debt, and we need to make sure there is money for our
children's education, health care costs and energy bills. We can cut
taxes, but we need to look at it responsibly, Mr. Speaker.
I support a broad and even retroactive tax cut. I do not want our
citizens too overburdened by a tax system any more than our Republican
colleagues do, but we know the priorities of our citizens is not
immediately to have a tax cut.
Mr. THOMAS. Mr. Speaker, I yield 2 minutes to the gentleman from Ohio
(Mr. Portman), a valuable member of the Committee on Ways and Means.

[[Page H768]]

Mr. PORTMAN. Mr. Speaker, I thank the chairman for yielding me this
time, and I applaud him for this tax bill, which is a great tax relief
effort; and I will be strongly supportive.
I want to just respond briefly to what my colleague from Texas said.
I have never seen any President, Republican or Democrat, reach out so
much to the other side. I look at some of my Democrat colleagues over
here, who have been down to the White House with me to meet with the
President, and I know they have been down there without me too, so he
has reached out. He has tried to bring Democrats and Republicans
together, and he has put together, with the gentleman from California
(Mr. Thomas) and the Committee on Ways and Means, a very responsible
bill here.
First of all, it fits within the budget. The President outlined the
budget last week. We are protecting Social Security and Medicare as we
never have before. For over 30 years, we raided that trust fund. We are
not doing that. We are protecting Social Security and Medicare. We are
paying down the debt in a way we never have before. We are paying down
more debt in his budget than we ever have in the history of this
country. In fact, we are going to pay down all the available debt. So I
do not know what people are talking about in terms of the debt.
After all that, we are going to have some spending increases in
places like education and the military, and still there is room for tax
relief for the hard-working American people who created every dime of
this big surplus we have.
People are overtaxed. We just heard earlier people spend more on
taxes now than they do on food, shelter, and clothing combined. We have
the highest tax burden since World War II. Taxpayers in Ohio need some
relief. I know they do. And they ought to get it.
Finally, I want to say that we need to do this for the economy, even
if it did not fit in the budget so neatly, even if taxpayers were not
so overburdened with taxation. Do any of us want to see us go into a
recession? Every economist will tell us that tax relief is going to
help the economy. It did when President John Kennedy passed tax relief,
which incidentally was much larger than this tax relief. This is about
half the size of John Kennedy's tax relief. When Ronald Reagan did it
again in 1981, and incidentally it was a lot more than this tax relief,
it was about three times higher than this tax relief, it helped the
economy.
We can disagree on the impact precisely, whether it will help a lot
or a little; but we know it will help the economy. In Ohio, people are
talking about layoffs. Around the country all the economic data is very
troubling. We have to do this tax cut to give this economy a boost, to
be sure we can keep the good jobs we have, and expand the economy and
continue the prosperity this country has enjoyed over the last decade.
Vote for this bill. It is good tax policy, it fits in the budget,
people need it, and it is necessary for the economy.
Mr. RANGEL. Mr. Speaker, I yield myself such time as I may need to
just advise my colleagues that the House rules say that the House has
to have a budget, not the White House. That is the House of
Representatives. And that we do not have.
Mr. Speaker, I yield 1\1/2\ minutes to the gentlewoman from Florida
(Mrs. Thurman), a member of the Committee on Ways and Means.
Mrs. THURMAN. Mr. Speaker, I thank the gentleman for yielding me this
time.
Mr. Speaker, America's families decide what they can spend based on
their yearly income and not 10 years out. Should we in the people's
House act differently? No. Congress has no idea how it will meet our
national priorities, Medicare, prescription drugs, education, tax cuts
and more, because we do not have our national family's budget planned.
But the House is willing to jeopardize all of these priorities if the
projections are wrong. If a family's projections are wrong, they must
dig into their savings or take out loans. If our projections are wrong,
then Congress will have to take out loans or use our savings, Social
Security and Medicare.
Quite frankly, I do not know about my colleagues, but I do not want
to go back to the time when interest rates were 18 percent, when
working families could not afford to buy homes, when unemployment was
high and underemployment kept workers at low wages. I think it is time
for prudence to guide us.
I think we should first look at the country and give us a real honest
and responsible budget with tax cuts, just like we did in 1997. I do
not think that is too much to ask for.
Mr. THOMAS. Mr. Speaker, I yield 2 minutes to the gentleman from
Michigan (Mr. Camp), a member of the committee.
Mr. CAMP. Mr. Speaker, I thank the chairman for yielding me this
time.
Over the next 10 years, the Federal Government will collect more
money than it needs to operate. Even after setting aside money to
protect Social Security and Medicare, the government will collect much
more than it needs. If that money is left in Washington, there is no
doubt that it will be spent, when in all fairness it should be returned
to the American people.
Today, the average American family pays more in taxes than on food,
clothing, and shelter combined. Every dollar that passes through the
taxpayers' hands on its way to Washington is a dollar that could be
saved for a child's education, used for necessary living expenses or
household repairs. In my district in Michigan, I know these dollars
could be used to help with the high cost of gasoline and heating fuel.
High taxes are not only a tax on the ability to create wealth for
working people, they are a tax on opportunity itself; the opportunity
for Americans to determine their own destiny, make their own choices,
and keep more of what they have worked so hard to earn. These values
are the essence of democracy itself. It is the people's money. They
worked hard for it, and they deserve it. They deserve a refund.
Today, we have a great opportunity. It has been 20 years, since
Ronald Reagan was a new President, to see any significant Federal tax
relief. Let us vote to give the American people a refund.
Mr. RANGEL. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from
Texas (Mr. Doggett), a member of the Committee on Ways and Means.

{time} 1445

Mr. DOGGETT. Mr. Speaker, the notion that this tax bill will correct
the economic slowdown is truly a fantasy. This proposal was concocted
during last year's Republican campaign primaries. It was not developed
during hard times, and it is certainly not designed for hard times. The
only reason that its supporters seem preoccupied with the thought of
recession is that they cannot sell this distorted tax cut any other
way.
This year, the daily benefit to the typical American family of this
tax bill will be less than the cost of one good cup of coffee. That is
pretty wimpy help when you get right down to it. And if your family
does not want to share a cup of coffee, you can use your big tax
savings to buy a can of beans every day. Or, down in Texas, black-eyed
peas, with a few pennies to spare. And not just any beans, you can get
Bush's Best black-eyed peas or beans. In fact, if they have got coupons
at the grocery store, you can probably get a couple of cans of beans so
everybody will have extra helpings every day as a result of this Bush's
Beans tax cut.
For the average American family, it is not $1,600. This year this is
the Bush's Best Beans tax cut. And that is all that it amounts to. But
while you get so very little immediate tax relief, over time, over 10
years, the wealthiest Americans get a huge bonanza of benefits out of
this bill. The disaster that will occur to Social Security and our
children's educational opportunities is a very, very serious one, if we
approve this bill without ensuring that it can fit within an overall
balanced budget. I am for all the tax relief that fiscal sanity will
permit, but even the Republican economists have made it clear that this
Bush tax cut is not about the economy, it is about overpromising to the
privileged at campaign time.
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
I anxiously await creating a larger tax cut so the gentleman can add
to the canned beans something he is quite familiar with, canned ham.
Mr. Speaker, it is my pleasure to yield 2 minutes to the gentleman
from Illinois (Mr. Crane), the senior member of the Committee on Ways
and Means.

[[Page H769]]

(Mr. CRANE asked and was given permission to revise and extend his
remarks.)
Mr. CRANE. Mr. Speaker, I rise in strong support of the Economic
Growth and Tax Relief Act of 2001. When Governor Bush released his tax
relief proposal during the campaign with tax reductions as its
centerpiece, I knew we had the right program at the right time. I
congratulate the gentleman from California (Mr. Thomas) for moving the
rate reductions so quickly through the Committee on Ways and Means. I
urge my colleagues to support it, and I urge the Senate to pass the
same measure at the earliest possible occasion.
I know many of our friends on the other side of the aisle are
concerned that we have moved this bill so quickly. Some, like my friend
the gentleman from New York (Mr. Rangel), have said we should wait
until we have a budget resolution. I respectfully disagree. There is no
question the surplus projections will permit the size of tax cut before
us without endangering Social Security or Medicare and without
endangering our other priorities, including debt reduction. The only
information a budget resolution would provide us is how much additional
tax relief the Congress can provide this year.
I also believe it is imperative that we pass this bill without delay.
We must act quickly to build credibility with the American people that
this Congress will make good on the President's promise to cut taxes.
We have experienced a high degree of gridlock in recent years. The
American people are waiting to see if President Bush can work with the
Congress to enact important legislation. Nowhere is this more true than
with respect to tax relief. We have talked about major tax relief for
many years, with little to show for it because of President Clinton's
opposition. The American people, naturally enough, are skeptical that
we will really give them the tax relief that President Bush has
promised.
With our economy struggling, timely tax relief is exactly the right
complement to the interest rate cuts made by the Federal Reserve in
recent weeks. But the real effect of these cuts is not that it puts
cash in people's pockets today but that it promises to reduce their
taxes tomorrow. It is the expectation of lower tax rates that alters
decisions to invest and work today that increases economic activity
today and tomorrow. Incentive effects like these, which are the real
engine of a tax policy that strengthens the economy, are forward
looking. But for these incentive effects to take hold, taxpayers must
have some confidence that the tax cuts will be enacted. And that is why
we must act so quickly, to build confidence in the minds of the
taxpayers that we will enact the promised tax relief, so that they can
build these lower tax rates into their plans, so that the economy will
strengthen more rapidly.
I urge my colleagues to support the bill.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentlewoman from
California (Ms. Pelosi), a member of the Committee on Appropriations.
Ms. PELOSI. I thank the ranking member for yielding me this time.
Mr. Speaker, today the Republican majority rises to a new level of
recklessness and irresponsibility by proposing a tax cut which benefits
the wealthiest Americans, giving 44 percent of this tax cut to the
highest 1 percent of our country. And who pays for this gift to the
richest Americans? America's working families. We all know that the
biggest and best tax cut is low interest rates. Low interest rates on
our home payments, car payments, mortgage payments, credit card
payments. If we instead would pay down the debt instead of giving this
gift to America's wealthiest, we would be able to enable America's
working families to have the best tax cut of all.
We do not have the surplus Members are talking about here. First of
all, we are talking about a tax cut based on a budget we have not seen,
on a surplus we cannot guarantee, at a time when we have unmet needs in
our country. We have unmet needs in education, in prescription drug
benefits. Why should our children and our seniors pay for this tax cut
to the wealthiest? I urge our colleagues to vote no.
Mr. THOMAS. Mr. Speaker, it is with great pleasure that I yield 2
minutes to the gentleman from Pennsylvania (Mr. English), a member of
the Committee on Ways and Means.
Mr. ENGLISH. Mr. Speaker, I think the time has come for candor. We
need to recognize that America is experiencing a slowdown. After we
have seen the smoke clear from last year's election campaign, it became
increasingly obvious that the economy was not doing as well as some had
claimed. And in the manufacturing sector that makes up so much of the
economy of my district, we are clearly experiencing a recession. We
have an opportunity to move forward right now and change those
dynamics. But the only way we can do it is by recognizing that in this
background, we are imposing the heaviest tax burden in peacetime ever
on the American economy, and we need to recognize that if we are going
into a recession, the last thing on earth we want to do is run a huge
surplus.
Our tax bill would address that issue. Our tax bill would stimulate
the economy, lower the tax burden and encourage growth, savings and
investment.
A recent study by the Heritage Foundation of H.R. 3 suggests that
this bill would clearly increase economic growth, increase investment,
increase savings, increase family income and over 5 years create
500,000 new jobs. Now, our opponents are making phony procedural
arguments against the bill and using strange numbers. But the fact is
they want to spend the money. We want to give it back to the American
public so it can stimulate the economy and get our economy back on a
growth track. There is nothing more urgent facing this Congress than
the right kind of economic policy. We should act swiftly to pass this
tax cut and send the resources back to the economy.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from Iowa
(Mr. Boswell).
(Mr. BOSWELL asked and was given permission to revise and extend his
remarks.)
Mr. BOSWELL. Mr. Speaker, I will recall again, if I could, for all of
us that the President came up to Nemacolin here a few weeks ago and he
shared with us and we appreciated it very, very much. We asked him
there, can we see a budget? And he said yes. And that has come forth.
None of us expect that to be a perfect document. We have the gentleman
from Iowa (Mr. Nussle) and the gentleman from South Carolina (Mr.
Spratt) to work on that. We would like to see what they will produce
and come forward with.
So I am wondering, is this a criticism, what we are doing without a
budget, is this a criticism of the President's ability to lead or is
this a criticism of the folks to follow? We have got our work to do. We
have not done it. Common sense would tell us we would not expect to do
this with a business or a family. We have heard those comments made
several times. We would not go ahead and do something to our family and
plan a vacation and not have kids to have their shoes for school or
whatever. We would not do that. Let us not gamble on our future. We do
not have to. We have got a better situation. We do not have to do that.
A little bit ago, someone referred to 1981. We do not have the
luxuries of 1981. We do not have a $1 trillion debt. We have got $5.7
trillion. We ought to deal with it.
Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 2 minutes to the
gentleman from Wisconsin (Mr. Ryan), one of the newer members of the
Committee on Ways and Means.
Mr. RYAN of Wisconsin. Mr. Speaker, I thank the chairman for yielding
me this time. I have been listening to this debate with a lot of
wonder. I am a newer member to the committee and a newer Member to
Congress. It is amazing to me the excuses we are hearing to further
separate people from their own money. We hear that this tax cut is just
too big, it is irresponsible, we cannot handle it. I refer Members to
this chart which shows that this is six cents on the dollar, six cents
on the dollar that every American taxpayer is sending to Washington
over the next 10 years. $1.6 trillion out of $28 trillion.
More importantly, what is this all about? People are overpaying their
taxes. Everybody who pays income taxes are overpaying their income
taxes. That is why we are trying to

[[Page H770]]

pass this now. I hear this bizarre excuse that the process is wrong,
that we should do this bill in October, not in March. I encourage
Members of Congress to take a look at this chart. This was the cover of
Newsweek not too long ago: ``Laid Off, How Safe Is Your Job?'' In the
First District of Wisconsin, we are losing jobs by the thousands. We do
not have time to wait to give people money back in their paychecks.
Energy costs, job rates, they are chewing up the paycheck of working
Americans. We are trying the highest tax burden we have in the
peacetime history of this Nation.
It is time, it is more than time, that as people overpay their taxes,
especially after we are paying off the debt and protecting Social
Security and Medicare, as people continue to overpay their taxes, we
give them some of their money back. That is what we are doing today.
All of these excuses are other attempts to further separate people from
their own money as they overpay their taxes, so, guess what, they can
spend that money here in Washington.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentlewoman from
Nevada (Ms. Berkley).
Ms. BERKLEY. Mr. Speaker, I came here today to vote for an across-
the-board tax cut, but the tax cut that I support must be fair, it must
be responsible, and it must ensure that this country pays down its
national debt. Sadly, this tax bill does none of these things.
When my constituents in southern Nevada sit down to figure out how
much of their paychecks they can afford to spend, they know better than
to spend money they do not have, or money that they need to pay their
bills, or money that they might earn in the future. Unfortunately, this
Congress has not learned these simple lessons. We are getting ready to
pass a very large tax cut. How will this tax cut affect our education
system, our seniors, our prescription medication plan, our veterans,
our military? We do not know, because we have not got a budget yet.
I want to pass a large tax cut but to do so without a budget, without
protecting Social Security and Medicare, without paying off our
national debt is irresponsible and inappropriate. We should be here
voting on a bipartisan bill that fits our budget and helps American
families. We are not. We are attempting to ram something through
without hearings, without input, without reasoning.
It is very disappointing, Mr. Speaker. I cannot condone this process,
and I am not going to be a party to it.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from North
Carolina (Mr. Price).
Mr. PRICE of North Carolina. Mr. Speaker, like most Members of this
body, I support tax relief. But today we are debating this bill in
clear violation of the budget law which states, quote, the concurrent
resolution on the budget must be adopted before budget-related
legislation is considered.
This body is in violation of sound budget procedure, and we are in
violation of common sense. Who among us would dream of building a house
without a blueprint? That is what we are being asked to do: to shout
through a tax cut costing $1 trillion on the way to $2 trillion,
benefiting mainly the richest 5 percent of taxpayers, before we have a
budget resolution or a detailed budget proposal from the
administration.
With this tax bill, we would bet the store on shaky surplus
projections, more than two-thirds of which are more than 5 years away.
If you need any lessons on the unpredictability of projections and
forecasts, just ask the school children in my district about the snow
day they were promised last Monday!
This bill would compromise our ability to pay off the national debt.
And it would make it impossible to meet the obligations both parties
have made without a high and unacceptable risk of deficit spending.
This is a case of putting the cart before the horse if there ever was
one. Vote no.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from Maine
(Mr. Allen).
Mr. ALLEN. Mr. Speaker, Abraham Lincoln called on the better angels
of our nature. President Franklin Roosevelt asked us to set fear aside.
President Kennedy asked for sacrifices to enhance the common good. But
the rallying cry of the Bush administration is, ``It's not the
government's money, it's your money.'' That is a shriveled-up vision of
what the American people care about. We are better than that. The
American people want and deserve lower taxes, but not a cut so large
that seniors still cannot afford their drugs, our kids are stuck in
inadequate schools, and baby boomers lose benefits under Social
Security and Medicare. This Republican tax cut is a clarion call for
more spending on luxury goods by the wealthiest Americans.

{time} 1500

To those seniors who cannot afford their prescription drugs, this
bill says forget it, they are on their own. To those students, teachers
and parents who know that our schools need full funding of special
education, this bill says, forget it, they are not a high priority.
To the baby-boom generation not far from Medicare and Social
Security, this bill says forget any help from general revenues any time
soon.
Support the Democratic alternative.
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I am just a little bit confused now. I thought all we
were giving was a can of beans and now we are depriving virtually every
American of a significant portion of their share of the American pie. I
just really wish my colleagues on the other side would get together on
their side in terms of which argument it is going to be.
Mr. RANGEL. Mr. Speaker, will the gentleman yield? It is as clear as
it could be.
Mr. THOMAS. If the gentleman wants to yield on his time I would be
more than willing to do that.
Mr. RANGEL. No, because I think it is very clear what we are doing.
The gentleman is making it cloudy.
Mr. THOMAS. Mr. Speaker, I yield 2 minutes to the gentleman from
Kentucky (Mr. Lewis), a valued member of the committee.
Mr. LEWIS of Kentucky. Mr. Speaker, in the true spirit of
bipartisanship, I want to be as partisan as my colleagues across the
aisle. There they go again. They say they want tax relief, but actions
speak louder than words. Their history: Big spending, big taxes, big
government, and they are fighting with all their heart, mind, soul and
body to stop tax relief. That is the bottom line.
The sad part about this is that the President offered a hand across
the aisle in a true bipartisan spirit for their help to give the
American people a refund on their money. What did he get in return? A
partisan slap in the face.
I think that beyond a shadow of a doubt what has been displayed here
today with the Democratic dilatory tactics, the American people can see
what the Democrats are all about. They have never seen a tax cut that
they like. They have never seen a tax increase that they have not
liked. They have never seen a big government spending bill that they
would not vote for.
Mr. Speaker, let us get the money, the tax money, out of Washington
and in the pockets of the American people.
Families need help, not Washington bureaucrats. If the Democrats
refuse to help and Republicans have to do it alone, so be it.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from
Arkansas (Mr. Berry).
Mr. BERRY. Mr. Speaker, I want to thank the distinguished ranking
member, the gentleman from New York (Mr. Rangel), for yielding me this
time.
Mr. Speaker, I have to say if we get any more bipartisan than we are
here today, it is going to be an absolute miracle. We will have to
remove the center aisle.
We favor tax cuts, but we do not favor a bigger debt. We are not in
favor of running up the debt another $5.7 trillion. We are not in favor
of our children having to pay off this debt. We are not in favor of not
having a budget, not having a spending plan that will protect our
children and protect Social Security and Medicare like both parties
have over and over promised to do; provide an education for our
children; do a better job for our national defense; take care of our
farmers and our agricultural industry in this country and provide
better infrastructure.

[[Page H771]]

We all know we have to do that to be a successful Nation, and at the
same time we can have these tax cuts but we need to have a budget
first. This is absolutely ridiculous.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from
Massachusetts (Mr. Meehan).
Mr. MEEHAN. Mr. Speaker, I thank the gentleman from New York (Mr.
Rangel) for yielding me this time.
Mr. Speaker, we have an historic opportunity to pay down the debt,
cut taxes substantially for middle-class and working families, provide
a Medicare prescription drug benefit for seniors and invest in the
children of our country in education. Instead, we are snatching
deficits from the jaws of surpluses.
Families watching this debate across America have to be scratching
their heads. When they consider making major financial commitments,
they first sit down at their kitchen tables with a pad and a calculator
and see if they can afford it. When they cannot afford to repay their
debts, they pay down those debts before using the money to buy new
goodies. But some in this body, I guess, know better than the American
people, because today we are passing a trillion dollar tax cut in a
budget vacuum, and we are making excuses about why we cannot pay down
the debt. Only in this Congress do we strap on a blindfold before
making major fiscal policy decisions.
We can do better than this, and the American people know it. I urge a
no vote on this bill.
Mr. RANGEL. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from
Texas (Mr. Reyes).
Mr. REYES. Mr. Speaker, I thank the gentleman from New York (Mr.
Rangel) for yielding me this time.
Mr. Speaker, it has been said that those that refuse to learn from
history are doomed to repeat their mistakes. I want to say that I
support a fair, reasonable and affordable tax cut; but I cannot support
this proposal because we have had no hearings; there is no budget; and
there have been no opportunities for us to express our shortcomings
with this proposal.
I want to also illustrate that if we are using the Texas model, and
this is where history comes in, and President Bush has said over and
over again he is using the Texas model, I want to point out that a
Democrat and a Republican State Senator have said the following:
Senator Chris Harris, Republican, said, we made tax cuts because we
thought we had this huge surplus. I might have voted a little
differently on all of these tax cuts had I realized that we were only
funding 23 months of these programs.
A Democratic Senator said, we should have taken a harder look at the
tax cuts. We did not look down the road and so now we find ourselves,
as a result of these budget priorities, in a difficult hole.
This is what has happened to Texas because of two enormous tax cuts
that then-Governor Bush proposed.
When he was asked about this on the campaign trail, then-Governor
Bush said, I hope I am not here to deal with it.
Well, guess what? Texas is dealing with this hole today, a deficit
that is as red as my tie. It is important that we not repeat the
mistakes of the past.
I think it is more important that we realize that we must have a
sensible, affordable tax cut proposal and not my way or the highway
proposal.
I hope we do not repeat history again.
Mr. THOMAS. Mr. Speaker, I yield 2 minutes to the gentleman from
Georgia (Mr. Collins), a member of the Committee on Ways and Means.
Mr. COLLINS. Mr. Speaker, for 8 long years I have waited to tell the
people of Georgia that the President of the United States has sent a
bill to Congress which will reduce the tax burden on every taxpayer in
America. That day has come.
Mr. Speaker, the previous administration was not only taxing
Americans' wallets but they taxed their patience as well.
We suffered through 8 years of either tax hikes or so-called targeted
tax cuts which were awarded to selected Americans who met certain
criteria, who agreed to jump through certain hoops.
This Washington-knows-best type of tax policy is ending. Today we are
considering across-the-board tax relief to all Americans, to all
taxpayers, of every level so that they can keep more of their earnings
and spend those earnings as they wish. They can save the money or they
can spend it. It is their money so it should be their decision and not
Washington's, Mr. Speaker.
The same old, usual complaints from those who are pained to see this
money escape from Washington unspent we are hearing over and over again
today. They say tax relief is too expensive, but the President's tax
relief amounts to only 6 percent of all Federal revenues over the next
10 years.
They say it is unfair, but what is fairer than returning the
overpayment of taxation back to the people who paid the taxes in in the
first place? What is fairer than including the tax relief as part of a
plan which strengthens defense, improves education and sets aside
payroll tax dollars for Medicare and Social Security? What is fairer to
the future generations than passing this relief as part of a plan which
will allow us to responsibly pay down the publicly held national debt?
Eight years and coming, Mr. Speaker. Today is the day; now is the
time to act. I urge a yes vote on this tax reduction bill.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from
Michigan (Mr. Levin).
(Mr. LEVIN asked and was given permission to revise and extend his
remarks.)
Mr. LEVIN. Mr. Speaker, the President's tax plan is a gamble. It is a
risky gamble. It is true, it is the public's money. The Bush plan is
gambling with the public's money. It is gambling because there is no
budget, and there is no clear indication what it would mean for
education, for prescription drugs and others. It is a gamble because it
would use 75 percent of the projected surplus, 75 percent, and leave
little else for other things. That is only a projected surplus.
We have learned in the past how risky those projections are.
It is a gamble because 1 percent would receive over 40 percent, the
highest 1 percent in income would receive over 40 percent of this tax
cut, and they have their own money all ready for a gamble.
Some gambled in 1981, and it resulted in the highest deficits in the
history of the world. Our alternative is fiscally responsible. Let us
pass it.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from
Louisiana (Mr. Jefferson), a member of the Committee on Ways and Means.
Mr. JEFFERSON. Mr. Speaker, I just saw a member of our Chamber of
Commerce from back home who urged me to vote for this bill, and I told
him it was incredulous to me how a man could fiscally ask that sort of
question of me, because I reported to him that if he had had a great
year at his business and could look down the road and see 4 or 5 other
great years but had a big debt at the bank, what would he do about it?
Would he send a dividend down to his shareholders or would he pay off
his debt in advance?
He had to admit he would pay his debt off because to do anything else
would be irresponsible.
This debate is uninformed by the claim that this is the people's
money. Of course it is, as are all the taxes which are paid by the
people. Does that mean we send all the taxes back to the people because
it is their money? Of course, it does not. It means that the folks have
entrusted us to make some fiscally responsible decisions about the
expenditure of that money for their government. The money is here to
support the government, support things that people cannot do by
themselves that we do collectively. That is the whole idea behind it.
We are making fiscally imprudent choices, unwise choices for the people
now, and we are violating the trust of the public in sending back their
money to them when we need to have our money spent on priorities that
will meet the needs of the people back home.
Mr. RANGEL. Mr. Speaker, I yield such time as he may consume to the
gentleman from Rhode Island (Mr. Kennedy).
(Mr. KENNEDY of Rhode Island asked and was given permission to revise
and extend his remarks.)
Mr. KENNEDY of Rhode Island. Mr. Speaker, I rise in strong opposition
to this Reaganesque, trickle-down tax cut that will not spur the
economy and will further deficits.
We are debating here today more than what the IRS's next batch of
forms will look like.

[[Page H772]]

President Bush is proposing a major shift in our national priorities.
The real debate here is over the sort of society we want to have, about
the degree of responsibility we as a community are prepared to accept--
for each other, and for the future. The question of taxes is merely a
vehicle for this larger question.
I believe that the President's tax plan is a betrayal of the rhetoric
he has used to cloak himself as a moderate. He claims that he is
determined to leave no child behind, but he will leave millions behind
if his plan becomes law. He talks about instilling a sense of
responsibility, but proposes to saddle future generations with
tremendous deficit. He touts help for working Americans while
dramatically widening the income gap.
This bill, and the tax plan of which it is a part, is bad for
America. I understand the House leadership's desire to pass it as
quickly as possible, before the American people take a close look.
Because if they examine it, they will see that it rests on pie-in-
the-sky economic forecasts. No responsible family would commit itself
to spending patterns based on guesses about its income in ten years,
and neither should the government.
They will realize that we have been here before, we have experimented
with enormous tax cuts with disastrous consequences. The country cannot
afford a return to the discredited supply-side, trickle-down economics
of the 1980s.
They will notice, as the Republicans wish they wouldn't, that the tax
cuts are appallingly tilted to the wealthy. Our nation has rarely been
as polarized between rich and poor as it is today, yet the Bush plan
would direct 43 percent of the tax cuts to people earning more than
$300,000 per year.
And they will, I believe, agree that we have higher priorities as a
nation than unfair, economically suspect tax cuts that will return the
country to deficits and prevent investment in our people and our
future.
To put the choices that we face in context, I'd like to ask you to
imagine you had a brother. Imagine your brother graduated from college
and got a good job with a decent salary. But your brother has expensive
taste. In the years that followed he lived high on the hog. HIs
earnings weren't enough and he borrowed to keep that lifestyle going.
At 35, your brother was pretty much maxed out on the credit cards,
the mortgages, and the car loans. He was swamped with debt and spending
nearly twenty percent of his income just on the interest.

So your brother, bless his soul, changed his ways. He tightened his
belt, reined in his extravagant taste. Over the next eight years, your
brother was paying down his enormous credit card balances, slowly.
Although he's a long way from paying off his debt, he's finally started
bringing in more money than he's spending, by a little.
Of course, his new approach was not without cost. He has been unable
to put money away for his kids' education, or save for retirement, or
pay for needed home repairs. But at least he's now in a position to do
so in the future.
And now imagine that your long, lost Aunt Millie has died and left
him a big pile of dot-com stock options that vest in five to ten years.
He calls you up, really excited. ``I'm back in the money!'' he says,
imagining himself at the wheel of a Lexus, already plotting his new
spending spree.
How are you going to respond to your brother? He's 43 now. He's spent
eight years digging himself out of the mountain of debt created during
his youthful indiscretions. He has been unable to provide adequately
for his children or invest for the future. But in those stock options,
he sees a big glittering pot of gold--never mind that you never know
what the stock market might do.
So what will you tell him?
I've belabored this little story enough, but it does illustrate the
juncture at which our country stands. The choices we make tell a lot
about our values. This country is your fictional brother, poised to
head off to Vail. What will we say?
The language of this debate is tax policy, but the substance of it
runs much deeper. This debate is about priorities. It is about the sort
of community we choose to make for ourselves. It is about our young
children and our elderly parents, about the working poor and the
uninsured, about creating an America we can be proud of.
We live in a national community that allows forty-three percent of
its children to grow up poor enough to qualify for free or reduced
lunches. Forty million of our citizens go without health insurance. Our
public education system frequently consigns children to classes of
thirty or more in crumbling buildings, without textbooks, where
everyone including the students knows they will not learn what they
need to know to escape poverty.
How can we possibly look at our society and conclude that addressing
poverty and health insurance and education are less important than huge
tax cuts? If we as a nation do reach that decision, what does it say
about our American community? What does it say about us?
This choice is real. President Bush and the majority may try to spin
it otherwise, but there is not room for both massive tax cuts and plans
to address needs like health care, education, and Social Security in
any meaningful way.
Underlying this new tax-cutting mania is the famous surplus. Let's
look at that surplus. The Congressional Budget Office recently
estimated the ten year surplus at five-point-six trillion dollars.
But nobody, including the CBO, knows what will happen five or ten
years in the future. If you want proof, just go back to some old CBO
projections. Only five years ago, the CBO was predicting deficits as
far as the eye could see. The estimate for fiscal 2000 alone was off by
almost half a trillion dollars! And that was only four years later. The
prediction made five years ago for a single year, 2006, differs by
nearly a trillion dollars from the estimate made this year.
As you can see, these numbers are not exactly rock solid. The
estimated surplus is not money in the bank. In fact, more than 70% of
the surplus that the President proposes to spend is projected in years
six through ten. But if the CBO's five year projection is off by a
half-trillion dollars again, there is no surplus.
So point one is that we are playing with dot-com stock options here.
We are as reckless as your zany brother if we spend trillions of
dollars now on the assumption that the ephemeral surplus will
materialize as predicted.
It's also important to realize that more than half of the surplus
predicted by the CBO belongs to the Social Security system and to
Medicare. We shouldn't spend that money on tax cuts.
And we need to be prepared for future growth. The CBO estimates and
the Bush tax plan assume that spending will increase only at the rate
of inflation. This assumption is unrealistic because the population
keeps growing. Every year there are more cars on the road, more
travelers in airports, more students in college, more children eligible
for Head Start, more kids in our public schools. We need to increase
spending just to keep up with the increasing demand on government
services.
The Bush tax plan ignores these considerations. Not only does it rely
on untrustworthy numbers, it threatens to dip into Social Security and
Medicare and it ignores the need for increased spending.
And nobody in Washington is talking about the ripple effect that this
will have at the state level. As federal taxes are cut, state and local
taxes, which are often at least partially tied to the federal tax rate,
are going to have to be increased to make up the difference. In
addition, because the federal government will have to cut back even
further on services, pressure will mount on the states to pick up the
slack. In a small state like Rhode Island, that prospect is
particularly ominous.
So this bill and the Bush tax plan, first, rely on numbers nobody in
their right mind would count on, and, second, spend even more than
those numbers estimate to be available. If this sounds eerily familiar,
that's because it is.
Like your hypothetical brother, this country has spent the better
part of two decades trying to put its financial house back in order
after the massive Reagan tax cuts of 1981. We have watched more and
more kids wind up in poverty, counted the steady increase in the number
of uninsured Americans, seen schools deteriorate, pleaded poverty as
students struggled to keep up with escalating college costs, buried our
heads in the sand about Social Security and Medicare's coming
demographic crisis--all in order to slowly, painfully, clean up the
mess caused by the last giant tax cuts.
But like your spendthrift brother, George W. Bush and the Republicans
in Congress can't help themselves. The instant gratification of tax
cuts overwhelms common sense borne of twenty years' experience.
We are witnessing the restoration of Reaganomics. The Republicans
were wrong in the early '80s when Ronald Reagan promised that the huge
tax cuts would balance the budget by 1984. Instead, we had the biggest
deficits in history, the accumulation of a 4 trillion dollar debt, and
higher interest rates. They were wrong again in 1993 when they insisted
that raising the rates on the wealthiest taxpayers to pay down the
deficit would cause economic disaster. Bill Clinton and the Democrats
passed that budget without a single Republican vote and it began the
biggest economic boom our country has ever seen.
For most people who lived through the last twenty years, supply-side
economics has been thoroughly discredited. After the Reagan tax cut
passed the House in 1981, short term interest rates shot up two full
points in ninety days. The Dow fell 11 percent in the two months after
the tax cuts became law. Within a year, four million Americans were out
of

[[Page H773]]

work and the unemployment rate was in double digits.
Even David Stockman, who orchestrated the Reagan tax cuts, admitted
in his 1987 book that the ``fiscal wreckage'' of that time was the
result of the ``basic assumptions and fiscal architecture of the Reagan
Revolution itself.''
It unfortunately appears, however, that George W. Bush missed the
lesson about the folly of supply-side economics. Not only is he going
back to the supply-side policies that brought on massive deficits, he
is advertising this tax cut plan as tonic for the economy. But this is
just old wine in a new bottle. Long before the warning flags went up
about the slowdown of the economy, he was saying gargantuan tax cuts
were needed.
You can tell his plan is not intended to be an economic stimulus by
its structure. If you wanted to help the economy now, you would put
more money in the pockets of working class people, the people who are
having trouble meeting their bills, as soon as possible. Not only are
the Bush tax cuts mostly back-loaded, due to take effect six or more
years down the road, but they are heavily tilted towards the wealthy.
They are not economic medicine, they are economic poison.

It is a question of priorities. Are we going to rely on numbers that
nobody thinks are accurate and then squander the entire surplus that
might or might not materialize? Are we going to gamble away your future
in the hopes that the budgetary roulette wheel comes up black? Are we
going to tell the children on Head Start wait lists, the seniors unable
to afford prescription drugs, the families made homeless by the lack of
affordable housing that they have to wait another twenty years? What
sort of community do we want?
And if we do cut taxes, we must ask for whom? Under the Bush tax
plan, 43 percent of the tax savings would go to the wealthiest one
percent of Americans. That means people earning more than $319,000 are
receiving a huge windfall. What about working folks, the forty percent
of our citizens who earn less than $25,000? They get a measly 4.3
percent of the President's largesse.
The President touts his big income tax rate cuts, but four out of
five American workers pay more in payroll taxes than they do in income
tax. In fact, most workers earning under $35,000 per year don't pay any
income tax at all. Therefore, a typical family who could really benefit
from a tax cut is left out. Even the Wall Street Journal, hardly the
mouthpiece of the left, has written that the affluent stand the most to
gain from the Bush tax cuts.
Take a home health aide in Woonsocket, in my district, struggling to
make ends meet on $13,600 per year or less. The President's helping
hand to her is a tax cut totaling $42--I hope she doesn't spend it all
in one place. I know it's not a lot, but that's all that's left after
giving Bill Gates, Ross Perot, and the rest of the richest one percent
their average $46,000 tax cut.
Don't be misled by the $1,600 average tax cut that President Bush
advertises. Remember, that includes the hundreds of thousands of
dollars that the Bill Gateses of the world will save. You're not likely
to see $1,600. Eighty-eight percent of taxpayers--or virtually every
family making less than six figures--will receive less than that. In
fact, a quarter of all taxpayers will see zero benefit from the Bush
tax plan according to the Washington Post.
Another pillar of the Bush tax plan is the elimination of the estate
tax, or inheritance tax. This tax is currently paid only by the
wealthiest two percent of families. If a couple's estate is worth less
than $1.3 million, they pay no estate tax. In other words, one of the
Republicans' highest priorities is $50 billion per year in tax relief
for millionaires.
By ending the estate tax, the President would be allowing the richest
Americans to avoid paying any tax ever on over a third of their wealth,
on average. Over half of the value of the average estate worth more
than $10 million has never been taxed. A working, single mother here in
Bristol has to pay tax on every dollar she earns, but the Republicans
are proposing to let millionaires and billionaires go tax-free on a
substantial portion of their earnings. Plus, eliminating the estate tax
is likely to sharply curtail charitable giving, further hurting the
poor. Some estimate that donations to charity could drop by 90 percent.

Even provisions that could help working people if done right are
skewed towards more affluent taxpayers. The Republican plan to
eliminate the marriage penalty in the last Congress was structured in
such a way that 89 percent of the benefits would go to those making
more than $75,000 per year. The increase in the child tax credit the
President proposes is nonrefundable, which means most working class
families will not see the benefit of it.
If you were serious about helping working people, why would you not
make the child tax credit refundable? A credit against your income
taxes isn't helpful if, like most working families earning less than
$35,000, you don't pay income tax.
Again, it's a question of choices. As MIT Economics Professor and New
York Times columnist Paul Krugman has written recently, it is not class
warfare to point out that the Bush tax cut disproportionately benefits
the very, very affluent. It is, instead, a debate over priorities.
George W. Bush ran like Bill Clinton but is already governing like
Ronald Reagan. He talks a good game, but his actions belie his words.
He trotted out working folks for photo ops, but if those appearances
had anything to do with his tax plan, he should have been standing
there with some of his wealthy friends who stand to gain twenty to
sixty times the families brought in as props.
The Republicans justify this reverse Robin Hood approach by saying
that the affluent get the biggest share because they pay the most in
taxes. Well I say that they also gained the most from this economic
expansion. The wealthy have already received the upside of the economic
growth. It's time that the working men and women who made this surplus
possible saw some of the benefit.
During the booming '90s, from 1988-89 to 1997-98, the poverty rate in
Rhode Island increased by 3.9 percent. A far greater percentage of
Rhode Island children qualify for free and reduced school lunches now
than at the beginning of the '90s.
In other words, the benefits of the expansion have gone predominantly
to the wealthy.
In fact, it wasn't until halfway through the expansion that regular
working folks saw their incomes rise at all. And even today, the bottom
twenty percent is still earning nearly nine percent less in real
dollars than they did in 1979.
And now the President is proposing to give 43 percent of a multi-
trillion dollar tax cut to people whose incomes average $900,000 per
year. The income gap is already the widest it's been in decades. The
wealth gap is even wider. I want to ask George Bush and the
Republicans in Congress, how wide must that gap be before tax cuts are
shared fairly?

This discussion is not just about the arcane minutiae of the federal
budget. This discussion is about people's lives. It is about asking
ourselves what matters most. Are we the kind of people who will cause
our children to go without, who will blithely blindfold ourselves to
the needs of the future, to gratify our short-term wants?
Before we pass any tax cuts, we first must take a long, national look
in the mirror.
I look at our society and I am not satisfied. I see a failing
education system, skyrocketing rents, uninsured children, and critical
shortages of quality childcare. I see a retirement system that we know
for a fact will soon require large infusions of cash to maintain the
status quo. I see millions and millions of our fellow citizens working
160 hours more per year for less money than they earned a quarter of a
century ago.
I see an America with many needs more pressing than massive tax cuts
for the wealthy.
Medicare needs a prescription drug benefit. Students need help
affording college. Children need day care and Head Start programs. Our
schools need teachers and textbooks. Our workers need health insurance.
Social Security needs reform. Families need affordable housing.
A community, like a garden, requires tending. We are finally in a
position to give our garden some of the water and sunshine so long
denied. We have labored for years to put our fiscal house in order, so
that we would be able to do things like responsibly reform Social
Security before it's too late or help communities build new schools. We
are in a position to invest for the future, but like a happy-go-lucky
big spender, the very prospect of money is burning a hole in some
politicians' pockets.
Twenty years ago we closed our eyes to hopelessly optimistic economic
predictions, and allowed an affable President to gamble our future on a
dubious economic theory that promised us the moon. He told us we could
afford to eat dessert before dinner, we could get big tax cuts and a
balanced budget. We made some decisions about priorities that led to
trillions of dollars in national debt, the biggest deficits in our
nation's history, more poverty, and fewer federal investments in
people. Are we going to make those decisions again?
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from
Indiana (Mr. Hill).
Mr. HILL. Mr. Speaker, my wife and I taught our three daughters to
eat their dinner before they could have their desert. What this House
is doing today is they are trying to have their dessert before they eat
their dinner.
Now, the way we eat our dinner here in Congress is we write a budget.
We sit down and we decide what our priorities are going to be. We
answer some difficult questions, like how do we balance tax cuts
against paying down the national debt? How do we balance tax cuts
against protecting Social Security and Medicare? How do we balance tax
cuts against supporting the men and

[[Page H774]]

women in our Armed Forces, our farmers, and our veterans? That is what
budgets are for.
Mr. Speaker, we are going to get our dessert this year. We are going
to have a tax cut this year, but we should eat our dinner first. We
have to figure out how to fit this tax cut into a responsible budget
framework. Let us pass the budget first, then cut taxes.
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, the problem is that the Federal Government has been
eating the American taxpayers' dinner for too long. We would just like
to give a little of it back.
Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr.
Brady), a new member of the Committee on Ways and Means.
Mr. BRADY of Texas. Mr. Speaker, the American people are a lot
smarter than folks in Washington give them credit for. They know that
tax cuts do not cause deficit spending; spending causes deficit
spending.
They understand that today they are footing the bill for a million
dollar, two-hole outhouse, that is a million dollars for an outhouse
the Parks Department recently built. They know that they are footing
each year $2,000 a fish each year to help some salmon get back to their
spawning ground. For $2,000, we could put each fish in a first class
seat and fly them from the mouth of the river and back and still save
money.

{time} 1515

Common sense says the best way to pay down the debt and to keep these
surpluses going is to keep our economy strong, and that is what this
tax relief bill is about.
We are facing recession, and we are working hard to stay out of it;
but we know if a recession occurs, that 3 million American families
will lose their jobs. That is 3 million families that are going to have
a lot of hurt.
Now, maybe we cannot save all of those jobs, but we can surely save
some of them; and there is a good chance we can save a lot of them, and
we ought to do our very best to do that. I know there is a lot of
pressure on my Democratic friends to not go along with the President,
to not work with him; there is a lot of bitterness from the past
election. But those who will be laid off are not Republicans or
Democrats, and the small businesses and their employees are not
Republicans or Democrats, they are Americans. I would ask them to work
with us to try to save this economy.
Mr. RANGEL. Mr. Speaker, I yield such time as he may consume to the
gentleman from Texas (Mr. Sandlin) to close debate.
Mr. SANDLIN. Mr. Speaker, Herbert Hoover said, ``Blessed are the
young for they shall inherit the national debt.''
We do not need another Herbert Hoover. Americans deserve tax cuts. We
can afford tax cuts. We support tax cuts. But it is irresponsible to
consider a tax bill before we have a budget. Not only is that course
irresponsible, it is contrary to the law. The Congressional Budget
Impoundment Control Act of 1974 says that a budget must be enacted
before consideration of a tax bill. Congress makes laws and expects the
public to follow the laws. We should do no less in the United States
Congress.
Finally, make no mistake about it: across-the-board seems to indicate
that everyone will share. That is a serious misnomer. Most people
believe that they will share. The truth is under the Republican plan,
across-the-board means 44.3 percent of the relief goes to the richest 1
percent of the people, and that is just not fair.
Mr. Speaker, I encourage my friends watching in Texas to look at
their friends to the left and look at their friends to the right,
behind them and in front of them. They have not seen one person who
benefits by this plan. Not one person in Texas. We tried this trickle-
down before. Trickle-down dried up at the Red River. Mr. Bush, Senior,
knew what to call it. He called it voodoo economics. Here we go again.
Mr. THOMAS. Mr. Speaker, I yield myself the remainder of the time. I
tell my friend, he probably ought not to use Herbert Hoover as an
example. That President raised taxes and plunged us into the
Depression. We are here cutting taxes.
Mr. Speaker, talk is cheap. We hear talk about the weather, we hear
excuses about process, we see props like cans of beans. Please, why is
it so hard for the folks on the other side to say yes? Yes to returning
a little bit of the tax surplus to those who paid it: hard-working
Americans. Every taxpayer gets exactly the same tax reduction; no
matter what my Democratic colleagues say, it is true. It is in these
seven little pages. It is here. Every American this year gets the same
reduction.
Just say yes on H.R. 3 and relieve your pain.
Mr. BLUMENAUER. Mr. Speaker, the beginning of this Congress has been
dominated by discussions of President Bush's massive tax cut proposal--
a proposal which, after accounting for the true costs to government, is
likely to cost close to $2.6 trillion rather than $1.6 trillion over
the next 10 years.
It is also the most important issue that we'll face over the next six
months. Not only will it dominate the news; whether and how much to
reduce government revenue will also frame every policy debate in
Congress. The decision will determine our ability to honor our health
care commitments, protect our environment, educate our children, defend
our country, or keep our economy strong.
For many in Washington, cutting taxes has become the popular mantra.
Gone is concern for the 1997 Balanced Budget Agreement, which
instituted spending caps to help reduce our national deficit. Now,
however, Congressional leaders are winking and nodding at those
unrealistic restrictions and empty past promises, hoping the American
press and public won't notice.
Since coming to Congress in 1996, I have based my fiscal policies and
budget decisions on five principles--principles that continue to guide
my responses to the current tax cut proposals:
1. Tax reductions need to be fair. Every Oregonian should be
positively affected by these tax reductions, not just a selected few.
The Bush proposal ignores the largest burden for most Americans:
payroll taxes. Hardworking families who need help the most should have
their burden reduced as much as those who are the most well off.
Approximately 146,000 Oregon families are left out.
2. We must honor our promise to fund Social Security and Medicare.
These obligations are not diminishing over time; in fact, they are
growing larger each year, as the baby boom generation retires and
requires increased medical assistance.
3. We need to pay down our $6 trillion national debt. This single act
is the most effective way to lower government spending--and reduce the
long-term interest costs for American families and business.
4. We must avoid future funding shortfalls. The robust economy of the
past few years has lured many states-Kansas, North Carolina, and
President Bush's own state of Texas, among others--into cutting taxes
and fees, only to find themselves struggling to fund basic services.
5. We need to honor the commitments we've made to provide health care
for our seniors, education for our children, and a cleaner environment.
Time and again, my constituents tell me that honoring these
obligations and commitments takes precedence over reduction in taxes.
Ms. LOFGREN. Mr. Speaker, I have received a lot of advice from my
constituents about H.R. 3, President Bush's tax cut proposal. Mostly my
constituents have told me not to vote for this plan, although some have
urged support. I have listened carefully and read every letter and
email. I've thought about what people back home have told me. I take
very seriously my responsibility to act prudently in this matter.
I have heard President Bush and other proponents of H.R. 3 say that
the surplus ``belongs to the people'' and that ``the people have
overpaid'' and ``the people deserve a refund.'' Well what about the
accumulated national debt? That doesn't belong to some other group of
people. What that phrase overlooks is that the accumulated national
debt, over 4 trillion dollars, is also ``the people's national debt.''
That debt needs to be paid, and if it is paid, it will be paid off with
``the people's money''.
In listening to my constituents, as well as economic experts, I have
focused on several elements.
First, there is concern among many that a softening of the economy
could be countered with a tax reduction that would stimulate consumer
spending and help counter recessionary trends. I think it is important
to underscore that the American economy is not in a recession, but it
is also clear that softening has occurred. In addition to providing
relief to taxpayers who want and need it, I agree that a tax reduction
effort might well have a salutary impact.
To maximize this benefit, the tax cut should be quick, should be
directed towards those who will spend it but must also avoid deficit
spending. H.R. 3 falls short in these requirements.

[[Page H775]]

Second, if we enact a tax reduction plan we must exercise care to
insure that we avoid returning to the days of deficit spending, a
phenomenon we have only recently escaped.
I have focused on the need for fiscal responsibility for the 22 years
I have served in public office. As a member of the Board of Trustees of
the San Jose-Evergreen Community College District in the late 1970's, I
was part of the coalition that reduced administrative costs by more
than 25%--and put the money into the classrooms. As a member of the
Santa Clara County Board of Supervisors in the 1980's, I was part of
the Board majority that cut spending dramatically and balanced the
county's budget. This earned the county its excellent bond rating and
saved taxpayers money on interest.
As a Member of Congress since 1995, 1 have supported policies that
have helped this country to balance its operating budget and to begin
to pay down the national debt. I'm proud of that and I believe that
fiscal responsibility is good for America. Why? Deficit spending eats
up revenue in interest rates. It leads to inflation, which eats up the
budgets of families. In fact, some observers have predicted that if the
Bush tax reduction plan results in a return to deficit spending, that
most families will end up spending more on increased interest rates
than they will see in a reduction of tax liability through the plan.
Finally, we need to make sure that a tax reduction plan, of an amount
that is consistent with a balanced budget and deficit reduction, is
constructed in a manner that advances the American principles of
fairness and equity.
The Bush plan falls short. It postpones too much of the benefit to
later years, defeating the effort to stimulate immediate economic
activity. It directs 43% of the tax reduction benefit to those whose
annual incomes are over $900,000 a year. I have nothing against those
with incomes over $900,000 a year. In fact, I think it's terrific that
we have a country where so many are able to prosper and to grow
incomes. However, directing so much of the benefit to this income
bracket is not the best way to stimulate economic activity nor is it
perceived as equitable by the American people. People who have middle
class incomes are having a harder go of it than those who have met with
extraordinary financial success. Finally, there is geographic
discrimination in this bill.

Because the economy of Silicon Valley has been so extraordinarily
successful and because people have worked so hard and productively,
median incomes are high. This is a wonderful thing. However, costs are
also high in Silicon Valley. Families with incomes that would seem
extraordinary in other parts of the country struggle with the costs of
housing and childcare in Santa Clara County.
Because of the shortcomings in H.R. 3 to deal with the alternative
minimum tax, many of my constituents will be denied the benefit of
provisions of the bill that will help other middle class people. Let me
give just one example: the increased child deduction is a good thing
and something I support. Unfortunately, this promised benefit will be
denied to my constituents whose annual income is $87,800 a year--just
about the median 'income for the county under this bill. That's not
fair and it's geographic discrimination.
I believe that it is wise to enact a tax cut, but I think President
Bush's plan is not balanced and will damage America. There is broad
consensus in this Congress that a major overhaul of the estate tax,
correction of the so-called ``marriage penalty tax'' and increases in
child deductions should be made. Nobody likes taxes, and many of us
would like to see further reductions. But reductions have to be in
harrnony with debt reduction as well as realistic forecasts of
spending. Many of my constituents have told me that they would prefer
higher investments in energy research, education and transportation
than this proposed tax cut.
That is one of the reasons why it is a terrible mistake (as well as
violative of the rules of the House of Representatives) to take action
on this proposed tax bill before we have even discussed, let alone
adopted, our budget.
Unfortunately, the manner in which this tax plan has been handled by
the Republican leadership of the House has precluded the possibility of
give and take, compromise and a sound consensus bill that would serve
America well.

Center on Budget and Policy Priorities, March 2, 2001

NEW JOINT TAX COMMITTEE ESTIMATES RAISE COST OF BUSH TAX PLAN

Cost now well over $2 trillion
New Joint Tax Committee cost estimates of several elements
of the Bush tax plan, which were released March 1 in
conjunction with House Ways and Means Committee action, show
that the cost of the Bush tax cuts is mounting. The Joint Tax
Committee estimates find that the cost of the plan's income
tax rate reductions exceeds the cost listed in the
Administration's budget.
The Joint Tax Committee estimates also show that the rate
reduction in the Bush plan would raise the number of
taxpayers subject to the Alternative Minimum Tax to a
stunning 36 million by 2011--or about one of every three
taxpayers. The Joint Committee found that enactment of the
proposed rate reductions would increase the cost of fixing
the problems in the AMT by nearly $300 billion over 10 years.
The budget the Administration issued on February 28 shows
that the tax cut would consume $2.0 trillion in projected
surpluses. The Administration's estimates show the tax cuts
would lose a little more than $1.6 trillion in revenue over
10 years and would raise the cost of interest payments on the
national debt by nearly $400 billion, for a total cost of
$2.0 trillion.
The cost estimate the Joint Tax Committee released March 1
shows that the Bush proposal to reduce the 28 percent, 31
percent, 36 percent, and 39.6 percent tax rates would cost
$59 billion more over 10 years than the Administration's
budget estimates.
The Joint Tax Committee also provided a cost estimate for
the Bush proposal that would create a new 10 percent tax
bracket; the estimate includes the effects of the Ways and
Means Committee action to accelerate the phase-in of this
provision. Primarily because of the faster phase-in, the cost
of this provision is $67 billion higher than the cost listed
for this provision in the Administration's budget.
This additional $126 billion in tax reductions, shown by
the Joint Tax estimates, results in additional interest costs
of $54 billion. This brings the overall added cost to $180
billion, raising the cost of the tax cut from $2.0
trillion to $2.2 trillion.
Further increases in cost may occur when the Joint Tax
Committee issues its estimates for the cost of other
components of the Bush tax plan. A comparison of the estimate
of the cost of the Bush plan that the Joint Tax Committee
issued last May to the estimates in the Administration's
budget suggests the Joint Committee's forthcoming estimate of
other aspects of the plan also is likely to exceed the
Administration's figures.
The Joint Tax Committee's shocking AMT estimates
Another new analysis the Joint Tax Committee released in
conjunction with the Ways and Means Committee action finds
that the rate reductions the Committee approved would result
in 15 million additional taxpayers becoming subject to the
Alternative Minimum Tax by 2011. To prevent the Bush tax cut
from subjecting these additional 15 million taxpayers to the
AMT would require changes in the AMT that, according to the
JCT analysis, would cost $292 billion over the next ten
years.
Since the Bush plan fails to address this problem, this
nearly $300 billion in added cost is not included in the
Administration's estimate of its plan. But this cost
eventually will have to be paid; neither party will stand by
and allow one of every three taxpayers to be hit with the
complexities (and increased tax burdens) of the AMT. The Bush
plan thus ultimately entails a cost of an additional nearly
$300 billion, plus added interest costs. This raises to more
than $2.5 trillion over ten years the likely amount of
projected surpluses that ultimately will be consumed if the
Bush plan becomes law.
The Alternative Minimum Tax was intended to prevent high-
income taxpayers from using a combination of tax breaks that
would eliminate most or all of an individual's income tax
liability. Taxpayers must pay the larger of either their
normal income tax bill or the income tax they would owe under
the AMT.
Because of flaws in the AMT's design, growing numbers of
taxpayers will become subject to the AMT unless the problems
in the AMT are addressed. According to the new Joint Tax
Committee analysis, the number of taxpayers subject to the
AMT is expected to rise under current law from 1.5 million
taxpayers in 2001 to 20.7 million in 2011.
The income tax rate cuts in the Bush plan, as reflected in
H.R. 3 (the legislation the Ways and Means Committee approved
March 1), would further increase the number of people subject
to the AMT, because the income taxes these people would owe
under the regular income tax would now be lower than what
they would owe under the AMT. The Joint Tax Committee
estimates show that under the Ways and Means bill, the number
of taxpayers affected by the AMT would rise to 35.7 million
in 2011. In other words, the bill would result in an
additional 15 million taxpayers being thrown into the AMT
(i.e., 15 million taxpayers on top of the filers who would
become subject to the AMT under current law). Under the Ways
and Means bill, approximately one-third of all people who
would pay income taxes would be subject to the AMT by 2011.
The Joint Tax Committee estimates find it would cost $292
billion over ten years just to keep these additional 15
million taxpayers from becoming subject to the AMT as a
result of the Bush tax-rate reductions. This estimate does
not reflect the cost of addressing the underlying problems in
the AMT that, if not fixed, will push the number of taxpayers
subject to the alternative tax from 1.5 million to nearly 21
million by 2011 even in the absence of the Bush tax cuts.
Fixing this underlying problem will entail additional costs
beyond the $292 billion.

[[Page H776]]

____
Center on Budget and Policy Priorities, February 26, 2001

IS A LARGE TAX CUT NEEDED TO FORESTALL AN EXPLOSION IN SPENDING?

Some supporters of a large tax cut this year, such as the
tax cut the Bush Administration has proposed, argue that a
large tax cut is needed to prevent an explosion of federal
spending. They state that the Congressional Budget Office has
determined that action by Congress and the last
Administration in the final half of 2000 increased federal
spending by $561 billion over the next ten years. A $1.6
trillion tax cut is needed, this argument goes, or else
further spending explosions will occur. There are several
problems, however, with the use of these figures to make the
case that a spending explosion has begun.
How much did spending increase last year?
CBO has reported that actions taken in the last session of
Congress increased CBO's estimate of baseline spending on
government programs by $434 billion over the next ten years.
Since this $434 billion will be used for program expenditures
rather than for paying down debt, CBO has estimated that
interest payments on the debt will be $118 billion higher.
The figure of ``$600 billion in new spending'' that some
policymakers have cited as a reason for a large tax cut is
reached by adding the $118 billion in interest payments to
the $434 billion in projected increased spending, also adding
(inappropriately) $9 billion in increased interest costs that
CBO says will result from some modest tax cuts enacted last
year, and rounding the resulting $561 billion figure up to
$600 billion.
It may be noted that $368 billion of the $434 billion in
projected increases in program spending--or 85 percent of the
increases in program spending--consist of increases in
discretionary spending. The remaining $66 billion includes
$28 billion in increased entitlement spending for health care
for military retirees, a net of $20 billion in increased
Medicare spending as a result of scaling back some Medicare
savings provisions enacted in 1997, and $18 billion in
increases in spending for other entitlement programs.
Should all of these costs be considered as spending
increases?
Upon closer examination, a question arises as to whether
this $368 billion in discretionary spending should all be
regarded as a spending increase. Whether, and to what extent,
it constitutes a spending increase depends on the baseline
against which the new discretionary spending levels are
measured.
No adjustment for population growth
The baseline that CBO employs assumes the maintenance of
discretionary spending at its level for the preceding fiscal
year, adjusted only for inflation. Since the U.S. population
increases each year but the CBO baseline contains no
adjustment for population growth, the CBO baseline
essentially assumes a decline each year in the purchasing
power of discretionary programs on a per-person basis. Under
the CBO baseline, simply keeping discretionary spending
constant in real per capita terms (i.e., keeping it at the
same level in its ability to provide goods and services per
U.S. resident) is counted as a significant spending increase.
A number of analysts have argued over the years that a more
appropriate baseline for discretionary spending would be one
that adjusted for both inflation and population growth.
Robert Reischauer, the former CBO director who now heads the
Urban Institute, argued (unsuccessfully) when CBO was first
etablished that the discretionary spending baseline should
account for population growth as well as inflation. In
addition, President Bush himself stated on a number of
occasions during the presidential campaign that the right way
to measure changes in spending in Texas during his tenure as
governor was by comparing the actual spending that occurred
to what spending would have been if it had kept pace with
both inflation and population growth. Were the same approach
used here, the magnitude of the increase in discretionary
spending that policymakers approved last year would be
significantly smaller.
Spending as a share of the economy to hit half-century low
Furthermore, when measured as a share of the Gross Domestic
Product, federal spending declined this year, despite the
spending actions the last session of Congress took. The new
CBO report on the budget shows that between fiscal year 2000
and fiscal year 2001, federal spending will drop from 18.2
percent of GDP to 18.0 percent. The 18.0 percent level for
fiscal year 2001 is the lowest level since 1966. The CBO
report also projects that federal spending will decline
further to 15.1 percent of GDP by 2011, which would be the
lowest level since 1951.
In addition, CBO projects that discretionary spending will
remain constant at 6.3 percent of GDP between 2000 and 2001,
which is the lowest level ever recorded. (These data go back
to 1962.) Under the CBO projections--which include the much-
touted ``explosion'' of spending--discretionary spending will
decline to 5.1 percent of GDP by 2011, a level that would be
the lowest by far in at least half a century.
One wouldn't know from the claims of a spending explosion
that federal spending is at its lowest level as a share of
GDP in 35 years or that by 2011, it would--under the baseline
that includes the $561 billion in added spending reach its
lowest share as a percentage of GDP since 1951.
Defense constituted nearly one-third of spending increase
A fact not often mentioned by those decrying the ``spending
explosion'' is that the spending added in the last session of
Congress was disproportionately directed toward defense
spending. Defense spending increases accounted for nearly
one-third--31 percent--of the $434 billion in spending
increases over ten years. Defense spending accounts for 18
percent of the federal budget, exclusive of interest
payments, so defense's share of the spending increase was
nearly twice its share of the budget.
CBO has estimated that as a result of action in the last
session of Congress, defense discretionary spending in the
baseline will be $106 billion higher over the next 10 years,
while entitlement spending for military health will be $28
billion higher. This $134 billion total accounts for 31
percent of the $434 billion projected increase in program
spending before the increased interest payments are added.
Conclusion
Proponents of a large tax cut frequently speak of revenues
as being at or near their highest level as a share of GDP
since World War II. In discussing trends in federal
expenditures, however, tax-cut proponents typically eschew
use of a standard that measures federal spending as a share
of GDP. They measure trends in discretionary spending against
a baseline that assumes reductions in such spending on a real
per-capita basis and counts spending levels that keep
discretionary spending constant in purchasing power per
person as constituting spending increases. These definitions
of what constitutes a spending increase underlie arguments
that a spending explosion has taken place, arguments that
overlook the reality that federal spending is at its lowest
level in decades as a share of the economy.
____

Center on Budget and Policy Priorities, Revised March 1, 2001

THE ADMINISTRATION'S BUDGET RESERVE: DO THE NUMBERS ADD UP?

(By Robert Greenstein, Richard Kogan, and Joel Friedman)

The budget is said to contain a $842 billion reserve.
Closer examination, however, indicates that the numbers
underlying the reserve do not add up.
1. Medicare: The budget fails to set to the side the
surpluses in the Medicare Hospital Insurance trust fund and
creates a fiction that Medicare has no surpluses and is in
deficit. Tables in the budget show that OMB actually projects
that the Medicare Hospital Insurance trust will run a $526
billion surplus over the next 10 years. The Medicare HI
surplus, which policymakers of both parties have voted to set
to the side and not to use to finance tax cuts or other
programs, amounts to more than half of the so-called
``reserve.''
In the budget, the administration tries to make this
surplus disappear through a clever but misleading budget
display. Medicare Hospital Insurance (Part A) is financed by
payroll taxes and, to a small degree, by a portion of the
income taxes that are collected from the taxation of a
portion of the Social Security benefits of higher-income
beneficiaries. Medicare Hospital Insurance has its own trust
fund. The physician's services part of Medicare (Part B) is
funded separately and, unlike Part A, was never intended to
be self-financing. One-fourth of its financing of Medicare
Part B comes from monthly premiums that beneficiaries pay,
but the other three-fourths comes from general revenues. This
is how Medicare was designed.
The administration takes the unprecedented step of adding
the total costs of Medicare Parts A and B and then comparing
them to Medicare revenues just froom payroll taxes and
premiums. Since three-quarters of Medicare Part B is intended
to be funded by general revenue, the effect is to make it
look like Medicare's costs exceed Medicare's income. The
administration then pronounces the Medicare HI surplus as
meaningless and claims that Medicare is in deficit so it has
no surpluses to save. This serves the politically convenient
purpose of helping to justify what otherwise would seem
politically unjustifiable--failing to set aside the Medicare
HI trust fund surplus and instead using it to fund other
items.
Using this device to claim that Medicare is in deficit is
not justifiable. By this logic, all programs funded by
general revenues--including the Pentagon, the military
pension Program, and the education and health research
programs that the administration proposes to expand--are in
deficit and thus in need of reform, as is everything in the
budget not specifically financed by an earmarked tax.
By camouflaging the Medicare HI trust fund surplus and
artificially making it ``disappear,'' the Administration can
turn around and add the $526 billion Medicare HI surplus to
the surplus in the rest of government to make it appear as
though all of these funds are available to finance the tax
cut and other programs. Through this maneuver, the
Administration is able to make it look as though there is
more room in the budget for its tax cut and to hide the
troubling trade-offs the large tax cut creates for the rest
of the budget. Ironically, one of those troubling trade-offs
is that if the tax cut is enacted, there will be less money
available for an adequate Medicare drug benefit and for an
infusion of more general revenue into Medicare as part of
a Medicare reform package that restores long-term solvency
to the program.

[[Page H777]]

Once the Medicare HI surpluses are set to the side, only
$316 billion of the Administration's $842 billion reserve
remains.
2. Inevitable Costs that are Left Out. The budget leaves
out a number of inevitable costs. These include:
Continuing current payments to farmers, at a cost of about
$100 billion over 10 years (Table S-11 shows spending for
agricultural programs plummeting from $26.1 billion in 2001
to $14.9 billion in 2003 and smaller amounts in subsequent
years, because of the administration's failure to include the
virtually inevitable costs of continuing these farm
payments);
Fixing a well-known problem in the Alternative Minimum Tax
so it does not subject millions of middle-class families to
the AMT, which entails a cost of approximately $300 billion
over 10 years if the Bush tax cut is passed; and
Extending the expiring tax credits for 10 years (the budget
shows the cost of extending most of these credits for only
one year), which adds about another $25 billion.
The more-than-$400 billion in costs just mentioned would
also generate additional costs for interest payments on the
debt. This would bring these costs to more than $500 billion,
which exceeds the $316 billion left in the reserve when the
Medicare HI trust fund surplus is set to the side.
3. Additional Costs the Administration has not specified.
The administration's ``helping hand'' prescription drug
proposal is supposed to be only a first step; it is limited
to low-income seniors. As a candidate, President Bush said
this would then be broadened into a drug benefit for other
seniors as well. The budget does not include resources that
could accommodate a significant drug benefit for middle-
income seniors.
The budget also does not include funds for a national
missile defense or other defense spending increases that are
likely to emerge from the Administration's defense review.
Conclusion
The ``reserve'' is a convenient way to avoid providing
specifics in a number of areas. It obscures the fact that
rather than creating a reserve for unforeseen contingencies,
the budget lacks sufficient funds to avoid a return to
deficits outside the Social Security and Medicare HI trust
funds, unless large cuts in domestic programs--cuts that the
Administration does not identify at this time--are enacted.

Center on Budget and Policy Priorities, Revised March 1, 2001

THE ADMINISTRATION'S BUDGET: GAPS BETWEEN RHETORIC AND REALITY

(By Robert Greenstein, Richard Kogan, and Joel Friedman)

Initial analysis of the Administration's budget suggests
substantial differences in key areas between the realities
that underlie this budget and the comforting rhetoric
surrounding it:
1. The supposed $842 billion contingency reserve is
essentially an illusion.
First, the reserve is inflated by more than $500 billion
through a misleading presentation that camouflages the
surpluses in the Medicare Hospital Insurance trust fund,
which both houses of Congress voted by nearly unanimous votes
last year to set aside and not to use for tax cuts or other
programs. The budget artificially makes the Medicare HI
surpluses ``disappear'' in order to make the surpluses
available for tax cuts and other initiatives appear to be
larger than they actually are.
Second, the ``extra'' funds that constitute the reserve are
generated by failing to include in the budget various costs
that will inevitably occur, such as the costs of maintaining
current payments to farmers, fixing the Alternative Minimum
Tax so it doesn't hit millions of middle-class taxpayers, and
extending a number of expiring tax credits for the full 10
years. The ``extra funds'' also are generated by the lack of
inclusion in the budget of the costs of some key initiatives
the President promised in the campaign and plans to pursue,
such as a national missile defense.
Third, the math underlying the reserve assumes that a
prescription drug benefit and Medicare reform can be
accomplished for $153 billion over 10 years. This amount is
far below what any drug benefit that provides even modest
help to middle-income seniors will cost and ignores the fact
that restoring long-term solvency will require large
additional sums to be devoted to Medicare from general
revenues, even if controversial changes like those in the
Breaux-Frist or Breaux-Thomas packages are enacted. (The
Breaux-Frist and Breaux-Thomas packages would close only a
modest share of the long-term funding gap in the Medicare
Hospital Insurance trust fund. The need for additional
general fund revenues can be avoided only if Medicare payroll
taxes are raised significantly, an approach the
Administration clearly does not favor.)
Fourth, any use of the reserve for purposes other than debt
reduction--i.e., for AMT relief, Medicare reform, farmers,
extra defense costs, or the like--will generate extra
interest costs that also must fit within the reserve.
Fifth, the existence of the reserve also rests upon an
assumption contained in the budget that cuts of several
hundred billion dollars will be needed over the next 10 years
in non-defense discretionary programs outside education,
health research, and a few other favored areas. Such cuts
will be very difficult to secure political support for,
especially in a period of surpluses. They are unlikely to
occur.
When realistic accounting is done, the reserve disappears
and a budget hole emerges. If this budget hole is not filled,
the budget will entail a return of deficits outside Social
Security and Medicare (and of the use of Social Security and
Medicare surpluses to fund other programs). In other words,
since the reserve is inadequate to cover the likely claims
against it, deficits outside of Social Security and Medicare
Hospital Insurance trust funds are likely to return unless
still larger cuts in domestic programs can be achieved.
The reserve turns out, upon close inspection, to be a
clever accounting device that obscures more than it
illuminates and cloaks the budget trade-offs the
Administration's large tax cut creates. By failing to
disclose the costs of a number of items and distorting
Medicare financing, the budget essentially ``hides the ball''
and prevents policymakers and the public from seeing the
trade-offs the tax cut entails. (The reserve is discussed in
more detail in our accompanying piece, ``The Administration's
Budget Reserve: Do the Numbers Add Up?.'')
2. A careful reading of the tables in the budget reveals
that the budget math depends upon significant, unspecified
reductions in non-entitlement programs. Table S-4 shows that
the budget proposes cuts of $12.1 billion in fiscal year 2002
in discretionary programs outside defense, education, health
research, and a few other favored areas. Table S-4 also shows
a reduction of $8.4 billion in FY 2002 appropriations below
the FY 2001 level for one-time items and earmarked items.
Reductions of this magnitude in earmarked and one-time items
are unlikely--each year's appropriations bills have new
earmarks and one-time items. The probable result would be
reductions greater than $12.1 billion next year in
discretionary programs outside the favored areas. Another
table (S-6) provides data showing that fiscal year 2002
funding for discretionary programs in an array of departments
and agencies would be cut below a ``freeze'' level--that is,
below the FY2001 level even without an adjustment for
inflation. Among the agencies in which overall funding for
discretionary programs would be cut below a freeze level are
the Departments of Agriculture, Commerce, Energy, Interior,
Justice, and Labor, and the Environmental Protection Agency.
The budget also shows that the Administration's education,
defense, health research, and other discretionary initiatives
would add $260 billion over 10 years, without counting
national missile defense, while total discretionary spending
would rise just $30 billion over 10 years. This means non-
defense discretionary spending outside education, health
research, and a small number of other favored areas would
have to be reduced $230 billion below the current year's
level, adjusted for inflation. These cuts are left
unspecified. And when the Administration eventually proposes
increases for national missile defense and other defense
spending increases, the size of the reductions needed in
other discretionary areas could grow several hundred
billion dollars larger--or, more realistically, constitute
another claim against an already oversubscribed
``reserve.''
Also of note, Table S-7 shows that the Administration is
proposing new caps on total discretionary spending, to be set
approximately at this year's level adjusted for inflation.
Table S-12 purports to show how much each area of the budget
would receive under the caps. But the figures in Table S-12
are illusory; a footnote to the table shows that the defense
numbers in the table do not include any of the defense
spending increases the Administration will propose in the
future. Providing more money for national missile defense and
other defense programs, as the administration is expected to
do, will mean that other departments need to be cut to lower
levels than the levels shown in the table, in order for total
discretionary spending to fit within the caps the
Administration has proposed.
What emerges is that the Administration is using the
``reserve''--along with the lack of specificity regarding
what it will seek for national missile defense and various
other defense spending increases and what specific cuts it
ultimately will propose in an array of domestic discretionary
programs--to camouflage the trade-offs and tough choices its
tax cut entails. Indeed, the strategy may be to show the
defense increases--along with some of the proposed cuts--in
the budget released a year from now, after the tax cut has
been enacted.
3. Another point that emerges from the budget is that the
Administration's tax cut costs at least $2.0 trillion. Table
S-2 shows the tax cut will lose $1.62 trillion in revenue. It
also shows increased interest payments on the debt of $417
billion. The overwhelming bulk of this $417 billion in added
interest costs results from the tax cut. (The $417 billion
reflects the added interest costs due to $1.62 trillion in
tax cuts and $173 billion in net spending increases.) Since
about $375 billion of the $417 billion in interest costs
results from the tax cut, that brings the overall cost of the
tax cut to $2.0 trillion. This $2 trillion cost does not
include added costs from fixing problems in the Alternative
Minimum Tax or from accelerating some of the tax cuts, which
the President has said he favors.
4. The budget pays down less debt than it could. The
Administration's claim that $2 trillion is the maximum amount
of debt that can be paid down over 10 years rests on an

[[Page H778]]

assertion that there is $1.2 trillion of publicly held debt
that cannot be paid down in this period. This figure is
disputed by other experts. CBO has estimated that the amount
of debt left outstanding at the end of ten years would be
about $800 billion if the Treasury simply continues its
existing policy of buying back some marketable debt before it
matures. In recent testimony, Federal Reserve Chairman Alan
Greenspan used a figure of $750 billion (plus some modest
amounts of debt the Fed may or may not need to hold on to).
Gary Gensler, the former Treasury Undersecretary who managed
the Treasury's debt operations, concludes in a new analysis
that the amount of debt outstanding in 2011 could be reduced
as low as $400 billion to $500 billion. The Administration's
figure is conveniently above these other estimates.
5. Finally, in some areas, the Administration's press
releases and the President's address to Congress risk
creating misleading impressions. For example, the President
said last night that his budget would increase spending on
Social Security, Medicare, and other entitlements by $81
billion in 2002. In fact, $68 billion of this increase
represents no change in the operation, eligibility, or
generosity of these programs; this $68 billion simply
reflects costs that will automatically occur under current
law as a result of the annual Social Security cost-of-living
adjustment, increases in health care costs charged by medical
providers, and an increase in the number of elderly
beneficiaries. The true increase that the President is
proposing in 2002 in these programs is $13 billion, about one
percent of the cost of these programs, which would largely go
for the ``helping hand'' prescription drug proposal.
____

Center on Budget and Policy Priorities, March 2, 2001

IN BUSH BUDGET, TAX CUTS FOR TOP ONE PERCENT ARE LARGER THAN HEALTH,
EDUCATION, AND ALL OTHER INITIATIVES COMBINED

In the Presidential campaign, Vice President Gore contended
that then-Governor Bush would provide more in tax cuts to the
top one percent of taxpayers than he would provide for all of
the initiatives he proposed. Mr. Bush replied that this was
untrue. Both campaigns provided numbers to support their
cases. In so doing, both campaigns engaged in some distortion
of the numbers (as explained in the box on page 2), with Gore
overstating and Bush understating the tax reductions that
would go to the top one percent.
A new analysis, based on the Bush budget document issued
February 28 and free of the distortions of both campaigns,
finds the top one percent would get at least $555 billion in
tax cuts over the next decade under the Bush plan. All
initiatives in the budget--including a prescription drug
proposal for seniors, increases in education, health
research, defense, and other areas--would total less than
$500 billion. (As explained below, these figures are based on
a methodology that favors the president.) Thus, the tax cuts
that would go to the one percent of taxpayers with the
highest incomes--a group whose incomes have soared in recent
years and have risen much more rapidly than the incomes of
the rest of the population--would exceed the new resources
proposed for all other national priorities combined.
Methodology
According to the Bush budget, the President is proposing
tax cuts that would lose $1.62 trillion in revenue over the
next ten years. This total includes both those tax cuts
President Bush unveiled in the campaign that are often
thought of as ``the Bush tax cut'' and about 20 other, mostly
small, tax reduction proposals. Virtually all analyses of the
proportion of the proposed tax cut that would go to the top
one percent of taxpayers have examined the proposals in ``the
Bush tax cut'' and not the additional, smaller proposals. In
analyzing the amount of tax reductions that the top one
percent would receive in the next ten years, we include only
the tax proposals in ``the Bush tax cut'' and exclude the
other Bush tax reductions. This understates the amount of tax
cuts that would go to the top one percent.
The Bush budget shows a total of $1.494 trillion in tax
cuts over ten years from the tax provisions in the ``Bush tax
cut'' (see Table S-9 of the budget). This figure appears to
understate the size of the tax cuts; on March 1, the Joint
Tax Committee informed Congress that the income tax rate
reductions in the Bush plan would cost $59 billion--or 12
percent--more over ten years than the Administration's budget
estimates. Earlier Joint Tax Committee estimates suggest the
Committee is likely to raise the price tag on other
provisions of the tax cut as well. In this analysis, we use
the Administration's estimates, which are lower than the
Joint Committee's, because a Joint Committee estimate on
the cost of the full Bush tax cut is not yet available.
We divide the administration's estimate of the cost of the
tax cut into three categories: what the administration
estimates the individual income tax reductions will cost;
what it estimates the estate tax changes will cost; and what
it estimates its corporate tax reductions (which are
relatively small) will cost.
We multiply the income tax reductions by the percentage of
the Bush income tax cuts that Citizens for Tax Justice has
estimated would go to the top one percent of taxpayers. The
CTJ estimate comes from the well-respected Institute for
Taxation and Economic Policy model, which CTJ uses. In the
past, CTJ estimates of the distribution of proposed income
tax cuts among different income groups have been similar to
those that the career staff at the Treasury Department has
produced.
For estate tax repeal, we multiply the administration's
estimate of the amount of tax reductions that this proposal
would generate over the next ten years by the Treasury's own
estimate of the proportion of the estate tax that the top one
percent of taxpayers pay. Treasury issued a major study of
this issue in September 1999 and since then has used the
study's findings on this matter in analyzing how different
income groups would be affected by tax proposals that include
changes in the estate tax.
For the modest corporate tax changes in the Bush plan, we
use the Treasury estimate (from the same September 1999
study) of the proportion of corporate taxes that are borne by
the top one percent of taxpayers. The results on the
corporate tax changes are essentially the same regardless of
whether one uses the CTJ results from the ITEP model or the
Treasury estimate.
The result is an estimate that $555 billion in tax cuts
over the next ten years would go to the top one percent of
taxpayers. This estimate understates the actual amount
because, as noted, it excludes some tax reductions contained
in the administration's budget and uses the
administration's estimates for the cost of tax cut
provisions that the Joint Tax Committee says carry a
higher price tag.
The initiatives
The amounts the administration is proposing for initiatives
in its budget are set forth in the tables at the back of the
budget the administration issued on February 28.
The budget proposes $153 billion over ten years for
Medicare, principally for a drug benefit (Table S-1).
The budget proposes $260 billion over ten years in
discretionary spending increases in education, defense,
health research, and seven other areas (Table S-5). The
budget also proposes $230 billion offsetting savings from
unspecified reductions in discretionary programs. In this
analysis, we count the $260 billion in proposed increases
without netting out the proposed decreases.
The budget contains $2 billion in mandatory spending
initiatives outside Medicare. The budget also contains $20
billion in savings in mandatory programs. We count the $2
billion without subtracting the reductions.
This produces a total of $415 billion in spending
initiatives. This is well below the $555 billion in tax
reductions the top one percent of taxpayers would receive.
The administration may argue that the proposal it has
included in the budget for health insurance tax credits
should be considered more like a program initiative than a
tax cut. According to the Office of Management and Budget,
the budget includes $70 billion to $80 billion for this
purpose, consisting of $50 billion to $60 billion in tax
reductions and $20 billion in refundable tax credits to
taxpayers with no remaining income tax liability. Including
the $70 billion to $80 billion cost of this proposal brings
the initiatives to $485 billion to $495 billion, still well
below the tax reductions the top one percent of taxpayers
would secure.
Finally, the budget also includes $63 billion to $73
billion for approximately 20 other tax incentives. Some of
these appear to be proposals that would primarily benefit
higher-income taxpayers; other of these proposals would not
have that effect. The administration has not yet provided
information that breaks out the cost of each of these tax
proposals. An appropriate accounting would count these as tax
reductions, a portion of which would go to the top one
percent of taxpayers. Even if we assume that the bulk of
these tax preferences should be treated as initiatives, like
the health tax credit, the total for initiatives in the
budget still would not exceed what the top one percent would
receive through tax cuts.
____

Center on Budget and Policy Priorities, March 5, 2001

IS THE HOUSE TAX BILL NEEDED TO AVERT A RECESSION?

(By Peter R. Orszag)

On March 1, the House Ways and Means Committee passed the
Economic Growth and Tax Relief Act of 2001, which reduces
income tax rates roughly in line with the Bush
administration's tax cut proposal. (The Ways and Means
legislation includes one change from the Bush budget: It
would create an interim 12 percent bracket this year,
accelerating a small part of the income tax cut.)
Many advocates of the tax cut, including members of the
Bush administration, have argued that it will help to spur
the economy out of its current period of sluggish growth and
avoid a possible recession. Most economists are dubious of
this argument. Even Treasury Secretary Paul O'Neill stated in
his confirmation hearings that ``I'm not going to make a huge
case that this is the investment we need to make sure we
don't go into a recession.''
The argument that the proposed tax cut is necessary to
avoid a recession overlooks several key factors.
The tax cut is backloaded and does not provide much stimulus
in short run
The tax plan the Ways and Means Committee has passed would
do little to lift the economy in the short run because its
tax cuts are backloaded. Indeed, only 0.5 percent (or $1 out
of every $200) of the cost of the legislation between 2001
and 2011 would occur in

[[Page H779]]

2001. Less than 5 percent of the total cost occurs before
2003, by which time economic conditions are very likely to be
different than today. Fundamentally, such backloading is
inconsistent with spurring the economy in the short run: The
tax cuts would do little to boost families' spending power
immediately and therefore do little to spur the economy in
the months ahead.
Another perspective on the size of the tax cut in 2001 is
that it amounts to just 0.05 percent (or roughly $1 out of
every $2,000) of Gross Domestic Product for the year, as
estimated by CBO. This reduction is too small to have much
macroeconomic impact in the short run.
As Alan Auerbach, a leading tax economist at the University
of California, Berkeley, recently noted, the Bush tax package
``was never designed to be a stimulus package, and it can't
be made into a stimulus package unless you throw it away and
start over. It has no effect in the short run.'' The Ways and
Means Committee did not throw out the Bush tax proposal and
start over; the legislation it passed was not designed to be,
and is not, an effective stimulus package.
The reason that the Bush tax cut is not designed to
stimulate the economy in the short run is not only that it is
backloaded but also that it is heavily tilted toward high-
income earners. When fully in effect, the Bush tax cut would
deliver nearly 40 percent of its benefits (including its
estate tax reductions) to the top one percent of the
population. This substantially exceeds the share of federal
taxes this group pays. (The top one percent pays 24 percent
of all federal taxes.) Moreover, the share of the tax cuts
the top one percent of the population would receive when the
Bush proposal 5 is fully in effect is greater than the share
the bottom 80 percent of the population would receive. The
distribution of tax benefits is significant because higher-
income families are more likely to save some portion of their
tax cut than are lower- and middle-income families.' If the
objective is to spur the economy, the Bush tax cut is not
well-designed for the task. Putting more money back in the
hands of lower- and middle-income families would provide a
greater ``bang for the buck.''
Tax cuts are not an effective tool for managing the economy
Whatever the design of the tax cut, a large majority of
economists believe tax cuts are simply not an effective tool
for managing the macro-economy. In many cases, such tax cuts
take effect after the economy has already started to recover.
Even if the Ways and Means Committee legislation were
enacted, families would likely not receive any additional
cash until the second half of the year. By then, as
William McDonough, the President of the Federal Reserve
Bank of New York, was recently quoted as saying, the
economy is expected to be ``quite strong'' even in the
absence of a tax cut. As discussed below, CBO similarly
projects a strong, fairly prompt return to solid economic
growth rates without a tax cut.
Most economists believe that monetary policy is more
effective than fiscal policy in managing short-term problems
in the economy. Alan Greenspan noted in testimony on January
25, ``Lately there has been much discussion of cutting taxes
to confront the evident pronounced weakening in recent
economic performance. Such tax initiatives, however,
historically have proved difficult to implement in the time
frame in which recessions have developed and ended.''
In most cases, the Federal Reserve can provide as much or
more stimulus than Congress by increasing the money supply,
which reduces interest rates. A tax cut is usually
unnecessary, given the ability of the Federal Reserve to
reduce interest rates and to act quickly. Paul Krugman, a
well-known economist at Princeton, recently wrote, ``almost
all economists now agree with the position that monetary
policy, not fiscal policy, is the tool of choice for fighting
recessions.''
It is far from clear that a recession looms
The seriousness of the economic slowdown remains uncertain.
CBO projects that while economic growth will slow in 2001,
the economy will avoid a recession, with GDP rising by 2.4
percent, after adjusting for inflation. CBO also projects
that the economy will then rebound and grow at a solid rate
of 3.4 percent in 2002 and a rate of 3.1 percent throughout
the rest of the coming 10-year period. CBO forecasts that the
economy will avoid a recession, rebound from its current,
slower rate of growth, and enjoy a higher subsequent growth
rate, without a tax cut.
The Federal Reserve itself, in its February 13 monetary
policy report to Congress, also predicted a return to
stronger growth later this year in the absence of any fiscal
policy changes. As the report stated, ``Although the economy
appears likely to be sluggish over the near term, the members
of the Board of Governors and the Reserve Bank presidents
expect stronger conditions to emerge as the year progresses.
For 2001 overall, the central tendency of their forecasts
of real GDP growth is 2 percent to 2\1/2\ percent,
measured as the change from the fourth quarter of 2000 to
the fourth quarter of 2001.''
Private-sector forecasters similarly are doubtful the
economy will enter a recession. The Economist magazine's most
recent poll of private-sector forecasters suggests an average
projected growth rate of 1.8 percent in 2001. The average
growth forecast for 2001 among the forecasters included in
the latest Blue Chip Economic Indicators, published February
12, is 2.1 percent. While these rates of growth are lower
than those of recent years, they indicate that most
forecasters do not believe a recession will occur. The
unofficial definition of a recession is two consecutive
quarters of negative growth (that is, the economy contracts
rather than continuing to grow).'' Only five percent of the
forecasters included in the Blue Chip report believed the
economy is in a recession. Moreover, the average Blue Chip
forecast is for a strong rebound from the current growth
slowdown, with a growth rate of 3.5 percent in 2002.
This uncertainty regarding whether the economy is in, or
will enter, a recession provides another motivation for
leaving macroeconomic management to the Federal Reserve: the
Federal Reserve is better equipped to monitor the economic
situation as it evolves than Congress is.
Conclusion
The Ways and Means tax cut is not well designed to address
a possible economic slowdown since it is backloaded. The tax
cut in 2001 is too small to be of much macroeconomic benefit
in the short run and is also unlikely to be passed in time to
address the current sluggishness in the economy. Most
economists believe that with the exception of a significant
recession, macroeconomic fluctuations such as a decline in
the growth rate should be addressed primarily by the Federal
Reserve.
____

Center on Budget and Policy Priorities, March 6, 2001

IN MANY STATES, ONE-THIRD TO ONE-HALF OF FAMILIES WOULD NOT BENEFIT
FROM BUSH TAX PLAN

(By Nick Johnson, Allen Dupree, and Isaac Shapiro)

A substantial number of families in every State would not
benefit from tax plan
A substantial portion of families with children in each of
the 50 states and the District of Columbia would receive no
assistance from President Bush's tax plan submitted to
Congress in early February. In some states, as high a portion
as one in two children live in families that would receive no
assistance under the provisions of the plan. In every state,
the number of families that would not benefit from the plan
is substantial.
Nationwide, an estimated 12.2 million low- and moderate-
income families with children--31.5 percent of all families
with children--would not receive any tax reduction from the
Bush proposal. Approximately 24.1 million children--33.5
percent of all children--live in the excluded families. The
vast majority of the excluded families include workers.
These families are distributed somewhat unevenly across the
states. Among the states where high percentages of families
and children would not benefit from the plan are Arizona,
Arkansas, California, Georgia, Louisiana, Mississippi,
Montana, New Mexico, North Dakota, Texas, and West Virginia,
plus the District of Columbia. In each of those states, about
40 percent to 50 percent of all children live in the excluded
families. In California alone, 1.7 million families with 3.7
million children would not benefit from the tax cut. Even in
the states with the smallest proportion of low- and moderate-
income families--such as Colorado, Connecticut, Maryland,
Minnesota and Wisconsin--about one in five families would not
benefit from the tax cut.
This analysis investigates these figures in more detail and
examines the reason that so many families and children do not
benefit--the families have incomes too low to owe federal
income taxes. The Bush plan reduces only income taxes and
taxes on large estates. This leads to a discussion of whether
families that do not owe income taxes should benefit from a
large tax-cut proposal and the extent to which they owe taxes
other than income taxes, most notably the payroll tax. The
large majority of the excluded families do pay payroll taxes
and other federal taxes, plus substantial amounts of state
and local taxes, and can have significant overall tax bills.
Among all American families, three of every four pay more in
federal payroll taxes than in income taxes.

FAMILIES AND CHILDREN THAT WOULD NOT BENEFIT FROM BUSH TAX PLAN, BY STATE
----------------------------------------------------------------------------------------------------------------
Percent Percent
State Number of of Number of of
families families children children
----------------------------------------------------------------------------------------------------------------
New Mexico.................................................... 117,000 47 278,000 52
District of Columbia.......................................... 25,000 43 54,000 48
Mississippi................................................... 194,000 42 339,000 45
West Virginia................................................. 99,000 42 161,000 45
Louisiana..................................................... 270,000 41 496,000 44
Arizona....................................................... 278,000 41 565,000 41
Tennessee..................................................... 298,000 39 528,000 38
Montana....................................................... 50,000 38 98,000 41
Texas......................................................... 1,167,000 38 2,256,000 41
Georgia....................................................... 431,000 38 859,000 41
Arkansas...................................................... 140,000 37 276,000 40
New York...................................................... 922,000 36 1,865,000 39
Alabama....................................................... 227,000 36 436,000 38
North Dakota.................................................. 30,000 36 61,000 40
California.................................................... 1,742,000 35 3,744,000 40
Kentucky...................................................... 198,000 35 326,000 35
Hawaii........................................................ 58,000 34 108,000 33
South Carolina................................................ 190,000 34 338,000 37
Idaho......................................................... 62,000 33 138,000 40
North Carolina................................................ 349,000 33 644,000 34
Florida....................................................... 630,000 33 1,213,000 35
Oklahoma...................................................... 144,000 32 282,000 35
Oregon........................................................ 146,000 31 291,000 33
Wyoming....................................................... 22,000 30 43,000 33
Missouri...................................................... 236,000 30 435,000 30
Kansas........................................................ 107,000 29 201,000 30
Delaware...................................................... 32,000 29 70,000 34
Ohio.......................................................... 460,000 29 887,000 30
Maine......................................................... 49,000 29 90,000 29
Nebraska...................................................... 63,000 28 132,000 29
Massachusetts................................................. 224,000 28 471,000 31
Illinois...................................................... 482,000 28 985,000 30
Michigan...................................................... 396,000 28 807,000 28
Nevada........................................................ 76,000 27 172,000 29
Vermont....................................................... 23,000 27 43,000 28

[[Page H780]]

South Dakota.................................................. 27,000 27 50,000 27
Iowa.......................................................... 107,000 26 201,000 28
Pennsylvania.................................................. 413,000 26 835,000 29
Virginia...................................................... 242,000 25 439,000 26
Washington.................................................... 203,000 25 391,000 28
Rhode Island.................................................. 34,000 25 68,000 26
Indiana....................................................... 208,000 25 390,000 26
Alaska........................................................ 25,000 24 50,000 25
New Jersey.................................................... 247,000 23 486,000 24
Utah.......................................................... 78,000 23 171,000 24
New Hampshire................................................. 41,000 23 83,000 23
Maryland...................................................... 136,000 21 255,000 21
Minnesota..................................................... 134,000 20 297,000 22
Wisconsin..................................................... 157,000 20 316,000 20
Connecticut................................................... 86,000 19 191,000 21
Colorado...................................................... 106,000 18 233,000 20
-------------------------------------------------
U.S. Total.............................................. 12,182,000 31 24,148,000 34
----------------------------------------------------------------------------------------------------------------
Source: Center on Budget and Policy Priorities tabulations from U.S. Census, Current Population Survey.

Who would be excluded?
We examined the latest data from the U.S. Census Bureau to
estimate the number of families and children under 18 who
would receive no assistance from the Bush tax plan. To ensure
accurate estimates at the state level, we used data for the
three years from 1997 to 1999; our analysis estimates the
effects of the plan as if it were in full effect in those
years. Using data for three years rather than data collected
within a single year enlarges the sample size, thus
increasing precision.
The table on page 2 shows how many of these families live
in each state and in the District of Columbia. The figures
indicate that throughout the country, there would be
substantial numbers of children left out of the plan. In some
states, extremely high numbers of children and families would
receive no benefit.
An estimated 3.7 million children in California, 2.3
million children in Texas, 1.9 million children in New York,
and 1.2 million children in Florida, along with their
families, would receive no benefit from the tax proposal. In
each of another eight states--Arizona, Georgia, Illinois,
Michigan, North Carolina, Ohio, Pennsylvania, and Tennessee--
the families of half a million children, or more, would fail
to gain from the tax cut plan.
In less populous states, the numbers of children and
families that would not benefit from the plan are smaller but
still substantial. Even in the least populous states, such as
Alaska, Vermont and Wyoming, tens of thousands of families
with children would not benefit.
Approximately 52 percent of children in New Mexico live in
families that would not benefit under the tax proposal. Other
states where approximately 40 percent to 50 percent of
children live in families that would not benefit include
Alabama, Arizona, Arkansas, California, Georgia, Idaho,
Louisiana, Mississippi, Montana, New York, North Dakota,
Tennessee, Texas, and West Virginia, plus the District of
Columbia. Not surprisingly, because the families that would
be excluded under the Bush plan are those with incomes below
the poverty line or modestly above it, these states tend to
have relatively high levels of child poverty.
By contrast, families in wealthier states are least likely
to be excluded from the Bush plan. Even in relatively low-
poverty states, like Colorado, Connecticut, Maryland,
Minnesota and Wisconsin, 18 percent to 22 percent of
children and families would not benefit from the plan.
The finding that about one in three families nationwide
does not benefit from the tax plan is consistent with the
findings of independent analyses of who is left out of the
Bush plan that have been conducted by researchers at the
Brookings Institution, the Urban Institute, and the Institute
on Taxation and Economic Policy. All three sets of analyses
indicate that among all families with children, nearly one in
three would not receive any assistance from the
Administration's proposal.
Even the Bush proposal to double the child tax credit--the
feature of the President's tax plan that one might expect to
provide the most assistance to children in low- and moderate-
income families--would be of little or no help to most of
these children. This proposal would provide the largest tax
reductions to families with incomes above $110,000 and confer
a much larger share of its benefits on upper-income families
than on low- and middle-income families.
Under the Bush plan, the maximum child credit would be
raised from $500 per child to $1,000 in 2006.
All families with two children in the $110,000 to $250,000
range, however, would receive an increase in their child tax
credit of more than $500 per child. For most of these
affluent taxpayers, the child credit would rise from zero
under current law to $1,000 per child under the
Administration's plan. This is because the Bush proposal
extends the child tax credit to many families with high
incomes who currently receive no credit at all. (This outcome
results from two provisions of the Bush plan. The plan both
increases the point at which the child credit begins to phase
out and slows the rate at which it phases out. Under current
law, the credit for a married family with two children phases
out between $110,000 and $130,000. Under the Bush plan, when
fully in effect starting in 2006, the credit for such a
family would phase out between $200,000 and $300,000.
Families between $130,000 and $300,000 thus would be made
newly eligible for the credit.)
By contrast, the Bush plan does not extend the credit to
any low- and moderate-income families who currently receive
nothing from the credit. Under the plan, increased coverage
for high-income families with children is not accompanied by
increased coverage for low-income families.
Why don't families benefit?
During 2000, Bush campaign officials touted their tax-cut
plan as benefitting lower-income taxpayers substantially in
two key ways--by doubling the child credit to $ 1,000 per
child and by establishing a new 10 percent tax-rate bracket.
Some married families also would benefit from the plan's two-
earner deduction. None of these features, however, affect a
family that owes no income taxes under current law.
A large portion of families with children fall into this
category. As a result of the combination of the standard
deduction (or itemized deductions if a family itemizes), the
personal exemption, and existing credits such as the child
tax credit, these families do not owe federal income taxes.
(As described below in more detail, these families can pay
substantial amounts in other taxes, such as payroll and
excise taxes, even after the Earned Income Tax Credit is
taken into account.)
The level at which families now begin to pay federal income
taxes is well above the poverty line. For example, in 2001, a
two-parent family of four does not begin to owe income tax--
and thus does not begin to benefit from the Bush plan--until
its income reaches $25,870, some 44 percent above the poverty
line of $17,950. Families with incomes below the poverty line
would receive no assistance from the tax cut, nor would many
families with incomes modestly above the poverty line.
The framers of the Bush plan could have assisted low-income
working families by improving the Earned Income Tax Credit,
which provides tax relief and supplements wages for low- and
moderate-income working families. Alternatively, the Bush
plan could have expanded the dependent care tax credit--a
credit that can offset a family's child care costs--and made
it available to the low-income working families who now are
denied access to this credit because it is not ``refundable''
(that is, it cannot exceed the income taxes a family
otherwise owes). Or, the plan could have increased the now-
limited degree to which the child tax credit is refundable
and can be used to offset taxes other than income taxes. The
plan takes none of these steps.
Which families should benefit?
Since the reason that millions of families and their
children would not benefit from the Bush plan is that they do
not owe federal income taxes, some have argued that it is
appropriate they not benefit. ``Tax relief should go to those
who pay taxes'' is the short-hand version of this
argument. This line of reasoning is not persuasive for
several reasons.
1. A significant number of these families owe federal taxes
other than federal income taxes, often paying significant
amounts. For most families, the biggest federal tax burden by
far is the payroll tax, not the income tax. Data from the
Congressional Budget Office show that in 1999, three-fourths
of all U.S. families paid more in federal payroll taxes than
in federal income taxes. (This comparison includes both
employee and employer shares of the payroll tax; most
economists concur that the employer's share of the payroll
tax is passed along to workers in the form of lower wages.)
Among the bottom fifth of households, 99 percent pay more in
payroll than income taxes. Low-income families also pay
federal excise taxes and state and local taxes, which are
discussed further on the next page. While the Earned Income
Tax Credit offsets these taxes for many working poor
families, many families with incomes modestly above the
poverty line who would not benefit from the Bush plan are net
taxpayers.
Consider two types of families earning $25,000 a year in
2001, an income level President Bush has used in some of his
speeches, including his first radio address to the nation
about his tax package. In this radio address, the President
used the hypothetical example of a waitress who is a single-
mother with two children and earns $25,000 a year and
indicated her family would be a prime beneficiary of the tax
cut. The figures suggest otherwise.
A single mother with two children and income of $25,000
would pay $3,825 in payroll taxes (again, counting both the
employee and employer share) and lesser amounts in gasoline
and other excise taxes. The family pays various state taxes
as well. The family would receive an Earned Income Tax Credit
of $1,500, well under half of its payroll taxes.
As a result, even if just payroll taxes and the EITC are
considered, the family's net federal tax bill would be
$2,325. Nonetheless, this family might receive no tax cut
under the Bush plan. If this single-mother waitress pays at
least $170 a month in child care costs so she can work and
support her family--an amount that represents a rather modest
expenditure for child care--she would receive no tax cut
under the Bush plan despite having a significant net tax
burden. (The amount of child care costs affects the
calculation due to the interaction between the dependent care
credit and the child credit. If she had no child care costs,
she would qualify for no dependent care credit and would

[[Page H781]]

receive a modest income tax cut, though it would be far below
what she owes in payroll taxes.)
A two-parent family of four with income of $25,000 would
not receive a tax cut under the Bush plan, whether or not the
family has child care costs. For such families as well, their
payroll taxes exceed their EITC by $2,325.
2. Low and moderate-income families in every state pay
state and local taxes, often paying a larger percentage of
income in such taxes than higher-income families. Families
with incomes below or near the poverty line bear substantial
state and local tax burdens. These taxes commonly include
sales taxes, excise taxes on such items as gasoline, property
taxes (passed on by landlords to tenants in the form of
increased rent), various tax-like fees, and sometimes state
or locality-specific taxes such as local taxes on wages. In
addition, many states have income taxes that tax families at
much lower income levels than the federal tax does. The
Institute on Taxation and Economic Policy estimates that
state and local taxes altogether equal anywhere from eight
percent to 17 percent of the income of an average low-income
married couple, depending on the state. Furthermore, these
burdens are inequitably distributed; in almost every state,
lower-income families pay a larger share of their incomes in
state and local taxes than higher income families.
Although some states have taken steps to reduce the burden
of taxes on low-income families in recent years, they are
limited in their ability to do so. States that for many years
have levied the sales, excise and property taxes that are
most burdensome on the poor cannot simply eliminate those
taxes without dramatic effects on state budgets. In addition,
it is cumbersome for states to target relief to poor families
that are burdened by these taxes. For example, the sales tax
is collected by merchants from consumers without regard to
their income level, and property taxes are passed through
from property owners to renters as part of a rent payment.
Moreover, states with higher levels of poverty often have the
least fiscal resources with which to pay for tax relief
for low-income families.
These state and local taxes that poor families pay often
help finance federally required services or joint federal-
state programs. For instance, state contributions to Medicaid
typically are financed in whole or in part by general fund
taxes such as state sales taxes and excise taxes. Similarly,
state contributions to federal highway construction often are
financed by gasoline and other motor vehicle taxes. In part
because these and other federal programs rely on state and
local taxes, it can be appropriate for the federal government
to administer tax relief that helps offset the burden of
those taxes.
3. An additional income boost would further the objective
of helping working families lift themselves out of poverty. A
key theme of welfare reform has been to prod, assist, and
enable families to work their way out of poverty. The
principle of helping families work their way out of poverty
has gained support across the political spectrum. This
principle is important for married families and single-parent
families, and there is considerable evidence that welfare
reform--in combination with a strong economy, low
unemployment rates, and the EITC--has significantly increased
employment rates among single mothers. Providing increased
assistance to the working poor through the tax system could
further the goal of ``making work pay.''
Such assistance is particularly important since much of the
recent gain in the earnings of the working poor has been
offset by declines in other supports. For example, from 1995
to 1999 the poorest 40 percent of families headed by a single
mother experienced an average increase in earnings of about
$2,300. After accounting for their decrease in means-tested
benefits and increases in taxes, their net incomes rose only
$292. (Both changes are adjusted for inflation.)
In addition, a study the Manpower Demonstration Research
Corporation recently released finds that improving income--
and not just employment--is important if the lives of
children in poor families are to improve. The MDRC report
examined five studies covering 11 different welfare reform
programs. The report's central finding was that increased
employment among the parents in a family did not by itself
significantly improve their children's lives. It was only in
programs where the parents experienced increased employment
and increased income that there were positive effects--such
as higher school achievement--for their elementary school-
aged children.
4. The Bush approach fails to reduce the high marginal tax
rates that many low-income families face. Throughout the
campaign and early into the new Presidency, President Bush
and his advisors have cited the need to reduce the high
marginal tax rates that many low-income working families face
as one of their tax plan's principal goals. They have
observed that a significant fraction of each additional
dollar these families earn is lost as a result of increased
income and payroll taxes and the phasing out of the EITC. Yet
a large number of low-income families that confront some of
the highest marginal tax rates of any families in the nation
would not have their rates reduced at all by the Bush plan
Analysts across the ideological spectrum have long
recognized that the working families who gain the least from
each additional dollar earned are those with incomes between
about $13,000 and $20,000. For each additional dollar these
families earn, they lose up to 21 cents in the EITC, 7.65
cents in payroll taxes (15.3 cents if the employer's share of
the payroll tax is counted), and 24 cents to 36 cents if they
receive food stamp benefits. They lose additional amounts if
they receive housing assistance or a state child care subsidy
on a sliding fee scale, or if they are subject to state
income taxes. Their marginal tax rates are well above 50
percent. The Bush plan does not reduce these rates.
Ways to reduce marginal tax rates for such families are
available and not especially expensive. One approach is to
raise the income level at which the EITC begins to phase down
as earnings rise and/or reduce the rate at which the EITC
phases down. Bipartisan legislation that Senators
Rockefeller, Jeffords, and Breaux introduced last year
follows such a course, as does another proposal made by Rep.
Ben Cardin. Another way to lower marginal rates would be to
expand substantially the existing, very limited refundable
component of the child credit.
5. The rewards from the surplus should be spread throughout
the population. The Bush tax plan would take most or all of
the surplus that is projected to occur over the next ten
years outside Social Security and Medicare. Democratic
leaders have proposed substantially smaller but still
significant tax cuts. If tax cuts are to be provided as one
of the principal uses of the surplus, as seems likely, it is
appropriate to dedicate some portion of those tax cuts to
people with the most pressing needs, such as low-income
families with children.
Mr. CASTLE. Mr. Speaker, I rise today in strong support of H.R. 3,
``The Economic Growth and Tax Relief Act of 2001.'' This $958 billion
proposal to reduce income tax rates over the next ten years represents
the center piece of President George W. Bush's tax plan for the
American people. It also represents a very fair form of tax relief
because it does not give tax relief to special interests. Instead, it
gives money back to every American who paid more in income taxes than
is necessary to operate the Federal government. All working Americans
of every income level deserve to have some of their tax dollars
returned to them. I congratulate President Bush for his leadership
putting tax relief for every American ahead of special interest groups.
This proposal demonstrates his commitment to changing the culture in
Washington, D.C.
The rate reductions in this bill would cut rates for taxpayers from
15% to 10% on the first $12,000 a couple earns; 15% for income from
$12,000 to $45,200; from 28% or 31% to 25% for income from $45,200 to
$109,250; and from 36% or 39.6% to 33% for income above $109,250. In
addition, the plan adjusts the Alternative Minimum Tax to protect
taxpayers from being penalized for claiming the child tax credits they
are promised under the tax code.
In recent months, there has been much discussion about the fairness
of tax cuts. When one looks beyond the rhetoric of class warfare, there
is strong evidence that President Bush's tax cut proposal is truly
fair. When the tax cut is fully implemented, families earning less than
$18,000 [the bottom quintile (0%-20%) of income earners in this
country] will see their after-tax income rise 1.1%. With the Earned
Income Tax Credit program they receive an income tax credit without
paying federal income taxes. It is also important to keep in mind that
we will continue to fund an important array of federal programs that
provide assistance to low-income Americans. More than $3.7 trillion in
federal funds will be spent over the next ten years on programs that
are intended to help low-income Americans. We must help low-income
Americans and we will continue to do so.
Mr. Speaker, taxpayers in my state of Delaware are large contributors
to the Federal Government. Delawareans receive only 84 cents in return
for every tax dollar they pay to the federal government. I am proud
that I come from a successful and well-run state. However, when their
federal taxes will help create a true budget surplus of $2.7 trillion,
it is proper for Delawareans to ask for some share back so they can use
their hard-earned money to help their families and keep their local
communities strong. According to one estimate, the rate reduction in
this bill could return $3.8 billion to Delawareans as a whole. These
funds will be invested in ways to create jobs and keep Delaware's
economy strong and growing--helping all families.

The tax relief under this plan is intended to help lower income
Americans. Families earning less than $35,000 [income earners
representing second quintile (21%-40%)] currently pay 0.5% of all
federal income taxes. Under President Bush's rate reduction plan, their
after tax income would rise 1.5%. In fact, if the President's child tax
credit is enacted in addition to this rate cut, a married couple with
two children living on one income, will pay no income taxes on the
first $39,000 they earn.
Will the highest income taxpayers continue to pay their fair share?
Yes, and a larger percentage of federal taxes as well. Taxpayers at the
top 10% of income levels, these families

[[Page H782]]

earning more than $140,000 currently pay 61.3% of all federal income
taxes. This is up from 57.3% in 1988. The reason is that in 1990 the
top income tax rate was raised from 28% to 31%. Then, in 1993, it was
raised again to 39.6%. The justification cited at that time was that
these funds were needed to reduce the federal budget deficits. Those
deficit spending days are gone and taxpaying families that shouldered
the extra burden for the last decade also deserve some tax relief.
Instead of returning the top income tax rate to 28%, President Bush's
plan reduces it to 33%. Upper income taxpayers will continue to pay the
largest portion of federal taxes, but they will receive some tax
relief.
Apart from the question of fairness, is the question of the overall
size of the tax cut and the soundness of the assumptions upon which the
surplus projections rest. $958 billion over the next 10 years falls
within the range of tax cuts that both Republicans and Democrats
believe is reasonable within the projected $2.7 trillion surplus.
However, 10-year surplus projections are inherently uncertain. One only
needs to look at projections from a few years ago that predicted budget
deficits. I support additional steps to ensure we achieve the predicted
surpluses and continue to reduce the national debt.
One safeguard that should be considered is a trigger on the phase in
of future tax cuts and new spending. Like Federal Reserve Chairman Alan
Greenspan, I support adding a trigger that would delay the phasing in
of these tax rate reductions if the surplus does not materialize as
projected and the national debt is not reduced. Contrary to some
interest groups' political spin, a trigger does not raise taxes. I also
note that Chairman Greenspan's support for tax cuts is conditioned upon
this surplus materializing. He still believes that debt reduction is
the first priority. I agree with his views that debt reduction, used as
a tool to decrease the interest many Americans pay on credit care debt,
home mortgages, and education loans, is the best way to bring financial
relief to our country and spur economic growth.
Mr. Speaker, even though this initial tax relief legislation does not
contain a trigger, I still support its passage for three reasons.
First, I recognize that this is the beginning of the 2001 tax debate,
not the end. There will be other opportunities to improve the final
budget and tax legislation and I look forward to that discussion with
you. Second, the Federal Government has a spending problem. In budget
negotiations with the previous Administration, there was a serious lack
of fiscal control in both parties. Spending increases far exceeded the
rate of inflation. If this were sustained, there would not be room in
the surplus for a tax cut or debt relief. Third, triggers on tax cuts
represent only half the story. Those who have listened carefully to
Chairman Greenspan note that he supports both a trigger on tax cuts and
on long-term spending. During the upcoming budget debate, there will be
opportunity to discuss the value of a trigger on both spending and tax
cuts. I believe Americans need to hear both sides of this story.
Mr. Speaker, again, I am proud to support ``The Economic Growth and
Tax Relief Act.'' It meets the tests of fairness by providing
meaningful relief to all income levels. It is fair and brings relief to
my state of Delaware. Its size is compatible with debt reduction goals.
Finally, it sends the proper message to Washington, D.C. that broad-
based tax relief is more important than ever-increasing levels of
government spending. I will continue to work to ensure that the
ultimate tax relief and budget legislation is fair to all Americans,
protects the surplus and pays down the debt. I look forward to this
effort.
Mr. UDALL of Colorado. Mr. Speaker, I regret that I cannot support
this bill--but I am convinced that to vote for it today would be a
serious mistake.
In fact, we should not even be considering the bill today. We have
not yet even begun consideration of an overall budget resolution, let
alone reached an agreement with the Senate on a budget framework.
We have not had a chance to weigh how this bill or any other bills to
reduce taxes would affect other important priorities, including
continued progress in reducing the publicly-held debt, strengthening
Social Security and Medicare, and investing in our schools, our
communities, and our country.
We do not yet have a complete budget proposal from the President, but
already we can see he is proposing to make room for his tax bill by
cuts in other areas, including important research and development
programs. And the bill before us today is only the first installment on
the President's plan.
That is why the law says, and what is provided for by the House's own
rules. But that is not what we are doing--we are waiving the rules, so
that we can rush to pass this bill before we have a chance to consider
how--or whether--it would fit with every other part of the budget.
It may be politically important for the new Bush Administration to
rush this process, but it is not a responsible way to make budgetary
decisions that may have profound consequences for future generations of
Americans. That is the way the budget process is supposed to work. That
is not the way any family in America would go about making a budget,
and it is not how we should go about doing our jobs either.
That is why I voted against the resolution to waive the normal rules
and bring the bill to the floor today.
But since the Republican leadership insisted on going forward,
regardless of the normal rules and common prudence, we should have at
least proceeded more cautiously and with a better focus.
That is why I voted for the Democratic substitute--because it was the
more prudent alternative.
Mr. Speaker, Colorado is an arid state. If you come to visit us in
the summer you will find it is sunny almost every day. We like it that
way, and do so our summer visitors. But that means we have to be
careful about water. We watch the snowpack carefully, and we work to
conserve water so we will be prepared for a dry season. We know how
hard it is to accurately forecast the weather, and how risky it would
be to drain our reservoirs prematurely because of a long-range forecast
of surplus water in coming years.

And, Mr. Speaker, it is just as risky to rely too much on long-range
forecasts of future budget surpluses--as the Republican bill does.
The Democratic alternative took a more cautious approach. The
Democratic alternative would have lowered taxes for everybody, by
lowering from 15 percent to 12 percent the tax on the first $10,000 for
a single taxpayer, the first $18,000 for heads of households, and the
first $20,000 for married couples filing jointly. It also would have
addressed the ``marriage penalty'' by allowing married couples filing
jointly twice the standard deduction used by single filers. And it
would have adjusted the alternative minimum tax (AMT) to assure that
all taxpayers who pay income taxes would receive the benefit of its
reduction in rates and that everyone eligible for the Earned Income Tax
Credit and the child credit would receive the full benefit of those
provisions of the law.
But it would not have gone as far as the Republican bill to slow
reduction of the publicly-held debt. It would not have gone as far to
reduce our ability to strengthen Social Security and Medicare. I would
not have bet as much on a 10-year forecast of good economic weather. In
short, the Democratic alternative would have provided real tax relief
for millions of Americans, without the same risks to the economy as the
Republican bill.
It is very important that we continue on the path of fiscal
responsibility and pay down the public debt, which will mean lower
interest rates, lower mortgages, and lower student loan payments. That
is first-class tax relief.
Today, my first choice would have been for us to first debate an
overall budget resolution under normal rules, so that we could
carefully frame real, substantial tax reductions in the full context of
the debt and other important priorities. My second choice was to
support the Democratic alternative.
The Republican leadership rejected both those courses and have left
me only with the choice of an irresponsible vote or a vote against this
bill.
That means I have no responsible choice except to vote no, and hope.
I hope that the Senate will take a more cautious, responsible course
than the Republican leadership here in the House. And I hope that the
result will be a sounder, more balanced bill that all of us can and
should support.
Mr. SANDLIN. Mr. Speaker, I want to take a moment to talk about
today's vote on tax cuts and in so doing lay out what I believe is a
responsible and balanced approach to fiscal policy. We have heard a
great deal from the Republican Leadership and the Bush Administration
about the importance of passing massive tax cuts now. Last week, the
President came to this chamber to make his case for tax relief and I
must say I found myself agreeing with a great deal of what he said. I
support tax fairness for America's working families. We need tax relief
and I support lower taxes--including complete repeal of the Federal
Estate Tax and elimination of the Marriage Penalty.
It is, however, because of my desire to enact significant tax relief
coupled with the fact that I am interested in working with President
Bush on the items in his agenda, that I am so disappointed in how the
Republican Leadership has chosen to proceed. To pass any massive tax
cut without first setting a budget framework is simply irresponsible
and does not set a positive tone. Debating, voting, and passing a
budget resolution that balances the priorities of Congress and the
President is not an argument about process or rules. Rather, it is the
foundation from which all subsequent debates between Congress and the
White House follow. To act on a tax proposal before enacting, let alone
debating, a budget framework severly restricts Congress's ability to
address other priorities, particularly strengthening

[[Page H783]]

Social Security and Medicare and paying off the national debt.
The submission of a budget blueprint by President Bush setting out
how he proposes to balance priorities within an overall budget is an
important first step. Congress should take the next step of adopting a
budget resolution that balances the President's priorities with those
of Members of Congress in both parties. The large projected surpluses
by the Congressional Budget Office (CBO) are as tempting to squander on
new spending programs as on passing a massive tax cut. We must remember
that it was not that long ago official forecasts predicted crushing
budget deficits, which would make today's debate over the size of a tax
cut seem reckless. A budget resolution, therefore, puts Congress on
record to adhere to set spending levels. Rushing ahead with tax cut
legislation before we have reached an agreement on a fiscally
responsible budget framework that honestly balances all of the tax and
spending priorities of both parties would be irresponsible and could
have severe negative consequences for the budget and the economy.
A bipartisan budget is imperative because the budget sets the tone
and tenor for the year, the Congress, and this administration.
President Bush has spoken often of the need to change the tone in
Washington and his early actions demonstrate a commitment to
bipartisanship. As a member of the Blue Dog Coalition, a group of
Members who support enacting a fiscally responsible budget plan, we
have asked the President to insist that Congress consider a budget
resolution before tax cuts. I am disappointed that to date all we have
gotten from the White House is a budget outline, short on specific
budget figures. Silence from the White House has lead us to where we
are today--voting on a massive tax cut before anyone fully understands
how such a measure impacts the budget. By putting the cart before the
horse and passing a tax cut before a budget is in place, the President
has squandered an opportunity to capitalize on the goodwill of his
first few months in office.
Although I am disappointed by the handling of today's debate by the
House leadership, I still believe that Congress can work together to
pass significant tax relief. I ask my colleagues on the other side of
the aisle to stop playing politics with tax cuts. The American people
deserve tax relief; however, they expect Congress not to abandon the
sound fiscal policies and risk a return to deficits. We can provide
affordable tax cuts, strengthen Social Security and Medicare, and pay
off the national debt, but we must be careful not to squander this
momentous opportunity through irresponsible fiscal policy.
Mr. HOLT. Mr. Speaker, I strongly support the alternative tax cut
package put forth by Congressman Rangel and oppose the package by the
President and the majority in the House.
People in New Jersey pay too much in taxes. That's why I have been
one of the few Democrats in Congress who has been willing to cross
party lines to vote for eliminating the estate tax, to vote for
eliminating the marriage penalty, to vote for cutting taxes for small
businesses, and to vote for cutting taxes for senior citizens. It's why
I have pushed for tax breaks that will help local communities keep
their property taxes low by helping with the costs of school
construction. And it's why I have consistently supported making
permanent job-producing tax credits like the Research and Development
Tax Credit.
The Rangel tax cut proposal deserves our support. It cuts the tax
rates for hard pressed New Jerseyans, adjusts the Alternative Minimum
Tax, and expands the child tax credit for families with kids. It
undertakes all of these tax cuts in a responsible way while protecting
Social Security and Medicare, paying down our debt, and saving part of
the budget surplus in the event of a ``rainy day.''
H.R. 3, the bill the majority has brought before us today, is simply
too large, too irresponsible and based on projections that are just too
uncertain.
The authors of this bill have rushed it to the floor without knowing
what the rest of the budget holds. And they are basing their bill on
financial projections that may or may not materialize. High tech
forecasters can't predict the weather two days away as we have been
reminded when forecasts earlier this week called for a historically
large snowfall in New Jersey that never materialized. But supporters of
H.R. 3 are betting that we can accurately predict the financial weather
a decade from now. It is worth noting that economic projections that
were made just three years ago have proven to be trillions of dollars
off the mark. One can only guess how accurate these ten-year
projections might be.
Parents in my central New Jersey district don't bet their children's
financial future on rosy scenarios, and castle-in-the sky projections.
They sit around the kitchen table and budget their bills, their income
and their anticipated expenses. They make tough choices. They don't
squander a lot of money to buy a lavish vacation home, counting on a
raise the breadwinner hopes to get in future years, without first
figuring out how to pay the medical bills, send their children to
college and save for retirement. They expect from us the same type of
honesty and responsibility when we make budget decisions that affect
their families.
When this proposed tax cut is combined with the other elements of
President Bush's entire tax plan, it costs well over $2 trillion, after
adding in interest on the debt and other hidden costs. The entire
available surplus is just $2.7 trillion. Spending that much of the
surplus--that is, the projected surplus--is simply irresponsible. It
leaves no room for the other important priorities that our nation
faces. And it is a recipe for huge budget deficits.
My constituents elected me to make decisions based on evidence, not
partisan ideology. And the evidence is that this bill is all too likely
to throw our economy into the same financial ditch that President
Bush's Secretary of Treasury, Paul O'Neill, admits President Reagan's
1981 tax cut put the country in. Republicans and Democrats alike have
labored long and so hard to pull us out of that ditch. Let's not repeat
the mistakes of the past.
This plan is also unfair. It gives 45% of the tax benefits to the top
1%--those with an average income of $1.1 million--and fails to give a
single dime to more than 12 million low- and middle-income families
with 24 million children. We can do better than that.
By arriving at a tax cut in a responsible way and making sure that we
can continue to pay down the national debt, we can generate confidence
among investors and consumers, ensure lower interest rates, and put
more money in the pockets of almost all Americans than they would get
from the proposed tax cut.
Together, I know that we could come together to pass a responsible
tax cut for Americans. But this bill is not responsible, and it has not
been crafted in the bipartisan, civil way that President Bush has asked
us to behave.
Let me also say that, like most Americans, I have been greatly
encouraged by President Bush's promise to change the tone in Washington
by ending the excessive partisan warfare in this city. It pains me to
see that pledge undercut at the very beginning of the President's term.
The Administration and the Leadership should not rush through on a
partisan basis legislation embodying the President's top priority,
without consulting with Democrats. They should work together with me
and others in the minority who support tax cuts to craft a bipartisan,
responsible tax cut.
I urge my colleagues to support the Rangel tax cut and oppose H.R. 3.
Mr. CUNNINGHAM. Mr. Speaker, I rise today in support of H.R. 3, the
Economic Growth and Tax Relief Act of 2001. The plan that we are
considering today reduces to 12% the current 15% tax rate on the first
$12,000 of taxable income for couples ($6,000 for singles) to get money
in the hands of those who need it most. The new rate is applied
retroactively to January 1, 2001. This plan also consolidates by 2006
the current 5-rate tax structure (15%, 28%, 31%, 36% and 39.6%) into
four new rates (10%, 15%, 25%, and 33%). This legislation is an
important first step in returning tax overpayments to the American
people.
The American people are working harder than ever, and they are
spending forty percent of their income in federal, state, and local
taxes. I think that it is unconscionable that families are paying more
in taxes, than for food, clothing, and shelter combined, and that four
months of every year, taxpayers are working to pay the federal
government. The Congressional Budget Office (CBO) has estimated that
over the next ten years, Washington will collect a $5.6 trillion tax
surplus. Taxpayers are sending us more than we need--and there is no
doubt in my mind that if we don't return it, that money will be spent.
It is time to return that money and let the American people spend their
own money to meet their own needs.
When we return this tax surplus to American families, they will see
more than just the benefit of a refund check. I am concerned that our
economy is slowing down--consumer confidence, capital investment and
growth are down, while layoffs, energy prices and anxieties are up. We
need to give the economy a boost, and any credible economist can tell
you that tax cuts will do that. So not only will the American people
get their overpayment back, but they will also reap the benefit of a
rejuvenated economy that will enhance their prosperity.
I look forward to working with President Bush and my colleagues in
the House and Senate to build on this important first step to return
the tax surplus to the American people. I rise today in support of H.R.
3, and also to voice my support for President Bush's other tax refund
initiatives which include doubling the child tax credit, reducing the
marriage penalty, eliminating the death tax, expanding the charitable
tax deduction, and making the research and development tax credit
permanent.

[[Page H784]]

Mrs. CAPPS. Mr. Speaker, today I voted to cut taxes for all
Americans. And I voted in support of fiscal responsibility.
I believe we need to cut taxes and have voted to do so repeatedly
during my short time in Congress. At a minimum, we should lower overall
tax rates, fix the marriage penalty, and reform the estate tax laws.
But tax cuts must be done in the context of an overall budget
framework that will allow us to meet other pressing priorities. And we
must remember that much of this surplus is still only a projection--
it's not money in the bank.
We must continue paying down the $3.4 trillion national debt. Our
progress in debt reduction has kept interest rates down and allowed
families to pay less for their homes and cars. We must also ensure the
long-term solvency of Social Security and Medicare, provide
prescription drug coverage for our seniors, improve education and
protect our environment.
The proposal I voted for today will allow us to do all these things,
while providing tax cuts for all taxpayers.
I fear that the tax cut bill being pushed by the House leadership and
President Bush is too big and won't allow us to accomplish these other
important goals. I also fear that it could open the door to a new era
of runaway deficits that would cripple our economy. And I am
disappointed that the House leadership has chosen to bring tax cuts to
a vote before we have a budget in place.
The prosperity we have enjoyed over the last decade has produced the
record surpluses we have today and are projecting for the future. Let's
take advantage of this moment and give American families the tax relief
they deserve. But let's not squander this opportunity by passing
irresponsible tax cuts that our families, and our nation, can ill
afford.
Mr. CHAMBLISS. Mr. Speaker, our government is too big and spends too
much money. Americans are over taxed and being asked to pay too much to
the federal government. Tax relief is about freedom. Freedom for
American families to save, spend or invest as they see fit. Tax relief
is about returning dollars and decisions back home to families in
Georgia and across the country.
Americans will send $5.6 trillion more to Washington over the next
ten years than is needed to run the federal government. Some of these
funds will be locked away to ensure that Social Security and Medicare
are strengthened. Some of these funds will go toward reducing the
national debt. And some of these funds will be spent on important
priorities such as education, prescription drugs, and strengthen our
military. But the rest of the federal budget surplus should be returned
to the American people in the form of tax relief. Working Americans
deserve relief now.
We worked hard over the past few years to enact tax relief for
American people but were stymied by the previous president. President
Bush has shown leadership in putting forward a plan that helps relieve
the tax burden on working families, and I am pleased that we now have
an opportunity to provide a refund to those people who work hard
everyday to make the greatest country in the world productive.
The President's plan is balanced and fair; it reduces inequities in
the tax code while at the same time providing for long term economic
growth. This bill today will give tax relief to all taxpayers and
return decision making power to families who know best how to spend
their money.
I urge my colleagues to join me in supporting this bill because it is
simple and fair and will provide powerful incentives to save and
invest.
Mr. GILMAN. Mr. Speaker, I rise today in strong support of H.R. 3,
the Economic Growth and Tax Relief Act of 2001.
H.R. 3 represents the first vote on a key component of the new
President's campaign agenda; tax relief for American families. This
legislation begins this process by providing for across-the-board
reductions in the marginal rates of the Federal income tax.
Under H.R. 3, the current 15 percent rate would be reduced to 12
percent on the first $12,000 for couples and the first $6,000 for
single filers. This provision would be applied retroactively to the
beginning of 2001.
The bill further reduces and makes adjustments to rate brackets over
the next five years, so that by 2006, the current five brackets (15
percent, 28 percent, 31 percent, 36 percent and 39.6 percent) would be
replaced by four lower brackets set at 10 percent, 15 percent, 25
percent and 33 percent respectively.
Mr. Speaker, this House passed a number of important tax reduction
bills over the past two years, only to see them fall victim to
presidential vetoes. We are now in a position to break this pattern and
offer real tax relief for hard working American families. It is
refreshing to know that we now have a partner in the White House who is
willing to work with us in achieving this goal, rather than dredging up
the tired old class warfare excuses not to enact real reductions.
This change in political climate could not have come at a better
time. After years of sustaining high levels of growth, the economy took
a sharp downturn in the 4th quarter of last year. While it does not
appear that it has slipped into recession, this possibility cannot yet
be discounted. Given this, as well as the fact that the long-term
budget surplus estimates continue to exceed expectations, it makes
sense to use a tax cut to help boost our economy.
I have always strongly supported the premise that everyone who pays
income taxes should benefit from an income tax cut. Therefore, I
believe that this legislation to reduce the marginal rates across-the-
board is appropriate. The higher rates were sharply raised in 1993 to
help reduce the budget deficit. Since then, this increase accomplished
what it set out to do. At the time there was no reason to believe that
those tax increases were intended to be permanent. Given our current
growing surplus, it is inappropriate not to repeal them.
This point cannot be overstated. Our Nation is currently enjoying a
budget surplus, above and beyond the surplus provided by the Social
Security Trust Fund. Over the next ten years this surplus is expected
to substantially increase.
For those who cite the inaccuracies of long term projections as a
reason to oppose tax cuts, it bears noting that the Congressional
Budget Office is using very conservative numbers for economic growth
assumptions in formulating these projections. The rate of economic
growth has exceeded similar projections over the past five years, and
should it continue to do so in the future, the size of the surplus will
only grow.
Moreover, the last five years have shown that the Congressional
Budget Office (C.B.O.) has consistently underestimated the level of
economic growth and the size of the surplus. My colleagues may remember
that the budget was not supposed to initially go into a surplus until
2002. The changeover actually occurred in 1999, three years early.
Yet, despite the President's assurances to the contrary, there are
those on the other side of the aisle who charge that this tax cut is
risky and reckless. Yet history has shown the minority's definition,
and the numbers behind it, have shifted dramatically. In 1999, they
charged that any tax cut over $250 billion was reckless. During last
year's campaign, the Democratic candidate stated that any cut over $500
billion was risky. Now, less than four months later, the minority is
willing to cut taxes by $900 billion, far more than the risky tax bill
this House passed in the First Session of the 106th Congress.
Finally, it bears mentioning that whenever taxes have been cut, be it
marginal rates or capital gains, tax receipts have subsequently grown.
This has occurred despite the alarmist predictions of the opponents of
tax cut reductions. If history is any guide, tax receipts will increase
after this bill becomes law. When tax receipts increase, so does the
surplus.
Accordingly, I urge my colleagues to support this tax reduction
legislation.
Mr. HINOJOSA. Mr. Speaker, I am here today because I am greatly
disturbed by the irresponsibility being displayed by the Republican
Leadership in Congress today.
I cannot believe that the rules of Congress and the People have been
violated once again, and now--we are going to vote on a tax cut before
we pass a budget.
No family or business would make a decision that would have a major
impact on their finances for the next ten years without first sitting
down and working out a budget to figure out what they can afford. We
owe it to the citizens of America to apply that same common sense
principle to the Nation's budget and its security.
I am further outraged that the plan the Republicans have offered
gives the lions share, 43 percent, of the peoples surplus to the
wealthiest one percent and ignores the majority of the hard working
Americans who greatly contributed to the creation of the surplus.
This outright robbery is further perpetuated when one realizes that
most Americans will not be impacted by the tax cut, especially not the
$25,000 a year waitress that the President speaks of with such
conviction.
For this reason, I ask you to pass a measure that utilizes common
sense and provides for all American families and American workers. This
can only be done by passing the Rangel Amendment, an amendment that
takes care of our families and our future.
The Rangel measure that cuts taxes responsibly and for everyone by
increasing the earned income tax credit and helping our married
families get tax relief.
Let there be no mistake; today we stand at a crossroad with two
paths:

The first gives the surplus to the wealth for expanded
purchases of luxury items. The second gives Americans the
extra funds needed to live a better life. If a decision is to
be made today, I hope we make the right one.
Mr, KNOLLENBERG. Mr. Speaker, passing H.R. 3, the Economic Growth and
Tax Relief Act of 2001 is simply the right thing to do.

[[Page H785]]

Whenever the federal government collects taxes, it takes money away
from hard-working American people. The government isn't entitled to
that money. It's the people's money and the government takes it away.
We, as Members of Congress, have a responsibility to ensure the
government doesn't take away any more than it needs.
Over the next ten years the federal government is expected to run a
surplus of approximately five and a half trillion dollars. In other
words, the federal government will be taking away from the American
people five and a half trillion dollars more than it needs to pay its
bills.
This is simply wrong. people need their money to pay their bills, put
food on their tables, send their children to college, plan for their
retirement, and meet all of the other challenges they face every day.
Under the President's plan, we will send a mere 30 percent of that
tax overpayment back to the people who work hard to earn their money.
Not the entire tax surplus, just 30 percent of it. And the legislation
we're debating today is even less than that--roughly 17 percent.
Mr. Speaker, passing this bill is not only the right thing to do; we
have a fundamental responsibility to do it for the people we represent.
This bill will increase fairness in the tax code, allow every
American income tax payer to keep more of their own money, and provide
support to our economy at a critical time.
I urge all Members to do the right thing tonight and vote in favor of
this legislation.
Mr. ALLEN. I rise in opposition to this excessive, unfair Republican
tax cut that will block our best opportunity to improve our education
and health care systems for years to come.
Abraham Lincoln lifted America's spirits by calling on ``the better
angels of our nature.''
President Franklin Roosevelt inspired a nation to set fear aside.
President Kennedy and others asked for sacrifices to enhance the common
good.
But the rallying cry of the Bush Administration is different: ``It's
not the government's money. It's your money.''
What a shriveled up vision of what the American people care about! We
are better than that.
This tax cut is a clarion call for more spending on luxury goods by
the wealthiest Americans.
Those earning over $300,000 per year can buy a Lexus every year with
this tax cut. Those earning about $35,000 would have difficulty getting
a muffler.
This tax cut slams the door on spending for the common good.
To those seniors who cannot afford their prescription drugs, this
bills says forget it, you're on your own.
To those students, teachers and parents who know that our schools
need full funding of special education, this bill says forget it,
you're not a high priority.
To the baby boom generation not that far from Medicare and Social
Security, this bill says forget any help from general revenues any time
soon.
The Democratic alternative is half this size and is fair to middle
income Americans.
A tax cut half this size would allow us to put the medicines they
need in the hands of our seniors.
A tax cut half this size leaves room to fully fund 40 percent of the
special education mandate we imposed on the states.
A tax cut half this size leaves room to shore up Social Security and
Medicare instead of privatizing both for the benefit of insurance
companies and brokerage firms.
The American people want and deserve lower taxes, but not a cut so
large that seniors still cannot afford their drugs, our kids are stuck
in inadequate schools, and baby boomers lose confidence in Social
Security and Medicare.
I urge my colleagues to reject this bill.
Mr. TOM DAVIS of Virginia. Mr. Speaker, I rise today in strong
support of H.R. 3, the Economic Growth and Tax Relief Act of 2001.
The U.S. economy is currently experiencing a slowdown. In order to
fend off a further downturn or recession, it is imperative that
Congress act quickly to breath life back into the economy. By reducing
income tax brackets retroactively to the beginning of this year, H.R. 3
provides immediate tax relief by decreasing withholding rates. This
will result in an infusion of cash into the economy--up to $360 for a
married couple in 2001--that our economy urgently needs. Some say that
it is reckless to bring a tax relief bill to the floor of this body
before we have adopted a budget resolution. I disagree. Rather, I
commend Chairman Thomas for recognizing the fact that undue delay would
deaden the positive, restorative effects that lowering marginal rates
would bring. Furthermore, this being a bicameral legislature, we must
wait for the other body to do their part on this bill. It is even more
imperative, then, that we spur them on by doing our work expeditiously.
Before a final conference report comes before us, we will have the
benefit of a budget resolution. But if we wait for the final budget
resolution before we begin the process, the tax cut could lost its
stimulative effect on the economy. We have a choice: Either take the
necessary steps to return our country to the positive growth, or bring
the danger of recession ever closer through indecision and delay.
H.R. 3, is only the first step in bringing tax relief to the American
people. There are other areas of the tax code that Congress must fully
address--the marriage penalty, the alternative minimum tax, higher
savings levels for Individual Retirement Accounts, and the death tax;
however, those must wait for a later date. Our focus now must be on
keeping the economy healthy, keeping Americans working, keeping small
businesses open, and ushering more and more people into the middle
class through the prosperity that has blessed this country in recent
years. Across-the-board cuts affect withholding rates now and give an
immediate stimulus to the economy.
Finally, reducing marginal tax rates is an issue of fairness. I
believe that is simply wrong that the government currently takes away
up to 40 percent of an individual's income--and much more when other
taxes are taken into account. We must encourage enterprise. We must
encourage savings. Our policies must reflect the oft-touted belief in
the American Dream that through hard work and sacrifice one might build
a better life--not become the object of higher government tolls and the
subject of vilification merely because of success. I have heard from
many of my constituents who would be positively affected by the relief
this bill would bring. They are not the ``idle rich.'' They are
individuals and couples who have mortgages to pay. They are parents
trying to pay for their children's educations. They are making car
payments. They are the people who tirelessly serve our federal
government. They are the entrepreneurs whose small businesses are at
the core of the high-tech revolution that has fueled our economy's
growth over the past several years. I can assure you that they do not
live lives of ease as has so often been portrayed by opponents of this
plan. They deserve to get a small portion of the money that they have
overpaid to the government back. It was their hard work and sacrifice
that rescued the government from the massive debt it had accumulated
over years of bloated excess. Now that they need a helping hand, we
must not abandon them. I urge my colleagues to support this bill.
Ms. PELOSI. Mr. Speaker, as a Member of the Appropriations Committee,
I am particularly concerned about the impact of the Bush tax cut on the
overall federal budget. We must not sacrifice investments in education,
infrastructure and health, which make our economy stronger, in order to
provide excessive tax cuts.
In 1981, President Reagan passed a major tax cut, increased defense
spending drastically, and supported cuts in investments in the American
people. His policy marked the beginning of the worst economic downturn
since the Great Depression and quadrupled the national debt.
Over the last eight years, the Clinton Administration has eliminated
the budget deficit but we still have a $3.5 trillion national debt.
Interest payments on the debt alone cost the United States more than
$200 billion a year. A lower national debt means lower interest rates,
lower mortgage payments, lower car payments, lower credit card
payments, and more jobs. Paying down the national debt will put the
U.S. government in the best possible position to meet the Social
Security and Medicare needs of future generations, when the retirement
of the ``Baby Boom'' generation places a significant strain on the
federal budget.
Nearly $3 trillion of the $5.6 trillion projected surplus is supposed
to be dedicated to Social Security and Medicare. Are the Republicans
going to take those funds from seniors to pay for their tax cut?
Increased debt service, farm payments, extending expiring tax credits,
and emergency defense and non-defense spending will also need to be
accounted for in a responsible budget.
Unfortunately, the Republican majority has jammed this tax cut
through before we even have a budget resolution. Therefore, we are
forced to have this debate without any budgetary framework. However, we
do know that of the nearly $2 trillion of the surplus that remains
after we protect Social Security and Medicare, funding a tax cut must
compete with providing a prescription drug benefit for seniors and the
modernization of our schools, two of the top priorities of the American
people. Do we want to underwrite an unaffordable tax cut at the expense
of our children's education and our seniors' and veterans' health?
I urge my colleagues to oppose the Bush tax rate plan.
Mr. COSTELLO. Mr. Speaker, I rise in opposition to the $1.6 trillion
tax cut package proposed by President Bush as well as the Democratic
substitute that will be voted upon today with the Bush tax cut plan.

[[Page H786]]

I believe that the Congress can and should pass legislation giving
tax relief to the American people. That is why last year I voted to
eliminate the death-inheritance tax and the marriage penalty.
Unfortunately, President Clinton vetoed both bills. However, when these
bills come back before the Congress in this session, I will vote to
again eliminate the inheritance tax and the marriage tax penalty.
The Congress can and should give tax relief to the American people
after President Bush lays out his spending plan to the Congress and the
American people and after we put a mechanism in place to adjust the
plan if revenue projections prove to be wrong.
Most of us remember the 1981 tax cut proposed by President Ronald
Reagan and approved by the Congress cutting taxes for the American
people with the promise that the tax cut would help the economy and
balance the federal budget within three years. Then candidate George
Herbert Walker Bush called the Reagan plan voodoo economics. Republican
Senator Howard Baker called the Reagan plan a river boat gamble.
Unfortunately for the American people, George Herbert Walker Bush and
Senator Baker were right.
In fact, taxes were cut but spending continued to increase and the
American people saw two decades of huge budget deficits and saw the
national debt explode to $5.7 trillion. President Reagan and the
Congress were successful in cutting taxes but not holding down
spending.
Last week, former Chairman of the House Ways and means Committee
Republican Bill Archer said that if anyone believes that we will have a
surplus eight or ten years from now with this tax cut plan is
``hallucinating''. Others have questioned the ability of this President
and this Congress to control spending. They fear a repeat of the Reagan
years with taxes being cut and spending continuing to increase
resulting in a return to the days of huge deficits that will hurt
interest rates and the economy.
Today I intend to vote against the Bush tax cut plan as well as the
Democratic substitute. I believe that we should force the President to
lay out his spending plan so that we can see how the President intends
to fund critical programs important to the American people like Social
Security, Medicare/Medicaid, national defense and other important
programs. After the President lays out his budget to the Congress and
the American people then we should bring a tax relief package before
the Congress that is realistic and that has a mechanism that directly
ties tax cuts to controlled spending and the amount of revenue that
will come to the federal treasury each year.
Mr. Speaker, today we should reject both the Bush tax plan and the
Democratic substitute and come back to pass a bill that gives tax
relief to the American people later this spring after the President
lays out his detailed budget to the American people.
Ms. SOLIS. Mr. Speaker, I rise today in adamant opposition of H.R. 3,
the Economic Growth and Tax Relief Act which was proposed by President
Bush.
In the past few months, the Bush Administration has desperately tried
to convince the American public that their planned tax cuts are fair,
that their tax cuts rightfully return money to those who have paid the
most, that their tax cuts will help spur our economy.
Evidently, the Bush Administration's attempts have failed. In a Los
Angeles Times poll released today, the majority of Americans support
the alternative Democratic tax bill--and for good reason. The public is
not gullible. No matter how you skew the numbers, no one can deny that
the richest Americans stand to gain the most from this plan, while
virtually no money will be returned to the working poor.
In addition, the public understands that our projected budget surplus
is not stable; we need to pay down our deficit and not repeat the
disastrous tax policies of the 1980's which plunged us further into
debt. President Bush wants us to risk slashing funds for Social
Security, housing, health care, environmental protection and a slew of
other vital programs for the sake of making the rich even richer. How
can these cuts possibly better our society?
Under President Bush's proposal, the richest one percent of the U.S.
population will receive more in tax cuts than the bottom 80 percent of
the population combined. This high-income group pays 20% of all federal
taxes, yet they would receive at least 36% of the tax cuts under the
Bush plan. That means that the amount in tax cuts that these
individuals would get back would be nearly double the share of federal
taxes that they pay.
On the other hand, the bottom 40 percent of tax filers, a group that
makes up a significant population in my district, will only get four
percent in tax cuts--an average of about $115. Moreover, 12 million low
and moderate income families will get absolutely nothing in return--
that is almost one-third of all families in the United States and
includes 24 million children.
Among African-American and Hispanic children, the percentage rises to
over 50% who will not see one penny of the Bush tax cut. Even the much
hyped increase in the child tax credit from $500 to $1,000 would not
assist those who need it the most. How can President Bush justify
increasing the income required for families to qualify for this child
tax credit to $200,000, rather than expanding the Earned Income Tax
Credit for those struggling families who can barely feed their
children?
This tax plan grossly neglects the needs of honest, hard working
citizens whose toil and sweat are the source of America's greatness.
Where is the support for the seniors and veterans of my district who
helped create the surplus that we are squandering today? This plan
proposes an estate and gift tax repeal--a tax which, according to some
figures, would go to only the top 5% of the country's population! Yet,
our seniors and veterans, who dedicated their youth to the growth of
our nation's wealth and security, will receive no specific tax cut
whatsoever. They will have to be content with insufficient assistance
from federal programs that are in danger of being cut due to President
Bush's exorbitant tax reductions.
The bottom line is that the Republican tax plan is bad policy.
President Bush's proposal does nothing but deplete our hard earned
surplus for the benefit of those who need it the least. I vehemently
urge my colleagues to act responsibly and block this disastrous measure
from becoming law.
Mr. OTTER. Mr. Speaker, I rise today to voice my strong support for
H.R. 3, the ``Economic Growth and Tax Relief Act of 2001.'' This bill
will ease the terrible yoke of federal taxation that is crushing the
people of Idaho and the rest of the United States. I am proud of
President Bush for proposing this bill, proud of our House leadership
for bringing it to the floor so quickly, and proud to say that I will
vote for it.
This bill takes the common sense view that taxpayers deserve their
money. The people of Idaho can better prioritize what to do with their
hard earned money than bureaucrats in Washington, D.C. Passing this
bill says that we trust the people in the states. We trust hardworking
people. They are smart enough to make the money. Aren't they smart
enough to spend it?
By reducing the number of tax rates and the rate of taxation this
bill will lower our record high tax burden. Right now America pays more
of its GDP in taxes than it ever has in peacetime. Currently Americans
are paying Uncle Sam more in taxes than they spend on food, clothing,
housing, and energy costs combined. This legislation provides a fair,
needed refund of tax overpayments to all Americans. It is a great first
step.
It is a first step, but not the only step. Farmers and small
businessmen in my state are looking forward to repealing the estate
tax. Without estate tax repeal the money we return to the American
people today will only be stolen from their heirs. Our farmers and
small businessmen are already suffering from drought, electricity
shortages and record low commodity prices. The least we can do is say
``If you are successful, your children can inherit what you worked
for.''
The people of Idaho are waiting for us to pass lower, fairer taxes to
help them in their time of need. The people of America are waiting for
us to pass lower, fairer taxes to get the economy moving again. Let's
vote for the Economic Growth and Tax Relief Act and give the people
what they want.
Ms. KILPATRICK. Mr. Speaker, today I rise in strong opposition to the
tax proposal submitted by President Bush. I do so for many reasons,
none of which are founded on the ``myth'' so blatantly pushed by the
President, that the Democrats are engaged in class warfare.
We are not here to engage in warfare between the rich and the not-so-
rich. We are here today to preserve those things which most of us here
in Congress have fought so hard to promote over the course of the past
8 years. We are here to maintain the fiscal discipline that has given
us unprecedented prosperity in good times. We are here to maintain the
fiscal discipline necessary to insure that in uncertain times, the
nation does not slip into recession.
Today we should be mindful of the state of the nation back in 1992.
Just a little more than 8 years ago we saw an economy that was
faltering. Unemployment peaked at nearly 7%, as layoffs spread
throughout the land. Consumer confidence was low. In the political
arena fingers were pointed in all directions. President George H.W.
Bush's administration blamed the voodoo economics of the previous
Reagan era. Democrats agreed. The Republican faithful argued that the
excesses of the Democrat Congress resulted in the sharp economic
downturn.
In this context, former President Bush chose to do what he believed
was the responsible thing. He chose to raise taxes--and he suffered the
consequences. He suffered the scorn of his political opponents, but
more importantly, he suffered the scorn of the majority of the
Republican establishment. Although he was trying to do the responsible
thing and

[[Page H787]]

mitigate the increasing federal deficit, he violated the cardinal rule
for which Republicans claim to stand. He violated that often repeated
Republican refrain, that ``God created Republicans to cut taxes''--not
increase them.
Well today we stand before the American people because President
George W. Bush faces a choice similar to the one his father made:
whether to do the responsible thing, or to do what history has so
vividly illustrated is the wrong thing to do. I am sure his father's
experience resonated prominently in his decision to forward this tax
proposal we consider today. His father made a tough choice to increase
taxes. Former President Bush chose to counter the policies of his
predecessor, Ronald Reagan, whose history I am sure also resonates
prominently in President Bush's decisions today.
After all, President Reagan drastically cut taxes during the 1980's
and he is revered by the Republican establishment. Republicans loved
his execution of Republican ideals and credit him with the restoration
of hope and optimism to the American people. Most importantly, however,
in the Reagan lesson, is the fact that he was reelected for a second
term.
Today, I stand here to remind the American people of the cost of Mr.
Reagan's policies. I come from the city of Detroit. I represent a
population that was devastated in many ways by the policies of the
Reagan administration. I watched as services critical to my city's
youth were cut. No longer were funds made available for successful
after school programs. Budgets for parks and recreation stagnated,
leaving few alternatives for youth activity. The loss of these benefits
soon led to the feelings of despair and desperation. Drugs plagued the
inner city and the introduction of crack cocaine into our neighborhoods
devastated the community. Today the City of Detroit is still digging
out from the plague of crack-cocaine in the 1980s.
I point this out to say there are consequences to this tax-proposal--
both in economic, and most importantly, in human terms. Sure I am for a
tax cut. I am not, however, for irresponsibility.
I ask the American People to reflect on what we consider here today.
Today, there are projected surpluses of approximately $5.6 trillion. Of
this amount, $2.5 trillion in attributable to the Social Security Trust
Fund and $.4 trillion or $400 billion is attributable to the Medicare
Trust Fund, leaving the Non-Social Security, Non-Medicare Surplus at
$2.7 trillion.
President Bush has proposed a tax-cut across all income brackets. The
cost of which is $1 trillion dollars not including other tax proposals
he plans to introduce. If we include these other proposals, the tax cut
could cost anywhere from $1.6 trillion to upwards of $2 trillion.
Additionally, the Joint Committee on Taxation, a bipartisan committee
on taxation, recently released estimates that show that the true cost
of President Bush's Proposal exceeds the cost listed in the
Administration's Budget. Their study also shows that the cost of
remedying the problems associated with the Alternative Minimum Tax
would increase to $300 billion over 10 years under the Bush proposal.
This would raise the cost of the Bush tax cuts to nearly $2.5 trillion
over the next ten years. This would mean that only $200 billion dollars
of the surplus would remain for other national priorities.
In order to put this in perspective, I would like to point out that
the cost of the proposed national missile defense system is estimated
to be nearly $30.2 billion. Improving the lives of our military
personnel is estimated to cost nearly $100 billion. We do not know the
cost of privatizing a portion of Social Security, or other increases in
spending promised by President Bush during the campaign. And even after
we address these concerns this bill does not even consider the cost of
reforming Medicare, the cost of a prescription drug benefit (estimated
at nearly $200 billion) or the cost of addressing this nation's
education needs.
I would also like the American people to ask themselves a question.
Would you in your own personal finances write checks based on money
that you did not have in your account? I would bet that most Americans
would never be so careless with their expenses and the expenses of
their families. So how can we today afford to be so careless with
surpluses that are not yet in treasury accounts?
Nor would you spend money for a vacation, or new car, without looking
at how such an expenditure would affect the rest of your budget. You
would not go out and buy a car knowing that the payment may prevent you
from being able to pay your rent or mortgage. Yet here, we will not
have the opportunity to debate the full budget in Congress prior to
voting on this tax bill. Forget about the fact that by law (the
Congressional Budget Act) Congress must pass a budget before it passes
tax breaks.
We were told that the President's priority was education. You would
think that as a body, we would consider education legislation first.
Today we see the true priorities of the administration and the
leadership of this Congress. President Bush and the Republican
leadership tell the American people that they care about education, yet
they war willing to pass a tax cut that may jeopardize that very
priority. Don't be surprised if we later learn that in order to
accommodate today's tax cut, we must make sacrifices in education and
other national priorities.
I do not stand here today to criticize without offering a credible
alternative. Moreover, I would like the public to know that there are a
number of alternative proposals from both Democrats and Republicans.
However the leadership, through the rules committee, has limited the
consideration of many of these proposals--this all in the so called
spirit of transparency and bipartisanship.
Do not be led to believe that Democrats do not believe in tax relief.
There is an alternative Democrat tax-cut proposal. The Democrat
proposal is a simple budget plan that directs \1/3\ of the Non
Medicare, Non-Social Security surplus towards a tax cut, \1/3\ toward
our national priorities like education and a prescription drug benefit
and \1/3\ of the surplus to paying down the national debt. This tax cut
is responsible in its scope and addresses the other priorities
expressed by the American people. More importantly, the Democratic
alternative would provide tax relief where tax relief is needed most--
to the working families of this country.
Ms. BALDWIN. Mr. Speaker, I rise today in strong opposition to H.R.
3, the Economic Growth and Tax Relief Act. This $958 billion tax cut,
which is part of a larger $1.6 trillion tax cut package, does not focus
relief on those who need our help the most.
I support responsible tax cuts for working families, which is why I
am voting for the substitute being offered on the floor today. The
substitute offers marriage penalty tax relief, and provides larger
refunds to low and middle-income families with children.
Two weeks ago I held listening sessions across the Second District of
Wisconsin. I heard from many who are struggling to pay their bills.
Some showed me their prescription drug receipts as evidence for the
increasing costs they must pay. Others told me about the tremendous
increases in their home heating bills, which have jumped dramatically
due to the recent increases in the price of natural gas and other
energy sources.
Many of the families I heard from during my listening tour do not
make enough money to benefit substantially from this tax cut plan. Some
have incomes so low they do not owe federal income taxes. Those
families would receive nothing from the tax cut proposed in H.R. 3.
Other middle income families will receive very small tax cuts that pale
in comparison to their increased expenses.
In addition to the fact that many middle and lower income families
would not benefit substantially from this legislation, the magnitude of
this tax cut would limit resources that could go to programs to address
their very real needs. I believe a tax cut this large puts at jeopardy
the funds needed to add a Medicare prescription drug benefit. This
means that the seniors I represent will not see adequate relief in
addressing their health care needs. If this tax cut is passed, the Low
Income Heating and Energy Assistance Program (LIHEAP) could face a
freeze on its level of funding, or even worse, a cut. This would be
devastating for people with low incomes in my district who are
confronting enormous heating bills during this frigid Wisconsin winter.
Today's tax-cut legislation does not address the needs of families
struggling to pay their increasing bills every month. Those who
genuinely need relief will not receive the real fruits of this
legislation. We must place a higher priority on a tax cut that provides
relief to those who need it most. We must pass a responsible tax cut
that does not jeopardize the fiscal health of this nation.
Mr. STARK. Mr. Speaker, I vehemently oppose President Bush's tax cut
plan and encourage my colleagues to do the same.
I did not support the bill in the Ways and Means Committee markup
because the House has not adopted a budget; the tax cut is one piece of
a larger tax plan that imperils Social Security and Medicare; the bill
leaves no room for more deserving priorities like a Medicare
prescription drug benefit for seniors and better education for our
children; and it provides far greater tax breaks to wealthy Americans--
like members of Congress--than it does to the vast majority of working
families.
A prudent family who has just experienced an increase in their annual
salary would not run out to buy a yacht before they figure out how much
debt they have on their credit cards, whether or not they're saving
enough for the kids' college education, and if their retirement savings
plan is in order. Likewise, Congress is acting irresponsibly by not
setting spending priorities before blowing all our forecasted resources
on a massive--not requested--tax cut.
President Bush did not send Congress a budget proposal. He sent
Congress a blueprint for disaster dressed up in partisan rhetoric. The
Bush ``budget'' is merely the rationale for

[[Page H788]]

a bloated tax cut. There are also some $20 billion in domestic spending
cuts for next year alone that the President has yet to detail in his
budget. These cuts could result in fewer cops on the street, less
relief for over-crowded schools, less research and development for
alternative energy, and reductions in federal emergency assistance.
Nor, does the President take into account all of the obligations that
Congress is required to calculate when we devise a real budget.
Congress is forced to account for an increase in population and
therefore an increase in spending programs. Congress must account for
additional interest on the debt when the debt isn't paid down and
instead spent on a $2.5 trillion tax cut. Congress must account for the
annual tax extenders that are renewed every single year. However, this
Administration seems to think itself immune from taking into account
these real costs to the federal government. This Congress isn't
remotely ready to debate--much less vote on--a nearly $1 trillion tax
cut which is only the smaller portion of an eventual $2.5 trillion tax
cut.

President Bush is attempting to persuade the American public that his
number one priority is education and that he also wants to protect
Medicare and provide a new prescription drug benefit in the program.
This is a blatant attempt to mislead America's seniors and parents
alike.
The $2.4 billion in education spending increases pales in comparison
to the $2.6 trillion cut the President plans to give primarily to the
wealthiest Americans. The Administration's budget blueprint calls for a
12% increase in education spending. But once again, this figure is
completely misleading. Bush calculates $2.1 billion in funds that
Congress already provided for 2002 appropriations and already
designated for specific education programs. You can't truthfully count
these funds twice.
Likewise, the President is double-counting on Medicare and Social
Security. His rhetoric states that he's protecting the Medicare and
Social Security trust funds. In fact, his budget raids both trust
funds--that Congress has consistently voted to put into a ``lock box''
to be used only to extend the solvency of Medicare and Social
Security--as a resource to fund the wrong-headed priorities of his
budget.
Because of the overwhelming size of the tax cut he's proposing, he
also fails to provide the necessary resources to create a Medicare
prescription drug benefit. Make no bones about it--the funds don't
exist in President Bush's budget to provide seniors with an adequate
and affordable Medicare prescription drug benefit. And, his use of the
Trust Fund to finance other parts of his budget could imperil the
program's future.
Finally, the President attempts to sell his tax package to the
American people by advertising it as an economic stimulus. The problem
with this misleading advertisement is that the entire tax plan isn't
fully phased in until 2006. Most economists agree that most of the tax
relief that has been promised by the President won't take effect until
the economy has recovered.
I want my constituents to know the real substance of what I am about
to vote on. This rate reduction tax bill is a small part of a larger
problem. There is no real budget in place that spells out the realities
of our spending priorities. The bill before us today sets up the
federal government for increasing deficits. The tax benefits of this
bill--which are wrongly directed to disproportionately assist the
wealthy--arrive too late to provide any real stimulus for the economy.
This will then force Congress to make drastic cuts to the programs that
low and middle-income workers rely on like Medicare, Social Security
and quality public education. It is unfair to leave our children with
the burden of our federal debt so that the GOP can give away trillions
of dollars to America's wealthiest taxpayers. I urge my colleagues to
vote no on H.R. 3.
Mrs. CHRISTENSEN. Mr. Speaker, I rise in strong opposition to the
Bush Tax cut plan and in support of the Rangel Democratic Substitute
because H.R. 3 is misguided and just plain wrong. The Democratic
proposal, however, would provide immediate and fair tax relief, while
not threatening the surplus that so many of us worked hard to make
possible.
Instead of following the law which requires that a budget be passed
before tax cuts, the Republican Leadership has decided to ignore the
law and rush to the floor a tax cut proposal which if it is adopted,
will preclude us addressing some of the critical needs of the people of
this country.
By the President's own admission, this tax cut is designed to make
sure there is no money for spending; meaning they would take this
unprecedented surplus and unique opportunity to secure our future and
do good for those who need it most, and give it away to those who need
it least.
Regardless of what my friends on the other side of the aisle say, Mr.
Speaker, independent organizations report that an estimated 12.2
million low and moderate income families with children--31.5 percent of
all families with children--the majority of them headed by hard working
adults, would not receive any tax reduction at all.
That means primarily African Americans and other people of color. We
won't benefit from the tax cut, that is clear. But what is the
President talking about when he says he wants to cut government
spending?
Today, with the sure passage of the Bush tax cut, the House begins
the first step in dismantling all of our hard work and the progress
that we have made in education, health care, housing, economic
opportunity and the many other needs of our constituents.
He is in essence, talking about leaving many Americans, especially
Black and Hispanic behind.
He is talking about inadequate spending for education, the issue
Americans care about most. But others will talk about that.
He is talking about closing the doors of economic opportunity. For
example, he proposes no New Markets initiative, a program that would be
the first ever by SBA to actually provide the venture capital needed in
our communities so that our constituents can open a business, create
jobs, and pull our communities out of economic distress.
The Bush tax cut will also mean that 45 million Americans will
continue to be without health insurance, and that HMO's will continue
to make profits by denying care. It also means that over 25 million
seniors will still be denied prescription drug coverage, and that
Americans living in the territories and others living in the states
will be denied access to health care because Medicaid will be cut so
that those who are in the top 10% of incomes in this country can get
more.
Mr. Speaker, we applaud the almost $3 billion increase for research,
but African Americans, Latino Americans, native Americans, and Asian
and Pacific Islanders need health care now.
I need not remind you, my colleagues, that health care is a right not
a privilege--not for some, but for all.
We have the resources today to right many of the negative commissions
and omissions of the past. On behalf of the people of this country, we
must insist that President Bush and the leadership of this Congress not
to squander our wealth, but invest it in the people of this nation
instead.
Today portends not to be America's finest hour. But there is still an
opportunity to help her live up to her legacy by passing the Democratic
Substitute.
Under the Democratic Substitute, a new 12% tax bracket would be
created, giving an across the board rate cut for all Americans and
overwhelmingly benefit middle income taxpayers. Additionally, and most
importantly, the Democratic alternative will give those working
families who only pay payroll and federal excise taxes a refund through
expansion of the Earned Income Tax Credit.
Finally, the Democratic alternative would provide families with
children who earn less than $65,000 within most cases larger tax breaks
than under the Bush proposal.
My colleagues we must tell the President and the Congress: ``No tax
cut until our Seniors are secure, our children have access to a quality
public school education, and until everyone--everyone--has access to
quality health care.''
Mr. BALLENGER. Mr. Speaker, President George W. Bush and the
Republican Congress understand that we can achieve our budget
objectives while providing this long overdue tax relief--while,
simultaneously, protecting Social Security, Medicare and retiring the
public debt. My constituents share this vision, and have written the
following to me in support of our efforts:
``The bottom line is, we are a low to moderate income working class
family with a college age daughter. We pay huge amounts of income tax
in comparison to our net worth and earnings, and we do not qualify for
any assistance. $1,600 is a lot of money to us. Let us keep more.''
``Two of our children are in college while the other two are still at
home. My husband and I both work. I prepare the payroll at my job and
see how much is withheld from every paycheck. The American people
already pay too much in taxes.''
``We are not in the top half or the bottom--we are caught in the
middle. We get no extra help, nor do we want any, but we pay one-third
of our income in taxes. Please help.''
``Please remember Mr. Ballenger, it's our money.''
``As a mother of three, I feel this package would greatly help our
family and allow my husband and myself to better provide for our
children.''
``As a Navy retiree and the father of two school age children, I
would greatly benefit from this refund of my `overpayment' of taxes.''
``It really does not matter to me if Bill Gates gets a big enough tax
refund to buy himself a whole fleet of Lexus cars, my only concern is
what I'm going to do with my tax refund.''

[[Page H789]]

``Please hold the Democrats accountable for their distortions about
the Reagan-era tax cuts--remind them of the late 70's under a Democrat
president and the inflation of that time.''
My colleagues, let's vote for H.R. 3, the first installment in our
tax relief agenda.
Mr. STUPAK. Mr. Speaker, unfortunately I am not able to vote on this
issue because of a prior family commitment. With all that has happened
to my family in the past nine months, this was a commitment I vowed to
keep!
In our current times of economic surplus, and in light of Federal
Reserve Chairman Greenspan's recent statements, I am in favor of tax
cuts and believe that we need to use this opportunity to return money
to hard-working Americans. Furthermore, with some signs of an economic
slowdown, I hope that we can examine ways that a tax cut can act
quickly to boost the economy. However, I cannot support President
Bush's tax cut plan; it is simply too expensive and too speculative,
will jeopardize vital programs such as Social Security and Medicare and
will prevent us from taking aggressive action to reduce our nation's
outstanding debt.
President Bush's $1.6 trillion tax cut package will actually cost
more than $2 trillion when other hidden costs are taken into account,
such as the costs of making it retroactive and additional interest
costs of the national debt. This is simply too expensive. It leaves no
room to ensure the future solvency of Social Security and Medicare, to
reduce the debt and to account for future budgetary needs, such as our
children's education or a prescription drug benefit for our nation's
seniors.
I believe we must plan responsibly. Our first priorities must be to
use the surpluses to protect Social Security and Medicare and pay down
our national debt. In addition, we must leave room for the budgetary
needs that inevitably occur, be they unforeseen needs for emergency
relief, or because of an increase contained in the budget that
President Bush has indicated he will propose. It is important to note
that while Republicans in the House are rushing to vote on this issue,
the Senate has indicated that it will hold off on any tax cut votes
until the President's full budget is set forth. As any business or
family would do, Congress needs to know its budget before determining
how much it can afford to spend on a tax cut. The President has not yet
offered Congress a complete budget to review. When he does so, we can
rationally study this issue.
Furthermore, the current projected surplus is just that, a
projection, and we cannot recklessly spend it, even with the best
intentions. I would not plan my own family's budget that way, and I
will certainly not invest the nation's future that way. As Chairman
Greenspan said, ``We need to resist those policies that could readily
resurrect the deficits of the past and the fiscal imbalances that
followed in their wake.''
With responsible planning, I believe that we can promote the
priorities of paying down the national debt, protecting our seniors'
retirement and health security, and enacting tax cuts. I want to work
in a bi-partisan manner with the president and members of both parties
on Capitol Hill to pass a sensible budget that includes tax relief for
America's working families. Unfortunately, this is not the approach
being taken by the President and the Republican leadership; therefore,
I oppose this package.
Mr. BEREUTER. Mr. Speaker, this Member rises today in support of H.R.
3, the Economic Growth and Tax Relief Act of 2001, a bold and fair tax
relief plan that will reduce the inequities of the current tax code and
help ensure that America remains prosperous. This measure will reduce
taxes for everyone who pays income taxes, and it will encourage
enterprise by lowering marginal tax rates.
This Member would also like to thank the gentleman from California
(Representative Bill Thomas) the Chairman of the Ways and Means
Committee for his efforts in bringing H.R. 3 to the House Floor as it
provides tax relief to all hardworking taxpayers. However, this Member
must lament the fact that, in what appears to be a partisan decision,
none of the Minority Members of the Committee were willing to support
refunding these surplus tax dollars back to the people who paid the
taxes--our constituents.
This Member strongly believes that some considerable portions of the
Federal budget surplus should be returned to the American taxpayer,
especially to middle income Americans. And, this Member also believes
it is symbolically and financially important to use part of the surplus
to at least make significant reductions in the national debt.
Therefore, this Member is pleased to support the President's common
sense plan that funds our nation's top priorities, pays down our
national debt and gives tax relief to every taxpayer. Over-charged
taxpayers deserve some of their own money back. It is interesting to
note that in the first four months of fiscal year 2001, the surplus
generated $74 billion. Clearly, the American people are being taxed too
much.
In fact, Federal taxes are at the highest peacetime rate in history.
Americans currently pay more in taxes than they spend on food, clothing
and housing combined. This year, it will take most Americans more than
four months of paychecks to pay their tax burden.
This Member is supportive of this tax cut because George W. Bush is
President and we have a Republican Congress to check truly excessive
levels of Federal spending. The legislation will help strengthen our
economy, create jobs, and put money back in the pockets of those who
earned it and need it most.
The measure provides immediate tax relief by reducing the current 15
percent tax rate on the first $12,000 of taxable income for couples
($6,000 for singles). A new 12 percent rate would apply retroactively
to the beginning of 2001 and also for 2002. The rate would be reduced
even further to 10 percent as follows; 11 percent in 2003 through 2005
and 10 percent in 2006. The reduction in the 15 percent bracket alone
provides a tax reduction of up to $360 for couples in 2001 ($180 for
singles), increasing to as much as $600 for couples in 2006 ($300 for
singles).

Furthermore, in accordance with President Bush's income tax rate
reductions, H.R. 3 reduces other income tax rates and consolidates rate
brackets. By 2006, the present-law structure of five income tax rates
(15 percent, 28 percent, 31 percent, 36 percent and 39.6 percent) would
be reduced to four rates of 10 percent, 15 percent, 25 percent and 33
percent. No American will pay over one-third of his or her income in
income taxes.
This Member supports the reduction in the tax rates provided in H.R.
3 because the bill reduces taxes for all Americans who pay income
taxes, spurs economic and job growth for all Americans and provides an
average of $1,600 in tax relief for the average American family (family
of four) phased-in over a 5-year period. The $1,600 amount represents
the average mortgage payment for almost two months, one year's tuition
cost at most community colleges, and the average gasoline costs for two
cars for one year.
The legislation will also begin to address the growing problem of the
alternative minimum tax by repealing the current-law provisions that
offset the refundable child credit and the earned income credit by the
amount of the alternative minimum tax. In addition, it should be
remembered that this is only the first element of the Bush tax plan--
additional tax relief is in sight for married couples and others that
will benefit from more targeted tax cuts.
According to the non-partisan Joint Committee on Taxation, savings to
taxpayers over ten years would be $958 billion under the provisions of
H.R. 3.
In closing, Mr. Speaker, this Member would like to express his
appreciation to our President, George W. Bush, for his willingness to
steadfastly ``demand a refund'' for the American taxpayer. This Member
urges his colleagues to support H.R. 3 as an important step toward tax
relief for all Americans.
Mr. COYNE. Mr. Speaker, I rise in opposition to this legislation. I
oppose this bill because it is irresponsibly large. I also oppose this
legislation because it does not provide enough of its tax relief to
working- and middle-class households. And I oppose it because we
shouldn't pass a major tax bill before we pass a budget.
In my opinion, Congress shouldn't pass a major tax cut until we see
how it affects the rest of the Federal budget. We received an outline
of the President's budget plan only last week, but even this outline
has caused me great concern. This document raised as many questions as
it answered.
Normally, Congress doesn't take up a tax bill until after it has
passed its annual budget resolution. The whole point of the process
laid out under the Budget Act of 1974 was to avoid making decisions
about major tax and spending proposals piecemeal--but, rather, to make
major decisions about taxes and spending as part of the annual budget
process. I strongly believe that abandoning this process is a recipe
for disaster. It could well undermine future efforts to address
pressing national problems like paying down the national debt, keeping
Social Security solvent, creating a Medicare prescription drug benefit,
improving education, fighting crime, and preserving our environment.
I am concerned that if we pass the tax cuts that the President is
proposing, we might not have enough money left to pay down the national
debt, keep Social Security and Medicare solvent, and pay for important
Federal priorities like education and health care--especially because
the surpluses that he is counting on to pay for his tax cut don't
exist. They are only estimates that may or may not materialize over the
next 10 years.

However, I understand that the Majority in the House will approve
this bill later today. Consequently, I will do what I can to limit the
damage that I believe that this bill would do. I will support the
Democratic substitute, which would lose less revenue than the mark--and

[[Page H790]]

which would result in more of the tax relief provided by the bill to
low-income taxpayers, the people who need help the most. The Democratic
alternative reduces the lowest tax bracket from 15 percent to 12
percent. It also contains $60 billion in Alternative Minimum Tax relief
and contains $60 billion in tax relief for American working families
through expansion of the earned income tax credit.
To those of my colleagues who argue that the earned income tax credit
is too vulnerable to error, fraud, and abuse, I would only observe that
it is remarkable that they have not expressed the same concern about
the much higher error, fraud, and abuse rate for small businesses and
sole proprietorships--which has been reliably estimated at 40 percent.
That apparent inconsistency suggests to me that the disagreement over
expanding the EITC really is a disagreement over who needs tax relief
the most--and that is a debate I feel confident about winning.
To sum up, Mr. Speaker, I don't think that we should be considering
this bill today. We shouldn't mark up major tax legislation until after
we finish work on the budget resolution. But since the majority intends
to ram this bill through the House this afternoon, I will do what I can
to ensure that most of the tax relief this provides will go to the
hard-pressed middle-class families that Governor Bush talked so much
about during the recent Presidential campaign.
I urge my colleagues to support the Democratic substitute.
Mr. CROWLEY. Mr. Speaker, I rise in strong opposition to the Bush
Republican tax cut. I oppose this misguided plan to provide tax cuts to
a select few while leaving working New Yorkers holding the bag.
Though, unlike the rhetoric you have heard on the other side of the
aisle--Democrats, like myself, support cutting taxes--they are too high
and stifling.
I am a strong believer in tax cuts--as a married man with two infants
at home, I personally know how devastating the marriage penalty tax
is--and I have voted in the past to eliminate this onerous tax.
I have worked with my colleagues in both parties to eliminate the
regressive tax on talking that levies a tax on every phone call you
make.
And as the representative of a middle and working class district
comprised of a diverse swath of neighborhoods in Queens and the Bronx,
NY, I know how punitive the estate tax is on the Mom and Pop
enterprises that dot my district.
Estate taxes are too high and they must come down.
I spoke out just yesterday in the Committee on Financial Services for
legislation that would lower the tax burden on the investing public via
taxes levied on individuals' 401(k) plans, mutual funds and retirement
accounts.
So for people to claim that I, or the majority of my colleagues, are
opposed to any form of tax relief is ludicrous and out right wrong. I
am for tax cuts--but responsible tax cuts.
In 1993, without one single Republican vote, Congress passed an
austere plan for cutting spending, raising taxes on a targeted few
wealthy individuals and injecting real fiscal discipline into our
economy.
The other side cried that this bill would be the death knell of the
American economy--but the facts bear them wrong, again. In fact, our
nation then began to see annual budget surpluses instead of deficits,
deficits created mostly by fiscal irresponsibility of the Reagan and
Bush White Houses.
Now, thanks to the fiscal discipline of the Democratic Party, we are
in a situation where we have experienced several years of back to back
annual budget surpluses with more surpluses predicted into the future.
I am proud to prove the pundits wrong and stand before you today and
say the Democrats are the party of fiscal responsibility while the
Republican majority has become the party of fiscal irresponsibility.
We have seen a decade of incredible economic growth and expansion.
The virtual elimination of inflation and the smallest interest rates in
a generation.
Unemployment went from 8 percent under the last President Bush in
1992, down to 7 percent, then 6 percent, then 5 percent and then 4
percent and then a historically low 3.9 percent--unheard of.
All the while, real incomes rose--again, something not seen during
the Reagan and Bush Administrations. Home ownership skyrocketed and
consumer confidence was sky-high. but Americans didn't just spend, they
invested, and the stock market exploded.
Coincidence--I think not. It was a careful economic plan worked on by
the Democrats in Congress--the Republicans continually refused to work
with us--and the White House as well as the Federal Reserve Bank.
Democrats cut spending and erased the deficit--all the while the
percentage of income sent to the Federal government in the form of
income taxes continued to decline. Now, we want to throw the gains of
the most prosperous decade in American history out the door to pass a
backward tax cut plan that will primarily benefit the wealthy.
Even President Bush himself says a large share of the tax cut
benefits will go to the rich--finally something we can all agree on.
We are basing economic forecasts for the next 10 years on data that
is as reliable as weather reports. A year ago, the Government estimated
our Nation's 10-year surpluses at a little over three trillion
dollars--now they ``revised'' it to over $5 trillion--Guess they forgot
to carry a one. Or, instead of being a mathematical goof, these 10 year
projections are very flawed. Everyone from Alan Greenspan to the CBO
agrees on this point.
No family could budget itself like this, no company would dare give
away bonuses based for the next 10 years under the guise of favorable
10-year projections.
But that's the way the Republicans like to think when it comes to our
future--they are gambling with Social Security and Medicare. This Bush
Republican plan represents fiscal irresponsibility at its worst.
In fact, the President and the Republican Congress refuse to even
consider an idea of providing triggers in their tax plan in case these
projected surpluses do not happen. Triggers on these tax cuts are the
only sensible option to prevent us from returning to the staggering
Reagan-Bush deficits of the near past.
But instead, the Republicans want the go-go parties of the 1980's to
continue whereby we spend all of our children's inheritance and leave
them with the bill--that stinks both economically and morally, and that
is why I oppose this foolish and reckless tax cut.
Congress and the President should work together, with guidance from
the Fed, to address our Nation's fiscal concerns. I believe the
economic priorities of the last Administration and of the Democrats in
Congress are the right ones.
The expected Federal surplus is the people's money--it is not the
government's money. Therefore, these funds should be used to benefit
the people.
That is why I support a budget strategy commonly referred to as \1/
3\, \1/3\, \1/3\--where our country would use \1/3\ of the surplus for
tax cuts; \1/3\ for debt reduction; and \1/3\ for increased spending.
I believe one-third of our surplus should be returned to the American
people in the form of a tax cut. Not one like the President supports
which would reward almost $1 trillion of his $2 trillion plan to the
richest one percent of Americans--but a fair tax plan.
I support and have voted for the elimination of the marriage
penalty--something that will not occur even if Congress passed the
President's plan exactly as written. Using just one-third of our
surplus will allow for the elimination of this onerous tax. Also we can
provide families and small businesses estate tax relief.
Another \1/3\ of our surplus must be used to pay down our national
debt. I have two young children, I do not want them and millions of
other children to inherit a multi-Trillion dollar debt because I would
not provide any fiscal discipline.
That is morally and economically wrong. The past 8 years America has
borne witness to the wonders debt relief and deficit elimination will
have on our Nation's overall economy and growth rates--this is
undisputed, regardless of what some of my Republican colleagues insist.
If a family ran its budget like the Republicans want America to run
its budget, they'd be in bankruptcy court, losing everything they
worked for--and this will happen to our Nation if we pass these
economically foolish tax cuts. We cannot let this happen.
The other third of the surplus should be used to provide for our
Nation's critical investments, such as providing a prescription drug
benefit under Medicare or shoring up Social Security or providing a
well deserved pay raise to the hard working men and women of the U.S.
military.
In my own district I know of too many people who ration their own
medications because they cannot pay for their doses.
A also support increased public investments in our nation's crumbling
schools. I released a study several weeks ago showing 97 percent of the
school children in my district studying in overcrowded and antiquated
classrooms.
I believe our children should be introduced to the Internet and
computers at a young age. It is universally noted that the Internet
economy has sparked much of our Nation's boom over the last decade, and
this high technology has greatly improved our Nation's economic output
and productivity levels, a reason why inflation has been virtually
nonexistent.
Congress can and should provide tax relief, but we should not abandon
our basic values, like Medicare or Social Security, or risk the
reemergence of ballooning deficits to achieve this goal.
Democrats have a plan to accomplish this goal. This Republican bill
will not accomplish this goal.
We need an economic policy for all of America--not just the richest
of America.

[[Page H791]]

Mr. SERRANO. Mr. Speaker, I rise in vehement opposition to H.R. 3,
the so-called ``Economic Growth and Tax Relief Act of 2001''.
There is no need to rush into the tax issue today. Indeed, it is
foolish to move forward with any bill cutting taxes until we can put it
in the context of the entire budget. For that reason, I will not
support the Democratic substitute either at this time.
Before we cut taxes, we need to know how much we will need to spend
to meet national needs--education, which is top priority of the
American people, Social Security and Medicare, including a prescription
drug benefit, universal access to health care, a cleaner environment,
more effective law enforcement, a robust foreign policy, and all the
necessary activities of the Federal Government.
We need to decide how we will respond to the American Society of
Civil Engineers' 2001 Report Card for America's Infrastructure, issued
today, which gives our public works a grade of D+ and estimates that we
will need to invest $1.3 Trillion over five years in our roads,
bridges, aviation system, schools, water, waste, and energy systems.
We need to reach agreement on paying down the Federal debt to prepare
for the pending retirement of the Baby Boom generation, which will
place enormous strains on the Federal budget and the national economy.
Just as important, because we know that the Bush tax plan will cost
far more than the $1.6 Trillion he claims, and that his budget won't
add up without cuts (or deficits), we need to understand what areas of
the Federal budget President Bush proposes to cut to make his numbers
work. And that's assuming the ten-year surplus projections come true,
which is a very risky assumption.
Apart from the timing and the lack of a budgetary context, the
substance of H.R. 3 is not worthy of support.
The Bush tax proposals, those in this bill and those yet to come, are
unfairly skewed away from the neediest families. The wealthiest 1
percent of the income distribution, with incomes averaging $900,000,
pay about 21 percent of federal taxes but would receive 43 percent of
the benefits, an average tax cut of $46,000.
Many working families, including those who pay more in payroll taxes
than in income taxes, would get nothing. On Tuesday, the Center on
Budget and Policy Priorities released a study which indicates that if
Congress approves the Bush tax plan, an estimated 12.2 million low- and
middle-income families, with 24.1 million children, would not receive
any tax reduction at all.
Mr. Speaker, I represent the South Bronx in New York. There are many
people in my district who work two or more jobs just to make ends meet.
Just think what these families could do with some extra money. They,
and low- and moderate-income families like them, need and deserve tax
relief as much as anyone, and they are likely to put any money they get
from tax relief into the local economy.
The Republicans keep saying the rich deserve the biggest tax breaks
because they pay the most taxes. But don't forget, the rich pay the
most taxes because they have the most money.
Don't get me wrong, Mr. Speaker. I believe Americans should get a tax
cut, but I also believe a tax cut package should be reasonably sized,
fairly distributed, and achievable within a budget that addresses
national needs, especially education.
I urge my colleagues to vote against HR 3.
Mr. SHAYS. Mr. Speaker, I rise in strong support of the tax reduction
legislation before the House.
We've heard a number of our colleagues come to the floor today to
brand this tax cut as irresponsible. Let me state nothing could be
further from the truth.
We need to put this legislation in perspective, not simply in terms
of the enormous surplus projections for the next 10 years, but also in
terms of federal revenue and spending over that same period.
Consider the following: over the next decade, the U.S. Government is
anticipated to collect $28 trillion in taxes. We are asking that $1.6
trillion be returned to the American people.
Of the $28 trillion in revenue, total federal spending is already
expected to be $22.3 trillion over the next 10 years, unless, of
course, Congress finds new ways to spend taxpayers' money.
When we compare the $1.6 trillion tax package to our other
commitments over the next 10 years this tax cut seems rather modest. We
anticipate spending $3.6 trillion for our military; $4.2 trillion for
discretionary non-defense programs; $5.8 trillion for Social Security;
$3.0 trillion for Medicare; and $2.1 trillion for Medicaid.
We've heard today, like a broken record, that this is a tax cut for
the rich.
The reality is this is a tax cut for those who pay taxes. If you pay
taxes, you will receive a tax cut. In fact, 6 million of the lowest
income earners will be taken off the income tax rolls by this
legislation. They will pay no income tax.
Some of my colleagues don't want you to know that the top 5 percent
of taxpayers pay more than 50 percent of personal income taxes, and the
top 50 percent of taxpayers pay more than 95.8 percent. That's a very
progressive tax system, and if the president's tax package is enacted,
the tax code will become even more progressive.
A married couple who both work making $55,000 with two children would
receive a $1,930 tax cut. Yet a similar household making an additional
$20,000 would receive only $120.
Mr. Speaker, the bottom line for me remains this: if we don't return
some of the $5.6 trillion in tax surplus that the U.S. Treasury is
estimated to collect over the next 10 years, it will be spent and the
growth in the size of government will increase.
I am convinced the natural tendency to spend more money will only
worsen with annual surpluses rolling in every year.
The President's proposal is very consistent with my long-standing
efforts to limit the growth of government, cut wasteful federal
spending and move power, money and influence out of Washington and back
to local communities where it belongs.
I am pleased to support this bill, and urge my colleagues to do the
same.
Mr. LaFALCE. Mr. Speaker, I rise today in strong support of fiscal
responsibility. Unfortunately, the bill before us today is not fiscally
responsible, and it is also not fair. It is unfair because it will
exclude millions of working families from receiving any tax relief. In
my state of New York alone, one in three families will get nothing from
this bill. Nearly 1 million families and 1.9 million children in New
York will receive absolutely no benefit from this tax cut. And these
are the poorest of our working families, those who pay substantial
payroll and other federal taxes but have no income tax liability.
The bill before us today delivers fully 44 percent of its benefits to
the wealthiest 1 percent of Americans. It is the first and largest
installment of the President's $2 trillion tax cut plan--a plan whose
tax cuts for the wealthiest 1 percent would cost more than all of the
President's new spending initiatives combined; and a plan that would
force us to raid the Social Security and Medicare Trust Funds. The
Republican Leadership has chosen to introduce the most expensive
element of the President's plan first; it is also the component that
(with the exception of the repeal of the estate tax) most favors the
wealthiest Americans, which seems to reflect their priorities.
In short, Mr. Speaker, this bill and the overall Bush tax plan have
three glaring problems, any one of which should cause us to reject them
resoundingly.
First, it is the wrong kind of tax cut, providing the lion's share of
benefits to the wealthiest Americans. It does nothing for the most
vulnerable taxpayers who need the most help, while providing
substantial help to the wealthy who need it least.
Second, it is much too expensive and will crowd out important federal
spending priorities, many of which the President himself claims to
support. It will also derail our efforts to eliminate the national
debt, which poll after poll shows is a clear priority for the American
people.
Finally, we are putting the cart before the horse in considering this
tax cut today, prior to laying out a budget for the year.

the wrong kind of tax cut

Promoters of this tax cut have a peculiar notion of fairness. They
believe it is fair that the wealthiest 1 percent of Americans get 44
percent of the benefits from this tax cut. In the old days, they might
have argued that these benefits would ultimately trickle down to the
rest of America through dramatic surges in economic growth. In 1981, we
were asked to suspend disbelief and watch as a tax windfall for the
wealthy would supposedly bring dramatic benefits to even the poorest
Americans. Of course, these benefits never trickled down and we learned
an important, if obvious, lesson: a tax windfall for the wealthy is
nothing more than a tax windfall for the wealthy.
Now, the Republicans are trying a different tack, arguing that the
wealthy face the highest burden from taxes, so they deserve the lion's
share of a tax cut. But this just isn't true. After-tax income for the
wealthiest 1 percent of Americans grew by a whopping $171,000 (or 40
percent) per family over the past decade, while after-tax income for
the bottom 90 percent of families grew by just $1,241 (or 5 percent)
per family. In light of this growing disparity in after-tax income, it
should be obvious who is feeling the real burden of taxes today, and it
is not the very wealthy. Yet, working families will get little or no
relief from this tax bill. Again, 1 in 3 families in my state will get
zero benefit from this bill or the President's overall tax plan. And
these are the very families who need the help the most--the working
poor and lower middle class. The conclusion from these numbers is
unassailable: this tax

[[Page H792]]

cut will further widen the gap between the very wealthy and the rest of
America. What definition of tax fairness could possibly apply to this
bill?

this tax cut will crowd out spending and debt reduction priorities

In his address before Congress last week, President Bush repeatedly
assured us that his massive tax cut plan could easily be paid for by
what was ``left over'' after meeting spending and debt reduction
obligations. Now his own sketchy budget proposal shows that nothing
could be further from the truth. As many of us have been warning for
weeks now, the President's tax plan, and today's bill, will come at the
expense of federal budget priorities and debt reduction.
The President's budget director said we would have to look long and
hard to find any cuts in the budget proposal. It took me less than 30
seconds: a 20% cut at the Federal Emergency Management Agency, a 17%
cut at the Environmental Protection Agency, a 15% cut at the Department
of Transportation, and so on. In fact, the President's so-called
``budget blueprint'' is nothing more than a tax cut masquerading as a
budget. And today's vote for the biggest piece of this tax cut is
effectively a vote to slash federal programs, raid the Social Security
and Medicare trust funds, and reverse progress toward eliminating the
national debt.
Among the many program cuts in the President's budget, I find two
areas particularly egregious. President Bush would dramatically cut the
budgets of the Department of Housing and Urban Development and the
Small Business Administration. I have played a lead role in the
oversight of these two agencies during the past decade, and I can
attest to the tremendously important work they do in serving American
families and small businesses.
Yet, at a time when our affordable housing needs are growing, the
proposed HUD budget would cut housing funding by $2.2 billion in real
terms. Included in these cuts is the elimination of the Drug
Elimination Program for public housing, as well as a $700 million cut
in the public housing Capital Fund, a critical source of funds for
upgrades and repairs to ensure that low income and senior citizens'
housing remains safe and accessible.
The budget of the Small Business Administration would be decimated
under the Bush plan, with cuts totaling over 46% next year. The
President proposes to sustain the Small Business Development Centers
program and the General Business Loan and Small Business Investment
Company programs by raising fees or introducing new fees charged to
small businesses. He is effectively proposing to impose new taxes on
America's small business in order to finance his tax windfall for the
very wealthy--in short, a windfall for Wall Street paid for on the
backs of America's Main Streets. Worse yet, he proposes to completely
eliminate key elements of the New Markets Initiative, which is
successfully realizing the untapped productive potential of America's
under-served communities.
I am also concerned about our ability to meet critical infrastructure
needs in light of this expensive tax cut. According to the American
Society of Civil Engineers, the United States must spend a staggering
$1.3 trillion over the next 5 years to meet our infrastructure needs.
Much of the burden of that spending will fall on the federal
government, and we must be prepared for it. Infrastructure investments
are desperately needed to ensure that the water we drink is clean, that
the roads and bridges we drive on are safe, that we can accommodate
increased air traffic and alleviate airport congestion, and that we can
continue to clean up our environment.
In the City of Buffalo, alone, the critical need to fix crumbling
schools will likely cost $1 billion over the next decade. Multiply this
amount by the countless number of other cities, large and small, that
face similar school repair needs. The needs are substantial and real,
and we will not be able to meet them if we pass this bill.
Finally, there are substantial human needs, which continue to go
unaddressed by the federal government. 45 million Americans continue to
go without any form of health insurance. And none of 39 million senior
citizens on Medicare receive any prescription drug benefit from that
program, at a time when drugs offer great hope for healthier and longer
lives. Again, we simply will not be able to meet these needs if we pass
this bill and follow the President's path for tax cuts.
In short, in passing this bill, we are incapacitating and
emasculating the federal government's ability to meet all of these
pressing needs. And we are re-digging the deficit ditch, after spending
a long and difficult 18 years extricating ourselves from it.

This Tax Cut Puts the Cart Before the Horse

Poll after poll indicates that the American people do not support a
massive tax cut that would jeopardize federal spending priorities and
debt reduction. Congressional Republicans know this, which is why they
are now rushing to put the cart before the horse, by passing the
President's tax plan before we even know what our budget will be for
the year. Mr. Speaker, we tried this approach before, and it was a
disaster. In 1981, President Reagan assured us that we could first pass
a massive tax cut and then meet federal spending priorities, all the
while keeping the federal deficit in check. In reality, the 1981 tax
cut plunged us into a decade of mounting debt, while putting the
squeeze on important federal programs.
This experience should have taught us that we cannot rely on magic
asterisks and vague promises to meet federal budget priorities. It is
critical that we consider tax cuts after we give serious consideration
to a detailed budget for the year. In adopting the Republicans' plan,
we would be turning the President's message on its head--he told us
that tax cuts would be paid for by what was ``left over'' after budget
priorities and debt reduction goals were met. But today, we are, in
fact, moving headlong into a fiscal plan that will pay for all of the
federal government's spending obligations, as well as debt reduction,
out of what is left over from a massive tax cut.
Mr. BENTSEN. Mr. Speaker, I rise in strong opposition to H.R. 3, the
first installment of President Bush's proposed tax cut package.
Having voted for tax cuts many times, I support an income tax rate
cut, but not outside a sensible budget framework. By rushing H.R. 3 to
the floor even before we've adopted next year's budget, the Republican
Leadership has abandoned even the semblance of fiscal prudence. Mr.
Speaker, I cannot support a tax cut of this magnitude before we have
had an opportunity to engage in a full and fair debate on the competing
budgetary priorities, including those of the President. The Republican
Leadership has rushed the $1 trillion tax cut to the floor before
deciding how much will go to debt reduction, funding the President's
own spending increases, and reforming Social Security and Medicare.
This is a classic case of putting the cart before the horse.
In all the euphoria over the projected budget surplus of $5.6
trillion over ten-year projection, released by the Congressional Budget
Office, we run the risk of failing to continue the fiscal restraint
which has brought us to this point today. In just eight years, the baby
boomers begin retiring and place unprecedented stresses on Social
Security and Medicare. All the major economic forecasters, including
CBO, OMB, GAO, as well as independent analysts, agree that the long-
term budget picture shows deficits returning in due course and
ultimately rising to unsustainable levels. The Republican Leadership is
today throwing fiscal responsibility to the wind for short-term
political gain and are denying the lessons of the past about relying on
speculative economic and political assumptions.
I also think it is irresponsible to structure a tax cut against the
entire on ten-year surplus projections, the bulk of which are projected
to materialize after 2006. History has taught us that it is far easier
to enact additional tax cuts in future years of economic projections
hold up or improve, while it is far more difficult to enact tax
increases or budget cuts in the future if the projections go
unrealized. CBO itself acknowledges that current projections may
substantially overstate projected surpluses and has concluded that
``the estimated surpluses could be off in one direction or the other,
on average, by about $52 billion in 2001, $120 billion in 2002, and
$412 billion in 2006.'' While there is significant doubt about whether
surpluses will be realized, the coming retirement of the baby
generation is a certainty for which we must plan.
I also have serious reservations about some of the contortions in the
President's Budget Blueprint. The Administration plans to dedicate $2
trillion of the surplus, attributable to Social Security Trust Fund, to
debt reduction and reserve the remaining $600 billion of Trust Fund
receipts for Social Security privatization.
Futhermore, the President's Budget assumes dramatic spending
increases in some accounts with unrealistic spending cuts in others. In
recent days, the Administration has reversed itself on some of its
proposed cuts and the Republican Chairman of the Senate Budget
Committee has called into question the President's discretionary budget
assumptions. Finally, in recent days of hearings before the Budget
Committee, we have learned that the President's proposed ``contingency
fund,'' which is supposed to offset additional spending, tax cuts or
unrealized surpluses, is actually not $842 billion, but less than $200
billion, once you subtract the projected Medicare Trust Fund balance
and add the increased cost of the H.R. 3 over the President's estimate.
Thus, Mr. Speaker, I must oppose H.R. 3. This House is moving too
fast to gain political advantage before determining how we can meet our
longterm obligations, including paying down the debt.
Mr. McGOVERN. Mr. Speaker, I rise today in strong opposition to H.R.
3, the Economic Growth and Tax Relief Act of 2001. While I strongly
support giving money back to hard-

[[Page H793]]

working Americans and to the families that need a tax cut, this is not
the right way to do it.
While current economic projections show that we might see a
significant budget surplus, the projections are just that--projections.
We must be very cautious with these forecasts because the money we
spend today--on tax cuts or on necessary programs--will be directly
drawn from the projected surplus. Before Congress and the new
Administration begin spending this surplus, we must take steps to
ensure that our economy does not return to the budget deficits of the
1980s and early 1990s.
There are several reasons I am opposed to and will vote against H.R.
3.
First and foremost, this tax cut does not provide the necessary
relief to the people who need it most. Instead of providing tax relief
to middle-income families and working Americans, this bill benefits the
most affluent of Americans. The top one percent of the income
distribution would receive 43 percent of the tax benefits. This means
that people whose incomes average over $900,000 per year would receive
an average annual tax cut of $46,000! Yet many moderate- and low-income
families will receive little or no benefit.
For example, while the top one percent of income earners receive tax
breaks, an estimated 224,000 low and moderate income families in
Massachusetts will not benefit from this plan. 28 percent of families
living in Massachusetts will not benefit from this tax cut because
their incomes are too low to owe federal income taxes.
Second, the U.S. House of Representatives is considering this tax cut
without having considered or approved a budget. Instead of crafting and
debating a budget for the next fiscal year, the majority party has
rushed this tax bill for a vote at the expense of other priorities. The
budget is the framework for all spending in the next fiscal year,
including tax policy. Without a budget, we are endangering important
priorities like education, health care, public safety, environmental
protection, Social Security and Medicare.
This tax cut is nothing more than a replay of Reaganomics--the rich
will get the tax cut, promises will be made that the money the rich
receive will trickle down to the rest of us, and the nation will return
to deficit spending.
Instead, we should move forward with a blueprint that has provided us
with record surplus projections and has allowed us to consider such
vital programs as a prescription drug benefit. We must protect and
extend the Social Security and Medicare Trust Funds. We must continue
to pay down the debt. As we pay down the debt, the surplus will
continue to grow and we will be better able to pay for the priorities
that are vital to all Americans.
We must not ignore our responsibilities to all Americans by providing
tax breaks to just a few. I urge a no vote on H.R. 3.

Amendment in the Nature of a Substitute Offered by Mr. Rangel

Mr. RANGEL. Mr. Speaker, I offer an amendment in the nature of a
substitute on behalf of myself, the gentleman from North Dakota (Mr.
Pomeroy); the gentleman from Rhode Island (Mr. Langevin); the gentleman
from California (Mr. Honda); the gentlewoman from California (Mrs.
Davis); the gentleman from Oklahoma (Mr. Carson); and the gentleman
from Missouri (Mr. Gephardt), the Democratic leader.
The SPEAKER pro tempore. The Clerk will designate the amendment in
the nature of a substitute.
The text of the amendment in the nature of a substitute is as
follows:
Amendment in the nature of a substitute offered by Mr. Rangel:
Strike all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE.

(a) Short Title.--This Act may be cited as the ``Tax
Reduction Act of 2001''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is
expressed in terms of an amendment to, or repeal of, a
section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal
Revenue Code of 1986.
(c) Section 15 Not To Apply.--No amendment made by this Act
shall be treated as a change in a rate of tax for purposes of
section 15 of the Internal Revenue Code of 1986.

TITLE I--INDIVIDUAL INCOME TAX RATE REDUCTIONS; EXPANSION OF EARNED
INCOME CREDIT ASSISTANCE

SEC. 101. INDIVIDUAL INCOME TAX RATE REDUCTIONS.

(a) In General.--Section 1 is amended by adding at the end
the following new subsection:
``(i) 12 Percent Rate Bracket.--
``(1) In general.--In the case of taxable years beginning
after December 31, 2000--
``(A) the rate of tax under subsections (a), (b), (c), and
(d) on taxable income not over the initial bracket amount
shall be 12 percent, and
``(B) the 15 percent rate of tax shall apply only to
taxable income over the initial bracket amount.
``(2) Initial bracket amount.--For purposes of this
subsection--
``(A) In general.--Except as provided in subparagraph (B),
the initial bracket amount is--
``(i) $20,000 in the case of subsection (a),
``(ii) 80 percent of the dollar amount in clause (i) in the
case of subsection (b), and
``(iii) 50 percent of the dollar amount in clause (i) in
the case of subsections (c) and (d).
``(B) Phasein.--The initial bracket amount is--
``(i) \1/4\ the amount otherwise applicable under
subparagraph (A) in the case of taxable years beginning
during 2001, and
``(ii) \1/2\ such amount otherwise applicable under
subparagraph (A) in the case of taxable years beginning
during 2002.
``(3) Inflation adjustment.--
``(A) In general.--In the case of any taxable year
beginning in a calendar year after 2003, the $20,000 amount
under paragraph (2)(A)(i) shall be increased by an amount
equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment determined under
subsection (f)(3) for the calendar year in which the taxable
year begins, determined by substituting `calendar year 2002'
for `calendar year 1992' in subparagraph (B) thereof.
``(B) Rounding rules.--If any amount after adjustment under
subparagraph (A) is not a multiple of $50, such amount shall
be rounded to the next lowest multiple of $50.
``(4) Adjustment of tables.--The Secretary shall adjust the
tables prescribed under subsection (f) to carry out this
subsection.''
(b) Adjustment in Computation of Alternative Minimum Tax.--
Paragraph (2) of section 55(a) is amended to read as follows:
``(2) the sum of--
``(A) the regular tax for the taxable year, plus
``(B) in the case of an individual, 3 percent of so much of
the individual's taxable income for the taxable year as is
taxed at 12 percent.''
(c) Repeal of Reduction of Refundable Tax credits.--
(1) Subsection (d) of section 24 is amended by striking
paragraph (2) and redesignating paragraph (3) as paragraph
(2).
(2) Section 32 is amended by striking subsection (h).
(d) Conforming Amendment.--Subclause (II) of section
1(g)(7)(B)(ii) is amended by striking ``15 percent'' and
inserting ``12 percent''.
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.
(f) Protection of Social Security and Medicare.--The
amounts transferred to any trust fund under the Social
Security Act shall be determined as if this Act had not been
enacted.

SEC. 102. MODIFICATIONS TO EARNED INCOME TAX CREDIT.

(a) Increases in Percentages and Amounts Used to Determine
Credit; Marriage Penalty Relief.--
(1) In general.--Subsection (b) of section 32 is amended to
read as follows:
``(b) Percentages and Amounts.--
``(1) Percentages.--The credit percentage, the initial
phaseout percentage, and the final phaseout percentage shall
be determined as follows:

The initial The final
``In the case of an eligible The credit phaseout phaseout
individual with: percentage percentage percentage
is: is: is:

1 qualifying child............ 34 15.98 18.98
2 or more qualifying children. 40 21.06 24.06
No qualifying children........ 7.65 7.65 7.65

``(2) Amounts.--
``(A) In general.--The earned income amount and the initial
phaseout amount shall be determined as follows:

The initial
``In the case of an eligible The earned income phaseout amount
individual with: amount is: is:

1 qualifying child............... $8,140 $13,470
2 or more qualifying children.... $10,820 $13,470
No qualifying children........... $4,900 $6,130.

In the case of a joint return where there is at least 1
qualifying child, the initial phaseout amount shall be $2,500
greater than the amount otherwise applicable under the
preceding sentence.
``(B) Final phaseout amount.--The final phaseout amount is
$26,000 ($28,500 in the case of a joint return).''
(2) Modification of computation of phaseout.--Paragraph (2)
of section 32(a) is amended to read as follows:
``(2) Phaseout of credit.--The amount of the credit
allowable to a taxpayer under

[[Page H794]]

paragraph (1) for any taxable year shall be reduced (but not
below zero) by the sum of--
``(A) the initial phaseout percentage of so much of the
total income (or, if greater, the earned income) of the
taxpayer for the taxable year as exceeds the initial phaseout
amount but does not exceed the final phaseout amount, plus
``(B) the final phaseout percentage of so much of the total
income (or, if greater, the earned income) of the taxpayer
for the taxable year as exceeds the final phaseout amount.''
(3) Total income.--Paragraph (5) of section 32(c) is
amended to read as follows:
``(5) Total income.--The term `total income' means adjusted
gross income determined without regard to--
``(A) the deductions referred to in paragraphs (6), (7),
(9), (10), (15), (16), and (17) of section 62(a),
``(B) the deduction allowed by section 162(l), and
``(C) the deduction allowed by section 164(f).''
(4) Conforming amendments.--
(A) Subsection (j) of section 32 is amended to read as
follows:
``(j) Inflation Adjustment.--
``(1) In general.--In the case of any taxable year
beginning after 2002, each of the dollar amounts in
subsection (b)(2) shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f)(3), for the calendar year in which the taxable
year begins, determined by substituting `calendar year 2001'
for `calendar year 1992' in subparagraph (B) thereof.
``(2) Rounding.--If any dollar amount, after being
increased under paragraph (1), is not a multiple of $10, such
dollar amount shall be rounded to the nearest multiple of
$10.''
(B) Subparagraph (C) of section 32(c)(1) is amended by
striking ``modified adjusted gross income'' and inserting
``total income''.
(C) Paragraph (2) of section 32(f) is amended to read as
follows:
``(2) Requirements for tables.--
``(A) In general.--The provisions of subsection (a)(1) and
the provisions of subsection (a)(2) shall be reflected in
separate tables prescribed under paragraph (1).
``(B) Subsection (a)(1) table.--The tables prescribed under
paragraph (1) to reflect the provisions of subsection (a)(1)
shall have income brackets of not greater than $50 each for
earned income between $0 and the earned income amount.
``(C) Subsection (a)(2) table.--The tables prescribed under
paragraph (1) to reflect the provisions of subsection (a)(2)
shall have income brackets of not greater than $50 each for
total income (or, if greater, the earned income) above the
initial phaseout threshold.''
(b) Repeal of Denial of Credit Where Investment Income.--
Section 32 is amended by striking subsection (i).
(c) Earned Income To Include Only Amounts Includible in
Gross Income.--
(1) In general.--Section 32(c)(2)(A)(i) (defining earned
income) is amended by inserting ``, but only if such amounts
are includible in gross income for the taxable year'' after
``other employee compensation''.
(2) Conforming amendment.--Section 32(c)(2)(B) is amended
by striking ``and'' at the end of clause (iv), by striking
the period at the end of clause (v) and inserting ``, and'',
and by adding at the end the following new clause:
``(vi) the requirement under subparagraph (A)(i) that an
amount be includible in gross income shall not apply if such
amount is exempt from tax under section 7873 or is derived
directly from restricted and allotted land under the Act of
February 8, 1887 (commonly known as the Indian General
Allotment Act) (25 U.S.C. 331 et seq.) or from land held
under Acts or treaties containing an exception provision
similar to the Indian General Allotment Act.''
(d) Modification of Joint Return Requirement.--Subsection
(d) of section 32 is amended to read as follows:
``(d) Married Individuals.--
``(1) In general.--If the taxpayer is married at the close
of the taxable year, the credit shall be allowed under
subsection (a) only if the taxpayer and his spouse file a
joint return for the taxable year.
``(2) Marital status.--For purposes of paragraph (1), an
individual legally separated from his spouse under a decree
of divorce or of separate maintenance shall not be considered
as married.
``(3) Certain married individuals living apart.--For
purposes of paragraph (1), if--
``(A) an individual --
``(i) is married and files a separate return, and
``(ii) has a qualifying child who is a son, daughter,
stepson, or stepdaughter of such individual, and
``(B) during the last 6 months of such taxable year, such
individual and such individual's spouse do not have the same
principal place of abode,
such individual shall not be considered as married.''
(e) Expansion of Mathematical Error Authority.--Paragraph
(2) of section 6213(g) is amended by striking ``and'' at the
end of subparagraph (K), by striking the period at the end of
subparagraph (L) and inserting ``, and'', and by inserting
after subparagraph (L) the following new subparagraph:
``(M) the entry on the return claiming the credit under
section 32 with respect to a child if, according to the
Federal Case Registry of Child Support Orders established
under section 453(h) of the Social Security Act, the taxpayer
is a noncustodial parent of such child.''
(f) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001.

TITLE II--MARRIAGE PENALTY RELIEF

SEC. 201. MARRIAGE PENALTY RELIEF.

(a) Standard Deduction.--
(1) In general.--Paragraph (2) of section 63(c) (relating
to standard deduction) is amended--
(A) by striking ``$5,000'' in subparagraph (A) and
inserting ``twice the dollar amount in effect under
subparagraph (C) for the taxable year'',
(B) by adding ``or'' at the end of subparagraph (B),
(C) by striking ``in the case of'' and all that follows in
subparagraph (C) and inserting ``in any other case.'', and
(D) by striking subparagraph (D).
(2) Increase allowed as deduction in determining minimum
tax.--Subparagraph (E) of section 56(b)(1) is amended by
adding at the end the following new sentence: ``The preceding
sentence shall not apply to so much of the standard deduction
under subparagraph (A) of section 63(c)(2) as exceeds the
amount which would be such deduction but for the amendment
made by section 201(a)(1) of the Tax Reduction Act of 2001.
(3) Technical amendments.--
(A) Subparagraph (B) of section 1(f)(6) is amended by
striking ``(other than with'' and all that follows through
``shall be applied'' and inserting ``(other than with respect
to sections 63(c)(4) and 151(d)(4)(A)) shall be applied''.
(B) Paragraph (4) of section 63(c) is amended by adding at
the end the following flush sentence:
``The preceding sentence shall not apply to the amount
referred to in paragraph (2)(A).''.
(c) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2000.
The SPEAKER pro tempore (Mr. LaHood). Pursuant to House Resolution
83, the gentleman from New York (Mr. Rangel) and a Member opposed each
will control 30 minutes.
Mr. THOMAS. Mr. Speaker, I do rise, along with the entire Republican
leadership and every Republican member of the Committee on Ways and
Means and the vast majority of Republicans in opposition to the
substitute.
The SPEAKER pro tempore. The gentleman from California (Mr. Thomas)
claims the time in opposition.
The Chair recognizes the gentleman from New York (Mr. Rangel).
Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume. I
would note that the gentleman from California (Mr. Thomas) did not
mention the Republican President that I assume is still trying to be
bipartisan.
Mr. Speaker, as we have said, we all would like to have a tax cut.
Some of us believe that it should be responsible; all of us hope that
it would be bipartisan. We want it to be fair, we want it to be honest,
we do not want the hidden costs, as we see with the major bill that is
on this floor today.
We think that it is unfair that 44 percent of the tax bill that is
before us would go to 1 percent of the taxpayers, and those other
people who make over $373,000 each year. What we have done is created a
new 12 percent rate bracket for the first $20,000 of taxable income;
and truly, all people would enjoy some type of tax relief.
But another issue which I hope will be discussed during the debate is
that Republicans like to say, if you do not pay income taxes, do not
expect an income tax return. Well, for 80 percent of the hard-working
people that pay payroll taxes, they think it is a tax on their income.
They work hard every day, and they do not get any relief under this
bill. So we do not tinker and stop the flow of the money to Social
Security or to Medicare, but we do create in our substitute an
expansion of the earned income tax credit, so that we would provide a
cushion for these hard-working people. The Republican bill does not
deal with the marriage penalty. What we do is create a double standard
deduction that is twice the standard deduction that would be available
to the single people.
I admit that we are concerned about the people that are in high-
income States too, because under the Republican bill, the deductibility
of local and State taxes will be prevented by a mechanism that is
referred to as the alternative minimum tax. We raised this to the
chairman, but the Republicans obviously say ``manana,'' or tomorrow,
they will take care of it. They will take care of the estate taxes,
they will take care of the marriage penalty, they will take care of the
deficit that might result as a result of their bill.

[[Page H795]]

So I am hoping that at this time we would reject the Republican bill
that is before us. It is not bipartisan; it has not been discussed with
us. We think that this substitute is fiscally responsible; we think it
is fair; we think it is honest; and, unlike H.R. 3, we think that it
warrants the support of Republicans and Democrats, and we urge our
colleagues to support it.
Mr. Speaker, I reserve the balance of my time.
Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
Again, I guess I am just a little bit confused. I thought that what
we heard for the last hour was how quickly Republicans were moving, and
that we just should not really move this quickly on a tax cut. I
thought I just heard my friend and colleague from New York now indicate
that we are not moving in this tax bill on the marriage penalty, on the
death tax, on child credit, on alleviating the alternative minimum tax;
and they just wonder if we are ever going to move.
I would tell the gentleman that, just as the President in the joint
session in the well said that he wanted immediate tax relief for all
Americans, which we are providing today, he also mentioned that we
should have a child credit increase; that we should fix the marriage
penalty; that we should eliminate the death tax. And we are going to do
all of those.
I look forward to working with my colleague as we go forward in
putting those tax packages together. It is March, and I do apologize to
the gentleman because we do not have all of those other portions of the
President's plan in front of us today, but I know that we will work
diligently in committee; and before this month is out, very likely, we
will be able to present the rest of the President's package.
So I do take the admonition about moving quickly for the other parts
of the package, and I look forward to the gentleman working with us.
Today is not the day, however; and today is to pass the heart of the
President's program, and that is the rate reductions, the lowering of
the fundamental structure of taxes for all income tax payers. That is
what H.R. 3 does, and that is why we support the bill rather than this
quickly conceived, hastily thrown together substitute.
Mr. RANGEL. Mr. Speaker, would the distinguished and articulate
chairman of the Committee on Ways and Means yield?
Mr. THOMAS. Mr. Speaker, I would certainly yield to the gentleman
from New York on his time.
Mr. RANGEL. Well, the gentleman is not yielding then. That is
parliamentary. It is impossible for him to do that. Has the gentleman
from California no sense of how this House is supposed to operate? How
can the gentleman yield to me on my time? I asked the gentleman to
yield. That is unfair.
Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 2 minutes to the
gentleman from New York (Mr. Houghton), a valued member of the
Committee on Ways and Means, and a gentleman who understands the rules.
Mr. HOUGHTON. Mr. Speaker, I wish this were a little more evenly
balanced in terms of a bipartisan approach, but evidently we are
dealing with things which have been triggered by the White House, and
we have to follow that route.
Look, there are certain things about the Republican bill that I do
not particularly like. It is a very uncertain future. Who knows what is
going to happen in 10 years? Also, there are some things in terms of
child credits and in terms of a whole variety of things such as
alternative minimum taxes that maybe should be considered, but there
are certain things we do know. We know we are dealing with a huge
surplus, a gargantuan surplus; and irrespective of what happens here in
terms of the economy, we have a lot of area to play with. And it seems
to me that what we want to do is to stretch and give as much as
possible back to the people, where this money came from.
I used to be in business, and if one said to the stockholders and the
employers in the business, look, we have been losing money for 30
years, which is exactly what the Federal Government has done, and now
we are beginning to make a little bit, and what we want to do is to
thank you for holding with us and we want to give you a dividend
increase, we want to give you a salary increase; we are going to pay
back our debts, but we are not going to pay them back all at once
without taking care of you, we are going to do it in a balanced way. It
seems to me that this is the whole premise of the Republican budget,
and I support it.
Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from
California (Mr. Stark), a senior member of the Committee on Ways and
Means.
Mr. STARK. Mr. Speaker, I am so happy to follow my distinguished
colleagues on the other side of the aisle from California and from New
York. The gentleman who preceded me is arguably somewhat more wealthy
than I am, and I think I would just like to explain in terms he and I
can understand.
Mr. THOMAS. Mr. Speaker, will the gentleman yield briefly?
Mr. STARK. No.
Mr. THOMAS. Mr. Speaker, I do not believe there is any argument.
Mr. STARK. Regular order, Mr. Speaker.
It is pretty clear, because I talked to my colleagues a few months
ago about why I did not intend to support removing the inheritance tax
to make my children even richer than they will be, and so I am here
today to explain to my colleagues in the simplest terms about what
greed has done.
I know the gentleman from New York (Mr. Houghton) will do far better
than I will on this, but my accountant tells me that under the
Republican plan, I will save $28,253.82. Under the Democratic
alternative as proposed by our distinguished ranking member and the
Democrats, I would save $737, a difference of $27,500.
My father-in-law is a retired teamster in San Marino, California. He
has had a small business. He and people under $44,000 a year will
receive $316 under the Bush plan, $289 under ours, a $25 difference.
The $27,500 that my Republican colleagues are giving to Members of
Congress is going to us instead of paying for a drug benefit for
seniors. That is what is the issue today. The Republicans would destroy
Medicare and Social Security by giving the money to the gentleman from
New York (Mr. Houghton) and to me who arguably do not need it and deny
decent benefits to the seniors in this country. It is clear.
Mr. THOMAS. Mr. Speaker, as someone who clearly does not have that
dilemma in front of him, I yield 2 minutes to the gentleman from
Oklahoma (Mr. Watkins), a valued member of the Committee on Ways and
Means.
Mr. WATKINS. Mr. Speaker, I have a great deal of respect for the
gentleman from New York (Mr. Rangel). I support this bill because I
truly believe we must stimulate the economy.

{time} 1530

When you have Alan Greenspan, Chairman of the Federal Reserve,
lowering the interest rates twice in January, and the economic
indicators have been down. They need to be stimulated in order for us
to build jobs and build the economy. We must not let the economy go
into a tailspin.
There are a lot of people that like to point out that it does not go
far enough. I agree there. And let me say to the gentleman from New
York (Mr. Rangel), if he does not believe in tax reduction, let me have
the gentleman's capital gains tax reductions that the gentleman has
with the empowerment zones.
Let me also have the gentleman's tax credits that the gentleman has
in Harlem and also the accelerated depreciation, and if the gentleman
gives me all of those, I will back off because I know tax reduction
works.
The gentleman from New York (Mr. Rangel), my good friend, knows it
works, because that is the only hope to stimulate that economy in
Harlem. Just like I have high hopes that I can get industry into the
lower income rural economic depressed areas of Oklahoma where we have
had out-migration. We have lost our population. We have had welfare,
low per capita income.
The tax reductions do work, because we have to have the economic
opportunities to stimulate jobs. Some people like to point back and say
look at Ronald Reagan's time. That was totally a different time 20
years ago.
If my colleagues remember, that budget was built by David Stockman
with inflated figures. Does the gentleman remember that? They were out

[[Page H796]]

of bounds. We did not have a balanced budget.
Today we have a balanced budget. In fact, we are paying down debt. We
do not have a huge military buildup like we had back at that time
either. Circumstances are a lot different.
Let me say I stand in support of this tax bill and let us send part
of this surplus back to our taxpayers.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentlewoman from
Texas (Ms. Eddie Bernice Johnson), the chairwoman of the Congressional
Black Caucus.
(Ms. EDDIE BERNICE JOHNSON of Texas asked and was given permission to
revise and extend her remarks.)
Ms. EDDIE BERNICE JOHNSON of Texas. Mr. Speaker, I thank the
gentleman from New York (Mr. Rangel) for yielding the time to me.
The Congressional Black Caucus supports the Democratic alternative to
the Bush tax plan, because it really is better. However, the
Congressional Black Caucus believes that before we do any tax cut, we
do need a budget plan.
I just heard the gentleman, a friend, talk about wanting to stimulate
jobs. The last administration stimulated 22 million jobs. We are not in
a crisis for a tax break.
The Democratic plan calls for a $900 billion tax cut that is fiscally
responsible and fair to the average American. The Democratic plan
contains a new 12 percent bottom bracket that would cut taxes on all
individuals up to $300 and to all couples $600 annually, not just the
top 1 percent.
The plan contains a married penalty relief for couples who use the
standard deduction and for the tax relief for married couples who
utilized the earned income tax credit.
Mr. Speaker, the Congressional Black Caucus supports the Democratic
alternative to the Bush tax plan, because it is better. However, the
Congressional Black Caucus believes that before we do any tax cut we
need to have a budget plan.
The Democratic plan calls for a $900 billion tax cut that is fiscally
responsible and fair to average Americans.
The Democratic plan contains: a new 12 percent bottom bracket that
would cut taxes on all individuals up to $300 and to all couples up to
$600 annually; the plan also contains marriage penalty relief for
couples who use the standard deduction and further tax relief to
married couples who utilize the earned income tax credit; and the plan
includes estate tax relief that would eliminate this tax for over two-
thirds of all estates that are currently subject to this tax.
The Democratic plan protects Social Security and Medicare. It
reserves one-third of the projected $2.7 billion surplus so that we can
meet our obligations to the Baby Boomers when they start to retire in
2008.
This Democratic plan leaves enough money for investment priorities
that even the administration has said they support, such as improving
education and providing a real prescription drug benefit for senior
citizens.
The Democratic tax cut also lets us pay down the debt rapidly by
setting aside one-third of the projected surplus for debt reduction.
Every American benefits from this because everyone will at some point
want to own a home, or buy a new car. Paying down the debt ensures that
interest rates on loans will stay low, meaning lower monthly mortgage
and car payments.
The slowdown in the economy does require a tax cut to ensure that a
full scale recession does not occur.
Tax cuts should be fair to the average American family. The
President's plan is not. The Citizens for Tax Justice organization
performed independent analysis that found that the President's plan
provides an average $46,000 tax cut to the top 1 percent of taxpayers
while leaving only an average tax cut of $227 for the lowest 60 percent
of working families.
The President's plan is also fiscally irresponsible. It raids the
surplus, threatens Social Security and Medicare, and leaves no room for
important investments like education and health care.
The President's plan threatens economic prosperity by reversing all
the progress that was made during the last administration. It will
plunge the country back into deficit spending just like President
Reagan's tax cuts of the 1980s.
The President's plan even threatens Medicare and Social Security
because it leaves no room for error if the economy does not grow as
quickly as current projections.
Mr. Speaker, we need a budget plan before voting on any tax cuts.
However, the Democratic alternative is the better tax approach.
Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 2 minutes to the
gentleman from Virginia (Mr. Goodlatte).
Mr. GOODLATTE. Mr. Speaker, I thank the gentleman from California
(Mr. Thomas), the chairman of the Committee on Ways and Means, for
yielding the time to me and for his strong leadership in bringing this
bill to the floor.
Mr. Speaker, I rise in opposition to the Democratic substitute and in
support of H.R. 3, the Economic Growth and Tax Relief Act. This is very
simple, what we are about here. This is money that was earned by the
American people. They have paid it.
The government is taking in far more, far more than we are spending,
and it is appropriate to give it back. It is a lot like if someone
baked a batch of cookies and put them all out on a plate on the table
at one time, watch and see what happens to it. In most families, they
are going to go just like that. That is why we have to give this money
back to the taxpayers, and we need to do it in a responsible way,
because if we leave that money here, that plate of cookies right here,
they are going to spend it.
It is entirely appropriate that instead of doing that, we provide for
a reduction in statutory tax rates under the individual income tax. A
vital step towards reducing the complexity of our tax process is
reducing taxes in general. Instead of squandering the surplus on
wasteful government spending, the Bush administration and Congress are
working to ensure that government provides tax relief to all Americans.
Mr. Speaker, by reducing the current five tax brackets into four and
making the new 12 percent rate retroactive, Washington will return hard
earned dollars to those who earned it, the American citizens. This bill
allows people to make choices on how to best spend their money.
The government should not be making that decision for them. This is
the heart, the heart of President Bush's tax plan, and I urge my
colleagues to support this bill.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentlewoman from
Missouri (Ms. McCarthy).
(Ms. McCARTHY of Missouri asked and was given permission to revise
and extend her remarks.)
Ms. McCARTHY of Missouri. Mr. Speaker, I thank the gentleman from New
York (Mr. Rangel) for yielding me the time.
Mr. Speaker, I rise in opposition to the Republican tax cut plan,
H.R. 3, and in support of the Democratic substitute. I support tax cuts
for all Americans. Under the President's plan, many of American working
families would still be left behind.
The President's tax plan provides each of the wealthiest 1 percent of
the taxpayers $46,000 in relief with the lowest 60 percent of working
families getting a tax cut of just $227, or less than a dollar a day.
This plan leaves working families and children behind.
Mr. Speaker, 30 percent of Missouri's families will be left behind, a
third of Missouri's children will be left behind. I support a tax plan
that focuses its relief on workers and families with children. This is
fairness.
I support a budget that protects Social Security and Medicare and
continues to reduce the national debt. This is fiscal responsibility.
Supporting a tax cut of such magnitude as the President's will leave us
unable to meet the needs of the economy of the American people and
especially the educational needs of our children.
It is not a fair plan nor a responsible fiscal policy, and I urge my
colleagues to vote no on H.R. 3 and support the Democratic alternative.
Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 1 minute to the
gentleman from Michigan (Mr. Smith).
Mr. SMITH of Michigan. Mr. Speaker, I thank the gentleman from
California (Mr. Thomas), chairman of the Committee on Ways and Means,
for yielding the time to me.
Mr. Speaker, the most important reason to have a tax cut is to get
some of this money out of town. It has been mentioned that spending is
the danger.
There are a lot of problems in this country. There are a lot of
problems in the world, and it is easy for politicians to say let us
spend a little more of that available money.
Let me just give my colleagues a quick example, Mr. Speaker, in the
last one, if we would have stuck to the caps that we set on ourselves
for 1997, the baseline for the next 10 years would be

[[Page H797]]

$1.7 trillion less spending than the baseline that exists because of
our expanded spending.
The danger is more and more spending from this body, and it has been
said many times how many people believe that if you leave it on this
political counter in Washington most of it is going to be spent for an
expanded government; that is the worst thing we can do for the future
of the economy.
It is the worst thing we can do for the liability that our kids are
going to have to bail us out of. Let us get some of the money out of
town. Let us be fiscally responsible and start setting priorities.
Mr. RANGEL. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, it amazes me the lack of confidence that these
Republicans have in their leadership as relates to spending, but they
know best.
Mr. Speaker, I yield 1 minute to the gentlewoman from California (Ms.
Lee), who served in the State Finance Committee before she came to the
Congress.
(Ms. LEE asked and was given permission to revise and extend her
remarks, and include extraneous material.)
Ms. LEE. Mr. Speaker, I thank the gentleman from New York (Mr.
Rangel) for yielding me the time.
Mr. Speaker, I rise today to oppose the Bush tax cut plan, which
discriminates against millions of families with children, especially
minority families.
According to the Center for Budget and Policy Priorities, 55 percent
of African American families and 56 percent of Latino families,
including 12 million children, would not receive 1 penny of tax relief
under the Bush tax plan.
Let me read you a quote from a full page ad in the West Coast edition
of the New York Times that ran last week. It says your proposed $1.6
trillion tax cut inadvertently puts our children at risk.
Now this ad, this full page ad, was taken out by a multi-ethnic
coalition of 38 church, community and small business associations in
California, including the California Hispanic Chamber of Commerce, the
California Black Chamber of Commerce, and the National Council of Asian
American Business Associations.
President Bush states that he wants to unify the Nation, but his tax
plan is not a unifying plan. It leaves out many minority families.
Instead of huge tax breaks, we should spend any surplus on education,
on housing, Social Security and paying off the debt.
Mr. Speaker, I submit the following ad I mentioned in my remarks for
the Record:

[From the New York Times, Mar. 1, 2001]

Open Letter to the President--We Support Your Pro-Child Inaugural
Address: Please Create A Pro-Child Tax Cut

``And whatever our views of [poverty's] cause, we can agree
that children at risk are not at fault. Abandonment and abuse
are not acts of God, they are failures of love.'' (Inaugural
Address, Jan. 2001)

Dear President Bush: Your eloquent and compassionate
Inaugural Address will long be remembered if your tax
policies follow the pro-children theme of this address.
Your proposed 1.6 trillion-dollar tax cut inadvertently
puts our children at risk. By its sheer size and focus on the
wealthiest one percent of families (average income of one
million dollars) it jeopardizes the children-at-risk theme of
your compassionate educational and health care projects.
Over half (56%) of all Latino and African American children
live in families that will receive no tax cuts.
Only one in 25 children live in families that will receive
any significant benefits, and virtually all of these families
can presently fully provide for all their children's needs
and wishes.

protect our most precious resource: a $1,200 annual tax rebate for a
family of four

Consistent with the compassionate theme of your Inaugural
Address we support an annual $300 per person tax rebate for
all U.S. residents, including senior citizens. A family of
four would receive $1,200 a year.
Over 95% of children and their families would receive more
under this proposal than under your proposal. And, only the
top one percent of families (average income of one
million dollars) would receive significantly less from the
pro-child proposal than from your proposal. Your proposal
gives these families $63,000 a year in tax cuts in the
first year and close to a million dollars over a ten year
period.
Even the typical senior citizen would benefit. Under your
proposal a widow earning $20,000 would get a rebate of just
$60. Under the $300 per person proposal, she would receive
five times as much.
And, the typical family earning under $80,000 would receive
$233 more per year under this proposal than from your tax cut
proposal.
Unlike your proposal, the $1,200 per family of four
proposal will not jeopardize social security, Medicare,
military spending, or environmental protection, since it will
cost fewer than 90 billion dollars a year and can be adjusted
upward or downward depending on the size of our national
surplus.
This $1,200 rebate will directly and immediately stimulate
the economy and work in tandem with Federal Reserve Chairman
Greenspan's interest rate cuts. It will do so because it can
be provided immediately and 95% of the beneficiaries will use
it for domestic spending such as health care, food, clothing
and housing. In contrast, a tax cut for the super-rich will
either not be spent or expended largely on foreign luxury
goods such as Ferraris.
Mr. President, do not forget our children! Do not put our
most precious resource at risk! Let their families, not the
super-rich determine their future.

``African Americans fully understand the distinction
between complex tax cuts for the super rich and a sweeping
and simple across-the-board cut that equally benefits every
American, including the humble and hardworking factory,
hospital and restaurant workers of America.'' (Reverend J.
Alfred Smith, Jr., co-pastor, Allen Temple Baptist Church)

``Latinos future success is largely dependent upon tax
policies that promote and protect our most precious resource,
our children.'' (Raul Medrano, Chairman, California Hispanic
Chamber of Commerce)

Reverned Mark Whitlock, First AME Church, Los Angeles; Raul
Medrano, California Hispanic Chamber of Commerce; Aubry
Stone, California Black Chamber of Commerce; Gelly Borromeo,
National Council of Asian American Business Associations;
George Dean, Greater Phoenix Area Urban League; Reverend J.
Alfred Smith, Jr., Allen Temple Baptist Church; Jorge
Corralejo, Latin Business Association; Angelina Casillas-
Corona, Hermandad Mexicana Nacional; Leo Avila, American GI
Forum; Mary Ann Mitchell, National Black Business Council;
Stanley H. Hall, Bay Area Urban League; Darlene Mar, Council
of Asian American Business Association; Reverend Stephen
McGlover, Black Business Association; Ben Benavidez, Mexican
American Political Association; George Bivins, Black Business
Association of Los Angeles; Lisa Yuchengco, Asian Pacific
Publishers Association; Gayle Orr-Smith, San Francisco
Business and Professional Women; Calvin Louie, CAABA; Ray
Uzeta, Chicano Federation of San Diego; Manuel Pena, Orange
County Minority Business Council; Arabella Martinez, Spanish
Speaking Unity Council; John Gamboa, The Greenlining
Institute.

Prepared by The Greenlining Institute, A multi-ethnic coalition of 38
church, community, and small business associations, 785 Market Street,
3rd Floor, San Francisco, CA

Mr. THOMAS. Mr. Speaker, I yield myself 45 seconds.
Mr. Speaker, I believe that pretty well clears the air in terms of
what some folks want to do with other people's money.
I believe that the point of the gentlewoman from California (Ms. Lee)
was that there are a number of Americans who do not pay income taxes.
This is a reduction, a permanent reduction in the income tax rate. More
than 60 million women income tax payers will be benefitted. More than
16 million African American income tax payers will be benefitted. More
than 15 million Hispanic American income taxpayers will be benefitted.
Those African Americans, Hispanics and women who will be benefitted
are income taxpayers. The concern of the gentlewoman about those who do
not pay income taxes was addressed by the President when he talked
about needed reform in Social Security.
We will be doing that, and we will be doing it soon.
Mr. Speaker, it is my pleasure to yield 2\1/2\ minutes to the
gentleman from California (Mr. Cox), chairman of the Republican Policy
Committee.
Mr. COX. Mr. Speaker, I thank the gentleman from California (Mr.
Thomas), the distinguished chairman of the Committee on Ways and Means.
Mr. Speaker, the gentleman could not have said it better. Higher tax
rates do not produce jobs. Lower tax rates do.
High tax rates do not help single moms. Lower tax rates do.
High tax rates do not help our kids and our families. Lower tax rates
do.
Mr. Speaker, today, for the first time in 20 years, we had on this
floor a bill that will provide across the board tax rate relief for
every working American, everyone. And, of course, the greatest
percentage relief goes to the lowest end of the income scale.
The last time we did this was the Economic Recovery Tax Act of 1981.
That was the catalyst for the staggering economic growth of the 1980s,

[[Page H798]]

the 1990s, the growth that we are still enjoying today. By reducing tax
rates, we found during the decade of the 1980s that income tax revenues
to the government more than doubles.
The problem was, of course, congressional spending at that time which
more than doubled, but now a fiscally responsible Congress is prepared
to keep a lid on spending.
I do expect that we will live within the 4 percent growth in
discretionary spending that President Bush has laid out for us.
Mr. Speaker, what better time for a tax rate reduction than when we
are enjoying record surpluses, something we were not blessed with back
in the 1980s. Since the 1981 tax rate reduction, the American people
have suffered eight tax hikes, so that today the tax burden on the
American people and the tax burden as a share of this largest economy
in our history is, in fact, the greatest in American history, eclipsing
even the tax burden of World War II, when we were facing a death
struggle with Nazi Germany and imperial Japan.
The need is clear. It is time to reduce tax rates which are placing a
burden on our economy right now, which is the greatest since the
largest war in the history of man.
Mr. Speaker, $2,000 that the average family of four will save because
of this bill will go a long way towards setting this economy back on
the path of economic growth and prosperity for every American.
Mr. Speaker, I want to thank the gentleman from California (Mr.
Thomas), chairman of the Committee on Ways and Means, for his
leadership in bringing this bill to the floor and commend this bill to
my colleagues who I know will vote in its support.
Mr. RANGEL. Mr. Speaker I yield 1\1/2\ minutes to the distinguished
gentleman from Massachusetts (Mr. Neal), a member of the Committee on
Ways and Means.
Mr. NEAL of Massachusetts. Mr. Speaker, what we are essentially being
asked to do today is this, to vote on what economic conditions are
going to be like in 10 years. The gentleman from New York (Mr.
Houghton) had it right on target when he suggested that.
Let me take my colleagues back 10 years. What we were told that we
had to replicate in America 10 years ago were simply Japanese
management practices. If every businessman and businesswomen in America
simply did what the Japanese did, we would be in great shape, and the
prosperity would be just around the corner.
Who among us would argue that today? We were told we were going to
have deficits for the next 25 years. Who would argue that today?

{time} 1545

We were told by Paul Kennedy at Yale with his popular book 10 years
ago that America's best days were behind; and it was widely read and on
the best seller list forever. Who would argue that today? But yet we
are being asked to do precisely that by projecting what economic
conditions will be like a decade from now.
Then we are being told we better do this today so we can stimulate
the economy. The Senate is not going to take this up until spring or
summer, but we are told it has got to be done today. Minimal debate.
Shove it through. Ram it down the minority's throat.
Let me tell my colleagues what we are going to do with AMT. We are
going to make the matter even worse today. Currently, there are 1.5
million taxpayers who are caught in the AMT net. Under current law,
that increases to 20 million in 2011, some with incomes as low as
$50,000. Because of the bill that we have before us today, 15 million
more people are about to pay AMT over the next 10 years. The problem,
cost, $292 billion.
Reject this sham today. We will offer a tax cut here. A reasonable
tax cut targeted to middle-income Americans is where we should be
headed.
Mr. RANGEL. Mr. Speaker, I yield 1\1/2\ minutes to the distinguished
gentleman from Georgia (Mr. Lewis), a member of the Committee on Ways
and Means.
Mr. LEWIS of Georgia. Mr. Speaker, I thank the gentleman from New
York (Mr. Rangel) for yielding me this time.
Mr. Speaker, I rise today in support of the Democratic substitute.
The Republican bill is not the way to go. It is going to take the
country down the wrong road.
This whole thing is unbelievable. It is unreal. In my 15 years in
Congress, I have never seen such a thing. We are now debating the first
part of a $2 trillion tax bill, and we are doing it before we have a
budget. $2 trillion is a lot of money, especially when it is based on
an unreliable 10-year forecast. There are no assurances. There are no
guarantees.
What if we are wrong? What if the surplus does not happen? The
administration, the Republicans, somebody, somebody is not telling the
whole story. They need to be honest with the American people, honest
about the true cost of the bill, honest about what will happen if the
surplus does not materialize, honest about what will happen to Social
Security, to Medicare and other priorities. It is time to tell the
truth, the whole truth, nothing but the truth.
The Republicans are playing with the numbers. It is deceptive. It is
a sham. It is a shame. We should be paying down the debt, saving Social
Security and Medicare, taking care of the basic human needs of all of
our people.
The Republican bill is not right for America. It is not fair, and it
is not just. I urge all of my colleagues to vote against it and vote
for the Democrat substitute.
Mr. THOMAS. Mr. Speaker, it is my real pleasure to yield 2\1/2\
minutes to the gentleman from Louisiana (Mr. McCrery), a very valuable
member of the Committee on Ways and Means.
Mr. McCRERY. Mr. Speaker, I want to talk about debt, because we have
heard from a lot of folks on the other side of the aisle that they are
concerned about debt. They are concerned that this tax cut is too big;
and because it is too big, we will not be able to pay down the debt
that is going to be a burden on our children and grandchildren.
Well, I am glad they are concerned about the debt. It is about time.
But the fact is that we have been paying down debt. The best way to
gauge the level of debt held by the public is to compute that debt as a
percentage of our national income, our Gross Domestic Product.
The Congressional Budget Office baseline, which assumes no tax cut,
some spending increases and everything else going to debt reduction,
tells us the debt in 2006, just 5 years from now, will be 9.4 percent
of our national income, the lowest level since 1917.
Using that same baseline, but assuming we pass the President's $1.6
trillion tax cut, the publicly held debt in 2006 will be about 14
percent of our national income, again, the lowest our debt will have
been since 1917.
Now, let us say that we give the President his $1.6 trillion tax cut
and we spend the rest of the surplus except for that that is
attributable to Social Security and Medicare. Well, the publicly held
debt in 2006 would be 15.1 percent of GDP, the lowest level since 1917.
Well, let us say we will use only the Social Security surplus to buy
down the publicly held debt. In 2006, it would be 16.6 percent of GDP,
except for 1 year, 1929, the lowest level since 1917.
But in his address to Congress just last week, President Bush said he
would like for us to pay down only $2 trillion of debt over the next 10
years. Well, where would that leave us? It would leave the debt at 21.5
percent of GDP, and that would be the lowest level since 1930. And that
is counting the President's tax cut plus increased spending for
education, the military, health research, and Medicare.
We have been paying down the debt. Even with the tax cut and
increased spending over the next 5 years, our debt will be lower than
it has been since 1930. Since 1930, we have lived through the great
depression, World War II, the Korean conflict, the Vietnam war, the
boom times of the 1980s and the 1990s, and it will be the lowest since
any of that occurred.
We can afford a tax cut and pay down the debt. Let us do it.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from
Indiana (Mr. Roemer).
(Mr. ROEMER asked and was given permission to revise and extend his
remarks.)
Mr. ROEMER. Mr. Speaker, about 2 weeks ago, our President stood right

[[Page H799]]

here and gave a very eloquent and moving address to the country,
painting a canvas with a brush of statistics about two Americas, an
American with surpluses and promise and hope, an America with too many
deficits and failing schools.
So the question before this body today is: What do we do with those
surpluses if they show up? Well Alan Greenspan has said urge caution on
tax cuts, both on spending and on tax cuts. Let us make sure that we do
not either spend our way back into deficits or tax our way back into
deficits.
Secondly, this should be a fair process. According to the accounting
firm of Deloitte & Touche, a millionaire with grown children gets a
$47,000 tax break. A middle-class family with two children earning
$55,000 gets $1,900. Let us work in a bipartisan way to get a real tax
cut that we can afford that does not challenge our debt and paying down
that debt and is fair to all Americans.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from
Washington (Mr. Baird).
Mr. BAIRD. Mr. Speaker, I rise today with mixed feelings about the
President's tax bill. Make no mistake, I am in favor of cutting taxes;
and I support making our Federal tax code more fair. In fact, I have
written legislation to reinstate sales tax deductibility. I support
elimination of the marriage penalty and reform of estate taxes.
While it is important that we provide a tax cut, that tax cut must be
passed within the context of a balanced budget. We must pay down the
national debt. We must honor our commitment to Social Security and
Medicare, and we must make important investments in education, health
and defense. Those priorities must not be sacrificed in the name of a
tax cut.
Under the President's plan, vital programs will have to be cut back,
and let me give you a couple of examples: The Federal Emergency
Management Agency and the Small Business Administration are right now
in my district in Washington State helping people recover from a
terrible, devastating earthquake. We must not cut programs to FEMA, to
SBA and other critical investments. How many small businesses will not
get support if we pass this excessively large tax cut. I support tax
cuts, but the President's plan does not do the job the proper way.
Support the Democratic alternative.
Mr. Speaker, I rise today with mixed feelings about the President's
tax relief bill. Make no mistake--I am in favor of cutting taxes and I
support making our federal tax code more fair.
I not only favor tax cuts and tax fairness, I have written
legislation that will reinstate the sales tax deduction for citizens of
states that do not have an income tax. I support relief for those
penalized by the marriage tax. I support estate tax relief. I support
tax cuts that will benefit each and every American. However, we in
Congress have a duty to have an honest, thoughtful debate on the
consequences of a tax cut as large as the one we are considering today,
and that has not happened.
While it's important that we provide a tax cut, I feel strongly that
such tax relief must be passed within the context of a balanced
budget--we must be able to pay down the national debt, we must be able
to honor and strengthen our commitment to Social Security and Medicare,
and we must be able to make important investments in education, health,
conservation, and defense. These priorities cannot be sacrificed.
I also believe it is unwise for the House to pass a large tax cut
before we pass a budget. It just doesn't make sense to talk about
spending trillions of dollars on a tax cut before we have established a
budget that takes into account both spending and revenues. No small
business could operate that way; no family could sustain that kind of
spending--and we in Congress shouldn't do it either.
As I said before, I support eliminating the marriage tax. I support
changing the estate tax system. I want to restore fairness to the tax
code by restoring the sales tax deduction.
But the bill before us makes none of those changes. And worse, I am
afraid that passage of this bill will cause serious hardships for
residents of my home state.
Under the President's plan, the Commerce Department, the
Transportation Department, the Corps of Engineers and the Small
Business Administration will all have to be cut back--some
drastically--to pay for this tax bill.
The Federal Emergency Management Agency (FEMA), which was sent into
action just last week in my district following a devastating
earthquake, is one of those agencies slated for a number of deep cuts.
Let me tell you, we cannot afford to strip down agencies like FEMA,
because if your home or business is wiped out in an earthquake, I don't
care how big a tax cut you get, you're going to need agencies like FEMA
and SBA to be there to help you rebuild your neighborhood and to
rebuild your life.
How many small businesses won't get the SBA loan they need to stay in
business? How many construction projects will the Corps of Engineers
have to defer or abandon because they don't have adequate funding to
move forward? How many roads and bridges will fall into disrepair
because we could not fund transportation projects?
For these reasons, although I support fair and reasonable tax cuts
that would stimulate the economy, I must oppose the tax bill before us
today.
Mr. Speaker, when we make a rush to judgment, we can place vital
programs at-risk. When we spend $1.6 trillion or more without a budget
to show us the impact of that spending, we place our nation's future at
risk.
Vote no on this bill today and let's bring up a tax relief bill that
we can all stand behind.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from Ohio
(Mr. Kucinich), who is the Chair of the Progressive Caucus in the
House.
Mr. KUCINICH. Mr. Speaker, we can be for tax relief, but it makes
sense to see the budget first. The government should not spend money
that it does not have and should not give away money it might need. I
know there are some people with great resources who do not need public
education, Social Security, Medicare, or prescription drug benefit.
Some do not need these programs because they can take care of
themselves.
Mr. Speaker, why give away 43 percent of the tax cuts to the top 1
percent when we may need that money for education, Social Security and
Medicare needed by most Americans. Basic American fairness requires
that we should give the most to the many. Under our alternative,
millions of waitresses, mechanics, nurses, home health aides, teachers
and factory workers would get about $300. Families would get between
$600 and $800.
Mr. Speaker, that proud eagle above our heads spreads its wings to
protect the entire Nation. It is not some bird to be plucked and
stuffed and eaten by a few.
Mr. RANGEL. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from
North Dakota (Mr. Pomeroy), a new, but valuable member of the Committee
on Ways and Means.
Mr. POMEROY. Mr. Speaker, I thank the gentleman for yielding me this
time.
The Rangel substitute represents a better way to proceed on getting
tax relief to the American people, in sharp contrast to the majority
bill which we know is step one of a series of measures committing all
of the general fund surplus based on an optimistic revenue forecast
stretching out 10 years. The Rangel bill is responsible; it fits within
a framework that commits nearly a trillion dollars of the projected
surplus to tax relief, but also recognizes there are other budget
priorities like paying down the debt.
The majority bill backs off of debt retirement. It poses the prospect
that we might dissipate the surplus now and leave the national debt
behind for our children to take care of. The Rangel substitute focuses
tax relief on middle-income families, and as a result, does a better
job of giving them relief than the majority bill. It also gets relief
to the millions of Americans who pay payroll taxes but earn at levels
so modest they do not have income tax liability. They get nothing under
the majority bill; they get relief under the Rangel substitute.
Mr. Speaker, a final strength of the Rangel substitute is that unlike
the majority bill, it fully protects the Social Security and Medicare
trust funds. Folks think the money they pay in payroll taxes and Social
Security and Medicare ought to be used exclusively for those purposes,
but only the Rangel substitute makes that so.
It is time for tax relief, and the Rangel substitute is the right way
to do it.
Mr. THOMAS. Mr. Speaker, I yield 2 minutes to the gentleman from
Florida (Mr. Shaw), a very valuable member of the Committee on Ways and
Means.
Mr. SHAW. Mr. Speaker, I thank the gentleman for yielding me this
time.
I have been sitting on the floor for the last few minutes, and I
heard one Member say we cannot predict with absolute certainty what the
economy is going to be, what revenue is going to be, what spending is
going to be 10 years from now, and then from that

[[Page H800]]

come to a conclusion that the American people do not need a tax
reduction.
If we are waiting for absolute certainty in our projections, the
American people will never get anything back, but then what disturbs me
most is a comment that was just made on the floor a few moments ago
when one Member said the government should not give away money it may
need. The government may not give away money it may need.
Mr. Speaker, this is the taxpayers' money. It is not the government's
money. When the government has enough to operate and to pay down the
debt and to act in a responsible way for the foreseeable future, it is
our obligation to let the American taxpayers keep more of what they
earn.
There are things that we do know with certainty. We do know that
Federal taxes are at the highest level ever since peacetime. Americans
work for more than 4 months just to pay their taxes. We know that with
certainty. The typical American family pays more than 38 percent of its
income in total taxes. We know that. On top of that, households are
facing higher energy prices. My colleagues from the Northeast know
that. The price of oil has doubled over the last 18 months.
Manufacturing activity is at its lowest level since the 1990 recession.
We know that. These are things we know and these are things that we
have to operate on.
The Congress is not going away. We are going to be back year after
year after year. The miracle of our democracy is that we are able to
adjust to the times. We are able to adjust to current circumstances. We
are able to adjust to our economy. Let us pass this tax bill. It is the
taxpayers' money, it is not the government's money.

{time} 1600

Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from
California (Mr. Sherman).
Mr. SHERMAN. Mr. Speaker, before we pass a series of tax cuts
totaling over $2 trillion, we need to know what we can afford. The
Republican plan is based on unreliable projections, no budget
resolution, no administration budget.
Mr. Speaker, this is what a budget for the Federal Government looks
like; yet what we have been given by the administration is this.
Scarcely more than a long political pamphlet. In fact, it is skimpy
compared to the budget of the State of Rhode Island. Mr. Speaker,
perhaps the fuzziest of fuzzy math is to provide no numbers at all.
My colleagues, the President stood where the Speaker stands now and
asked us to think of a struggling unmarried waitress with two kids. Yet
most waitresses, raising two children, get nothing under the
President's plan. Not even a one cent insult tip is left on the table.
The Democratic substitute provides such waitresses with $539 and leaves
$1.5 trillion more to pay off the national debt by 2008.
Let us stand up for Social Security, Medicare, and fiscal
responsibility, and vote for the Democratic substitute.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from
Vermont (Mr. Sanders).
Mr. SANDERS. Mr. Speaker, I thank the gentleman for yielding me this
time.
Mr. Speaker, the Republican proposal is grossly unfair and grossly
irresponsible. At a time when millions of middle-class families are
struggling to keep their heads above water, the Republican proposal
provides 43 percent of the tax breaks to the wealthiest 1 percent, the
people who need it the least, and 12 percent of the benefits to the
bottom 60 percent of the people who need it the most.
Equally important, by providing a huge $1.6 trillion tax break, there
will not be money available in future years to help us in Social
Security, Medicare, Medicaid, veterans needs, and education. Can we
afford a tax cut? Yes. It should be smaller than the President's, and
it should be geared to the middle class and not the wealthy. Support
the Rangel substitute.
Mr. THOMAS. Mr. Speaker, I yield 3 minutes to the gentleman from
Missouri (Mr. Hulshof), a very valuable member of the Committee on Ways
and Means.
(Mr. HULSHOF asked and was given permission to revise and extend his
remarks.)
Mr. HULSHOF. Mr. Speaker, I thank the gentleman for yielding me this
time.
Mr. Speaker, in a few moments, I expect my colleague from Missouri,
the Democratic leader, will be coming to the well of the House and
closing on the Democratic alternative. I find it noteworthy that over
the last 4 years we have had 12 occasions to debate a substantive tax
relief measure, and these are the Congressional Records from those
debates. I note that my colleague from Missouri, who is likely to join
us in a few moments, has spoken in opposition on each and every
occasion save one. My good friend from Missouri has never met a tax cut
that he did not spike.
I go back to the Taxpayer Relief Act of 1997, and we were in the
midst of deficits. As we were debating as a body whether to create an
education savings account, cutting the capital gains tax rates, putting
into place the Roth IRA, here are the statements from my good friend
from Missouri. Let me say this, and I am quoting from the Record, ``I
am a tax reformer. I believe we ought to get less deductions and
exemptions and special treatment. I think we need to get lower rates
for everybody.'' Amen, I say, Mr. Speaker. Vote for H.R. 3. This is
across-the-board relief, where the greatest reductions are going to
those who pay in the lower income tax brackets.
Let us fast-forward a year to 1998, as we were considering the
Taxpayer Relief Act of 1998. On that occasion the gentleman from
Missouri argued against the bill primarily because of his concern about
raiding the Social Security Trust Fund. Again I go to the Record: ``I
am from Missouri. We have a saying in Missouri. Show me. Show me the
trust fund.'' Well, we took that comment to heart as well. I think that
everyone in this Chamber recognizes that this Republican majority has
locked away every penny of the Social Security and Medicare trust funds
and payroll taxes. What we are talking about in this tax relief measure
today is the overpayment of income tax surpluses.
If the Chair would permit me one final example. As we were debating a
year ago the tax relief measure, again I think the gentleman from
Missouri, with his usual rhetorical flourish, came before us and cried
foul about the Republican plan for tax relief, talking about needing to
pay down the debt and pointing out that a family of four earning
$50,000 a year would only receive a refund of about $250. Once again,
we have taken those constructive comments to heart. We are making
unprecedented progress on paying down the national debt. And when the
President's tax plan is fully phased in, that working family of four
making $50,000 a year, that the gentleman from Missouri defended so
vigorously, they will see their tax bill reduced by $1,600 annually.
I suppose through these congressional pages the arguments against tax
relief are myriad and numerous. And I suppose my colleagues could
conjure up any number of reasons to vote ``no.'' Here is a compelling
reason to vote ``yes'': it is not the government's money. On behalf of
hard-working American taxpayers, I join with our President in asking
for a refund, urging my colleagues to vote ``no'' on the Democratic
alternative and ``yes'' on H.R. 3.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from
Minnesota (Mr. Luther).
Mr. LUTHER. Mr. Speaker, I thank the gentleman for yielding me this
time.
Mr. Speaker, Americans deserve to know the truth about the Federal
budget, and they need to know that the surplus money, loosely being
talked about, does not exist. In fact, what is occurring today are
budget projections. That is what is being talked about.
As my colleagues can see from this chart, this shows the surplus
projections from the nonpartisan Congressional Budget Office, that the
current projection could easily be nearly $.5 trillion off in just 5
years. We have a tremendous opportunity here today. Let us not make the
mistakes of the past, but rather let us use common sense and develop a
national budget before we begin to allocate future projections for the
next 10 years.
Let us change the way Washington operates today. Let us function like

[[Page H801]]

real families in the real world. Real families would not risk the
future of this country with deficit financing like what was done in
this country by this Congress just a few years ago.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from
Maryland (Mr. Hoyer), a distinguished member of our delegation here.
Mr. HOYER. Mr. Speaker, welcome to the Great River Boat Gamble of
2001. Today our Republican friends are urging the American people to
take a luxurious vacation into the tax cut casino. But let us remember,
we have not even written our budget yet and do not have any idea
whether or not we can afford it.
Everyone agrees that we ought to have a tax cut, and in 1997 I voted
for that bill to which the gentleman referred. We need tax relief. It
is clear from this fiscally irresponsible bill, however, that the GOP
has not learned a thing from the mistakes of the past.
Twenty years ago, President Reagan assured America we could have it
all, a huge tax cut, a major defense buildup, and a balanced Federal
budget, which he guaranteed us in August of 1981 when he signed the tax
cut. He said it would be balanced by October 1, 1983. We had about a
$100 billion deficit that year alone.
George Bush, our current President's father, said that was voodoo
economics. He was right. It is the taxpayers' money; and, my friends,
the debt is also the taxpayers. Let us be responsible. Let us vote for
the Democratic alternative. Let us make sense for America.
Mr. RANGEL. Mr. Speaker, I yield 2 minutes to the gentleman from
Michigan (Mr. Bonior), our distinguished minority whip, under the very
restrictive time that we have.
Mr. BONIOR. Mr. Speaker, I thank the gentleman for yielding me this
time.
Mr. Speaker, many of us here have served through a number of
administrations. We have seen how each President has had his own
agenda. But they all understood one thing, and that is that they could
not ask Congress to make decisions about taxes unless they had a
budget. It is a matter of fiscal responsibility. Yet this White House
has decided that that rule does not apply to them.
Democrats, as we have heard, want to cut taxes. But what is the White
House response when we point out the President's scheme will cost over
$2 trillion, or when we ask how they are going to pay for improving
Social Security or education or Medicare, or when we ask how we are
supposed to pay down the debt? Trust us, they say. They say trust us,
the money is going to be there. Well, if I can paraphrase former
President Reagan: it is good to trust, but it is better to verify.
It took years to pull ourselves out of the financial hole created by
the last two Republican Presidents, and now this one is proposing that
America jump right back into it. And for what, a tax cut that gives the
richest 1 percent of Americans 43 percent of the breaks, while a
waitress, who has maybe a couple of kids and is making $22,000 a year,
gets nothing at all?
We can provide families with the tax cuts they have earned and still
strengthen Social Security and modernize Medicare and provide for
education and prescription drug care. That is what our substitute does.
Our plan is backed by real numbers, not by empty promises. And unlike
the President's scheme, it will not break the back, it will not burn up
the surplus and plunge America deeper into debt. This country has been
down that road before, Mr. Speaker. Why would we ever want to go back
down that path?
I urge my colleagues to vote ``yes'' for the substitute by the
gentleman from New York, and, if it fails, to vote ``no'' on final
passage.
Mr. THOMAS. Mr. Speaker, I yield 2 minutes and 10 seconds to the
gentleman from Texas (Mr. DeLay), the majority whip.
Mr. DeLAY. Mr. Speaker, I have to say, that the Democrat leadership
has no credibility when it comes to fiscal responsibility. They are the
ones that were in charge and who drove up the debt.
They point to Reaganomics as the reason for the debt going up, but
what they do not point out is that because of the Reagan tax cuts
revenues went up twice, two times as much. The problem was that the
Democrat-controlled House drove spending up three times as much. It is
spending, stupid. It is spending that creates the deficit. It is
spending.
And now, Mr. Speaker, the Democrat substitute amendment is a paltry
half measure that falls far short of the important tax relief that the
American taxpayers deserve and should demand from this Congress. But
there is more at stake here than the simple math of reducing the unfair
tax burden on the American people, and that is that taxes are simply
too high.
Clearly, whenever the Federal Government runs a surplus, taxes are,
by definition, too high. But our opponents would have us believe that a
budget surplus only proves that the Federal Government is not spending
enough. And listening to the debate this afternoon, we have been warned
in a hundred different ways that the sky is going to fall if we simply
allow the taxpaying American public to keep more of what they earn.
Let us just sweep aside all those empty arguments, because this
debate raises a fundamental question: Will we let the Federal
Government spend first and then stick the taxpayers with the bill? They
want to spend the tax surplus; we want to let America keep it. Will we
let the American people determine how high their taxes should be and
then require the Congress to live within its means? That is how it
works for every American family. That is how America runs its small
businesses, and that is how the Federal Government should keep its
books. Only in Washington do we spend the taxpayers' hard-earned money
first and ask questions later.
Our opponents argue that we cannot offer tax relief because the
budget for the next fiscal year has not been completed. But we have a
surplus this year, and we want to help American families this year. We
can do it, we should do it, and we will do it by allowing every
American taxpayer to keep more of what they earn.
Mr. RANGEL. Mr. Speaker, I yield 30 seconds to the gentleman from
Maryland (Mr. Hoyer) to correct the record.
Mr. HOYER. Mr. Speaker, I thank the gentleman for yielding me this
time.
Mr. Speaker, the majority whip has the same tired bogus argument. Let
me remind my Republican friends that from 1981 to 1987 the Senate was a
Republican United States Senate. Let me remind my friends, if they have
forgotten, that Ronald Reagan was President of the United States. Let
me remind my colleagues further that not one bill was vetoed by Ronald
Reagan and had his veto overridden to spend more money. Not one.
So get rid of this bogus argument as to who upped the debt of this
Nation.
Mr. RANGEL. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from
California (Mr. Becerra), a valued member of the Committee on Ways and
Means.

{time} 1615

Mr. BECERRA. I thank the ranking member for yielding me this time.
Mr. Speaker, we need a plan to cut taxes that will be responsible,
that will be fair and will invest in our future. We would not be
allowed to buy a house anywhere in America if we could not prove that
we could pay that mortgage on that home. Yet today Congress is telling
America, we can buy a house, we do not have to tell you where the
budget is, nor do we have to tell you how in the next 10 years we will
get the money. We just have projections and we will assume we will have
the money. Now, if that is considered responsible, then you will see
how we get back to those deficits that we had for years and years and
years.
We finally have a surplus. Let us stick with those surpluses that we
have and not get back into deficit spending. Is it fair? One in three
California families with children will not get anything out of this
Bush tax plan. Does it invest in our future? Well, there will not be
enough money to strengthen Social Security and Medicare. There will not
be enough money to invest in education. There will not be enough money
to promote economic growth in our neighborhood and certainly there will
not be the money to pay down the national debt which will be now
hoisted on our children in the future who will have to pay for our sins
and for our work if we pass this bill.

[[Page H802]]

Let us be fair, let us be responsible, and let us invest in our
future. Let us vote for the Democratic substitute and bring down the
Bush tax plan.
Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 2\1/2\ minutes to
the gentleman from Oklahoma (Mr. Watts), the Conference chairman.
Mr. WATTS of Oklahoma. Mr. Speaker, I would encourage everyone to
take off their Republican and Democrat caps here and just consider
something. We tax the American people from the time they wake up until
the time they go to bed.
When you get up in the morning and you go take a shower, you get
taxed on the water. When you go and eat your breakfast, you get taxed
on your food. When you go and put your clothes on, you get taxed on
your clothes. When you get in your car and go to work and buy fuel, you
get taxed on your fuel. When you go to work and punch the clock you get
taxed on your income. When you come home in the evening, turn on the TV
and you watch Fox News Network or Fox Sports Network or CNN or ESPN,
you get taxed on your cable. And then you go and you fall to your knees
at night, you pray to the true and living God, thank him for the day
you have had, then you get off your knees, kiss your bride good night
and you think that is free, but it is not. You get taxed. You have a
marriage tax. Then if you say I am going to get out of all this and
die, we still get you. We tax death. It is unfair.
The American people are overtaxed. What we are saying in this $1.6
trillion tax relief package, let us take six pennies that comes into
Washington over the next 10 years and give it back to the taxpayers,
give it back to the people that pay the bills in Washington and pay the
bills at home. And then we are going to take 94 cents and put more
money in education, build national defense, take care of Social
Security, pay down the debt, which we have done over the last 3 years.
When the Democrats were in control, I will remind my friends that for
35 years they paid not one dime on the national debt. They spent the
Social Security surplus. We protected that.
What is so bad about giving people some of the money back to help
them buy groceries, pay the utility bills, help buy the kids school
clothes, help pay for the car insurance? What is bad about that? What
is bad about eliminating all of the marriage tax, to say we should not
penalize people simply for saying ``I do.'' That is wrong. We should
not penalize small businesspeople and people who own farms and pay
taxes on them every year and then when they die, the government gets 55
percent of the farm. Why would we be supportive of that? What is bad
about allowing people who have kids to not write off $500 per child,
but $1,000 per child? What is bad about that? I do not understand this.
There are two philosophies here in play. One says we want to keep the
money in Washington and spend it on Washington programs to create power
for ourselves. There is another philosophy that says we want to take
six pennies of every dollar that comes into the system and give it back
to the American people. Vote no on this substitute and yes on final
passage.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from Rhode
Island (Mr. Langevin).
(Mr. LANGEVIN asked and was given permission to revise and extend his
remarks.)
Mr. LANGEVIN. Mr. Speaker, I rise today in strong opposition to H.R.
3 because it flies in the face of the disciplined approach to spending,
commitment to paying down the national debt and responsible tax relief
that I have always advocated.
In my home State of Rhode Island, the Republican plan will leave out
an estimated 34,000 families and their 68,000 children because they do
not have Federal income tax liability. A full 25 percent of Rhode
Island's families with children would not see a cent under H.R. 3.
That is why I have cosponsored and will vote today for the Democratic
substitute. I support a tax package that provides relief to everyone
who pays Federal income or payroll taxes. This plan is fiscally
responsible and offers immediate and fair relief for middle- and low-
income families. What is more, the Rangel substitute will leave enough
room for us to make substantial progress in paying down the national
debt, a goal which should inform every aspect of our budget policy.
Therefore, I urge my colleagues to support the Democratic substitute
and vote against the underlying bill.
Mr. Speaker, I rise today in strong opposition to H.R. 3, the
Economic Growth and Tax Relief Act, because it flies in the face of the
disciplined approach to spending, commitment to paying down the
national debt, and responsible tax relief that I have advocated since I
entered public service 15 years ago. Instead, as a co-sponsor of the
Democratic substitute, I support a tax package that would give relief
to those who need and deserve it the most.
As rosy as the budget surplus projections look now, it is important
to remember that they are in fact only that: projections. We cannot
assume that these projections guarantee a decade or more of windfall
revenues, and such a rash conclusion could lead to our debt spiraling
further out of control. A simple trigger mechanism would halt the
implementation of tax cuts if the surplus does not materialize. This
precaution would safeguard our budget against inaccurate projections,
but H.R. 3 fails to include such commonsense protection.
I would also remind my colleagues that Congress is required to pass a
budget resolution at the beginning of each year precisely because
Members need to know what funding levels are feasible for a broad range
of critical federal programs. Otherwise, Congress risks spending money
the government does not have, which is exactly what will occur with the
passage of H.R. 3.
Let us not forget that just recently we struggled with annual
deficits of up to $290 billion, a national debt of $5.6 trillion, and
interest-only payments on that debt of $300 billion annually. Put into
perspective, those interest payments represented more than we were
spending on Medicare, and almost as much as our entire national defense
budget.
Retiring the national debt is a paramount concern that should inform
every aspect of our budget policy. I want to be secure in the knowledge
that our debt will continue to be reduced and our children and
grandchildren will not have to shoulder the burden of our recklessness.
In addition, paying down the debt will result in one of the best tax
cuts we can provide to America's working families. Reduction and
elimination of the debt will ensure low interest rates and a sound
long-term economic future for the nation.
We all want to reward hard-working families by returning some of
their tax dollars, but this cannot come at the expense of our nation's
future fiscal well-being, nor should we adopt an approach that is so
disproportionately skewed toward the wealthy. I have strong
reservations about the size of the across-the-board tax cut included in
H.R. 3 and the inadequate number of taxpayers who would benefit from
it. Under this measure, an estimated 34,000 families with children,
68,000 children to be exact, in my home state of Rhode Island would not
benefit from the proposed rate cut because they do not have federal
income tax liability. In other words, 25 percent of Rhode Island
families with children would not see a cent of the Republican tax cut!
While they would see no benefit from an income tax cut, these
struggling families would still be required to pay the same payroll tax
as wealthier Rhode Islanders, which is a significantly higher
percentage of their income. For most families, the largest federal tax
burden is their payroll tax, not the income tax. Furthermore, all
families must pay state and local taxes--again, low-income families pay
a considerably larger percentage of their income in such taxes than
wealthier families. That is why H.R. 3 is not a tax cut for all but
rather the few. And that is why I cannot support this bill in its
current form.
Instead, I am cosponsoring the Democratic substitute with the Ranking
Member of the Ways and Means Committee, because it is fiscally
responsible and offers immediate and fair tax relief for middle- and
lower-income families. This measure would create a new 12 percent tax
bracket, give all Americans an across-the-board tax cut, and give those
working families who pay only payroll and federal excise taxes a refund
through expansion of the Earned Income Tax Credit. It also provides
marriage tax penalty relief by doubling the standard deduction for
married couples and leaves room in the budget for consideration of
estate tax relief in the future. Most important of all, under our
alternative, families with children who earn less than $65,000 will
receive equal or larger tax breaks than under the Administration's
proposal.
I ask my colleagues to consider all of our nation's needs. Without a
doubt, taxpayers deserve relief. But they also deserve a strengthened
Social Security system, a Medicare program that covers necessary
prescription drugs, a military that is equipped to protect our nation,
a quality health care system that is affordable and accessible to every
family, and a world-class educational system that prepares our children
for the 21st century. These needs

[[Page H803]]

are great and they must not be ignored. Because--at the end of the
day--I refuse to look into the eyes of our elderly, our children, our
soldiers and our working families and tell them that I traded their
futures for those of the wealthy.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentlewoman from
Florida (Ms. Brown).
Ms. BROWN of Florida. Mr. Speaker, here we go again, another round of
voodoo economics and another huge tax cut for the rich. I encourage my
colleagues to consider the terrible situation in my home State of
Florida, where massive tax breaks for the rich have come at the expense
of much needed services for the poor.
Yesterday, Florida Governor Bush called for even more tax breaks for
the rich while continuing to neglect some of the most pressing issues
facing Florida residents. The Bush tax cuts are like the Reagan cuts
that devastated our economy with huge debts, skyrocketing unemployment
and high interest rates. We have been down that road before and it took
us 20 years to crawl out of that mess.
I would like to remind my Republican colleagues that the American
people did not support the Bush plan. We would not be in this mess if
the coup had not taken place in Florida. There is no mandate for the
Bush plan. He did not win the election. And the majority of the people
did not vote for this irresponsible action of this Congress.
Mr. RANGEL. Mr. Speaker, I yield 1 minute to the gentleman from South
Carolina (Mr. Spratt), the ranking Democrat on the Committee on the
Budget.
(Mr. SPRATT asked and was given permission to revise and extend his
remarks.)
Mr. SPRATT. Mr. Speaker, in 1 minute this chart says it all. These
are the reasons we cannot support this tax bill. It starts with the
surplus, a blue sky surplus estimated at $5.6 trillion. We then back
out what everybody agrees we should back out, the surplus in Social
Security, the surplus in Medicare. That gives us an available surplus
of $2.527 trillion. And what is the cost of this tax cut? When we add
debt service, associated debt service, and when we also add the cost of
extenders we know will be provided and the cost of fixing the AMT, it
is $2.3 trillion. That leaves $207 billion to cover other priorities
and Social Security. It leaves no room for error, no room for other
priorities, no room for Social Security and Medicare.
That is why we are offering a much more moderate substitute that is
balanced and will provide for all of these things, including tax
reduction.
Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 3 minutes to the
gentleman from Texas (Mr. Armey), the majority leader.
Mr. ARMEY. Mr. Speaker, I thank the gentleman for yielding me this
time, and I want to thank the gentleman from California for his
leadership as well.
Mr. Speaker, I have to say I chuckle at what I am hearing here today.
Actually I am amazed. I am hearing all these reasons why we should not
give people tax relief. Have we ever before heard so many reasons for
not doing the right thing?
``It's too big.'' ``It's too soon.'' ``What's the rush?'' ``It's too
risky.'' ``People don't want it.'' ``We can't afford it.'' ``You've got
the cart before the horse.''
Beam me up, Mr. Speaker.
This bill, Mr. Speaker, is the least we can do.
The American people are paying the highest taxes in peacetime
history. Families pay more in taxes than they do on food, clothing and
shelter combined. We have had 15 years of tax rate increases and
retroactive tax hikes. Americans now work 1 hour and 57 minutes out of
each working day just to pay taxes to Washington. The American people
are working hard. They produced these huge tax surpluses. They have
earned some relief. They now deserve something, this year.
Mr. Speaker, this tax relief is the least we can do.
Mr. Speaker, the American people are nervous. They see the economy
slowing, they see their neighbors losing their jobs, they see their
401(k)s and their mutual funds shrinking, while their energy bills
double, triple and even, in California, quadruple. Their credit card
debts are going up. They expect us to do something.
Mr. Speaker, this tax relief is the least we can do.
Over the next 10 years, taxpayers will be overcharged by a staggering
$5.6 trillion. Even after paying down the payable debt, and funding all
our priorities, Washington will still be awash in cash surpluses. If we
do not get that money out of town, it will either be spent or it will
be used to start buying into the private economy. Either way, the
government will grow and personal freedom will suffer, unless we get
our fiscal house in order now. We need to get that money out of
Washington and in the pockets of the American people, and we need to do
this as soon as possible.
And, Mr. Speaker, this tax relief is the least we can do.
Eight years ago, President Clinton raised taxes, retroactively. Two
years ago, he vetoed $792 billion worth of tax reduction that would
have stimulated this economy and would have helped to avoid the current
malaise. He later vetoed marriage tax relief. He vetoed death tax
relief. He even vetoed the repeal of the Spanish-American War telephone
tax. And last year some in the House Democrat leadership actually
opposed our bill to promote retirement savings, a bill that passed with
over 400 votes. Obviously the Beltway liberal elites just do not want
tax relief. They have delayed and obstructed long enough. The time for
action, Mr. Speaker, is now.
And, Mr. Speaker, this tax relief is the least we can do.
But it is not all we should do. This is just the beginning. We are
going to do a lot more. We are going to eliminate the unfair marriage
penalty tax. We are going to eliminate the immoral death tax. We are
going to promote retirement savings. We are going to help people afford
health insurance. And as we fight for fairness, we should not be bound
by some artificial number. We should do what is right for the American
people. Because, Mr. Speaker, it is their money. They earned it. They
produced it. It is theirs.
And this tax relief, Mr. Speaker, is the least we can do.
Mr. Speaker, some people here are saying, ``Enough already.'' Let me
tell you, there is a whole lot more to come.
Mr. RANGEL. Mr. Speaker, I yield the balance of my time to the
gentleman from Missouri (Mr. Gephardt), a voice of reason, the minority
leader of the Democratic Party.
(Mr. GEPHARDT asked and was given permission to revise and extend his
remarks.)
Mr. GEPHARDT. Mr. Speaker, I rise to ask Members to vote against the
tax bill offered by the Committee on Ways and Means and to vote for the
substitute offered by the gentleman from New York (Mr. Rangel). I
arrive at that position for a number of reasons.
First, I think that it is wrong to be taking up a tax bill without a
budget. In fact, without even spending a moment deciding what the
budget will say. By assigning 900 and some odd billion dollars to a tax
cut that this bill encompasses, we are making decisions that will make
it difficult, or different at least, to make other decisions that we
might want to make in the budget, how much debt we are going to pay
down, how much we are going to assign to defense or education or health
care or all the other functions that are in the budget.

{time} 1630

So the cart is in front of the horse, and we should be waiting for
this tax bill until we have considered the budget.
A second reason that I urge Members to look at the Democratic
alternative is because the forecasts that are the premise of the
context for this tax cut bill so often are wrong. In fact, CBO recently
said that they are always wrong. Now, sometimes they are better than we
thought they were going to be; sometimes they are worse.
The other day the weather forecasters said we were going to have a
big snowstorm in the Northeast. A lot of us listened to that forecast.
People decided not to fly. Flights were cancelled. Airports were
closed. People stayed home from work. People went and got shovels and
bought water and flour and bread. Then it did not snow. When it did not
snow, none of us were surprised because often weather forecasts are
wrong.

[[Page H804]]

We are taking an action today, if we vote for this bill, that really
leaves us less alternatives in case the forecasts are wrong. Why would
we want to do that?
The third argument I would make is that the thing we have to keep
most on our mind is what action can we take that will best help the
economy, that will make the economy go forward?
I had lunch the other day with a very wealthy individual, and he said
why are you doing this big tax cut?
I used a lot of the arguments that my friends on the other side of
the aisle make, and that I believe and we all believe, and that is we
have a big surplus and we ought to give taxpayer money back to
taxpayers. That is the right thing to do. That will help the economy.
He said, yes, a tax cut of a reasonable size will be helpful to
people, but he said remember the most helpful thing to all of us is
keeping the economy working. Then he said, think about this: 1 percent
off interest rates would pick up for an average family of four about
$1,500 a year savings in car payments and house payments. If we add
that to a reasonable tax cut, he said, maybe $800 a year, we are going
to wind up putting more money in those people's pockets than by the
larger tax cut that would probably keep interest rates up.
We have to keep in our mind that the goal here is to keep the economy
moving, to keep unemployment down, to keep growth up, and one of the
best ways to do that is to keep interest rates down.
So I argue today, think about what this does to the economy and to
ordinary families in this country who pay interest rates every month.
Another reason that I think we need to reconsider this tax cut and to
go for the smaller alternative is because it allows us to take care of
other alternatives in the budget.
The President has talked very dramatically about what he wants to do
in education. Query: Will we have the funds to do what he wants to do,
what we want to do, in education? Will we be able to take care of
Medicare and Social Security?
Ken Conrad, the other day, made a very important statement. He said
we could make a mistake on a tax cut in 1981 but we did not have $4
trillion in debt at the time and we did not have the baby boomers come
into the Social Security fund 9 years from now. We all voted 2 weeks
ago to put Medicare in a lockbox. The budget the President sent that
encompasses the tax bill, part of which is on the floor today, invades
the Medicare Trust Fund. The lockbox has already been picked if we vote
for this kind of a tax bill.
Do we really want to do that? I do not think so.
Then there is the issue of fairness. If we are going to deliver tax
relief, let us deliver it to the people who most need it. We have 12
million families in this country with 24 million children who will not
get one red cent out of the Republican tax cut. They pay payroll taxes.
They do not pay a lot of income taxes. Our tax bill, on the other hand,
delivers real help to them.
Finally, let me simply say this: President Bush came just a few days
ago to this Chamber. He came to Washington just a few weeks ago to be
inaugurated, and he said he wants to be the uniter and not the divider.
He said he wants to change the culture in this town; he wants to
compromise; he wants to work with all parties and all people to put
together compromise, bipartisan solutions to our problems. His rhetoric
has been welcome. The American people want us to work together in the
middle to get things done, but I must say with all due respect that
this tax-cut bill, coming without a budget, is another my-way-or-the-
highway approach to legislating in this Congress.
The President, my friends on the other side of the aisle, could
easily sit down with the Democrats on the Committee on Ways and Means,
and we could reach an honest compromise on taxes.
Everybody in this Chamber is for tax cuts. It is a question of how
much they cost and to whom they go. Surely in the spirit of real
compromise, we could come together and find an answer to this question
that would get 400 votes on this floor today. We could do that. I
believe that with all my heart.
So I say to my friends on the other side of the aisle, let us stop
this approach to legislating. We are going to have a bipartisan retreat
this weekend and we go in the spirit of trying to find bipartisan
answers, but we cannot just be bipartisan in West Virginia. We have to
be bipartisan in this building, and we have to work together and do the
hard work of finding those compromises that we can both live with. We
should have a tax bill on this floor today that gets over 400 votes.
The American people would appreciate it, and I believe that it is what
the American people told us they want us to do in the election of
November. Vote against this bill. Vote for the Democratic alternative.
Let us do better the next time.
Mr. THOMAS. Mr. Speaker, I yield the remainder of the time to the
gentleman from Illinois (Mr. Hastert), the leader of the House of
Representatives, the Speaker of the House, who has decided with his
leadership that there does not need to be another time.
Mr. HASTERT. Mr. Speaker, I rise today in support of the Economic
Growth and Tax Relief Act of 2001. The name of this legislation is
significant for two reasons. First, this bill promotes economic growth
by returning money to the private sector, alias the American taxpayer.
Who among us can say that the economy does not need a little
encouragement? Consumer confidence is down. Energy prices are up.
Economic growth is stagnant. The economy needs a boost, and this tax
relief will provide that boost.
It will give consumers more money to pay off credit card bills. It
will give families more resources to pay off high energy bills, and it
will give parents more money to pay for education expenses.
It will give the private sector more money so it can grow more.
Second, this tax bill gives taxpayers some relief also. Mr. Speaker,
taxpayers need some relief. They need relief from the highest tax
burden put on taxpayers since the end of the second world war.
Many of these tax incentives were put on taxpayers to help balance
the budget. Well, the budget is balanced. In fact, we now have the
largest tax surplus in our Nation's history. That means the American
people are paying too much in taxes, giving too much of their money to
the government and not enough money to their families. Now is the time
to give taxpayers some relief.
I have heard criticism on this floor from some of our friends on the
other side of the aisle and it is based on that we do not have the
process right. Well, let me say, when we talk about process and we look
at giving people a retroactive tax cut this year, I remember this
year's budget, we passed it last year. We set aside 90 percent of that
surplus, non-Social Security Medicare surplus, 90 percent of it, to pay
down the debt. We took 10 percent of it to give people a tax break.
Well, we passed tax relief out of this House and out of the Senate and
we sent it down to the other end of Pennsylvania avenue, and President
Clinton vetoed that.
We have $8 billion set aside in this year's budget to give people a
retroactive tax break. We ought to do it. It is there. We owe it to the
American people. It is the right thing to do.
I have heard that the argument is based on process and not on
substance. Well, we need to look at substance. I know that many of my
colleagues really want to be for tax relief, but for political reasons
they are now opposed to it. Tax relief goes to the heart of what this
country is all about. There are three things that can be done with a
surplus. Some of it we need to spend. We are going to spend some money
on education and defense and the needs of our people across this
country. We are going to take some of that money, and as of September
30 of this year we will pay down $600 billion in public debt. We need
to do that, but we need to take a fraction of that surplus and we need
to give it back to the American people so that they have it in their
pocket, so that they can make decisions how they are going to spend
that money for their families and their future and education and the
needs of their debt, their credit card debt.
I do not think we ought to let politics get in the way of taking care
of the needs of the American people.
I remember in 1996 standing in this Chamber. In 1996, we were able to
pass

[[Page H805]]

one of the first tax relief bills in a long time, almost over a decade.
As we finished the business of the day and we went into special orders,
I stood over there underneath the balcony and one of my colleagues who
happened to be from Illinois on the other side of the aisle stood up
and he was giving a very, very impassioned speech why we should not
have tax relief for the American people; that we had a lot of
responsibilities; we need to spend that money.
He made a statement and said, the American government cannot afford
to give this money back to the American people. There was a fellow that
stood right up there in that gallery and he came to the front of the
gallery and said, ``What do you mean? It is our money.''
Well, Mr. Speaker, the guards came up and dragged that guy out and we
never heard from him again; but I will say something, that that
gentleman was right, it is their money. It is the money of the American
taxpayers. They deserve some of it back. When we pay too much to Uncle
Sam, he ought to give some back. Do not let politics get in the way of
economic growth. Vote for this common sense tax bill. Vote for a
growing economy and tax relief for the American people.
Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise in opposition of H.R. 3
which provides for only one amendment of this major piece of
legislation. The Republican Leadership has simply pushed this
legislation to the floor with irresponsible tax proposals that will
exceed $2 trillion. I must oppose this legislation which
disproportionately and overwhelmingly benefits the wealthiest
Americans.
Mr. Speaker, these tax cuts would go to one percent of taxpayers with
the highest incomes--a group whose incomes have soared in recent years
and have risen much more rapidly than the incomes of the rest of the
population--and would exceed the new resources proposed for all other
national priorities combined.
The bill reduces federal revenues by $958.2 billion over 10 years,
and represents the first installment of President Bush's proposed $1.62
trillion tax cut plan, accounting for 60 percent of the total cost of
the president's proposal. If enacted, Mr. Speaker, it would effect the
first reduction in federal income tax rates since 1981.
H.R. 3 reduces and restructures federal income tax rates by
consolidating, over a period ending in 2006, the five current rates of
15 percent, 28 percent, 31 percent, 36 percent and 39.6 percent into
four rates--10 percent, 15 percent, 25 percent and 33 percent. The net
effect of these changes, however, would have a number of adverse
consequences for Americans.
For example, a third to one-half of children in many states live in
families that would not receive any tax reduction from the President's
tax proposal, according to a new analysis from the Center on Budget and
Policy Priorities. In 12 states plus the District of Columbia, at least
40 percent of children live in such families. The analysis uses Census
Bureau data to estimate, on a state-by-state basis, the number of
families' whose incomes are too low for them to owe federal income
taxes. The large majority of these families, however, work and pay
payroll taxes and other taxes unaffected by President Bush's proposal.
H.R. 3 reduces only income taxes and taxes on large estates.
This legislation simply is inadequate because substantial numbers of
children in every state would not benefit from the President's plan.
Some states would have especially high numbers of unaffected children.
These states include my state of Texas (2.3 million children
unaffected), California (3.7 million), New York (1.9 million), and
Florida (1.2 million). In each of another eight states--Arizona,
Georgia, Illinois, Michigan, North Carolina, Ohio, Pennsylvania, and
Tennessee--families with at least half a million children would gain
nothing from H.R. 3, the proposed tax plan.
Nationwide, an estimated 12.2 million low--and moderate income
families with children--31.5 percent of all families with children--
would not receive any tax reduction from the Bush proposal. This
funding is consistent with independent analyses conducted by the
researchers from the Brookings Institution, the Urban Institute, and
the Institute on Taxation and Economic Policy. The vast majority of the
excluded families include workers.
The tax plan under consideration would squander all of the funds
necessary for critical investments in the future. We cannot afford to
forgo a surplus that needs to be used for education, prescription
drugs, and ensuring the solvency of Social Security and Medicare.
For these reasons, I look forward to supporting the Democratic
Substitute that provides immediate and fair tax relief for middle
income families and is also fiscally responsible. A new 12 percent tax
bracket would be created, thereby giving an across-the board rate cut
for all Americans--but one which will overwhelmingly benefit middle
income taxpayers.
The tax plan numbers contained in H.R. 3 just do not add up, and the
surplus estimates that have been used are completely unreliable.
Accordingly, I want to urge my colleagues to oppose H.R. 3 and support
the Democratic Substitute that will be offered.
Mr. HONDA. Mr. Speaker, the Majority today is shortchanging middle
and lower income families by giving $688 billion to the wealthiest 1
percent of Americans. Imagine if we gave $688 billion to the poorest
individuals in our nation? Why does this budget seem any less extreme?
Our budget surplus is money that belongs to the American people. Let us
also remember that the deficits and damage that will be caused by this
plan will belong to all of us as well.
Budgets are about choices. American families make these important
choices everyday as they plan for the future. On behalf of the American
people I urge my colleagues to think about our budget as families think
about theirs--as if the lives of your children depended upon it.
Imagine if you had not saved for your retirement, that you owed money
on your credit cards and you could not afford health insurance and then
you came into some extra money that could pay off most of these
obligations. Would you spend the money on a new sports car or secure
your family's future by living up to your obligations? Fiscal
discipline and common sense tell us that we must take care of these
important obligations to secure the future of this great nation--we
have no greater obligation to the families of the United States of
America. For their sake, I urge all of you not to buy the sports car by
voting for the majority plan and instead meet your obligations by
voting for the prudent and balanced alternative.
The SPEAKER pro tempore (Mr. LaHood). Pursuant to House Resolution
83, the previous question is ordered on the bill, as amended, and on
the amendment in the nature of a substitute by the gentleman from New
York (Mr. Rangel).
The question is on the amendment in the nature of a substitute by the
gentleman from New York (Mr. Rangel).
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. RANGEL. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
The Chair will reduce to a minimum of 5 minutes the period of time
within which a vote by electronic device, if ordered, will be taken on
any question incidental to questions on adopting the amendment.
The vote was taken by electronic device, and there were--yeas 155,
nays 273, not voting 5, as follows:

[Roll No. 42]

YEAS--155

Abercrombie
Allen
Baca
Baird
Baldacci
Baldwin
Barcia
Barrett
Becerra
Berkley
Berman
Bishop
Blagojevich
Blumenauer
Bonior
Boswell
Boucher
Boyd
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Clay
Clayton
Clement
Condit
Coyne
Cramer
Crowley
Cummings
Davis (CA)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Dooley
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Filner
Frank
Frost
Gephardt
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Hastings (FL)
Hilliard
Hinchey
Hinojosa
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Levin
Lewis (GA)
Lofgren
Lowey
Luther
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Menendez
Millender-McDonald
Miller, George
Mink
Moakley
Moran (VA)
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Payne
Pelosi
Pomeroy
Price (NC)
Rangel
Reyes
Rivers
Rodriguez
Roemer
Rothman
Roybal-Allard
Rush
Sabo
Sanders
Sawyer
Scott
Sherman
Slaughter
Smith (WA)
Solis
Spratt
Stark
Strickland
Tierney
Turner
Udall (CO)
Udall (NM)
Velazquez
Watt (NC)

[[Page H806]]

Waxman
Weiner
Wexler
Woolsey
Wu
Wynn

NAYS--273

Aderholt
Akin
Andrews
Armey
Bachus
Baker
Ballenger
Barr
Bartlett
Barton
Bass
Bentsen
Bereuter
Berry
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Borski
Brady (PA)
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Clyburn
Coble
Collins
Combest
Conyers
Cooksey
Costello
Cox
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis (FL)
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Doggett
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Fattah
Ferguson
Flake
Fletcher
Foley
Ford
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Harman
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill
Hilleary
Hobson
Hoeffel
Hoekstra
Holden
Horn
Hostettler
Houghton
Hulshof
Hunter
Hutchinson
Hyde
Isakson
Issa
Istook
Jackson (IL)
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Jones (OH)
Kanjorski
Kaptur
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Leach
Lee
Lewis (KY)
Linder
Lipinski
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
Matheson
McCrery
McDermott
McHugh
McInnis
McKeon
Meeks (NY)
Mica
Miller (FL)
Miller, Gary
Mollohan
Moore
Moran (KS)
Morella
Murtha
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Pastor
Paul
Pence
Peterson (MN)
Peterson (PA)
Petri
Phelps
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Rahall
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Ross
Roukema
Royce
Ryan (WI)
Ryun (KS)
Sanchez
Sandlin
Saxton
Scarborough
Schaffer
Schakowsky
Schiff
Schrock
Sensenbrenner
Serrano
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Simmons
Simpson
Sisisky
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Snyder
Souder
Spence
Stearns
Stenholm
Stump
Sununu
Sweeney
Tancredo
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Terry
Thomas
Thompson (CA)
Thompson (MS)
Thornberry
Thune
Thurman
Tiahrt
Tiberi
Toomey
Towns
Traficant
Upton
Visclosky
Vitter
Walden
Walsh
Wamp
Waters
Watkins
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson
Wolf
Young (AK)
Young (FL)

NOT VOTING--5

Ackerman
Lewis (CA)
Shows
Skelton
Stupak

{time} 1707

Messrs. MILLER of Florida, SIMMONS, TIBERI, NUSSLE, SERRANO, MEEKS of
New York, and CONYERS changed their vote from ``yea'' to ``nay.''
Ms. ROYBAL-ALLARD and Mr. ORTIZ changed their vote from ``nay'' to
``yea.''
So the amendment in the nature of a substitute was rejected.
The result of the vote was announced as above recorded.

Motion to Reconsider Offered by Mr. Berry

Mr. BERRY. Mr. Speaker, I move to reconsider the vote whereby the
amendment in the nature of a substitute was rejected.

Motion to Table Offered by Mr. Thomas

Mr. THOMAS. Mr. Speaker, I move to lay the motion to reconsider on
the table.
The SPEAKER pro tempore (Mr. LaHood). The question is on the motion
to table offered by the gentleman from California (Mr. Thomas).
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. BERRY. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. This will be a 5-minute vote.
The vote was taken by electronic device, and there were--yeas 228,
nays 197, not voting 8, as follows:

[Roll No. 43]

YEAS--228

Aderholt
Akin
Bachus
Baker
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Coble
Collins
Combest
Condit
Cooksey
Cox
Cramer
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis (FL)
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hill
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hunter
Hutchinson
Hyde
Isakson
Issa
Istook
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Leach
Lewis (KY)
Linder
Lipinski
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
Mica
Miller (FL)
Miller, Gary
Moore
Moran (KS)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Scarborough
Schaffer
Schrock
Sensenbrenner
Shadegg
Shaw
Shays
Sherwood
Shimkus
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Snyder
Souder
Spence
Stearns
Stump
Sununu
Sweeney
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Traficant
Upton
Vitter
Walden
Walsh
Wamp
Watkins
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson
Wolf
Young (AK)
Young (FL)

NAYS--197

Abercrombie
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Barrett
Becerra
Bentsen
Berkley
Berman
Berry
Bishop
Blagojevich
Blumenauer
Bonior
Borski
Boswell
Boucher
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Clay
Clayton
Clement
Clyburn
Conyers
Costello
Coyne
Crowley
Cummings
Davis (CA)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank
Frost
Gephardt
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Harman
Hastings (FL)
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lofgren
Lowey
Luther
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Moakley
Mollohan
Moran (VA)
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ross
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Sisisky
Slaughter
Smith (WA)
Solis
Spratt
Stark
Stenholm
Strickland
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn

[[Page H807]]

NOT VOTING--8

Ackerman
Armey
Ballenger
Lewis (CA)
Sessions
Shows
Skelton
Stupak

{time} 1716

So the motion to table was agreed to.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. LaHood). The question is on the
engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.

Motion to Recommit Offered By Mr. Stenholm

Mr. STENHOLM. Mr. Speaker, I offer a motion to recommit.
The SPEAKER pro tempore (Mr. LaHood). Is the gentleman opposed to the
bill?
Mr. STENHOLM. I most certainly am in its current form, Mr. Speaker.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:

Mr. Stenholm moves to recommit the bill H.R. 3 to the
Committee on Ways and Means with instructions not to report
the same back to the House before April 15, 2001 (the date
set forth in section 300 of the Congressional Budget Act of
1974 as the date that Congress completes action on the
concurrent resolution on the budget) unless Congress has
completed action on the concurrent resolution on the budget
for fiscal year 2002 before that date.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Texas (Mr. Stenholm) is recognized for 5 minutes on his motion to
recommit.
Mr. STENHOLM. Mr. Speaker, this motion to recommit is very
straightforward. It simply requires that we do what the law requires us
to do, what any family or small business has to do, put in place a
budget before we make decisions that will affect our Nation's finances
for the next decade and beyond.
This debate is not about whether we should cut taxes. Everyone in
this body agrees that the American people deserve tax relief. The Blue
Dogs have repeatedly called for the largest tax cut we can afford that
fits within the context of a fiscally responsible long-term budget
framework.
Within an honest and responsible budget, we can eliminate the
marriage penalty, provide estate tax relief for small businesses,
family farmers and ranchers, and provide tax relief for every family
across the Nation.
I wanted to provide tax relief through cuts in income taxes, but I
also want to provide for cuts in our taxes for our children and
grandchildren by eliminating the debt burden we have placed on them and
leaving them with Social Security and Medicare programs that are
financially sound.
But the folks I represent at home told me that their top priority for
the surplus is paying down our national debt and strengthening Social
Security and Medicare. They understand that the best tax cut we can
give them is lower interest rates on their credit cards, car loans and
mortgages by paying down the debt.
Last week, the President came to this very Chamber and spoke to us
about his plans for our Nation's budget. I found myself in substantial
agreement with most of what he had to say. I support many of the goals
he outlined in his speech, including debt reduction, strengthening
Social Security and Medicare, and tax relief for all Americans. I
particularly appreciated his call for cooperation and civility.
Those of us in the Blue Dog Coalition have expressed our desire to
work with the President, and we have given him our pledge to be honest
brokers in dealing with the issues before this Nation.
I deeply regret that this bill is being rushed to a vote under a
process that contradicts the spirit of bipartisanship that the
President spoke about so eloquently last week.
Many of us spent many years working extremely hard in and casting
many tough votes to eliminate the deficit and put us in the position to
pay down the debt. I for one do not wish to squander the opportunity
and return to the era when deficit spending placed a tremendous drag on
our economy and ran up 5 trillion 700 billion dollars of national debt
that is still with us today.
The budget blueprint the President submitted last week is the first
step of the budget process. Now, those of us who were elected to
represent our constituents in Congress have a responsibility and an
obligation to thoroughly examine the details of the President's budget
and have a full debate on the overall priorities as part of the regular
congressional budget process before we vote on any individual elements
of the plan.
The President's plan is an important voice in this process, but it is
not the only voice. There are a lot of questions about how the
priorities the President identified in his budget will add up without
borrowing from the Social Security and Medicare Trust funds.
Likewise, many questions have been raised about what his budget means
for other priorities, such as debt reduction, protecting Social
Security and Medicare and deal with the needs in the areas of defense,
education, health care prescription drugs, agriculture, and energy
policy.
Some of us are concerned about enacting a tax cut based on projected
surpluses, especially since over 70 percent of the projected surpluses
will not even materialize until 2007 and beyond.
USA Today reported that the President's budget would slow down the
path of debt reduction by almost $600 billion over the next several
years.
Our insistence that Congress act on a budget resolution before voting
on tax or spending legislation is not an argument about process or
arcane budget rules; rather, it is about acting responsibly to balance
priorities important to our constituents. Before we enact a tax cut,
the American people deserve to know what the tax cut means for other
priorities that are important to them.
I was one of the Democrats who supported President Reagan in 1981
when Congress passed a large tax cut before agreeing on the spending
cuts to pay for the tax cut. The result was $4 trillion in national
debt increase and increased spending of $600 billion in the 1980s alone
on interest.
We cannot afford to repeat the mistake of rushing to cut taxes before
considering how they will fit within a fiscally responsible budget. I
lived through that experience where we allowed ourselves to believe
words that sounded too good to be true. It pains me to think that we
have learned nothing from our mistakes.
No family would make a major financial decision such as buying a new
home without first sitting down and working out a budget to figure out
whether they will be able to afford the mortgage and still meet
household expenses and leave flexibility to deal with family
emergencies in the future. We owe it to our constituents to follow that
common sense approach to the Nation's budget by agreeing on a budget.
Mr. Speaker, Americans have become cynical of government because they
are tired of politicians telling them one thing and doing another. By
putting a budget in place first, Congress can ensure that it maintains
fiscal discipline.
The SPEAKER pro tempore. Is the gentleman from California (Mr.
Thomas) opposed to the motion to recommit?
Mr. THOMAS. I am, Mr. Speaker.
The SPEAKER pro tempore. The gentleman from California (Mr. Thomas)
is recognized for 5 minutes in opposition to the motion to recommit.
Mr. THOMAS. Mr. Speaker, as is the tradition on major pieces of
legislation, we had the minority leader close on H.R. 3, and we had the
Speaker be the final speaker. I hope Members were listening to what
both the minority leader and the Speaker had to say. One of the phrases
that struck my ear from the minority leader was as far as taxes are
concerned, it appears that it is going to be my way or the highway.
Mr. Speaker, one of the difficulties we have with that is that when
you look at this motion to recommit, it really seems that the line
ought to be as far as permanent rate reduction is concerned, no way.
Let us look at the motion to recommit. It says that we have to send
it back to committee and wait until the budget for fiscal year 2002 is
completed.
Now I know that my colleagues on the other side of the aisle had
trouble with a 7-page bill. It is 7 pages. But actually you only had to
get to page 2. You only had to get to page 2. Look at line 17 on page
2, what does it say. On page 2, line 17 as far as rate reductions, it
says, ``In case of taxable years beginning after December 31, 2000.''
Let us

[[Page H808]]

see. If it is after December 31, 2000, that means 2001.
What you heard the Speaker of the House say in the well is that we
are currently in fiscal year 2001. If you are concerned about paying
down the debt, then God bless you if you voted for the budget in 2001,
because by the end of this fiscal year we will have paid down an
additional $650 billion on the debt.
If you are so worried about the Medicare lockbox and the Social
Security lockbox, if you voted for the 2001 budget, you voted for the
Medicare lockbox, and you voted for the Social Security lockbox. So
guess what, if you want permanent rate reduction now, all you have to
do is vote down this motion to recommit.
Vote H.R. 3. We have a budget in place. It is called this year's
budget because if Members ever looked at the bill, it would have told
them it starts now if they vote yes. Vote down the motion to recommit.
Reduce taxes now, vote yes.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.

Recorded Vote

Mr. STENHOLM. Mr. Speaker, I demand a recorded vote.
A recorded vote was ordered.
The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair
will reduce to a minimum of 5 minutes the period of time within which a
vote by electronic device, if ordered, will be taken on the question of
passage.
The vote was taken by electronic device, and there were--ayes 204,
noes 221, not voting 8, as follows:

[Roll No. 44]

AYES--204

Abercrombie
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Barrett
Becerra
Bentsen
Berkley
Berman
Berry
Blagojevich
Blumenauer
Bonior
Borski
Boswell
Boucher
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Clay
Clayton
Clement
Clyburn
Condit
Conyers
Costello
Coyne
Cramer
Crowley
Cummings
Davis (CA)
Davis (FL)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank
Frost
Gephardt
Gonzalez
Gordon
Green (TX)
Gutierrez
Hall (OH)
Harman
Hastings (FL)
Hill
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Lucas (KY)
Luther
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McIntyre
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Moakley
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Peterson (MN)
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ross
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Sisisky
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Stenholm
Strickland
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn

NOES--221

Aderholt
Akin
Armey
Bachus
Baker
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Blunt
Boehlert
Boehner
Bonilla
Bono
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Coble
Collins
Combest
Cooksey
Cox
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hunter
Hutchinson
Hyde
Isakson
Issa
Istook
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Leach
Lewis (KY)
Linder
LoBiondo
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McKeon
Mica
Miller (FL)
Miller, Gary
Moran (KS)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley
Paul
Pence
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Scarborough
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Spence
Stearns
Stump
Sununu
Sweeney
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Traficant
Upton
Vitter
Walden
Walsh
Wamp
Watkins
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson
Wolf
Young (AK)
Young (FL)

NOT VOTING--8

Ackerman
Ballenger
Bishop
Kaptur
Lewis (CA)
Shows
Skelton
Stupak

{time} 1746

Mr. LATHAM changed his vote from ``aye'' to ``no.''
So the motion to recommit was rejected.
The result of the vote was announced as above recorded.
The SPEAKER pro tempore (Mr. LaHood). The question is on the passage
of the bill.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. THOMAS. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. This is a 5-minute vote.
The vote was taken by electronic device, and there were--yeas 230,
nays 198, not voting 5, as follows:

[Roll No. 45]

YEAS--230

Aderholt
Akin
Armey
Bachus
Baker
Barr
Bartlett
Barton
Bass
Bereuter
Biggert
Bilirakis
Bishop
Blunt
Boehlert
Boehner
Bonilla
Bono
Brady (TX)
Brown (SC)
Bryant
Burr
Burton
Buyer
Callahan
Calvert
Camp
Cannon
Cantor
Capito
Castle
Chabot
Chambliss
Clement
Coble
Collins
Combest
Condit
Cooksey
Cox
Cramer
Crane
Crenshaw
Cubin
Culberson
Cunningham
Davis, Jo Ann
Davis, Tom
Deal
DeLay
DeMint
Diaz-Balart
Doolittle
Dreier
Duncan
Dunn
Ehlers
Ehrlich
Emerson
English
Everett
Ferguson
Flake
Fletcher
Foley
Fossella
Frelinghuysen
Gallegly
Ganske
Gekas
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Gordon
Goss
Graham
Granger
Graves
Green (WI)
Greenwood
Grucci
Gutknecht
Hall (TX)
Hansen
Hart
Hastert
Hastings (WA)
Hayes
Hayworth
Hefley
Herger
Hilleary
Hobson
Hoekstra
Horn
Hostettler
Houghton
Hulshof
Hunter
Hutchinson
Hyde
Isakson
Issa
Istook
Jenkins
Johnson (CT)
Johnson (IL)
Johnson, Sam
Jones (NC)
Keller
Kelly
Kennedy (MN)
Kerns
King (NY)
Kingston
Kirk
Knollenberg
Kolbe
LaHood
Largent
Latham
LaTourette
Leach
Lewis (CA)
Lewis (KY)
Linder
LoBiondo
Lucas (KY)
Lucas (OK)
Manzullo
McCrery
McHugh
McInnis
McIntyre
McKeon
Mica
Miller (FL)
Miller, Gary
Moran (KS)
Morella
Myrick
Nethercutt
Ney
Northup
Norwood
Nussle
Osborne
Ose
Otter
Oxley

[[Page H809]]

Paul
Pence
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pitts
Platts
Pombo
Portman
Pryce (OH)
Putnam
Quinn
Radanovich
Ramstad
Regula
Rehberg
Reynolds
Riley
Rogers (KY)
Rogers (MI)
Rohrabacher
Ros-Lehtinen
Roukema
Royce
Ryan (WI)
Ryun (KS)
Saxton
Scarborough
Schaffer
Schrock
Sensenbrenner
Sessions
Shadegg
Shaw
Shays
Sherwood
Shimkus
Simmons
Simpson
Skeen
Smith (MI)
Smith (NJ)
Smith (TX)
Souder
Spence
Stearns
Stump
Sununu
Sweeney
Tancredo
Tauzin
Taylor (NC)
Terry
Thomas
Thornberry
Thune
Tiahrt
Tiberi
Toomey
Traficant
Upton
Vitter
Walden
Walsh
Wamp
Watkins
Watts (OK)
Weldon (FL)
Weldon (PA)
Weller
Whitfield
Wicker
Wilson
Wolf
Young (AK)
Young (FL)

NAYS--198

Abercrombie
Allen
Andrews
Baca
Baird
Baldacci
Baldwin
Barcia
Barrett
Becerra
Bentsen
Berkley
Berman
Berry
Blagojevich
Blumenauer
Bonior
Borski
Boswell
Boucher
Boyd
Brady (PA)
Brown (FL)
Brown (OH)
Capps
Capuano
Cardin
Carson (IN)
Carson (OK)
Clay
Clayton
Clyburn
Conyers
Costello
Coyne
Crowley
Cummings
Davis (CA)
Davis (FL)
Davis (IL)
DeFazio
DeGette
Delahunt
DeLauro
Deutsch
Dicks
Dingell
Doggett
Dooley
Doyle
Edwards
Engel
Eshoo
Etheridge
Evans
Farr
Fattah
Filner
Ford
Frank
Frost
Gephardt
Gonzalez
Green (TX)
Gutierrez
Hall (OH)
Harman
Hastings (FL)
Hill
Hilliard
Hinchey
Hinojosa
Hoeffel
Holden
Holt
Honda
Hooley
Hoyer
Inslee
Israel
Jackson (IL)
Jackson-Lee (TX)
Jefferson
John
Johnson, E. B.
Jones (OH)
Kanjorski
Kaptur
Kennedy (RI)
Kildee
Kilpatrick
Kind (WI)
Kleczka
Kucinich
LaFalce
Lampson
Langevin
Lantos
Larsen (WA)
Larson (CT)
Lee
Levin
Lewis (GA)
Lipinski
Lofgren
Lowey
Luther
Maloney (CT)
Maloney (NY)
Markey
Mascara
Matheson
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McDermott
McGovern
McKinney
McNulty
Meehan
Meek (FL)
Meeks (NY)
Menendez
Millender-McDonald
Miller, George
Mink
Moakley
Mollohan
Moore
Moran (VA)
Murtha
Nadler
Napolitano
Neal
Oberstar
Obey
Olver
Ortiz
Owens
Pallone
Pascrell
Pastor
Payne
Pelosi
Phelps
Pomeroy
Price (NC)
Rahall
Rangel
Reyes
Rivers
Rodriguez
Roemer
Ross
Rothman
Roybal-Allard
Rush
Sabo
Sanchez
Sanders
Sandlin
Sawyer
Schakowsky
Schiff
Scott
Serrano
Sherman
Sisisky
Slaughter
Smith (WA)
Snyder
Solis
Spratt
Stark
Stenholm
Strickland
Tanner
Tauscher
Taylor (MS)
Thompson (CA)
Thompson (MS)
Thurman
Tierney
Towns
Turner
Udall (CO)
Udall (NM)
Velazquez
Visclosky
Waters
Watt (NC)
Waxman
Weiner
Wexler
Woolsey
Wu
Wynn

NOT VOTING--5

Ackerman
Ballenger
Shows
Skelton
Stupak

{time} 1754

So the bill was passed.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.

____________________