[Congressional Record Volume 147, Number 48 (Wednesday, April 4, 2001)]
[Senate]
[Pages S3423-S3428]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                 TAXES

  Mr. GRASSLEY. Mr. President, I want to address the issue of tax cuts. 
It is an issue on which Republicans and Democrats all agree. We may not 
agree on how much taxes should be cut, but we do agree that the Federal 
Government is collecting too much tax. The current and projected U.S. 
tax receipts are far in excess of the amounts needed to operate the 
Federal Government. The most troubling news is that the bulk of these 
excess collections come from individual taxpayers. By coming from 
individual taxpayers, I mean through the individual income tax.
  The Congressional Budget Office projects that the Federal Government 
will accumulate over $3.1 trillion in excess tax collections over the 
next 10 years. These excess collections are projected at the time when 
overall Federal tax receipts are at one of the highest levels in the 
history of the country. You will see from the charts that, even worse, 
individual income tax collections are near an all-time high, even 
higher than some levels imposed during World War II.
  I have a series of charts to illustrate our present situation. The 
first chart I

[[Page S3424]]

have shows total Federal tax receipts as a percentage of gross domestic 
product for the last 40 years. As you can see from this chart, tax 
receipts have fluctuated frequently since 1960. But they have escalated 
very significantly since 1993. The increase in receipts from 1965 to 
1969 was attributable to the Vietnam conflict. The runup in receipts 
from 1976 to 1981 was caused by bracket creep, which occurs when 
inflation causes wages to increase, forcing people into ever higher 
rate brackets. We corrected the problem of bracket creep from inflation 
years ago.
  However, the most shocking spike in tax receipts began, as you can 
see, in 1993. The Congressional Budget Office's January 2001 report to 
Congress shows that, in 1992, total tax receipts were around 17.2 
percent of GDP. However, since that time, Federal receipts have spiked 
upward very rapidly. By the year 2000, Federal tax receipts had 
exploded to an astronomical 20.6 percent of GDP. The significance of 
this percentage can only be appreciated in a historical context.

  In 1944, which was at the height of the buildup during World War II, 
taxes as a percentage of gross domestic product were 20.9 percent, only 
one-half percent higher than they are this very day. By 1945, those 
taxes had dropped to 20.4 percent of GDP, which is lower than the 
collection level this very day.
  It is simply unbelievable to me that in times of unprecedented peace 
and prosperity, the Federal Government should rake in taxes at a level 
that exceeds the level needed to defend America and the rest of the 
world during World War II. It simply does not make sense that the 
Federal Government should be collecting this record amount of taxes.
  As bad as what I said sounds, it is not the whole story. That is 
because Federal agencies are required to exclude a significant piece of 
Federal collections. I am talking about user fees that taxpayers pay in 
order to obtain Federal services. These are fees but are still money 
collected from the people of the United States by the Federal 
Government.
  For example, when someone visits Yosemite or Yellowstone National 
Park, they pay an entrance fee. Businesses are often required to pay 
user fees to obtain services of the Federal agencies. The dirty little 
secret on user fees is that, under our budget laws, they are not 
included as Federal receipts. Instead, they are treated as an offset to 
the expenses of the Federal agency collecting those receipts. So you 
heard me right, they never really show up on the Federal books as money 
that the Federal Government collects. Under this treatment, user fees, 
then, are a stealth receipt, one that understates Federal revenues and 
understates Federal outlays by offsetting the agency's operating 
expenses. These fees I just mentioned are not insignificant. During the 
year 2000, they accounted for nearly $212 billion in hidden revenue and 
expenses. You see on this chart that with user fees, we soon get to an 
unprecedented tax level of 22.76 percent of gross domestic product.
  The most sorry part of this whole story is that this huge increase in 
taxes has been borne almost exclusively by the individual American 
taxpayer. As this next chart shows, over the past decade, tax 
collection levels for payroll taxes, corporate taxes, and all other 
taxes have been relatively stable.
  Just look, every color on that chart--other taxes, corporate taxes, 
payroll taxes--have been constant over the last decade. But look at the 
very significant increase in income taxes during that period of time. 
Corporate taxes during the past 10 years have increased from 1.6 
percent of GDP to 2.1 percent. Estate taxes have remained essentially 
unchanged. Collections of individual income taxes have soared.
  As this chart shows, in 1992, tax collections from individual income 
taxes were 7.7 percent of our gross domestic product. That percentage 
has risen steadily each year and, as of the year 2000, was an 
astounding 10.2 percent of gross domestic product. Any wonder, then, 
why the President and most Members of Congress believe there ought to 
be a tax cut? That is why the President and most members of his party 
believe there ought to be a significant tax cut and it ought to be 
concentrated on reducing income taxes.
  Individual income taxes now take up the largest share of gross 
domestic product in history. Even during World War II, collections from 
individuals were 9.4 percent of the gross domestic product, nearly a 
full percentage point below the current level.
  So, as you can see, the main source of the current and projected 
surpluses is from the huge runup in individual tax collections that 
have occurred since the passage of the biggest tax increase in the 
history of our country--the 1993 tax Clinton tax increase.
  Admittedly, some of this increase is due to our booming economy. A 
portion of this increase is attributable to real gains in wages, which 
has forced people into higher tax rate brackets. This real wage growth 
increase is not compensated for by the usual indexing of income tax 
brackets.
  Since 1992, total personal income has grown an average of 5.6 percent 
a year. In contrast, however, the Federal income tax collections have 
grown an average of 9.1 percent a year, outstripping the rate of 
personal income growth by 64 percent.
  That fact alone is outrageous. And it is a simple enough reason why 
we need to do something about individual income taxes and let American 
working men and women keep more of their resources.
  Again, this started with the biggest tax increase in the history of 
the country under President Clinton in 1993. The results of these 
increases are obvious from the charts that we have reviewed. Each chart 
shows a large increase in taxes from 1993 to the year 2000. The Joint 
Committee on Taxation, at the request of the Joint Economic Committee, 
estimated that just repealing the revenue-raising provisions of 
President Clinton's 1993 tax hike would yield tax relief of more than 
$1 trillion over 10 years.
  So I think the Democrats and Republicans alike can agree, and should 
agree, that individual taxpayers deserve relief from the Federal 
Government's overtaxation.
  We have a tax surplus. That tax surplus should go to the people who 
earned it in the first place. It should be retained by the taxpayers. 
It will do more economic good in their pockets than in the pockets of 
Federal bureaucrats and Members of Congress, and letting them make a 
determination of how that money is spent. Sometimes it burns such a 
hole in our pocket that we do not know how to get rid of it fast 
enough.
  President Bush has offered a plan to reduce individual income tax 
rates across all rate brackets, and to reduce the number of brackets. 
This benefits all income tax payers across America. We hear, however, a 
hue and cry from some on the other side of the aisle that not all 
taxpayers should receive a rate reduction. We hear that the President's 
plan is disproportionately benefitting upper income taxpayers, and does 
not provide enough relief at the lower end of the income scale.
  That is a bunch of baloney. We have some news for our colleagues: 
None of those allegations are true. To begin with, we need to first 
understand the current distribution of tax burdens in America. We have 
a highly progressive income tax system. According to the Congressional 
Budget Office, the top 20 percent of income earners pay over 75 percent 
of all individual income taxes. Now, by contrast, households in the 
bottom three-fifths of the income distribution pay 7 percent of all 
individual taxes.
  The President's plan not only preserves this progressive system, but 
it actually makes it more progressive. Now that is going to sound 
strange to people who have been concentrating on the rhetoric coming 
from the other side of the aisle that somehow only the rich are 
benefitting from the tax cut. But I say--and I can justify through the 
reports of the Joint Tax Committee--that once the President's program 
is passed, we are going to end up with an even more progressive system.
  So to all those who are trying to engage in class warfare over the 
President's proposal, I want you to pay special attention to the 
following two charts.
  As this first chart demonstrates, the President's marginal rate 
reductions, when combined with his increase in the child credit, the 
additional deduction for lower earning spouses, and his refundable tax 
credit for individual health insurance, provide the greatest

[[Page S3425]]

reduction in tax burden for lower income taxpayers. Just see the 
charts. The $0-to-$30,000 categories actually come out with a 136-
percent decrease in taxes.
  The upper income taxpayers receive an 8.7-percent reduction in their 
burdens. Compare a 136-percent reduction at the low income end to the 
high income end where the reduction is 8.7 percent.
  Now, there has to be some reason for a 136-percent reduction in 
taxes. This is because we take 4 million taxpayers off the income tax 
rolls. A four-person family earning $35,000 a year will no longer have 
any income tax burden.
  As this chart also shows, a large portion of tax burden reduction is 
targeted towards taxpayers making between $30,000 and $75,000 a year. 
These taxpayers will experience relief ranging from 20.8 percent to 
38.3 percent of their current tax burdens. This is an important range 
of benefit because most small business owners and farmers operate their 
businesses as sole proprietorships, partnerships, limited liability 
corporations, or S corporations. The income of these types of entities 
are reported directly on the individual income tax returns of the 
owners, and a rate reduction for individuals reduces rates for farms 
and small businesses.
  The Department of Treasury has estimated that at least 20 million 
farmers and small business owners will benefit under the President's 
tax relief plan when it is fully phased in.
  Remember, I also said that the President's plan actually makes our 
tax system more progressive.
  The next chart provides the proof. This is a very important chart for 
those who are constantly demagoging the President's proposal on the 
basis of income differences. This is the class warfare that we hear 
about.
  As this chart clearly demonstrates, under the President's proposal, 
the overall tax burden goes down for all taxpayers earning below 
$100,000. For taxpayers making $100,000 and above, their share of the 
Federal tax burden will actually increase under the President's 
program. That demonstrates the statement I made earlier that based upon 
a Joint Tax Committee study, when the President's program is in place, 
the tax system will be more progressive than it is today.
  Now, I will give some ``for examples.''
  The share of the tax burden for taxpayers earning between $30,000 and 
$40,000 will drop from 2.5 percent to 1.8 percent. For those earning 
between $50,000 and $75,000, their burden share drops from 12.2 percent 
to 11.3 percent.
  This is not the case for taxpayers earning $200,000 or more. Their 
share of the overall burden will increase by a full 3 percentage 
points. So as you can see, as I have said now for the third time, the 
President's plan not only retains the progressivity of our tax system, 
it actually enhances it. The President's plan gives tax relief to all 
income-tax payers, and it does so in a fair manner, one that requires 
more from those who are most able to pay and provides the greatest 
relief to those with the most need.
  Moreover, this tax cut is needed to redress any longstanding slowdown 
in the economy. No one can witness the events of the past few weeks and 
not be concerned about where the economy is headed. I was startled by 
what I read in the Congressional Budget Office's 2001 Budget Options 
report. The Congressional Budget Office stated that a typical estimate 
of the economic cost of a dollar of tax revenue ranges from 20 cents to 
60 cents over and above each dollar of taxes collected. Based on these 
numbers, the negative economic effects flowing from the current 
historically high levels of overtaxation obviously cannot be ignored.
  We know from the Finance Committee hearing a few weeks ago that 
marginal rate reductions are the most efficient means of disbursing the 
benefits of any tax cut. Just think of the stimulative effect that 
could be achieved with a broad-based tax reduction that benefits all 
who pay taxes and targets the benefits to those who need them the most. 
That is what President Bush's tax plan does. I hope before this budget 
resolution debate is completed, we will have passed a budget resolution 
that gives my Finance Committee the ability and the flexibility to get 
the best possible tax reduction we can in a bipartisan way.
  I want to run through a hypothetical calculation of a tax cut agenda 
and look at each number to see if it accommodates the agenda of its 
proponents. That is the work of the Senate Finance Committee. I will 
look at Senator Conrad's number of $900 billion. The proposal Senators 
Daschle, Conrad, and the Democratic leadership have been talking about 
is their stimulus and rate reduction package. Under Joint Tax Committee 
scoring, the proposal loses $506 billion over 10 years. That leaves 
about $394 billion for tax cuts that Senator Conrad and others have 
said they support. We are talking about other bills beyond what is in 
their stimulus and rate reduction package.
  The Finance Committee's Democratic alternative on marriage tax relief 
without a sunset contains a revenue loss of $197 billion over 10 years. 
The Democratic alternative on death tax relief creates a revenue loss 
of $64 billion over 10 years. So using the Democratic proposals and 
last year's revenue estimates, which would only go up this year because 
of the higher revenue baseline, we have less than $133 billion left. 
Keep in mind, these are only the Democratic proposals we are talking 
about.
  Now let's go to the bipartisan tax cuts that have passed either or 
both Houses recently. There is a retirement security bill; Senator 
Baucus and I will soon be introducing that. That is a bipartisan bill. 
A similar bill passed the House almost unanimously. That bill will run 
about $52 billion. A bill to repeal the 104-year-old Spanish-American 
War phone tax passed the House last year by an overwhelming vote. That 
will run about $50 billion. Then there is the small business and 
agriculture tax cuts that everybody supports in a bipartisan manner. 
That package adds up to about $70 billion. Then we have the Educational 
Tax Relief Act that passed out of our Finance Committee unanimously in 
the last couple weeks. That runs about $20 billion.

  You have Democratic proposals that eat up more than the tax cuts they 
say they want. Then we have bipartisan proposals that are out there, 
that are very popular, and which have to fit into a package. These 
bipartisan tax cuts are left over from last year, and also exceed what 
is left in the Democratic budget.
  Now we have heard a lot of pointed criticism of President Bush's tax 
cut plan from Senator Conrad and other leaders on the other side who 
are handling the Democratic management of the budget resolution. We 
have heard them talk about the issue of the alternative minimum tax, 
sometimes referred to as the AMT. Senator Conrad has said it will take 
$200 billion to $300 billion to fix this AMT problem under the Bush 
plan. Remember, under current law, 10 percent of the taxpayers will 
have to deal with the alternative minimum tax. Senator Conrad is 
correct that the President's plan could make the problem worse. As I 
have said, our Finance Committee should be addressing that problem. 
Please note, however, that the Senate Democratic economic stimulus 
package does nothing with the AMT and will in fact make the problem 
worse.
  According to the Joint Tax Committee, by the year 2011 about 21 
million taxpayers will be subject to AMT under current law. The 
Democratic bill will add about another 7 million taxpayers to the AMT 
hit. So if the Democratic leaders who make such a point of the AMT 
issue, then let them practice what they preach. These leaders will have 
to raise their budget tax cut numbers to deal with this alternative 
minimum tax situation.
  Under the tests I have laid out, the Democratic budget number does 
not accommodate their own tax priorities. We have all of these Democrat 
proposals before us. We have all the bipartisan proposals, some of them 
actually having been voted on by both Houses of Congress. These are all 
ideas that everybody wants passed. But the number put forth for tax 
reduction by the other political party will not accommodate all the 
ideas they propose. I know there are a lot of people on the other side 
of the aisle, such as Senator Breaux, who know this.
  I think those who have proposed numbers in the range between $2 
trillion and $4 trillion are also pushing a wrong number. Most of those 
people are on my side of the aisle or, if not in the Senate, in the 
House of Representatives. That tax cut number does not

[[Page S3426]]

balance our priorities of paying down the debt and targeted spending 
increases.
  I believe this brings us back to a low Democratic number that doesn't 
even accomplish all the tax policy they want adopted. The other extreme 
is people saying $1.6 trillion is not enough, it ought to be up near 
$2.5 trillion. This brings us to the point of President Bush's number 
that he proposed as being very appropriate. It is not appropriate just 
because President Bush proposed it. It is appropriate because it will 
allow us--particularly the Senate Finance Committee--to accommodate the 
bipartisan tax cut priorities that are before us.

  Senator Breaux's number is better than the Democratic number because 
it allows more tax cuts to be addressed. It is, however, not enough--it 
does not provide enough flexibility for the Senate Finance Committee to 
do its work. Unlike the Democratic number, though, Senator Breaux's 
number might be enough to cover Democratic priorities, plus a little 
bit more. But it would ignore the President's priorities. In 
considering the number, I want to give you my angle, as Chairman of the 
Senate Finance Committee. Senator Baucus and I need the full $1.6 
trillion to make the tax cuts that all of the Members of Congress are 
interested in doing and may have voted on.
  I think that many in this body are looking at the 1.6 trillion number 
in terms of a win or a loss for President Bush, rather than whether it 
is the right policy. Many Republicans are tending to look at the 
number, or anything higher, as a win for the President. Democrats are 
looking at anything less than the number as a loss for President Bush. 
Senator Conrad and Senator Daschle have been explicit in their 
objective. They have worked very hard to try to defeat the President's 
tax cut.
  Let me give you an example. I just talked to my staff on a piece of 
legislation that I am trying to get budget authority for. I had 20 
Democrats lined up for the Family Opportunity Act--a bill that last 
year had 78 cosponsors--and we are getting close to that number this 
year. But we weren't taking the money for the bill out of the tax cut. 
So the message went out: Don't help Grassley.
  Now, thank God, the main leader on the other side in that effort who 
is working with me, Senator Kennedy, has assured me he is going to be 
with me on what we ought to do. We are going to do the right thing. But 
that is how desperate the other side is to make sure that there is some 
victory of subtraction from the $1.6 trillion, just so the President 
can be defeated. We have to look at the numbers, whatever those numbers 
are, in terms of the tax cut agenda that is out there, including the 
President's and our own.
  So, Mr. President, when Senator Breaux's amendment comes up tomorrow, 
while it is well-intentioned, it just doesn't provide the Finance 
Committee with the tools necessary to do the job of delivering 
bipartisan tax relief.
  I want to take about 2 minutes--and then I will finish--on another 
item related to the recent debate.
  I was stimulated to give these remarks based upon the overuse of the 
word ``raiding''--the word ``raid'' or the word ``raiding''--like we 
are raiding the Medicare trust fund. I speak mostly about the 
leadership on the other side of the aisle. The manager for the 
Democrats speaks very well and very clearly. But I want to focus his 
attention on Webster's Dictionary. So I want to speak to Senator Conrad 
and others who have suggested that the Domenici budget and the 
amendments that we have adopted will raid the Medicare trust fund.
  I understand how tempting it is to use such colorful language, but I 
want to point out to my colleagues what the definition of the word 
``raid'' is. As I read from Webster's dictionary, it says, ``a sudden 
hostile attack by an armed, usually mounted, bandit intent on 
looting.''
  Well, I suppose we have to use some words from Sol Olinsky's school 
of political activism--which says that the more extreme you can be, the 
more attention you are going to get. There are some people in this body 
who have great aptitude in that respect. But, obviously, any people who 
study our budget process and who know what a Medicare trust fund is, or 
what any trust fund is, will know that no one is raiding the Medicare 
trust fund. I will explain what is really going on.

  Under the Domenici budget, Medicare will collect payroll taxes. Those 
taxes will be credited to the balance in the trust fund. That balance 
will be reserved for Medicare and is reserved only for Medicare. The 
Medicare trust fund is just like your bank account. When you make a 
deposit, your bank account increases the balance in your account, and 
only you can make a withdrawal from your own personal bank account.
  Now, when Senator Conrad talks about raiding the Medicare trust fund, 
he is trying to mislead us. He wants people to believe that we are 
reducing the balance in the Medicare trust fund for some other purpose. 
That is just not true. The balance in the Medicare trust fund can only 
be reduced to pay Medicare benefits. That is the law.
  Our budget does nothing to change the law. Once you get past the 
rhetoric, you will see this debate is not about Medicare, it is about 
debt reduction. In Senator Conrad's view, we have to use the Medicare 
surplus to pay down the debt, or else we are raiding Medicare. Now, 
going back to the example of your own personal bank account, that is 
like saying your bank has to use your deposit to pay off the bank's 
mortgage, or else it is raiding your bank account. As everybody who has 
a bank account knows, that is clearly absurd because when you deposit 
money in your bank account, you rely on the bank's ability to collect 
on its loans to repay your money. When the Government borrows from 
Medicare, we rely on the Government's ability to do one of three 
things--raise taxes, reduce spending, or borrow from the public to 
repay Medicare.
  It might be easier to repay Medicare if we pay down the debt. But the 
fact is, we are already doing that, as you have heard so many times 
during these three days of debate. Under our Domenici budget 
resolution, we are going to pay down every dollar of national debt that 
can be paid down between now and the year 2001.
  Now, I believe that Senator Conrad knows that is true. So that is why 
he has stopped talking about public debt and he is now started talking 
about long-term debt.
  ``Reducing long-term debt'' is a secret code word for Social Security 
and Medicare reform. Of course, we have not been presented a plan to 
reform Social Security or Medicare from the other side of the aisle. As 
a result, we can only conclude that once the Government runs out of 
public debt to pay down, it will be forced to invest Social Security 
and Medicare funds in private assets.
  Federal Reserve Chairman Alan Greenspan has warned that such 
investments will disrupt the financial market and reduce the efficiency 
of our economy. Chairman Greenspan is not the only one concerned about 
such investment. In fact, in 1999, the Senate voted 99-0 against 
investing Social Security money in private assets.
  I suggest that instead of talking about our budget raiding Medicare, 
I believe the Senators on the other side of the aisle who use that word 
need to explain their secret plan to reduce the long-term debt.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Colorado.
  Mr. ALLARD. Mr. President, I ask unanimous consent that my time be 
marked against the general resolution and that I have 15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ALLARD. Mr. President, I want to recognize the exemplary comments 
we just heard from the chairman of the Finance Committee, Senator 
Grassley. That is one of the most complete discussions I have heard on 
the President's tax policy and how it impacts our total debt goals, 
actually what we call paying down the public debt and what we are going 
to do to save Medicare.
  Anybody who listened closely fully understands the balance of the 
President's plan before us. I thought it was an extremely good speech, 
and I enjoyed listening to what he had to say.
  I want to bring a little more discussion to some of the points he 
made. For example, he talked about the advantage of small business. As 
a small businessman, I want to talk about some of

[[Page S3427]]

my thoughts about how cutting taxes really does help the economy.
  Senator Grassley talked about paying down the debt. I also want to 
take some time to talk about my experience in the Congress in efforts 
to pay down the debt and add my two bits' worth as to why I think the 
President is on the right track.
  Just as the Presiding Officer of the Senate, I started my business 
from scratch. I know what it is to have to start a small business from 
scratch. I remember the frustration the first several years I was in 
business. I began to build up some revenue. I wanted to do a good job 
of serving my clients as many small businesspeople do. They have a 
great idea and want to move forward.
  At the end of the year, I found the capital I began to accumulate in 
my business all of a sudden was taken away because of taxes.
  That has a dramatic impact on the growth of a small business, 
particularly at the early stage of growth and when they are starting.
  Small businesspeople, such as myself and the Presiding Officer suffer 
a disproportionate impact from rules, regulations, and taxes on our 
small business.
  I point out to the Members of the Senate, most of the innovative 
ideas in America and in democracy really start at the small business 
level. If we can put incentives out there that allow individual 
businesspeople to retain more of their income, to capitalize their 
businesses for growth, that means we create more jobs. The end result 
is that we begin to strengthen our economy.
  I do believe these tax cuts will help the economy, and if we make the 
tax cuts even retroactive starting at the first of the year when they 
begin to have an impact even on the paycheck that goes home, it will 
help us.
  I encourage Members of the Senate to work hard to put in place the 
$1.6 trillion tax cut that is proposed by the President.
  Let me talk a little bit about my experiences in trying to pay down 
the debt. I probably have worked harder than any Member of the House or 
the Senate to try to put in place a plan to pay down the debt. When I 
first brought a plan forward, I was a Member of the House of 
Representatives, and as a Member of the Senate I introduced several 
plans.
  When I was first elected to the Senate, I introduced a bill to pay 
down the debt within 30 years. I had a plan somewhat similar to an 
amortization schedule. I had a schedule of how we would pay down more 
money each year so that, over a 30-year period, the Federal Government 
would have paid down the debt. That was 4 years ago.
  Two years ago, I looked at the amount of revenue coming in to the 
Federal Government, and I was amazed. So I introduced a bill that had a 
plan to pay down the debt within 20 years.
  What I see now is that we are going to be able to pay down the public 
debt within 10 years and still be able to have the $1.6 trillion tax 
cut the President is proposing.
  That is a reasonable plan he has put together. He is taking a quarter 
of the surpluses for tax cuts. It is reasonable and certainly a much 
better proposal than what I hear coming from the Democratic side where 
they want to take $60 billion and redistribute it to everybody. The 
President's proposal is that those people who pay taxes are the ones 
who will get a tax cut.
  With the $60 billion plan on the other side, they are talking about a 
redistribution of income, so everybody gets a rebate, whether you pay 
taxes or not. It ends up being a massive redistribution income plan 
basically.
  What we need to pass in the Senate is a real tax cut plan that gives 
a tax cut to the American taxpayer.
  I remind Members of the Senate and Americans who might be watching 
right now that a record amount of their dollars is being sent to 
Washington. We saw some figures presented on the other side which 
indicated that as a percentage of gross domestic product, GDP, our tax 
burden is as low as it ever has been, but the growth in our gross 
domestic product has been so phenomenal for the last 5, 7, 8 years that 
any figure one compares to the gross domestic product is going to look 
low in comparison.
  I prefer to look at actual figures. Looking at the actual figures--
the amount of money being sent to Washington--the American taxpayer is 
sending a record amount of money to Washington, DC.
  When we look at the plan that is being proposed by the President, it 
is a very modest tax cut. As was pointed out in testimony before the 
Budget Committee and other speeches made on the Senate floor, President 
Kennedy had a greater tax cut than this tax cut. President Reagan's tax 
cut was greater. In fact, as was pointed out by my colleague from Iowa, 
the largest tax increase in the history of this country, which was in 
1993, with a Democrat Congress and Democrat President, was more than 
the tax cut that is being proposed by President George W. Bush.
  We have to keep in mind that when taxpayers send money to Washington 
and then we have some sort of scheme where it is sent back to the 
taxpayers, one might want to call it a grant or maybe call it a rebate 
or revenuesharing or earned-income tax credits or just a gift. The fact 
is, when you send your money to Washington and we send it back, there 
is a passenger charge. The subtle message is somehow or another it is 
the Government's money. In reality, it is the taxpayers' dollars. That 
is where it starts. They are the ones who originally send the money to 
Washington.
  We need to institute a policy that recognizes hard work and 
productivity of the American taxpayers.
  I also point out that some of the phenomenal growth we are getting in 
revenues to the Federal Government is a consequence of having reduced 
the capital gains tax a couple years back. When you reduce the capital 
gains tax, historically the revenues to the Federal Government have 
always increased. We have reduced capital gains rates from 28 percent 
to 20 percent. What happened? We opened the floodgates of commerce.
  With these new dollars coming into the Federal Government from more 
commerce, you end up having more revenue. I think that is a tax cut. It 
has been taxpayers who got that advantage. The result is more revenue 
is coming to the Federal Government. I don't think we have recognized 
that phenomenon enough on the Senate floor, and I want to take a moment 
to point that out.
  The proposal being suggested by the President is a very balanced 
proposal. I think it has the right amount of tax cuts. I think it 
addresses debt reduction.
  Now, on debt reduction, as I have looked at the issue of how much you 
can pay down the debt when you get down to the bottom trillion 
dollars--that is a lot of money still--there are some fundamental 
issues at which this Congress needs to look.
  For example, in some of the testimony we had before the Budget 
Committee, the Fed, in managing the money supply of this country, uses 
debt. There is about $500 billion they use to manage that debt. If we 
are to completely pay down the debt, there has to be a fundamental 
discussion as to what you want the role of the Federal Government to 
be. Do you want the Fed to still have that ability to manage the supply 
of the dollar? If you want that, we will have to keep some debt in 
there so they can manage it. If you want to turn the dollar completely 
free on the market without any opportunity for the Fed to regulate 
supply, then perhaps the proper solution is to go ahead and pay the 
debt even further. That is a basic fundamental public policy that I 
think needs to be discussed in the Congress. I think we need to have 
some discussion among ourselves about how important that is.
  For some people who don't want to turn in their war bonds or their 
Treasury notes--they have become a collector's item--we find it is 
costing more today to pay down, in some cases, perhaps as much as 43 
percent more than the value of the bond to retire.
  The President, again, I think has a right balance on tax relief, on 
debt reduction. He takes care of basic needs, which I think can be 
supported. He has overall spending for the 10 years at 4.7 percent. He 
has very significant increases in education in 2002, an 11.5-percent 
increase, a significant increase in defense, 4.5. We passed an 
amendment here that provides another $8.5 billion for that. He has 
increases for

[[Page S3428]]

health. I supported doubling NIH research dollars. There is money in 
there for transportation and veterans health.
  I think this is a good budget. It is a good starting place. I am 
disappointed today we chipped away at some of that tax cut. I think 
that means there will be less opportunity for economic growth for 
people, particularly in the small business sector, who look for a 
reduction in the burden of taxes in order to be able to grow their 
business and to create jobs.
  I thank the chairman of the Appropriations Committee, Senator 
Stevens, for allowing me to speak. This is an important issue.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. STEVENS. I ask my remarks be charged similarly to those of the 
Senator from Colorado.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________