[Congressional Record Volume 147, Number 75 (Saturday, May 26, 2001)]
[Senate]
[Pages S5770-S5796]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001--CONFERENCE
REPORT
Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Senate
now proceed to the consideration of the conference report to accompany
H.R. 1836, the tax reconciliation bill.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered. The clerk will report.
The assistant legislative clerk read as follows:
The committee of conference on the disagreeing votes of the
two Houses on the amendment of the Senate to the bill (H.R.
1836), to provide for reconciliation pursuant to section 104
of the concurrent resolution on the budget for fiscal year
2002 having met, have agreed that the House recede from its
disagreement to the amendment of the Senate, and agree to the
same with an amendment, and the Senate agree to the same,
signed by a majority of the conferees on the part of both
Houses.
The ACTING PRESIDENT pro tempore. The Senate will proceed to the
consideration of the conference report.
(The conference report is printed in the House proceedings of the
Record (continuation) of May 25, 2001.)
Mr. DURBIN. Mr. President, about 15 minutes ago I was handed this
stack of paper. It is not uncommon for us to receive bills of great
consequence and great moment only a few minutes before we are asked to
vote on them. We rely on good staff work and hope they give us some
insight into what the legislation means.
This piece of legislation, of course, represents the proposed tax
bill--457 pages. I will hazard a guess that very few Members of the
Senate will have a chance to study it or reflect on it or even ask for
a response from others before we are asked to vote in a very few
minutes. That is not unusual.
I don't want to suggest that this is an extraordinary situation, but
it is extraordinary in this respect: What we are being asked to vote on
in this tax bill will literally have an impact on America for 10 years,
long after many of us have gone from the scene. Long after this
President has finished his tenure in the White House, the impact of
this bill will still be felt. So it is important for us to pause and
reflect on what we are doing. We are being asked to sign onto a tax cut
proposed by the White House, originally, and now crafted by the leaders
in the House and the Senate, which will have a dramatic impact on the
economy of this country.
It is a tax bill which doesn't affect just next year but in fact goes
into effect sometimes 5, 6, 7, 8, 9, 10 years from now. Someone noted
that the marriage tax penalty provisions, which I believe under the new
bill go into effect in 2009 or 2010, will go into effect after many
currently married couples are no longer married; many who are
contemplating marriage will have been married and perhaps will no
longer be married. The provisions about the estate tax will go into
effect about 10 years from now after many people who are watching this
debate are long gone.
The reason I raise this point is to try to put in some historic
perspective the vote we are about to take this morning. I think this
tax bill is a serious mistake. The Congress of the United States made a
grievous error in the early 1980s under President Reagan when we
accepted his message--and many voted for it--that called for a massive
tax cut. It is easy to preach the gospel of a tax cut. What could be
easier for a politician than to go to people and say, I want to reduce
your taxes. There can't be anything more appealing.
But we have a responsibility in the Congress to reflect on what the
tax cut means and whether or not it is the right thing to do. In the
Reagan years, when many yielded to the siren call for a tax cut, they
created a deficit situation in this country which crippled our economy
for more than 10 years. History tells the story. With the Reagan tax
cut and with the increase in spending on military affairs and other
things, America did not have enough money to meet its basic needs for
Social Security, Medicare, education, transportation, for the things
which people expect this Government to provide in a civilized society.
As a result, we took the accumulated debt of America when President
Reagan became President and saw it explode to the point where it is
today of $5.7 trillion--$5.7 trillion in national debt, a national debt
which requires us to collect in taxes $1 billion a day across America
simply to pay the interest. That was a serious mistake. The bill we are
considering today, unfortunately, could jeopardize our future just as
much.
This morning's Washington Post gave us information about the
productivity over the last several months in America. The projected
productivity we hoped for did not occur. In this time of slowdown, in
this time bordering on recession, we have seen our economic activity
and growth reduced in America.
Many people who only 8 or 10 months ago were sure we were in
prosperity and expansion were proven wrong. It was only 8 or 10 months
ago when Alan Greenspan, the Chairman of the Federal Reserve, who is
viewed as the wisest man in all of Christendom when it comes to our
economy, guessed wrong. He was raising interest rates because he was
afraid of inflation. Now Alan Greenspan is struggling and running as
fast as he can to reduce interest rates. He was wrong.
This bill on which we will be voting is based on the best guess of
the economists for President Bush that we will have continued
prosperity for the next 10 years--10 years. There is no economist who
would wage their reputation on where we will be 10 months from now, let
alone 10 years. It is based on pure speculation about anticipated
surpluses, and that is a significant shortfall in the logic behind this
tax cut.
It is important we have a tax cut, but we should go carefully to make
certain we do not go out too far or too big and jeopardize our economy.
That is what is at stake.
Most Americans will tell you: A tax cut is important to me; even more
important to me is what is going to happen to the economy, how will my
family do in just the next few years, how will small businesses do.
We have seen an unparalleled period of economic prosperity over the
last 8 or 9 years: 22 million new jobs in America, a recordbreaking
number of small businesses created, record home ownership, the lowest
inflation in decades,
[[Page S5771]]
welfare rolls coming down, crime rolls coming down, a clear indication
we were on the right track. This bill puts it all at risk. This bill
says we will give a tax cut to some in America and hope we are right
that the money will be there over the next 10 years.
I will give some illustration of what this bill does. The Senate tax
bill gave 35 percent of all of the tax cut benefits to the top 1
percent of taxpayers. What does that mean? A $44,000 tax break for
people with incomes above $373,000 a year. I do not believe that was
responsible. Quite honestly, if there is to be a tax cut, it should be
a tax cut for all Americans, not heaped on the wealthiest in this
country. But hold on. The new bill, this product of a conference
report, does not make this tax cut any fairer.
Under the conference agreement, the average tax cut for these same
people making over $373,000 a year has increased by 23 percent. Instead
of a $44,000 tax windfall for the highest 1 percent of taxpayers in
America, it is now a $54,000 tax windfall for those with incomes in
excess of $373,000.
Some come to the floor and say: Wait a minute, the top 1 percent of
taxpayers pay the most taxes; shouldn't they get the most when it comes
to tax cuts. Those in the top 1 percent pay about 22 percent of Federal
taxes. The Senate bill gives them 35 percent of the benefits of this
tax cut. This conference agreement raised that share to 38 percent.
They paid 22 percent of the taxes; they receive 38 percent of the
benefits. There is no fairness here.
I suggest that sending a $300 check to a taxpayer sometime this year
as an indication of good will with this tax cut is cold comfort when
one considers the wealthiest in this country will receive $54,000 a
year in tax benefits under this proposal we are considering.
Quite honestly, we should have a tax cut, but one that is fair. This
is not fair.
I also reflect on the fact that this tax cut does nothing to protect
funding for Social Security and Medicare. The Senator from North
Dakota, Mr. Conrad, is in the Chamber. He will speak in a moment. He
has said to us repeatedly that in 10 years the baby boomers will show
up for Social Security and Medicare. When they show up, we had better
be prepared. We promised them those programs would be ready and funded,
but there is absolutely no way to fund this tax bill without raiding
the Social Security trust fund, as well as Medicare benefits. That is
totally irresponsible. For us to offer $300 checks to people today and
run the risk that 10 years from now, when they show up for Social
Security or Medicare, it will not be adequately funded is totally
irresponsible. This bill raids Social Security and Medicare, and for
that reason alone it should be defeated.
The final point I will make is this. This bill eliminates our ability
to make necessary investments in the future of this country, the most
important being education. All the speeches that have been given about
bipartisan commitment to funding new education programs really
disappear in a heartbeat when we vote to pass a tax cut which takes
away the money that is absolutely essential for us to make sure that
our kids in the 21st century are well prepared to lead the world.
I encourage all of my colleagues to oppose this bill, to vote for a
tax cut for American families that is fair, one that does not go too
far and jeopardize our economy, Social Security, or Medicare.
Mr. President, I yield the floor. Senator Schumer and Senator Gregg
are seeking recognition.
The ACTING PRESIDENT pro tempore. The Senator from New Hampshire.
Mr. GREGG. Mr. President, finally, finally, the American people are
going to get some of their money back. The American people have been
paying more money into the Federal Government than we need to operate
the Government.
Over the next 10 years, it is projected they are going to pay $5.6
trillion into the Federal Government that we do not need. But the other
side of the aisle does not want to give any of that money back. They do
not want to let the American taxpayers keep some of their hard-earned
money. No, they want to spend it. They have programs; they have ideas;
they have initiatives; they have things on which they have to spend
money.
There are a lot of good things to spend money on as a government, but
one of the best things we can spend money on as a government is the
taxpayers, by allowing the taxpayers to keep some of their hard-earned
income so they can make decisions with their dollars, so they can make
the decisions as to whether or not they want to buy a new car, spend
more money on their children's education, improve their home, or save
their money.
It is about time we return to the American people some of this
surplus.
I congratulate the President; I congratulate the chairman of this
committee; I congratulate the ranking member of the committee, the
Senator from Montana, who will soon be the chairman of the
committee for pulling forward a bill which is to some extent
bipartisan--although, obviously, not a majority on the other side
support it--which returns to the American taxpayers their hard-earned
income. Hallelujah, it is about time.
Let's look at what this tax bill does. For people in the lowest
rates, they get the highest percentage cut, from 15 percent down to 10
percent. For people who don't even pay taxes today but have families
and have issues with raising their children, they are going to receive
a direct payment. Not an income tax refund, because they are not paying
income taxes, but a direct payment to assist them in raising their
children, a child tax credit.
This is a bill which is directed at the middle-class Americans--
Americans who are working hard every day to make ends meet, some of
them in a low enough tax bracket so they don't pay taxes but still they
need assistance; Americans who know the dollars they are sending to the
Federal Government, to some extent, are not needed down here anymore.
They are not needed in Washington because Washington has this huge
surplus. They are needed at home. Americans across this country need
those dollars to manage their family budgets better.
The representation was made on the other side of the aisle that we
have this huge debt and we need to pay this debt off. Every projection
we have says this debt will be paid off by, at a minimum, the year
2011. The public debt of the Federal Government will be zero by the
year 2011 and will probably be zero long before then. We will pay down
more debt faster than at any time in this country's history while still
cutting these taxes. Why? Because the surplus is so large. So this debt
argument is a red herring.
The argument has been made on the other side that we are not
protecting Social Security with these funds. That is totally
inaccurate. The fact is, the Social Security trust fund is running a
$2.5 trillion surplus over this period. Not only can you protect the
Social Security trust fund--and it is protected under this proposal--
but we are actually going to be in a position, as a result of those
surpluses in the trust fund to, I hope later down the road, allow
American citizens who are paying Social Security taxes to save those
taxes and actually own the assets which they have in the Social
Security trust fund through some sort of personal or individual savings
account.
The Social Security system is in a very healthy situation. It is
getting stronger for the next few years. Regrettably, in the outyears,
it has serious problems which need to be addressed. But this tax bill
does not in any way negatively impact the surplus of the Social
Security trust fund, nor does it impact the surplus of the Medicare
trust fund.
First off, there is not a surplus in the Medicare trust fund; there
is only a surplus in Part A. Part B is running at a deficit. If they
merge the two, they run a deficit overall. The fact is, money is in
this account; it is there for the purposes of Medicare, and we are
talking about a significant increase in Medicare funding so we can fund
the prescription drug benefit.
After we have done this--paid down the debt, protected the Social
Security and Medicare trust funds, after we put in place preserving
funds for prescription drugs--we still have a surplus at the Federal
Government level because we are running so much more in revenues than
we are in expenditures.
What do some of my colleague on the other side of the aisle say? They
do not
[[Page S5772]]
want to return the dollars to the American taxpayer but spend it and
create more programs.
This is not a debate as to whether or not the money is available. It
is a debate about what we should do with the money. The President has
set the correct course. He has said, when the Federal Government takes
in more money than it needs to operate, after it has committed to
protecting Social Security, Medicare, and paying down the debt
completely, then those dollars should be returned to the American
taxpayer because it is their money, not our money. That is the
difference. We understand it is the taxpayers' money; it is not
Washington's money.
I congratulate the leadership of this committee in putting forward a
balanced, fair, and appropriate bill, one which will give much needed
relief to the taxpayers of this country who for too long have been
asked to pay too much.
I yield the floor.
The PRESIDING OFFICER (Mr. Crapo.). The Senator from Montana.
Mr. BAUCUS. I yield 5 minutes to the Senator from New York.
The PRESIDING OFFICER. The Senator from New York.
Mr. SCHUMER. I thank my friend, the soon-to-be chairman of the
Committee on Finance, for yielding and for the work he has done.
At the outset, let me say I will oppose this conference report out of
strength of conviction. There are some good things in it. I think the
child tax credit is good. I think tax relief, particularly for middle-
class people, is good. I am particularly proud of the tuition
deductibility. While I have wished it would go further, there is $5,000
of tuition relief, tuition deductibility. It is aimed at middle-class
families.
For far too long we have ignored middle-class families, not only in
tax relief but in the biggest financial nut they face--if God gives
them good health--and that is paying for tuition for the kids. To have
that in there is really important.
I salute the leaders of the bill. I will vote against it but with a
little bit of sadness because that provision is in the bill, something
for which I have worked long and hard. I salute my colleague from New
Jersey, Mr. Torricelli, for working hard to get it included, as well. I
thank him for that, as well as the other Senators who pushed hard for
that legislation.
I am opposing this bill for five reasons. First, it is filled with
gimmicks. This is not tax policy--put a provision in, sunset it; put
another provision in, sunset it. The most laughable provision is the
estate tax. Under this new proposal that has come back to us, the only
year in which you can die and have your estate free from tax is 2010.
If you die in 2009, you pay an estate tax. If you die in 2011, you pay
an estate tax. All those who are so strongly for repeal of this ought
to hope that, if God is going to take them, he takes them only in 2010,
because that is the only year that the estate tax is repealed. What
kind of policy is that?
In my city of New York, we have hundreds, probably thousands, of
lawyers who are busy planning estates. Boy, are they going to be happy
because they will have to plan estates aimed at an estate tax bill that
goes up, that goes down, that goes up, that goes down. We do the same
for many other provisions. The bill is filled with gimmicks. It is not
tax policy. It is politics--to have to reach $1.35 trillion, no more,
no less.
The writers of this bill tied themselves in a knot like a pretzel. We
cannot have a policy, even for tuition, that expires in 2006. We cannot
have a policy that tells American parents, you might have your tuition
deductible in 2005 or 2006 but not 2007.
Second, the relief is disproportionate for well-to-do people. I do
not believe in class warfare. I think people who work hard and earn
money should, indeed, get relief. I voted for a capital gains cut
because I would like to see the encouragement to channel that money
into job creation, build a new business, invest in equity, invest in a
bond.
I hear on the other side we are talking about working families. I
listen to the speeches; I listen to the speeches in the House. Tell the
truth: Working families get small relief. The most well-to-do in
America get large relief.
It is said they pay the taxes. Yes, they pay more of the income
taxes, but if you add in payroll taxes, if you add in sales taxes, the
people making $50,000 pay about the same percentage of taxes as the
people making $500,000. So why is the relief so disproportionately
directed at the high end?
This bill is befuddling and confounding in that way. Let us assume
you believe Government has too much money. Let us assume and believe
you think we should send it back. Why do we send so much of it back to
the highest end when, if you look at their total Federal tax bill, it
is working people who pay as high a proportion as high-end people. We
are not even doing it in a way to encourage investment and savings.
That is the second reason I am against the bill.
Third, needed programs. Perhaps the greatest hypocrisy in this budget
we have passed is this: Our President says he is the education
President as he is going around the country. When the good Senator from
Vermont became an Independent, he said: That is not true. I am fighting
for education. Yet his budget has no money for education.
The President last week gave an energy speech and he, again, cut all
tax credits for energy.
I yield my time because I know we have important business to do. I
ask when we resume business I could be given 3 minutes to finish up my
speech.
The PRESIDING OFFICER (Mr. Allen). Is there objection? Without
objection, it is so ordered. The Senator from New York will reserve 3
minutes when the time comes. The Senator from Idaho.
Mr. CRAPO. Mr. President, I ask unanimous consent the time between
now and when we vote be divided for debate as follows: Mr. Baucus, 5
minutes; Mr. Kennedy, 5 minutes; Mr. Dodd, 5 minutes; Mr. Conrad, 10
minutes; Mr. Grassley, 5 minutes.
I further ask consent that at the expiration of this time the Senate
proceed to a vote on the adoption of the conference report with no
intervening action or debate.
The PRESIDING OFFICER. Is there objection?
Mr. CORZINE. Reserving the right to object.
The PRESIDING OFFICER. The Senator from New Jersey.
Mr. CORZINE. I suggest the absence of a quorum.
The PRESIDING OFFICER. The Senator from Idaho has the floor. The
Senator from New Jersey cannot suggest the absence of a quorum. He may
state his objection.
Mr. CORZINE. I withdraw the objection.
The PRESIDING OFFICER. Is there objection to the request? Without
objection, it is so ordered.
The Senator from Montana, Mr. Baucus.
Mr. BAUCUS. Mr. President, I will yield myself a very short period of
time because there is a Senator who very desperately needs to vote
quickly and get home. In deference to him, I will speak briefly.
The British statesman Benjamin Disraeli said that, ``in politics, a
week is a long time.''
The past week or so is a good example.
On the tax bill, we have gone from a handshake deal, through a day-
long markup in the Finance Committee, through 43 votes on the Senate
floor, and then through a brief but difficult conference that, more
than once, veered close to a breakdown.
It is almost always difficult to reconcile two different bills in
conference. That was the case here. The stakes were high, time was
short, and some of the differences were profound.
But I am delighted to join our chairman, Senator Grassley, in
announcing that we have a conference agreement that embodies a solid,
balanced, bipartisan compromise.
Let me describe the key elements of the compromise.
The centerpiece of the Senate bill was the immediate creation of a 10
percent rate, to cover the first $12,000 of taxable income. This
benefits low and middle income taxpayers the most.
And it provides a boost to the economy.
The conference report adopts this provision lock, stock, and barrel.
Another key element of the Senate bill was the set of provisions
geared to low and middle income families. Here, again, we did well.
[[Page S5773]]
The conference report expands, and simplifies, the earned income tax
credit. And it incorporates the Senate proposal to make the child
credit refundable.
Putting the 10-percent rate, the EITC, and the child credit
provisions together, we have, to my mind, written one of the best tax
bills ever for middle income working families.
That's an accomplishment we all can be proud of.
On top of that, the Senate bill included new incentives for
retirement savings and for education, and the conference report
includes a large measure of each.
Let me step back for a minute, and describe why, to my mind, this
bill represents a balanced package.
In the first place, everybody who pays income taxes will get a tax
cut. The government has a surplus. We can afford to give some of it
back. That's good news, not bad.
The President deserves credit for making this point.
But his proposal fell short, in one critical respect.
The President's proposal was aimed primarily at society's winners.
People in the top tax brackets. People with large estates.
We should not begrudge these people their success.
But, at the same time, we should not stop there. In writing a bill of
this scope, we have an unique opportunity to reach out. To lend a hand,
and give an incentive, to families that are working hard, raising kids,
and dreaming dreams.
The Senate bill did that. And so does this conference report.
As I have explained, we cut taxes for working families.
We create new incentives for education, like the new deduction for
college tuition.
We create new incentives to save for retirement, through IRAs,
401(k)s, and the new low income matching program.
These are important provisions that create new opportunities.
And there is more. For example, thanks to Senator Landrieu, we expand
the tax credit for adoption.
Thanks to Senator Kohl, we create a new tax credit to encourage
employers to provide child care for their employees.
All told, the conference report contains dozens of positive
provisions.
Does the conference report have flaws? Sure.
As the debate has gone on, I have taken heed of the warnings of
Senator Conrad, who fears that the tax cut may use up too much of the
surplus.
I hope he's wrong. But I agree that we must watch the budget closely,
and make corrections if necessary.
There are other flaws. For example, I don't think we should have cut
the top rates so steeply. I don't think we should completely repeal the
estate tax. I wish we could have made the R&D tax credit permanent.
But, putting all of the provisions together, I believe that this is a
good compromise that deserves broad bipartisan support.
At this point, let me say a few things about the bill's impact on my
state of Montana.
From the very beginning, the impact of the tax cut on Montana has
been something of a paradox.
On one hand, Montanans are rugged individualists. We do not like
regulations and we do not like taxes.
On the other hand, Montana's economy is hurting. Incomes are low. A
tax cut like the one proposed by the President, that was aimed
primarily at high-income folks would not help us very much.
In fact, under the President's proposal, Montana would have received
less of a tax cut, per capita, than any other state in the nation.
Fortunately, the conference committee has produced a bill that, for
Montana, improves dramatically on the President's proposal.
We cut taxes, across the board. But we pay special attention to
working families.
As a result, the conference report will give Montanans a tax cut that
is, on average, 15 percent higher than under the President's proposal.
And we will cover almost 70,000 more Montana children, under the
child credit, than the President's proposal--70,000.
Just as important, the conference report retains key incentives for
education, which is at the very heart of our work to generate new jobs
for the new economy.
And it creates new incentives to help small businesses set money
aside for their employees retirement.
These incentives will help with the most important task in Montana,
economic development.
All in all, you might say that this is a tax cut that was made in
Montana.
Pulling it all together, this bill is good for working families. It
is good for education. It is good for the economy. It is good for
Montana.
This legislation is good for the country, it is good for America. It
is much better than the legislation we would otherwise have before us.
I worked with Senator Grassley, the chairman of the committee, to
produce a Finance Committee bill which has provisions that are much
better from a Democrat's perspective than we would otherwise be faced
with on the floor. I worked with Chairman Thomas, chairman of the House
Ways and Means Committee, and produced a conference report that is much
better than what we would otherwise be voting on on the Senate floor
from the point of view of most Democrats. This is a much better bill.
This conference report is much less backloaded--less backloaded by a
third compared with the House-passed bill. It is, in terms of the
frontloading/backloading, the same as the Finance Committee-passed
bill.
It retains the child credit refundability provisions so important to
so many people, particularly the children in our country who otherwise
do not get benefits. This proposal was championed by Senator Snowe,
Senator John Kerry, and many others. We are proud to have that
provision in the bill.
It also very much helps the distribution of this bill toward middle-
and low-income Americans. Every American gets a tax cut from this bill.
The most wealthy get a greater tax cut because they pay the most taxes.
But I might say middle-income Americans also get a very significant tax
cut. In fact, they receive proportionately more than current law. The
only exceptions to this proportionality are the estate tax provisions
and, of course, many Senators favor those estate tax provisions whether
they oppose the rest of the bill or not.
All in all, this is a bill which is fair. Its provisions are for the
country.
In the education section, for example, Senator Torricelli's provision
is excellent. Senator Mary Landrieu's adoption tax credit is an
excellent provision as well. The pension provisions, which are very
important to both sides, are in this bill. There is modest--not much
but a modest alternative minimum tax cut provision. We, obviously, have
to address that situation, and we will in the future.
The conferees worked off the Senate bill, not the House bill. This
explains why we have all the provisions in the Senate bill that were
not in the House bill.
On upper rates, we moved about halfway toward the House, but,
frankly, the House moved more than halfway toward the Senate on upper
rates. We create a 10-percent bracket retroactive to the first of this
year.
One final point I would like to make. Some may complain that this
bill is more expensive than the $1.35 trillion allowed in the budget
resolution. Their complaint is that the bill sunsets at the end of 2010
rather than September 30, 2011.
A point of order would lie against this conference report had we not
moved the sunset date. As it is before us, all of the tax provisions in
this bill terminate in 10 years, which means any estimates of cost over
the subsequent 10 years are meaningless. There is no cost from this
bill beyond 2011 because of the sunset. The change in the sunset date
was necessary because of Senate rules. It also helped us make sure we
have the provisions that we care about: education, child tax credit
refundability, 10 percent rate; widening the bracket of 15 percent, and
others.
I see my time is expiring. I urge Senators to remember, perfection
should not be the enemy of the good. Nothing is perfect, even this
bill, but it is a good bill.
I yield to whomever next seeks time.
[[Page S5774]]
CONGRESSIONAL BUDGET ACT COMPLIANCE
Mr. DOMENICI. Mr. President, pursuant to section 313(c) of the
Congressional Budget Act of 1974, I submit for the Record a list of
material in the conference agreement on H.R. 1836 considered to be
extraneous under subsections (b)(1)(A), (b)(1)(B), and (b)(1)(E) of
section 313. The inclusion or exclusion of material on the following
list does not constitute a determination of extraneousness by the
Presiding Officer of the Senate.
To the best of my knowledge, H.R. 1836, the Economic Growth and Tax
Relief Reconciliation Act of 2001, contains no material considered to
be extraneous under subsections (b)(1)(A), (b)(1)(B), and (b)(1)(E) of
section 313 of the Congressional Budget Act of 1974.
submitting changes to committee allocations, functional levels, and
budgetary aggregates
Mr. DOMENICI. Mr. President, section 310(c)(2) of the Congressional
Budget Act, as amended, provides the chairman of the Senate Budget
Committee with authority to revise committee allocations, functional
levels, and budgetary aggregates for a reconciliation conference report
which fulfills an instruction with respect to both outlays and
revenues. The chairman's authority under 310(c) may be exercised if the
following conditions have been satisfied:
1. The conferees report a bill which changes the mix of the
instructed revenue and outlay changes by not more than 20 percent of
the sum of the components of the instruction, and,
2. The conference agreement still complies with the overall
reconciliation instruction.
I find that the conference report on H.R. 1836 satisfies the two
conditions above and pursuant to my authority under section 310(c), I
hereby submit revisions to H. Con. Res. 83, the 2002 budget resolution.
The attached tables show the current 2002 budget resolution figures as
well as the revised committee allocations, functional levels, and
budgetary aggregates.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[[Page S5775]]
[GRAPHIC] [TIFF OMITTED] TS26MY01.001
[[Page S5776]]
[GRAPHIC] [TIFF OMITTED] TS26MY01.002
[[Page S5777]]
[GRAPHIC] [TIFF OMITTED] TS26MY01.003
[[Page S5778]]
[GRAPHIC] [TIFF OMITTED] TS26MY01.004
[[Page S5779]]
[GRAPHIC] [TIFF OMITTED] TS26MY01.005
[[Page S5780]]
[GRAPHIC] [TIFF OMITTED] TS26MY01.006
[[Page S5781]]
[GRAPHIC] [TIFF OMITTED] TS26MY01.007
[[Page S5782]]
[GRAPHIC] [TIFF OMITTED] TS26MY01.008
[[Page S5783]]
Ms. CANTWELL. Mr. President, I support efforts to provide hard-
working Washingtonians and all Americans with tax relief such as
eliminating the marriage penalty, making college tuition tax
deductible, providing estate tax relief, and assisting workers in
saving for their retirement.
That's why I voted for the amendment offered by Senator Daschle that
would have provided roughly $900 billion in tax relief, including
immediate $300 refund checks for all American taxpayers, given all
income taxpayers a tax cut by creating a new ten percent income tax
bracket, provided marriage penalty relief right away, as opposed to
years from now as in the conference report, wiped out the estate tax
for the vast majority of taxable estates, established a permanent
research and development tax credit to stimulate research and
innovation, provided a deduction for college tuition, enhanced
incentives for retirement savings, and created a package of energy
conservation and efficiency tax incentives, among other important
provisions. This amendment also made sure that Social Security and
Medicare are protected and reserved sufficient funds to enact a
Medicare prescription drug benefit.
Unfortunately, that amendment failed and instead the Senate today
considered, and passed, a $1.5 trillion tax cut. When you take away all
the gimmicks, some estimate $1.9 trillion. This cost explodes to over
$2 trillion when you add interest costs and exceeds $4.3 trillion in
its second ten years. I believe that the bill we have passed today is
short-sighted and fiscally irresponsible. Comprehensive tax relief must
be measured against the need to maintain fiscal discipline, and
stimulate economic growth through continued federal investment in
education and job training, as well as giving relief to citizens in
times of surplus. The conference report passed today fails this test.
The tax cut is based on the promise of budget projections for the
next ten years--projections that are notoriously inaccurate. Ten years
is just about the worst planning horizon possible--too long for
accuracy, too short for completeness. Moreover, these tax cuts are
premised on a surplus that may or may not appear. Budget projections
are notoriously inaccurate and, therefore, highly likely to be wrong,
especially when projected out ten years. Indeed, the nonpartisan
Congressional Budget Office says its surplus estimate for 2001 could be
off in one direction or the other by $52 billion. By 2006, this figure
could be off by $412 billion. It is very likely that we will only be
able to afford this tax cut by raiding the Social Security and Medicare
trust funds.
We need to invest in our nation's economic future by making a
commitment to research and development to maintain our status as a
global leader. Even though the Senate included a permanent extension of
the research and development tax credit in its version of the bill,
that provision was dropped in conference. That was a mistake. We need
to do more, not less, in these times of economic uncertainty to
stimulate investment and spur our economy forward.
The country is at a critical juncture in setting our fiscal
priorities: our choices are maintaining our fiscal discipline and
investing in the nation's future education and health care needs, or
cutting the very services used daily by our citizens. I am afraid that
today we have gone down the wrong path. Our approach should be more
balanced. We should provide tax relief to all Americans but retain our
ability to invest in our citizens education and pay down the debt. This
will best help continue and enhance our long-term economic strength.
Mr. NELSON of Florida. Mr. President, I rise in opposition to the
conference report to H.R. 1836, the reconciliation tax legislation. I
strongly support paying down our national debt. I support fair tax
cuts, marriage penalty relief, and estate tax repeal. I voted for a
substitute for a $900 billion tax cut, and another substitute which
provided for a $1.2 trillion tax cut.
But this bill does not meet my criteria that the Social Security and
Medicare trust funds will not be touched now or in the future. Because
of the fiscally irresponsible way the bill was drafted, with gimmicks
like changing the beginning and ending dates of key tax provisions,
this bill is flawed public policy that will in fact cost our country
much more than the $1.35 trillion allowed by the budget resolution.
As a fiscal conservative, I cannot in conscience, nor in substance,
vote for this bill. This legislation is the height of fiscal
irresponsibility.
In order to make the tax cut fit into the limits of $1.35 trillion
over 10 years imposed by the budget resolution, this bill suspends the
tax cuts in the ninth year, reverting to the status quo of current law
with no tax cuts in the tenth year. This is fiscal deception at its
worst.
If the tax cut is extended in the tenth year by future Congresses, as
expected, the cost then becomes $1.53 trillion over 10 years, which
breaks the budget agreement, and therefore, throws us into fiscal
chaos.
This legislation greatly increases the likelihood that the Federal
Government will use up all of the projected surplus and there will not
be any left over to pay down the national debt without raiding the
Medicare and Social Security trust funds. That would be tragic.
And if there are additional investments needed over the next decade,
as there certainly will be, such as for education, the environment,
health care, and national defense, then the federal budget will be
written in the red ink of deficit spending.
In other words, we would be spending more than we have coming in, and
therefore, increasing the national debt.
I will not take such a risky course with our economy, and I must
express myself in the strongest possible terms.
Mr. CORZINE. Mr. President, I rise in strong opposition to this
conference report.
I have been in the Senate for 143 days, and I have felt honored to
serve with senators from both sides of the aisle. Today, however, we
vote on a conference report that fails the tests of intellectual
honesty, fairness, and fiscal responsibility.
The conference report is not intellectually honest. It cynically
includes a variety of provisions designed to hide its true costs. Some
provisions are not effective for several years. Some are sunsetted
after a few years. And all are eliminated after 9 years. In addition,
the conference report fails to extend the research and development tax
credit, it fails to extend many of the other expiring provisions that
we know will be extended, and it fails to provide relief from the
alternative minimum tax that we all know will be necessary. These are
nothing more than deceptive inventions to shoehorn tax provisions that
far exceed $1.35 trillion, the limit agreed to in the in the budget
resolution. These deceptions are intended to divert the American people
from the real costs of the legislation. Ultimately, they will only
reinforce the public's cynicism about politics.
The conference report also is fundamentally unfair. It would provide
tax benefits averaging more than $50,000 for the top one percent, whose
average incomes well exceed one million dollars. Meanwhile, the
overwhelming majority of ordinary taxpayers, 72 million of whom are in
the 15 percent tax bracket, will receive no marginal rate relief at
all. That is not fair, and it is not right.
As a matter of fairness, how can the top one percent of taxpayers,
who pay 22 percent of federal taxes, receive 38 percent of this
legislation's benefits? Where is the tax relief for those working
Americans who carry the heavy burden of payroll taxes, sales taxes and
property taxes?
Finally, Mr. President, this conference report is fiscally
irresponsible. In fact, this tax bill returns America to a dangerous
formula for fiscal affairs which runs the risk of promoting financial
instability as this legislation unfolds. We surely jeopardize the
financial stability of Social Security and Medicare by limiting federal
revenues which could be used to shore them up for the impending
retirement of the baby boomers, and to provide a prescription drug
benefit for seniors today.
But maybe the most important financial consideration is the 180
degree turn from our recent commitment to fiscal responsibility and the
reduction of our public debt. The return to fiscal irresponsibility in
the 1990's led to the
[[Page S5784]]
greatest expansion we have enjoyed since World War Two. We have
experienced thriving entrepreneurship and productivity gains. 22
million jobs have been created. Two million businesses were
established. And we have enjoyed the longest period of low inflation in
decades. All of this is now at risk.
Once global financial markets--currency, debt, and equity--begin to
fully understand the long-term implications for fiscal discipline, I
fear in the intermediate or long-term we will have instability in these
markets. That instability potentially will limit investment due to
rising interest rates, a depreciating dollar and lower equity
valuations. It may take some time for the full impact of this tax
package's implications to be understood, but I believe the analysis
will come and the problems will occur.
We all support a legitimately sized and directed tax cut. It is
unfortunate that we have chosen this tax cut, which limits our ability
to secure Social Security and Medicare for the long-term, which will
make it impossible to pay off our national debt, and limit our ability
to deal with important domestic and defense priorities we all say we
support.
I hope that my colleagues will reflect on the concerns I have
outlined with respect to intellectual honesty, fairness and financial
stability, and vote no on the conference report.
Mr. CRAIG. Mr. President, I rise in support of the Conference Report
for H.R. 1836, the Economic Growth and Tax Relief Reconciliation Act of
2001.
I commend the leadership and hard work of the chairman and ranking
member of the Finance Committee, as well as the many colleagues who
have actively helped shape this bill. This bill is a true
accomplishment, and a truly bipartisan one at that.
As an adoptive parent, myself, I especially want to comment on one
section: Section 202, for the extension, expansion, and improvement of
the adoption tax credit and adoption assistance programs.
I am happy to note that this section is virtually identical to the
Senate floor amendment proposed by the Senator from Louisiana, Ms.
Landrieu, and myself. This is a perfect example of a bipartisan effort
that will accomplish much good for so many people in need.
The adoption provisions include the following:
Extending the regular adoption tax credit, and the exclusion from
income for adoption assistance programs, making them permanent, like
the currently-permanent special needs adoption tax credit; Increasing
both the tax credit and the income exclusion to $10,000; For families
adopting special needs children, de-linking the special needs credit
from cumbersome and inflexible IRS regulations that currently exclude a
wide range of legitimate adoption expenses related to these children;
Protecting the benefit of the adoption tax credit by allowing the
credit against the alternative minimum tax, permanently; and Making
both the adoption credit and exclusion for assistance available to more
families--and more children needing adoption--by lifting the cap on
income eligibility to $150,000.
It is not possible to overstate the importance of these provision to
the many families and many children who have hoped to build an adoptive
family, but have found so many barriers to doing so. In agreeing to
include these provisions in this conference report, the Congress has
taken a giant pro-adoption and pro-family step forward. More children
will have loving and permanent homes. I thank my colleagues for that.
Overall, this bill signals a great day in America. The Congress has
delivered the tax relief the American people voted for when they put
George Bush in the White House, and elected this Congress.
There has never been a more important time to reduce the tax burden--
right now Americans are more heavily taxed than at any time in history
and pay more in taxes than they spend on food, clothing, and housing
combined.
This tax relief agreed upon today is a quality example of how
Republicans and Democrats can work together to get the job done for the
American taxpayer.
This bill means relief for every American who pays taxes. Compared
with their current tax burdens, this bill provides the most relief to
modest--and middle-income families. It is good for small businesses and
jobs, and it will help jump-start the economy at a critical time. This
bill means hardworking Americans and their families will have a little
more freedom, and the Federal Government a little less control over
their lives.
I commend my colleagues for passing this bill, and I applaud our
President for having the vision and tenacity to initiate this tax
relief and see it through to becoming law.
Mrs. FEINSTEIN. Mr. President, I rise today in support of the
reconciliation conference report currently pending before the Senate.
I do so for a simply reason: I strongly believe that when the
Government is in position to be able to return money to the American
taxpayers, we should.
Likewise, I believe that when times are tough the Government has an
obligation to consider increasing taxes to meet the need of the Nation.
This is what we did in 1993, when I first came to the Senate and we
were facing mounting deficits and an increasing national debt.
And today, thanks to those hard choices, the budget is in balance and
we have surplus projections for the next decade. We are in a position
to return some of the hard-earned money of the American people.
This approach to taxes--that the Government taxes when it must, and
decreases taxes when it can--is the approach that I took when I was
mayor of San Francisco, and it is the approach that I continue to
follow to this day.
Additionally, I believe that this tax package is important to my
State, California, which today stands on the precipice of a major
economic slowdown.
California is the largest taxpaying State in the Nation, with some 13
million income taxpayers. In fact, California is a net contributor to
the federal budget, giving more in taxes than we receive in benefits.
Today, as many of my colleagues are aware, a serious and acute energy
crisis is causing businesses in California to shut down, and people to
be laid off of work.
Already this year it is estimated that between $25 and $30 billion
have been taken out of the California economy to be spent on increased
energy costs. If things continue on the same course this figure will
mushroom in the months ahead. This is a major problem, and one whose
impact will not just be limited to California.
In my judgment the benefits provided under this tax package are
important, at this time, to help California and Californians face the
economic challenges created by this energy crisis. For example, the
creation of the new 10-percent income tax bracket, for example, will
result in an annual tax cut of $300 for an individual, $600 for a
couple for all California income taxpayers. This new 10-percent bracket
is retroactive, and for people seeing their energy bills spiral up and
up, receiving these refunds checks will be a big relief.
Likewise, this conference report has accelerated the tax relief in
the upper tax brackets, so that middle class families in the 28-percent
and 31-percent brackets will see their tax bills decrease in 2001 and
2002, with the lower withholding rates going into effect this July,
just as the energy crisis in California is projected to reach a new
plateau.
And the child credit provisions, refundable as per the Senate-passed
bill, will provide much-needed assistance to California families
earning as little as $10,000--and there are 1.5 million households in
California that make between $10,000 and $20,000.
As I discussed on the floor earlier this week, I also believe that
other provisions of this bill--providing marriage penalty relief,
estate tax relief, providing pension and education incentives, and
making a down payment in addressing the alternative minimum tax
problem--are likewise important to assure the continued long-term
economic health of the California economy, and will benefit many hard-
working American families.
I would not argue that this is the perfect bill. Nor would I claim
that it is the exact bill that I would have drafted.
Some of my colleagues, for example, have raised concerns that the
size of this tax package may threaten to undermine future fiscal
stability. I share these concerns. But I would remind my colleagues
that although this bill may be larger than some on our side
contemplated at the beginning of the year,
[[Page S5785]]
it is also far smaller than the proposal put forward by the President.
And I would also remind them that this bill contains ``sunset''
provisions--critical to my decision to support this legislation--which
will allow us to revisit the components of this bill in the future, and
make adjustments if and as need be.
The bottom line is that I believe that this is a bill that will
provide significant relief to the people of California and the people
of the United States. I urge my colleagues to join me in support.
Mr. BINGAMAN. Mr. President, I rise to note that on today's vote on
the tax reconciliation bill conference report, I will be pairing with
my colleague, Senator Domenici. My position on this tax bill is well
known, as is Senator Domenici's. Were I actually casting a vote, it
would be a ``no'' vote, just as it has been in the Finance Committee
and on the Senate floor previously. I have grave concerns about this
bill and its implications for our future budgets, and its implications
for New Mexico, and I remain opposed to the substance of this
conference report.
Since he had important commitments in New Mexico during the past 48
hours, Senator Domenici is unable to be here for today's vote, and he
has made a personal request that I pair with him. As a courtesy to my
colleague. I have agreed to do so, and would ask Senate records to
reflect my position on this bill as a ``no'' vote.
(At the request of Mr. Daschle, the following statement was ordered
to be printed in the Record.)
Mrs. BOXER. Mr. President, just as I voted no on the Senate
version of this tax bill because it was fiscally irresponsible, raided
Social Security and Medicare, and would force cuts in investments in
working Americans, including education, so too do I oppose this
conference report. It is even worse, and if I were able to be present
for the vote, I would vote no.
The top marginal tax rate--that for the wealthiest of Americans--is
reduced even more than in the Senate bill. Instead of dropping to 36
percent, it drops to 35 percent. And with other changes in the bill,
the administration is claiming that the top rate has been effectively
reduced to 33 percent.
The refundability of the child tax credit--a key to helping children
in low-income families--has been changed. By indexing the eligibility
threshold, it will leave children behind.
And I continue to oppose the repeal of the estate tax. This
overwhelmingly benefits the wealthiest Americans. Only 2 percent of
Americans are subject to the estate tax.
All of this means, that the richest 1 percent of Americans, earning
an annual average salary of over $1.1 million, will, according to The
Washington Post, receive about 40 percent of the tax cut. That is
unfair.
Finally, this tax bill plays a game with our fiscal future. To meet
the target of $1.35 trillion of tax cuts over the next 10 years, all of
the tax cuts in this bill expire in nine years. Why? Because if they
were in effect 10 years from now, the cost of this bill would be
astronomical, and it would be very clear to the American people that
this tax bill is nothing but a riverboat gamble with our children's
future.
Mr. LIEBERMAN. Mr. President, I am deeply disappointed with the tax
bill that we are voting on today. As I have expressed for some months
now, I believe that we can afford a significant and responsible tax cut
and I would very much like to vote for one. However, the bill that we
are considering today has come back to us from the conference committee
as an even more irresponsible piece of legislation than the already
bloated and gimmicky bill that we passed out of the Senate earlier this
week. With a wink and a nod, this legislation backloads and sunsets
provisions in order to squeeze a tax cut of at least $1.7 trillion into
a reconciliation package requiring a much smaller $1.35 trillion tax
cut. Even more alarming, because so many provisions of this bill are
heavily backloaded, the full cost can really be seen only by examining
the cost in the second 10 years, from 2012 to 2021. This is the first
period in which all of the measures in the bill would be fully
effective. This bill would cost more than $4 trillion during its second
ten years.
This tax cut squanders the hard-earned prosperity that our country
has built over the last several years of historic economic growth. It
returns us to the fiscal nightmare of the 1980s. This huge tax cut will
bust the budget, resurrect the deep deficits of the past, and drive our
economy into a ditch. For these reasons I will vote against this bill
and urge my colleagues to do so as well.
Ms. SNOWE. Mr. President, I rise in support of the bipartisan
conference report on the fiscal year 2002 tax cut reconciliation
package that provides much needed tax relief for the American people,
including a provision that I and Senator Lincoln and others fought to
retain: a new refundable per child tax credit for low-income, working
families.
I first want to thank and commend Chairman Grassley and Ranking
Member Baucus for working so closely together to develop a fair and
balanced tax bill that passed the Senate by a vote of 62 to 38 last
week--and for fighting to retain the structure and focus of that
package so effectively in the ensuing House-Senate conference. Because
of their efforts--and the manner in which they so successfully defended
the Senate's position--I believe the conference report we are now
considering deserves at least the same level of bipartisan support as
the original Senate bill, and urge its adoption.
No package could truly be said to produce fairness without including
a refundable child tax credit. That's why, as part of the original
Senate package, I worked with Senators Lincoln, Kerry and Breaux--as
well as both the Chairman and Ranking Member--to include a provision
that builds on the President's proposal to double the $500 per child
tax credit by making it refundable to those earning $10,000 or more,
retroactive to the beginning of this year. That's why I offered an
amendment last week that called for the retention of this provision in
the House-Senate conference--an amendment that was adopted by a vote of
94 to 4. And that's why, during the conference, I continued to fight to
retain this provision in the face of strong resistence by detractors.
Through these efforts--and because of the unyielding support of
Chairman Grassley and Ranking Member Baucus--families earning the
minimum wage will be able to receive a refundable per child tax credit
for the first time. Let there be no mistake, this is introducing a
wholly new concept with respect to that child tax credit, and one that
is most assuredly warranted.
How will this help? In its original form, the tax relief plan would
not have reached all full-time workers--the tax reduction would have
disappeared for wage-earners with net incomes of less than about
$22,000. Indeed, without refundability, there are almost 16 million
children whose families would not benefit from the doubling of the
Child Tax Credit. To give an idea of how many children we're really
talking about, that's about twice the population of New York City or
about thirteen times the entire population of my home State of Maine.
Thanks to this provision, the bill now provides a substantial tax
credit to a total of 37 million families and 55 million children
nationwide who might otherwise have gained no benefit from the proposal
to simply double the per-child credit.
Many of these are families earning minimum wage, struggling to make
ends meet in addition to paying their share of State and local taxes,
payroll taxes, gasoline taxes, phone taxes, sales taxes, and property
taxes. All told, the average full-time worker earning the minimum wage
pays more than $1,530 in payroll taxes, and more than $300 in federal
excise taxes.
This is no small burden to working families already living on the
fiscal edge. In fact, despite America's strong economy, one in six
children live in poverty, and the number of low-income children living
with a working parent continues to climb. My provision to make the
child tax credit refundable will give these families a hand up as they
strive for self-sufficiency, and give these kids the hope of a
childhood without poverty.
When fully phased-in, the partially refundable credit will provide a
benefit of up to 15 cents on every dollar earned above $10,000 per
year, adjusted for inflation. Likewise, the maximum refundable credit
will rise from $500 to $600 this year, increasing to $1,000 by
[[Page S5786]]
2011. Families with more than one child would also receive a refundable
credit based on their income.
Will this tax relief solve all the financial problems faced by
eligible families? No. But it will help to purchase essentials, like
groceries, heating fuel, or electricity. And it sends an important
message of encouragement that we want those who work hard and strive to
improve their lives to succeed. Refundability shows that tax relief is
for all full-time working families.
With these kinds of adjustments, we take a critical first step in
ensuring that the balance of this package in its totality will help
lower and middle income taxpayers.
The fact of the matter is that the case for tax cuts has never been
more compelling. As a percent of GDP, federal taxes are at their
highest level, 20.6 percent, since 1944--and all previous record levels
occurred during time of war or during the devastating recession of the
early-1980s, when interest rates exceeded 20 percent and the highest
marginal tax rate was 70 percent.
The fact of the matter is, it would be irresponsible not to return a
reasonable portion of the surplus--which is really just an overpayment
in the form of taxes--to the American taxpayer. And there should be no
mistake--if we fail to enact meaningful relief package, we will fail
both working families and the economy upon which their work depends.
And let us not forget that this package is nearly 25 percent smaller
than was proposed by President Bush in his budget. Let us not forget
that it will utilize less than one-half of the projected surplus over
the coming 10 years, 45.7 percent, excluding both Social Security and
Medicare surpluses.
In fact, even with a $1.25 trillion tax cut over the coming ten
years, we will still have about $1.5 trillion available for other
priorities, including the funding of a new prescription drug benefit
and additional debt reduction. This package is neither unreasonable nor
irresponsible.
Just as importantly, many of us fought hard to ensure that the
benefits of this tax cut package will be weighted toward those who need
relief the most--middle and lower-income taxpayers--and that weighting
has been retained.
We have before us a thoughtful proposal that addresses concerns I,
myself, had with the distributional effects of the original package.
And it does so in a variety of meaningful ways--retroactively creating
a new ``ten percent'' bracket, providing much-needed AMT relief for
middle-income families, and ensuring marriage penalty relief for all
couples while bolstering the Earned Income Tax Credit.
And that's not all. The bipartisan education package that the Finance
Committee reported in March is included in this bill, along with a new
deduction of up to $4,000 for higher education tuition paid--a
provision that I sought along with Senators Torricelli and Schumer.
With the cost of college quadrupling over the past 20 years--a rate
nearly twice as fast as inflation--this provision will provide critical
assistance to individuals and families grappling with higher education
costs.
It also includes the bipartisan IRA and pension package--introduced
separately by Senators Grassley and Baucus that will not only
strengthen and improve access to pensions and IRA's, but also enhance
fairness for women who frequently leave the workforce during prime
earnings years, and suffer from reduced retirement savings accordingly.
Again, this is a balanced and fair package. In looking at the various
analyses of the changes we made to the package, the Joint Tax Committee
estimates that those earning less than $50,000 will see their share of
federal taxes drop from 14.3 percent under current law to 14 percent in
2006. Conversely, in the same year, the share of federal taxes paid by
those with incomes of $100,000 or more will increase from 58.4 percent
to 58.7 percent.
Moreover, as a result of the refundability of the child tax credit,
according to Joint Tax, those in the $10,000 to $20,000 income range
will see their share of federal taxes reduced from 1.5 percent to 1.4
percent--a reduction of $3 billion. And by 2006, this level is down to
1.1 percent.
And in terms of the overall package, it is worth noting that creation
of the new 10 pecent bracket accounts for $421 billion, while
reductions in all other brackets amount to $420 billion--that's 50
percent of the cuts going to the lowest bracket alone.
As for the compromise we developed that results in a reduction of the
uppermost bracket from 39.6 to 35 percent, it's worth noting that many
individuals in that bracket are small business owners whose business-
related income is taxed as personal income.
According to the Treasury Department, in 2006, 63 percent of the tax
returns that would benefit from reducing marginal rates in the top two
brackets would be reporting some income or loss from a business. And in
my home State of Maine, for example, about 97 percent of all businesses
are small business.
The reality is, small businesses have played a central role in our
Nation's economic expansion. From 1992 to 1996, for example, small
firms created 75 percent of new jobs--up 10.5 percent--while large-
company employment grew by 3.7 percent. So why--when we're talking
about such a tremendous impact on individuals and the economy--when the
top corporate tax rate is 35 percent--why should we continue making
small business men and women pay more?
And let's face it, the economic impact of this tax cut cannot be
dismissed. In fact, given the warning signs in our economy, I believe
the timing of this tax package is fortuitous. One Business Week article
spoke of a terrible first quarter, stating that ``The earnings of the
900 companies on Business Week's Corporate Scoreboard plummeted 25
percent from a year earlier--The first quarter profit plunge was the
Scoreboard's sharpest quarterly drop since the 1990-91 recession.''
Productivity fell at a 0.1 percent annual rate in the first quarter--
the first quarterly drop in six years. And layoffs are at their highest
levels since they were first tracked in 1993, with major corporations
announcing more than 572,000 job cuts this year. Little wonder, then,
that the unemployment rate has risen to 4.5 percent, with April's job
loss the largest since February 1991.
Even more ominous is Business Week's recent observation that if wide
layoffs of high wage earners continue, the likelihood of recession
becomes even greater.
And the Washington Post noted recently that Federal Reserve cuts in
interest rates have been the most aggressive since the second quarter
of 1982--the worst recession since the great depression--and that
observation came before the most recent half-percent rate cut.
And while it is true that a tax cut may not actually prevent a
recession, if one is in the offing, I well remember the words of
Federal Reserve Chairman Alan Greenspan, who came before the Finance
Committee in January.
Chairman Greenspan stated that tax cuts, while perhaps not having an
immediate effect, could act as ``insurance'' should our recent downturn
prove to be more than an inventory correction--that it could soften the
landing and shorten the duration of any recession should it occur. And
let's keep this in mind as well--``blue chip'' economists have
indicated just this week that they are factoring the tax cut in their
projections.
Given our growing economic uncertainty and the grim repercussions it
could have, I am pleased that--as I urged on the floor last week and in
a letter to the Senate conferees--the final conference report ensures
that even more money will be in the hands of taxpayers this year than
was originally anticipated in the Senate bill. Specifically, by
providing for the delivery of refund checks to taxpayers this fall--
$300 for single taxpayers and $600 for couples--tax relief will be
accelerated during the current year, and hopefully help get the economy
back on track.
I think the American public often thinks about tax cuts the way they
would think of winning the lottery--it would be great if it really
happened, but it in reality it really only happens for ``the other
guy''--that tax cuts will only apply to someone else--and if they do
happen, they'll be so small as to have no appreciable effect on
everyday life.
Well, the American people should know that this tax cut applies to
everyone, and especially those who could
[[Page S5787]]
use the break the most. And that's true not just on paper, but in
reality--in the real world.
This is no phantom tax cut--this is real, this is balanced, and this
is fair. And what this all comes down to is, if you're really serious
about cutting taxes, you should support this package that begins the
process of providing some relief given, once again, the status of our
economy and the tax burden on the American people.
We know we're never going to get unanimity on an issue of this
magnitude. But we can have progress and we can come to some kind of
consensus. This package represents a bipartisan effort that, in the
aggregate, is good for our future and good for the American taxpayer
today. And it deserves our support. Thank you very much.
Mr. ROCKEFELLER. Mr. President, I rise today in strong opposition to
this fiscally irresponsible conference report. Today, this tax cut
perpetrates a fraud on the American people.
Their hard work created this surplus and this opportunity to sustain
our economy and strengthen Social Security and Medicare. But no one
should be fooled that this conference report is anything but an
irresponsible, unfair, and politically motivated giveaway to the
wealthiest in our society.
I deeply regret that we have failed to take this historic opportunity
to provide a meaningful tax cut to all Americans, and at the same time,
continue to make real progress paying down our national debt and
reserve sufficient resources to invest in our future.
I voted for a $900 billion tax cut that would have allowed us to
provide all Americans with an immediate and meaningful tax cut across
the board and that included important education and energy provisions,
and would have allowed us to pay down the debt and provide a Medicare
prescription drug benefit, as well leave room for other West Virginia
priorities.
The conference report's tax cut is far too large to protect West
Virginia's priorities and its future whether it's education, a Medicare
prescription drug benefit, federal investments in roads and aviation
safety, or safer communities. In fact, the true cost of this bill is
probably over $1.7 trillion over the 10 years of the budget. And
because of backloading of the tax cuts, which means that the effective
dates for many of the tax cuts don't occur for at least 5 years, the
tax cut cost will explode in later years.
Even more farcical, the conferees have hidden even more of the true
costs of the tax cut by making it appear that it will expire, and taxes
substantially rise, after 2010. The Chairman and Ranking Member of the
Committee know this is simply not what will happen, but they have
nevertheless used this gimmick to make it appear that they have held to
the Senate-passed Budget Resolution. It is ludicrous to think that the
Congress would impose a quarter of a trillion dollar tax increase on
the American people in 2010 when this tax cut proposal expires. These
tax cuts will be extended, and their cost will thus explode to $4
trillion and more. That's not responsible, and it's bad economic
policy.
What's even worse, this bill is just not fair to hardworking
Americans who created the surplus.
This tax conference report simply gives too much to the wealthiest
Americans and does too little to reduce our national debt. This tax
plan endangers our ability to provide a desperately needed Medicare
prescription drug benefit to 39 million American seniors and taps into
the Medicare Trust Fund. It threatens Social Security just when our
``baby boomers'' start to retire. It leaves us too little to invest in
our children's education, and jeopardizes our efforts to improve our
Nation's transportation infrastructure. It chokes our ability to
improve our national defense and veterans health care--ironically, just
as many Members of Congress are planning to return to their states to
honor their veterans on this coming Memorial Day. This tax bill short-
circuits critical components of a balanced energy policy to invest in
clean coal research and encourage alternative fuels and energy
efficiency.
And this tax giveaway will, undoubtedly, return us to the huge budget
deficits we worked nearly a generation to eliminate. All of us remember
the consequences of the Reagan tax cut--two decades of spiraling
deficits. And for my state of West Virginia, the consequences were
devastating. As a Governor, I know how my state suffered. I don't want
to return to those days, and West Virginians don't either. This
proposal, regretfully, sets us on that path.
As the second ranking Democrat on the Senate Finance Committee, I was
officially named a conferee on this tax legislation. I had hoped to
work hard to improve the Senate-passed bill where we could, and, at a
minimum, retain the Senate's provisions. While the Senate's tax
proposal was backloaded and cost the same unaffordable $1.35 trillion,
it included some essential improvements for lower and middle income
families. As grave a mistake as I believe this tax package is, and as
dangerous as I believe it will be for our Nation's economic future, I
was prepared to support these Senate provisions in conference and do
what I could to prevent further erosion of the already tilted tax cut
for the rich. I deeply regret to report, however, that neither the
Minority Leader nor I were included in the negotiations of this bill.
We were presented with this conference report after it had been
completed and at the same time my nonconferee colleagues learned of the
package's content. I note this procedural point only to raise my
concern that we have deviated from the traditional committee processes
and from any semblance of true bipartisan negotiating, to our Nation's
and the Senate's ultimate detriment. The Chairman's repeated assertions
that this matter has been conducted in an open and inclusive process
does not reflect reality.
Let me outline the most obvious problems with this irresponsible tax
cut. The tax conference report has several fatal flaws. It plays games
with the effective dates of the tax cuts in order to mask the real cost
of this tax proposal. Those games mean that married people won't get
relief from the marriage penalty for 5 years, until 2006. The reason
why married people have to wait for their tax cut is because the
conference report chose to give even more money to the wealthiest
Americans at their expense.
The top income tax rate that was reduced from 39 percent to 36
percent in the Senate bill is now lowered to 35 percent by the terms of
the conference report--that's a 1.6 percent deeper cut than any other
income tax bracket. While there is no reduction in marginal rates for
the 15 percent income tax bracket--where most Americans and most West
Virginians pay their last dollar of tax--there is a 4.6 percent
reduction for the wealthiest Americans who need it the least. West
Virginians will not be fooled by that; they will see that this is
unfair. When we get the best analysis from the experts, it will no
doubt document just how much is robbed from middle income taxpayers to
finance the tax break for the wealthiest. Only 0.3 percent of West
Virginians are in the top income tax bracket. And let's not be misled
by the rhetoric that the wealthy get more of the benefit only because
they pay more taxes. Of course, the wealthiest Americans pay a
significant share of Federal taxes--about 22 percent. The President's
proposal would have given those wealthiest Americans 43 percent of the
tax cuts. This conference report will give them roughly 38 percent of
the entire tax cut. They pay in 22 percent, but they get 35 percent of
the surplus. I can't explain why they have been rewarded with more of
the surplus than they deserve at the expense of hardworking West
Virginia families, and I can't support it. I can't support a tax cut
that gives about 15 percent of our Nation's surplus to the bottom 60
percent of taxpayers, and 38 percent to the top 1 percent.
The estate tax provisions of this bill, also a benefit solely for the
wealthy, begin almost immediately--in 2002, but middle income married
couples are told they must wait for their relief until 2006. The estate
tax is also totally repealed in 2010. But another startling fact about
this tax bill is that the entire bill--even the tax relief for lower
and middle income people, the child credit, and EITC improvements, all
sunset in 2010 in order to pretend that this bill really costs $1.35
trillion over 10 years. We know that this is a sleight of hand. We know
Congress won't sunset or trigger off the tax cuts in 2010. So the true
cost of this bill, while it purports to be $1.35 trillion--will be
[[Page S5788]]
well over $4 trillion in the next 10 years. The Senate-passed bill cost
$1.35 trillion over 10 years, but to finance the upper income tax cut,
that timeframe was shortened by a year so about $90 billion could be
used to transfer it to the wealthiest Americans.
I should note that there are needed provisions to help lower and
middle income families with children in this bill that I think we can
all be proud of, even as they are set in the context of a tax bill for
the wealthiest Americans. I do not support this massive irresponsible
tax cut. But I do support the provisions to make the child tax credit
partially refundable. I do support the provisions to increase the
Earned Income Tax Credit, EITC, and to simplify and reduce errors in
the EITC. As the Chairman of the National Commission on Children years
ago, we issued a bold bipartisan report calling for a fully refundable
child tax credit of $1,000. The child credit and EITC provisions of
this bill are a major step in that direction, and it will help millions
of children and their families. I believe that tax relief should be
directed towards the families that need it the most: the parents who
are working and playing by the rules, but struggling to raise their
children on low-wages. I cannot support this overall package because I
do not believe it helps the majority of West Virginia families. But
some of its provisions, like the partially refundable child tax credit,
the EITC, and the education provisions will help families in my state
who need and deserve help.
The Senate-passed tax bill, bloated as it was, included a permanent
extension of the R&E tax credit. The conference report fails to include
this provision. The R&E tax credit is a highly successful way of giving
businesses an extra incentive to invest more in research and
experimentation that is highly beneficial but otherwise can be beyond
the reach of private companies. This investment benefits all Americans
by allowing companies to expand our understanding of science and
technology, and by enabling the marketplace to bring better products
and services to everyone. Congress should permanently extend the
credit, rather than leaving companies in limbo every few years about
whether it will be merely extended, in order to provide businesses with
the certainty they need to engage in long-term planning and resource
allocation. If businesses can count on the credit, they can make the
long-term, continuous investments that are necessary for real
breakthroughs.
I am glad that this conference report included pension provisions
that will help some middle income families save and improve
portability. Again, here, I would have done more for the majority of
taxpayers that need to be encouraged to save, but the balance of the
bill is an important savings tool.
Finally, the sad fact is that this tax cut is now so large that it
commits every dime of the surplus for tax cuts and current obligations,
leaving nothing--0--for Medicare solvency, new defense needs, or any
other future or unanticipated emergencies.
I will conclude by saying I regret that we are passing this bill
today without much opportunity to review its details, but knowing that
overall it gives too much to those who already have much, and reserves
too little for our Nation's most important priorities. I cannot support
this tax bill, and I hope that my fear that this bill will endanger our
Nation's economic future will be proven incorrect. It will
unquestionably make meeting the many needs of my state more difficult.
Mr. McCONNELL. Mr. President, this bill is about righting wrongs in
the tax code that are so flagrant as to transcend partisan rancor. It
is not fair to penalize Americans for marrying. It is not fair to
penalize Americans for dying. And it is not fair to ask the American
citizen to pay more taxes than ever during a peacetime economy. The
average American works almost two hours a day, or more than four months
a year, to pay his or her federal tax burden. Tax Freedom Day did not
arrive until May 3rd this year, the latest date ever.
It is fair, however, to help families shoulder the costs of raising
children and to encourage Americans to save their hard-earned money for
retirement and for education. This bill does just that. One provision
of this bill of which I am extremely proud of is the proposal to make
savings from qualified state tuition savings plans tax free. We are all
aware of the high costs of obtaining a college education. Even when you
account for inflation, we have seen a steady and stifling increase in
the costs associated with attending an institution of higher learning.
One of the most promising tools available to families who are trying to
save for these rising costs is the qualified state tuition savings
plan. These plans aide those families trying save for college by using
the power of compounded interest. For those families who use a state
tuition savings plan to save, compounded interest can be a blessing.
For those who must borrow to afford tuition, compounded interest can be
a heavy burden.
My home state of Kentucky has been at the forefront of those states
offering such plans, and in 1994 I introduced the first legislation to
make savings from qualified state tuition savings plans tax free. Since
that time, it has been my pleasure to work with my colleagues Senators
Sessions and Graham to enact several measures to facilitate the use of
these savings tools with the eventual goal of making qualified state
tuition savings plans tax-free. Earlier this year, I once again
introduced legislation, the Setting Aside for a Valuable Education,
SAVE, Act to do just that. I am honored at the tremendous support for
this provision from the members of the Finance Committee and I thank
them for again including it in their bill. I also want to express my
profound gratitude to the House and Senate conferees for including this
important provision in the Conference Report.
Indeed, it is fair to say that this tax bill restores tax fairness
and promotes financial flexibility with respect to our most basic
American institutions--education, marriage, children, and retirement.
The next generation of Americans will have better access to education
because of this bill. They will marry without paying a penalty. They
will pay less to the Government, and therefore, will have more money to
raise their families. They will be able to save more money to retire
with dignity. And finally, when their parents pass away, they will not
have to sell a family business to pay a death tax. These are not
Democratic or Republican goals, these are American ideals.
So, you might ask, why are our opponents complaining? I don't think
they are complaining about restoring tax fairness and financial
flexibility to American families. No, I think their real complaint is
that we did so while doing what our opponents have always claimed was
impossible--lowering taxes and protecting Social Security and Medicare,
and paying down the debt, and continuing to balance the budget. For
years we heard that any tax cut, no matter how fair it may be, would
rob Social Security, balloon the national debt, and raid domestic
spending. But now we have called their bluff: we have tax fairness that
is fiscally responsible. We finally are shedding some light on the
real, albeit unacknowledged, complaint of our opponents--that there
won't be as many spending sprees in Washington over the next 10 years.
Frankly, I wish we could do more in the way of tax relief. For
fairness sake, I wish we could repeal the death tax and the marriage
penalty immediately. And I wish we could push income tax rates even
lower.
We have spent a lot of time arguing about what Americans want when it
comes to tax relief. Well here's a novel idea--let's ask them. A Zogby
poll found that 8 out of 10 Americans think the maximum tax rate should
be less than 30 percent. Fox News reported similar results. And Gallup
found that 65 percent of Americans feel like they pay too high a
federal income tax.
My office has been filled with constituents coming to complain about
the death tax. As hard as it may be for some of my Democratic
colleagues to believe, most of these constituents are not tycoons. No,
they are small business owners, and they are fed up with the estate tax
looming over their families and their businesses. If only a tiny
fraction of small businesses are affected by the estate tax, as our
opponents constantly claim, why are all these people calling, writing,
and coming to see me? I'll tell you why. It's because they, and others
who own small businesses, all pay a price for the death tax. Some may
have to sell their businesses before they die to avoid the
[[Page S5789]]
death tax, and many of them pay a fortune in estate planning fees to
avoid the death tax. For those that can't escape the tax and whose
heirs may be forced to sell their businesses. Both the heirs and the
communities served by these small businesses suffer tremendously. Our
opponents rarely compute these collateral costs when they wave their
partisan statistics.
And to those who continue to argue about reform, rather than repeal,
of the death tax, I say this: it simply is not fair, as a moral,
political, or philosophical matter, to tax someone for dying. Dying is
not a choice, Mr. President, but passing on hard-earned assets to loved
ones is a choice, and one that our Government should not penalize by
making Americans visit the undertaker and the IRS on the same day.
To close, and to re-emphasize the issue of fairness, I want to
crystallize the two sides of this debate. Imagine if you overpaid your
mortgage bill to the bank for ten consecutive years. Because that's
what we're about to do--overpay our bill to the Government for the next
ten years. My guess is that everyone in this chamber would demand his
or her money back from the bank. I don't think we would accept
listening to the bank tell us that it had devised other plans to spend
our money. Indeed, we would be absolutely outraged at the very idea
that the money wouldn't be returned to us immediately.
And this is the crux of the debate: There are those, myself included,
who believe that taxes paid over and above the cost of government
belong to the American people--that the money should be returned to
them immediately for them to spend as they choose. And then there are
those who believe that taxes paid over and above the cost of Government
still belong to the Government and that the Government has the right to
choose whether to return it to the taxpayers or to spend it as they see
fit. Well, I am proud to say that I believe that this surplus belongs
to the American people, and I am glad we are going to give it back to
them.
Mr. McCAIN. Mr. President, I rise to oppose the Conference Report on
the Reconciliation bill. I do so after having expressed hope that the
progress we made in the Senate bill to scale back the benefits going to
the top rate taxpayers to make room for more tax relief to lower income
Americans would prevail in the final tax bill.
During the debate on the Senate version of the tax reconciliation
bill, I had urged my colleagues that substantial tax relief to middle
income Americans should be our top priority. While I regret that my
amendment to cut the top rate by one percent to 38.6 percent so
millions more middle class Americans would fall into the 15 percent tax
bracket failed on a tie vote, Senator Grassley did move in that
direction in the Senate bill by insisting that the top rate should be
cut to only 36 percent. As a result, I reluctantly voted for the bill
but pledged to vote against the Conference Report should further
reductions in the top tax rate be made at the expense of the majority
of Americans who are in much greater need of tax relief.
Unfortunately, the Conference Report did just that by jettisoning the
commendable work both Senators Grassley and Baucus did in crafting a
Senate reconciliation bill that provided more tax relief to middle
income Americans. This Conference Report lowers the top rate cut to 35
percent, at the cost of delaying, for several years, much needed tax
relief for married couples unfairly penalized by our tax code.
I regret having to vote against this Conference Report. We had an
opportunity to provide much more tax relief to millions of hard-working
Americans. I supported a $1.35 trillion tax cut despite my concern that
a tax cut of that size would restrict our ability to fund necessary
increases in defense spending. But I cannot in good conscience support
a tax cut in which so many of the benefits go to the most fortunate
among us, at the expense of middle class Americans who most need tax
relief.
Mrs. LINCOLN. Mr. President, today we have the opportunity to
demonstrate that bipartisanship is working in Washington.
We have before us what is no longer just the President's tax plan.
Just a few short weeks ago, the majority of our colleagues in the
other body rubber stamped President Bush's plan that heavily tilted tax
cuts to the rich while delaying most of them until after 2006. That
plan would not have helped my State or many other southern States for
that matter. In fact, almost 50 percent of the wage earners in Arkansas
would not have received a tax cut under President Bush's original plan.
But with the input of Senate moderates, both Republican and Democrat,
we have created tax cut opportunities for millions of low and middle
income taxpayers almost immediately. We have stubbornly refused to give
in to the argument that because people work for less than $21,000 a
year, they don't deserve a tax cut. They may not earn enough to pay
income taxes but they are surely taxpayers in every sense of the word.
They are hard working Americans who pay payroll taxes, sales taxes,
excise taxes and just about every other form of tax other than the
Federal income tax.
I am proud that the final plan before the Senate today recognizes
their contribution to our economy.
I want to extend my gratitude to my colleague on the Finance
Committee, Senator Snowe from Maine. Together we have stood fast in our
insistence that the child tax credit should be refundable so hard-
working, low-income families would receive a tax cut. By doubling the
child tax credit and making it refundable up to $1,000, this tax plan
rewards hard work and recognizes that all Americans truly deserve a tax
cut. I mean no disrespect to my male colleagues in this body, but I
believe this provision might not exist in this plan had women not had a
seat at the Finance Committee table.
Senate moderates have changed the President's original plan in other
important ways.
The amount of income subject to the alternative minimum tax will be
increased immediately. This is a critical issue which the President
ignored. In fact, his original plan would have accelerated the pace at
which middle income taxpayers are forced into the alternative minimum
tax category. His tax cut would have actually resulted in a tax
increase for some unfortunate taxpayers.
The revised tax plan will allow people to increase their
contributions to IRAs and 401(k) plans, an extremely important change
in an era when we have seen America's national savings rate drop to its
lowest point in 40 years.
Another change expands the 15 percent tax bracket for married couples
so that more of their income is subject to the lower tax.
And, while I believe that the top income tax rate of 35 percent could
still be higher, I am gratified that Senate moderates forced a
substantial increase from the President's original 33 percent rate.
We can thank bipartisanship in the U.S. Senate for making this plan
better and one that truly accomplishes the promise of a tax cut for all
Americans. The real thanks, however, goes all the way back to 1993 and
to the American people. When our nation was deep in the deficit ditch,
the U.S. Congress went to the people of this great nation and asked
them to bare the burden of program cuts and higher taxes in order to
balance the budget. We now have a balanced budget and budget surpluses
and we can now responsibly lift that burden with gratitude to the
citizens of this country.
I want to especially thank three of my distinguished colleagues on
the Finance Committee, Senators Grassley, Baucus and Breaux, who have
earnestly negotiated the final terms of this bill during the last days.
I believe that in most important aspects, it remains true to the
principles advanced by the Senate earlier this week.
massive tax cuts starve national needs
Mr. BYRD. Mr. President, 8 years ago, this Congress built a bridge so
that future generations would be able to cross from budget deficits to
budget surpluses. That bridge resulted in lower interest rates, a
booming economy, and provided the nation with an opportunity to fix
Social Security and Medicare and retire the national debt.
The senate today blew up that bridge, and plunged our grandchildren
and ourselves into the deficit ravine below.
I have spoken many times in recent months about my concerns regarding
[[Page S5790]]
the size of this tax cut. The events of recent days do not change these
concerns, as the fundamental dynamics of the fiscal year 2002 budget
and appropriations process remain the same.
While I would favor a much smaller tax cut, the fiscal year 2002
budget resolution that was put into place in April, and this $1.35
trillion tax cut package that was passed today, will make it impossible
for this Congress to come up with the appropriations necessary to fully
address our Nation's priorities.
I fear that this tax cut will return us eventually to annual deficits
and impede our efforts to retire the national debt.
I fear that this tax cut will consume vital resources that could
otherwise be used to ensure the long-term solvency of Social Security
and Medicare and provide for a prescription drug benefit.
I fear that this tax cut will put this Congress in a position where
it will be unable to adequately finance our nation's fiscal and human
infrastructure needs. For all of the promises being made as the senate
debates the education reform bill, the Congress will not have the funds
it needs to appropriately address these necessary reforms.
The administration has tried to assuage these fears by promising the
best of all worlds: massive tax cuts that will maintain budget
surpluses without draining resources away from infrastructure
investment and retirement programs.
Abraham Lincoln said in his 1862 Message to Congress that ``we cannot
escape history. We of this Congress and this administration will be
remembered in spite of ourselves.''
History will hold us accountable for what we did here today in
passing this monstrous tax cut. This tax cut, which mainly will benefit
the wealthy, is based on pie-in-the-sky projected surpluses which
probably will not materialize. History will not forget that the
national needs of today and of future generations have been sacrificed
for the sake of carrying out a political promise made in the heat of a
political campaign last year.
The PRESIDING OFFICER. The Senator from Massachusetts, Mr. Kennedy,
is next on the list.
Mr. BAUCUS. Mr. President, I do not see any Senators seeking time. I
will have to, therefore, suggest the absence of a quorum.
The PRESIDING OFFICER. The Senator from Oklahoma, Mr. Inhofe.
Mr. INHOFE. Mr. President, I seek recognition.
The PRESIDING OFFICER. Is there objection? The Senator from Nevada.
Mr. REID. What is the request?
Mr. INHOFE. I was going to request a few minutes, instead of going
into a quorum call.
Mr. REID. We have a unanimous consent agreement. I think it would be
best for everyone if we could move forward under the time agreement.
Senator Conrad.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. CONRAD. Mr. President, I support a significant tax cut for all
Americans. I proposed and voted for a $900 billion tax cut. I think
that is a level we can afford, one that will accommodate protecting the
Social Security and Medicare trust funds, one that will permit us to
set aside money to strengthen Social Security for the future, one that
will allow us to reserve resources for important domestic priorities.
I cannot support this conference report because it does not permit us
to protect Social Security and Medicare. It threatens to put us back
into deficit. It threatens to put us back into building debt after a
decade of getting our fiscal house in order.
This morning's Washington Post labels this conference report for what
it is, ``Tax Fraud.'' It says:
The House-Senate tax cut conferees came up with a way,
yesterday, to stuff even more cuts into the bill without
appearing to break the cost ceiling that Congress virtuously
imposed on itself earlier in the year.
They went on to say:
Without apparent embarrassment, they adopted the mother of
all accounting gimmicks. To keep the supposed 10-year cost of
the bill at $1.35 trillion, they will pretend that major
provisions expire after nine years.
What they have done is alter the calendar. In a bill that is to cover
10 years, they just took off the last year. What is the effect of that?
The Washington Post says:
This is a permanent tax cut masquerading as temporary. But
the masquerade is all that matters. The accounting
conventions allow the conferees to claim that they've done
what they said they would. Once again what they've really
done is mortgage the long-term future for short-term
political gain.
They go on to say:
When the gimmicks are removed from the bill, the true cost
is three times what the sponsors pretend--perhaps $4 trillion
over [the second] 10 years.
Instead of a $1.35 trillion tax cut, which is what was agreed to just
weeks ago, the true cost of this bill over the period of the budget is
$1.7 trillion.
Those who have said they somehow negotiated a reduction from what the
President was seeking, to be more fiscally responsible, have come back
with a conference report that does not do it. It does not reduce the
size of the President's proposal because they take the 10 years, and
put it into 9. If you make an honest assessment of the full 10-year
cost, you are at $1.7 trillion.
The accounting gimmicks do not end there. As the Washington Post
indicated, this bill is massively backloaded. It is advertised, in the
first 10 years, as costing $1.35 trillion. But in the next 10 years it
explodes in cost because they have backloaded provision after provision
after provision. The result is that the cost absolutely explodes right
at the time the baby boomers start to retire. They are digging a deep
hole for the United States.
The New York Times labeled it ``The $4 Trillion Tax Cut.'' They said:
The tax cut's $1.35 trillion price tag is a deception. The
figure was calculated with an array of artificial devices
that disguise the true cost. Some of the tax cuts to be
enacted abruptly expire before the 11-year period is up. . .
.
This was written before the last gimmick was inserted, the gimmick of
just taking an entire year out.
Remember that Republicans, a couple years ago, tried to put 13 months
into a 12-month year as a gimmick to disguise the effect of their
budget proposals. This time they have taken an entire year off the
calendar.
The New York Times goes on to say:
Other provisions are phased in slowly, with most of them
not fully enacted until 2009, 2010 and 2011. This means that
although the tax cut technically costs $1.35 trillion in the
first decade, its cost in the second decade--when the baby
boomers will all be retired--is more than $4 trillion. The
tax cut cannot be paid for except by raiding the Social
Security and Medicare trust funds. It is a scheme that seems
deliberately aimed at wrecking the basic American retirement
programs, perhaps to force their dismantling or
privatization.
I think the New York Times and the Washington Post have it right. We
are in a period of surplus now. But we all know that in the next decade
we move to massive deficits. That is when this tax cut, because of the
way it has been designed, absolutely explodes: from $1.35 trillion, it
balloons to $4 trillion in cost over the second 10 years.
When one examines the real budget--the defense expenditures the
President is asking for, the alternative minimum tax that must be
fixed, the education expenditures the Senate is in the midst of
approving now--as we consider the education bill, the emergencies, and
just the average emergencies we have experienced over the last 10
years, fast forward them to the next 10 years: We are not only going to
be raiding Medicare, we are going to be raiding the Social Security
trust fund as well.
We estimate that this bill, when combined with the real budget
reflecting what will actually be spent over the next 10 years, will be
raiding the Medicare trust fund by $311 billion and raiding the Social
Security trust fund by $234 billion. Make no mistake, this vote has
real consequences.
It is not just that it is fiscally irresponsible. In fact, this bill
is a monument to fiscal irresponsibility. But in addition to that, this
bill is not fair. The top 1 percent get more than twice as much of the
benefit as the bottom 60 percent. In fact, the bill has been made much
worse in terms of its fairness when you compare what left the Senate to
what has come back in the conference committee. The top 1 percent get
nearly 38 percent of the benefits. The bottom 60 percent get less than
15 percent of the benefits.
This bill cannot pass any fairness test, or any fiscal responsibility
test. It does not pass the fundamental test we ought to apply to any
tax bill. This
[[Page S5791]]
final tax bill is clearly unfair. The top 20 percent get 71 percent of
the benefits. The bottom 20 percent get 1 percent. Seventy-one percent
of the benefits to the top 20 percent; 1 percent to the bottom 20
percent.
We heard our colleagues say that this bill is much more fair than the
Bush proposal. Well, it is a little bit more fair but not much more
fair. Seventy-one percent of the benefits in this bill go to the top 20
percent. In the President's proposal, 72 percent of the benefits went
to the top 20 percent.
One of the things I think is most revealing about this proposal is
what happens to the various tax brackets. It is fascinating what has
come back from the conference committee. Those who are the wealthiest
among us get by far the biggest rate reduction--by far. Those who are
in the top 1 percent, who on average earn $1.1 million a year, they get
a 4.6 percentage point reduction, which is, in overall percentage,
about a 12-percent reduction in their marginal rate. They are getting
4.6 points of reduction in a 39.6-percent bracket. That is about a 12-
percent reduction.
The other brackets get 3 percentage points. They roughly average
between 8 and 11 percent of rate reduction. So those at the very top
get the very most. And the final bracket, the 15-percent bracket, where
70 percent of the American taxpayers are, gets no rate reduction--none,
zero. You talk about a bill that is weighted to the very top, the very
wealthiest; this bill is a testimony for campaign finance reform.
Have we learned nothing from the past? We tried this same approach in
the 1980s, and it skyrocketed the deficits and the debt, and it took us
15 years to end it.
The PRESIDING OFFICER. The Senator's time has expired.
Mr. CONRAD. Mr. President, I ask unanimous consent for 30 additional
seconds.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. CONRAD. Mr. President, some have said: But we are paying down the
debt. Make no mistake, we are paying down the publicly held debt, but
the gross debt is going up, because the debt to the trust funds is
skyrocketing under this proposal.
Let me just end. This is a chart that shows what is happening to the
gross Federal debt. It is $5.6 trillion today. At the end of this
period, it is going to be $6.7 trillion. The debt is not going down,
the debt is going up. This bill ought to be defeated.
The PRESIDING OFFICER. The Senator's time has expired.
The Senator from Connecticut.
Mr. DODD. Mr. President, I commend our colleague from North Dakota
for his very thoughtful presentation. He has laid out the arguments
against this tax bill rather well.
Mr. President, we all are familiar with the famous expression of
George Santayana which says that those who fail to remember the
mistakes of history are destined to repeat them. I regret that we are
about to do that today with the vote on this tax bill.
There are a handful of us here today who were on this very floor in
this Chamber 20 years ago when a similar, although smaller, tax cut was
being proposed. No one doubts today the damage that proposal had on our
economy over the ensuing years. Its author, in fact, the head of the
Office of Management and Budget, has written extensively about the huge
mistakes that Congress made in the early 1980s in crafting a tax
proposal that was way out of balance, and had no sense of
proportionality in terms of the economic needs of the country.
It took us more than a decade to recover from that tax cut. Luckily,
we began doing so in the early 1990s and, ultimately, we reached the
point we are at today where we are enjoying budget surpluses.
I am sure my colleagues are familiar with the mythological figure
Sisyphus, the King of Corinth, who was condemned to roll a heavy stone
up a hill only to have it roll down again as it neared the top. This
legislation is much like Sisyphus's dilemma. Just as we start to
produce surpluses, to reduce that $220 billion a year in interest
payments on our national debt that don't build a new school, that don't
make anyone healthier, and don't contribute to the environment, just as
that rock gets up to the top of the hill, we are about to let it fall
back upon us by adopting a proposal that sends us right back in the
wrong direction.
I am for a tax cut, and I believe we have plenty of room for one. But
a tax cut of this size that eats up $1.35 trillion of the surplus in
the coming years is the height of irresponsibility, especially since we
don't have any real clear idea of how this Nation's economy will look
3, 4, 5, let alone 10 years from now.
I regret deeply we are limited to this short amount of time to debate
a proposal of this importance and significance in light of what our
country experienced as a result of a similar tax cut. I hate to say
this to my colleagues--I said it in 1981; I will repeat it today, 20
years later--we are about to make the same mistake again. The
difference is, we will not have the time to correct it as we did with
the mistake made 20 years ago. At the very hour that millions of
Americans will look to us for Social Security and Medicare, this
proposal is going to create a train wreck with those programs.
I urge, in the waning moments of this debate, that those who may be
wavering to please think again, not about the Democrats or Republicans,
liberals or conservatives. This is an excessive tax cut and one that we
cannot afford. I urge our colleagues to reject this proposal. Go back
to the drawing board. It is only May. We have plenty of time to do this
in a far more thoughtful, prudent, and balanced way.
For those reasons, I urge rejection of this conference report and
urge our colleagues, whom I know have worked very hard on the Finance
Committee, the Ways and Means Committee, to go back and try again to
see if they can't come up with a more balanced approach that treats all
taxpayers fairly and leaves room for the needy investments that America
must make if it is going to be the great power of the 21st century that
it has been in the 20th.
With that, I yield the floor to my colleague from Massachusetts.
The PRESIDING OFFICER. The Senator from Massachusetts.
Mr. KENNEDY. Mr. President, this is the final vote on a tax cut which
is far larger than the country can afford. It has been pushed through
Congress by the Republican leadership in unprecedented haste without
adequate debate. They have sought at every turn to avoid a serious
discussion about national priorities. They pretend that we can have it
all--that this massive tax cut will not affect our ability to
adequately fund our education and health care needs, to reduce the
debt, and to financially strengthen Medicare and Social Security for
future generations. This view is a fantasy. The reality is that this
tax cut will have a direct and substantial effect on our ability to
fulfill our responsibilities in each of these areas.
Let's focus on one of these priorities--education. The budget
resolution on which this $1.35 trillion tax bill is based also
eliminates $308 billion of funding for education which had the support
of a majority of Senators. We recognized that those funds are essential
to providing a quality education for every child. Yet the enormous size
of this tax cut is incompatible with real education reform. Sadly,
Republican priorities place the needs of the wealthiest taxpayers for
new tax breaks above the needs of America's school children. Democrats
support a substantial tax cut--one that would cost nearly a trillion
dollars over the next 10 years and one that would give working families
a fair share of the tax benefits. Under Democratic plans, the vast
majority of American families would receive the same, or even more, tax
relief than the Republicans provide, but at a fraction of this bill's
cost. That is possible because the Republican bill gives such a huge
windfall to the rich. Four hundred and fifty billion dollars will go to
the wealthiest 1 percent of taxpayers. This tax cut reported from the
conference committee is clearly excessive. It is neither fair nor
affordable.
The conference report gives even larger tax breaks to the rich than
the Senate tax bill did. It reduces the rate of the top income tax
bracket by an additional percent, but still fails to provide any
reduction in the 15 percent tax rate that nearly three quarters of all
taxpayers pay. The extra dollars consumed by reducing the top income
[[Page S5792]]
tax bracket come from budget gimmicks that make the bill even more
fiscally irresponsible in the long run.
Over one of every $3 of tax breaks in this conference report will go
the wealthiest 1 percent of taxpayers. Once the tax breaks are fully
implemented, the richest 1 percent will receive an average tax cut of
over $37,000 each year--more than the pay most families take home in an
entire year. The $37,000 a year that this bill provides to the
wealthiest 1 percent could pay the salary of a new teacher in most
school districts. But now there won't be funds for new teachers. The
Republicans decided that wealthy taxpayers need the money more.
Education is far and away the most important concern of Americans, so
I offered a number of amendments to protect education from the adverse
effects of the most extravagant parts of the tax cut. Again and again
Republicans chose tax breaks aimed exclusively at the wealthiest 1
percent of Americans, people with average incomes of $1.1 million, over
full funding of elementary and secondary education for disadvantaged
children, over full funding for the Individuals with Disabilities
Education Act, over teacher quality improvements for all students, over
increased access to safe after-school activities, over bilingual
education, over Pell grants, over HOPE Scholarship Tax Credits, and
over Head Start. The President's rhetoric may say ``leave no child
behind,'' but this tax bill leaves a whole generation of children
behind. It leaves them behind so that the very wealthiest taxpayers can
get a half-trillion dollars in new tax breaks. If we do not have
adequate resources to provide all our children with a quality
education, then we certainly don't have the excess revenue that
justifies new tax breaks for millionaires. Nationwide, there are 129
million income tax returns filed each year, but only 900,000 of these
report income in the top marginal income tax bracket, which is
presently 39.6 percent. These are the wealthiest men and women in
America, and tax cuts that exclusively benefit them should not displace
the education funding that the Senate has already agreed is necessary.
Only by the use of smoke and mirrors and budget gimmicks has this tax
bill been made to comply with the mandate of the budget resolution to
report a tax bill costing $1.35 trillion over eleven years. But the
real cost are even higher. The real costs of this bill explode in the
out years. Most disturbing of all is the extreme use of back-loading to
conceal the enormous cost of these tax cuts when they completely take
effect. The rate reduction is not fully implemented until the year
2006. Marriage penalty tax relief does not even begin until the year
2005. The amount of the child credit does not reach the full $1,000
until the year 2010. The estate tax is not repealed until that year as
well, so that almost none of the cost of the repeal shows up until the
year 2011.
These tactics are the height of fiscal irresponsibility. The
excessive cost of the bill in the first decade is troubling enough. But
that cost will more than triple in the following ten years. A $1.35
trillion tax cut in the first 10 years will mushroom to substantially
more than $4 trillion in the next 10 years--precisely when the nation
will confront unprecedented new costs in Medicare and Social Security
from the retirement of the baby boom generation. Funds urgently needed
to strengthen these basic programs are being consumed by reckless tax
cuts. The Republican leadership could easily have accepted the recent
Senate vote on the Harkin budget amendment reducing the size of the tax
cut by 20 percent and investing the resulting $250 billion in education
over the text 10 years. A responsible proposal like that would enable
vital improvements to be made in education throughout America, while
still leaving $1 trillion for tax cuts that both Democrats and
Republicans support. Unfortunately, they refused.
Across America, 12 million children live in poverty--but we currently
provide the full range of title I Federal educations services to only
one in three of these children. Four of every 10 children in poverty
are taught by teachers who lack an undergraduate major or minor degree
in their primary field. Gym teachers are teaching math. English
teachers are teaching physics. Nearly one in five first-through-third
graders are attempting to learn in overcrowded classes of 25 or more
students. In these cases, some students inevitably lose in the
competition for essential teacher time.
In addition, over 7 million latchkey children are left alone to fend
for themselves after school each day, without constructive after-school
activities to keep them off the streets, out of gangs, and away from
drugs and other dangerous behavior. Even though Head Start ranks as the
public's favorite government program, inadequate funding continues to
deny Head Start to half of all eligible children.
Students with disabilities suffer from the same Federal neglect. The
Federal Government has long promised to fund 40 percent of disability
education. Yet it still only funds 17 percent. For years, parents and
States have called on the Federal Government to live up to its
commitment to disabled students. Almost 14 million children attend
schools in inadequate facilities--schools that are overcrowded with
classes held in hallways and trailers and schools that are crumbling
and unsafe. Seven million children attend schools with severe safety
code violations.
While money may not guarantee quality education, it is impossible to
provide quality education in today's schools without substantial new
investments. ``Reform'' without resources will have no real impact on
what takes place in America's classrooms.
The massive tax cut contained in this bill will shortchange an entire
generation of children. Nowhere are Republicans' misplaced priorities
clearer. After all the talk about the importance of education to
children's lives and the Nation's future--after all the talk about
unmet needs in the Nation's schools--after all the Senate votes to
increase investments to meet the most basic education needs, the
Republican tax cut crowds out new investments in education. It tells
millions of children who attend inadequate schools that they don't
count. If the Federal Government lacks the resources to provide both,
shouldn't the education of our children take precedence over new tax
cuts for the wealthiest taxpayers? Who in this Chamber would openly
declare that the wants of 900,000 millionaires are more important than
the needs of millions of school children? That, in essence, is what we
are voting on today.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. GRASSLEY. Mr. President, I thought we were going to let the
Senator from Minnesota speak.
Mr. REID. Would the Senator from Massachusetts yield his time to the
Senator from Minnesota?
Mr. KENNEDY. I yield my remaining time to the Senator.
The PRESIDING OFFICER. The Senator from Massachusetts has 2 minutes
19 seconds remaining.
Mr. KENNEDY. I yield that to the Senator from Minnesota.
The PRESIDING OFFICER. The Senator yields his 2 minutes 19 seconds to
the Senator from Minnesota.
Mr. WELLSTONE. Mr. President, I rise to strongly oppose this
conference report. As I have said consistently, I support tax relief,
and have voted for more modest alternative tax cut packages. But I
believe in tax cuts that reward work, not wealth. That are distributed
fairly across the economic spectrum, with a special emphasis on relief
for those most in need, who bear an unjust proportion of the tax
burden, including payroll taxes, already--working families. The
original Senate bill did not meet this test. Sadly, when confronted by
the priorities of the most extreme elements of the House Republicans,
the conference committee has made a bad bill even worse--more grossly
unfair, with more of the benefits tilted toward the very wealthiest
Americans.
The worst possible outcome for this decade would be a return to a
1980s mentality of huge tax breaks for the rich, increases in a bloated
military budget, and neglect of our social infrastructure, including
key insurance programs like Social Security and Medicare. Yet that
appears to be where the President and the Congressional majority would
have us go. We are making a terrible mistake if we pass this conference
report today.
I can't say it more plainly than that. We are making a grave mistake.
If the economy goes south, this conference
[[Page S5793]]
report will almost certainly leave us without sufficient funds to make
key reforms in Medicare like providing for a new prescription drug
benefit, or for reforming Social Security in a way that will secure its
future for generations to come. The costs of these tax cuts, so
obviously backloaded, will explode just at the time when a huge
generation of baby boomers prepare to retire in 10 years. And they will
be left holding the bag, along with the generations that come after.
The American people should not have any illusions about what we are
about to do. The economy and hard choices made in the past have endowed
us with budget surpluses. In a time of growing economic uncertainty,
it's not yet clear how large they'll be; private economists, the
Congressional Budget Office, and even White House (OMB) estimators have
all readily acknowledged the uncertainty of their projections. But it's
clear there is some surplus, and Congress has to decide how to spend
it.
If we had crafted a fairer, more modest tax bill, the benefits of
which would have been distributed according to some principles of
fairness, I would have supported it. But this conference report is
nothing but a Robin Hood in reverse raid on the federal treasury. When
fixes to the Alternate Minimum Tax and interest costs are added in, the
tax cut will cost over $2 trillion over the next ten years. The cost
will likely top $4 trillion over the following ten years (2012-2022). A
vote for this bill is a vote to squander the opportunity to address our
nation's most pressing problems. We could lift up all children and
restore the shining promise of equal opportunity by investing in the
education and health care of our kids, over 20 percent of whom still
live in poverty in this country. We could move to restore the dignity
of older Americans by providing affordable prescription drugs, long-
term care, and securing the Social Security system. We could invest in
responsible, long-term energy policies which protect our environment
while boosting our energy capacities. Instead, we are today almost
certainly deciding to ignore these priorities for years to come. We are
surrendering on environmental conservation and protection. We are
surrendering on investment in clean energy technologies. We are
surrendering on tax relief for low and middle income Americans. And we
are surrendering on decisions to invest in the health, character,
skills and intellect of our kids.
But it isn't just that we are spending nearly the whole surplus for
the foreseeable future in one vote. It is what we are spending it on:
tax cuts for the rich, the powerful, the connected.
These tax cuts are still overwhelmingly weighted toward the
wealthiest Americans: 35 percent of the benefits go to the wealthiest 1
percent of Americans. Altogether, 55 percent of the cuts go the
wealthiest 10 percent, while less than 16 percent of the cuts go to the
60 percent of American families who earn $44,000 or less.
Put another way, 80 percent of Americans will get 30 percent of the
benefits in the bill, while 70 percent of the benefits in the bill will
go to the 20 percent of Americans with the highest incomes.
There are provisions of this bill I support. There is modest tax
relief in this bill that goes to those who most need it. But not nearly
enough. And the price we pay for this meager relief for working
families is tax cuts three times larger targeted to the richest
Americans. That's not a deal that I would want to explain to the
working people in my state.
Consequently, Americans who earn between $27,000 and $44,000 will get
an average tax cut of merely $596. But the wealthiest Americans, with
an average income of over $900,000, will see an average cut of $44,536.
Additionally, 10 million children, 1 in 7 children, live in families
that will still get no benefit from the legislation, because the
parents or guardians do not earn enough to qualify for the tax cuts in
the bill.
In contrast, in 2010, the plan fully repeals the estate tax. This
will cost the Federal Government $30 billion in that year alone and
will cost nearly $1 trillion over the next 10 years. Yet the vast
majority of estates, and nearly all small business and farms, will
already be exempted from the estate tax when the repeal goes into
effect because of the other estate tax reforms in the bill. By 2010,
under the bill, a couple would be able to shield $7 million from estate
taxes. Full repeal on top of those high exemptions will only benefit
the richest of the rich.
In Minnesota, in 1999 only 636 estates paid any estate tax. Only 636
estates out of the nearly 5 million people who lived in my State. Only
36 of those estates were valued at over $5 million!
Now let me give credit where credit is due. At the strong insistence
of some of us on the Democratic side, the child credit expansion that
is included in the bill is a significant improvement over the
President's proposal. It would be refundable to families earning more
than $10,000 per year, phasing in at 15 percent of earnings above that
amount. So, for example, a family earning $11,000 a year would get $150
and a family earning $16,000 would get $900 as a refund from the IRS.
If this provision becomes law, half a million children will be lifted
out of poverty. This proposal offers some modest relief for certain low
and moderate income families with kids, and the Committee should be
applauded for at least including a partially refundable child credit in
this bill.
However, the partial refundability provision in this bill would still
leave 10 million very poor children behind. That includes every child
of a parent who works full-time at the minimum wage. Children left
behind with the partial-refundability proposal include: 2 million
children with a disabled parent; more than 300,000 children who live
with a grandparent or other family members who are not working because
they are retired; more than 6 million children whose parents work
during all or part of the year; and 4 million children whose parents
together worked at least 26 weeks--or half the year.
Like the Reagan tax cuts of the early 1980s, this bill is too big,
and fiscally irresponsible. It is grossly unfair. Its benefits go
mostly to the wealthiest Americans. It will crowd out critical
investments in education, health care, protecting the environment,
energy conservation and renewables, and other key priorities for years
to come. It will severely limit our ability to protect Social Security
and Medicare, just as the baby boomer generation is preparing to
retire.
In conclusion, Mr. President, as we get ready to vote, I thank my
colleagues for all their cooperation on this vote and say, with a
twinkle in my eye, to my good friends on the other side, that in some
ways this tax cut has finally made me a fiscal conservative because, as
I look at what is going to happen in the out years, I see a huge
erosion of the revenue base.
I am so worried that at the very time people reach the age where they
qualify for Social Security and Medicare, we are not going to have the
resources. This is a mistake. It is a profound mistake, though I
understand the good intentions and goodwill of, for example, the
Senator from Iowa, Mr. Grassley.
On another point: Whatever happened to the President's goal of leave
no child behind? Whatever happened? The Senator from Massachusetts is
absolutely right.
The huge victory here--if you want to call it that--for those who
believe there is no positive role for Government to make in the lives
of people is that there will not be the revenue. So for those children
who come from disadvantaged backgrounds, we are not going to have the
funding for title I. We won't be able to make the commitment to make
sure the children are kindergarten-ready or that higher education will
be affordable. We won't be able to renew our national vow of equal
opportunity for every child.
I believe these tax cuts are directly antithetical to what our
country is about, which is equal opportunity for every child. That is
why I will vote no.
The PRESIDING OFFICER. The Senator from Iowa, Mr. Grassley, is
recognized.
Mr. GRASSLEY. Mr. President, do I have 5 minutes?
The PRESIDING OFFICER. The Senator is correct.
Mr. GRASSLEY. Mr. President, I yield the first 2 of my 5 minutes to
the Senator from Texas, Mr. Gramm.
The PRESIDING OFFICER. The Senator from Texas, Mr. Gramm, is
recognized.
Mr. GRAMM. Mr. President, I had the great good fortune of being here
20 years ago and being involved in the
[[Page S5794]]
Reagan tax cuts--tax cuts that let working people keep more of what
they earned and ignited the golden economic age in which we live.
One of the advantages of living a long time and serving in public
office a long time is that you get an opportunity for a day such as
this when, 20 years later, we are cutting taxes again. This is a great
day for the people who do the work and pay the taxes and pull the wagon
in America and who often get forgotten by their Government.
It is obvious in listening to our colleagues that it is a sad day for
those who desperately wanted to spend this money here in Washington,
DC, but I hope my colleagues find some solace in the fact that working
men and women sitting around their kitchen tables trying to make ends
meet will use this money far more effectively to promote their
interests and America's interests than we would use it spending it here
in Washington, DC.
I thank our distinguished chairman, Senator Grassley, for his
leadership in making this day possible. I reserve the remainder of the
time for Senator Grassley.
Mr. GRASSLEY. Mr. President, we have now come to the end of our many
days of deliberation over the tax cut bill. This will probably be my
final bill during my brief tenure as chairman of the Finance Committee,
and so, I want to make a few closing remarks about the bill before us
this morning.
This bill represents an enormous bipartisan effort. This bill has had
bipartisan participation from its very creation, all the way through to
its completion in conference with the House. The bill before us today
was drafted in concert with Senators Baucus, Breaux, and many others on
the Finance Committee from both sides of the aisle--all of whom I
consulted with personally. I thank you all for your insights and
guidance in designing this bill.
I would also like to thank Chairman Bill Thomas of the House Ways and
Means Committee. His responsiveness to the difficulties we face here in
the Senate was refreshing and very constructive. But most of all, we
should thank President Bush. It was his leadership and vision that led
us to this historic moment--as we prepare to enact the largest
individual income tax cut in 20 years.
We took as a starting point President Bush's efforts to provide
income tax relief to all Americans. This legislation includes the four
main elements of President Bush's goals for providing tax relief to
working families: the bill before us today provides an across the board
tax cut and creates the new low 10 percent rate requested by the
President; the bill reforms and repeals the death tax, which the
President wanted; the bill provides marriage penalty relief, which the
President and Congress have sought for a very long time; the bill also
includes a $1,000 refundable child credit, which was specifically
requested by the President. Sixteen million more children will be
helped by our bill. In addition, the bill contains an extensive
education incentives package, pension and IRA enhancements, and AMT
relief.
This tax bill is a victory for Republicans. It is a victory for
Democrats. It's a victory for the President, but most importantly, it
is a victory for the taxpayers of the United States.
Now for some of the details. First, the conference bill reduces
marginal rates across-the-board and applies the President's 10 percent
rate retroactively to January 1st of this year. The Treasury Department
will issue rebate checks to American taxpayers to remit any excess
taxes that have been withheld on their 10 percent earnings earlier this
year. The 28 percent, 31 percent and 36 percent rates will be reduced
by 3 points over the next several years.
The first one point rate reduction will take effect on July 1--just a
month from now.
The rebate checks and immediate rate reductions will provide a
stimulus that our sluggish economy very much needs. In addition, the
39.6 percent top marginal rate will drop to 35 percent. While we don't
go as far as the President in reducing the top rates--and I would add
we didn't go as far as I would like--we also address the hidden
marginal rate increases caused by current law that denies deductions
for personal exemptions and itemized deductions.
Those laws will be repealed, thus eliminating these hidden marginal
rate increases and removing another complexity from the Code. We
provide marriage penalty relief for married families--for families
where both spouses work and where only one spouse works.
The President's desire to expand the child credit to $1000 is met in
this bill. And in response to the concerns of Senators Snowe, Lincoln,
Breaux, Jeffords, and Kerry the child credit was expanded to help
millions of children whose working parents do not pay income tax.
And lastly, we heard America's voices and have reformed and repealed
the death tax. Starting January 1 of next year, the unified credit is
increased to $1 million and the top rate is cut to 50 percent. The
burden of the death tax is reduced and will be eliminated--as called
for by President Bush. This effort is due to the work of many Senators
but I would particularly note the efforts of Senator Kyl and Senator
Lincoln.
In addition, the bill contains many provisions targeted for
education. Elements include expansion of prepaid tuition programs to
help families pay for college--long advocated by Senators Collins,
McConnell, and Sessions. In addition, we provide college tuition
deduction thanks to Senators Torricelli, Snowe, and Jeffords, as well
as an expansion of the education savings accounts--in honor of Senator
Coverdell--thanks to the work of Senator Torricelli and the Majority
Leader. In addition to President Bush's proposals for tax relief for
working families, we also included the Grassley-Baucus pension reform
legislation which probably would not have made it in the bill without
the longtime support of Senators Hatch and Jeffords.
In addition to maintaining the basic framework of the bipartisan
agreement, we were able to retain some of the important amendments
added to the RELIEF Act on the Senate floor. The key amendments we kept
were keeping with the major focus of the bill--providing benefits for
working families. First among these is that the adoption credit is
extended and expanded effective 2003. I have been a long advocate on
this matter, but I want to recognize the critical work of Senators
Landrieu and Craig in this matter. Further, we were able to retain the
goal of giving employers greater tax incentives to provide child care
to their employees--long advocated by Senator Kohl.
In addition, we kept the policy advocated by Senator Jeffords of
expanding the dependent care tax credit--which assists families facing
the difficulties of providing care for children and spouses with
special needs. We include Senator Bingaman's amendment offered in
committee that allows the IRS to provide greater relief to families who
are in a disaster area.
Finally, we retained the Senate amendment championed by Senator
Fitzgerald that excludes from income payments made to survivors of the
Holocaust. America is a society of opportunity. Over 60 percent of all
families will at one time or another be in the top fifth of income in
this country.
This bill will provide the American taxpayer with the greatest amount
of tax relief in a generation. And they deserve it. It is wrong that in
a time of surpluses we are still imposing a record tax burden on
workers. With passage of this bill, struggling families will have more
money to make ends meet; parents and students will be able to more
easily afford the costs of a college education.
A successful business woman will be able to expand and hire more
people; a father finally getting a good paycheck after years of work
will be able to better provide for his aging mother; and, a farmer can
pass on the family farm without his children having to sell half the
land to pay estate taxes. The examples are endless of the great
benefits that we realize when we give tax relief to working families. I
would remind my colleagues again that the hallmark of this bill is that
relief for low-income families comes first.
The marginal rate drop to 10 percent is immediate, and the effects of
that reduction will be placed in taxpayer's hands this year. The child
credit expansion to low-income families is immediate. Over 16 million
more children will be helped by the provisions of this
[[Page S5795]]
bill. In addition, the numbers show that once again, our bipartisan
bill makes our tax system even more progressive. That is, at the end of
the day upper income families would be paying a greater share of taxes
than lower income taxpayers.
I also have a message for those who claim this bill benefits the rich
at the expense of the poor, and that it will jeopardize Medicare and
Social Security. Those things just aren't true. This is a bipartisan
bill. We'll spend at least $3.5 trillion on Medicare in the next 10
years. That's more than 2.5 times the size of the tax cut. We wouldn't
put forward bipartisan legislation that jeopardizes Medicare and Social
Security. So I hope Americans will rest easy that this tax bill doesn't
shortchange one group of Americans at the expense of others.
My message to taxpayers is this: Substantial tax relief is on the
way. The Government will ease its grip on your wallet. You deserve
this. Now, the last time the Senate considered this bill, it turned the
bill over and over and around and around. Some Members tried to huff
and puff and blow this bill down. That didn't work. Like a house made
of bricks, our bipartisan bill is standing strong. But apiece of
legislation is only as good as the last vote it survives. Today, we are
faced with a crucial vote. Let me say it again: This is a bipartisan
bill.
I have described this legislation to remind Senators of the balanced
approach that took place in crafting this bill; to highlight the fact
that it reflects the views and priorities of a wide range of members on
both sides of the aisle. I can assure my colleagues on the other side
of the aisle that if Senator Baucus had not been present at the
creation of this bill--it would have been a very different piece of
legislation.
It is because of his efforts that there are many elements in this
bill that members on the other side of the aisle can enthusiastically
support. I am tired of reading in the press the constant carping of
Senator Baucus' efforts to draft a bipartisan bill. It seems that while
many are happy to talk about bipartisanship that can't stand to see
bipartisanship practiced. We saw that happen the last time we brought
this bill to the floor of the Senate.
I urge my colleagues to stop the petty partisanship and put the
American taxpayers first. Now it is time for the Senate to send this
much needed tax relief to the President for signature. America is
waiting, and America is watching. Let's send them this historic tax
relief package today.
Mr. President, I have 3 minutes, and I yield 1 minute to Senator
Hatch.
Mr. HATCH. Mr. President, I am grateful that I was a conferee in this
monumental historic event. I personally congratulate Chairman Grassley
and the ranking member, Senator Baucus. Both worked very well together.
Of course, Chairman Thomas and House Leader Armey and Speaker Hastert
did a terrific job, as did John Breaux, who has worked so magnificently
through the years.
Six months ago nobody thought the President would win on a $1.35
trillion tax cut. It is amazing. He hung in there. He stood for what he
believed, and I believe the American people are going to be the
beneficiaries.
I want to highlight one thing. There are 16 million additional
children who directly benefit from the refundable child credit
contained in this comprise. This is one of the best bills for children
and families I have seen in years and I just wanted to make that clear
to everybody. The rate reductions and every other provision will
benefit America.
This conference report is not perfect, just as no political
compromise is perfect. I, like many of our colleagues, would have
greatly preferred a larger tax cut of at least $1.6 trillion. Ideally,
the top marginal rate should have come down to no more than 33 percent,
with corresponding reductions in all the other brackets. The
alternative minimum tax still will afflict millions of Americans. And,
I greatly regret that the permanent extension of the research and
experimentation credit was not accommodated in the final product.
On the other hand, Mr. President, this conference report includes the
necessary elements that will make it stand out as landmark legislation.
It does so much for the people of Utah and for the people of America.
It begins to reverse the flawed philosophy that says the government
knows best how to spend the taxpayers' hard-earned money. It cuts taxes
for every American who pays them. It will stimulate the economy and
provide incentives to keep it strong in the future. It acknowledges the
importance of families, as well as the need for providing a good
education for our people. It also includes strong incentives for all
Americans to increase their savings and prepare for their own
retirements. It recognizes the gross unfairness of the confiscatory
death tax and begins immediate relief with repeal within a decade. It
makes great strides against the unfairness of the marriage tax penalty
in a way that does not punish those families where one spouse chooses
to stay at home. On the whole, it is a very good bill.
Although this tax cut bill is the capstone of our budget agreement, I
also look at it as just the beginning. The beginning of what I hope
will be more bipartisan work this Congress to make the tax code even
more fair and certainly more simple. And, what I hope will be
continuing cooperation between the President and the Congress.
I again want to extent my congratulations and gratitude to the
chairman of the Finance Committee, Senator Grassley, for his
extraordinary dedication to bipartisanship and his tireless dedication
to accomplishing the triumph that is represented in the conference
report that lies before the Senate today. Without his perseverance and
persistence in sticking to the goal at hand despite many obstacles,
this victory for the American taxpayer would not have been possible.
Likewise, I thank Senator Baucus for the major role he played in
getting us to this point today, and for his courage in the face of
opposition of many in his own party. He, along with Senator Breaux,
have shown all of us what it means to rise above partisanship and pure
politics for the sake of what is good for the nation. They, together
with the others in the soon-to-be majority party who supported this
bipartisan tax cut, have my respect, my gratitude, and my promise that
I will continue to reach across the aisle to work with them to further
improve our tax system in the future.
My fellow conferees deserve a lot of credit for accomplishing this
difficult task. Congressman Thomas, the new chairman of the Ways and
Means Committee, demonstrated toughness, dedication, knowledge, and
compassion in representing the House position. I also want to commend
Speaker Hastert and Leader Armey for their tireless support and
contributions. On the Senate side, Senators Murkowski, Nickles, and
Gramm put in many long, difficult, and late hours in helping us find
our way through the differences in the House and Senate bills to reach
the compromise.
Mr. President, most of all, I want to extend my congratulations to
President George W. Bush. The tax cut the Senate just passed is a
testament to his vision and his willingness to carry out with single-
mindedness a campaign promise that many, frankly, took lightly and
considered highly unlikely if not impossible. This is what real
leadership is all about, and I commend him for it.
This is a great day in the United States Congress. I am proud that I
was able to be part of it.
I thank my colleagues.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. GRASSLEY. Mr. President, there will be a lot of speeches about
the substance of the legislation and, obviously, I think it is a good
piece of legislation or I would not have negotiated the final product.
I think it is good for the economy. It is surely good for working men
and women of America to have tax relief. It is surely good for fiscal
discipline within our Government as we make sure that the Government
must squeeze every dollar of value out of every penny that we spend.
I think leaving this money in the pockets of the taxpayers rather
than sending it to Washington will help us with our fiscal discipline.
Most importantly, I think the process by which this product is before
us is much more significant than the product because the control of the
Senate hangs in the balance--even over the next several years, it seems
to me, regardless of the exact numbers.
[[Page S5796]]
The Senate is known for its bipartisanship to pass legislation. I
hope that the work Senator Baucus and I have done in a bipartisan way
to bring this product of tax relief to the American taxpayers and to
this body for it to become law serves as an example not only for the
entire Senate but also will continue the tradition of bipartisanship
that we have had in our committee.
I hope that we do, in fact, look upon the Senate as being very
closely divided for a long period of time, and for whoever is in
control, it is very important that we continue this bipartisanship in
the Senate.
I yield the floor, and I yield back the remainder of my time.
The PRESIDING OFFICER. The question is on agreeing to the conference
report.
Mr. CRAIG. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The clerk will call the roll.
The legislative clerk called the roll.
Mr. BINGAMAN (after having voted in the negative). Mr. President, on
this vote, I have a pair with the Senator from New Mexico (Mr.
Domenici). If he were present and voting, he would vote ``yea.'' If I
were permitted to vote, I would vote ``nay.'' I therefore withdraw my
vote.
Mr. AKAKA (after having voted in the negative). Mr. President, on
this vote, I have a pair with the Senator from Wyoming (Mr. Enzi). If
he were present and voting, he would vote ``yea.'' If I were permitted
to vote, I would vote ``nay.'' I therefore withdraw my vote.
Mr. NICKLES. I announce that the Senator from Wyoming (Mr. Enzi) and
the Senator from New Mexico (Mr. Domenici) are necessarily absent.
I further announce that if present and voting, the Senator from
Wyoming (Mr. Enzi) and the Senator from New Mexico (Mr. Domenici) would
each vote ``yea.''
Mr. REID. I announce that the Senator from California (Mrs. Boxer),
the Senator from Massachusetts (Mr. Kerry), the Senator from Washington
(Mrs. Murray) are necessarily absent.
I further announce that the Senator from Vermont (Mr. Leahy) is
absent attending a funeral.
I also announce that the Senator from Iowa (Mr. Harkin) is absent
attending his daughter's wedding.
I further announce that if present and voting, the Senator from
California (Mrs. Boxer), the Senator from Iowa (Mr. Harkin), the
Senator from Massachusetts (Mr. Kerry), and the Senator from Vermont
(Mr. Leahy) would each vote ``nay.''
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 58, nays 33, as follows:
[Rollcall Vote No. 170 Leg.]
YEAS--58
Allard
Allen
Baucus
Bennett
Bond
Breaux
Brownback
Bunning
Burns
Campbell
Carnahan
Cleland
Cochran
Collins
Craig
Crapo
DeWine
Ensign
Feinstein
Fitzgerald
Frist
Gramm
Grassley
Gregg
Hagel
Hatch
Helms
Hutchinson
Hutchison
Inhofe
Jeffords
Johnson
Kohl
Kyl
Landrieu
Lincoln
Lott
Lugar
McConnell
Miller
Murkowski
Nelson (NE)
Nickles
Roberts
Santorum
Sessions
Shelby
Smith (NH)
Smith (OR)
Snowe
Specter
Stevens
Thomas
Thompson
Thurmond
Torricelli
Voinovich
Warner
NAYS--33
Bayh
Biden
Byrd
Cantwell
Carper
Chafee
Clinton
Conrad
Corzine
Daschle
Dayton
Dodd
Dorgan
Durbin
Edwards
Feingold
Graham
Hollings
Inouye
Kennedy
Levin
Lieberman
McCain
Mikulski
Nelson (FL)
Reed
Reid
Rockefeller
Sarbanes
Schumer
Stabenow
Wellstone
Wyden
PRESENT AND GIVING A LIVE PAIR, AS PREVIOUSLY RECORDED--2
Akaka,
against
Bingaman, against
NOT VOTING--7
Boxer
Domenici
Enzi
Harkin
Kerry
Leahy
Murray
The conference report was agreed to.
Mr. ENSIGN. I move to reconsider the vote by which the conference
report was agreed to.
Mr. BROWNBACK. I move to lay that motion on the table.
The motion to lay on the table was agreed to.
____________________