[Congressional Record Volume 147, Number 78 (Thursday, June 7, 2001)]
[House]
[Pages H2986-H2990]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        THE PRESIDENT'S TAX CUT

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 3, 2001, the gentleman from Texas (Mr. Culberson) is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. CULBERSON. Mr. Speaker, as a new Member of Congress representing 
the west side of Houston, Texas following in the footsteps of Bill 
Archer, the former chairman of the Committee on Ways and Means, I rise 
today to remind the Nation, the Congress, to go through some of the 
details of a remarkable achievement that President Bush, our former 
Governor of Texas, achieved today in signing a $1.35 trillion tax cut, 
fulfilling the keystone of President Bush's campaign pledge to the 
Nation that he would return to American taxpayers a portion of that tax 
surplus that they have paid into the U.S. Treasury in excess of the 
needs of the Federal Government.
  Because first and foremost it is a tax surplus, the money that the 
American people have earned and pay into the Federal Treasury does not 
belong to the United States Government, it belongs first to the 
American taxpayer. I took great pride in sitting alongside Chairman 
Archer today at the ceremony at which President Bush signed that $1.35 
trillion tax cut into law.
  First, Mr. Speaker, I think it is important for the listening 
audience, those in the gallery here today as well as those in the 
listening audience there watching C-Span today to put the tax cut, the 
Bush tax cut, into perspective. In today's dollars, President Ronald 
Reagan's tax cut of 1981 would be equivalent to $5.5 trillion, that 
1981 tax cut placed into today's equivalent dollars in 2001. By 
comparison, of course, President Bush's tax cut was only $1.35 
trillion. In fact, the Bush tax cut that was signed into law today was, 
as a percentage of government revenue, even smaller than the tax cut 
proposed by President Kennedy in 1963.

                              {time}  1430

  In fact, another way to look at it would be that the Bush tax cut, 
which was signed into law today, will reduce government revenues by 
less than 5 percent versus current law over the next 10 years, or less 
than a nickel for every dollar collected by the Federal Government. So 
the tax cut, which took effect today, which those of us who are fiscal 
conservatives would like to have seen be larger, which President Bush 
would have like to have seen be larger, but as a result of compromise 
and working its way through the legislative process, was finally 
determined to be a $1.35 trillion tax cut, that tax cut will only be 
essentially a nickel out of every dollar collected by the Federal 
Government.
  Even after this tax cut, Mr. Speaker, the tax surplus will be large 
enough to protect 100 percent of the Social Security and Medicare trust 
funds. The tax surplus after the tax cut will be large

[[Page H2987]]

enough to pay off all available publicly-held debt over the next 10 
years. There will still be enough money, after the Bush tax cut is 
enacted, to increase government spending by about 4 percent per year, 
even with inflation over the next 10 years. At the same time we are 
protecting Social Security, paying off the maximum level of public 
debt, increasing government spending by about 4 percent per year. After 
the Bush tax cut is signed into law, we have still set aside a 
contingency fund to ensure that there is enough money there for 
additional tax relief or additional spending in the event of an 
emergency. We have prepared for those contingencies.
  The tax cut that President Bush proposed and signed into law today is 
prudent; it is the right thing to do philosophically and economically.
  I would quote from, if I could, Mr. Speaker, the testimony presented 
to the House Committee on the Budget by Chairman Alan Greenspan of the 
Federal Reserve system on March 2, 2001. I will not attempt to read 
from it, because frankly it is not as interesting to read testimony 
like this as it is to paraphrase it, because I remember it very vividly 
as a new Member of Congress, a new member of the Committee on the 
Budget, Alan Greenspan, in my mind, is one of the most widely-respected 
economists, someone whose objectivity and ability is unquestioned by 
people from the Democrat side of the aisle as well as the Republican 
side, the chairman, Alan Greenspan, in his testimony to the Committee 
on the Budget, stated that, in fact, using the projections from the 
Office of Management and Budget and the Congressional Budget Office, 
that if current policies remain in effect, that the total surplus will 
reach about $800 billion in the year 2010, including an on-budget 
surplus of about $500 billion. In his opinion, analyzing these 
projections, the surplus will continue well beyond the year 2030, 
despite, as he says, the budgetary pressures from the aging of the 
baby-boom generation, especially on the major health programs.
  Now, Chairman Greenspan's testimony is important, Mr. Speaker, 
because it lays the groundwork for, I think, demonstrating objectively 
and irrefutably the soundness of the decision that the Congress made 
under President Bush's leadership to pass this tax cut, because it is 
an inescapable, objective reality that there will be record-breaking 
tax surpluses in the Federal Treasury. The question becomes, what do we 
do with them?
  The chairman of the Federal Reserve went on to testify that these 
surpluses do leave the Congress, the Federal Government, with a very 
profound policy decision. The choice is, as Chairman Greenspan points 
out, what do we do with these tax surpluses? Well, we obviously, in his 
opinion, as it is my opinion, the opinion of the President and fiscal 
conservatives here in the Congress, need to first and foremost pay down 
the national debt.
  The national debt, of course, is held in a form of Treasury bonds and 
other marketable bonds, many of which are overseas. As Chairman 
Greenspan pointed out, those holders of long-term Treasury securities 
may be reluctant to give them up, cash them in, especially those who 
highly value the risk-free status of those issues. In order to induce 
them to sell their bonds, it will require the American taxpayer to pay 
those bondholders a significant premium. In Chairman Greenspan's 
testimony, he pointed out that paying those bondholders that premium to 
cash in their bonds early would require, to quote Chairman Greenspan, 
paying premiums that far exceed any realistic value of retiring the 
debt before maturity.
  Both the Congressional Budget Office and the Office of Management and 
Budget project an inability of current services unified budget 
surpluses to be applied wholly to repay debt by the middle of this 
decade.
  Without policy changes, Chairman Greenspan pointed out that the 
Federal Government would begin to accumulate very significant amounts 
of private assets, meaning stocks in the stock market, and other types 
of private assets, which is clearly a policy judgment that he says we 
need to make and something that holds tremendous risk. To have the 
Federal Government become, for example, a significant shareholder in 
General Motors or IBM or some other private companies is obviously not 
only a dangerous trend from a policy perspective but also, in the 
chairman's opinion, something that would lead to changes in the way 
those private companies are managed, and that, indeed, that is a path 
that he recommends we do not follow.
  So if these tax surpluses are not to be used once we pay down the 
debt, the tax surplus is not to be used to begin to accumulate private 
assets, then the question becomes whether the Congress uses the tax 
surplus to increase spending or to cut taxes.
  Chairman Greenspan, in his opinion, after very careful analysis of 
reviewing fiscal policy for the United States and analyzing the 
projected tax surpluses on into the future, concluded in his testimony 
to the Committee on the Budget that, quote, it is far better, in my 
judgment, that the surpluses be reduced by tax reductions rather than 
by spending increases. He came to that conclusion again, Mr. Speaker, 
to avoid the possibility of the Federal Government becoming a majority 
shareholder or even significant shareholder in private companies or in 
increasing government spending to the point where if there were a 
reduction in the tax surpluses in the future that we might be faced 
with a situation where we would need to actually increase taxes.
  Those who have been listening to the debate over the last hour saw 
the distinguished Member, the gentleman from Illinois (Mr. Kirk), quite 
correctly point out that the projections of the Congressional Budget 
Office have been off target virtually every single year over the last 6 
years, and those projections of the Congressional Budget Office have 
typically been pessimistic, and the tax surplus has actually been quite 
much larger.
  To reinforce that point, before I go through in an outline form the 
highlights of the President's tax cut, I would like to quote a few 
highlights from a very important speech that Vice President Cheney gave 
to the National Association of Manufacturers on February 28 of this 
year, in which the Vice President laid out several key points which 
demonstrate conclusively how cautious, how conservative, how prudent 
and careful President Bush was in preparing the tax cut proposal that 
he put before the Congress.
  Vice President Cheney pointed out that day that, first of all, the 
Bush administration's economic growth forecasts were very conservative 
and were actually below the blue chip forecasts that had been given 
over the next 10 years. The blue chip forecast, quoting Vice President 
Cheney, for the next 10 years was about 3.3 percent. The Bush 
administration used a forecast of about 3.1 percent.
  Secondly, Vice President Cheney pointed out that the Bush tax cut 
proposal was based on the assumption that revenue would grow more 
slowly than the economy does, which was another conservative bias, as 
the Vice President pointed out, that was built into the system as the 
Bush administration projected how large the surpluses are likely to be 
over the next decade.
  Third, the Vice President pointed out that the budget and the 
forecast used by the Bush administration assumed no increase in 
productivity in the Federal Government over the next 10 years.
  Productivity in the private sector is increasing about 3 percent, and 
as the Vice President points out, we should certainly expect to see 
some productivity increase from Federal Government employees over the 
next 10 years. But just to be absolutely certain that the projections 
used by the Bush administration were as conservative, prudent as 
possible and that we might all be pleasantly surprised by increases in 
those projections over the next 10 years, the Bush administration did 
not assume any productivity increase in the operations of the Federal 
Government.
  The fourth critical assumption used by the Bush administration in 
preparing this tax cut proposal was that they used a static revenue 
analysis. They did not assume any feedback into the economy as a result 
of the tax cuts, and clearly there will be. We all know from history 
that the Reagan tax cuts of 1981 increased government revenue by $2 for 
every $1 of tax cut that President Reagan was able to sign into law.
  The problem was the other party which controlled the Congress at that 
time, the Democrats, increased spending by about $3 for every $2 of 
increase

[[Page H2988]]

in revenue, and that is what led to the deficits.
  The static revenue estimate analysis used by the Bush administration 
assumed that there would be no increase or stimulation of the economy 
and no increase in government revenue. Clearly there will be some. So 
that is another conservative factor built into the Bush 
administration's analysis that will probably lead to a pleasant 
surprise for all of us over the next decade.
  Fifth, Vice President Cheney pointed out in his speech to the 
American Association of Manufacturers that the baseline from which the 
Bush administration calculated the surplus assumed growth in 
entitlements. He said it can be estimated how big the Medicare 
population is going to be in 10 years, and all of that has been 
factored into the projections used by the Bush administration in 
proposing their $1.6 trillion tax cut; and again the Congress passed a 
$1.35 trillion tax cut.

  Finally, the sixth point used by the Vice President in his speech is 
an important one, and that is that the assumptions, the baseline used 
by the Bush administration, included all of the President's new 
spending proposals. Those are built into the forecasts used over the 
next 10 years by the Bush administration.
  Having done all of that, the Vice President points out, we then set 
aside about an $800 billion contingency fund that will be used for what 
we can anticipate may be out there, such as, for example, the 
additional defense spending that may be necessary as a result of the 
strategic review; emergencies in agriculture, for example; additional 
Medicare expenses; other types of emergencies and contingencies that we 
cannot project. The Bush budget sets forth, sets aside, and the 
Congress has agreed, the House has agreed that we are going to have, 
and the Senate in the budget package, which the gentleman from Iowa 
(Mr. Nussle) has put here in the House, and which has been adopted by 
the Senate and sent on to the President, about an $800 billion 
contingency fund.
  With those estimates in mind, those baseline projections in place, 
the fact that is irrefutable is that we are going to have a record-
breaking tax surplus over the next decade. The question then becomes, 
what do we do with it?
  Alan Greenspan's testimony that we need to use it for tax reduction 
rather than spending increases and certainly do not want to use that 
tax surplus to accumulate private assets, such as buying stock in 
private companies like IBM or General Motors, recognizing all of the 
conservative factors built into the baseline assumptions used by the 
Bush administration, the tax cut, the Bush tax cut, clearly is the 
right policy decision for the Nation and it is the right policy 
decision for this Congress, and certainly right for the American 
people.
  How will this tax cut affect the average American family? If one paid 
taxes last year, they will receive a tax cut under the Bush tax cut 
signed into law today. Every single American who filed and paid taxes 
for the last tax year will receive a rebate of 5 percent of their first 
$6,000 in taxable income if they are single, or a maximum rebate of 
about $300. If one is the head of a household, they will receive a 
refund check in the mail of about $500. Those checks, we believe, 
should be able to go out towards the end of this summer.
  A married couple filing jointly will receive a maximum tax refund of 
$600 in the mail from the United States Treasury.
  The mechanism to make that happen has already begun, and each and 
every one of us who paid taxes in this country will expect to receive 
that tax refund check, I believe by the end of this summer.

                              {time}  1445

  So be looking for an envelope from the United States Treasury. It is 
going to be carrying good news. The only question is how big will that 
check be, depending on whether you are single, filing jointly, or 
filing as the head of a household.
  You will also see this year a reduction in tax rates. There will be 
immediately a reduction in the tax rates across-the-board. We will see, 
for example, small business owners, individuals as well as small 
business owners, will see their individual tax rates cut. The 28 
percent rate will be cut immediately to 27 percent; the 31 percent rate 
to 30 percent; the 36 percent rate to 35 percent. These rates will 
continue to be cut over the next decade.
  The marriage penalty is going to be reduced. We are going to see the 
standard deduction for couples set at twice the level for individuals, 
which will be phased in over the next 5 years. The 15 percent bracket 
for couples will be set at twice the level for individuals. We are 
going to see a doubling of the child tax credit, from $500 per year to 
$1,000 per year.
  The adoption tax credit is going to be increased to $10,000 per 
eligible child. That will include children with special needs. For 
employers who provide adoption assistance, there is going to be an 
exclusion from income of up to $10,000 for assistance that people 
receive from their employers for adoption assistance. Those are all 
going to make a significant difference for families.
  For small business owners, the death tax will be repealed and phased 
out over the next 10 years. The exemption will go to $1 million next 
calendar year, and then the exemption from the death tax will increase 
to $1.5 million in the year 2004, $2 million in 2006, and finally $3.5 
million in 2009, and then the death tax will be completely repealed by 
the year 2010.
  One question that has been raised that I have heard from 
constituents, as well as by those who would prefer to spend the tax 
surplus rather than cut taxes, is that these tax cuts are phased out 
and disappear in 10 years. The 10-year life-span of these tax cuts is a 
direct result of the opposition of the Democrats and a direct result of 
a rule that they placed into effect which would require the President 
to win 60 votes.
  If we were to pass the tax cut and put it into effect permanently, a 
rule that the Democrats put into effect in the Senate, it is called the 
Byrd rule that was named after its sponsor, Senate Democrat 
Appropriations Chairman Robert Byrd of West Virginia, established a 
rule many years ago that we today would be required to pass the tax cut 
with 60 votes if it were to have permanent effect.
  Well, because of the opposition of the Democrats who want to spend 
the tax surplus, who do not want us to see a tax cut at all, who have 
fought the President, almost all Democrats, he has had the help of some 
Democrats, but because of the Democrats, it would be impossible to get 
60 votes in the Senate to pass the tax cut and make it permanent, so, 
therefore, a second procedure had to be used which only requires 51 
votes. That second procedure had to be used because we knew we could 
get 51 votes for the tax cut, and that second procedure can only give 
the tax cut a lifespan of 10 years.
  But I can tell you, Mr. Speaker and the listening public out there 
watching on C-SPAN and those who are here in the galleries, that the 
Republican leadership of the Congress is today working on legislation 
that will make the tax cut permanent. We will pass that out of the 
House as soon as possible, and that legislation making these tax cuts 
permanent will be sent on to the Senate as soon as possible, and it 
will then be up to the new leadership of the Senate to determine in a 
very visible and public way whether or not they support permanent tax 
cuts, or whether they want to see the tax cuts disappear in 10 years. 
We will give them that option.
  That is a very, very important point, that we in the House, our 
Republican President, wanted to make this tax cut permanent, but 
because of opposition from the other side, we were unable to do so and 
had to give it a 10 year lifespan.
  We have in the House, the Republican majority in the House, our 
Republican President, I think it is appropriate that the American 
people by electing a Republican House, a Republican Senate, the 
American people did elect a Republican Senate, and a Republican 
President, won the election in Florida, George Bush did win the 
election in Florida, as we all know, the Republican Congress, our 
Republican President, cut taxes retroactively to the first of this 
year, and that is a dramatic difference with the previous 
administration and the Democrat control of this Congress. While they 
raised taxes retroactively, we cut them retroactively. It is a dramatic 
and important difference, and one that we absolutely should not forget.

[[Page H2989]]

  In fact, I hope that all of those who are listening to this debate 
today, those at home on C-SPAN as well as those in the gallery, I can 
tell you as a new Member of Congress, the Congress is not as partisan a 
place, there is not as much partisan bickering as the national press 
corps would have us believe. All of us in the Congress are working in 
an honest and diligent way to represent our districts as best we can.

  There are honest and important differences of opinion of principle 
that we believe in very passionately that have made us Republicans or 
Democrats, and I would urge everyone listening today, whether they be 
at home or here in the gallery, to remember that after George 
Washington, our Nation's probably second most significant and important 
Founding Father, Thomas Jefferson believed that his most important 
achievement in his life was being a partisan Republican. It is 
something we should all be proud of, to be a Member, whether it be in 
the Democrat Party or Republican Party, to stand up for our principles 
that we have chosen to join these political parties, because they 
represent our viewpoint.
  This tax cut proposed by President Bush in his campaign on which he 
was elected, on which the Republican Congress was elected as a keystone 
principle, President Bush has fulfilled that promise. That tax cut 
represents a core philosophy, which is what led us to become 
Republicans, one that led me to become a Republican, as a believer in 
limited government, in limiting the size, power and cost of the Federal 
Government and returning power to the States, in paying off the 
national debt as rapidly as possible, is certainly my highest national 
legislative priority. To pay off the national debt, to cut taxes, to 
allow taxpayers to keep more of the money they send to the Federal 
Government are my top two legislative priorities.
  My highest local legislative priority is to expand the Katy Freeway 
there in West Houston, Interstate 10, which is in such disastrous shape 
that I often think of it as a rolling blackout in West Houston every 
morning and afternoon. We have got terrific schools, safe streets, a 
thundering economy, but terrible transportation problems in West 
Houston.
  I as an individual Member of Congress have those priorities and those 
principles that matter to me, that led to my election by the people who 
worked hard to see me elected to represent them in West Houston and 
succeed Chairman Archer, and those core principles are what led me to 
become a Republican. It is something I am very proud of.
  I can tell you that the passion that I share for the principles of 
the Republican Party, the passion that my colleagues share for their 
belief in the Democrat Party, were a point of great pride to Thomas 
Jefferson.
  I would close, Mr. Speaker, by quoting from a letter that Mr. 
Jefferson wrote towards the end of his life in February of 1826, just a 
few months before his death. As Mr. Jefferson was reviewing his long 
and wonderful life, he looked back over the many, many years of public 
service that he had performed, and remember that his public service in 
his mind was his greatest achievement.
  Those of us, if you visited Monticello and you visit Thomas 
Jefferson's grave, people are often surprised to see that he has only 
listed on his tombstone three things: That he was the author of the 
American Declaration of Independence, that he was the author of the 
Virginia Statute of Religious Freedom, that he was the father of the 
University of Virginia.
  Mr. Jefferson listed those things because he wanted to be remembered 
by the things he had done for the Nation, rather than by those things 
that the Nation had done for him, by honoring him by electing him to a 
number of different offices. There frankly is no better way we can be 
remembered than by the service we perform for our country.
  Mr. Jefferson, in this letter from February of 1826, a few months 
before his death, reviewed his long life and all of his achievements. 
He points out that he came of age in 1764; that he was nominated to be 
a judge in the county in which he lived; he was then elected to what we 
would call the State legislature of the State of Virginia, the Virginia 
Assembly; he was then elected to serve in the original Congress of the 
Confederation; he then went to work in revising and reducing the whole 
body of the British statutes and the Acts of the Virginia Assembly, 
working on a recodification of Virginia law.
  Mr. Jefferson was then elected Governor of Virginia. He was then 
elected to the legislature once again and to Congress again. He was 
sent to Europe as the American Minister to France. He was appointed by 
President George Washington as our Nation's first Secretary of State.
  Thomas Jefferson was then elected Vice President, and then President 
in 1800, and finally, he says, I was elected as a Visitor and Rector of 
the University of Virginia.
  These different offices, he says, with scarcely any interval between 
them, I have been in the public service now 61 years, and during the 
far greater part of that time in foreign countries or other States.
  He goes on to point out that of all of those services, of everything 
that Thomas Jefferson did in his life, he says there is one, there is 
one service which is the most important in its consequences of any 
transaction in any portion of my life, and he says that was the head 
that I personally made against the Federal Principles and Proceedings 
during the administration of Mr. Adams.
  In modern parlance, in the language of the year 2001, Mr. Jefferson 
is telling us that his greatest achievement in his entire life was 
being a partisan Republican. It mattered to him more than anything else 
he had done, because they created, James Madison and Thomas Jefferson, 
created political parties to ensure the election of Republicans, of 
people that were Republicans, as they called themselves. Mr. Jefferson 
never called himself a Democrat. He called himself a Republican, their 
political party was the Republican Party, because they were committed 
to the preservation of the American Republic, the core principles that 
made the country great: reducing the size, power and cost of the 
Federal Government, preserving the power of the State governments to 
control the things that affected the lives, prosperity and well-being 
of individual citizens in those States.
  Mr. Jefferson set out as his highest priority as our new President, 
the first Republican President of the United States, elected 200 years 
ago, Mr. Jefferson set forth as his highest priority the elimination of 
the national debt, reducing taxes, abolishing the income tax.
  Many people do not realize that Republican President Thomas Jefferson 
abolished all Internal Revenue taxes, a noble goal that I am committed 
to, along with my colleague, the gentleman from Texas (Mr. Sam 
Johnson). We have coauthored a constitutional amendment to abolish the 
income tax, the Internal Revenue Service and do to the IRS what Rome 
did to Carthage, tear it down stone by stone and sow salt in the 
furrows.
  That was Thomas Jefferson's greatest achievement in his first term as 
President. Mr. Jefferson and the Republicans abolished all Internal 
Revenue taxes. They passed laws which ensured the power of the States 
over things like public education, over the domestic improvements, 
things that were purely internal to each State.
  All of those core principles that led Mr. Jefferson, Mr. Madison, the 
majority they elected to Congress, to become Republicans, to create the 
Republican Party, are the same core principles that animate me today, 
that animate my good friend, the gentleman from Indiana (Mr. Pence), a 
freshman Member, another stalwart and fiscal conservative of impeccable 
integrity, and someone with a long and illustrious career ahead of him 
in the United States Congress.
  We, each one of us, Democrats and Republicans, should take great 
pride in our affiliation with our political parties, and do not let the 
national media and the national press fool you into thinking that this 
is something to be ashamed of to be a partisan Republican or partisan 
Democrat. It is what made this country great; it is what gives each of 
us as Americans a true choice. And as we go into vote, we often do not 
have any other thing to guide us as we vote, than whether someone is a 
Democrat or a Republican. We should each one of us be proud of it, 
stand up and defend it.

[[Page H2990]]

  It was Thomas Jefferson's greatest achievement that he was the head 
of the Republican Party, and I take immense pride and pleasure in 
having been there today to see our Republican President, George W. 
Bush, sign into law only the third tax cut in the last 100 years. And 
the only reason that the American people got a tax cut today is because 
we elected a Republican President, George W. Bush, and we had a 
Republican Congress in the House and the Senate who stood by their 
principles, who stood proudly on those principles and won the election 
last year.
  I look forward to supporting President Bush in the years ahead in the 
remainder of his term and seeing that we return more of the American 
people's hard-earned money to them and continue to transfer power back 
to the States, protecting the authority of State governments over 
public education, local improvement, public safety, all those things 
that led the original Republican Party of 200 years ago to win a 
majority of the House, the Senate, and to elect a Republican President.

                              {time}  1500

  I am confident we will lead the American people to reelect George W. 
Bush and to reelect a Republican majority of this Congress, as long as 
we all remember why we are Republicans and why we are Democrats. I hope 
the American people will remember this tax cut as one of the most vivid 
examples of why it is important to preserve a Republican majority in 
the House and in the Senate.

                          ____________________