[Congressional Record Volume 148, Number 15 (Friday, February 15, 2002)]
[Senate]
[Pages S883-S884]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                                TAX CUTS

  Mr. CONRAD. Mr. President, on another subject, I noticed in today's 
Washington Times a story headlined: ``White House to Show Triumph of 
Tax Cuts, Says Recession Stalled Jobs Added.'' This is a news story 
that comes as a result of a speech later today to the Council on 
Foreign Relations by Vice President Cheney, and it indicates that he 
will present findings by the President's Council of Economic Advisers 
as an answer to Democratic critics of the tax cut. The findings the 
Vice President will discuss show the third quarter growth last year 
would have contracted at an annual rate of 2.5 percent instead of the 
reported 1.3 percent without the tax relief.
  That should not be any great surprise to anybody. What is surprising 
is the Republicans attempting to claim credit for the tax cuts that 
occurred last year.
  We should not rewrite the history of what occurred. Last year, it was 
the Democrats who were proposing much greater tax relief than the 
President's proposal because we believed we needed to give lift to the 
economy. Here are the facts. For 2002, the President's budget proposed 
almost no tax relief. The Democratic budget proposed $60 billion of tax 
relief last year.
  Those are the facts. Absolutely, Democrats were for more tax relief 
last year than the President proposed because we thought we needed to 
give lift to the economy. In fact, we actually passed even greater tax 
relief than that. But this is what was in our budget. That is what was 
in the President's budget. I don't think the administration should be 
running out and claiming credit for what was our idea.
  This is what actually passed last year: a total of $73 billion, $33 
billion in the form of the rebate, and corporate tax changes of $40 
billion. Some of the latter were just timing questions that had no 
impact on stimulus.
  In terms of the fundamental question about differences in tax cuts, 
we were not in favor of as much of a tax cut over the 10 years. While 
we favored a much bigger tax cut last year in order to give lift to the 
economy than the President proposed, we proposed a much smaller tax cut 
over the 10 years because we were concerned about the impact on long-
term interest rates.
  Our tax relief proposal was $750 billion over 10 years; the 
President's proposal was $1.6 trillion. We said at the time that we 
feared his tax proposal was too large and would threaten the Social 
Security and Medicare trust funds.
  Guess what? We were right on both counts. We were right to support a 
bigger tax cut last year, to give lift to the economy. We were right to 
support a smaller tax cut over the 10 years because the larger tax cut 
endangered the trust funds of Social Security and Medicare. The facts 
are now in, and it is just as clear as can be, we were right. The 
President's new budget shows he will be taking $2.2 trillion over the 
next 10 years out of the trust funds of Medicare and Social Security. 
In Social Security alone, the President will be taking over $1.6 
trillion of Social Security trust fund money to pay for his tax cut and 
his other spending priorities. That is a fact.
  So, yes, tax cuts are beneficial at a time of economic slowdown. 
Democrats proposed them. Again, the budget difference is very clear. 
The budget difference, in terms of what was proposed, is right here. 
This is the President's budget: $183 million. That is what he proposed 
for tax relief in his budget for last year. Our budget resolution had 
$60 billion of tax relief. That is the fact.
  Let's not get confused about the 1-year and the 10-year. It is 
absolutely true that over 10 years we proposed smaller tax cuts so as 
not to raid the Social Security and Medicare trust funds. But for the 
Vice President to run out now and claim the tax cuts of last year were 
really their idea--you have to go back and look at the budget they 
submitted. It was not their idea. It was the idea of the Democrats who 
proposed much more significant tax relief last year to give lift to the 
economy. That is the fact.
  We also said last year that the 10-year tax cut the President 
proposed would have an adverse effect on long-term interest rates. 
Again, I think the evidence is now quite clear. Here is what we see in 
terms of short-term rates versus long-term rates. We have had eleven 
interest rate reductions by the Federal Reserve? You can see that by 
the short-term rates: 11 reductions, and the short-term rates have come 
down smartly.
  But look at long-term rates. Long-term rates have been largely stuck. 
They have not come down. That was one of the concerns we had about the 
President's long-term proposal, that the markets could see that his 
budget plan did not add up and that would put pressure on long-term 
rates and keep them high. That is exactly what has happened. These 
rates are higher than we believe they would otherwise have been.
  It is true that short-term rates have come down dramatically. Long-
term rates have not. So we believe our position has been confirmed on 
all counts. No. 1, we supported more tax cuts last year in our budget 
than the President did in his because we wanted to give

[[Page S884]]

lift to the economy at a time of economic weakness. Now the Republican 
White House is going out and saying they are the ones who had the idea. 
They are not. Anybody who cares to research it can go back and look at 
the President's budget--not just the first budget he submitted, but the 
second budget he submitted, the follow-on budget in the spring. It is 
the same thing. He had virtually no tax cut last year.
  The February budget had virtually no tax cut, and his April budget 
had virtually no tax cut. The people who were pushing for a big tax cut 
last year for the year 2002 were those of us on this side of the aisle, 
Democrats. And we were right.
  As it turns out, we were also right to oppose the size of his 10-year 
tax reduction because we said then--two things. No. 1, it would 
endanger the trust funds of Social Security and Medicare, and we now 
know that is true. No. 2, we said it would put upward pressure on 
interest rates; that, even at a time when the Federal Reserve was 
lowering short-term rates, it would hold long-term rates up. That is 
exactly what we see. The evidence is in. It is just as clear as it can 
be.

  I hope as we move forward this year, we can move to rectify fiscal 
mistakes that were made last year. The raids on the Social Security and 
Medicare trust funds, the President's budget plans, are dramatic.
  Here are the facts. The President is going to be taking every penny 
of the Medicare trust fund surpluses over the next 10 years to pay for 
his tax cuts and to pay for other spending priorities--every dime--over 
$500 billion, according to his own calculations.
  The President is going to be taking, under his budget plan, over $1.6 
trillion of Social Security surpluses over the next decade to pay for 
his tax cuts and other spending priorities. It is in his budget. That 
is his plan.
  There is only $600 billion left, every dime of which is Social 
Security money. The Congressional Budget Office, we believe, when they 
rescore the President's proposal, will show that virtually all of that 
is gone because the President has dramatically underestimated the cost 
of Medicare over the next 10 years.
  Yesterday, in a hearing with Health and Human Services Secretary 
Tommy Thompson, I showed that the Congressional Budget Office believes 
the President's budget has underestimated the cost of Medicare by $300 
billion over the next decade. So there is no money left except Social 
Security money. That is the hard reality. And the President's budget 
has taken most of that.
  I believe history will show very clearly that Democrats last year 
proposed a greater tax cut in 2002 to try to give lift to the economy, 
but we proposed a more modest tax cut over the 10 years because we did 
not want to endanger the trust funds of Social Security and Medicare, 
and we did not want to keep long-term rates from following short-term 
interest rates down because that also gives lift to the economy.
  What is important to understand is that fiscal policy--that is, the 
spending and tax policy of the Federal Government--can adversely affect 
the monetary policy that is guided by the Federal Reserve Board. While 
we move to give lift to the economy through stimulus, that can all be 
countered by interest rates. If interest rates go up or stay high, that 
can prevent the economy from gaining strength and moving forward.
  Facts are stubborn things, as a previous President said. I believe 
the facts of who stood where with respect to economic policy are just 
as clear as they can be--absolutely. Tax cuts last year helped reduce 
the impact of the recession. But it was Democrats who advocated 
substantial tax cuts last year. It was not the President, either in his 
February budget or in his April budget. He proposed virtually no tax 
relief last year. That is the fact.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The bill clerk proceeded to call the roll.
  Mr. DASCHLE. Mr. President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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