[Congressional Record Volume 148, Number 57 (Wednesday, May 8, 2002)]
[House]
[Pages H2220-H2227]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         EDUCATION TAX CREDITS

  The SPEAKER pro tempore (Mr. Otter). Under the Speaker's announced 
policy of January 3, 2001, the gentleman from Colorado (Mr. Schaffer) 
is recognized for 60 minutes as the designee of the majority leader.
  Mr. SCHAFFER. Mr. Speaker, I want to spend this leadership hour 
discussing in the context of Special Orders the important issue of 
education and specifically of education tax credits. There is 
legislation that I am working on, preparing for introduction within the 
next few weeks and have been working on that legislation for some time.
  That legislation is supported and enjoys the assistance of a great 
number of our colleagues, growing coalition, large coalition of 
Representatives here in the House and even some over in the Senate who 
are firmly convinced that an education tax credit bill should be 
introduced; and to all those who may be monitoring today's proceedings 
and this discussion on tax credits, I want to extend an invitation to 
our colleagues to join me here on the floor if they would like to 
participate in a discussion on this important initiative.
  It is an important initiative and one that really extends beyond the 
walls of this House in terms of its appeal and its scope. There are a 
great number of outside organizations, family groups, taxpayer groups, 
educational organizations that are supportive of an effort to try to 
get more cash into the American education system and to do so in a way 
that does not discriminate based on the kind of institution that is 
providing an education service or certainly does not discriminate based 
on the children and the choices they have made on where they might want 
to attend school.
  This is an effort to try to get a massive cash infusion of funds 
available to all children in America, regardless of the academic 
setting that they have chosen in which to learn; and it does so by 
essentially cutting government out of the picture, which is attractive 
for some, which is a problem for others, I understand; but my goal is 
not to worry about the comfort of those who are comfortably employed in 
the halls of bureaucracy, dispensing education cash to children. My 
goal is quite the opposite and that is to make children the primary 
objective of our education initiatives in Washington and throughout the 
country.
  Here is how a tax credit works. It essentially reduces the tax burden 
on an American who makes a direct cash contribution to a child who is 
attempting to receive a better education. In some cases, that might be 
through an organization which we have referred to in legislation as an 
education investment organization. These groups exist in all 50 States 
today. Some of them provide scholarships to low-income children so that 
they can attend the school of their choice.
  The other component of the bill would allow direct cash contributions 
to government-owned institution organization public schools for 
specific projects or enrichment programs that exist at these schools; 
and once again, a contribution to an effort of that sort would result 
in a reduction in Federal income tax obligations to the extent of 50 
percent in the case of the bill that has been proposed.
  It might be instructive, Mr. Speaker, to kind of run through how 
money gets to children today, and I will refer to the chart here to my 
right. At the top, we have a taxpayer. This represents any ordinary 
hardworking American who is working hard today, having a portion of his 
wages confiscated by our government at the time he received the 
paycheck, and of course, in April we try to get a portion of that back 
by filing our tax returns. Americans throughout the country today are 
getting a portion of those dollars returned to them, and these 
are essentially payments that they have sent to the government or money 
that the government has taken from them over and above their actual 
obligation to pay.

  So I want to start there with taxpayers because nobody likes paying 
tax. I do not know too many people who have ever told me that they 
enjoy paying taxes, but as Americans we understand our obligation to do 
it. There

[[Page H2221]]

are some legitimate functions of government that are worthwhile and 
important and, in fact, essential to maintain a sovereign Republic as 
our country is, and so we are all consigned to pay a portion of our 
earnings to the Federal Government to maintain those legitimate 
functions of government.
  Education is certainly an important function of government, providing 
an education system for our children. This is a function that has been 
traditionally a State responsibility, but over the years we see that 
more and more education authority has been moved out of the States and 
toward Washington. We saw that take place just last year with the 
massive education reform bill that was passed here in Congress and 
signed by the President, and that was done to try to accomplish the 
need of more accountability in education across America so that we have 
this whole strategy now of national testing and national accountability 
and national rules that try to dictate more precisely how these dollars 
will be spent.
  I want to start there because for many in government that is a 
perfectly fine system, this system I am about to describe; and it works 
well for some. I do not believe, however, it works well for all, and 
that really is the motivating factor behind tax credit legislation.
  Most Americans are like this guy right up here. They work hard and 
they are willing to send their cash to Washington and trust us here in 
government, politicians, to divvy up these funds and establish 
priorities; and to the extent that we do a good job of spreading these 
dollars across the priorities that tend to coincide with the attitudes, 
opinions and beliefs of the taxpayer, this works perfectly well.
  Most Americans are like me; they tend to think that they are 
overtaxed. They tend to think that the government wastes too much of 
their money, and they tend to think that by the time a hard-earned 
dollar paid reaches the intended purpose of a particular government 
program, there is so much lost in the middle here that there is not 
much left at the end; and that is again what I intend to describe here.
  If a taxpayer knew, however, that the dollars they send for an 
important purpose, education, for example, really reached a child, I 
think people would be a little less resentful of this system that 
exists here; and we might describe this as kind of a spending funnel, 
as dollars come from the taxpayer to government.
  They are confiscated, as I mentioned at the time, right out of 
Americans' paychecks. Those dollars are taken in by the U.S. Treasury. 
This is where we find the Internal Revenue Service that we are all 
familiar with, especially as it relates to paying taxes. Then it is 
subject to a number of political decisions. This is us here as Members 
of Congress, all of us here, politicians. We come to this floor and 
decide how to divvy up taxpayers' cash.

                              {time}  1745

  A portion of these hard-earned dollars are spent on the U.S. 
Department of Education. The Department takes money and distributes 
those dollars to States, primarily. Some of those dollars go directly 
to local school districts, but most of them are distributed down to the 
State level. Once those dollars get to the State level, you have more 
politicians, State legislators in this case, and Governors, who 
redistribute those funds on a Statewide basis to programs that they 
believe to be important in their States. Once those politicians are 
done, a certain portion of those dollars are spent on the State 
Departments of Education. From the State Department of Education, the 
taxpayers' money then goes to school districts throughout the country.
  Most school districts, if not all, are managed by an elected board of 
politicians, school board members, and these politicians then 
redistribute the taxpayers' dollars even further, down to the various 
schools that are managed within a school district. And then once those 
dollars are at the school, why then the principals and the 
administrators who run the individual schools distribute those dollars 
to the student, way down there at the bottom, who is pretty happy to 
receive any attention and resources with respect to his academic 
future.
  That is how American education dollars get to students today, within 
the context of Federal spending. Again, hardworking taxpayers send cash 
to Washington, on an involuntary basis, I might add, and those dollars 
are then filtered through this entire process of government agencies, 
politicians, government agencies, different levels of government, other 
politicians, other agencies in the States, smaller jurisdictions, being 
school districts, more politicians who run school districts, down to 
the schools, and finally to the child.
  Now, what is unfortunate about this picture is that every one of 
these levels of bureaucracy and political decision-making, they 
actually cost money too. You see, it costs money to run the Department 
of the Treasury and the IRS. So they take their cut and they get their 
portion. We here in the Congress, we have other priorities, and of 
course we have to pay for this building, too, and pay ourselves 
handsomely for the hard work we do here. So some of that money is lost 
here.
  Over at the Department of Education, as we have known through the 
audits that have been very difficult to accomplish over the years, some 
of that money has just been stolen. Some of it has been lost over the 
years. Things are getting turned around slowly over at the Department, 
but even still that is a big agency. They have a number of very large 
office buildings here in Washington and there is a lot of people who 
work there, so we have to pay them, too. And then we have to account 
for a certain percentage of those dollars that are lost due to waste, 
fraud and abuse. So the Department takes its cut, and that is a pretty 
big one, by the way.
  Then at the State level of course you have this State process where 
the States, in order to administer these Federal funds, they need a 
portion of those dollars, too, because those employees who exist to 
redistribute Federal funds through the States, they have to be paid, 
after all. And the politicians at the State level, they have priorities 
of their own also, and so they skim off a little portion of the money.
  The State deputies of education work very similar to our departments. 
They are really embroiled in a lot of recordkeeping and accountability, 
filing of reports, and just dealing with all the red tape of education. 
That costs money. So we have to pay for that, and that comes out of 
these dollars, too.
  Then you find the same at the school district, because what you have 
here is a bunch of people who communicate with each other. Since these 
dollars are distributed through this process up above, they want to 
make sure that the school districts down here at the bottom are 
spending the dollars the way these bureaucrats want them to be spent. 
So they require all kinds of reports to be filed and accountability 
requirements and strings and red tape as well just to make sure the 
dollars are being spent the way these people in these agencies believe 
it should be spent. And so you have a lot of people who fill out a lot 
of paperwork at the school district level, and of course they need to 
be paid. So there is an expense associated with that.
  So paying for all of that nonsense comes out of this taxpayer dollar, 
too. Same with managing the schools. There is an accountability chain 
here that is pretty intense, with every principal filling out reams of 
paperwork in order to satisfy the Treasury Department, the politicians, 
the Department of Education, the State, State politicians, State 
Department of Education, school districts and school board members that 
the principal is spending the dollars correctly. And so you have just 
got all this paper running back and forth, with site inspections too, I 
might add.
  In order for the Department of Education, way up here, to be able to 
persuade us here in the Congress that they are doing a good job, they 
send auditors down here to the schools. And when they show up, the 
school has to stop teaching for a while and the administrators need to 
answer all the questions of the interrogators who come from the 
Department of Education to make sure the money is being spent well. And 
by the time you get your dollar through this whole process, all of 
these agencies have skimmed off quite a sizable portion, so that the 
dollar amount that actually reaches the child is very small.
  Once again, this process obviously makes sense to somebody, because 
it

[[Page H2222]]

did not occur by accident. It occurred over many, many years, through a 
series of successive votes here on the House floor. And we here in the 
House and over in the Senate and down at the White House over the years 
deliberately built this system the way we have it today.
  So when we talk about trying to improve it, do not get me wrong, it 
does disrupt the comfort level of some people who understand this 
process. There are people who like this. The kids probably do not, but 
there are people who work in all these agencies, a number of 
politicians, our colleagues, who get to make important decisions on how 
these dollars are spent. They like this process just fine because it 
suits them well.
  And at the end of the day they believe in their hearts they are doing 
something worthwhile for kids. I cannot deny that. And I think these 
are probably good people who we can find throughout this process. It is 
just that, in my estimation, it is probably not the best way to get 
money from the hardworking taxpayer down to the needy child who 
deserves a good education.
  So in constructing a process by which we can get more dollars to the 
child, and bypass this whole process, just from a political standpoint 
we have come to the conclusion that changing this very dramatically is 
not all that practical. These people all have lobbyists. They have 
people who represent them that stand just outside the halls of the 
Congress here, and they strike up friendships with our colleagues here 
in the House and over on the Senate side. And when you talk about 
changing the way the Department works or the way the States work or the 
way these school boards work or the State departments, or even the way 
we manage schools, you are in for a political fight that leaves the 
child down there behind and leaves the taxpayer behind. You get caught 
up in this whole mess of bureaucracy. And those who care about the 
taxpayer and care about the child usually lose these battles.
  So I have fought them for years at the State level and I have fought 
them here in Washington, and they are fun battles to be a part of. They 
make you feel good and warm inside, because you care about the kids, 
but at the end of the day this bureaucracy always wins and it always 
gets bigger. So my point being that changing this is a good idea, 
something that needs to happen, but focusing all our attention on this 
process is probably not going to result in measurable meaningful help 
to the child down there. The politics of this are just too big.
  So we have something different in mind, and that is this tax credit 
proposal. We did not invent it here in Washington. I certainly did not, 
although I am very impressed by the efforts that are taking place 
throughout the country in a number of States, because the States are 
frustrated with this, too. So what we have seen in a handful of States 
around America is an effort to bypass this bureaucratic process, too, 
by trying to get these dollars around this bureaucratic system down to 
the child.
  That model looks more like this. Here we have the same taxpayer, way 
over there to my right, and those dollars that he is earning come 
directly to the child. Now, the way this works is for every dollar 
donated to an organization that benefits students, or donated directly 
to the child's school, that taxpayer will be able to reduce by a 
certain degree the amount of money he sends to Washington through that 
other process that I just mentioned. And that is really all that is 
behind a tax credit.
  In that other system that I described, this one here, over the last 
25 years, we have spent $125 billion just this way. This is how we have 
done it. And when taxpayers get frustrated by the huge amounts of money 
they have spent and the less than impressive results they have received 
for those expenditures, this really explains why: $125 billion spent 
through this process over the last 25 years.
  And in America children still languish far behind their international 
peers in the areas of math and science. The racial achievement gap in 
America on test scores is actually widening, not getting smaller. The 
test scores, according to the Nation's report card, the National 
Assessment of Education Progress, have remained largely stagnant over 
the past 20 years.
  So once again, I will acknowledge and concede that there are many 
people who like this system, who are appreciative of the $125 billion 
that have been spent through this process, and some people are actually 
satisfied with the results. I am just a little different, I guess, and 
maybe the people that I represent in my district in Colorado are as 
well.
  And we are not alone there. I have traveled all around the country 
with our Committee on Education and the Workforce, as a member of a 
particular subcommittee that does research on education issues. We have 
traveled to cities all across America, and I have heard at stop after 
stop after stop, in all of these field hearings, from droves of parents 
who are tired of seeing their tax dollars squandered and having their 
children grow up with something less than an excellent education system 
available for them. What they want are choices. They want choices to be 
able to act like customers in an education marketplace.
  Now, for many people, choosing the government-owned school in the 
neighborhood, the traditional public school, is all they want. They are 
content to move into a neighborhood, call the school district, the 
government agency that runs schools in their area, and ask them, what 
school do I send my child to. And what usually happens is the school 
district will say, what is your address. You give them the address and 
they look at a chart of some sort or a register of addresses and they 
compare those addresses to the nearest school and they say, well, since 
you live at 123 Smith Street, for example, then you go to school A. And 
that is the choice you get. Many people are content to do that. They 
are fine with the notion of their government dictating their school for 
their child based on their address.
  And for parents who like that sort of thing and feel comfortable with 
that and believe the results are good, I say great for them. That is a 
good choice for them and for their child. And more power to the parents 
who want to let other people make decisions for their children about 
what schools they attend. That is great for them. There ought to be 
schools for them. Others would like to choose a different public 
school, a different government-owned institution. Instead of school A 
in the neighborhood, they might want another school A in a different 
neighborhood that is run by the same organization but maybe has some 
different flavor about it, some different emphasis, perhaps on math or 
science, or maybe discipline, maybe sports. It all depends. If a parent 
believes that product is in the best interest of their child, well, by 
all means they ought to be able to choose to send their child to that 
different academic setting.
  And then there are still other parents who believe that the 
government-owned monopoly structure of education is not for them; that 
they might want to send their child to a privately owned institution, a 
school that maybe excels in one area or another; again, maybe math or 
science, or maybe it is a school that has some character quality about 
it that defines it. Maybe it is a religious school, maybe it is a 
school that focuses on a foreign language, or whatever the case may be.
  But for them, they are really out in the cold, to a large extent, 
because the money they are paying to this large government structure is 
not available to them when they want to take their child to a different 
school that is not part of the government monopoly. And that kind of 
discrimination plays disproportionately on the poor. Because wealthy 
people in America can choose to forego the cash they are sending to the 
government and pay even more on top of that to pay the tuition to send 
their child to a nongovernment school, a private school, or even maybe 
provide tutoring or some other academic services. But if you are poor, 
you are pretty much stuck with the option that is handed to you.
  And, again, if it is a good school, that is a great thing, and I 
would not want to tamper with that. But if it is a school that is 
failing, then that is a child that needs to be rescued, frankly. That 
is a child that deserves our compassion, deserves our support, and 
deserves our attention. And that is what this discussion is all about 
and why so

[[Page H2223]]

many people, including our President, have indicated their unyielding 
support for education tax credits.

                              {time}  1800

  Mr. Speaker, let me give an example of the way tax credits are 
working in a number of States. First, six States have enacted some form 
of tax credit at the State level, and these are generally for 
elementary and secondary education services. Arizona is one, Minnesota, 
Iowa, Illinois, Florida, and Pennsylvania are probably the best 
examples. There are several other States, probably over 30 right now, 
that are considering in their legislative sessions enacting similar 
legislation.
  This is the case in my home State of Colorado. It is a vigorous 
debate that is exciting because it is finally beginning to focus on 
children as the most important element of education debate, not as the 
chart here on the right illustrates, all of the education 
constituencies that tend to be a part of education discussions in 
America today. This is really true.
  When we talk about empowering States, that threatens the Federal 
Government and their Department of Education. When we talk about moving 
authority to Washington as Congress did last year, it threatens States 
and local school districts. So we have some of these conflicts that 
exist between various levels of government; and too often the education 
debate here in Washington centers on the relationship between these 
institutions and these bureaucracies.
  We need to get away from that. I think we need to get to a point 
where we start measuring fairness by the relationship between children 
throughout the country and making sure that all children are treated 
fairly. We can care about the bureaucracy, too. My point is that should 
come second. The children should actually come first. I know there are 
Members that believe that bureaucracies should come first, and with 
them I always enjoy having the debates on the floor. They are even 
better when those who want to put the bureaucracies first are honest 
and willing to engage in a debate on whether some union wins or some 
school building wins or some administration happens to win.
  But in the end what I have heard from Americans across the country is 
they want to see us begin to talk about children for a change and what 
we need to do to make children become the victors in an education 
debate. That is what these States are accomplishing. The tax credit 
initiatives that we have seen in the States went through these vigorous 
debates to begin with. There were people in government at the State 
level that said if you give parents choice, if you empower children and 
give them the ability to shop and choose the kind of academic setting 
that they want to be a part of, that threatens these government 
decision-makers that have made the decisions for them. These debates 
have been vigorous and public and spectacular at the State level. Even 
as some of these tax credit initiatives were enacted by States, there 
was some doubt about whether or not they would work.
  In those States where tax credits exist, we are beginning to see 
public support for what they are achieving as being quite remarkable. 
They are winning over public confidence at a pretty dramatic rate, and 
they are bringing people together across partisan lines. One would 
think that this is a proposal that appeals to conservatives as opposed 
to liberals, and throughout the States we are seeing education tax 
credits are appealing to groups that really do not care about the 
politics. They do not care whether these are proposed by Republicans, 
which is what I am, or Democrats, or liberals or conservatives. They 
just want to see Congress finally talking about children for a change 
and not the bureaucracy, not the politics of it.
  Here again, once these tax credit proposals are up and running, and 
we see these massive cash infusions taking place into the education 
systems of these various States, all of a sudden people get it because 
now the poor child who has been trapped in a bad school finally has a 
little bit of liberty and freedom. They get to attend better schools, 
and the schools they leave get better as well. Just the force of the 
marketplace that we see in every other important industry in America 
has been denied, for all intents and purposes where the most important 
industry is concerned, that being education; but in these States that I 
mentioned, we are starting to see children benefiting and schools 
benefiting as a result of just a small introduction of a tiny 
representation of a market-based economy, and a market-based approach 
to public schooling.
  There is a corporate tax credit component that we find in some States 
as well that allows businesses to target some of the most needy schools 
within a State. When a corporation helps to replace the leaky roof, for 
example, at an inner city school in the city, that corporation also 
receives a commensurate reduction or related reduction in their tax 
obligation to the Federal Government.
  The way we have structured this bill, we actually get a two for one 
benefit as a result of these kinds of investments. In fact, our bill 
calls for a 50 percent tax credit, which means for every dollar donated 
to the school, the donor's tax liability to the Federal Government is 
reduced by half of that amount. From our standpoint, from the 
government's standpoint, for every dollar that does not come to 
Washington to be spent on education by the bureaucracy, $2 are spent on 
a child. When we couple the Federal proposal with what we see taking 
place in the six States that I mentioned, well, the benefit to children 
becomes rather dramatic and exciting.

  Just a few weeks ago the Committee on Education and the Workforce 
held a hearing on this topic, and we heard from at least one child that 
represents several throughout the country, I am convinced, give his 
opinions about the benefit that he has received and realized as a 
result of receiving a scholarship. Here is his testimony. His name is 
Joshua Holloway. He says, ``I was born in Denver. My favorite subject 
is football. I am 10 years old. My mother passed away last year. I have 
a brother who is 6. His name is Jeremiah. We go to church every Sunday. 
Before I go to school, I read the Bible. I live with my grandfather. 
Sometimes my cousins come over and we play outside and play video 
games. Before my mom passed away, she told my grandfather to bring us 
to Watch Care.''
  I might inject here, Watch Care is a school in Denver, Colorado, that 
is a private school and Joshua was only able to attend because he 
received a scholarship from a private education investment 
organization.
  ``We were at Watch Care before we moved to New York. My grandpa could 
not afford to pay for me and my brother.'' Mrs. Perry, who is the 
principal at Watch Care Academy, told him about a particular 
scholarship that exists in Colorado. The testimony goes on: ``My 
grandpa applied and we received an ACE scholarship. Jeremiah and I say 
thank you. It is with your help that my grandpa is able to bring us to 
this fantastic school. I know my mom is happy and thanks you also. When 
I grow up, I want to be a lawyer, and then a football player. Thank you 
for helping all of the children who are getting such an education 
through your program. I want to win. This will help my grandpa with 
money for Jeremiah and I.''
  He thanks us for considering these tax credits. Joshua came and 
testified before the Committee on Education and the Workforce on April 
16. His testimony was moving. I think it held most committee members 
spellbound, and it spoke clearly about who benefits. It is 
contributions to this kind of scholarship program which will be 
eligible for the tax credit that we are proposing in the legislation.
  The gentleman from Michigan (Mr. Hoekstra) was at that hearing and is 
one who has been devoting a great amount of time over the years to 
perfecting this tax credit proposal.
  Mr. Speaker, I yield to the gentleman from Michigan (Mr. Hoekstra).
  Mr. HOEKSTRA. Mr. Speaker, as we try to help young people like 
Joshua, last week I had an opportunity to go through a public charter 
school in my hometown and explain to some of the parents and some of 
the teachers and the principal exactly what we were looking at with the 
tax credit proposal.
  There was a tremendous amount of enthusiasm because they recognize 
that not only would it help Joshua in this case, but it would also help 
the students at that school, a public charter school, to get some 
additional resources for some things that they felt

[[Page H2224]]

that they desperately needed; and it would not require them to go to 
the taxpayers and raise the tax. It allows them to go directly to the 
people who have a vested interest in that school. Whether it is a 
public charter school, whether it is a traditional public school, or 
whether it is the kind of school that Joshua goes to, these tax 
credits, number one, will provide for a significant infusion of new 
money into our local schools for all of our kids and will get everybody 
vested in improving education for every one of our kids.
  The gentleman and I go through this process each and every year where 
we have the opportunity to nominate kids to the military academies. We 
know that there are some tremendous kids coming out of our public 
schools. We know that there are some tremendous kids at the school I 
went to, the charter school; there was someone leaving there on June 27 
to go to the Naval Academy. They are doing a good job. There are kids 
coming out of our private and parochial schools that are going to our 
academies.
  When I speak with students as to why they are in private school, they 
will often say that this one just kind of fits me better or fits what 
we need to get done and what my parents thought that I needed. I think 
that these different kinds of educational alternatives are tremendous, 
and then allowing parents and others in the community to invest in 
these schools, to increase the amount of money that is going into 
education, without the red tape, without the great sucking sound which 
is a dollar coming into Washington, us taking our cut and feeding it 
back. Actually it is a two for one. They invest $2, and it costs 
Washington $1 because that is the ratio. It is a $500 donation, but it 
is only a $250 tax credit. It is a real win/win for the school, for the 
child, for the parent, and for the taxpayers because what we are doing 
is moving more money into education, which we have identified as one of 
the most important priorities that we have in the Nation today.

  Mr. SCHAFFER. Mr. Speaker, some Members have tried to demonize tax 
credit proposals that we have seen in the States, and even our proposal 
in Washington, as a voucher. The voucher, as we say, is the ``V'' word 
here in Washington that has such a connotation about it because there 
are some many organizations that exist to prevent that kind of a school 
choice mechanism from taking place.
  One of the ways that they have tried to characterize the tax credit 
provision proposal that we have is by referring to it as a voucher, but 
it is nothing like that. A voucher would essentially be effectively a 
taxpayer giving their cash to the people here in Washington, and the 
government here giving those dollars back through a voucher, kind of a 
check, that could only be spent the way that the government says it can 
be spent. We are not proposing that at all.
  Mr. HOEKSTRA. Mr. Speaker, the difference between what we are trying 
to do and how Members characterize vouchers, vouchers are typically 
viewed as taking the educational pie, the amount of money that we are 
investing in education and redistributing it so that means that there 
are some people that are going to get less money; and since there are 
new people getting money, they are going to be getting more money, so 
somebody is going to be left out or they are going to go home with a 
smaller check than they got before.
  That is not at all what we are doing here. We are saying that there 
is the money coming into Washington, about 7 percent of all the 
education dollars come into Washington, and what we are doing is saying 
that money is going to stay there. We are going to keep increasing 
that. That money has been going up, but now we are going to create a 
new educational investment fund that is going to be driven at the local 
level and not at the Washington level. Basically, this is new money 
where people are saying I am willing to contribute extra money to 
education if I can determine where it goes and what it is going to be 
used for, and if I can build that relationship with my local public or 
private or local charter school; and if they can come to me and make a 
compelling case as to how this is going to benefit the community and 
the children in our community, I will write that check. The states are 
finding that they are doing it.
  Mr. SCHAFFER. What we are trying to accomplish through this 
legislation is a mechanism that reflects what we have been hearing 
throughout the country as we have held field hearings and listened to 
parents.

                              {time}  1815

  That is, number one, they want to be able to make the choices 
necessary to advance the academic goals of their child, but even more 
is this important point. That is, that Americans are willing to spend 
more money if the dollars they spend really help a child. They just do 
not have the faith and confidence that this system I described earlier, 
and illustrated through this chart, that spending money through the 
Treasury Department, politicians in Congress, the Department of 
Education, State politicians in the State legislature, State 
Departments of Education, school board members, more politicians, 
schools and principals and ultimately the child, Americans inherently 
know that funneling cash through this bureaucratic process means that 
you have these agencies take their cut and that the dollars that get to 
a child are small.
  If this process worked and these dollars really did get to a child, I 
suppose more Americans would feel very good about this and comfortable 
with it, but as it is now, the children do not feel good about this, 
the taxpayers do not feel good about it, some of these people in the 
middle, they certainly feel good about it because they get some of the 
money, but what we have tried to do is take this sentiment that has 
been expressed by taxpayers when they tell us, if know the money is 
really going to help a child, especially a poor child, I will spend 
more, I am willing to spend more, I will make the investment in the 
child so that we can improve America and improve the education system.
  I would like the gentleman to address, if he would, the reality that 
although I described this in kind of a negative way, since we are 
talking about new money being invested in the child down there, we can 
do this without really threatening the people who like this kind of 
nonsense here, who like this kind of system. We can do this without 
touching this.
  Mr. HOEKSTRA. That is exactly the point that I was going to make. 
That system, with the tax credit, is going to stay in place. We are not 
going to take money out of that system, although that system takes out 
about a quarter to a third of every dollar that we commit to spending 
on education. When the dollar starts here in Washington, before it ever 
gets into a classroom, we think we lose a third. We are not going to 
get into that argument as to whether that system is effective, 
efficient, and whether it is working or not because the other thing 
that comes along with that is when that 67 cents get into that local 
classroom, the local teacher, the local principal, the local 
superintendent, they have been told pretty much how to spend this money 
and what they can spend it on.
  We are not threatening that system. We are leaving that system 
intact. We have tried that before, saying we do not think that system 
works and all of that. We are just saying that, hey, there appear to be 
a lot of people in Washington and maybe even at the State level and a 
lot of people in this Chamber would like that process that says, ``We 
are willing to have 33 percent of every dollar bleed off just so that 
we can use that money here in Washington to tell people what to do in 
their classroom at home, we think that is a good deal.'' We are not 
going to argue with them on that, although we probably at times have, 
but that is not what this is about.
  This is saying you can keep that sacred cow, you can keep that system 
intact. What we want to do is we want to have a system that is not 
going to even come nearly as big as that one, but one where the 
relationship and the linkage is directly between the people in the 
community and the school and the children, where the local carpenter, 
the local contractor, the local plumber when they go out and do their 
work, get paid, pay their taxes to Washington, if they have a little 
bit of extra left, they can write a check directly to their school and 
we know that they are doing that in the six States that have passed tax 
credits. They are willing to put more money into their kids.
  Mr. SCHAFFER. It is an important distinction to make, an important

[[Page H2225]]

point that I think the House needs to keep in mind as this debate moves 
forward and the legislation eventually comes to the floor, that the 
bureaucratic model that exists today, it is a problem and it ought to 
be fixed, I think maybe someday it ought to be replaced, but that is 
not what this tax credit proposal does. It instead sets up a different 
mechanism to fund education and to provide this massive cash infusion 
in schools in addition to that bureaucratic model. It does so not by 
changing the education laws or dealing with redistributing the 
education money that is spent currently or even disrupting the 
scheduled increases in funding for the bureaucratic model. That is 
going to continue on unimpeded, unimpaired because, as you mentioned, 
there are so many people here in Washington who like that and support 
it.
  But what we are suggesting is that we can, in tandem through the Tax 
Code, make the necessary changes so that it becomes advantageous for 
Americans to work hard, to donate their cash to America's 
schoolchildren, to do it directly and bypass the bureaucratic model 
altogether.

  If you need a visual of how tax credits work, this is it right here.
  Mr. HOEKSTRA. If my colleague will yield, because the other thing 
that we know is we know what the difference is. In your model, it goes 
directly from the taxpayer, it can go directly down to the school 
district. We eliminate all this and we save that 33 percent. Actually 
what we do is we double it. We take the dollar, and rather than taking 
the dollar in this model where it shrinks it down to 67 cents, what we 
do in that model is we take the dollar and we multiply it to two, so it 
is a great contrast.
  If the gentleman will leave the chart up for just a second because 
the other contrast is, you and I have worked pretty hard over the last 
4 or 5 years, I think we have finally made some progress now that we 
have a new administration, but for a number of years the money going 
into this system could not be tracked. We did not know where it went. 
This organization right here, the Department of Education, could not 
get a clean audit. They could not tell us where the money went. There 
were all kinds of cases of waste, fraud and abuse, well documented. I 
think at last count, 18, 21 people are pleading guilty and have been 
sentenced for the crimes that they have committed but the 
accountability system really was not here.
  With Secretary Paige and all that, we are very optimistic that they 
are going to get a clean audit so they can tell us exactly where that 
33 percent goes and we will be able to determine whether we have value 
or not. But we are not threatening this system. The accountability 
model over there is very simple. If the principal or the superintendent 
or the local school board cannot convince the local taxpayer that the 
purpose that they need the money for is an appropriate purpose, they do 
not get the money. And if at some time in the future they get the money 
and they waste it, they will have broken trust with their 
constituencies and they will not get another check; whereas, if they 
spend it wisely and the people say, wow, what a great investment, they 
will get more.
  Mr. SCHAFFER. This model that you are displaying here, it is just 
impersonal. Because if a school district does a bad job and children 
suffer in a particular school, under this system the schools just keep 
getting cash. It just keeps coming. In some cases they actually get 
more. We reward failure oftentimes through this process and it is too 
impersonal. The people making decisions up at the top end of that 
funnel, or that tornado there, they are so far removed, those of us 
here in Washington, you are from the State of Michigan, I do not know 
your constituents in Michigan, I do not know the names of these kids 
and you do not know the names of the kids in my district.
  Mr. HOEKSTRA. Yes, I know Joshua.
  Mr. SCHAFFER. That is right. He came and testified. But that is 
indicative of a Federal system where we try to make laws and establish 
policy to help children in different neighborhoods throughout America. 
It is too impersonal. By the time those dollars get to kids, there is 
no human connection between the people who are calling the shots and 
establishing the policy and the poor child who is either languishing or 
succeeding in a school. But this model is very different because the 
person who contributes the money understands the value of the donation. 
And if that donation strikes them as a good idea, a good investment, 
something that is yielding appreciable benefits for the community and 
elevating the hope and future of children, that taxpayer is going to 
feel good about that donation and they are going to continue to make 
the donation. In fact, they might even make more as time goes by.
  That is just what we have seen in the several States that have tax 
credits, is as time goes on this tax credit strategy becomes favored 
over the bureaucratic model and more taxpayers like this system in a 
way that makes them feel better, makes them more generous with their 
dollars and in the end they are getting massive quantities of cash to 
the neediest children.
  Mr. HOEKSTRA. The other thing that happens and like we said earlier, 
we do not threaten this system. We are not taking money. We are not 
shrinking this funnel. This funnel is going to continue to grow and 
expand. This funnel will be there for people who like the guarantee of, 
yes, this money is coming in and some of it is going to filter its way 
down here and when it gets here, they are going to tell us how to spend 
it. If they like that kind of model, this model is going to stay 
around. What we want to do is we want to complement this model which 
you and I have questions about, but this model stays in place. But we 
are going to complement this model with the local control model, the 
parental and local involvement as an additional infusion of money 
so you will have money flowing into this model and then you will have 
that other chart with this person. This is confiscation. This guy has 
no choice. He has got to put the money into here. He or she will also 
have the opportunity whether they want to send some money directly 
through here, bypassing that system.

  And, like I said, what we have found in the States that have 
introduced the tax credit proposal, this person when they have got the 
direct ability to make a decision as to how that money is going to be 
spent and when they know the children, they know the schools, they know 
the people who are running those schools and when those people have 
built up their confidence with their constituents, this person will 
write them a check to make their school better and to make their kids 
better educated.
  Mr. SCHAFFER. It is a great model. Again I really commend the 
leadership of these various States that I mentioned that have initiated 
the tax credit philosophy and are seeing it work in their States. They 
have done so on a bipartisan basis. Once again, this is not a partisan 
sort of thing at all. These kids do not care whether Republicans or 
Democrats introduce these bills. What they want is they just want them 
to pass.
  If I can use my State as a good example, we have got this debate 
taking place in the State Legislature of Colorado today. Right now it 
is taking place. What we have there is a Republican in our State House 
of Representatives who introduced this legislation and the same bill is 
being carried in our State Senate by a Democrat and a pretty liberal 
one at that. So you have both ends of the political spectrum that are 
rallying around children for a change.
  That is the kind of political unity that I think we need to see more 
of in this Congress and hopefully it does not have to only take place 
around tragedies and terrorist attacks, and we can finally have this 
kind of unanimous consent around something that is positive and 
something that provides hope for the Nation, and that is our country's 
children.
  Mr. HOEKSTRA. What this is not about is about process. It is not a 
debate about process. What this is about is making sure that we put our 
children at the forefront and their education. That is what the whole 
debate always should be about. It should not be about all these other 
things. It should be how we are making sure that every child gets a 
good education, that they can all do reading, writing and math. How do 
we make sure that we do not leave a single child behind. That is

[[Page H2226]]

one of the things, and that is why in the States that they are moving 
to the tax credit as a complement to the bureaucratic model is that 
they recognize that in too many areas we are leaving too many kids 
behind.
  Republicans, Democrats, liberals, conservatives, African Americans, 
Caucasians are coming to the conclusion together that, just like 
testing in and of itself is not the total answer, just like more money 
through the bureaucratic model is not the total answer, tax credits, 
you and I, I do not think, believe that tax credits in and of 
themselves are going to revolutionize education. More parental 
involvement is not by itself going to do it. But if you take each of 
these, if you allow for more local control, if you put in some 
accountability measures so that parents get a better indication as to 
exactly how a school is performing and how their school is performing 
versus their neighboring schools, that you put more money into the 
bureaucratic model and that you put money into the tax credit model 
which builds the relationship between a community and their schools, 
all of these things together should move us forward more rapidly than 
what we have.
  The disappointing thing, and I do not have the statistics, but is it 
not like during the last 20 years, we have really not improved at all 
in our test scores and maybe in a number of areas we have actually 
decreased? We have got all this technology, we have got all of these 
new capabilities and understanding how kids learn, and the end result 
is that after learning everything about how kids learn, you would think 
we would have developed methods that you would have seen our test 
scores skyrocket.

                              {time}  1830

  But they have basically stagnated or, in some cases, they have 
decreased, and that is unacceptable. There is no reason why they should 
be stagnating or decreasing. So there is not a single silver bullet 
that will fix this. But what it is, it is taking a mixture of these 
things; and in Colorado, a certain mixture may work, or maybe in Denver 
a certain mixture will work, and in other parts of Colorado, something 
else will work, depending on exactly what is in the community, the 
state of the schools and those types of things; and that is what we are 
trying to do, is to allow people at the local level to tailor their 
educational system to meet the needs of their students. It is not like 
this is a free-for-all. They are going to have the State regulations 
and the new Federal mandates and those types of things, but it is going 
to give them more opportunity to reach for and achieve high standards.
  Mr. SCHAFFER. Absolutely. This element of choice is really key to the 
whole proposal. The reality that our standing, when compared to our 
international peers, is being diminished over time in math and science 
in particular, is a real problem. Not all schools in America are 
culpable in that regard. Some schools do, in fact, a very, very good 
job. It is a big country. We have lots of schools, lots of approaches, 
lots of managers. Most of them are competent and, in some cases, we 
find that they are not. They tend to be isolated in urban inner city 
areas, these schools that are failing to give children a decent 
education. In those cases, Americans really, the rest of us in America 
need to be quite concerned. We need to find ways to reach out to these 
kids.
  In every single State in the Union, these scholarship organizations 
have popped up that provide, that collect private money by way of 
donations to try to provide scholarships to some of these kids trapped 
in the worst schools. In fact, I have a map that was produced by just 
one of the organizations. It is called the Children's Scholarship Fund, 
and the Children's Scholarship Fund, again, it is just one organization 
that provides scholarships. They raise private money to provide 
scholarships. This blue area, everywhere we see blue on here tells us 
where they have received applications for scholarships. It is basically 
all across the country. These red areas is where we have high 
concentrations of applicants who have applied to try to get some of 
these scholarships. As my colleagues can see, the greatest amount of 
interest is in inner city areas, in Atlanta, in New York, in 
Washington, in Detroit, in Chicago, in Los Angeles, and so on. This is 
where we see the greatest level of interest is from inner city areas 
where children and their parents are applying for these scholarships so 
that they can afford to go to schools of their choice like other 
Americans can do.
  Mr. HOEKSTRA. Mr. Speaker, I think we have to be a little careful 
about calling them failing schools. I think what we have identified is 
that in those areas and other areas there are kids, for whatever 
reasons, that are falling through the cracks. It could be a problem 
with the schools, or it could be other issues that are affecting it; 
but in each of those areas, there are people that are saying, man, what 
I need and what I need for my kids just is not matching what I am 
getting.
  Mr. SCHAFFER. Exactly.
  Mr. HOEKSTRA. What we are finding then in each of these areas is we 
are finding people who are going out and embracing these kids and 
trying to give them an answer to make sure that they will enter 
adulthood well prepared for high-quality, high-paying jobs.
  The other thing that we will find is that in Detroit and these types 
of places, if they have identified that the schools are part of the 
problem, many of these people are also passionate about improving their 
local public schools.
  Mr. SCHAFFER. Right.
  Mr. HOEKSTRA. They are not giving up on their local public schools. 
They are passionately involved in fixing their local public schools. 
They are passionate about helping the kids out that are falling through 
the cracks right now. So there are a number of different ways that they 
are approaching it, but in no way has this become public versus charter 
versus other forms of education, versus home schoolers. This is really 
a national movement of people saying, I want to improve education and I 
want to make sure that we do not leave a single child behind, and there 
is a whole range of strategies that we need to embrace and take a look 
at for making sure that that is what happens.
  Mr. SCHAFFER. Mr. Speaker, this chart on my right is an illustration 
of just one scholarship fund that exists in America, the Children's 
Scholarship Fund. This is where the interest is and where people have 
applied.
  What we want to do is take a look at how widespread this interest is 
and actually enhance it and improve it. Because the reality is, the 
scholarship fund does not have enough money to give to all of the 
children who wanted the kind of choice that that scholarship allows. 
This is a chart that shows the distribution of where those scholarships 
went; and as my colleague can see, although it is impressive, it is in 
far fewer areas than the interest indicates. And by providing a tax 
credit, we cannot only help this particular fund, this is just one of 
them; we will help them get more money, certainly, so that they can 
make more loans; but just imagine that there are these kinds of 
organizations that exist in every single State.

  Mr. HOEKSTRA. Remember, Mr. Speaker, this is for a very narrow 
purpose. This is for scholarship funds to assist kids to go to a 
private school, a private or parochial school. Just imagine what 
happens now when we expand this to a tax credit and they get a tax 
benefit. These are all people who are willing to pay more money into 
education than what they do today; and if we expand it, think of all of 
the people that would be willing to pay into their local public 
schools, to their private, to the scholarship funds, for tutoring, and 
those are all people who are willingly today paying more to improve 
education.
  That chart would be fully red if we would allow tax credits to go to 
public education, because there are strong constituencies and 
supporters of public education around the country that, with a tax 
credit, would be really motivated to say, I am going to help my local 
school, and this is going to be the thing that is going to push me 
over.
  Mr. SCHAFFER. Mr. Speaker, that is our goal, is to change the Tax 
Code in a way that makes it easier for Americans to contribute to these 
kinds of organizations so that they can help more children, not just 
these kinds of organizations, but also contribute directly to schools. 
As shown on this map, this is an impressive distribution of private 
funds to America's children, but it is

[[Page H2227]]

possible that this entire map can be colored solidly red with every 
child in America having access to additional funds generated through an 
education tax credit, and it will benefit all children.
  Mr. HOEKSTRA. Mr. Speaker, this is what we are talking about, 
bringing a massive infusion of new money into education. This is nontax 
credit money going into education for a very specific purpose. If we do 
a tax credit, we will see an entire map being red and dollars going to 
help all of our kids at the local level to make sure that we do not 
leave a single child behind.
  Mr. SCHAFFER. Mr. Speaker, it is an exciting proposal and it is one 
that is just a few weeks away from being introduced. We expect it on 
the floor sometime in June. We are very appreciative of the President's 
commitment, personal commitment and obligation to help us see this 
legislation passed; and we will talk about it more over the coming 
weeks.
  Mr. Speaker, I appreciate the opportunity to be here this evening, 
and I thank the gentleman from Michigan (Mr. Hoekstra) for joining me.

                          ____________________