[Congressional Record Volume 149, Number 3 (Thursday, January 9, 2003)]
[Senate]
[Pages S96-S98]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TAX CUTS
Mr. DAYTON. Mr. President, I wonder if perhaps you and some of my
colleagues remember, as I do, the movie ``Animal House,'' one of the
classic American comedies. In the movie, the rogue fraternity Delta
House had one solution to many of their problems, and that was a road
trip. If there was an academic suspension--a road trip; fraternity
problems--a road trip; expulsions--a road trip.
Here in Washington we have some who hold a similar one-line refrain
to just about every problem; and that is--tax cuts. We have budget
surpluses--tax cuts; budget deficits--tax cuts; economic recessions--
tax cuts.
Well, like road trips, tax cuts are a lot more fun and popular than
dealing with unpleasant realities. Tax cuts are practically guaranteed
to make the politicians who support them popular with their
constituents, and so I must confess to liking them myself. But, like
road trips, tax cuts not only avoid unpleasant realities, they often
make them worse. They might postpone the day of reckoning, but the
conditions will be even worse as a result, not only because of the
delay in facing up to those realities, but also because of the tax cut
itself.
This tax cut proposal that the President made 2 days ago is the road
trip equivalent of visiting Fort Lauderdale. It is excessive, it is
reckless, it is dangerous, and it is seductively appealing.
Masquerading it as economic stimulus would be consumer fraud. I note
with interest that the White House has seemed to have dropped that
claim. Little of it would take effect actually this year, and none of
the proposals put real dollars in the pockets of consumers.
This is a reelection stimulus package aimed at 2004 rather than an
economic stimulus package aimed at 2003. It is
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putting money in the pockets of the wealthiest Americans who, if this
administration had its way, would, it seems, pay almost no Federal
taxes of any kind, whether they are alive or after they are dead. It is
important we remember that the richest Americans already got huge tax
reductions in 2001. Those with incomes of more than $1 million a year
will get an average of $650,000 in tax cuts over the 10-year life of
that bill. The rich do not need another tax cut, yet they would be the
ones getting most of the money in the President's proposal.
The struggling millionaire getting by on an annual income of $1
million or more would be getting another $50 to $100,000 a year in
additional tax reduction, depending on their amount of dividend income.
Middle-income-tax payers, upper middle income-tax payers, people who
work for a living, would get the benefit of the increase in the child
tax credit, which I support. That is a good idea. I hope this body will
pass it. But they will get little from the rest of the President's
proposals. And for most of them who put their investments into 401(k)s
or IRAs or other retirement accounts for whom dividend income is
already tax exempt, there would be no additional gain in our doing so
at the cost of some $67 billion over the next 10 years to the Federal
Treasury.
In fact, the total tax package of $670 billion in cost over the next
10 years would give little boost to economic recovery, little tax
relief to most Americans, and once again, more huge tax cuts to the
richest 1 percent of Americans.
Those of us who point this out are accused of class warfare. I must
say, this is not my proposal. These are the facts. And those who are
proposing it are the ones who are guilty of setting one class of
Americans against others.
In addition, this is a $670 tax package that we cannot afford. We are
already running, once again, $200-billion-a-year deficits. That is $200
billion a year in deficit after we use up all of the Social Security
trust fund surplus. President Clinton, in 1997 and 1998, balanced the
Federal budget for the first time in 28 years. Then he did it again in
1999 and 2000, in the actual operating account of the Federal
Government, leaving the Social Security surpluses untouched. As you
recall, those of you who, like me, ran in the year 2000, most of us, I
think probably all of us promised to put that money in a lockbox.
The President, when he was campaigning, promised to put the Social
Security surpluses in a lockbox which meant that the rest of the
Federal operating budget would have to be balanced, and it was. It was
projected by OMB in January of 2001 to remain balanced, actually in a
surplus, for the next 10 years. Well, of course, that has not happened.
We have gone from debating, when I first arrived here 2 years ago,
how to best utilize a $5.6 trillion expected surplus over the decade,
how we could pay down the national debt and save $200 billion a year in
interest payments so that when the baby boom generation retires in
significant numbers, starting in about a decade, when that trust fund
has to start cashing in its IOUs, that this country would be in the
strongest possible financial condition to meet those growing needs. But
in 2 years, those surpluses have disappeared, and we are now looking at
projected deficits every year for the foreseeable future, which is
heading us, with additional debt and no cushion, toward a financial
Armageddon in a decade that will rival nothing we have seen in this
country since the Great Depression.
The least we should do--not what we should do but the least we should
do--is not make it worse. This tax proposal would do so.
So in one tax proposal, we have greater tax unfairness, greater
income inequality, greater financial instability, a greater future
catastrophe. For this proposal and those who support it, it is like an
alcoholic. I am a recovering alcoholic, so I know whereof I speak. It
is like an alcoholic who knows that they should stop, that it is bad,
that there are going to be future disastrous consequences, but is
unwilling or unable to do so.
I must say that those of us who are ``Friends of Bill W.'' see other
signs of that kind of behavior in some of the statements being made
these days, justifications for these deficits--that a trifecta caused
our budget downfall; people don't cause deficits, trifectas cause
deficits--and denial where top administration officials are starting to
say: Well, deficits don't matter.
Well, they mattered when the President was campaigning in the year
2000 and pledged to keep the Social Security surpluses in a lockbox.
They mattered the last 2 years when the President criticized any
attempt to spend additional money on schoolchildren or prescription
drugs for the elderly. It seems that deficits don't matter only when
the White House wants to ignore them.
It is bad enough that people in the administration who should know
better say that deficits don't matter. It is their job to pretend that
the emperor has clothes even when he does not. But other economists and
economic policymakers around the country who are saying the same things
and making up rationalizations and contradicting their former positions
really are guilty of professional cowardice, and they do their country
a great disservice by the masquerade they are enabling. They have no
honest escape from or avoidance of the truth and the facts as they know
them to be.
I must say that responsibility starts with and falls most heavily on
the Chairman of the Federal Reserve, who has danced around the head of
a needle every time this administration has proposed policies which
contradicted the admonitions he consistently gave to the Congress
during the last administration. I think it will be shameful for
anybody, any professional economist, or economic policymaker to come to
Capitol Hill in the next few weeks and hedge or confuse or rationalize
whether this is an economic stimulus proposal, which is not what its
benefits are relative to its fiscal cost to this country, and whether
it promotes greater tax inequality or equity. And anyone who is
unwilling to speak that truth should have the integrity to step out of
any public position or should just stay away from here entirely.
To the millionaires and the multimillionaires of America, the
captains of industry who are running up support for this proposal, I
know whereof I speak. I say, you are letting your greed ruin America. I
can understand most Americans' aversion to taxes, especially the poor,
the middle class, even the upper middle class who are living on their
earned incomes, who are raising children, wanting to improve their own
financial conditions and that of their families. I can understand their
resentment for every tax dollar. But if you can't live on a million
dollars in this country and pay your fair share of taxes on it, you
should deal with that yourself. You are the luckiest people in America.
You are the luckiest people in the world. You are the luckiest people
in the history of the world.
If you are paying more taxes, it is because you are earning more
money, a lot more money in many cases in the last few years. For people
who want to make more money and pay less taxes on it, that, to me, is
greed. To advocate for it, knowing the financial condition of this
country, knowing the harm it would cause your children and your
grandchildren when they have to pay the bills in the years ahead, is
not only selfish, it is downright unpatriotic.
This antitax ideology is destructive to America. This obsession with
paying no taxes whatever it takes, moving a home or residence, moving a
business, setting up offshore shells and tax evasions and other kinds
of tax avoidance, people who are doing so should be ashamed. If this
country falls into a financial abyss in the years ahead, we will have
no one to blame but you. Nothing that anyone has hoarded will begin to
replace the economic strength of this country if it is lost.
There are other reasons this tax cut is terrible. That is that it
ignores the serious unmet needs of our people. The priorities of this
Congress and this administration regretfully have been tax cuts for the
rich ahead of quality education for our schoolchildren, prescription
drug coverage for senior citizens, disaster aid to destitute farmers
and flood and fire victims, and a lot of serious unmet social needs.
One of those areas of greatest critical need and a broken promise of
the Federal Government for a decade is the area of special education.
It was a quarter century ago when Congress made a promise that it would
pay for 40 percent of the cost of special education. In fact, Congress
even passed a
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law in 1982 that stated that it would do so. It legally bound itself to
providing 40 percent of the cost of special education.
Today, nationwide it is 16 percent; in other words, less than half of
the promise that was made.
For my State of Minnesota, that difference amounts to over $200
million a year in tax money, in funding for education that has to be
made up by tax money in Minnesota, with more regressive property taxes,
State income taxes--money that Minnesota does not have and many other
States don't have.
Now, I heard my friend from New Hampshire recite a great number of
statistics that purported to demonstrate how much the Federal
Government has increased its funding for education. The problem with
the numbers of percentage of increase is the actual base in many of
these programs--the measure was quite low. In fact, the Federal share
for funding of all of K-12 education has been 7 percent. The State and
local governments have been obligated to pick up the rest. For most of
the time it has been desirable because it has maintained local control
of our schools. But you can increase a low number by a high percent and
still have a low number.
I heard lots of blaming of the previous administration, that they
should have spent more for education. I would say, having come 2 years
ago, probably it should have done so. Probably the last 25 years of
administrations should have spent more for education--certainly in
special education they should have honored that promise when it was
made and kept it. The priority of the last administration, almost by
necessity, was to bring this country out of deficits, to put this
country back in sound fiscal condition, to put the Social Security
surplus money in a lockbox so it would, therefore, meet present and
future retirements.
I believe I heard the Senator from New Hampshire say that in all of
those 8 years, this country was operating in a surplus. That is not the
case.
The PRESIDING OFFICER. The Senator has used up his time.
Mr. DAYTON. Mr. President, I ask unanimous consent to have 2 more
minutes to finish my remarks.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. DAYTON. Certainly we should have spent more. President Bush, to
the extent he has spent more money--and he has--for special education,
boosting the Federal share from 12 to 16 percent, I give him credit for
doing so.
But I am not concerned about who is right. I am concerned about doing
what is right. I am concerned about what is right for the
schoolchildren of this Nation. I speak as a former schoolteacher who
taught in a public school in New York City with 32 children in the
classroom. It was the toughest job I ever had. I heard them say that
the number of students in a classroom doesn't make any difference.
Anybody who has tried to teach kids knows it makes a difference. I have
been to 150 more schools in Minnesota, and anybody who doesn't know
they are substandard and dangerously decrepit--they can cite all the
statistics they want, but they are not looking at reality. Anybody who
thinks the schools are over funded and that teachers who are averaging
$40,000 nationwide are overpaid should spend a day, a week, or a year
in a school and see what that job is about, see the kids from all
different backgrounds and countries with different languages and
capabilities--no wonder test scores are affected.
Anybody who thinks we are over funding public education is off in
another world. In Minnesota and in other States where funds are not and
will not be available through property taxes and State taxes, the
question is, Who will help us out? The Federal Government has these tax
cuts for the wealthiest people, and we are saying to these kids: No, I
am sorry, you go your own way, you suffer, we are not going to put
computers on your desks to enable you to succeed. We are going to test
you and find out how you are doing and use the bully pulpit. It is no
wonder good teachers are leaving. Who would want to stay when that is
going on. This next year is about priorities for this country,
priorities on how we will spend the money and the resources we have.
That debate should continue.
I yield the floor.
The PRESIDING OFFICER. Under the previous order, the Senator from
Ohio is recognized for 15 minutes.
Mr. DURBIN. Mr. President, I ask unanimous consent to follow the
Senator from Ohio for 15 minutes.
The PRESIDING OFFICER. Without objection, it is so ordered.
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