[Congressional Record (Bound Edition), Volume 145 (1999), Part 12]
[Senate]
[Pages 16942-16945]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 16942]]

                                TAX CUTS

  Mr. DURBIN. Mr. President, I wish to address an issue which is 
topical and one that most Americans will be hearing about during the 
course of this week and the next. It is an issue involving tax cuts. 
Can there be two more glorious words for a politician to utter than 
``tax cuts''?
  People brighten up and their eyes open and they look in anticipation, 
and they think: What is this politician going to bring me by way of a 
tax cut?
  Our friends on the Republican side of the aisle have decided that 
they will make the centerpiece of their legislative effort this year a 
tax cut, a tax cut which, frankly, will have an impact on America--
positive in some respects but overwhelmingly negative in other 
respects--for decades to come. So I think it is important for us to 
come to the floor and discuss exactly where we are today and where we 
are going.
  First, a bit of history:
  In the entire history of the United States of America, from President 
George Washington and through the administration of President Jimmy 
Carter, our Nation accumulated $1 trillion in debt--a huge sum of money 
over 200 years. But at the end of the Carter administration, and the 
Reagan and Bush administrations began, we started stacking up debts in 
numbers that were unimaginable. In fact, today we have over $5 trillion 
in national debt. Think about that--200 years, $1 trillion, and, just 
in the last 20 years, another $4 or $5 trillion in debt.
  What does it mean to have a debt in this country? You have to pay 
interest on it, for one thing. The interest we pay each year on that 
debt we have accumulated is $350 billion out of a national budget this 
year of about $1.7 trillion. You see that each year about 20 percent of 
our national budget goes to pay interest on the debt we have 
accumulated.
  The new President came in--President Clinton--in 1992 and said: We 
have to do something about this. We can't keep going down this path of 
accumulating debt and paying more money in interest. It isn't good for 
our current generation to be paying out that money, and certainly we 
shouldn't saddle our children with that added responsibility.
  In 1993, he came to the Congress and said: Let us take from what we 
have been doing over the past 10 years and do something new. The 
President proposed a new budget plan--a plan that was determined to 
bring down this debt. That plan passed without a single Republican 
vote. In 1993, the Clinton plan passed without a single Republican vote 
in this Chamber. Vice President Gore came to the Chair and cast the 
deciding vote to pass the plan.
  It was a big gamble. Some Members of Congress on the Democratic side 
lost in the next election because they voted for the Clinton plan. 
Marjorie Margolies-Mezvinsky, one of my colleagues from the State of 
Pennsylvania, cast a courageous vote for that plan and lost in the next 
election.
  But was the President right? History tells us he was dramatically so 
because in the last 6 years we have seen not only our economy grow 
dramatically in terms of the creation of jobs and businesses--low 
inflation, new housing starts, and all the positive things we like--but 
we have finally seen us turn the corner and move toward balance when it 
comes to our annual Federal budget.
  Now, if you will, we are not discussing what to do as we swim through 
this sea of red ink but, rather, what to do with an anticipated 
surplus. In 6 years, we have moved from talk of a deficit to speaking 
of surplus.
  There are two different views on what to do with this future surplus. 
The Republican side of the aisle is suggesting a $1 trillion tax cut 
over a 10-year period of time. I am sure that is appealing to some, 
particularly if you are in the higher income groups in America who will 
benefit from this tax cut. But certainly we ought to step back for a 
second and say: Is that the responsible thing to do? Should we be 
giving away $1 trillion in tax cuts over the next 10 years at the 
expense of virtually everything else?
  Our side of the aisle, the Democratic side of the aisle, working with 
President Clinton, has a different approach, one which I think is more 
responsible and more consistent with the leadership which the Democrats 
showed in turning the corner on these Federal deficits. It is basically 
this:
  First, let us meet our current obligations to Social Security and to 
Medicare.
  It is amazing to me, as I listen to the Republicans talk about all of 
our future challenges, that there is one word they are afraid to 
utter--the word ``Medicare,'' the health insurance program for over 40 
million senior and disabled Americans, a program which needs our 
attention and help.
  What the Democrats and the President propose is to take a portion of 
the future anticipated surplus as it comes in to solidify Social 
Security for another 50 years and to make sure Medicare can start to 
meet its obligations past the year 2012.
  We will have to do more, believe me. But at least by dedicating that 
portion of the surplus, I think we are accepting the responsibility, 
before we give money away for any new program or give money away for 
any tax cut, to take care of the programs that mean so much to American 
families and in the process bring down the national debt and start 
paying off this $5 trillion national debt.
  Is that important? It is critically important because not only by 
bringing down this debt will we reduce our annual interest payments of 
$350 billion, but we will free up capital in America for small 
businesses, large businesses, and families alike to borrow money at a 
low interest rate.
  Mrs. BOXER. Mr. President, will the Senator yield for a question?
  Mr. DURBIN. I am happy to yield to my colleague, Senator Boxer.
  Mrs. BOXER. Mr. President, I am happy to see our colleague, Senator 
Sarbanes, because we all serve on the Budget Committee because we know 
what a turning point this is for our Nation.
  My friend said that with the Clinton plan we have finally turned a 
sea of red ink into a fiscally responsible situation. Is my friend 
saying--I want to make sure we all understand--that in the Republican 
plan for the projected surplus there is not $1 set aside for Medicare? 
Is that what my friend is telling me?
  Mr. DURBIN. I thank the Senator from California.
  I point to this chart. I hope this can be seen because the Republican 
tax cut plan of $1 trillion over the first 10 years leaves nothing for 
Medicare--not a penny for Medicare, as if the Medicare program itself 
is self-healing. It is not.
  If you were going to deal with the Medicare problems--and they are 
substantial--you have only two or three options: raise payroll taxes 
and increase the amount paid by those under Medicare or cut benefits. 
We may face some combination of those, as painful as they will be. But 
they will be much worse if, in fact, we don't dedicate a portion of the 
surplus to the Medicare program.
  The Senator is right. If you take a look at this, there is not a 
penny of the Republican tax cut plan for Medicare and other priorities.
  Mrs. BOXER. Could I ask a final question?
  My friend and I have been on this floor on numerous occasions as 
proposals have come forward to raise the eligibility age for Medicare 
to 67 or 68. We have said, at a time when there are so many Americans 
with no health insurance, let us not raise the eligible age for 
Medicare.
  I know how strongly the Senator feels, and how Senator Sarbanes and I 
feel about Medicare. Does my friend not believe, as I do that, when we 
talk about the safety net for our senior citizens, we must talk about 
Social Security and Medicare--that, in fact, they are the twin pillars 
of the safety net?
  I ask my friend--and I will yield to him--that if we save Social 
Security--and both parties have agreed, because President Clinton laid 
down the challenge, that that was good--and then do nothing about 
Medicare--which is the Republican plan--and suddenly those

[[Page 16943]]

on Medicare have to pay $200, $300, or $400 a month more for their 
health care because Medicare is strapped, does that not mean there 
really is no safety net because the seniors will have to use their 
Social Security to pay out-of-pocket expenses for their health care?
  Does my friend believe, as I do, that to say you are reserving the 
safety net for seniors and at the same time you do nothing for 
Medicare, it is really kind of a fraud on the people?
  Mr. DURBIN. Mr. President, I agree with the Senator from California.
  I think we should take this a step further. It is not only a 
disservice to seniors who are covered by Medicare but to their families 
as well.
  Those of us who have dealt with aging parents and their medical 
problems understand that a family often has to rally together to try to 
figure out how to help a mother, a father, a grandmother, or a 
grandfather. If the additional expenses that are being shouldered 
because of the refusal of the Republicans to deal with the Medicare 
challenge end up falling on the shoulders of the frail and elderly, 
they will be expenses shared by many members of the family.
  I think it is an element that has to be brought to this basic 
consideration. It is one thing to say we are giving you a tax cut on 
the one hand and yet we are going to increase the cost of Medicare to 
you on the other.
  I want to make two points which I think are important as well. I am, 
I guess, right on the age of what is known as the baby boom generation. 
I took a look at this Republican tax cut not just for the first 10 
years. This isn't a tax cut where they want to change the law for 10 
years and then go back to the old one. It goes on indefinitely. We have 
a right and a responsibility to chart out what the Republican tax cut 
means beyond the first 10 years, to see what it means in the next 10 
years and the following 10 years.
  Look what happens. It explodes from the years 2000 to 2004, $156 
billion; $636 billion in the next 5 years; $903 billion in the 
following 4 years, and over $1 trillion in the last.
  What does it mean? For the so-called baby boomers such as myself, 
when the time comes for retirement, the debt is going to start 
exploding again. The service of that debt, the interest paid on the 
debt because of the Republican tax cut proposal, will be a new burden 
to be shouldered by that future generation. It is not responsible. The 
Republican approach is not responsible. Not only does it ignore 
Medicare but it drags America right back into the sea of red ink. They 
are so determined to give these tax cuts to wealthy Americans that they 
are going to do it at the expense of fiscal sanity. Haven't we learned 
a lesson over the last 10 or 20 years, that we cannot do this without 
jeopardizing the possibility that we are going to have some kind of 
fiscal sanity for decades to come?
  Think about this in the private sector. My friends on the Republican 
side say run government like a business. Microsoft is a very profitable 
business. Would Microsoft give shareholders huge dividends based on 
expected future profits? Of course not. They declare a dividend when 
the money is in the bank.
  The Republican tax cut programs wants to declare a national dividend 
in anticipation of money coming into the bank; the Democratic 
alternative says no, dedicate a portion of that surplus to Social 
Security and to Medicare, and if there is to be a tax cut, let it be a 
reasonable, affordable tax cut to help middle-income families first. 
That is the difference. It is an important difference.
  We also have to take into consideration that if the Republican tax 
cut is enacted, it is going to put pressure on Congress to cut spending 
in future years. Some people say Congress should cut spending; we ought 
to live within our means. The amount of money that will be taken from 
the Treasury by the Republican tax cut in the outyears would have a 
dramatic negative impact on America.
  This chart illustrates that. If the Republican budget passes, and the 
tax cuts which they have propose are enacted, here are the cuts we will 
face. The Head Start Program--a program for the youngest kids in 
America, in some of the most vulnerable families, who are given a 
chance to start school ready to learn--will be cut for 375,000 
children. The Republican tax cut leads to a cut in Head Start of 
services to 375,000 kids.
  What will happen to these children? They will show up for 
kindergarten and the first grade and they may not be ready to learn. So 
school districts will have added responsibilities and society will have 
added responsibilities. We see it reflected in crime statistics, in 
welfare statistics. When we cut back in early childhood education, 
which the Republican plan leads us to, we will pay for it dearly.
  Veterans, VA medical care. If the Republican plan passes, forcing the 
budget cuts which inevitably follow, they will cut treatment for 1.4 
million patients, veterans who come to hospitals asking for the care 
they were promised when they served our country. Is that a reasonable 
alternative? I think it is not.
  Under title I, education for the disadvantaged, cutting services for 
6.5 million children; The FBI, eliminating over 6,000 agents.
  The Republicans smile and say, come on, we can give tax cuts, we can 
cut the budget, and none of this will occur.
  We have lived through that era, that era of overpromising, that era 
that built up the red ink in this country to the point where we faced a 
national crisis and pleas from the Republican side to enact a 
constitutional amendment so that the courts could force Congress to 
spend its money responsibly. We don't want to return to that again.
  This morning I had a meeting with the superintendent of the Office of 
Education from the State of Illinois, Max McGee, and the chairman of 
the State board of education, Ron Gidwitz, a businessman from Chicago. 
They came in asking for more Federal dollars. They want to have early 
childhood programs so kids get a better start at learning. They want 
the schoolday to go from 3 o'clock in the afternoon until 6 o'clock 
where kids have added adult supervision. They want school extended in 
the summer so kids have an added chance to learn.
  These are all wonderful consensus ideas in education, and each one of 
them costs money. Naturally, our State education officials come to us 
asking for more Federal dollars. I told them they came at exactly the 
right moment because the debate starts across the Rotunda in the House 
today on whether or not the Republican tax cut plan will pass. If it 
does, and if it is enacted--which I doubt the President would see in 
the future--we will face the possibility of fewer dollars available for 
education at a time when most people believe if the 21st century is to 
be another American century, we need to dedicate resources to education 
and to our kids. That is the choice. It is stark. It is difficult. It 
is politically treacherous.
  We must do the responsible thing. The responsible thing is to take 
whatever surplus comes in the future, dedicate it first to Social 
Security, then to Medicare, and then to retiring the national debt so 
that families across America and businesses alike can enjoy continued 
prosperity, a responsible approach which guards the prosperity for the 
future.
  I don't think the American people will be deceived in believing this 
tax cut is their deliverance from concern in the future.
  The PRESIDING OFFICER (Mr. Brownback). The Senator from Maryland.
  Mr. SARBANES. Will the Senator yield?
  Mr. DURBIN. I am happy to yield to the Senator.
  Mr. SARBANES. I commend the Senator from Illinois.
  We have a marvelous opportunity at this point, having come out of 
this deficit box as a consequence of the fiscal policies pursued by 
this administration, to reduce the national debt for the first time in 
a great number of years. Indeed, if we maintain proper discipline, we 
can in effect eliminate the national debt for the first time since the 
first part of the 19th century.

[[Page 16944]]

  All of that is at risk of loss, as the Washington Post says, because 
of the ``egregious recklessness of the Republican proposal'' which goes 
way out to the extreme.
  I ask unanimous consent that this editorial be printed at the end of 
this discussion.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See Exhibit 1.)
  Mr. SARBANES. Mr. President, the Senator from Illinois has pointed 
out very carefully, first of all, this is an exploding tax cut. The 
cost of this tax cut escalates very quickly as time goes by. While the 
projections are over the first 10 years, in the second 10 years it 
virtually triples in terms of cost.
  Secondly, it is premised on the proposition there will be about a 20-
percent cut in existing programs; Head Start, VA medical care, title I 
for the disadvantaged--all the investments we need to make for the 
future strength of our country. The Republican appropriations bills are 
zeroing out the COPS program which is putting community police on the 
streets all across America and bringing down the crime rate.
  Thirdly, it does not adequately provide for Medicare. In fact, it 
doesn't provide at all for Medicare looking out into the future.
  The real question is whether we are going to take advantage of this 
opportunity to exercise a responsible fiscal policy. Furthermore, if we 
start stimulating the economy with a tax cut at the very time that we 
have gotten unemployment down to 4.2 percent--an unprecedented low 
level, the best in the last 30 years--then we are going to run the risk 
that we will start pressure on prices, have an inflation problem, and 
the Federal Reserve will start raising the interest rates.
  In fact, at the last Open Market Committee, the Federal Reserve 
raised the interest rates a quarter of a point. If the Republicans 
controlling the Congress start stimulating the economy, you can assume 
that the Fed will take up these interest rates in order to dampen down 
economic activity, and we will be right back in the box with a problem 
we had in terms of how to encourage economic growth and have a 
responsible economic policy. We have done a good job.
  Mr. DURBIN. Mr. President, I ask unanimous consent for 10 additional 
minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SARBANES. Mr. President, as the Senator from Illinois pointed 
out, in 1993 when we enacted the President's economic program, not one 
single person from the other side of the aisle supported that program. 
Not only did they not support the program, they made all sorts of dire 
predictions of what would happen to the Nation's economy. In the debate 
on this floor, Members stood up and it was as though the sky was going 
to fall in if this program was carried through.
  Only a few have been willing subsequently to own up to the inaccuracy 
of their prediction--only a few. The others sort of, I guess, forget 
they ever made the prediction. But the fact of the matter is, the 
policy has worked extraordinarily well: Unemployment at a 30-year low; 
inflation at a 30-year low; we have come out of deficit and into 
surplus. Now we have the opportunity to move ahead in a responsible 
manner, not in an egregiously reckless manner, as the Washington Post 
points out in this editorial.
  So I commend my colleague from Illinois for his comments. This is an 
extremely important decision we are about to make in terms of the 
future course of this Nation. If we make it responsibly, we can 
continue on the path of prosperity. We can continue to invest in the 
future strength of our country through education, research and 
development, and developing our Nation's infrastructure, our 
transportation, and our communication infrastructure. We can shore up 
the Social Security system. We can address the problems of Medicare. We 
can bring down the debt. We can even do targeted tax measures to help 
middle-income people and to help improve and increase productivity in 
our Nation. All of those are possible.
  But things must be done in moderation. We cannot go to extremes, and 
the Republican proposal is an extreme proposal. Subjected to analysis, 
it does not stand up. We must not go down that path. I commend the 
Senator from Illinois for making that point so effectively here on the 
floor this morning.

                               Exhibit 1

               [From the Washington Post, July 20, 1999]

                              A Tax Party

       In part to placate party moderates whose votes they need, 
     House Republican leaders are proposing modest cuts in the 
     cost of the tax bill they are scheduled to bring to the floor 
     this week. But no one should be fooled by this, least of all 
     the moderates whose stock in trade is that they take 
     governing seriously. The leadership trims don't begin to undo 
     the egregious recklessness of this bill. There are three main 
     problems.
       (1) The surplus the sponsors are using to finance the tax 
     cut the bill would grant is mostly phony. It is predicated on 
     a willingness of future Congresses to make deep spending cuts 
     from just the first phase of which this Congress already is 
     retreating. Most programs would have to be cut more than 20 
     percent in real terms. Without such cuts, about three-fourths 
     of the imaginary surplus in other than Social Security funds 
     disappears; the amount goes from $1 trillion over the next 10 
     years to perhaps $250 billion. If they set aside some money 
     for Medicare, as they are bound to do, even less will be 
     available for tax cuts--most likely nothing.
       (2) The bill when fully effective would actually cost much 
     more than the projected surplus. The cost is masked by the 
     fact that so many provisions have been carefully backloaded--
     written to take effect only toward the end of the 10-year 
     estimating period. The estimated cost of the first 10 years 
     of the Ways and Means Committee bill is $864 billion. The 
     likely cost of the next 10 years would be three times that; 
     one estimate puts it at $2.8 trillion. This is a ludicrous 
     bill, a lemming-like effort to put political points on the 
     board whose effect would be to return the government to the 
     destructive cycle of borrow-and-spend from which it only now 
     is painfully emerging. The economy and the ability of the 
     government to function both would be harmed.
       (3) The principal beneficiaries would be people at the very 
     top of the income scale. The rhetoric and some of the 
     analysis surrounding the bill suggest otherwise. But here 
     again, backloading comes into play. Some of the provisions 
     slowest to take effect are those that would be of greatest 
     benefit to the better-off. In the end, one analysis indicates 
     that nearly half the benefit of the bill would accrue to 
     households in the top one percent of the income distribution.
       This is a bill that would mainly benefit relatively few 
     people at the expense of many. It would once more strand the 
     government--leave it with obligations far in excess of its 
     means--and in the process do serious social as well as fiscal 
     and economic harm. Not even as a political billboard that the 
     president can be counted upon to veto should it pass. There 
     ought not be a tax cut. The parties ought not use imaginary 
     money to cut a deal at public expense. The greatest favor 
     that this Congress could do the country would be to pass the 
     appropriations bills and go home.

  Mr. DURBIN. Mr. President, I thank the Senator from Maryland who has 
been recognized for his work with the Budget Committee and the Joint 
Economic Committee. He is a thoughtful analyst of our Nation's economy. 
I certainly agree with his conclusion.
  I would like to make two points, though, that we have not raised so 
far, to take a closer look at the tax cuts proposed by the Republicans.
  The Citizens for Tax Justice have done an analysis of the House tax 
cut proposal, and they have found that 44 percent of all the benefits 
in that tax cut bill will go to the wealthiest 1 percent of Americans. 
I am sure Mr. Gates, Mr. Trump, and all the others who have done so 
well in this economy would love to see a tax cut. But I am not sure 
they need a tax cut.
  Take a look at this. Mr. President, 60 percent of the Republican tax 
cut would benefit the wealthiest 5 percent, three-quarters of it to the 
wealthiest 20 percent. Whom have they left behind? Working families--
working families who will see little or no tax relief as a result of 
this Republican plan.
  I think about Governor Ann Richards of Texas who used to make 
comments about the other party, the Grand Old Party, and say: They just 
can't help themselves. When it comes to tax cuts, they just can't stay 
away from giving tax cuts to the wealthiest people in America at the 
expense of working families, at the expense of Medicare, at the expense 
of paying down the national debt, and at the expense of our current 
economic prosperity.

[[Page 16945]]

  The Republican Party is adrift, searching for an issue. The one they 
think they can coalesce behind is a tax cut, the one thing that brings 
every wing of their party, from extreme right to right and everything 
between it, together. Yet every time they do it, it turns out they have 
tipped the scales so heavily to the rich that the American people say 
we do not want any part of this. If this is just going to be a cheering 
section of people from country clubs who think the tax cuts are really 
going to be something for the future, so be it, but it is not good 
enough for the country.
  Mrs. BOXER. Will the Senator yield for a very quick question?
  Mr. DURBIN. Yes.
  Mrs. BOXER. I have to again say thank you to the Senator. I was 
looking at some of the analysis of the Republican tax cut, the across-
the-board one. It said, if you earn about $300,000 a year, you would 
get a $20,000-a-year tax cut. I wonder if the Senator has thought about 
this. The tax cut, therefore, for those folks who earn over $300,000, 
would be almost twice as much money as a person working on the minimum 
wage earns, which is approximately $11,000, $12,000. Could my friend 
just talk about the unfairness of that situation?
  Mr. DURBIN. Mr. President, I think it is fundamentally unfair. I 
agree with the Senator from California. Most people who are in these 
high-net-worth situations would not miss a decimal point in their net 
worth, but the Republican tax cut plan wants to give them more money. 
Yet when we try to bring up an issue such as increasing the minimum 
wage from $5.15 an hour, the Republicans just will not accept that. So 
we are going to have that fight later this year, I am sure, on the 
floor of the Senate.
  That gives me an opportunity to summarize, if I may, my view of this 
Congress and the difference between the two parties. Take a look at the 
Senate over the last 2 months if you want to know the difference 
between this side of the aisle, the Democratic side, and the Republican 
side.
  On the issue of gun control, sensible gun control, after the 
shootings in schools across America, the Democrats pushed a sensible 
gun control plan which attracted the support of six Republican 
Senators. I salute their courage for joining us, giving us finally 
enough votes, as a minority, to bring in Vice President Gore casting 
the tie-breaking vote for sensible gun control--trigger locks for guns 
that are safer for kids, trying to make sure people buying guns at gun 
shows are not criminals or children, trying to make sure we do not keep 
importing these high-capacity ammunition clips of 240 rounds of 
ammunition. Who needs that for hunting or safety in their homes?
  We passed it, sent it over to the Republicans in the House, and they 
just beat it to pieces. There is nothing left. We have to get back and 
pass sensible gun control--a clear difference between Democrats and 
Republicans.
  On the Patients' Bill of Rights, we on the Democratic side came in 
and said what is going on is scandalous; doctors should make decisions, 
not insurance companies; and insurance companies should be held 
accountable when they make the wrong decision. The Democrats stood for 
that position. The Republicans, with the exception of two Senators, 
opposed us. The difference between the Democrats and Republicans: We 
believe in the Patients' Bill of Rights, the Republicans oppose it.
  When it comes to this issue, what a change of hats. The Democrats are 
in the role of fiscal conservatives. The Democrats are saying mind our 
own business when it comes to Social Security, the future of Medicare, 
and retiring the national debt; the Republican side says at least $1 
trillion in tax cuts the first 10 years, and then watch it explode in 
the outyears.
  For the American people following this debate in the Senate, they 
have a choice. If you buy into the Republican philosophy of runaway tax 
cuts and irresponsible spending in the future, if you buy into the idea 
of standing up on the floor of the Senate for the health insurance 
companies and opposing the efforts of families and doctors and 
hospitals to bring some sanity back to health care, if you buy into the 
Republican position supporting the National Rifle Association and the 
gun lobby, then that is your party, that is where you should turn, and 
be proud of it.
  But if you think there is a better choice, if you think coming 
together on a bipartisan basis for sensible gun control, for the 
Patients' Bill of Rights, and for a fiscally responsible approach to 
our budget in the future, I think that is the better way to go. That is 
the clear choice, and politics is about choices.
  I thank my colleagues from California and Maryland for joining me in 
the morning business, and I yield the remainder of my time.

                          ____________________