[Congressional Record (Bound Edition), Volume 145 (1999), Part 12]
[Senate]
[Pages 17617-17620]
[From the U.S. Government Publishing Office, www.gpo.gov]



                                TAX CUTS

  Mr. GRAMM. Mr. President, I want to say a few words about taxes. I 
want to deviate from my background in schoolteaching to be brief 
because I have to run over for a 2:30 meeting on the banking bill and I 
want to hear a little bit of what the Senator from New Mexico has to 
say before I leave.
  We are beginning a debate that is a very proper and important debate. 
I am frustrated in this debate because, in trying to discuss this issue 
with the White House, we have a concerted effort on their part to try 
to confuse the issue and mislead the American people as to what the 
choices are.
  I want to direct my comments to the choice we face. Basically, we 
have the great and good fortune of having two things that have occurred 
at the same time. No. 1, beginning in the mid-1980s we started the 
process of gaining control over spending. It was not a dramatic change 
in policy, but over the years we have seen a gradual slowdown in the 
rate of growth in Government spending, beginning in the mid-1980s.
  In the early 1990s we started to see an explosion of productivity as 
modern

[[Page 17618]]

technology became incorporated in the workplace in America, and the 
result has been rapid economic growth and, with that economic growth, a 
growth in Federal revenues. We therefore have a situation which anyone 
would dream of having during their period of service in public life, 
and that is, we have a very large budget surplus.
  Initially, the President proposed spending part of the surplus that 
comes from Social Security. I am proud to say that Senator Domenici, I, 
and others rejected that, and finally the President reached an 
agreement with us, in the best spirit of bipartisanship, that we were 
not going to spend the Social Security trust fund.
  We are trying to lock that into law in the so-called Social Security 
lockbox. We have an agreement with the President on the principle. We 
have not reached an agreement with the President and with the minority 
party in the Senate on exactly how to lock it up, but we are working on 
that.
  The debate we are beginning today is a debate about what to do with 
the surplus that comes from the general budget that does not come from 
Social Security, and, try as they may at the White House to confuse the 
issue and to mislead the public, there really are two stark choices 
being presented to the American people.
  The first choice is presented by the President and his 
administration. In regard to what is called the President's mid-session 
review, the Congressional Budget Office, which is the nonpartisan 
budget arm of the Congress, reviewed both the Republican budget and the 
budget submitted by the President. They concluded that the President's 
budget proposes $1.033 trillion worth of new Government spending on 
approximately 81 new programs, above and beyond increases for 
inflation.
  That $1.033 trillion of new spending that the President's budget has 
proposed is so big that it not only uses up, for all practical 
purposes, the non-Social Security surplus, but in 3 of the next 10 
years it will require plundering the Social Security trust fund or 
running an outright non-Social Security deficit because the level of 
spending is too big.
  As an alternative, Republicans have proposed that out of the $1 
trillion non-Social Security surplus, we give $792 billion back to the 
working people of America who sent the money to Washington to begin 
with and that we keep $200 billion plus to meet the basic needs of the 
country and to meet uncertainties we might face.
  That is a pretty clear choice. The President's budget says spend 
$1.033 trillion on new Government programs. That is how they would use 
the non-Social Security surplus. Our proposal says, take about 80 
percent of it and give it back to working people in broad tax cuts and 
keep 20 percent of it to meet critical needs and to deal with 
contingencies.
  If that were the debate we were having, Republicans might be winning 
the debate, we might be losing the debate, but we would be having a 
meaningful debate. The problem is, the administration continues to 
mislead the American public and basically to claim they are not 
proposing to spend this money. While proposing $1 trillion of new 
spending, they say that, by giving less than $800 billion back to the 
public in tax cuts, in the words of the President, we ``imperil the 
future stability of the country.'' This is quoting the President at a 
fundraiser, naturally, in Colorado, that by giving this $800 billion 
back in tax cuts, we ``imperil the future stability of the country.'' 
Yet to spend $1.033 trillion on new programs, the President would do 
wonderful things for the country.
  If the President were honest enough to stand up and say, Don't let 
Senator Domenici, don't let Senator Lott, don't let Senator Gramm give 
this money back to working people, let me spend it, I would have no 
objections to the debate. But I have to say that it begins to grate on 
a person when day after day after day this administration says things 
that are verifiably false with a level of dishonesty in public debate 
that is without precedent in the history of this country. No 
administration in debate on public policy has ever been as dishonest as 
this administration is. When you look at the actual numbers in their 
budget and then listen to what they are saying, it is as if we are 
talking about two totally separate budgets.
  The PRESIDING OFFICER. The Senator's 20 minutes have expired.
  Mr. GRAMM. I yield the floor so Senator Domenici may speak.
  Mr. REID addressed the Chair.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, I ask unanimous consent that the 30 minutes 
prior to the vote at 5:30 be equally divided between the two leaders so 
they can have the last word on this issue.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, I am very pleased that the distinguished 
Senator from Texas has joined me on the floor and that I am permitted 
to join him in the beginning of a debate. I know the Senator has to 
leave, and I will try to make my most succinct points in the next 5 
minutes.
  First, I will share with the American people, and in particular with 
my friend, how I see giving back some money to the taxpayers versus 
what else we are going to do with the surplus. I choose today, even 
though I looked around for a different dollar, an American dollar. This 
one is not signed by the new Secretary of the Treasury. I looked for 
one. I am not sure he signed any yet. This is one signed by his 
predecessor.
  I want everybody to look at that. It represents, in my analogy today, 
the entire surplus that is going to be generated. According to the 
Congressional Budget Office and the Office of Management and Budget, 
using moderate economics, even assuming we are going to have a couple 
of downturns or recessions in the next 10 years, the total surplus we 
are going to accumulate is this number, if you will all just look at 
this chart. It is a little bigger than the Senator has been using, and 
the numbers are a little bigger in terms of how much we have left over 
to be spent, but it is $3.37 trillion in the next decade.
  Mr. GRAMM. You are using Social Security.
  Mr. DOMENICI. I am using everything. This represents everything. Here 
is what the President says. The President says: Spend it all. Is that 
true? Does he say spend it all?
  Well, look here. Here is a chart showing the entire $3.71 trillion. 
He says, and we say, put $1.9 trillion of it on the debt by putting it 
in a lockbox for Social Security. Then the Congressional Budget Office 
evaluates the rest of the President's proposal. Here it is in yellow. 
It is $1.27 trillion, and every bit of that is literally spent, 
according to the Congressional Budget Office.
  The President will argue about that because he even says he has a tax 
cut. We have looked at the tax cut he proposed. Not Pete Domenici, not 
Phil Gramm, but the Joint Tax Commission evaluated it. They said it is 
not even a tax cut. It is an expenditure. It is in this spending, 
because the President is saying, collect taxes, give some of it back to 
some people so they can save it, but you are giving them tax dollars; 
you are not cutting their taxes. That is an expenditure of tax money.
  Believe it or not, when you do that, the President increases taxes in 
his budget by $95 billion.
  Let me use the same dollar and let me share it with the Senator. Here 
is the entire accumulated surplus. Republicans say very simply, here 
are two quarters. We are going to put those two quarters into the 
Social Security trust fund, 50 percent. The number that is available 
for spending is bigger than the Senator said. It is $434 billion for 
Medicare and other highly critical Federal programs, if there are any. 
So I am going to say one quarter for spending. And, lo and behold, what 
is the other quarter for? Tax cuts.
  I ask the American people, out of $1, is 25 cents given back to the 
American people for overtaxation too big a tax cut? Is it something we 
should become worried about, that we are going to destroy our 
Government?
  I believe the truth of the matter is that you can't have any tax cuts 
if you

[[Page 17619]]

propose what the President has proposed, because I will show you again 
what he proposes. On Social Security, he finally came our way, as the 
Senator said, and said put it all in a trust fund. All of the rest is 
spent.
  Let me ask, if we spend it all, is there any left for tax cuts? I 
mean, by definition, he is spending it all so there is nothing left for 
tax cuts.
  A lot has been said about the distinguished economic stalwart of 
America, Dr. Alan Greenspan, in the last few days. What has he said 
about it? I want to tell my colleagues that regardless of what was said 
in the last few days, Alan Greenspan has essentially made two 
statements about a surplus. I will give verbatim one of them from 
January 29 before our committee. Here is what he said: I would prefer 
that we keep the surplus in place; that is, reduce the debt. ``If that 
proves politically infeasible,'' he said, ``cutting taxes is far 
superior to spending, as far as the long-term stability of the fiscal 
system and the economy is concerned.''
  In the last speech he made, and I quote: ``Only if Congress believes 
that the surplus will be spent rather than saved is a tax cut wise.''
  Now, we don't have to guess about that. Why do we not have to guess 
about that? Because the President has already told us he is going to 
spend it. So Dr. Greenspan said, if you are going to spend it, it is 
far better for America's economic future to cut taxes.
  Essentially it seems to this Senator that we are being sold a bill of 
goods.
  We are being told that to spend one quarter of the surplus, that 
giving back the American people some of their overtaxation is risky to 
the economy. Dr. Alan Greenspan said the riskiest thing to do with the 
surplus is to spend it. That is what he just said. We are saying that 
we agree with him. We think it is too risky to do what the President is 
recommending. He will, by the time he is finished, have spent every 
cent of it, and he will call some of it ``saving Medicare.''
  I want everybody to know this. Let's look at this chart again. I 
don't know how much it is going to cost for the Finance Committee and 
the House Members to fix Medicare. They are working on it. They have 
all worked terribly hard on a bipartisan commission, and the President 
shot it down. Senator Breaux was involved in that, and he believed that 
we had one going. What we are saying--and this is very, very 
important--when we have completed our tax cut, there is $434 billion 
left for a Medicare fix, Medicare reform, and prescription drugs, if 
you want it, and for other highly important programs, such as 
education, defense, and others. In fact, we might, as the debate goes 
on, put together a budget and come to the floor and show how this $434 
billion might be used so that everyone will know there is money for 
education, if that is what you want, and there is money for Medicare 
reform, if that is what you want, and there is money for defense, 
because we have been told that that is what is left over as a surplus 
item, and it doesn't belong to Social Security. So it is either used 
for tax cuts or it is spent. We are saying: Save a quarter of it, give 
it back in tax dollars, and put a quarter of it in a rainy day fund, so 
to speak--a quarter of the dollar I showed you.
  I want to close with a few more comments.
  Mr. GRAMM. Will the Senator yield before he gets into his closing 
remarks?
  Mr. DOMENICI. Yes.
  Mr. GRAMM. Mr. President, let me make a point that I think goes right 
to the heart of the statement by the President that something is 
extreme about our fairly modest tax cut. I have a chart here that I 
wish every American could see and understand. It shows the percentage 
of the economy that was coming to Government the day Bill Clinton 
became President.
  The day Bill Clinton became President, the Government was collecting 
in taxes 17.8 cents out of every dollar earned by every American. As 
you will recall, in 1993, we had a very big tax increase, and with the 
growth in the economy, the Government is now taking in 20.6 percent of 
every dollar earned by every American. If we took the entire surplus--
not the $794 billion being proposed by Republicans, but the whole $1.33 
trillion, or whatever it is--if we took the whole surplus, which we are 
not proposing to do, and gave it back in a tax cut, 10 years from now, 
when it was fully implemented, the Federal Government would still be 
taking 18.8 percent of every dollar earned in taxes, which is 
substantially more than it was the day Bill Clinton became President.
  So what Bill Clinton is calling a ``dangerous, huge tax cut'' is 
actually a relatively modest tax reduction as compared to the tax 
increase and revenue growth that has occurred in the 6\1/2\ years that 
Bill Clinton has been President, even if we cut taxes by the amount of 
the entire surplus, which we are not proposing to do. But even if we 
did, the tax burden would still be higher than it was the day Bill 
Clinton became President. That is a point I think people need to 
understand.
  Mr. DOMENICI. Mr. President, I want to wrap this up, and I intend to 
do this everywhere I can, anyplace I am asked, on any TV show I can get 
on. In summary, plain and simple, it is the following: The man who is 
most responsible for a good American economy is probably Dr. Alan 
Greenspan of the Federal Reserve Board. He has said:

       I would prefer that we keep the surplus in place and reduce 
     the public debt. If that proves politically infeasible, 
     cutting taxes is far superior to spending it.

  Here is the Republican budget: Debt reduction in Social Security, in 
literal numbers. I used in the summary 50 percent; it is actually 56 
percent. Literally, the tax cut is less than a quarter; it is 23 
percent. The money left over for Medicare and other programs is 20.1 
percent. Frankly, that is a good plan. That is balanced, and it is not 
risky.
  Here it is encapsulated in another manner. Here is the President's 
plan: Of the $3.3 trillion accumulated over the next decade, $1.901 
trillion goes into Social Security and debt service. He contends he has 
done more in debt service than we have. Frankly, who do you believe? We 
believe the Congressional Budget Office. They say we are putting more 
on the debt than the President is. So when his emissaries get on 
television and say ``we want to reduce the debt,'' the implication is 
that Republicans don't. But we are doing the same amount, or more, than 
the President. It is right there.
  The President then says that they don't want to do any tax cuts 
because, if you look at his budget, according to the Congressional 
Budget Office, including a tax cut--which is not a tax cut--he spends 
every nickel of it. If you want to talk about a risky policy, that is a 
risky policy. From what I can tell, that is what Dr. Alan Greenspan 
said would be the worst thing to do--to spend all the surplus.
  Last, our plan: Debt reduction and Social Security trust fund 
encapsulated, so they can't be spent, in a lockbox. Tax cuts, $794 
billion, and for expenditure items that are very necessary, such as 
Medicare, education, defense, and others, there is $434 billion left 
over.
  Now, it is very difficult when the Secretary of the Treasury--the new 
one--gets on talk shows and says what a risky policy this is. He talks 
about the fact that they want to preserve or do more on the debt than 
we do. We are bound by the Congressional Budget Office in the Congress, 
and they tell us we are doing as much, or more, than the President in 
that regard. They tell us the President is spending every dime of the 
surplus on one program or another, or for a tax cut that is not a tax 
cut. And they maintain that a Republican plan that says, use 75 cents 
on a dollar for Social Security, debt reduction, Medicare, and domestic 
priorities, and give 25 percent back to the public, is risky. What is 
risky about it? Is it risky to give 25 cents out of a dollar back to 
the public to spend and less risky to keep it here and let the Federal 
Government spend it? I don't believe anyone would agree it is more 
risky to give some of it back to Americans and let them spend it, as 
compared with keeping it here and spending the entire 100 percent of 
the surplus on Federal Government-controlled programs and projects.

[[Page 17620]]

  Whatever time I have remaining, I yield back, and I yield the floor.
  Mr. CRAPO addressed the Chair.
  The PRESIDING OFFICER (Mr. Hagel). The Senator from Idaho.
  Mr. CRAPO. Mr. President, I yield myself such time as I may consume.
  Mr. President, I will commit most of my time to comments on the 
debate with regard to returning to the full import of Rule XVI. 
However, before I do that, I want to comment on the debate that has 
just taken place regarding tax relief. I think it is critical that we 
in America today understand that we have moved into a time of budget 
surplus, just what those surpluses mean, and what the opportunities are 
for the American people.
  Prior to the last 3 or 4 years, we saw, I think, that most Americans 
became accustomed to the fact we were running very large deficits, and 
that the Federal Government was not able to conduct its fiscal policy 
in a manner that was balanced. One of the commitments I made when I ran 
for the House of Representatives 6 years ago was to work to try to 
balance the Federal budget. Fortunately, for me, and I think for all 
Americans, we were able to successfully achieve that objective.
  The budget today is balanced. In fact, the projections we just heard 
talked about show that no matter how you look at the budget--whether 
you count the Social Security dollars, which I don't think should be 
counted, or whether you don't--we are moving into a balanced posture 
for the Federal Government.
  The debate today is over what we do in a surplus posture. It is a 
debate that Americans have not been able to have for decades because 
our Government has not run surpluses. Now that we are engaged in this 
debate, it is critical for Americans to focus and to identify what our 
fiscal policy should be as we move into an era of projected surpluses.
  In that context, I think it is critical that a few important 
priorities be recognized and acknowledged by the country.
  First and foremost, I am glad we have agreement on the principle, 
even though we don't have agreement on the details yet, that we have to 
protect the Social Security trust fund surplus dollars, and make 
certain that what Americans pay into the Social Security system is not 
then taken by Congress and the President and spent on other spending by 
counting those surpluses against the unified budget.
  We have a lock--in a way, a lockbox--which is now before the Senate 
that we have voted on six or seven times this year. We have to make 
sure those parts of the surplus remain dedicated to the Social Security 
trust fund. With the remainder of what I call the true budget, the 
onbudget surplus, we have to decide as a country on what we are going 
to focus.
  Over the next 10 years, we will have a surplus somewhere in the 
neighborhood of $1 trillion. You have heard different numbers discussed 
today. I think it is important that we not continue the path of growing 
the Federal Government, expanding the spending posture of the Federal 
Government, and spending those surplus dollars. If we do so, we will 
find a time in the near future when we will not be able to maintain 
surpluses in our budget; we will return to deficits, and we will see 
the national debt continue to rise.
  As a result of that, I think it is critical we focus on two high 
priorities. One is to reduce the national debt. Although we have 
balanced the Federal budget, we haven't reduced the national debt to 
zero. That should be one of our highest priorities. Two is to make sure 
that we return to the American people a tax cut.
  The American people recognize that this is an opportunity. It is an 
opportunity that we may not have too many times as we work through 
these difficult budget times to achieve tax relief. But to use, as the 
Senator from New Mexico indicated, just one quarter of this total 
surplus picture for tax relief I think is an appropriate commitment.
  That leaves us the opportunity to provide resources to parts of our 
Federal obligation that need strengthening. It gives us and the 
American people the opportunity to strengthen and to stabilize the 
Social Security trust fund. It is a sound policy.
  I think America should begin to focus on this debate as Congress 
works its way into a very important new era: How do we deal with budget 
surpluses?

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