[Congressional Record (Bound Edition), Volume 145 (1999), Part 13]
[Senate]
[Pages 17857-17858]
[From the U.S. Government Publishing Office, www.gpo.gov]



                        ALLOCATION OF RESOURCES

  Mr. TORRICELLI. Mr. President, by any measure, this is an 
extraordinary time in the life of our country. It appears that as the 
American century comes to a conclusion, the chances are good that what 
the world is going to witness is simply another American century, where 
our dominance may be exercised by different technologies, our power may 
be measured by different means, but our dominance is just as certain.
  The quality of life in America is rising to new heights. Our economic 
strength could be measured by many means, but it is considerable. Home 
ownership is now at the highest rate in the Nation's history. In 6 
years the United States has created 18 million new jobs, more than all 
of Western Europe and Japan combined. Unemployment is near record lows 
in the postwar period--genuinely an extraordinary time. Nothing 
surprises Americans more than that we are witnessing not simply the 
growth of an economy, employment and economic opportunities, but the 
Federal Government itself is participating in this extraordinary 
transformation.
  The United States is about to accumulate in our Government budget not 
only the largest surplus in American history but the largest surplus in 
the history of any nation in any government budget. Indeed, it is now 
projected to be $1 trillion larger than was anticipated only several 
years ago. By the year 2009, the total accumulated surplus of the U.S. 
Government could be an astonishing $2.9 trillion.
  The fundamental question now before this Government as we begin to 
plan for the next decade, the beginning of a new century, is how to 
allocate these resources.
  The U.S. Government is in a new experience. For more than 50 years we 
have been in the business of allocating pain. The dominating issues 
before the U.S. Government were winning the cold war and overcoming the 
budget deficit. All decisions were seen through these twin prisms. Many 
of our hopes and ambitions for our country and our people needed to be 
postponed.
  In 1993, the Deficit Reduction Act was a defining moment in that 
struggle. This Congress, with the Clinton administration's leadership, 
was facing deficits as high as $300 or $400 billion per year. It was 
artificially raising interest rates, causing problems with private 
investment, and difficulties in economic growth.
  The extraordinary vote of that year, passing each institution of the 
Congress by a single vote, did as much to change American economic 
history as any single act of the 20th century.
  (Mr. CRAPO assumed the chair.)
  Mr. TORRICELLI. For all of us who participated in the 1993 Deficit 
Reduction Act, it is probably the singular achievement and the greatest 
source of pride in our careers. For the American people, it is more 
than a source of pride; it is a source of new freedom. These surpluses 
allow us to dream again about rebuilding schools, providing child care, 
improving the quality of instruction, repairing American 
infrastructure, funding higher education. Things that were postponed by 
all these years of debt, struggle, and sacrifice have been made 
possible again.
  But it is important to remember in this transformation, in these last 
6 years, there are other heroes, too, more important than the Members 
of Congress who cast these votes--the people who gave up more and did 
more to create this new American prosperity. They are simple American 
families who did without Government programs, Government employees who 
saw Federal employment decline, people who suffered at declines in 
Government spending in all measures, and American taxpayers who paid 
more in Federal taxes to reduce the debt.
  It is important to remember because, as we think about the 
opportunities for education and health care and other Government 
programs this Federal surplus provides, so, too, is the American 
taxpayer to be remembered. I do not quarrel with the administration--
indeed, I support their notion--that the first obligation in committing 
these new surplus funds is to protect Medicare and Social Security. It 
is our first obligation. It is not our only obligation.
  Of the approximately $3 trillion of Federal surpluses to be allocated 
in the next 10 years, $2 billion of it will be required to ensure that 
Social Security and Medicare are protected. But certainly, with the 
remaining $1 trillion in accumulated surpluses over the next decade, 
there is the ability in this Congress to provide some tax relief for 
working American families. The tax burden of the United States is now 
the highest since the Second World War.
  Middle-class families, who were once in low-income brackets, through 
prosperity and inflation, have seen themselves, while still facing the 
enormous costs of education and housing and the requirements of an 
ordinary American life, facing tax brackets of 28 and 33 percent. 
Today, a family of four, living on a combined income of $72,000, which 
can be the simple income of a schoolteacher or a police officer or a 
public servant, is taxed at 28 percent, instead of the 15 percent which 
should, and once did, represent the Federal tax rate of middle-class 
Americans.
  It is wrong--it is even unconscionable--to ask a young mother and 
father trying to raise children, with the high cost of living in the 
United States, to postpone educational decisions or housing decisions, 
the requirements of building a family, to pay a 28-percent tax on a 
combined family income of $50,000, $60,000 or $70,000. It is not right. 
But mostly, with a Federal surplus of $1 trillion in the next decade, 
after protecting Social Security and Medicare, it is not necessary.
  I believe the first obligation of a Federal tax relief is to expand 
the 15-percent bracket to genuinely include Americans who are in the 
middle class, to place them in the tax bracket where they belong. The 
Roth plan participates in this strategy by expanding the bracket and by 
lowering the 15-percent bracket to 14 percent. It is a good beginning, 
but it is not a complete plan.
  The other twin tax crisis in America is not high rates but 
disincentives for savings which are causing a crisis in savings in 
America. The national savings rate in the United States is now the 
lowest since the Second World War. In May, our national savings rate 
was a minus 1.2 percent--a negative rate of savings not seen since the 
Great Depression. It has no corollary in the Western World, and it is a 
long-term, economic, Governmental and social problem.
  Sixty percent of all Americans who retire rely solely on Social 
Security. More than 50 percent of Americans effectively have no net 
worth of any appreciable value, other than their home.

[[Page 17858]]

It is a rational economic response to a tax system that provides 
discouragement for savings and encouragement for consumption.
  I believe this tax reduction legislation about to be considered by 
the Congress can provide a new beginning, first, by expanding the 
traditional IRA from $2,000 to $3,000. It is notable that when the IRAs 
were first instituted at $2,000, had they merely kept pace with 
inflation all these years, it would now allow for a $5,000 deduction 
rather than the continuing $2,000 level.
  Second, people who accumulate $10,000 in a savings account in America 
to provide themselves some security from the crisis of life, or for 
their retirements or to prepare for their children's futures, should 
not be taxed. The Federal Government has no business--indeed, it should 
have a disincentive--to ever tax an American family who wants to save a 
modest $5,000 or $10,000. We have an interest in them doing so and 
should not be providing a disincentive by taxing them on the modest 
interest they would accumulate. This simple provision of $10,000 in 
tax-free savings, exempting the first $500 in dividends and interest, 
would make the savings of 30 million Americans tax-free.
  Third, every American should be encouraged to participate in the new 
prosperity, burgeoning industries, new technologies, and growing 
market. The Federal Government should not be taxing the modest capital 
gains of people who earn $1,000, $2,000, or a few thousand dollars in 
the stock market, or from the sale of real estate. We should be 
encouraging every American to participate by investing, to gather some 
wealth for their own security, so that in retirement they don't rely 
solely on the Government, or continue to live paycheck-to-paycheck. 
Even if this accumulates only modest amounts of money in savings or 
investment, it is a beginning for a new economic freedom for American 
families.
  Many of these ideas were included in the tax reduction legislation I 
offered with Senator Coverdell. I am enormously proud that in Senator 
Roth's proposal, and indeed now in a bipartisan tax bill being 
discussed by Senator Breaux and Senator Kerrey of Nebraska, many of 
these same elements are included. I am glad Senator Coverdell and I 
have made that contribution.
  But now the question becomes not simply which elements of Federal 
taxes are to be reduced but by how much. Therein lies the argument. I 
believe, as many of my colleagues on both sides of the aisle have come 
to believe, that this Congress can responsibly afford, while protecting 
Social Security and Medicare, to enact a $500 billion tax reduction 
program over the course of the next decade. That would allow an 
additional $500 billion for discretionary spending, a prescription drug 
benefit, or other national needs beyond protecting Social Security and 
Medicare. It is modest. But it would have an appreciable impact on the 
quality of life of American families, and genuinely give tax relief to 
middle-income Americans.
  Finally, every Senator must come to the judgment about not only the 
size of this tax relief program, which I believe should be $500 billion 
but, indeed, where it should be targeted. It is middle-income families 
who have seen the rates of their taxes rise through the years as they 
were pushed into higher brackets by the cost of living and our national 
prosperity. They should be our first priority.
  Our principal national economic problem, even in extraordinarily good 
times, is the collapse of national savings. Reduction in taxes on 
savings should be a high priority.
  But I believe, as many Democrats and Republicans have come to 
conclude, that most of this tax reduction program should be for people 
who are paying most of the taxes in America.
  In the 1993 bill, this Congress can be very proud that with the 
earned-income tax credit we reduced the burden and, indeed, gave 
assistance to lower income Americans. They deserved and needed the 
help. This tax program should be for people who are paying taxes, 
bearing the burden, and need the help.
  This is an important moment for this Congress. This vote on a tax 
reduction program will say a lot about our priorities. We will chart a 
course for another decade.
  I believe we can reach across this aisle and find a reasonable 
compromise that gives genuine tax relief.
  I want the people of the State of New Jersey to know that I have 
committed myself to be part of that effort.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. ROCKEFELLER. Mr. President, is the Senator from West Virginia 
allowed to yield himself a certain amount of time?
  The PRESIDING OFFICER. The Senator may seek by unanimous consent for 
as long as he wishes.
  Mr. ROCKEFELLER. I thank the Presiding Officer.
  Mr. President, I ask unanimous consent to proceed for less than 15 
minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROCKEFELLER. I appreciate the courtesy of the Presiding Officer.

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