[Congressional Record (Bound Edition), Volume 145 (1999), Part 13]
[Senate]
[Pages 17860-17862]
[From the U.S. Government Publishing Office, www.gpo.gov]



                                 TAXES

  Mr. DURBIN. Mr. President, I commend the Senator from West Virginia. 
His has been a lonely struggle on the Senate Finance Committee in the 
minority. I know what he has said today on the Senate floor is an 
expression of his personal commitment and philosophy in the Senate 
Finance Committee.
  It is such an alluring possibility for politicians to vote for tax 
cuts. Can you think of two more exciting words for politicians to say 
other than: I'm going to cut your taxes--tax cuts? Yet we know it may 
not be the most responsible thing to do on behalf of families across 
America and the state of our economy.
  What the Senator from West Virginia has said during the course of his 
remarks bears repeating. Look to the question of fairness. We have 
heard statements on the floor from Members of the Senate who have 
suggested that taxes have gone up on American families.
  It is interesting that when looking at facts we find something 
different. A median-income family of four currently pays less Federal 
taxes as a percentage of its income than at any time in the last 20 
years.
  This data comes from the Treasury Department and the Congressional 
Budget Office. Lower-income families at one-half the median income 
level face a Federal tax burden which is the lowest in 31 years, 
according to the Treasury Department. A family of four can make up to 
as much as $28,000 a year without paying Federal income taxes. For a 
family of four at twice median income, that would put them in the 
middle-income category. The average Federal tax rate will be its lowest 
in over a decade.
  That is not to suggest families do not face a tax burden. They do. 
Many still pay the payroll taxes, some Federal income taxes, and State 
and local taxes.
  The general increase in revenue to the Federal Treasury really is 
evidence of a strong economy where people are working, making more 
money, and perhaps doing better in the stock market than they had in 
previous years.
  When we talk about tax fairness, many of us believe if there is to be 
any tax cut, it should be directed to the people in the lower- and 
middle-income groups. Those are the first who should be served.
  This chart illustrates what I mentioned earlier.
  Mr. ROCKEFELLER. Will the Senator yield?
  Mr. DURBIN. I will be happy to yield.
  Mr. ROCKEFELLER. I have one quick point. People say we ought to have 
a tax cut and we ought to give it back to the people who earned it. In 
other words, it is not the Government's money; it is their money.
  I think one thing is interesting: How much is it their money as 
opposed to their children's money and their children's children's 
money. In other words, when we talk about protecting money for future 
programs, such as Social Security and Medicare, we are not just talking 
about those who pay taxes, whether they be rich or poor, but whether or 
not their children and their children's children are going to have a 
reasonable shot at life. It is not just that we do not have money 
because we are living now and others are not, but we have to keep 
looking toward the future and our responsibility to that future; is 
that not right?
  Mr. DURBIN. The Senator from West Virginia hits the nail on the head. 
If we were to abandon our commitment to education, for example, in the 
country, it would be the most shortsighted thing in the world. It may 
reduce Government spending; yes, it may reduce taxation; but does 
anyone believe America would be a better country for it? I certainly do 
not.
  When we say to families we can give them a tax break this year, a tax 
cut this year or we can take the money and reduce the national debt, 
and by reducing that debt say to their children and their 
grandchildren, you are going to have less to pay in taxes for interest 
on the debt we accumulated in our lifetime, that to me is the most 
popular thing I have found as I have gone around the State of Illinois.
  People are saying: Senator, before you start talking about new 
programs or massive tax breaks primarily for wealthy people, shouldn't 
you accept your responsibility to bring down this national debt that is 
over $5 trillion, a national debt that costs us $1 billion a day in 
interest payments that are paid primarily to foreigners who hold the 
national debt of the United States in Treasury securities and the like?
  That to me is eminently sensible because when that debt comes down, 
we reduce the need for $1 billion a day in taxes being collected across 
America for interest and we reduce the Federal demand for money. When 
the Federal demand for money goes down, the cost of money--that is, the 
interest rate--comes down. Families benefit twofold: There is less of a 
burden when it comes to taxes for interest and paying off the national 
debt and lower interest rates, which means homes are more affordable 
and small businesses and farmers can at a lower cost borrow money 
necessary for their businesses. That to me is a sensible approach. In 
fact, let me go out on a limb and say it is a conservative approach.
  The Democratic plan we are putting forward is the fiscally 
conservative approach to deal with the national debt. I am heartened by 
the earlier statement of the Republican Senator from Ohio when he 
agreed with us. He believes, as I do and as Chairman Alan Greenspan of 
the Federal Reserve Board has said, that our first priority should be 
the elimination of that debt and keeping our commitment to Social 
Security and Medicare.
  Do not be misled as you hear some of my colleagues say we have $3 
trillion in surplus and we ought to be able to at least give a third of 
it back to the American people. They do not tell you the whole story. 
Almost $2 trillion, $1.9 trillion of the $3 trillion, is really money 
that we virtually all agree should be dedicated to Social Security. We 
do not want to raid the Social Security trust fund. People have that 
money taken out of their payroll for the purpose of making certain 
Social Security is there in the future. Those who are counting that as 
some sort of surplus really are not dealing fairly with the most 
important social program in America. So take off the table of this $3 
trillion surplus $1.9 trillion, leaving you a little over a trillion 
dollars.
  Of that amount, how much are we going to dedicate for some very 
important things--paying down the debt or Medicare? The Medicare 
system, if we do not touch it, by the year 2015, is going to be out of 
money. We have to decide whether or not we will dedicate a portion of 
our surplus to Medicare. Do we need to do more for Medicare? Of course, 
we do. Beyond giving money to

[[Page 17861]]

retire the debt and Medicare, we have to make some structural changes 
that may be painful, but they will be ever so much more painful if we 
do not dedicate a portion of our surplus to Medicare.
  Also, we have to look to the basic needs of Government. The Senator 
from West Virginia has made this point. Every American expects the 
Federal Government to meet certain responsibilities:
  National defense, of course; transportation.
  We know what the Interstate Highway System has brought to America and 
the demands for a more modern transportation system in every State--
better highways, mass transit.
  Fighting crime: The Federal Government played an important role with 
100,000 new cops, and we will continue that.
  The whole question of what we are going to do in the area of medical 
research.
  I commend my colleague, the Senator from West Virginia. It is an area 
near and dear to the hearts of everyone with whom I have spoken that 
the Federal Government press forward looking for cures for asthma, 
diabetes, cancer, heart disease, AIDS, and the many things that 
challenge us and our families.
  We expect that Federal commitment and other regulatory 
responsibilities. When we open that medicine cabinet, we hope, the Food 
and Drug Administration has done its job, that every prescription drug 
there is safe and effective and that they have money to do it. The food 
we eat is still the safest in the world and will continue to be.
  If we go down the track that is proposed by the Republicans in their 
trillion-dollar tax cut, we literally will imperil these programs. It 
is a fact of life. It will be Pollyanna-ish to suggest we can make a 
cut of $180 billion a year, as the Republicans have proposed, without 
having some impact on veterans programs, on Head Start, on 
transportation, and medical research. That becomes a major part of this 
discussion.
  Let's take a look for a moment, if you will, at what some of the 
economists have said about the Republican tax bill. Fifty economists, 
including six Nobel laureates, have said:

       An ever-growing tax cut would drain Government resources 
     just when the aging of the population starts to put 
     substantial stress on Social Security and Medicare.

  That, of course, means as we have more and more people reaching 
retirement age and wanting to live their lives comfortably and 
independently, Social Security and Medicare absolutely have to be 
there.
  The Republican approach to this, sad to report, not only does not 
protect the Social Security trust fund; if you will look at this chart, 
when it gets into the red ink, it means the Republican tax break plan 
has finally broken through and started using money from the Social 
Security trust fund. At the year 2005, the Republican tax breaks would 
raid the Social Security surplus. After all of the speeches they have 
given about lockboxes and protecting Social Security, they in fact turn 
to that money and pull it out in 2005, for what? To give tax breaks to 
the wealthiest among us.
  There is a commentator named Kevin Phillips who for years was 
identified as a Republican. I do not know what his partisan 
identification is, honestly, but I can tell you what he had to say 
yesterday on National Public Radio. It is something that every American 
should hear. He was introduced by Bob Edwards, a familiar voice on 
National Public Radio, who said:

       The Republican Party last week had its tax reduction 
     proposal passed by the House of Representatives. Commentator 
     Kevin Phillips says it's the most unsound fiscal legislation 
     of the last half century.

  I go on to read quotes from Mr. Phillips.

       . . . that's because the cuts are predicated on federal 
     budget surpluses so far out, six, eight or ten years, that it 
     would take an astrologer, not an economist, to predict 
     federal revenues.

  He goes on to talk about the fairness of the tax cuts. Kevin 
Phillips:

       . . . Democrats are certainly correct about the imbalance 
     of benefits by income group. Treasury figures show that the 
     top 1 percent of families, just 1 percent, would get 33 
     percent of the dollar cuts, the bottom 60 percent of families 
     get a mere 7 percent.

  So if you are in the category of a Donald Trump or a Bill Gates, or 
someone else, this is worth a lot of money. The Republican tax break 
plan literally could mean $10-, $20-, or $30,000 a year. But if you are 
a working family, struggling to make ends meet, putting some money 
together for your kid's college education or your own retirement, it 
turns out to be in the neighborhood of $20 or $30 a year. That, 
unfortunately, says a lot about what the Republican proposal would mean 
to the average family. To endanger our economic expansion, to possibly 
raise interest rates on home mortgages, business loans and farmers' 
loans, and to provide tax breaks which are amusing, at best, for 
average working families, that does not sound like a very sound deal.
  The Senator from West Virginia made the point, and effectively. We 
should be dedicating these funds to retiring this national debt. It is 
still hard to believe that only 2 years ago we were talking about 
amending the Constitution for a balanced budget amendment because we 
were so hopelessly ensnared by deficits--it was the only way out. Now 
we are talking about giving money away at such a fast pace that we can 
endanger the economic recovery we have seen in the United States.
  Let me read Kevin Phillips' conclusion in his remarks on National 
Public Radio's ``Morning Edition'' on Monday, July 26:

       We can fairly call the House legislation the most 
     outrageous tax package in the last 50 years. It's worse than 
     the 1981 excesses, you have to go back to 1948, when the 
     Republican 80th Congress sent a kindred bill to President 
     Harry Truman. Truman vetoed it, calling the Republicans 
     bloodsuckers, with offices on Wall Street.

  Not my words--Kevin Phillips'.

       Not only did [Truman] win reelection, but the Democrats 
     recaptured Congress.

  I think that puts it in a perspective that we should all be willing 
to acknowledge. If we are going to deal responsibly with tax cuts for 
working families, we have to do it in a way that does not tip the 
scales too heavily on the side of the wealthiest in America.
  This is a good illustration: For the top 1 percent of wage earners in 
America, under the Republican tax break plan, a $22,964 average 
payment; for the bottom 60 percent, families making less than $38,200 a 
year--hold on to your hats, America--the Republican tax break plan 
gives you $139. That is a little over $10 a month. But look what Bill 
Gates and other folks are coming out with. It is the same old story.
  Take a look at when the Republican tax break plan starts to bite. If 
you are in the baby boom generation, thinking about an idyllic 
retirement someday, right about the time you start to retire, the 
Republican tax breaks explode.
  What does it mean? It means that, frankly, there will be less money 
around for the basics of life that we expect from the Federal 
Government. It is hard to imagine that we are in a position, as we are 
today with this economic expansion, of jeopardizing it with this kind 
of a tax break plan. I think it is far better for us to take an 
approach which the President and the Democrats support--I am beginning 
to believe some Republicans support--which suggests that our priorities 
should include Medicare, Social Security, and paying down the national 
debt.
  The Republican approach literally provides no money, no money 
whatsoever, for us to take care of our Medicare obligation. I think it 
is just disingenuous for the Republicans to argue that they are only 
spending 25 percent of the surplus because we know that the unified 
surplus is, in fact, including the $1.9 trillion in Social Security 
trust funds. They talk a lot about lockboxes and protecting Social 
Security, and yet when it comes right down to it, when you look at the 
money available outside of Social Security, the actual surplus that we 
hope to imagine, 97 percent of it goes to the Republican tax cut and 
little or no money for Medicare and other national priorities.

[[Page 17862]]

  This debate this week is critically important for all American 
families to sustain the economic expansion which we have seen for the 
last 7 years.
  I yield back the remainder of my time.
  Mr. ROCKEFELLER addressed the Chair.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. ROCKEFELLER. I ask unanimous consent that I be allowed to speak 
for 10 minutes.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. LOTT addressed the Chair.
  Mr. ROCKEFELLER. I yield to the majority leader.
  Mr. LOTT. I thank the Senator for yielding.
  We are working on a unanimous consent request that we might want to 
try to get cleared in the next 6 or 7 minutes. So if that should occur, 
I would ask the Senator to yield me time to do that. But we would do it 
in such a way where his remarks would not be interrupted.
  I thank the Senator for yielding to me.
  The PRESIDING OFFICER. The Senator from West Virginia is recognized.
  Mr. ROCKEFELLER. I thank the majority leader for his courtesy.

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