[Congressional Record (Bound Edition), Volume 145 (1999), Part 13]
[Senate]
[Pages 18364-18453]
[From the U.S. Government Publishing Office, www.gpo.gov]



                  TAXPAYER REFUND ACT OF 1999--Resumed

  The PRESIDING OFFICER. The clerk will report the bill.
  The legislative assistant read as follows:

       A bill (S. 1429) to provide for reconciliation pursuant to 
     section 104 of the concurrent resolution on the budget for 
     fiscal year 2000.

  Pending:

       Abraham amendment No. 1398, to preserve and protect the 
     surpluses of the social security trust funds by reaffirming 
     the exclusion of receipts and disbursement from the budget, 
     by setting a limit on the debt held by the public, and by 
     amending the Congressional Budget Act of 1974 to provide a 
     process to reduce the limit on the debt held by the public.
       Baucus motion to recommit the bill to the Committee on 
     Finance, with instructions to report back with an amendment 
     to reduce the tax breaks in the bill by an amount sufficient 
     to allow one hundred percent of the Social Security surplus 
     in each year to be locked away for Social Security, and one-
     third of the non-Social Security surplus in each year to be 
     locked away for Medicare; and an amendment to protect the 
     Social Security and Medicare surplus reserves.
       Robb amendment No. 1401, to delay the effective dates of 
     the provisions of, and amendments made by, the Act until the 
     long-term solvency of Social Security and Medicare programs 
     is ensured.


           Motion to Waive the Budget Act Amendment No. 1398

  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, the pending amendment is not germane. I 
raise a point of order that the Abraham amendment violates section 
305(b)(2) of the Congressional Budget Act of 1974.
  The PRESIDING OFFICER. The Senator from Michigan.
  Mr. ABRAHAM. Mr. President, pursuant to section 904(c) of the 
Congressional Budget Act of 1974, I move to waive the Budget Act for 
consideration of the Abraham amendment.
  Mr. GRAMM. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. There is 2 minutes of debate.
  Who yields time?
  Mr. REID. Mr. President, in a letter dated April 21, 1999, on a 
similar provision, then-Secretary of the Treasury Robert Rubin wrote to 
Senator Moynihan that this ``provision could preclude the United States 
from meeting its financial obligations to repay maturing debt and to 
make benefit payments--including Social Security checks--also worsen a 
future economic downturn.''
  The lockbox in this proposal is potentially destabilizing in a manner 
reminiscent of the constitutional amendment to require a balanced 
budget.
  I remind those who propose rigid 10-year schedules for reducing the 
publicly held debt that economics does not follow the agricultural 
cycle. There will be periods when surpluses, both on and off budget, 
will fall far short of projections. We should not impose a debt 
reduction schedule, enforced by a declining debt cycle ceiling, even if 
it can be overridden with 60 votes. To do so will risk default every 
time the debt ceiling is lowered.
  Mr. ABRAHAM. Mr. President, first of all, we have endeavored to and 
have modified our amendment to try to address some of these concerns. I 
think we have done so. I believe we have given sufficient flexibility 
so that there will not be the concerns that were raised in that letter.
  This lockbox does not need a lot of debate. Americans have been 
hearing us talk about it now for almost 3 months. We will continue to 
try to get a straight up-down vote on this. I would note that once 
again this morning another procedural roadblock has

[[Page 18365]]

been put in place to prevent us from getting a straight up-or-down 
vote. I regret that. I was prepared to come today and offer both sides 
the opportunity to have straightforward votes. If one side or the other 
in their various lockbox proposals got 50-plus votes, they would win 
and we could give the American people what I believe they want, and 
that is protection for their Social Security dollars sent to 
Washington. But again, once more, what we have had is a procedural 
impediment placed in the way of getting final action on this 
legislation.
  Mr. President, I urge my colleagues who have previously supported 
this lockbox to do so. It is a tougher lockbox that protects Social 
Security. If we want to do it, I say vote ``yes.'' Vote to waive the 
Budget Act.
  The PRESIDING OFFICER. All time has expired. The question is on 
agreeing to the motion to waive the Budget Act. The yeas and nays have 
been ordered. The clerk will call the roll.
  The legislative clerk called the roll.
  The yeas and nays resulted--yeas 54, nays 46, as follows:

                      [Rollcall Vote No. 227 Leg.]

                                YEAS--54

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner

                                NAYS--46

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Breaux
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Roth
     Sarbanes
     Schumer
     Torricelli
     Wellstone
     Wyden
  The PRESIDING OFFICER (Mr. Frist). On this vote the yeas are 54, and 
the nays are 46. Three-fifths of the Senators present and voting, not 
having voted in the affirmative, the motion to waive the Budget Act is 
rejected. The point of order is sustained, and the amendment falls.
  Mr. ROTH. Mr. President, I ask unanimous consent that the remaining 
votes in this series be limited to 10 minutes in length, and I ask that 
all the Members of the Senate stay on the floor. We have a full and 
busy day.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, I move to reconsider the vote.
  Mr. REID. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                         Privilege Of The Floor

  Mr. LEAHY. Mr. President, I ask unanimous consent that Peter 
McDougall of my staff be given floor privileges throughout the day.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Motion To Recommit

  The PRESIDING OFFICER. The question is on the Baucus motion.
  Mr. BAUCUS. Mr. President, I understand each side has 1 minute of 
explanation.
  The PRESIDING OFFICER. The Senator is correct.
  Mr. BAUCUS. Mr. President, this is a very simple matter before the 
Senate. It is a choice: Do we want to protect Medicare or not. It is 
that simple. That is the choice that we are presented with today.
  The amendment I am offering is the House lockbox which passed the 
House by an overwhelming margin--it only had three or four votes 
against it--along with the Medicare lockbox. The Medicare lockbox we 
provide sets aside one-third of the on-budget surplus for Medicare. It 
can be used in whatever way we want to use it for Medicare, including 
to provide an affordable prescription drug benefit or for shoring up 
Medicare solvency.
  That is the choice before the Senate. Do we preserve Medicare or not. 
Our choice here today, however, is nothing compared to another choice. 
That is the choice that about 16 million seniors must make every day: 
Do I choose to buy my medicine, choose to pay the rent, or choose to 
buy food?
  We are saying set aside and preserve for Medicare one-third of the 
on-budget surplus so that the choices facing seniors are not quite as 
abhorrent.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Mr. President, this is another opportunity on the part 
of the other side to propose to the American people that they want 
anything but tax relief. This is a motion to recommit. It would do 
nothing to protect Medicare. It is the President's proposal, which is a 
phony transfer of IOUs to the Medicare trust fund. It does nothing to 
help senior citizens. It is just an effort to lock up $300 billion so 
you can't give the American people a tax cut, plain and simple. They 
don't want to confront the issue of a lockbox for Social Security so 
they muddle it up and instead of trying to solve something, they would 
like to create an issue instead of a solution.
  Frankly, there are hardly any experts in America who look at this 
lockbox concept for Medicare and say it helps the seniors or it helps 
Medicare. If this is the plan the President is alluding to across this 
land, then he has none.
  I believe, since the other side did not let us have a vote, we ought 
to do ours procedurally also, and I am compelled to do that.
  Therefore: The language in this amendment is not germane to the bill 
before us, so I raise a point of order under section 305(b)(2) of the 
Congressional Budget Act.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, pursuant to section 904 of the Budget Act, 
I move to waive the applicable sections of that act for the 
consideration of the pending amendment.
  Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the motion to 
waive the Budget Act in relation to the Baucus motion to recommit S. 
1429. The yeas and nays have been ordered.
  The clerk will call the roll.
  The legislative assistant called the roll.
  The yeas and nays resulted--yeas 42, nays 58, as follows:

                      [Rollcall Vote No. 228 Leg.]

                                YEAS--42

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Inouye
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Schumer
     Torricelli
     Wellstone
     Wyden

                                NAYS--58

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kerrey
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner
  The PRESIDING OFFICER. On this vote, the yeas are 42, the nays are 
58. Three-fifths of the Senators duly chosen and sworn not having voted 
in the affirmative, the motion is rejected. The point of order is 
sustained, and the motion falls.
  The PRESIDING OFFICER. The Senator from Delaware.

[[Page 18366]]


  Mr. ROTH. Mr. President, I move to reconsider the vote.
  Mr. MOYNIHAN. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. ROTH. Mr. President, I ask unanimous consent that all amendments 
and motions to recommit to S. 1429 must be filed by 2 p.m. today at the 
desk and with the bill managers.
  Mr. STEVENS. Reserving the right to object, what time was that?
  Mr. ROTH. Two p.m.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.


                           Amendment No. 1401

  Mr. ROTH. Mr. President, I think we are ready for the vote on the 
next amendment.
  The PRESIDING OFFICER. There are 2 minutes equally divided. Who 
yields time?
  Mr. ROBB addressed the Chair.
  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. ROBB. Mr. President, this amendment simply delays the effective 
date of the tax cut that is proposed. There are many who believe that a 
tax cut of this magnitude at this time would be ludicrous. But that is 
not the issue. The issue is whether or not we ought to go ahead with a 
tax cut notwithstanding the fact that we have not protected Social 
Security and Medicare.
  Most of the people who have spoken so far have talked about their 
concern for doing just that. The lockbox provisions were proposing to 
do just that.
  If you want to save Social Security and Medicare, this is an 
incentive. It will delay the implementation of the act, but it will not 
negate the effectiveness of the act.
  I ask that our colleagues vote to support this particular amendment, 
save the one-half of 1 percent of the total which would be expended 
this year, and not lock in cuts that would cost $792 billion, which 
would be almost impossible to reverse should that prove to be the case.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. THOMPSON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. THOMPSON. Mr. President, no one in this chamber thinks other than 
that we want a real, sound, solid, and solvent Social Security system 
and Medicare system. Most of us, however, realize we will only have 
that if we have fundamental reforms in those systems, such as that 
proposed by the Medicare commission at which the President scoffed.
  This amendment will serve to actually make Social Security and 
Medicare less sound. It will actually delay the process of real reform. 
The solvency dates that are used in this legislation are taken from the 
President's proposal and will invariably result in pouring more and 
more general revenues into these entitlement programs, delaying the day 
when we have to face up to the fact that we have to have fundamental 
reform.
  Our bill sets aside 75 percent of the surplus for Medicare, Social 
Security, debt retirement, and other spending priorities. With regard 
to the 25 percent remaining, there is no reason to delay tax cuts.
  If we saved every penny of the surplus, put it into Medicare and 
Social Security, it would not do one thing toward solving the 
fundamental problem.
  This language is not germane to the bill now before us; therefore, I 
raise a point of order, under section 305(b)(2) of the Congressional 
Budget Act of 1974.
  Mr. ROBB. Mr. President, pursuant to section 904 of the Congressional 
Budget Act of 1974, I move to waive the applicable sections of that act 
for the consideration of the pending amendment, and I ask for the yeas 
and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the motion to 
waive the Congressional Budget Act in relation to the Robb amendment 
No. 1401. The yeas and nays have been ordered. The clerk will call the 
roll.
  The legislative clerk called the roll.
  The yeas and nays resulted--yeas 46, nays 54, as follows:

                      [Rollcall Vote No. 229 Leg.]

                                YEAS--46

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Schumer
     Snowe
     Torricelli
     Voinovich
     Wellstone
     Wyden

                                NAYS--54

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner
  The PRESIDING OFFICER. On this vote the yeas are 46, the nays are 54. 
Three-fifths of the Senators duly chosen and sworn not having voted in 
the affirmative, the motion is rejected.
  The point of order is sustained, and the amendment falls.
  Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
  Mr. ROTH. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.


                           Amendment No. 1405

 (Purpose: To return to the taxpayers a portion of the budget surplus 
               that they created with their tax payments)

  The PRESIDING OFFICER. Under the previous order, the Senator from 
Texas is recognized to offer an amendment.
  Mr. GRAMM. Mr. President, I send an amendment to the desk in the 
nature of a substitute for myself, for Senator Lott, Senator Nickles, 
Senator Mack, Senator Coverdell, Senator Craig, Senator McConnell, 
Senator Inhofe, Senator Hutchison, Senator Bunning, Senator Kyl, 
Senator  Bob Smith of New Hampshire, Senator Allard, and Senator Hagel, 
and I ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Texas [Mr. Gramm], for himself, Mr. Lott, 
     Mr. Nickles, Mr. Mack, Mr. Coverdell, Mr. Craig, Mr. 
     McConnell, Mr. Inhofe, Mrs. Hutchison, Mr. Bunning, Mr. Kyl, 
     Mr. Smith of New Hampshire, Mr. Allard, and Mr. Hagel, 
     proposes an amendment numbered 1405.

  Mr. GRAMM. Mr. President, I ask unanimous consent that reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. GRAMM. Mr. President, I have the highest admiration for the 
chairman of the Finance Committee. I am supportive of the tax cut he 
has crafted in committee. I intend to vote for it on final passage if 
this amendment fails.
  But I believe we need a clearer vision. I believe we need to define 
very precisely what we would like to use this tax cut to do, rather 
than running around trying to stick a nickel in everybody's pocket with 
a targeted program.
  I would prefer to have a tax cut that has clear themes and this is a 
very simple substitute because it consists of simply five things. So 
this is a tax cut that you can explain to every American, and it 
contains basic principles that I believe every American can understand 
and support.
  The first principle is we ought to have an across-the-board tax cut 
of 10 percent. Now, I know our Democrat colleagues are going to jump up 
and down and say, first of all, that 32 percent of American families 
pay no income taxes, and so if you have an across-the-board tax cut, 
they will not

[[Page 18367]]

get a tax cut. And that is right. Tax cuts are for taxpayers. If you 
don't pay taxes and we have a tax cut, you don't get a tax cut. Most 
Americans don't get food stamps; most Americans don't get TANF; most 
Americans don't get Medicaid because they don't qualify for those 
programs. If you don't pay taxes, you don't qualify for a tax cut.
  Our Democrat colleagues are obviously going to jump up and down and 
say that Senator Rockefeller, who pays 10 times as much taxes as I do, 
with a 10-percent across-the-board tax cut, will get 10 times as big a 
tax cut. That is right, but he pays 10 times as much taxes. If you ask 
people in your church to take up money to build a new parsonage and it 
turned out you had taken up too much money, and you decided to give it 
back, isn't the logical way to give it back to simply take how much an 
individual gave and take the amount that you didn't need and give it 
back to them proportionately?
  So the point is, the first principle we believe in is there ought to 
be an across-the-board tax cut, so every American who pays income taxes 
will get a tax cut. Now, our Democratic colleagues have said they 
believe if you are rich, which means you are in the upper half of the 
income distribution--and they design that as roughly making somewhere 
around $50,000--you don't deserve a tax cut. In their proposal, you 
basically don't get one. I want to remind my colleagues that by 
excluding people who pay 99 percent of the income taxes in America, 
they are excluding from a tax cut 62 percent of all homeowners, 66 
percent of all Americans between the ages of 45 and 64, 67 percent of 
all families who have children in their homes, 67 percent of all full-
time workers, 68 percent of all Americans who have some college 
education, 69 percent of all married couples, and 80 percent of all 
two-wage earner families in America.
  Our Democrat colleagues love investment, but they hate investors. 
They love the benefits of capitalism, but they hate capitalists. An 
across-the-board tax cut gives everybody a tax cut, and if people pay a 
lot of taxes, they get a bigger tax cut--not proportionately, but they 
get the same tax cut. If that offends you, if you believe that somehow 
people who make over $50,000 a year are the enemies of the people and 
they ought to continue to be punished, you would want to be against 
this provision.
  The next thing this provision does is it eliminates the marriage 
penalty. Most Americans are not aware of that because our Tax Code is 
so perverted, if two young people, both of whom work, fall in love and 
get married, they, on average, pay the Federal Government $1,400 a year 
in taxes for the right to be married. My wife is worth $1,400, but the 
point is, she ought to get the money, not the Government. We eliminate 
the marriage penalty.
  Secondly, we have income splitting. Now, I know some of our Democrat 
colleagues are going to get up and say, well, look, if the husband 
earns all the money and the wife stays at home and raises the children, 
they ought not to get the correction for the marriage penalty. Well, we 
do income splitting. We have decided we don't want to inject the Tax 
Code in the decision about whether people work outside the home or not. 
My mama worked every day that I was a child, and she did it because she 
had to do it. My wife has worked every day that our children have been 
alive because she wanted to do it. I am not trying to distort the 
decision one way or another, or make a judgment. All I am saying is 
that people who stay at home and raise their children contribute to 
America. They make a big contribution. By allowing a couple, where only 
one of them works outside the home, to split their income and attribute 
half to each one of them--that is what the partnership of marriage is 
about--we are able to give them a substantial reduction in the penalty 
they pay for being married.
  The next provision is, we repeal the death tax, which is a certain 
kind of death penalty. I like the death penalty where we put murderers 
to death. I don't like the death penalty when working people die and we 
end up forcing their children to sell their business or their farm. All 
over America, people work a lifetime to build up a business or a farm, 
and then when they die, their children have to sell that business or 
sell that farm to give Government 55 cents out of every dollar they 
earned in a death tax. This provision repeals the death tax.
  Now, I know that our Democrat colleagues are going to get up and say, 
well, these are rich people. But I want to give you an example. When I 
first met a printer from Mexia named Dicky Flatt, I met him about 25 
years ago. He was in business with his daddy, who worked on these old 
calculator machines that businesses use. His mama kept all the books, 
his wife basically was working in their stationery shop, and Dicky 
Flatt did the printing business. They had an old building in Mexia, and 
it was cracking right down the middle. They kept putting sand in the 
bottom and kept tar-papering over the top. They had one bathroom, and 
it didn't have a door on it; it had a curtain on it. So when you went 
in to use the bathroom, you pulled the curtain.
  Now, they worked hard in that business. So now Dicky Flatt has torn 
down that building. He has built a Morton building, a metal building, 
and he has a good size print shop and stationery shop. He sent his two 
sons to Texas A&M. They have come back and have gone into business with 
him. He works every day. He gets in at 6 and leaves about 8. He is 
there on Saturday until 6 o'clock. Whether you see him at the PTA, Boy 
Scouts, or the Presbyterian Church, try as he may, he never gets that 
blue ink off the ends of his fingers.
  Now, Dicky Flatt may be rich, for all I know. He doesn't live like a 
rich guy. When his brother died of cancer, he took over his school 
supply business with his wife. My basic point is that Dicky Flatt and 
Linda, his wife, have worked 6 days a week their whole lives. They 
built up this business. Every penny they put into it has been in after-
tax dollars. How can it be right to force their two boys, who now work 
in that business, to sell that business when Dicky and his wife Linda 
die in order to give the Government 55 percent of it, in order to take 
the money from Dicky Flatt and give it to people who have been sitting 
on their fannies in Mexia, not working on Saturday, and in some cases, 
not working at all? I am sure we are going to hear that this is for 
rich people. I want to put a human face on it.
  When we revolted against King George, he wasn't doing things such as 
the death tax. This is an outrage. This is an assault on every value 
this country stands for, and I want to repeal it and repeal it 
outright.
  I want to index the capital gains tax.
  That is the fourth provision of this bill.
  I want to say that from this day forward, if you buy a house as an 
investment and the price doubles and you sell the house for twice as 
much as you paid for it, you haven't made any money, you simply kept up 
with inflation. But under current tax law, you have to pay the Federal 
Government a capital gains tax on the doubling of your house's price 
even though that new price will buy only the amount of goods you could 
have bought with the money for which you bought the house. So the next 
thing we do is index the capital gains tax for inflation.
  Finally, we eliminate not the last outrage in the Tax Code but it is 
a big outrage. If General Motors buys you health insurance, it is tax 
deductible for them, but if you buy it for yourself, it is not tax 
deductible. We eliminate that by saying that no matter who buys health 
insurance in America, the employer or the employee, a retiree or a 
worker, a homemaker or someone who is employed in the economy, that 
health insurance is tax deductible.
  It is a simple tax cut that you can put on one piece of paper. If you 
pay taxes, you are going to get a 10-percent reduction in income taxes 
out of this bill. It is easy to figure. If you pay $1,000 in income 
taxes, you are going to get $100. If you pay $10,000, you are going to 
get $1,000. If that breaks your heart, so be it. I think most people 
will like it.
  Second, we eliminate the marriage penalty and we allow income 
splitting. If you have one parent who stays at

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home, you are able to divide the income in half and have each of them 
claim half that income that belongs to them. This is endorsed by every 
family group in America because it is the right thing to do.
  We repeal the death tax outright over a 10-year period--no ifs, ands, 
or buts. If you live 10 more years, under this bill, and you build 
something with after-tax dollars, it belongs to your family forever.
  That is simple arithmetic. I think we can all understand it.
  We index the capital gains tax so that you never pay capital gains 
tax again on inflation. This is a big issue for every homeowner and for 
every investor in America.
  Finally, we provide full deductibility of health insurance. This is 
an equity issue. It is something that ought to be done.
  This is a tax cut you can understand. It represents what I believe is 
the vision of the party of which I am proud to be a member. I hope my 
colleagues will vote for this substitute. I believe it represents a 
dramatic improvement and simplification in the Tax Code.
  I reserve the remainder of my time.
  The PRESIDING OFFICER (Mr. Allard). Who yields time?
  The Senator from Montana.
  Mr. BAUCUS. Mr. President, I yield 1 minute to the Senator from 
California and then 10 minutes to the Senator from Wisconsin, off the 
bill.
  The PRESIDING OFFICER. The Senator from Delaware controls the time in 
opposition.
  Mr. BAUCUS. The Senator from Delaware delegated that to the Senator 
from Montana.
  The PRESIDING OFFICER. The Chair thanks the Senator for that 
clarification.
  The Senator from California is recognized.
  Mrs. BOXER. Thank you, Mr. President. I thank Senator Baucus.
  My colleague from Texas says the Democrats hate investors and the 
Democrats hate capitalism. As a former stockbroker, I deeply resent his 
remarks. Maybe when the Senator from Texas was a Democrat he hated 
capitalism and he hated investors, but the Democrats around here don't. 
One of the reasons we are not supporting his amendment is that we think 
it is bad for capitalism and we think it is bad for investors.
  I have to say that this amendment, which reflects what the House did, 
is a risky and radical amendment. It hurts the middle class. He says he 
loves the middle class. He talks about his momma and Dicky Flatt. And I 
love to hear him do it. But the bottom line is, the result of his 
amendment will hurt the very people he says he wants to help because it 
is such an unfair tax cut that would go to the very wealthiest and hurt 
the middle class and the working poor.
  I say to my friends who may be listening to this debate, the Senator 
from Texas is a great debater but he was wrong when he said the Clinton 
plan would lead to economic disaster and he is wrong today. I hope we 
will vote down his amendment.
  I yield my time.
  The PRESIDING OFFICER. The Senator from Wisconsin.
  Mr. FEINGOLD. Mr. President, I thank the Senator from Montana.
  Mr. President, I rise to offer some comments on the reconciliation 
tax measure we are considering.
  First, let me note that we have come a long way in the last seven 
years.
  When I first came to the Senate, we were facing an actual budget 
deficit of $340 million.
  That was the real figure--the figure that did not use the Social 
Security Trust Fund balances to mask the deficit.
  Thanks in large part to the President's deficit reduction package in 
1993, and to a lesser extent the bipartisan budget cuts of 1997, we are 
approaching a truly balanced budget.
  I emphasize `'approaching,'' Mr. President, for we are not there yet.
  The budget projections of the Office of Management and Budget, and of 
the Congressional Budget Office, are just that--projections.
  We do not currently have a budget surplus, not without including the 
Social Security Trust Fund balances.
  Mr. President, I do not mean to minimize the wonderful budget 
turnabout that has been achieved.
  But we should not be building massive new commitments on a shaky 
foundation of questionable budget assumptions.
  And that is just what we have.
  The assumptions underlying the tax measure we will debate depend on 
Congress making cuts of $775 billion in real spending over the next ten 
years compared to current levels.
  Let me note that this level of cuts does not include any additional 
cuts that might have to be made in order to offset the cost of 
unanticipated emergencies.
  Let me repeat that, Mr. President.
  The $775 billion in real spending cuts over the next ten years does 
not include the spending we do to help the victims of hurricanes, 
earthquakes, tornadoes, floods, or any kind of international emergency.
  But, for the moment, let us suppose that there will be no hurricanes, 
or earthquakes, or tornadoes, or floods in the next ten years.
  Let us suppose that there will be no international emergencies that 
require our assistance.
  Will Congress find the political will to cut spending by three-
quarters of a trillion dollars over the next ten years?
  Mr. President, Congress has yet to demonstrate it can stay even 
within the current spending caps, let alone find an additional three-
quarters of a trillion dollars in cuts.
  Last fall, Congress passed an omnibus appropriations bill that busted 
the current spending caps by more than $20 billion.
  This past winter, even before we passed a budget resolution, the 
Senate passed another budget buster, S. 4, the military pay and 
retirement measure, which over the next ten years would add another $62 
billion in spending.
  And just a few weeks ago, Congress busted the spending caps yet again 
with $15 billion in additional spending.
  Mr. President, this is not a record of fiscal discipline.
  Nor is it the kind of record that should give anyone confidence that 
the budget assumptions underlying this tax bill are sound ones.
  Mr. President, the assumptions underlying this tax bill are grounded 
not in fiscal reality but in political expediency.
  But, let us assume that somehow, Congress was able to enact the 
three-quarters of a trillion dollars in spending cuts.
  And let us further assume, as we did earlier, that there will be no 
hurricanes, or floods, or earthquakes, or drought, or any other kind of 
natural disaster for the next ten years.
  And that there will be no more Bosnias or Kosovos or Iraqs--no 
international emergencies of any kind for the next ten years.
  Even under all of these assumptions, would this tax proposal be a 
sound one?
  The answer is no, because even if each and every one of those rosy 
scenarios comes true, this bill would use over $75 billion in Social 
Security balances to pay for the tax breaks.
  Mr. President, I strongly oppose using Social Security to fund tax 
cuts; that is why I voted against the 1997 tax cut package.
  We simply should not be using Social Security balances--balances 
needed to pay future benefits--to fund other government programs, or to 
pay for tax cuts.
  Of course, some may argue that even more spending cuts will be found 
in order to avoid the use of Social Security balances--on the top of 
the three-quarters of a trillion dollars in cuts assumed in this 
measure.
  Mr. President, granting even this still rosier scenario, would this 
tax measure be fiscally responsible?
  I regret that it would not, because not only does this tax bill risk 
our current budget, it puts future generations at risk as well.
  Mr. President, while the revenue impact of any tax cut measure can be 
expected to grow over time, the policies outlined in this measure 
explode.
  Consider that while in the next ten years, the cost of this proposal 
is an already whopping $800 billion--if those

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tax policies are continued, the cost in the second ten years will be a 
nearly unbelievable $2 trillion.
  If you add the additional interest payments that will arise from debt 
service, the total cost of the tax policies in this bill rise to over 
$3 trillion.
  For those who may have forgotten, let me remind my colleagues that it 
is in that second ten years when the baby boomer generation begins to 
retire and put increased pressure on Social Security, Medicare, and the 
long-term care services provided under Medicaid.
  If ever there were a time to be prudent, now is the time.
  As improved as the short-term budget picture is, the longer-term 
budget picture is little changed.
  We still face serious problems in Medicare, and as I noted, the baby 
boomer generation will put enormous pressure on that program, as well 
as on the long-term care services, many of which are provided through 
Medicaid.
  There is also a consensus that we should address the long-term fiscal 
health of Social Security, and the sooner the better.
  And finally, Mr. President, we still face a mountain of debt that was 
run up during the 1980s and early 1990s because of the deficits that 
were run up during that time.
  In each of these areas, there is a stark choice: we can act now to 
address each of these areas; or, we can ignore them, watch the problems 
get much worse, and leave the work and cost of reform to our children 
and grandchildren.
  Mr. President, for me, that's an easy choice.
  I do not want my children footing the bill for the failure of past 
generations to act responsible.
  I want to support a tax cut, but not one that jeopardizes the work we 
have done to straighten out the current budget and squanders the 
opportunity to reduce our debt and put Social Security, Medicare, and 
our long-term care system on sound footing.
  Mr. President, let me take a moment to look at the make-up of the tax 
measure itself.
  One might expect that a tax cut of $800 billion would provide the 
sort of broad-based tax benefits that would be politically attractive.
  But given the amount of revenue dedicated to this tax cut, the 
benefits to the average taxpayer are surprisingly small, and the 
overall package is heavily skewed to some of the wealthiest individuals 
and corporations in the world.
  As was noted by the tax watchdog group Citizens for Tax Justice, the 
tax bill gives three-quarters of its benefits to the best-off fifth of 
all taxpayers.
  By contrast, only 11 percent of the tax bill's benefits go to the 
bottom 60 percent of all taxpayers.
  While the average tax reduction for the wealthiest 1 percent of 
taxpayers--those with incomes over $300,000--is over $23,000 a year 
under this bill, those with more average income do not do quite as 
well.
  The average tax cut for those who are among the middle fifth of 
taxpayers will be $279, or about $5 per week.
  For those in the bottom three-fifths of all taxpayers, the average 
tax cut is even smaller--about $140 per year, or less than $3 per week.
  Mr. President, under this $800 billion tax bill, the majority of 
taxpayers will have an average tax cut of $3 per week.
  Maybe the proponents of this bill are hoping most of America will use 
this windfall to buy one of those overpriced cups of coffee.
  Well, Mr. President, thanks to this tax bill, once a week, three-
fifths of America will now be able to go to one of those fancy coffee 
shops and get a frothy decaf cappuccino latte with skim milk.
  This tax bill is a bad tax policy any way you brew it.
  Mr. President, I recognize that some may genuinely believe we should 
dedicate about $800 billion to tax cuts over the next ten years.
  The tragedy is that even in that context, the $800 billion was spent 
unwisely, because in addition to Social Security, Medicare, long-term 
care, and reducing our national debt, one of our highest priorities 
should be significant reform of our tax code.
  It was just a few months ago that we heard how critical fundamental 
tax reform was to our future.
  Flat tax, consumption tax, a national value-added tax--there were a 
number of significant proposals that sought to address the inefficiency 
of our current Tax Code.
  Simplification was the order of the day, and let me add, Mr. 
President, that while I did not support many of those proposals, I 
think many of the proponents of reform got it exactly right.
  Our Tax Code should be simplified.
  We should reduce the number of special interest tax breaks and use 
that savings to lower the tax rates for everyone.
  I participated in just that kind of exercise at the State level as 
chair of the Taxation Committee in the Wisconsin State Senate.
  As we all know, there will be winners and losers in a reform of our 
tax code, and I can tell you from direct experience that the best time 
to enact tax reforms is when you have additional resources to help 
increase the number of winners and decrease the number of losers.
  Mr. President, this tax bill and the House version both squandered 
that opportunity as well.
  We might have had a significant start on real tax reform.
  Instead, we got a grab bag of goodies for special interests added to 
a tax code already thick with complexity.
  A recent article in the Washington Post listed a number of the 
special interest tax breaks in this bill and the House version.
  They include tax breaks for: multinational corporations, utility 
companies, railroad, oil and gas operators, timber companies, the steel 
industry, seaplane owners in Alaska, sawmills in Maine, barge lines in 
Mississippi, Eskimo whaling captains, and Carolina woodlot owners.
  This bill is a dream come true for business lobbyists.
  The Post reported one lobbyist as saying, ``If you're a business 
lobbyist and couldn't get into this legislation, you better turn in 
your six-shooter.''
  Mr. President, in the name of complete disclosure, let me note that I 
understand the Democratic alternative, which I may support, suffers 
from the same problem, though to a much lesser extent.
  And it will come as no surprise to my colleagues that I firmly 
believe this kind of pandering to special interests is a direct result 
of our campaign finance system.
  There's ample evidence to that effect right here in this bill.
  The campaign finance system gives wealthy interest an open invitation 
to influence legislation in this body, and in this bill it's clear that 
special interests accepted that invitation in droves, Mr. President.
  For the benefit of my colleagues and the public, I'd like to share 
just a few examples of what these interests gave in PAC and soft money, 
and what they got in either this bill, the House tax measure, or both.
  I do this from time to time; it is known as ``The Calling of the 
Bankroll.''
  According to the Washington Post, an umbrella organization called the 
Coalition of Service Industries, a coalition of banks and securities 
firms, won a provision to extend for five years a temporary tax 
deferral on income those industries earn abroad. The value of this tax 
deferral: $5 billion over ten years.
  So we know what Congress has given the Coalition of Service 
Industries, but what has the Coalition of Service Industries given to 
candidates and the political parties? During the 1997-1998 election 
cycle, coalition members gave the following:
  Ernst & Young--more than half a million dollars in soft money, and 
nearly $900,000 in PAC money.
  CIGNA Corporation--more than $335,000 in soft money, and more than 
$210,000 in PAC money.
  American Express--more than $275,000 in soft money and nearly 
$175,000 in PAC money.
  Deloitte and Touche--more than $225,000 in soft money and more than 
$710,000 in PAC money.
  Of course, as I said Mr. President, this is just a sampling of what 
Coalition of Service Industries members

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have given. I'd be up here a lot longer if I had a document all the 
millions of dollars these groups have given.
  But it doesn't stop there. These two tax bills mean Christmas in July 
for special interests, Mr. President, with gifts for jut about every 
industry in Santa's bag.
  The post reports the utility industry got a provision affecting 
utility mergers in the House measure, which, if it survives, is worth 
more than $1 billion to the utility industry. The provision would 
excuse the payment of taxes on the fund that utilities set up to cover 
the costs of shutting down nuclear power plants.
  Utilities companies that operate nuclear power plans would be 
particularly grateful to see this provision passed, Mr. President.
  Their depth of their gratitude would be matched only by the size of 
their campaign contributions during the last election cycle, including:
  Entergy Corporation, which gave $228,000 in soft money and nearly 
$250,000 in PAC money;
  Commonwealth Edison, which gave $110,000 in soft money and more than 
$106,000 in PAC money;
  And Florida Power and Light, which gave nearly $300,000 in soft money 
and more than $182,000 in PAC money.
  As it does so many other issues, our campaign finance system is 
preventing real reform to our tax code, and those who doubt that only 
need to look at this bill.
  Mr. President, the best thing we can say about this tax bill is that 
it will not be enacted into law.
  The President will almost surely veto it, and he will be right in 
doing so.
  This bill is fiscally irresponsible.
  It depends on budget suppositions that are at best fanciful.
  It uses Social Security balances to pay for tax cuts.
  It proposes a tax policy that no only jeopardizes our current budget 
but our future fiscal health.
  It sticks our children and grandchildren with the cost of paying-off 
the debt run up over the past two decades, and leaves them the task of 
extending the solvency of Social Security, strengthening Medicare, and 
reforming our long-term care system.
  And it hands our special interest tax breaks galore while providing 
little tax relief to the vast majority of taxpayers.
  Mr. President, I will vote against this bill, and urge my colleagues 
to do so as well.
  Mr. President, I yield the floor.
  Mr. BAUCUS. Mr. President, I yield 5 minutes to my good friend from 
Delaware, Senator Roth.
  Mr. ROTH. Mr. President, Senator Gramm has provided Members with a 
straightforward alternative to the bipartisan Finance Committee bill. I 
compliment him on the clarity of his approach, much of which I favor. 
Although provisions of Senator Gramm's substitute have appeal for me, 
frankly, I could not have used it as a basis for the Finance Committee. 
His proposal contains elements that would not garner a majority of 
committee members.
  In addition, Senator Gramm's substitute, though popular with many in 
the Senate Republican caucus, would not pick up support on the other 
side of the aisle. For that reason, his proposal would not be a 
blueprint for tax cuts, in the form of a signable bill, that we can 
deliver to the American people now.
  Finally, although Senator Gramm's amendment is simpler, it leaves out 
many bipartisan tax measures that address important tax issues. For 
instance, education savings incentives are deleted. This means parents 
who want to save for a child's college education would be left out of 
the picture. We're talking about millions of parents and students in 
every state.
  Yet another example is the student loan interest deduction. Under the 
Finance Committee bill, at least three million graduates, bearing the 
burden of college debt, would be allowed to deduct student loan 
interest on their tax returns.
  In my legislation I try to focus on matters of need to the American 
family. I provide incentives to promote savings, pensions, IRAs. Many 
in retirement depend not only on Social Security, which we will 
address, but also on personal savings and pensions. My bill addresses 
that. There is nothing to correct the problems of AMT, the alternative 
minimum tax. Unfortunately, thousands upon thousands of American 
families will be hit by AMT and not enjoy the full benefit of many 
programs such as the child tax credit.
  Finally, nothing is done with respect to charitable giving. We have 
proposals that will promote and create incentives.
  For these and other reasons, I must oppose Senator Gramm's well-
intentioned amendment.
  I reserve the remainder of my time.
  Mr. BAUCUS. Mr. President, I yield myself such time as I might 
consume.
  The Finance Committee has already rejected this provision. The 
Finance Committee deliberated this amendment in committee, and, by a 
large margin turned it down because it is excessive. It is 
irresponsible, in my judgment. It is not the right thing to do. It says 
we are going to take the entire on-budget surplus. And because of the 
tax cut plus the lost interest on the debt, there is nothing left for 
Medicare, discretionary spending or any other programs which will be 
cut anyway by a very large margin.
  It is excessive, too, compared to the bill passed by the committee 
because it is so backloaded. It is so top heavy. By that, I mean the 
bulk of the cost of the provisions are at the very end--6, 7, or 8 
years from now. No one can predict the future of this country and what 
position we will be in 6 to 8 years from now.
  I was speaking to the CEO of a major American company a few days ago, 
a man we all know, a company we all know very well. He told me they 
can't begin to plan for the future. They do have 5-year plans but they 
know the 5-year plans are not going to be accurate. So they have to 
just do the best they can on virtually a quarterly basis. They have to 
go ahead in the areas they think are the areas of the future, but it is 
almost impossible to plan in this modern era.
  So I say, if we today were to lock in provisions in the law which 
will hemorrhage this country's budget surplus based upon ephemeral, 
distant projections which are never accurate, that is not responsible. 
That is not the right thing to do. And that is what this amendment 
does. That is why basically, fundamentally, without going into all the 
details of it, why this does not make sense. It has often been stated 
during this debate that the time when the baby boomers begin to retire 
is when these things really start to kick in and the costs explode.
  I think prudence is the watchword here today. History sometimes is a 
guide. Look at the 1980s. What happened in the 1980s? There was a huge 
tax cut. Congress succumbed to the siren song of supply side economics. 
What was supply side economics supposed to do? It was supposed to make 
deep tax cuts, spend more on defense, and guess what, folks, that is 
going to cause the budget to be balanced. That was what supply side 
economics was supposed to do--advocated, by the proponents of this 
amendment. It was going to balance the budget.
  The theory is the trickle down theory: Cut the taxes of the most 
wealthy, they invest a lot more, it trickles down and the economy 
starts humming and it balances the budget. That was the Laffer curve. 
Guess what, it did not work. We kind of knew it was not going to work, 
but it was such a temptation, such a siren song to vote these huge tax 
cuts, hoping, hoping, hoping that what the proponents said would come 
true. Guess what, it did not. It did not come true at all.
  The tax cut was passed in 1981. Then what happened in 1982? This 
Congress, a Republican Congress, and President Reagan, had to change 
course. They had to raise taxes. The Republican Congress and Republican 
President raised taxes in 1982. Then guess what. This tax increase was 
not enough because the deficits were just so large. The Republican 
Congress and Republican President had to raise taxes again in 1984. 
They had to raise taxes more because the deficit was so large. The 
national debt in 1980 was roughly about

[[Page 18371]]

$1 trillion; 8 years later it was roughly $3 trillion, maybe close to 
$4 trillion. It tripled and quadrupled during that time of the huge tax 
cuts. Then we had to add more taxes back again in 1982 and 1984.
  So, in many ways this is history repeating itself. Democrats in the 
Senate support a tax cut. We support using a third of the on-budget 
surplus to pay for a tax cut. But we are just saying don't use all of 
the on-budget surplus for tax cuts with virtually all going to the most 
wealthy Americans.
  Do you know what else is going on here? I do believe the proponents 
of this bill are so--not distrustful, but so opposed to Government that 
they want these huge tax cuts partly to force down deeper cuts, way 
below the baseline in spending. I think they want to cut veterans' 
benefits 30 percent; they want to cut health education 20, 30 percent; 
want to cut these programs. I think there are really many on that side 
who want to make these cuts. They want to. As strange as that might 
sound, they want to. That is another reason for this huge tax cut 
because it will force cuts in spending later on.
  We have already cut spending. Discretionary spending has been cut so 
much by this body over the last 10 years it is unbelievable. And the 
size of government has gone down, with many fewer federal employees 
than there were years ago.
  To sum it all up, we have seen this provision in the Finance 
Committee. The Finance Committee soundly rejected this amendment. I 
urge the Senate to also soundly reject this amendment. It is not good 
policy.
  I reserve the remainder of our time.
  The PRESIDING OFFICER. The Senator from Texas.
  Mr. GRAMM. Mr. President, I yield 10 minutes to the distinguished 
Senator from Tennessee.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. THOMPSON. Mr. President, I think Senator Gramm is bringing a very 
important principle to the table, one that we need to address: If we 
are going to have a tax cut, what kind of tax cut should we have? What 
is best for the economy, and what is fair?
  There was a consensus in this country, 10, 15 years ago, that we 
needed to have a tax policy based upon a broader base and lower rates. 
That is essentially the tax bill that came out in 1986. We came down to 
two tax rates. We had a 15-percent and a 28-percent tax rate. There was 
a broader base, where more people were paying taxes, but lower rates.
  In the 1990s, we have gotten away from that. We have gotten away from 
that principle and gone, instead, toward what has been referred to as 
targeted tax cuts. That its basically the Government--we, the 
President--that decide, on an individual basis, who deserves the tax 
break or tax cut in any particular year. Usually it is based upon how 
much clout they have, or some notions of fairness of a particular 
congressional makeup at some particular time. So now we have wound up 
with higher rates and a narrower base. We now have five income tax 
rates instead of the two we had back in 1986 in addition to phaseouts. 
The Tax Code, not only do we have additional rates, it has become more 
progressive, even in addition to those rates.
  I do not think a lot of people are aware of this. I think most 
Americans think initially, basically, they can look at tax rates and 
see what their tax burden is. But then you look at all the phaseouts 
that we have. Congress has decided in its wisdom that people of a 
certain income level do not deserve some of the deductions, exemptions, 
and benefits that others deserve. So we have a personal exemption 
phaseout.
  We have an itemized deduction phaseout at basically the $124,000 
level for individuals. I am talking about individuals and not couples, 
in terms of the dollar amounts I am using. The personal exemption 
phaseout; itemized deduction phaseout, limitation of only being able to 
deduct that amount over 2 percent of itemized deductions; a 7.5 percent 
floor on medical deductions; a 10 percent adjusted gross income floor 
on casualty deductions; a $500 child credit that phases out at an 
income level of $75,000; a dependent child credit that begins to be 
phased out at an income level of $10,000--if you make that much it 
begins to be phased out; a deductible IRA, $30,000; an education IRA, 
$95,000; the HOPE credit, college credit, begins to be phased out at 
$40,000 for an individual. So we want to help you go to college, we 
want to help your kids go to college--as long as you do not have a job, 
basically is what that amounts to.
  We have a life-time learning credit of $40,000; student loan interest 
deductions, at $40,000 it begins to be phased out; education savings 
bond interest--if you make $52,000 you begin to lose that; elderly/
disabled credit, $7,500; adoption credit/exclusion, $75,000; DC first 
time homebuyer--if you make $75,000, you begin to have that phased out 
as a taxpaying individual; rental real estate losses; rehabilitation 
tax credit--on and on and on.
  In addition to continuing to raise the tax rate--the highest one in 
1986 was 28 percent and now it is up to 39.6 percent plus the maximum--
plus the limited itemized deductions and phaseout of personal 
exemptions, you wind up with an effective rate of over 40 percent. When 
you remove the cap on Medicare tax, plus these phaseouts, you are 
looking at, in some cases, close to an effective 45-percent tax rate, 
something like that.
  My only point is that, as we decide how to go forward, we need to 
understand that we have a progressive system as far as our income Tax 
Code is concerned, and that is the way it ought to be. A lot of people 
believe it is that way. But every time we have a tax cut, we cannot say 
let's give everybody the same dollar amount back in taxes regardless of 
how much they paid in because we have a very progressive system.
  We have progressive tax rates up to 39.6 percent, with phaseouts so 
that if you are making any money, if people are working hard and making 
a pretty good living, they begin to lose the deductions and credits. 
That makes it even more progressive.
  We come along and say we are going to give a tax cut now, and we say 
if the other guy is paying twice as much in taxes as I am, give him a 
tax cut. He lost all these exemptions because he is making good money. 
He is paying twice as much in taxes. But we come along with a tax cut 
and we say they are going to both get the same amount back? I do not 
think that makes much sense.
  Let's say the economy was good and we were able to have successive 
tax cuts over a period of time and we gave the same dollar amount back 
to everybody regardless of how much they were paying in taxes. We would 
have a narrower and narrower base all the time and fewer and fewer 
people paying any taxes at all. We would continually be taking people 
off the tax rolls. We already have 43 million people who do not pay 
taxes.
  As progressive as our Tax Code is, as does the Senator from Texas, I 
make no apologies for the proposition that when it comes time for a tax 
cut, let's base the tax cut on how much people are paying in.
  We have to ask ourselves a fundamental question: Are we interested in 
punishing folks who make a good living or are we interested in 
collecting money for the Federal Government to pay legitimate 
Government expenses? History shows every time we have had a reduction 
in tax rates, we have more money. Every time the Government reduces 
rates in any appreciable amount, the Government winds up getting more 
money.
  In the 1920s, it was true. In the 1960s, under President Kennedy, who 
said a rising tide lifts all boats, it was true. In the much maligned 
1980s, which laid the groundwork for the greatest economic prosperity 
this world has ever known, it was true.
  Increased revenues in the twenties was 61 percent over a 7-year 
period. In the sixties, a revenue increase after inflation was about 33 
percent. In the eighties, after cutting the tax rates, revenues 
increased 28 percent because it reduced the incentive to hide income, 
to shelter income, and to underreport income.
  Similarly, the share of the tax burden paid by the rich rose 
dramatically

[[Page 18372]]

as the rates fell. By cutting rates, we get more money out of the rich.
  Do we want to be concerned about how much somebody is making and try 
to hold that down or do we want the money for the Federal Government? I 
thought the idea was to have a fair Tax Code but to raise the money for 
the legitimate expenses of the Federal Government.
  In the 1920s, they called rich $50,000. I guess things have not 
changed that much. But in 1921, the rich paid 44 percent of the income 
tax. In 1928, after the rate cut, they paid 78 percent of all taxes. 
The gap was not quite as pronounced later on, but in 1963 under 
President Kennedy, at the time of the cut, the rich were paying 11.6 
percent of all the taxes being paid. In 1966, they were paying 15.1 
percent. In the 1980s, we were talking about the top 10 percent----
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. THOMPSON. I ask for another 3 minutes.
  Mr. GRAMM. I yield the Senator another 3 minutes.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. THOMPSON. In the 1980s--1981--the rich were paying 48 percent of 
the taxes. In 1988, they wound up paying 57 percent of the taxes. We do 
not get a lot of credit taking up for the rich, but our responsibility 
as public servants is to look out for the country and have policies 
that are going to get the most money and not try to be too concerned 
about who is going to get this share of the economic pie: I am going to 
get yours; you are not going to get mine. Our concern should be with 
making that economic pie better.
  As far as an across-the-board cut is concerned, every serious 
observer nowadays thinks it is sound economic policy. Lawrence Lindsey, 
former Federal Reserve Board member, George Shultz, former Secretary of 
State, and even the oft quoted Chairman Greenspan--there may be some 
discussion as to when he thinks a tax cut should come about, but he 
says when it comes about, it ought to be an across-the-board rate 
reduction. This is sound economic policy.
  I know the prospects for this particular amendment, but all of this 
business about soak the rich and unfairness, we need to keep a little 
balance and keep things in mind. If we want more money, if we want to 
be fair--first of all, we have to recognize we have a very progressive 
system in this country, so when it comes time for a tax cut, let's pay 
some attention to the idea of across the board and not have politicians 
deciding the detailed targeted tax cuts for their favorite people, but 
make it across the board. It is more fair, and it will get more money 
for the Federal Treasury. I yield the floor.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, I yield myself such time as I may take off 
the bill.
  Mr. President, a number of my colleagues have attacked the Reagan tax 
cut. With that I strongly disagree.
  I have no argument with those who want to bring up history in their 
attempt to argue against the need for this tax relief package. But I do 
have an argument when they attempt to change facts and debunk what 
was--and continues to be--a tremendous economic legacy.
  First, let me make it clear that cutting taxes to keep the economy 
strong did not begin with President Reagan--nor is the idea isolated to 
one political party or the other.
  In the 1960s, President Kennedy ushered America into economic 
expansion with his own historic tax cuts.
  In fact, in recalling our history it might help us to remember 
President Kennedy's statement to the Economic club of New York in 
December 1962. On that occasion, he said:

       Our true choice is not between tax reduction, on the one 
     hand, and the avoidance of large federal deficits on the 
     other. It is increasingly clear that...an economy hampered by 
     restrictive tax rates will never product enough revenues to 
     balance our budget just as it will never produce enough jobs 
     or enough profits.

  Second, the facts concerning President Reagan's economic record are 
very clear: everyone benefited from the broad based 25 percent across-
the-board tax cuts signed into law by President Reagan. The facts show 
that all income groups saw their incomes rise during the period of 1980 
to 1989. The facts show that during that period, the mean average of 
real income rose by 15.2 percent, compared to a 0.8 percent decline 
from 1970 to 1980.
  And what of record-setting deficits? Did cutting taxes 25 percent 
across the board deplete the Treasury revenues? Absolutely not. Again, 
the records, the facts show that Federal revenues actually exploded. As 
Americans grew in wealth, Treasury revenues grew. Between 1981 and 
1987, they grew 42 percent.
  The deficits remind my debunking colleagues--were not created by 
cutting taxes and stimulating economic growth; they were the product of 
a Congress that refused to hold the line on spending. While revenues 
increased 42 percent, following those tax cuts, spending increased by 
50 percent.
  And, my colleagues, that is unlikely to happen after this tax relief 
package becomes law, as Congress is largely controlled by the same 
individuals who--2 years ago--passed the first balanced budget in a 
generation.
  Mr. President, I yield the floor.
  Mr. HOLLINGS addressed the Chair.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. I yield the distinguished Senator from North Dakota 10 
minutes off the bill.
  Mr. DORGAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, what a remarkable debate. At a time when 
so many Americans think so much in politics is fuzzy and they can't see 
much of a difference between the two parties, this is a bright-line 
test. There is a radical difference in terms of what we stand for and 
what we fight for and what we have passion to change. I want to 
describe a little of that difference.
  But first I want to go back to what some would call ``the good old 
days.'' Let's go back to the year just before we passed, by one vote, 
the bill that increased some taxes for a few people in this country, 
cut some taxes for others, cut some spending, and put this country back 
on track with an economic plan that resulted in where we are today.
  In 1993 I voted for that package. We did not get one vote from the 
other side of the aisle--not one. It passed by one vote in the House, 
one vote in the Senate. We did not get one vote to help us from the 
other side of the aisle.
  In fact, some on the other side of the aisle stood up and said: If 
you pass this, this country is going into a depression. If you pass 
this, it will ruin the American economy. It will throw people out of 
work. It will injure this country. Well, we passed it anyway.
  Do you remember those days? The Federal deficit then was $290 billion 
and growing. We had nearly 10 million Americans out of work, looking 
for a job. The Dow Jones Industrial Average just barely reached 3,000. 
Inflation was double what it was last year. There were 97,000 business 
failures.
  Then we passed a piece of legislation that put this country back on 
track--over the objections, I might add, of the folks who bring----
  Mr. REID. Will the Senator yield?
  Mr. DORGAN. I am happy to yield.
  Mr. REID. The Senator from North Dakota--this is a question--
indicated that the Democrats did not receive a single Republican vote 
in the 1993 budget; is that true?
  Mr. DORGAN. That is correct.
  Mr. REID. Does the Senator also remember some of the statements of 
doom made?
  Mr. DORGAN. I do, indeed.
  Mr. REID. Do you remember this one made by the author of this 
amendment:

       I want to predict here tonight that if we adopt this bill 
     the American economy is going to get weaker and not stronger, 
     the deficit four years from today will be higher than it is 
     today and not lower . . . when all is said and done, people 
     will pay more taxes, the economy will create fewer jobs, 
     Government will spend more money, and the American people 
     will be worse off.

  Do you remember that statement?
  Mr. DORGAN. Of course I remember that. There were predictions of 
doom,

[[Page 18373]]

saying, if you pass this, you are going to throw this country into a 
tailspin.
  This is a country that had a $290 billion deficit, an anemic economy, 
with 10 million people out of work. This is a country that desperately 
needed a change in direction. We made it without the help of one vote 
from the other side.
  Frankly, I thought a couple of the folks you referenced were going to 
do a half-gainer off the Capitol Dome, they were so upset about us 
changing the fiscal policy of this country. But we did it.
  Guess what happened. Guess what happened. This country's economy has 
seen robust economic growth. Seven years later, we do not have a budget 
deficit. No, we do not have a $290 billion, and growing, budget 
deficit. We have a budget that is nearly in balance. Economists are 
predicting surpluses for the next 10 years--I might point out, the same 
economists who predicted in the early 1990s we would have a full decade 
of sluggish, anemic growth in this country.
  I mentioned yesterday these are the same economists who can't 
remember their home phone number or address telling us what will happen 
3, 5, and 10 years from now. We ought to be careful about these 
predictions. We do not have a budget surplus yet. The 10 years of 
estimated $3 trillion surpluses do not exist, and we have folks on the 
floor who are breathless to try to deal with them through tax cuts.
  Mr. REID. Will the Senator yield for another question?
  Mr. DORGAN. I am happy to.
  Mr. REID. I ask my friend from South Carolina, who is managing this 
bill, that whatever time I use asking these questions be yielded off 
the bill so the Senator does not lose his time.
  Mr. HOLLINGS. Yes.
  Mr. REID. I say to my friend, the statement I read to the Senator 
just a short time ago was given August 5 by the author of this 
amendment that we are now debating. A day later, on August 6, do you 
remember this statement? I quote:

       I believe that this program is going to make the economy 
     weaker. I believe that hundreds of thousands of people are 
     going to lose their jobs as a result of this program. I 
     believe that Bill Clinton is one of those people.
  The fact is, does the Senator from North Dakota realize that there 
have been 18 million jobs created in those 7 years? Hundreds of 
thousands losing their jobs?
  You do remember this statement, don't you?
  Mr. DORGAN. Oh, I do. In fact, the same people who made those 
predictions that were so wrong are now telling us they have new 
predictions and we should believe the new predictions.
  Mr. REID. I say to my friend, do you also understand that since this 
statement was made we have had the lowest inflation, the lowest 
unemployment, in some 40 years? Does the Senator acknowledge the fact 
that the deficits, when these predictions were made, which were about 
$300 billion a year, are now down to nothing? Does the Senator realize 
that?
  Mr. DORGAN. The economy has performed in a way no one expected. But 
we knew that the direction this country was headed in was wrong--$290 
billion in a year in deficits, and heading up; more inflation, more 
people out of work. And we proposed to change the fiscal program for 
this country.
  It took some guts to vote for it because it was not very popular. But 
I said to the folks I represent: Don't blame me for voting for that. 
Give me credit for it because I stand behind this program. We did what 
was necessary to put an end to these Federal budget deficits and to put 
this country's economy back on track--over the objections of a lot of 
folks in this Chamber who today are telling us they have a new vision, 
a new idea.
  We have heard their ideas. An old fellow in my hometown--a small 
town--once told me: Never buy something from somebody who is out of 
breath.
  There has been an almost breathless quality to the efforts by the 
majority party, for 6 months, to get to the floor as quickly as they 
could with their tax cuts.
  If this is a battle of the pie charts, I say you win, we just give 
up. Here is a pie chart. Let me just show you. Let us just right at the 
start of this discussion say: You win; this is your pie; if it is a 
battle of the pie charts, you get the pie award. Republican tax breaks: 
$23,344 for the top 1 percent of the income earners. So you win the pie 
award.
  Of course, these folks down here, they pay taxes, too. They all go to 
work. They pay payroll taxes. Eighty percent of the people in this 
country pay more in payroll taxes than income taxes.
  But you breathlessly run to the floor of the Senate with a bill that 
says let's cut income taxes, because that allows you to give a huge 
portion of this pie to the largest income earners in this country. In 
the meantime, there are folks working today for the minimum wage, $5, 
$6, $7 an hour, who pay a payroll tax, a big tax, pay more in payroll 
taxes than they do in income taxes. Are they going to get a tax cut? 
No; they don't count because they ``don't pay taxes.'' They are not 
taxpayers according to this strategy and this kind of philosophy. That 
is what is wrong with it.
  Let me just run through a couple charts.
  One of my colleagues showed this earlier this morning. I want to show 
it again.
  The bottom 60 percent of the income earners, under this plan, will 
get $141 in tax breaks a year; the top 1 percent, $23,344 a year. And 
people say: How dare you tell us this benefits the rich. How dare we? 
It happens to be the fact.
  As I said, so much of politics is fuzzy. But you do not need strong 
glasses to see this chart. There is nothing fuzzy about this. If you 
decide you do not want to do this, then do not do it. It is easy to 
amend your bill. If it is not your intention to give the bulk of the 
tax cut to the wealthiest Americans, then do not do it. But do not 
complain to us that we are calling attention to it when you do it. If 
you do not stand behind it, then change it.
  My problem is this: I don't understand what conservatism means 
anymore. I thought being conservative would be to try to put this 
country at a lower risk with respect to future opportunities and its 
future economy. Conservatism apparently means put the country at higher 
risk. If you see a glimmer of a prospect of an estimate by an economist 
that there might be a surplus, rush to the floor of the Senate and 
propose a three-quarters-of-a-trillion-dollar tax cut. Is that 
conservative?
  It was a perfect symmetrical proposition that, on the floor of the 
Senate yesterday, the first vote was to waive points of order that 
would exist against their bill, waive points of order for a conference 
report that has not yet been written, for a conference that has not 
been held. That was, in my judgment, in perfect symmetry to the 
proposition they bring to the floor to provide tax cuts, paid for with 
surpluses that don't yet exist. What perfect symmetry. But how 
perfectly awful as public policy to do that and put the country at this 
risk.
  We have some choices. The choice is that we have good economic times 
in the future. Let us all hope and pray we do because that is good for 
this country. More people are working. Fewer people are on welfare. The 
country is growing, less inflation. It is a wonderful opportunity we 
have in this country. But the same people who opposed the fiscal policy 
that got us here have decided they want to create a new fiscal policy 
and a new strategy that puts all of that at risk. They know we are 
heading towards a serious problem.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. DORGAN. I ask for an additional 5 minutes.
  Mr. HOLLINGS. An additional 5 minutes.
  Mr. DORGAN. We are heading toward a demographic time bomb in both 
Social Security and Medicare. The question is, If these surpluses 
exist, what shall we do with them; reduce the Federal debt? That has 
gone from $1 trillion to $5.7 trillion in two decades. Reduce the 
Federal debt? The answer of the Republicans is no. How about extend the 
solvency of Social Security

[[Page 18374]]

because we know we face this problem. Older people living longer; fewer 
people working to support them. Extend the solvency of Social Security? 
No. How about extending the solvency of Medicare? No.
  The only answer coming from that side of the aisle is take three-
quarters of a trillion dollars, package it up, put a huge bow around 
it, and then bring it to the floor of the Senate, and then complain 
about a pie chart that shows they have cut out the biggest piece for 
the wealthiest Americans.
  Mr. DURBIN. Will the Senator yield for a question?
  Mr. DORGAN. I will.
  Mr. DURBIN. I suggested that the amendment being offered by the 
Senator from Texas, which as I understand it, is the House version of 
the tax cut, is even worse than the Senate version when it comes to 
helping working families, and frankly, I think, gives the word 
``conservative'' a bad name. I ask the Senator if he would consider the 
following:
  In this Nation where we revere free speech, we basically let people 
say what they want to say. Some people have gone so far as to suggest 
that tomorrow will be the end of the world. Well, when tomorrow comes 
and goes and the world doesn't end, most of those people shrink away.
  The people who are offering this amendment, in 1993, said the Clinton 
plan for deficit reduction was the end of the economic world for 
America. We would see deficits as far as the eye could see. We would 
have unemployment, high inflation, the economy was in terrible shape. 
As a result, not a single Republican would vote for the Clinton plan.
  I ask the Senator, did the world end, as Senator Gramm and others 
suggested, with this Clinton plan? The same group is suggesting to us 
today that Alan Greenspan is wrong, Bill Clinton is wrong again, and 
that we have to pass this tax break for wealthy people which will 
endanger our economy.
  Mr. DORGAN. Well, the Senator knows the economy not only did not 
collapse and crash and go into a depression as a result of our new 
fiscal policy; the economy blossomed and grew and everything changed. 
The deficits were gone. The deficits were at $290 billion and growing. 
We changed the fiscal policy.
  A number of our friends stood up and said: You do this and you are 
going to collapse this country's economy. In fact, the fellow who has 
offered this amendment is an economist, taught economics. I taught 
economics in college. I have been able to overcome that and lead a 
reasonably productive life, but economists can argue forever about all 
these things.
  The question is whether we are going to put the country at risk by 
moving away from a fiscal policy that we know works and taking three-
quarters of a trillion dollars from surpluses that do not yet exist and 
giving big tax breaks.
  This amendment is the House tax bill. I want to read for the author 
something he probably heard me read yesterday.
  Mr. GRAMM. Will the Senator yield to correct a factual error? First 
of all, there is nothing wrong with the House tax bill.
  Mr. DORGAN. I will yield.
  Mr. GRAMM. This amendment is substantially more focused than the 
House tax bill.
  The PRESIDING OFFICER. Does the Senator yield?
  Mr. DORGAN. I did yield, and he made his point. Reclaiming my time, 
my understanding was it was described as the House tax bill. If you 
have made a couple of grammatical changes to that, so be it. Let me 
make the case, with regard to the House tax bill and, similarly, the 
Senate bill, Kevin Phillips, a Republican columnist, said the 
following:

       We can fairly well call the House legislation the most 
     outrageous tax package in the last 50 years. It is worse than 
     the 1981 excesses. You have to go back to 1948.

  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. HOLLINGS. Two additional minutes.
  Mr. DORGAN. The point I am making is this: This is not a Democrat 
talking. This is a Republican saying this. We all know what is in this 
legislation. This legislation is a piece of legislation that does what 
is always done by the same suspects that bring this to the floor. They 
are always shading, not just shading, they are galloping towards the 
highest end of the income ladder to provide very significant cuts. The 
folks on the lowest rung of the ladder, they pay payroll taxes and they 
are told they don't count. So the lowest 20 percent are going to get a 
$22 tax break; the top 1 percent, $23,300.
  So the question is, when you stand up and say that is unfair, what is 
unfair? That we are telling people what is in your bill? Is that 
unfair? Do you want to change the bill? Do you deny this? Do you want 
to change the bill? Offer an amendment, I will support the amendment to 
change the bill, but don't say it is unfair when we tell people what 
the tax cut is going to be--$22 for the lowest 20 percent of the 
American people, and the $23,300 for the top 1 percent--because you 
have decided that people who pay payroll taxes don't count as taxpayers 
and you don't intend to give them any help. It is the folks at the 
upper end of the income ladder who are going to get huge tax breaks 
from the income tax system.
  Mr. DURBIN. If the Senator will yield for a question, perhaps Bill 
Gates and Donald Trump do need a tax break. Maybe the Senator from 
Texas believes that is a good reason to pass the bill.
  The PRESIDING OFFICER. The Senator's 2 minutes have expired.
  Mr. DURBIN. I ask that the Senator be given 3 additional minutes.
  Mr. HOLLINGS. Three additional minutes.
  Mr. DURBIN. I ask the Senator from North Dakota: Is it true or not 
true that in the last 2 weeks Alan Greenspan, Chairman of the Federal 
Reserve Board, has testified before Congress several different times 
warning us that this kind of tax proposal that is coming from the 
Republican side could jeopardize the economic expansion? Is it not true 
that it is within the power of the Federal Reserve Board, by their 
monetary policy, to raise interest rates if they see indications of 
inflation, and by raising these interests rates, put an additional 
economic burden on families who are paying for their mortgages, family 
farmers who are trying to stay in business, and small businesses alike? 
Is it not true that if we see inflation come on the scene and interest 
rates go up, that a $22 tax break for working families will disappear 
in a heartbeat?
  Mr. DORGAN. Well, that is the case.
  I submit this: In a quiet moment, in a secluded corner, in a private 
conversation, most Members of the Senate who are supporting this three-
quarters-of-a-trillion-dollar tax cut would admit that a better 
approach for this country and its future and certainly its children 
would be to use anticipated surpluses, first, to begin to pay down the 
Federal debt. If during tough times you run up the debt from $1 
trillion to $5.7 trillion and then in good times you say, but we can't 
pay down the debt, there is something fundamentally flawed about that 
strategy.
  I think if you take all the politics and fuzz out of this and get in 
a quiet corner, those who are really conservative and have conservative 
values about these issues as embodied in the fiscal plan we passed in 
1993, I think they would admit that we ought to take some of this 
surplus and reduce Federal indebtedness. I think they would also admit 
there is not an intention to kick 100,000 kids off of Head Start or to 
decimate the education program. Yet that is where we are headed, on 
auto pilot, because this surplus is garnered by those who want to 
package it up in a tax cut that predominantly benefits the upper-income 
folks.
  We ought to do the right thing. The right thing, it seems to me, for 
our children's sake, is to tell them we are going to begin using some 
of this to reduce Federal indebtedness, and for our children's sake, 
that we are going to use some of this to extend the solvency of 
Medicare and Social Security, two programs that have made this country 
a much better place in which to live for millions and millions of 
Americans. We ought to do that. All of us know we ought to do it. 
Regrettably, we are on

[[Page 18375]]

the floor in a perverted process. Reconciliation was never intended for 
this process--never.
  Yet, we are here because it muzzles us up with a 20-hour debate and 
does not allow a full debate about fiscal policy and tax cuts. And I 
say to those on the other side, you will get your bill and have your 
votes and you will pass a bill. But, in my judgment, you will put this 
country at risk because you are spending, through tax cuts, surpluses 
that do not yet exist, just as yesterday you wanted to waive points of 
order on a conference report that had not yet been drafted.
  I yield the floor.
  The PRESIDING OFFICER. The time yielded to the Senator has expired.
  Mr. GRAMM. Mr. President, I want to take a little time off the bill 
to answer all this stuff, but first I want to give Senator Grams an 
opportunity to speak for 5 minutes.
  The PRESIDING OFFICER. The Senator from Minnesota is recognized.
  Does the Senator from Delaware yield time off the bill?
  Mr. ROTH. The Senator from Texas----
  Mr. GRAMM. I am yielding time off the amendment. I will ask for time 
off the bill to answer the points that have been raised.
  The PRESIDING OFFICER. The Senator from Minnesota is recognized.
  Mr. GRAMS. Mr. President, I ask if I may be recognized for up to 10 
minutes.
  The PRESIDING OFFICER. Is there objection?
  Does the Senator yield 10 minutes?
  Mr. GRAMM. Five minutes is all the time I have. I am sorry.
  Mr. GRAMS. Mr. President, I rise to support the tax relief plan 
offered by Senator Phil Gramm. But I also want to talk a little bit 
about what we heard from our Democratic friends and colleagues on the 
other side.
  Make no mistake about it, the surplus dollars out there are going to 
be spent. The question is, Who is going to spend it? Are we going to 
allow it to be returned to the hard-working families and Americans and 
allow them to spend it, or are we going to let Washington spend it? To 
some, it seems that if the taxpayers spend it, it will jeopardize the 
economy, but if we trust the President and trust Washington, the money 
will be spent correctly.
  Also, I heard them talk about 1993 and what a great turnaround in 
fiscal policy for this country it was, and that it was due to their 
efforts that turned this economy around. The CBO finds the increased 
revenues were propelled by personal income tax increases, and it cites 
four reasons for this unexpected revenue: First, the rapid growth of 
taxable income, which raised the tax base for personal income receipts; 
second, adjusted gross income, which has grown even more rapidly than 
taxable personal income, mainly through the realization of capital 
gains--the capital gains tax increased by 150 percent between 1993 and 
1997, which is a third of the growth of the tax liability relative to 
the GDP--third, raising taxes paid on pensions and IRA retirement 
income; fourth, and most important, is the increase in the effective 
tax rate. That is people making a little more money, inflation pushing 
them into the higher brackets, and now not paying 15 percent but 28, 31 
percent or higher.
  By the way, this is also what CBO said. It points out that the 
revenue windfall did not result from legislative policy changes, which 
my Democratic friends have claimed. In other words, the CBO says the 
legislative initiatives taken by the President and the Democrats did 
not generate this surplus; what generated this surplus was the 
investment in the economy by businesses, through the Reagan era of tax 
relief bills, and also by the high productivity, work, and effort of 
the American people. It wasn't by what Washington did; it was in spite 
of what Washington did that led to this.
  So, clearly, all four reasons that we have a surplus are the result 
of the productivity of working men and women and businesses in this 
country.
  Before I run out of time, I want to show you this chart. This depicts 
what is going to happen to the surplus. This is excess money that 
taxpayers have sent to Washington. Here is what I have often said. Here 
we have the man saying, ``I found someone's wallet, and I want to do 
the right thing, so I plan to spend the money carefully.''
  That is what our Democratic colleagues and the President want to do. 
When they find the money on the street, instead of giving it back to 
the people it belongs to, they are going to spend it carefully for you.
  Again, this debate is not over anything except who is going to spend 
the money. As the Senator from North Dakota said, it is a clear, bright 
line. The line is: Do we want Washington to spend your surplus tax 
money, or do we want to return it to you and allow you to spend it on 
your priorities?
  Thank you, Mr. President. I yield the floor.
  Mr. GRAMM. Mr. President, I ask our distinguished chairman to yield 
me 5 minutes off the bill.
  Mr. ROTH. I yield 5 minutes off the bill to the Senator from Texas.
  Mr. GRAMM. Mr. President, in Ronald Reagan's own words, I want to 
take our Democrat colleagues down memory lane. They have such fond 
memories of what President Clinton has done, and I would like to tell 
the rest of the story. It is true that Bill Clinton was elected 
President. It is true that he came to Washington and proposed the 
largest tax increase in American history. It is true that not one 
Republican voted for that tax increase. It is true that it passed by 
one vote. It is true that the largest tax increase in American history 
now bears heavily on working Americans.
  Everything else they said is not true. Let me try to explain why. 
They quote people saying harsh things about the Clinton program. Let me 
tell you the rest of the program. The rest of the program was a massive 
stimulus program where the Clinton administration proposed spending $17 
billion, in 1993 alone, on everything from ice skating rink warming 
huts in Connecticut to alpine slides in Puerto Rico. I had harsh things 
to say about it, and I am proud of that. I am very proud that 
Republicans, who were in the minority, killed that bill with a 
filibuster.
  Bill Clinton didn't just propose the largest tax increase in American 
history, he proposed having Government take over and run the health 
care system, collectivizing American medicine, forcing everybody into a 
Government-run health care collective, which was a giant HMO run by the 
Government. It would have meant Government taking over one-eighth of 
the American economy. I said it would be a disaster. I am proud that I 
helped lead the effort to kill it, and I am proud that it is dead where 
it belongs. That is the Clinton program. The point is, we were able to 
defeat every part of it, except the tax increase.
  Now, when the Republican majority showed up in Washington, DC, in 
January of 1995, they received this budget from President Clinton. On 
page 2 of this budget, President Clinton outlines what his budget was. 
It had a deficit for fiscal year 1995 of $192 billion, and then the 
next year $196 billion, $213 billion, $196 billion, $197 billion, and 
$194 billion. That was the Clinton budget.
  But we elected a Republican majority in Congress. What happened? With 
that Republican majority in Congress, we were not able to pass every 
bit of our Contract With America, but we reformed welfare, we cut 
spending, we stopped the runaway spending freight train of Bill 
Clinton. And under a Republican majority, while Clinton's deficits 
looked like this, the real deficit started to fall and turn into a 
surplus which is indicated on the chart.
  The question is, Who led, who followed, and who got out of the way? I 
believe that the Republican Congress led, the Democrats in Congress 
followed, and Bill Clinton got out of the way.
  So if we are going to tell the history of what happened in the 
Clinton era, let's not just remember his tax increase, let's remember 
his stimulus package, which we killed. The Democrat majority could not 
get 60 votes, and it died. Clinton was heartbroken, but it died. And we 
defeated the Clinton health care bill. It would have taken over one-
eighth of the American economy, and Americans were so shocked at the 
Clinton program that

[[Page 18376]]

they elected the first Republican majority since the 1950s.
  When we took over, things changed. With the same old Bill Clinton who 
was here in 1995, when the deficit was $200 billion, what changed was 
the Republican majority.
  I just say to the American people, give us a Republican President, 
and we will again control spending, and we will let working people have 
more of what they earn.
  Mr. President, I yield Senator Hagel 5 minutes off the amendment.
  The PRESIDING OFFICER. The Senator from Nebraska is recognized.
  Mr. HAGEL. Mr. President, thank you.
  I first want to add my thanks to the chairman of the Finance 
Committee, Senator Roth, for the leadership he has brought to the floor 
on such an important issue on a very substantive vehicle that we are 
using now to really make some decisions on behalf of the American 
public.
  I have heard this morning that this is an issue about priorities. 
Surely it is. This is about priorities. This will further be about 
priorities as we debate this issue throughout the day, and actually 
throughout this year and into next year, because the priorities are 
about whose money it is. It is not my money. It is not Senator Gramm's 
money. It is not President Clinton's money. It is the taxpayers' money. 
We tend to allow that to slip aside here when we are engaged in this 
theoretical debate.
  Second, we all have to appreciate that we live in the mythical 
kingdom around here. The political kingdom says that all the clouds and 
all the goodness will reside here in the knowledge and the fountain of 
wisdom coming forth from Washington. We are seeing a great dynamic of 
that given when we are trying to take the people's money and then tell 
them how we will spend it and give it back to them because we are 
benevolent Senators; we are benevolent representatives of the people; 
we can figure it out better.
  If there is a sense of arrogance in this, I think you are right if 
you sense that, that the Congress is going to decide who gets what; we 
are going to make that decision. So we are going to target all of these 
pieces of the pie because we can decide better for the American people 
how they should spend their money, if we decide to give them back some 
of their money.
  I have also heard some interesting conversations this morning about 
projections. As a matter of fact, I used to have a real job, and in 
that real job I was a businessman. I had to deal with projections 
because I had to put together budgets. Those budgets had to direct 
research and development. Those budgets had to direct investment, 
capital, and what we were doing for the long term. Yes, they are 
imperfect. Ten-year budgets are slippery, and they are dangerous. But 
the fact is, we must base a budget upon something. That budget must be 
based upon a relevant series of assumptions. So that is a given, and we 
have to deal with that.
  After we get through that, then we have to make some tough decisions. 
That is what we are going through today. I believe this bill that we 
have brought to the floor this morning does that. I think it does it 
first in a very responsible way. It does it in a way that allows 75 
cents of every surplus dollar to go back into debt reduction projects--
Social Security, Medicare, important Government programs such as 
defense. The first real obligation of responsibility of the Federal 
Government is national security--veterans programs, education, medical 
research, and health care. That money is there.
  We are talking about a $3 trillion budget surplus--both on the budget 
and off the budget, meaning in Social Security and out of Social 
Security--$3 trillion over the next 10 years. I don't know if that is 
going to materialize, but one of the things we know is that we have to 
make some tough decisions based upon what we know and what we project. 
This bill does it very responsibly. It does it in a way that addresses 
those needs of our Republic and what we have committed to the American 
public.
  My goodness, to say that giving 25 percent of that back to the 
American public in a tax cut is somehow irresponsible is well beyond my 
calculations.
  Senator Mack was on the floor yesterday. I want to repeat a couple of 
points he made. One, he said, for example, how can a $4 billion net tax 
cut for fiscal year 2000 overstimulate demands in a trillion-dollar 
economy? Of course, as of now, this bill phases in those tax cuts over 
a series of 10 years.
  Senator Mack said yesterday, and as my colleague again reminded us, 
he asked rhetorically, ``Would a $39 billion tax cut in the year 2002 
overheat the economy when this is only .004 percent of the total 
projected GDP?''
  I think you get the message.
  We are engaged once again in this mythical kingdom of fantasy. The 
fact is, this money is the taxpayers' money. The fact is, this is a 
responsible direction of those resources that surely, if they are 
allowed to stay here in Washington, will be spent.
  The President has given us ample opportunity to look over that very 
generous menu he has presented to us with all of his new spending.
  Mr. President, I strongly support this amendment.
  I yield my time.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. MOYNIHAN. Mr. President, I think our distinguished friend and 
colleague, Senator Hollings, is next.
  The PRESIDING OFFICER. The Senator from South Carolina.
  Mr. HOLLINGS. I thank the Senator.
  Mr. President, on behalf of myself and the distinguished Senator from 
Connecticut, Senator Lieberman, I send a motion to the desk in 
accordance with the rule, by 2 o'clock, that they be filed and we 
intend to make later today.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. HOLLINGS. I thank the distinguished Chair.
  Let me just say quickly to clear the record that the Senator from 
Texas was talking about what the Republicans have done for the economy.
  I can tell you what they have done for the economy. They came in 
1995, and for 1996 they worked, of course, on the budget. They 
immediately increased spending for the next year of $148 billion. They 
increased spending, and the budget went up another $50 billion. This 
year, of course, it is another $50 billion, and they have added. The 
track record will show that they have added $661 billion to the 
national debt.
  But what did President Clinton do in 1993? And we did not have the 
largest tax increase. That was under Senator Dole. I will show the 
articles analyzing both.
  But I readily acknowledge that I voted and supported and worked like 
a tiger to get the Deficit Reduction Act of 1993 passed, which 
prevailed by one vote. Yes, we did cut spending, we did downsize over 
300,000 Federal jobs. But more than anything else, yes, we raised 
taxes.
  The Senator from Texas, when we raised the taxes on Social Security, 
was adamantly opposed to that, and he said--I will use his expression--
you increase taxes on Social Security and they will hunt you Democrats 
down in the streets and shoot you like dogs.
  The Senator from South Carolina never forgot that expression. That is 
how tough we had it. They were going to hunt us down.
  Of course, the chairman of the Finance Committee at that time, 
Senator Packwood, said, ``I will give you my home if this thing 
works.'' The chairman of the House Budget Committee, Mr. Kasich, said, 
``I will change parties and become a Democrat if this thing works.'' 
And it is working.
  That is a tremendous frustration I have because it is working. We 
have the lowest unemployment, the lowest inflation, and the economy is 
moving along. Mr. Greenspan, not just on yesterday but earlier in the 
year, in February, said stay the course.
  My usually responsible Republican friends--I come from a Republican 
State, unfortunately--have given us what was called outrageous on 
Monday by the best of the best conservatives, Kevin Phillips--I ask 
unanimous consent that this be printed in the Record.

[[Page 18377]]

  There being no objection, the material was ordered to be printed in 
the Record, as follows:

    Commentary by Kevin Phillips on National Public Radio's Morning 
                     Edition, Monday, July 26, 1999

       Bob Edwards: 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:
       Kevin Phillips: Tax bills often deal with Pie in the Sky. 
     The mind boggling ten-year cuts passed late last week by the 
     House of Representatives however deserve a new term: Pie in 
     the Stratosphere. 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. The most publicized provision, phased in 
     ten-percent across the board reductions in federal income tax 
     rates, looks excessive. But these at least stand to be 
     delayed by a legislative trigger, if surpluses and debt-
     reduction don't occur as assumed. Not so for the truly venal, 
     smaller provisions. Ones too complicated to be explained in 
     40 seconds on the TV news shows. Democrats are certainly 
     correct about the imbalance of benefits by income group. 
     Treasury figures show that the top 1% of families, just 1%, 
     would get 33% of the dollar cuts, the bottom 60% of families 
     get a mere 7%. Conservatives reply that the tax cuts are 
     simply going to the people who pay the taxes and have the 
     incomes. That's partly true. The top 1% of families have 
     about 13% of the nation's income but that's under an official 
     definition that excludes capital gains. If you include 
     capital gains in household income, the top 1% may indeed have 
     some 20% to 30% of the national total these days. Which gets 
     us to the real guts of this bill: Two low profile, but high 
     favoritism provisions. First, reduction of the top federal 
     capital gains tax rate from 20% to 15% and, second, the 
     phasing out of the federal gift and inheritance taxes. Both 
     changes would concentrate a huge portion of their benefits in 
     the top 1%.
       The top 1% of American taxpayers reported about 60% of the 
     taxable capital gains dollar values several years back. To 
     reduce their capital gains rate from today's 20% to 15% is 
     unnecessary in terms of investment stimulus. All of the bull 
     markets of the last 50 years have occurred when the top cap 
     gains rate is in the 20 to 28% range. The bills special 
     interest provisions phasing out the Federal estate and gift 
     taxes over the next decade could be even more costly. 
     Demographers say life expectancies ending in the years 2000 
     to 2010 will send a tidal wave of estates through the 
     inheritance processes. The top 1% of families have the great 
     dollar bulk of what are now taxable estates and if these are 
     not substantially taxed, wealth and position in America will 
     be more and more inherited, not earned.
       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 in Wall Street. Not only did he 
     win reelection, but the Democrats recaptured Congress. We'll 
     see if Bill Clinton and Albert Gore have anything resembling 
     Truman's guts.
  Mr. HOLLINGS. Mr. President, one sentence of his commentary: ``We can 
fairly call the House legislation the most outrageous tax package in 
the last 50 years.''
  That is why I come to the floor to speak. I agree with Mr. Phillips. 
This tax bill turns everything on its backside when we have a good 
going economy, and the Republicans come in with, of all things, a tax 
cut. How come? I will tell Members exactly. I can't find out what was 
first, the chicken or the egg, but OMB got into this blooming 2000 
election, and CBO has a Republican--not any Alice Rivlin or Bob 
Reischauer, but they have a Republican fix--Mr. Crippen over at CBO. I 
have been working on this budget since we passed it back in 1973.
  Both CBO and OMB started finding money. How we could as a party put 
in tax cuts and have the real issue for the election 2000.
  This is very interesting. You don't find the word ``unified, unified, 
unified.'' That is all I have heard for the last 20 years--unified. It 
is not a unified budget. It is an outright budget surplus. That is what 
the CBO called it. It is not a budget surplus at all. The fact is, and 
I will quote the figures, the debt goes up each year for the next 5 
years.
  I ask unanimous consent to have printed in the Record from the CBO 
report on page 19.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                 TABLE 10.--CBO BASELINE PROJECTIONS OF INTEREST COSTS AND FEDERAL DEBT (BY FISCAL YEAR)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Actual
                                                1998     1999     2000     2001     2002     2003     2004     2005     2006     2007     2008     2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INTEREST OUTLAYS (BILLIONS OF DOLLARS)
 
Interest on Public Debt (Gross interest) \1\      364      356      358      358      350      345      342      338      333      328      323      316
Interest Received by Trust Funds:
    Social Security.........................      -47      -53      -59      -67      -74      -82      -91     -100     -110     -121     -132     -144
    Other trust funds \2\...................      -67      -68      -70      -73      -74      -76      -79      -81      -84      -87      -89      -92
                                             -----------------------------------------------------------------------------------------------------------
        Subtotal............................     -114     -120     -129     -140     -148     -159     -170     -182     -194     -208     -222     -236
Other interest \3\..........................       -7       -7       -6       -7       -7       -7       -8       -8       -8       -8       -8       -9
                                             -----------------------------------------------------------------------------------------------------------
            Total...........................      243      229      222      212      194      179      164      148      131      112       92       81
 
                                                FEDERAL DEBT AT THE END OF THE YEAR (BILLIONS OF DOLLARS)
 
Gross Federal Debt..........................    5,479    5,582    5,664    5,721    5,737    5,760    5,770    5,770    5,732    5,675    5,600    5,500
Debt Held by Government Accounts:
    Social Security.........................      730      856    1,003    1,157    1,321    1,493    1,675    1,869    2,075    2,292    2,520    2,755
    Other accounts \2\......................    1,029    1,107    1,188    1,267    1,350    1,431    1,510    1,589    1,666    1,743    1,813    1,880
                                             -----------------------------------------------------------------------------------------------------------
        Subtotal............................    1,759    1,963    2,190    2,425    2,670    2,925    3,185    3,458    3,741    4,035    4,333    4,635
Debt Held by the Public.....................    3,720    3,618    3,473    3,297    3,066    2,835    2,584    2,312    1,992    1,640    1,267      865
Debt Subject to Limit \4\...................    5,439    5,543    5,626    5,684    5,700    5,724    5,734    5,736    5,699    5,643    5,568    5,469
 
                                                 FEDERAL DEBT AS A PERCENTAGE OF GROSS DOMESTIC PRODUCT
 
Debt Held by the Public.....................     44.3     40.9     37.5     34.2     30.5     27.1     23.7     20.3     16.8     13.2      9.8     6.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Excludes interest costs of debt issued by agencies other than the Treasury (primarily the Tennessee Valley Authority).
\2\ Mainly Civil Service Retirement, Military Retirement, Medicare, unemployment insurance, and the Airport and Airway Trust Fund.
\3\ Mainly interest on loans to the public.
\4\ Differs from the gross federal debt primarily because most debt issued by agencies other than the Treasury is excluded from the debt limit. The
  current debt limit is $5,950 billion.
 
Source: Congressional Budget Office.
 
Note: Projections of interest and debt assume that discretionary spending will equal the statutory caps on such spending through 2002 and will grow at
  the rate of inflation thereafter.

  Mr. HOLLINGS. Gross Federal debt, on page 19: In the year 1999, 
$5.582 trillion; it goes to $5.664 trillion; 2001, $5.721 trillion; 
2002, $5.737 trillion; 2003, $5.760 trillion; 2004, $5.770 trillion.
  Up, up, and away. Deficits, not surpluses; deficits--the 
Congressional Budget Office says--as far as the eye can see.
  The Republicans were going to take the $1.9 trillion of Social 
Security. We have to not get into Social Security. We have to find $1 
trillion for the tax cut about which we have been talking. So they said 
we have another $1 trillion. How do we do it? They said--at least the 
Republicans, and I will limit my comment to that because that is what 
they have in this particular amendment--they said: Let's not just have 
current policy. Let's stick to the spending caps that we put in.
  They violate the spending caps. They violated it again last year, $21 
billion, and we already are up to $17 billion and it is going to be at 
least $35 billion or $40 billion or more at the end of this year--
already in violation of the caps. When the majority says they keep the

[[Page 18378]]

caps on with no emergency spending and the economy stays at a growth of 
around 2 to 2.5 percent. The chairman of the Budget Committee on Sunday 
said CBO estimated two recessions--That is not right and I would like 
to correct that. CBO in this book does not project any recession during 
the next 10 years, rather 2.5-percent growth.
  If you can get all of that growth you can get and have unemployment 
staying the same way, inflation staying way down, interest rates down, 
you obey the caps and you have no emergencies whatever. And then you 
find some money.
  However, I point out that they knew where most of the money, 80 
percent, was coming from--the other trust funds.
  I ask unanimous consent to have printed in the Record that page in 
the report, Trust Funds Looted to Balance the Budget.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                  TRUST FUNDS LOOTED TO BALANCE BUDGET
                      [By fiscal year, in billions]
------------------------------------------------------------------------
                                                 1999     2000     2004
------------------------------------------------------------------------
Social Security..............................      857      994    1,624
Medicare:
  HI.........................................      129      140      184
  SMI........................................       39       44       64
Military Retirement..........................      141      148      181
Civilian Retirement..........................      490      520      634
Unemployment.................................       79       88      113
Highway......................................       25       26       32
Airport......................................       11       14       25
Railroad Retirement..........................       23       24       28
Other........................................       57       59       69
                                              --------------------------
      Total..................................    1,851    2,057    2,954
------------------------------------------------------------------------

  Mr. HOLLINGS. So we have the other trust funds to the tune of a 10-
year period of $800 billion. We have $1 trillion to spend and that is 
the gamesmanship. There actually is no surplus. They are increasing 
deficits. If you don't believe CBO, believe at least the President.
  I ask unanimous consent to have printed page 43 of the OMB report.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                                TABLE 22.--FEDERAL DEBT WITH SOCIAL SECURITY AND MEDICARE REFORM
                                                                                    [In billions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                         Estimates                                                                 Projections
                                           -----------------------------------------------------------------------------------------------------------------------------------------------------
                                              2000      2001      2002      2003      2004      2005      2006      2007      2008      2009      2010      2011      2012      2013      2014
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Debt held by the public:
    Debt held by the public, beginning of      3,653     3,531     3,404     3,255     3,101     2,933     2,744     2,525     2,262     1,964     1,625     1,249       944       637       335
     period...............................
    Debt reduction from:..................  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
        Off-budget surplus:                 ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........  ........
            Surplus pending Social              -137      -144      -154      -165      -175      -193      -202      -215      -225      -233      -243      -246      -248      -246      -241
             Security and medicare reform.
            Social Security solvency               0         0         0         0         0         0         0         0         0         0         0      -107      -125      -145      -166
             transfers....................
            Returns on investment of               0         0         0         0         0         0         0         0         0         0         0        -3       -14       -27       -43
             transfers \1\................
        Medicare solvency transfers.......        -5        -0       -12        -5        -7       -10       -29       -59       -83      -113      -142       -67       -68       -65       -58
    Less purchase of equities by Social            0         0         0         0         0         0         0         0         0         0         0       110       139       172       209
     Security trust fund \1\..............
    Other financing requirements \2\......        21        17        17        16        15        13        12        11         9         8         8         8         8         9         9
                                           -----------------------------------------------------------------------------------------------------------------------------------------------------
            Total changes.................      -122      -127      -150      -154      -167      -189      -219      -263      -298      -339      -376      -305      -307      -302      -291
                                           -----------------------------------------------------------------------------------------------------------------------------------------------------
    Debt held by the public, end of period     3,531     3,404     3,255     3,101     2,933     2,744     2,525     2,262     1,964     1,625     1,249       944       637       335        44
    Less market value of equities.........         0         0         0         0         0         0         0         0         0         0         0      -110      -248      -420      -629
    Debt held by the public, less equity       3,531     3,404     3,255     3,101     2,933     2,744     2,525     2,262     1,964     1,625     1,249       834       388       -85      -585
     holdings, end of period..............
Debt held by Government accounts:
    Debt held by Government accounts,          1,962     2,172     2,377     2,612     2,848     3,096     3,363     3,667     4,012     4,394     4,823     5,299     5,822     6,374     6,949
     beginning of period..................
    Increase prior to Social Security            205       204       222       230       240       254       271       280       289       299       310       315       318       317       314
     reform...............................
    Social Security and Medicare solvency          5         0        12         5         7        10        29        59        83       113       142       173       193       210       224
     transfers............................
    Earnings on solvency transfers                 0         0         1         1         2         2         3         6        11        17        25        35        42        48        55
     invested in Treasury securities......
    Less purchase of equities by Social            0         0         0         0         0         0         0         0         0         0         0      -110      -139      -172      -209
     Security trust fund \1\..............
                                           -----------------------------------------------------------------------------------------------------------------------------------------------------
            Total changes.................       210       204       235       236       249       266       304       345       382       429       476       523       552       575       593
                                           -----------------------------------------------------------------------------------------------------------------------------------------------------
    Debt held by Government accounts, end      2,172     2,377     2,612     2,848     3,096     3,363     3,667     4,012     4,394     4,823     5,299     5,822     6,374     6,949     7,543
     of period............................
    Plus market value of equities.........         0         0         0         0         0         0         0         0         0         0         0       110       248       420       629
                                           -----------------------------------------------------------------------------------------------------------------------------------------------------
    Debt and equities held by Government       2,172     2,377     2,612     2,848     3,096     3,363     3,667     4,012     4,394     4,823     5,299     5,932     6,623     7,369     8,172
     accounts, end of period..............
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes accrued capital gains.
\2\ Primarily credit programs.
 
Note: Projections for 2010 through 2014 are an OMB extension of detailed agency budget estimates through 2009.

  The page shows increasing deficits going up. The national debt goes 
up from $5.6 trillion to about $7.6 trillion; $7.587 trillion over 15 
years.
  What do we have? We have an increase in the debt of Social Security 
of which the distinguished chairman has the jurisdiction. They owe it 
$857 billion. In 10 years, they will owe Social Security $2.7 trillion 
and they are talking about saving Social Security--lockbox. This is a 
shameful sideshow out here. There is no dignity left in this Senate. No 
responsibility.
  If they can put up a chart, run away, whine, and say the people back 
home know how to spend--if we have all the money, why can't the people 
get it back? They didn't give it back to the Social Security people 
when he was going to shoot me in the streets. They didn't give it back 
to where they came from, the wage earners, the payroll tax.
  Oh, no, as the Senator from North Dakota said, the rich get it all. 
Come on. It seems as if there would be a conscience in this crowd. I 
don't think this will sell with the American people when they hear the 
truth. That is what I am trying to give them here today--the truth.
  The distinguished Senator from Texas comes up. I knew it because I 
have been working at his side in previous years. He comes up and the 
first thing he said is the real problem is how to give it, and the best 
was ``across the board.'' I knew he was going to get to Dicky Flatt. He 
immediately changed subjects and the debate became the Gramm amendment, 
which is supposed to go between workers, wage earners, and deadbeats. 
If he can put that one over, then he has won the day with the hard-
working people and Dicky Flatt.
  Come on, give us a break. We have been through that. There is no 
education in the second kick of a mule.
  We have a good economy. Alan Greenspan, the best of the best, who has 
helped us maintain that, says stay the course. The Hollings-Lieberman 
motion is not to take sides in this intramural between tax cuts and 
spending. But just saying: Finance Committee, come back with a bill 
that says any surplus you find, apply it to reducing the national debt. 
Let's all go home. I think we will win the approval of the American 
people.
  Now, not coming in with all of the lockboxes, that immediately puts 
back the money into IOUs. They issue these Treasury bills, which are 
nothing more than an IOU under section 201 of Social Security, and then 
they spend the money on other things. There is not any true lockbox.

[[Page 18379]]

  We had an amendment and I showed that to the majority leader. I 
circulated it to all the Senators. That is why if they allow us to put 
our amendments up, including my amendment to cap the debt, we will get 
the truth. All I want to do is say cap the debt as of September 30, 
1999. If you have nothing but surpluses, then run around asking how to 
spend it or how to give a tax cut or whatever.
  I will agree that you are right if there is a surplus. But the debt 
won't go down at the end of the fiscal year. They didn't want that 
vote. That is why we are in a filibuster about the lockbox. Somehow, 
somewhere, we have to get the truth out and cut out this whining about 
the people back home know how to spend their money. The point is, you 
cannot cut taxes without increasing spending. That is the great fiscal 
cancer we have developed in the 1980s with the Reagan tax cuts. The 
national debt was less than $1 trillion, less than $1 trillion at that 
particular time. Now we have a $5.6 trillion debt. With all of that 
``growth, growth, growth--we are going to have growth everywhere,'' 
what has grown is the national debt with an interest cost of $1 billion 
a day.
  I served on Peter Grace's commission against waste, fraud and abuse. 
The only thing Congress created was the biggest waste of all, spending 
$358 billion in interest costs. If we had that $358 billion, we could 
do all these things--Social Security, Medicare, research, tax cuts and 
everything else. We are going to spend it on account of a political 
sideshow and use our credibility to get by. The reason we credibility 
get by, and I will finish in a moment. We had a wonderful debate in the 
1930s. I will listen to that any time.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. MOYNIHAN. Mr. President, off the bill we yield the Senator 2 
minutes.
  The PRESIDING OFFICER. The Senator is recognized for an additional 2 
minutes.
  Mr. HOLLINGS. We had a wonderful debate in the 1930s between Walter 
Lippmann and John Dewey. It was Mr. Lippmann's contention that the way 
to maintain and strengthen a democracy was get the best of minds in the 
various disciplines--foreign policy, economic policy, housing, 
whatever--get them around the table, determine the public's needs, the 
Nation's needs, determine a policy to answer those needs, and give it 
to the politicians in Congress and let them enact it.
  John Dewey, the educator, said no. He said give the American people 
the truth. Let the free press give the American people the truth, and 
the truth will be reflected through the Congressmen and the Senators in 
the Congress and we will have a strong democracy. And that is what we 
did for 200-and-some years. As Jefferson said, ``When the press is free 
and every man can read, all is safe.''
  What has happened? We are not safe any longer because the press has 
gotten into entertainment and they have joined the conspiracy and they 
call spending increases spending cuts and they call deficits surpluses. 
That is our dilemma. That is our dilemma. The only thing that is going 
to save us is that free press getting back to their professional code 
of conduct, and cut out the entertainment, and get back to telling the 
American people the truth. Then we would not have to argue about tax 
cuts. It has to be an embarrassment to come out here with a tax cut. It 
would be an embarrassment to come out here and just spend billions and 
billions of dollars that we do not have. This year we are spending $103 
billion more than we are taking in. We are in a deficit position.
  I thank the Chairman and I yield the floor.
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mr. GRAMM. I yield 5 minutes to the distinguished Senator from Texas.
  The PRESIDING OFFICER. The distinguished Senator from Texas is 
recognized for 5 minutes.
  Mrs. HUTCHISON. Mr. President, I want to address some of the issues I 
just heard from the Senator from South Carolina. The first is quoting 
of Alan Greenspan, the Chairman of the Federal Reserve Board. I believe 
Dr. Greenspan's comments have been taken far out of context. Because if 
you look at what he said, plainly it is if the choice is more spending 
or tax cuts, I will take tax cuts.
  It is true he said he would be very cautious.
  Mr. HOLLINGS. Will the distinguished Senator yield?
  Mrs. HUTCHISON. I will yield on your time.
  Mr. HOLLINGS. The Senator was correct in what I was saying. I said 
nothing about tax cuts--I favored those over spending. I said in my 
motion there is a surplus that we apply to reducing the national debt, 
and I quoted Mr. Greenspan as of February, when he said, ``Stay the 
course.'' I didn't say Greenspan said I prefer tax cuts over spending. 
I did not use that quote.
  Mrs. HUTCHISON. Dr. Greenspan said: If it is a choice of tax cuts 
versus spending, he takes tax cuts. Paying down the debt is exactly 
what the Republican plan does. So I think it is very important we keep 
Dr. Greenspan's comments in context.
  If you look at the President's plan, he takes $1 trillion and spends 
it. The Republican plan takes the same $1 trillion and gives $792 
billion back to the people who earned the money, and we have a cushion 
for spending on issues such as Medicare and education in the rest of 
the $1.3 trillion in surplus that comes from income tax withholding.
  The Republican plan takes all of the payroll taxes that we heard the 
Senator from North Dakota talk about and puts that into Social Security 
reform and stability. So when we are talking about a lockbox, we are 
saying all the payroll taxes for Social Security that people pay in 
will be set aside for Social Security. That is $2 trillion. That is 
exactly what the President's plan sets aside for Social Security.
  It also has the effect of paying down debt by about 50 percent, 
according to the estimates. So you pay down debt and you stabilize 
Social Security with $2 trillion that is set aside from the payroll 
taxes that people pay in.
  But for the other $1 trillion we are looking at that comes from 
income tax withholding, we have very different plans. The President 
would spend it. The Republicans would let the people who earned it keep 
it, and we would hold the rest in abeyance for spending on Medicare, 
education, national defense.
  Why do we want the people who earn this money, who work so hard for 
it, to be able to keep it? Because we believe the people who earn it 
need the relief for their own purposes--for them to decide how they 
want to spend their money. The typical American family is paying more 
in income taxes in peacetime than ever in our history--38 percent in 
income taxes. A 10-percent across-the-board tax cut is fair to 
everyone. Because when people paid their taxes last year--they know 
what they paid, and they can take 10 percent off that. That is the most 
fair of all tax cuts, to let people keep more of what they earn. In 
fact, our tax relief package is less than the tax increases that 
President Clinton put in place in 1993. At that time, President Clinton 
said he was going to tax the rich and he put in that category people on 
Social Security who earned $34,000 a year. That is what he declared as 
rich. I think these people deserve a break, and that is what we are 
trying to give them.
  We are giving marriage tax penalty relief. This morning at my 
constituent coffee, I met a schoolteacher and a football coach. I am 
going to estimate they earn about $35,000 and about $40,000 apiece. 
They get hit right square between the eyes with the marriage penalty 
because when you put their incomes together, they go into a new 
bracket. They are earning, then, $65,000 to $70,000 for a family of 
four.
  That is wrong. We should not tell people because they get married 
that they owe more in taxes, just because they got married.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mrs. HUTCHISON. Mr. President, did Senator Hollings' question come 
off his time or mine?
  The PRESIDING OFFICER. It came off of his time.

[[Page 18380]]


  Mrs. HUTCHISON. Mr. President, it is time we provide marriage tax 
penalty relief, tax relief across the board, death tax relief so people 
will not have to visit the undertaker and the tax collector on the same 
day and give up the family farms that have had to be sold because of 
death taxes. That is wrong. This amendment will correct that situation. 
It is time we give relief to the hard-working people of our country.
  I yield the floor.
  The PRESIDING OFFICER. The time of the Senator has expired.
  The distinguished Senator from Minnesota is recognized.
  Mr. WELLSTONE. Mr. President, I understand I have 10 minutes. I will 
try to cut that in half in the interest of moving this along.
  I cannot believe the amendment that is before this body. I am 
speaking about the Gramm amendment. The Center on Budget and Policy 
Priorities does very good work, as does Citizens for Tax Justice. Let's 
take the 10-percent tax rate cut across the board: this is what they 
say. 60 percent of the benefits of this tax cut will go to 10 percent 
of the taxpayers with the highest income. The bottom 60 percent of all 
taxpayers will share just over 9 percent of the total benefits under 
this plan. The average tax cut under the Gramm amendment, for the 
lowest income, 60 percent of all taxpayers, those with incomes below 
$38,000, will be about $99.
  By contrast, those in the top 10 percent will enjoy an average tax 
cut of about $4,000. Tax cuts for the 1 percent highest income, those 
making more than $300,000 a year, will average $20,000 a year. I am not 
even talking about estate and capital gains tax cuts, which make the 
Gramm amendment even more regressive.
  To pick up on the comments of my colleague from South Carolina, the 
original House Ways and Means Committee proposal in the second 10 years 
would explode the debt, costing $2.8 trillion. This may be only $2 
trillion. But even here, $2 trillion is a lot of money. From 2010 to 
2019, this tax cut package in the Gramm amendment will probably cost 
about $2 trillion. That is what it will cost us.
  Mr. President, Kevin Phillips, in some commentary the other day on 
``Morning Edition,'' talked about the House proposal. I think what he 
said applies to this Gramm amendment:

       The mind-boggling 10-year cuts passed late last week by the 
     House of Representa
     -tives . . . deserve a new term: [Not pie in the sky but] pie 
     in the stratosphere.

  That is what this Gramm amendment is: pie in the stratosphere.
  Sometimes my colleagues on the other side of the aisle--and I say 
this with a twinkle in my eye, it is never hatred; we always enjoy our 
work--they will accuse some of us of class warfare. I say to my 
colleague from Texas, this is class warfare. This is class warfare: 60 
percent of the benefits go to the top 10 percent of all taxpayers. The 
bottom 60 percent gets 9 percent. The average tax cut for most of the 
people in my State of Minnesota is about $99. But if you make over 
$300,000 a year, there will be an average tax cut of $20,000 a year. I 
say to my colleague from Texas, this is class warfare. That is what his 
amendment is.
  In some ways, I am glad to fight this war because the vast majority 
of people in this country, when they realize who gets the benefits and 
who does not, when they realize what this amendment does in the second 
10 years, here is what they are going to say. They are going to say: We 
heard enough about how this surplus belongs to us. We are responsible 
adults. We are responsible parents and grandparents, and we believe 
that whatever the performance of our economy--and I hope it will be 
good; we do not know, this is all assumed--and whatever we have by way 
of surplus, here is what we believe: We believe that it does not belong 
to us; it belongs to our children and our grandchildren.
  That means we pay off some of the debt we put on their shoulders, and 
that means we also make sure that Medicare and Social Security are 
there for them. It also means our children and our grandchildren, 
regardless of whether they are rich or poor, have opportunities; that 
there is equal opportunity for every child. That is what the American 
people believe. That is what Minnesotans believe.
  I love this Gramm amendment. I love it because I think it presents in 
the clearest possible way to people in Minnesota and people in the 
country what we are about, whose side we are on. It is a class warfare 
amendment, and it should be trounced in a vote. I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. MOYNIHAN. I yield the Senator from Michigan 10 minutes.
  The PRESIDING OFFICER. The distinguished Senator from Michigan is 
recognized for 10 minutes.
  Mr. LEVIN. I thank the Chair. Mr. President, I thank my good friend 
from New York.
  The tax program which is in the amendment before the Senate, like the 
plan that it would amend, is unfair to middle-income Americans. It is 
economically unwise, and it is based on unrealistic assumptions. The 
unfairness in the underlying bill it would amend is perhaps best shown 
in the fact that about two-thirds of its tax benefits go to the upper 
one-fifth of our people. The amendment makes that worse. It makes an 
unfairness doubly unfair because it will give almost 80 percent of the 
tax benefits to the upper one-fifth of the income bracket.
  In addition to being unfair, it is also economically unwise because 
it jeopardizes Medicare, it fails to strengthen Social Security, and it 
risks higher interest rates. Yesterday, Alan Greenspan, testifying 
before the Banking Committee said:

       We probably would be better off holding off on a tax cut.

Why? Because of the uncertainty of budget surplus projections and also 
because we should normally reserve tax cuts for periods of economic 
slowdown.
  The implication, in his words, has also been pretty clear over these 
last few months, which is that a large tax cut would cause the Fed to 
increase interest rates. For the average middle-income taxpayers, a 
rise in interest rates means larger mortgage payments, larger loan and 
credit card payments, larger payments on that automobile, and that 
would far outweigh the small share of the benefits from the tax cut 
which that average taxpayer might receive.
  The tax program that is being offered to us is also based on 
unrealistic projections. Projections are always risky. We have seen 
many Federal budget estimates, and we know that as quickly as the 
surpluses appear, they can disappear. The estimates of both the 
Congressional Budget Office and the Office of Management and Budget 
have frequently been far off the mark in recent years, and that is not 
their fault. We have some bright economists in the CBO and the OMB. 
They have a difficult task. Forecasting the performance of the economy, 
particularly over the course of several years, is more art than 
science, and there is a lot of guesswork in it.
  For instance, the CBO estimated that the unified budget surplus for 
fiscal year 2000 will be $79 billion. But 4 months later, in a January 
1999 CBO document, the surplus for fiscal year 2000 was estimated at 
$130 billion. In 4 months, it jumped from a $79 billion estimate to a 
$130 billion estimate. The July estimate for fiscal year 2000 now 
projects a $161 billion surplus. So there has been a change of over 100 
percent in the projection of the surplus in less than a year. If most 
Americans were confronted with such uncertainty over their own budget 
situation, they would follow a cautious course, and we should, too.
  The projections in both the underlying proposal and the pending 
amendment to it are extremely risky because they are based on 
assumptions about domestic spending levels that are highly unrealistic. 
The on-budget surplus, which the Republicans now say will pay for the 
tax cut, is reliant largely on massive cuts in discretionary spending, 
$595 billion over 10 years. That is a 23-percent cut in real terms from 
the 1999 level adjusted for inflation. Can we really believe we will be 
cutting discretionary programs by 23 percent in real terms?
  Is that what we are doing now?

[[Page 18381]]

  If a realistic defense spending level is adopted--even the 
President's proposal; if we assume just that--the domestic spending cut 
will grow to $775 billion over 10 years, which is a 38-percent cut in 
real terms.
  We have seen proof in the last few weeks that these levels are 
unrealistic. The so-called spending caps are already being exceeded by 
attaching emergency spending labels to new funding. We have already 
heard from the chairman of the Appropriations Committee that these 
limits, or caps, are going to be lifted in any event. The House tends 
to use emergency spending to get around the caps. Apparently, we are 
going to be more forthright and just lift the caps.
  So most people in Congress already believe--whether they acknowledge 
this publicly or not--that the caps are simply not going to hold. So we 
already have strong evidence that the basis of the surplus projection 
is not realistic or credible.
  The proposal before us is going to take the economy backwards, just 
as we are climbing out of a deficit ditch.
  In 1992, the deficit in the Federal budget was $290 billion. We made 
remarkable progress which has brought us now to the threshold of 
surpluses. It came in large part because of a deficit-reduction package 
which President Clinton presented in 1993 and which we passed by a 
margin of one vote. We should not now, by passing a tax bill such as 
the one before us, head down the road toward new future deficits.
  The alternative that Democrats offered yesterday was far better, by 
all three tests--the test of fairness, the test of prudence, the test 
of credibility. But by those same three tests, we should hold off on 
any tax cut. We should hold off on any tax cut, period.
  First, we should see if the surplus is real before we adopt tax cuts. 
Second, if the surpluses are real, we should pay down the national debt 
faster. And third, we should save tax cuts for a time of economic slow 
down.
  The argument is made that this is the taxpayers' money. It is. But 
the economy is the American taxpayers', too. The economy belongs to the 
American taxpayer. Social Security belongs to the American people, just 
as this money belongs to the American people. The surplus belongs to 
the American people. So does the Medicare program belong to the 
American people. Our education program, helping people through college, 
belongs to the American people, just as the surplus does.
  These are taxpayers' dollars. There can be no dispute about that. But 
the veterans' program is the American people's program. When we cut 
veterans' health care, we are cutting into something that the American 
people want. It is their program, just as the surplus, just as the 
taxes, are the American people's.
  The American people are speaking loudly, at least to me, at least in 
my office, when I go back home to Michigan every weekend and talk to 
the American people. What they are telling me is: Pay down the debt, 
protect Social Security, protect Medicare. Do what you need to do to 
invest in education. Don't cut veterans' programs. But we don't need 
this tax cut that is being proposed at this time, not just because it 
is unfair to middle income Americans--which it is, since most of the 
benefits go to the upper fifth--but we don't need the tax cut because 
we want debt reduction, real debt reduction.
  That is what they are telling us. That is what the American people, 
who produced this surplus, who send us the tax money, are telling us. 
They are telling us that loudly, not just in public opinion polls--in 
the mail that we open up, in the phone calls we get, and in the 
personal pleas we get when we go home.
  That is exactly what we should do: To hold off on any tax cut and 
reduce the debt with the money that otherwise would go to that tax cut, 
again, not just because it is unfair--which it is--but because it is 
unwise and imprudent.
  Mr. President, I yield the floor.
  Mr. GRAMM addressed the Chair.
  The PRESIDING OFFICER (Mr. Bunning). The Senator from Texas.
  Mr. GRAMM. Mr. President, it is my understanding that the Democrat 
side of the aisle has completed their run of speakers. They have a 
little time left. I have a little bit more. But it would be my 
intention, if it suits everybody else, to go ahead and try to answer 
all of these points that have been made, and try to deviate from my 
background as a schoolteacher and not take all day, and then go ahead 
and yield back my time if they would yield back theirs, and then we 
will set my vote aside and let Senator Kennedy offer his amendment, if 
that will suit everybody on time.
  The only thing I want to be sure of is--since I want to be sure I get 
to answer every point that has been made--I would like to be the last 
speaker on my substitute. So if that works with everybody, I am happy 
about it; if not, we can do it another way.
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. The Senator's proposal is entirely agreeable. I cannot, 
however, let pass the notion that Texas may be the only State in the 
Union where a former professor of economics refers to himself as a 
sometimes schoolteacher. But that is the way it is. We look forward to 
hearing all he has to say.
  Mr. REID. Will the Senator yield for a question?
  Mr. MOYNIHAN. Sure.
  Mr. REID. So we have someone here to speak when the Senator finishes, 
could the Senator give us an estimate of when he might complete his 
statement on this amendment?
  Mr. GRAMM. Mr. President, how much time do I have?
  The PRESIDING OFFICER. Eighteen and a half minutes.
  Mr. GRAMM. I will be through before that. Senator Kennedy may want to 
start making his way over here.
  Mr. President, we are about to wrap up the debate on this amendment. 
I think sometimes it is easy to get carried away and get in the 
business of trying to look at people's motives. I would like, in my 
concluding comments, to try to set this whole thing in perspective.
  I wonder sometimes if our Democrat colleagues do not just rediscover 
every once in a while how progressive--and that is the term that was 
made up by the people who wanted the Tax Code to be highly skewed, 
where higher income people paid the great preponderance of taxes in 
America.
  We are today talking about cutting income taxes. Our dear colleague 
from Minnesota points out that if you make less than $30,000, you are 
going to get less than $100 of income tax cuts in this bill. But what 
our colleague fails to recognize is that 50 percent of Americans pay 
only 4.3 percent of the income taxes; 32 percent of American families 
pay no income taxes whatsoever.
  So I know it makes for a good sound bite to say 32 percent of 
Americans will get no income tax cut if you cut taxes across the board 
by 10 percent, but they do not get a tax cut because they do not pay 
income taxes.
  Tax cuts are for taxpayers. The people who will get a tax cut under 
this bill get no food stamps. Is that an outrage? People who will get a 
tax cut under this bill do not qualify for Medicaid. Is that an outrage 
that they do not qualify for Medicaid? People who will get a tax cut 
under this bill do not qualify for Aid to Families with Dependent 
Children. Is anyone outraged about that? I am not, because AFDC, food 
stamps, Medicaid are not for everybody; they are for poor people. Tax 
cuts are for taxpayers.
  So when our colleagues stand up and say the top one-quarter of the 
taxpayers in America will get 60 percent of the tax cut under this 
bill, don't forget that the top 25 percent of income earners in America 
today pay 81.3 percent of all the taxes.
  Why would anybody be shocked that a group of people who pay 81.3 
percent of the taxes might get 60 percent of the tax cut? In fact, what 
our dear colleague from Michigan was pointing out is that the Roth bill 
is, from the point of view of the existing Tax Code, putting a heavier 
burden on higher income people. My amendment does not do that. Now, 
some of our colleagues, a

[[Page 18382]]

few minutes ago, suggested that I was offering the House bill. The 
House tax cut bill is 457 pages long. The tax cut I am offering is 46 
pages long. This is a very simple tax cut. At the end of my comments, I 
will go over what it does and does not do.
  It is true that the top 1 percent will get more tax cut than the 
bottom 50 percent. The top 1 percent of income earners in America earn 
16 cents of every dollar earned, but they pay 32.3 percent of the 
taxes. The bottom 50 percent pay only 4.3 percent of the taxes. So if 
you are giving a tax cut, people who pay taxes get it. If you are 
giving welfare or Medicaid, people who are poor get it. I don't know 
why that comes as a shock to our Democrat colleagues.
  Our dear friend from South Carolina said the rich get it all. Well, 
the plain truth is that the average family in America making $50,000 a 
year, they are rich, according to the Senator from South Carolina. But 
the average family making $50,000 a year will get $624 in a tax cut by 
the 10-percent across-the-board tax.
  How is it that only rich people are getting the tax cut? Well, you 
have to remember that when the Democrats, in 1993, raised taxes, they 
defined ``rich'' as anybody making over $25,000 a year when they taxed 
people earning $25,000 a year on their Social Security benefits. I hope 
people are not confused when they hear the Senator from South Carolina 
say under the Gramm amendment rich people get it all. I hope they 
understand that rich people are people over $25,000 a year. When 
Senator Hollings was saying, yes, he voted to raise taxes on Social 
Security, that was on rich people who made over $25,000 a year. Don't 
forget the code when we are talking about these things.
  There are a lot of people on the Democrat side of the aisle who say 
hold off on the tax cut. Well, I don't find that unappealing. Just to 
level with people, if we could stop the spending spree that is underway 
and hold off on the tax cut and have an election--I believe we are 
going to have a Republican President; I think I know who it is; I 
believe we are going to have a Republican majority in both Houses of 
Congress--I think we could do a better job 2 years from now. So when 
Senator Levin says hold off on the tax cut, why do I not end up 
supporting his position?
  Well, the problem is, this is the Congressional Budget Office 
analysis of President Clinton's budget. He is proposing to spend $1.033 
trillion, not only every penny of the surplus, but he is having to 
plunder Social Security for 3 out of the 10 years. So while our 
colleagues are saying don't cut taxes, what they are not telling is 
that the President has proposed spending every penny of the non-Social 
Security surplus, plus part of the Social Security surplus.
  We are already $21 billion over the budget this year. I would be 
willing to wait when we had a President who I think would support a 
better tax package, but under President Clinton's budget, we will have 
spent every penny of the surplus before we can elect a new President. 
So that is why we have to act now.
  The second thing is about how large this tax cut is, how outrageous, 
how obscene. If you want to spend all the money, any tax cut is 
obscene. If you don't want a tax cut, all tax cuts are for rich people, 
all tax increases are on rich people. So most people, at least in that 
language, don't have a stake in it.
  But the problem is, all tax increases are on working people and our 
tax cut is for working people. The question is, Is it too big?
  When Bill Clinton became President, Government was taking in taxes, 
17.8 cents out of every dollar earned by every American. Because of the 
massive tax increase in 1993 and because people, as incomes have gone 
up, have moved into higher brackets, Government is now taking a 
peacetime record 20.6 percent of the economy in Federal taxes.
  Now, if we took all $1 trillion of the non-Social Security surplus 
and gave it back to the American worker in tax cuts--and I remind 
Senators, we are giving less than $800 billion because we are keeping 
$200 billion for Medicare and for emergencies--if we gave it all back, 
the tax burden, at 18.8 percent of every dollar earned, would still be 
substantially higher than it was the day Bill Clinton became President. 
So even if you adopt our tax cut and even if the President signed it, 
when he left office and when this tax cut was fully implemented, he 
could say: Taxes were substantially higher when I left than when I 
came--even though supposedly we are talking about a huge tax cut.
  Now, finally, if you take the arithmetic and you say: How big is this 
tax cut relative to the level of taxes we are collecting, over a 10-
year period, the tax cut is a whopping 3.5 percent. Over a 10-year 
period, if we adopt our tax cut, we are reducing revenues by 3.5 
percent.
  How can the President say this tax cut endangers the American 
economy? In fact, the day before yesterday he was saying it endangers 
women's health care; if we let working people keep more of the money 
they earn, it is going to hurt women's health.
  I don't know, if this debate goes on another day or two, he may say 
that infantile paralysis will be back, that polio will suddenly descend 
on America. If you let people keep more of what they earn, it could 
happen. The bubonic plague could come back. The point is, we are 
talking about 3.5-percent tax cuts over 10 years.
  Why are we doing this? We are doing it because we are going to 
collect $3 trillion in taxes over the next 10 years above the level we 
are going to spend. We are taking $2 trillion and putting it away so 
when we get a President that has the courage to fix Social Security--we 
do not have such a President today, I am sad to say, but when we get 
one, we will have the money and we will be ready to do it.
  Then out of the trillion that is left, we are saying, let us give 
eight-tenths of it back in tax cuts and let us keep two-tenths of it 
for Medicare and for any emergencies we might have.
  Our colleagues say, if you give these tax cuts, the money is gone 
forever. That is interesting because we raise taxes round here all the 
time. But yet when they spend this money on $1.033 trillion of new 
programs, it is as if we can snap our fingers and have it back.
  The truth is, you can always get money back that you give to the 
American public in tax cuts. If we start 81 new programs, which is what 
President Clinton wants to do, we will never be able to get that money 
back. We will never be able to end those programs. That is what the 
debate is about.
  I see that one of my colleagues who had asked to speak before, came 
and waited for others to speak, has come back. How much time do I have 
at this point?
  The PRESIDING OFFICER. The Senator has 6 minutes.
  Mr. GRAMM. I yield that Senator 5 minutes of my time, and then I will 
sum up with the last minute.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. KYL. Mr. President, I have heard the name of the Federal Reserve 
Board Chairman, Alan Greenspan, invoked in this debate as if the 
Chairman would oppose the tax-relief bill. That is not my understanding 
of where Mr. Greenspan stands on the issue. I want to include for the 
Record at the end of my remarks a copy of a Wall Street Journal 
editorial on the subject that ran on July 27, 1999.
  When Chairman Greenspan testified before the Banking Committee last 
week, he said that he would delay tax cutting and apply the surplus to 
debt repayment--but here is the part of the quote that many in the 
media have failed to report. He said he would defer tax cuts:

       . . . unless, as I've indicated many times, it appears that 
     the surplus is going to become a lightening rod for major 
     increases in outlays (emphasis added). That's the worst of 
     all possible worlds, from a fiscal policy point of view, and 
     that, under all conditions, should be avoided.

  Mr. Greenspan went on to say, ``I have great sympathy for those who 
wish to cut taxes now to pre-empt that process, and indeed if it turns 
out that they are right, then I would say moving on the tax front makes 
a good deal of sense to me.''
  Mr. President, Chairman Greenspan's view is important because 
opponents of

[[Page 18383]]

this tax relief bill claim that the Federal Reserve will respond to its 
enactment by raising interest rates to the cool economy. But Mr. 
Greenspan's remarks make it clear that the real threat to continue 
prosperity is bigger government, not tax relief. And if the tax 
overpayment is not returned to taxpayers, I think it is clear that it 
will be spent long before it can be applied to debt reduction.
  Just consider that President Clinton is proposing new spending 
amounting to $826 billion--more than the 10-year cost of the tax-relief 
bill that is before us. Remember, too, that our tax bill accounts for 
only about 25 percent of the available surplus. In other words, we are 
only proposing to refund about 25 cents of every surplus dollar to the 
people who sent it to us--hardly a risky or irresponsible thing. 
Seventy five cents of every surplus dollar would be dedicated to 
preserving Social Security and Medicare, and funding other domestic 
priorities.
  Remember, to the extent that there is a surplus, we will have taken 
care of our core obligations already--things like education and health 
care, running our national parks, and providing for the national 
defense. It may be true that refunding the overpayment will mean we 
cannot fund some low priority programs, but that is the point: 
taxpayers ought to be able to decide how to spend their own hard-earned 
money before Washington wastes it.
  Critics of the tax-relief bill also claim that it cannot be justified 
because projected surpluses may never materialize, that Congress and 
the President will be unable to live within the spending limits we 
agreed to on a bipartisan basis only two years ago. In other words, 
they contend that spending the surplus is a preordained outcome. To me, 
that is not a reason to defer tax relief. It is the very reason we need 
to pass tax relief--before Washington can find new ways to spend the 
tax overpayment.
  Mr. President, I think it is important to clarify that we are talking 
about what to do with the non-Social Security surplus. Our plan saves 
all of the Social Security surplus for Social Security. President 
Clinton says that it is his goal as well, but his budget would actually 
spend $158 billion of the Social Security surplus on other programs. If 
our colleagues on the other side of the aisle would end their 
filibuster against the Social Security lockbox bill, we could pass it 
and make sure the Social Security surplus is not spent.
  Let me turn for a few moments to the specific provisions of the tax-
relief bill that is before us today. I want to begin by commending the 
chairman of the Finance Committee for producing a bill that fully meets 
the instructions of the budget resolution we passed earlier this year 
and provides a full $792 billion in tax relief over the next decade.
  But I must say that I would have written the bill very differently. 
It seems to me that there are too many provisions that are targeted too 
narrowly. For example, the bill includes a tax break for the renovation 
of historic homes. That is great if you intend to engage in such 
renovation. But if you do not have the means to own a historic home, or 
do not want one, you get no relief.
  People with a foreign address would have their frequent flyer miles 
exempted from the 7.5 percent air passenger ticket tax.
  Generation of electricity from chicken litter would earn a tax break.
  And if you are fortunate enough to get certain scholarships, your 
award would be excluded from tax.
  These four provisions alone--and each may have merit in its own 
right--have a combined revenue impact of about $4 billion over 10 
years--money that I would prefer to put toward broad-based, growth-
oriented tax relief that help all taxpayers.
  While there are many worthwhile provisions in the Finance Committee 
bill, a better approach is embodied in an amendment that will be 
offered by Senator Phil Gramm of Texas. Whereas the committee bill 
attempts to spread relief among some 130 parts of the Tax Code, the 
Gramm amendment would focus on just five areas, using the surplus to 
finally correct some of the most unfair and egregious provisions of the 
law.
  The Gramm amendment would, for example, expand on the provisions of 
the underlying bill to completely eliminate the marriage-tax penalty. 
What rationale can there possibly be for imposing such a penalty? All 
of us say we are concerned that families do not have enough to make 
ends meet--that they do not have enough to pay for child care, college, 
or to buy their own homes. Yet we tolerate a system that overtaxes 
families. According to Tax Foundation estimates, the average American 
family pays almost 40 percent of its income in taxes to federal, state, 
and local governments. To put it another way, in families where both 
parents work, one of the parents is nearly working full time just to 
pay the family's tax bill. It is no wonder, then, that parents do not 
have enough to make ends meet when government is taking that much. It 
is just not right.
  The marriage penalty alone is estimated to cost the average couple an 
extra $1,400 a year. About 21 million American couples are affected, 
and the cost is particularly high for the working poor. Two-earner 
families making less than $20,000 often must devote a full eight 
percent of their income to pay the marriage penalty. The highest 
percentage of couples hit by the marriage penalty earns between $20,000 
and $30,000 per year.
  Think what these families could do with an extra $1,400 in their 
pockets. They could pay for three to four months of day care if they 
choose to send a child outside the home--or make it easier for one 
parent to stay at home to take care of the children, if that is what 
they decide is best for them. They could make four to five payments on 
their car or minivan. They could pay their utility bill for nine 
months.
  The Finance Committee bill goes a long way toward resolving the 
marriage-penalty problem, and I thank the chairman of the Finance 
Committee for that; but since we have the resources to solve it fully 
once and for all, we should.
  The death tax is just as wrong, and we ought to do something about 
it, too. The Gramm amendment includes the provisions of the Kyl-Kerrey 
bill, as modified by the House, that would eliminate the death tax 
outright.
  Although most Americans will probably never pay a death tax, most 
people still sense that there is something terribly wrong with a system 
that allows Washington to seize more than half of whatever is left 
after someone dies--a system that prevents hard-working Americans from 
passing the bulk of their next eggs to their children or grandchildren, 
or even their local charities. Liberal Professor of Law at the 
University of Southern California, Edward J. McCaffrey, put it this 
way: ``Polls and practices show that we like sin taxes, such as on 
alcohol and cigarettes.'' ``The estate tax,'' he went on to say, ``is 
an anti-sin, or a virtue, tax. It is a tax on work and savings without 
consumption, on thrift, on long term savings. There is no reason even a 
liberal populace need support it.''
  Economists Henry Aaron and Alicia Munnell reached similar 
conclusions, writing in a 1992 study that death taxes ``have failed to 
achieve their intended purposes. They raise little revenue. They impose 
large excess burdens. They are unfair.''
  In fact, 77 percent of the people responding to survey by the Polling 
Company last year indicated that they favor repeal of the death tax. 
When Californians had the chance to weigh in with a ballot proposition, 
they voted two-to-one to repeal their state's death tax. The 
legislatures of five other states have enacted legislation since 1997 
that will either eliminate or significantly reduce the burden of their 
states' death taxes.
  Talk to the men and women who run small businesses around the country 
and you will find that death taxes are a major concern to them. The 
1995 White House Conference on Small Business identified the death tax 
as one of small business's top concerns, and delegates to the 
conference voted overwhelmingly to endorse its repeal. Remember, this 
is a tax that is imposed on a family business when it is least

[[Page 18384]]

able to afford the payment--upon the death of the person with the 
greatest practical and institutional knowledge of that business's 
operations.
  Although the death tax raises only about one percent of the federal 
government's annual revenue, it exerts a disproportionately large and 
negative impact on the economy. In fact, Alicia Munnell, a former 
member of President Clinton's Council of Economic Advisors, estimates 
that the costs of complying with death-tax laws are roughly the same 
magnitude as the revenue raised. In 1998, for example that amounted to 
about $23 billion. In other words, for every dollar of tax revenue 
raised by the death tax, another dollar is squandered in the economy 
simply to comply with or avoid the tax.
  Over time, the adverse consequences are compounded. A report issued 
by the Joint Economic Committee last December concluded that the 
existence of the death tax this century has reduced the stock of 
capital in the economy by nearly half a trillion dollars.
  By repealing the death tax and putting those resources to better use, 
the Joint Committee estimates that as many as 240,000 jobs could be 
created over seven years and Americans would have an additional $24.4 
billion in disposable personal income.
  Unlike the Finance Committee bill, which leaves the death tax in 
place indefinitely, the Gramm amendment would repeal the tax--pull it 
out by its roots. The House has already passed similar provisions, and 
the Senate should, as well. Death-tax repeal is a must.
  Mr. President, there are three other components of the Gramm 
amendment that I will touch on only briefly. First, it would reduce 
marginal income-tax rates by 10 percent across the board. In other 
words, all taxpayers would see their tax bills reduced, proportionate 
to how much they pay. This is probably the fairest way of returning the 
tax overpayment.
  Second, the amendment would index capital gains for inflation, 
recognizing that the Treasury should not reap the benefit of 
inflationary policies.
  Third, it would provide a full deduction for health insurance for the 
self employed.
  Mr. President, the Gramm amendment would provide broad-based relief, 
and would do so in a way that is not only fair, but which would keep 
the economy growing and providing a better standard of living for all 
Americans.
  I will vote for the Gramm amendment. If it is defeated, I will vote 
for the underlying bill in order to get it to conference where the bill 
could be improved. I will, however, reserve judgment about whether to 
support the conference report until I can see if it comes close to the 
Gramm amendment or the House bill.
  Before concluding, I ask unanimous consent that the Wall Street 
Journal editorial from July 27, 1999, which I mentioned at the 
beginning of my remarks, be printed in the Record at this point.
  There being no objection, the editorial was ordered to be printed in 
the Record, as follows:

                   Review & Outlook--Truth and Taxes

       Ronald Reagan once famously noted that ``facts are stubborn 
     things,'' but that was before the Clinton Presidency. One 
     consequence of Clintonism is that facts have been irrelevant 
     to political debate, as for example in the current fight over 
     tax cuts.
       Under the new Clinton rules, by now imbedded in media 
     coverage, it doesn't matter whether something is true; what 
     counts is whether it works politically. Thus last week 
     Federal Reserve Chairman Alan Greenspan suddenly found 
     himself hailed as a hero of the Democratic Party, allegedly 
     for trashing the House Republican tax-cut bill. Or so the 
     news reports said. We read his remarks, however, and the 
     truth is more interesting.
       Mr. Greenspan: ``My first priority, if I were given such a 
     priority, is to let the surpluses run.''
       Rep. John LaFalce (D., N.Y.): ``Thank you, Mr. Chairman.''
       Mr. Greenspan: ``As I've said before, my second priority is 
     if you find that as a consequence of those surpluses they 
     tend to be spent, then I would be more in the camp of cutting 
     taxes, because the least desirable is using those surpluses 
     for expanding outlays.''
       For some reason the press corps never mentioned this 
     spending caveat, as large as it is. We don't know how they 
     missed it, because a short time later the Fed chief said he'd 
     delay tax cutting ``unless, as I've indicated many times, it 
     appears that the surplus is going to become a lightening rod 
     for major increases in outlays. That's the worst of all 
     possible worlds, for a fiscal policy point of view, and that, 
     under all conditions, should be avoided.
       ``I have great sympathy for those who wish to cut taxes now 
     to pre-empt that process, and indeed, if it turns out that 
     they are right, then I would say moving on the tax front 
     makes a good deal of sense to me.''
       Now, also keep in mind that Mr. Greenspan is a central 
     banker. He runs monetary policy, which means he needs the 
     political running room to raise interest rates from time to 
     time. Like all central bankers, he gets irrationally 
     exuberant about deficits, which he fears could return and 
     complicate this task. Ergo, he'd prefer surpluses to pile up 
     from here to eternity.
       Yet, if the surpluses are going to be spent, he'd still 
     rather cut taxes first. And indeed, last week Mr. Greenspan 
     repeated his belief that the revenue-maximizing tax rate for 
     capital gains is ``zero'' and that he prefers a cut in 
     marginal tax rates.
       As it happens, last week the Beltway's media sleuths also 
     ignored some startling facts from the Congressional Budget 
     Office. CBO--historically no friend of tax-cutting--compared 
     Congress's budget proposals with Mr. Clinton's. And it found 
     that, despite its $800 billion tax cut over 10 years, 
     Congress's budget actually reduces the federal debt more than 
     does Mr. Clinton's
       How can this be? because Mr. Clinton proposes to spend that 
     money instead of use it to retire debt, just as Mr. Greenspan 
     fears. Here's the CBO math on the Clinton proposals:
       $111 billion for Medicare, including $168 billion for the 
     new prescription drug bribe less other savings;
       $245 billion for USA Accounts, another political handout;
       $328 billion for additional discretionary spending--$127 
     billion for defense and $201 billion in nondefense 
     programs''; and
       $142 billion for higher debt service costs because of the 
     higher spending.
       The GOP tax cut is about $792 billion, while Mr. Clinton's 
     new spending would amount to $826 billion. In short, Mr. 
     Clinton isn't against the GOP tax cut because he wants to 
     save it for posterity. He's against it because he wants to 
     spend that money instead. Which by Mr. Greenspan's own 
     testimony last week means the Fed chief would endorse cutting 
     taxes first.
       And, by the way, don't believe Mr. Clinton when he claims, 
     as he did in his Saturday radio address, that ``the GOP tax 
     cut is so large it would require dramatic cuts in vial areas, 
     such as education, the environment, biomedical research, 
     defense and crime fighting.'' As CBO also shows, since 1990 
     domestic spending (not including entitlements) has increased 
     by 5% a year; that's roughly double the rate of inflation.
       Mr. Clinton has taken to lying with such fluency that his 
     whoppers are barely even noticed. We're not optimistic that 
     anyone else will keep him honest. But we thought our readers 
     would like to know.

  Mr. KYL. To reiterate, the bill includes a tax break for the 
renovation of historic homes. That is great, if you intend to engage in 
such a renovation and you have a historic home. But if you don't have 
that kind of a home, it is not going to do you much good. People with 
foreign addresses would have their frequent flier miles exempted from 
the 7.5-percent passenger ticket tax.
  Generation of electricity from chicken litter would earn a tax break. 
If you are fortunate to get certain scholarship, you could be excluded 
from a tax. These four provisions alone, which may well have merit, 
have a combined revenue impact of about $4 billion over 10 years--money 
I would prefer to put toward the kind of relief Senator Gramm has been 
proposing. That is why I support his amendment.
  Let's take one of the provisions of his amendment, whereas, the 
committee bill attempts to spread relief. Out of about 130 different 
parts of the Tax Code, the Gramm amendment focuses on just 5 particular 
areas, using the surplus to finally correct some of the most unfair and 
egregious provisions of the law. For example, it eliminates the 
marriage tax penalty.
  The Finance Committee proposal goes a long way toward working on that 
marriage penalty, but it does not eliminate it. The Gramm proposal 
would do that. It is not fair that we overtax families just because 
they are married. The impact is estimated to cost the average couple an 
extra $1,400 a year. About 21 million American couples are affected. It 
is no wonder both spouses in the family are having to work. One, in 
effect, is working for the family, and the other is working to pay

[[Page 18385]]

off the taxes. They are upset with this marriage tax penalty. I support 
that provision.
  While we deal with the death tax in the Finance Committee proposal, 
we don't eliminate it. It ought to be eliminated. The Gramm proposal 
eliminates it along the lines of the Kyl-Kerrey bill. I appreciate 
Senator Gramm including our provision in his amendment. The death tax 
is the most unfair tax of all. Death should not be a taxable event. If 
you want to tax people because they make some economic decision to 
spend money, to take money out of an account, to sell an asset, then 
tax that economic decision. They understand going in what the 
consequences are going to be. But nobody chooses to die. Why their 
heirs should have to pay a tax because of a death is beyond most of us. 
It brings in about 1 percent in revenue. It is not worth it. An awful 
lot of small businesses and farms, which have all of the assets tied up 
in equipment and the capital of the business itself, end up having to 
sell their assets in order to pay the taxes. The idea that it was to 
prevent the accumulation of wealth no longer works. In today's world, 
when you have to sell the business, you usually sell to some big 
conglomerate that then takes it over.
  So the death tax is unfair. Our proposal, which in effect converts it 
to a capital gains tax on the sale of the assets if and when they are 
ever sold, is a much fairer proposal. It still permits the Government 
to recover some of the money, but it is not based upon the death of the 
individual, it is based upon the sale of the asset when the people want 
to sell it.
  There are three other components I will touch on briefly. First, it 
reduces the marginal income tax by 10 percent across the board. In 
other words, all taxpayers would see their taxes reduced, proportionate 
to how much they pay, as the Senator pointed out. It is probably the 
fairest way of returning the tax overpayment. The amendment would index 
capital gains for inflation, recognizing that the Treasury should not 
reap the benefit of inflationary policy. Finally, it would provide a 
full deduction for health insurance for the self-employed, something I 
think everybody would like to see done.
  We can afford to do those things, and we ought to do those things in 
this amendment. I will vote for the Gramm amendment. If it is defeated, 
I will vote for the underlying bill in order to get it to conference 
where it can be improved. I will reserve judgment on whether to support 
the conference report until I see whether it comes closer to the 
approach Senator Gramm has taken.
  Mr. GRAMM addressed the Chair.
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mr. GRAMM. Mr. President, I have worked up an example that I think 
tells the story here at the end of the debate. The question is, If we 
have a simple tax cut that cuts taxes across the board by 10 percent, 
eliminates the marriage penalty, repeals the death tax, indexes capital 
gains taxes, and gives a full deduction for health insurance, what will 
it mean to your family?
  Obviously, it is easy to take how much taxes you pay and then take 
the 10 percent. Here is an example. Take this couple Senator Hutchison 
talked about, where you have a teacher and a football coach and they 
are married. Together, they make $70,000 a year. Now, I know there are 
some people on the other side of the aisle who are going to say they 
are rich. They have two children, and they might have one of them in 
college. If they have both of them in college, they are among the most 
financially stressed people in America.
  But what would happen under this bill is that the 10 percent tax cut 
would mean that this family--a coach and a teacher, making $70,000 a 
year--would get an $800 tax cut; actually, it would be an $809 tax cut 
because of the 10 percent across-the-board cut; they would get a $1,400 
tax cut from the marriage penalty elimination, meaning, in total, they 
would get $2,200 in tax cuts. That is roughly, I think, what working 
middle America is about.
  Mr. President, I yield all my time back.
  Mr. MOYNIHAN. Mr. President, this side of the aisle yields all our 
time back.
  Mr. GRAMM. Mr. President, I ask unanimous consent that the Gramm 
amendment, No. 1405, be temporarily set aside in order for Senator 
Kennedy to offer a motion relative to prescription drugs. I further ask 
consent that following the debate time on that motion, the Senate then 
proceed to a vote on or in relation to the Gramm amendment, No. 1405, 
to be followed by a vote on or in relation to the Kennedy motion. I ask 
unanimous consent that no other amendments be in order to the amendment 
prior to the vote. I further ask consent that there be 2 minutes 
equally divided prior to each vote.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. MOYNIHAN. Mr. President, the Senator from New York, on behalf of 
the Finance Committee, is honored to yield to our distinguished friend 
and long-time colleague, Senator Kennedy of Massachusetts. We welcome 
him back to the debate.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized.
  Mr. KENNEDY. Mr. President, I understand we now have a 1-hour time 
limitation, am I correct, and the time is divided?
  The PRESIDING OFFICER. Thirty minutes on each side.
  Mr. KENNEDY. I yield myself 10 minutes, Mr. President.
  The PRESIDING OFFICER. The Senator from Massachusetts is recognized 
for 10 minutes.


                           Motion To Recommit

(Purpose: To modernize and improve the Medicare program by providing a 
   long-overdue prescription drug benefit, by reducing or deferring 
                        certain new tax breaks)

  Mr. KENNEDY. Mr. President, I send a motion to the desk.
  The PRESIDING OFFICER. The clerk will report the motion.
  The assistant legislative clerk read as follows:

       The Senator from Massachusetts, Mr. Kennedy, moves to 
     recommit the bill to the Committee on Finance, with 
     instructions to report back within 3 days, with an amendment 
     to reserve amounts sufficient to provide a prescription drug 
     benefit to all Medicare recipients, in the context of 
     modernizing and strengthening Medicare, by reducing or 
     deferring certain new tax breaks in the bill, especially 
     those which disproportionately benefit the wealthy.

  Mr. KENNEDY. Mr. President, as was indicated in the motion, senior 
citizens deserve coverage of prescription drugs under Medicare, and it 
is time for Congress to see that they get it. This amendment presents a 
clear choice between prescription drug coverage for the elderly and 
unnecessary new tax breaks for the wealthy.
  This debate is about priorities. New tax breaks are a priority for 
the Republicans. Prescription drugs for senior citizens are not. If 
senior citizens were the priority, we would be debating a Medicare 
prescription drug bill today--not a tax cut bill. If senior citizens 
were the priority, we would be debating a tax bill after we had taken 
care of Medicare and Social Security--not before.
  These Republican tax bills have $230 billion in new tax breaks for 
people with incomes over $300,000 a year. They reinstate the three-
martini lunch deduction.
  There are sweetheart deals for the insurance industry, the timber 
industry, the oil industry, and large multinational corporations. But 
there is not one dime for Medicare prescription drugs for senior 
citizens.
  Medicare is a clear contract between workers and their government. It 
says, ``Work hard, pay into the system when you are young, and you will 
have health security in your retirement years.'' But that commitment is 
being broken today and every day, because Medicare does not cover 
prescription drugs.
  When Medicare was enacted in 1965, coverage of prescription drugs in 
private insurance policies was not the norm--and Medicare followed the 
standard practice in the private market. Today, ninety-nine percent of 
employment-based health insurance policies provide prescription drug 
coverage--but Medicare is caught in a 34 year old time warp--and too 
many seniors are suffering as a result.

[[Page 18386]]

  Too many seniors today must choose between food on the table and the 
medicine they need to stay healthy or to treat their illnesses.
  Too many seniors take half the pills their doctor prescribes, or 
don't even fill needed prescriptions--because they cannot afford the 
high cost of prescription drugs. Too many seniors are paying twice as 
much as they should for the drugs they need, because they are forced to 
pay full price, while almost everyone with a private insurance policy 
benefits from negotiated discounts. Too many seniors are ending up 
hospitalized--at immense costs to Medicare--because they aren't 
receiving the drugs they need at all, or cannot afford to take them 
correctly. Pharmaceutical products are increasingly the source of 
miracle cures for a host of dread diseases, but senior citizens will be 
left out and left behind if we do not act.
  The 21st century may well be the century of life sciences. With the 
support of the American people, Congress is on its way to our goal of 
doubling the budget of the National Institutes of Health. This 
investment is seed money for the additional basic research that will 
enable private and public sector scientists to develop new therapies 
that will improve and extend the lives of people in the United States 
and around the globe.
  In 1998 alone, private industry spent more than $21 billion in 
research on new medicines and to bring them to the public.
  These miracle drugs save lives--and they save dollars too, by 
preventing unnecessary hospitalization and expensive surgery. All 
patients deserve affordable access to these medications. Yet, Medicare, 
which is the nation's largest insurer, does not cover out-patient 
prescription drugs, and senior citizens and persons with disabilities 
pay a heavy price for this glaring omission.
  Prescription drug bills eat up a large and disproportionate share of 
the typical elderly household's income. Senior citizen spend three 
times more of their income on health care than persons under 65, and 
they account for one-third of all prescription drug expenditures. yet 
they make up only 12 percent of the population.
  The greatest gap in Medicare--and the greatest anachronism--is its 
failure to cover prescription drugs. Ninety-nine percent of all 
employment-based plans--ninety-nine percent--cover prescription drugs 
today. But Medicare is still mired in the mid-1960s--when the private 
plans on which Medicare was modeled did not provide this coverage.
  Because of this gap and other gaps in Medicare, and the growing cost 
of the Part B premium, Medicare now pays only 50% of the out-of-pocket 
medical costs of the elderly. On average, senior citizens now spend 
almost as much of their income on health care as they did before 
Medicare was enacted. And Medicare was enacted because there was a 
crisis in health care for the elderly in the 1960s. How can we fail to 
act today, to deal with the health care crisis for the elderly in the 
1990s?
  Prescription drugs are the single largest out-of-pocket cost to the 
elderly for health care. The average senior citizen fills an average of 
eighteen prescriptions a year, and takes four to six prescriptions 
daily. Many elderly Americans face monthly drug bills of $100, $200 or 
even more.
  America's senior citizens and disabled citizens deserve to benefit 
from new discoveries in the same way that other families do. Yet, 
without negotiating power, they receive the brunt of cost-shifting--
often with devastating results. In the words of a recent report by 
Standard & Poor ``Drugmakers have historically raised prices to private 
customers to compensate for the discounts they grant to managed care 
consumers.'' The private customers referred to in this report are 
largely the nation's mothers, fathers, aunts, uncles, grandmothers, and 
grandfathers.
  Despite--and to a large extent because of--Medicare's lack of 
coverage for prescription drugs, the misuse of such drugs results in 
preventable illnesses that cost Medicare $20 billion or more a year, 
while imposing vast misery on senior citizens. It is in their best 
interest, and in the best interest

of Medicare, to design a system that encourages the proper use, and 
minimizes the improper use of prescription drugs. Substantial savings 
can be found if physicians and pharmacists are educated on senior 
citizen-prescription drug interactions and on ways to identify, 
prevent, and correct prescription drug-related problems.
  Beneficiaries, too, must follow instructions that are dispensed with 
the medication itself. Too often, we hear stories of senior citizens 
who skimp on medicine. They take half doses or otherwise try to stretch 
their prescription, to make it last longer. That is not right, and it 
doesn't have to happen. If senior citizens are confident that the drugs 
they need will be covered, proper usage will improve, and so will the 
quality of life for senior citizens.
  During the course of this debate, we will hear many arguments from 
the opponents of this amendment. Their arguments are as predictable as 
they are wrong.
  First, we will hear that the sponsors of this excessive tax cut are 
all for a Medicare prescription drug benefit, too. They claim that even 
after their tax cut, they still have $253 billion of surplus left. But 
we all know that those estimates are as phony as a three dollar bill--
and about as valuable.
  The only way that any money is left after the Republican tax cut is 
because their budget pretends to cut national defense by $198 billion 
below the President's request--a request that Republicans say is 
inadequate. Their budget also pretends that there will never be another 
emergency appropriation--even though emergencies will cost us $90 
billion over the next 10 years if present trends continue. Their budget 
pretends to cut domestic programs from Head Start to education to 
highway construction to law enforcement by half a trillion dollars over 
the next ten years, cuts that no one believes will ever happen.
  Republicans hope they can continue to play ``let's pretend'' until 
this reckless and irresponsible tax cut passes the Senate. But by then 
it will be too late--too late for today's senior citizens, who need 
prescription drug coverage--too late for tomorrow's senior citizens, 
who need a solvent Medicare--too late to protect Social Security--too 
late to meet pressing needs to educate the nation's children, support 
biomedical research, fight crime, protect the environment, and meet all 
the other pressing needs that are priorities for the American people.
  This is an issue of priorities. Republicans may say that there is 
enough money left over to protect seniors. Let them put their votes 
where their mouth is. All this motion does is say set aside enough 
money out of the tax cut to provide a prescription drug benefit before 
we vote to pass a tax bill. This should be a simple vote for any 
Senator who cares about senior citizens. Tax cuts are a priority for 
the Republicans. Prescriptions drugs for senior citizens are not. If 
senior citizens were the priority, we would be debating a prescription 
drug coverage bill today--not a tax cut bill. If senior citizens were 
the priority, we would be debating a tax bill after we had taken care 
of Medicare and Social Security--not before. If senior citizens were 
the priority, it would be tax breaks that would get the left-overs, not 
the elderly.
  Republicans also say that prescription drug coverage should not be 
provided to all senior citizens--only to the poor or those who have no 
current coverage. But we heard those same arguments when Medicare was 
originally enacted. The American people didn't buy these arguments 
then--and they won't buy them now.
  Let's look at the numbers. Fourteen million elderly and disabled 
Medicare beneficiaries--one-third of the total--do not have a dime of 
prescription drug coverage today. Not a dime.
  One-quarter of Medicare beneficiaries have coverage through an 
employer--but retiree health benefits are on the chopping block as 
companies seek to cut costs by trimming health care spending. In fact, 
the proportion of firms offering coverage has dropped one-quarter in 
just the last four years. No senior citizen--and certainly no 50-year-
old looking forward to retirement--can count on prescription drug 
coverage being there for them when serious illness strikes.
  Seven million Americans get prescription drug coverage through a 
Medicare HMO. But that coverage is offered voluntarily--and it is often 
being cut back or eliminated altogether. Three-quarters of Medicare 
HMOs will impose caps on their benefits of less than $1,000 next year. 
Almost one-third

[[Page 18387]]

will impose caps of less than $500. The majority of seniors have annual 
drug expenses well in excess of $500. More than $325,000 beneficiaries 
will be dropped from their HMOs next year. There is not a single senior 
citizens who joined an HMO because of the promise of affordable 
prescription drug benefits who can count on that promise being kept.
  Four and a half million senior citizens get prescription drug 
coverage through a Medigap plan. But that coverage is extraordinarily 
expensive and inadequate. According to Consumer Reports, a seventy-four 
year old senior citizen enrolled in the least generous Medigap plan 
offering drug coverage would pay an average of close to $2,000 a year 
more in premiums--on top of $1,4000 for the non-drug part of the 
coverage--a total of more than $3,000 a year. And that is an average. 
Some beneficiaries must pay more than $9,000 a year for drug coverage 
through Medigap. Whatever the starting premium, it goes higher and 
higher as senior citizens age and their need for medical care grows. 
Anyone who misses the chance to enroll in a plan offering drug coverage 
at age 65 never gets another chance if they have any health problems.
  The only senior citizens who have stable, secure, affordable Medicare 
drug coverage today are the very poor on Medicaid. The idea that only 
the impoverished should qualify for needed hospital and doctor care was 
popular with Republicans more than 30 years ago when they fought 
against the enactment of Medicare. The American people rejected that 
cruel doctrine--and Medicare for all was enacted. Today, it is time for 
the Senate to reject the equally indefensible proposition that poverty 
is the price that senior citizens should have to pay to get the 
prescription drugs they need.
  A couple of Marshfield, Massachusetts vividly demonstrates why we 
need to act now. Their plight is representative of millions of other 
senior citizens across the country. They live on a fixed income of 
$30,000 a year from Social Security and a retirement pension. They are 
not poor. Their income is not below 135% of poverty. In fact, it is not 
even below 200% of poverty--but it is not enough for them to afford the 
prescription drugs they need. Both have substantial medical needs, and 
both belong to the Medicare HMO--but 19% of the couple's income is 
still spent on prescription drugs.
  By April, the couple had already exhausted their HMO's $150 quarterly 
cap for prescription drug coverage. The $956 cost of the wife's 
medications for May and June will come completely out of their pockets. 
She has been rationing her medication--not taking it as prescribed, in 
an attempt to stretch out the medicine to save money. She was a stroke 
victim five years ago. Yet, she has to cut back considerably on her 
most expensive prescriptions. She is having a difficult time with the 
left side of her body, and cannot move her left arm.
  She says, ``My muscles are really tight, and it is a result of not 
taking my Methocarbamol, because I am trying to stretch my prescription 
dollars. We don't go out, we can't afford gas, and we have had to cut 
down on groceries.''
  Every senior citizen in America could find themselves forced to 
choose between a decent retirement and the medications they need to 
survive. No person and no family should have to make that unfair 
choice. This is what our amendment is all about.
  Senior citizens need and deserve prescription drug coverage under 
Medicare. Any senior citizen will tell you that--and so will their 
children and grandchildren.
  I would like to just reiterate an earlier point. The debate this week 
is really about priorities, and there are many of us who believe that, 
prior to moving toward any of these kinds of tax breaks, we ought to 
secure Social Security, we ought to ensure the security of the Medicare 
system, and include in the Medicare system a prescription drug benefit 
program.
  I have listened over the course of the past 2 days, as well as 
earlier in the year, to those who say we can afford the kind of tax 
breaks that are being recommended. They say that we will have 
sufficient resources at the end of it in order to provide for a 
prescription drug benefit. I don't believe that to be the case.
  Even if it were the case, I am not going to take our limited time to 
debate how much may be left over after we deal with the Republican tax 
breaks. I don't think there will be much, if anything.
  But what we are saying today is rather than wait to see if there is 
anything left, let's go ahead today. We are saying that any proposal 
that is going to

come out of this Senate dealing with tax breaks is also going to 
include an important prescription drug benefit for the senior citizens 
of this country. That is what we are saying.
  We say send this legislation back to the Finance Committee, and then 
we ask the Finance Committee to report back within a period of 3 days.
  There are a number of acceptable proposals. The proposal by the 
President of the United States is one that I favor. Senator Rockefeller 
and I also have a proposal that I favor. But this motion simply 
requires the Finance Committee to come back with funds sufficient to 
provide prescription drug coverage to all Medicare beneficiaries. It 
doesn't specify one proposal over another. That is, in effect, what 
this amendment is really all about.
  We believe that coverage of prescription drugs is necessary in order 
to effectively upgrade Medicare to deal with modern realities. There 
are other considerations in the Medicare program that the President and 
others have outlined which deserve consideration. But today we should 
say that before we pass significant tax breaks, we are going to make a 
commitment that a prescription drug benefit program be put into place.
  It is a matter of enormous importance. It makes an incredible 
difference in the quality of life of the senior citizens of this 
country.
  Prescription drug benefits in the current system are completely 
inadequate. Those who rise to oppose it will say: Let us just have a 
partial program because there are only about one-third that have no 
coverage. We went through those numbers earlier. Only the poorest 
seniors have affordable, reliable and adequate coverage.
  Those with retiree coverage cannot be certain it will continue. Those 
in HMOs are being told that their coverage will be limited to $500 or 
$1,000 a year. Others are being dropped because their plan is leaving 
the program. Seniors who can get into medigap are shelling out 
thousands of dollars a year for coverage that is inadequate.
  Coverage of prescription drugs is an issue of life and death for our 
senior citizens. Some would like to limit our assistance to only some 
of the elderly. Are we going to say now on this important issue that we 
should turn Medicare into a poverty program, a Medicaid program? 
Clearly, we should not.
  There are those who say, well, Mr. President, we only have a small 
group that aren't covered. Let's target it at that. But every kind of 
indicator shows that coverage is declining every year for those who are 
fortunate enough to have some coverage now.
  Our program is very clear and simple. Again, it says that this will 
be a priority.
  We said: Send this legislation back to the Committee. Have it come 
back to the floor with funds reserved to have a prescription drug 
program that is going to be worthy of its name. It says that before we 
see the major kinds of tax breaks and tax cuts in this bill, we should 
meet the needs of our senior citizens.
  Every Member of this body can give chapter and verse about what is 
happening in their communities, and about how important this is. I am 
sure that others in this body have had the opportunity, as I have, of 
visiting a nursing home or a senior citizen gathering and asking them: 
How many of you are paying out of your pocket for prescription drugs 
$25 or $50 or $75 a month? You see all the hands go up. You ask them: 
How many are paying $75 a month? You will find about half to three-
quarters of them. How many are paying $50? Half or three-quarters of 
them. How many are paying $100 or more? You will still see many of 
those hands in the air.
  We are finding that many of the senior citizens are skimping on their 
prescription drugs--they take half of it or skip days--despite all of 
the negative health implications that has.
  It is interesting that for the five most common preventable 
conditions or diseases in the elderly, just five preventable diseases 
for which prescription drugs are available, the Medicare

[[Page 18388]]

system pays $30 billion a year in hospitalizations. Many of those 
hospitalizations could have been avoided if those senior citizens had 
been able to afford the prescription drugs recommended by their 
doctors.
  That is what we are talking about. We are going to pay for it either 
on the front end or the back end.
  This motion makes sense because it is the right thing to do from a 
health point of view. It is the right thing to do from a bottom line 
point of view. It is necessary if we are going to meet our continuing 
responsibilities to our senior citizens.
  I would like to mention on the floor of the Senate a petition I just 
received from Silver Spring, MD. It is from the Homecrest House 
Resident Council in Silver Spring, MD. They wrote,

       We are enclosing our petition signed by most of our 300 
     residents. We are sure that we voice a concern of our friends 
     around the Nation, seniors and disabled. We do without other 
     necessities in order to buy needed medications.

  Here are the names from just one senior citizen center. Three hundred 
senior citizens and disabled persons. They understand the importance of 
this particular program.
  Again, this debate is about priorities. Are we going to have tax 
breaks for the wealthy and for special interests or are we going to 
have the protection of our seniors?
  Final point: I was listening with great interest to the debate on the 
other side about whether we are going to accept the House proposal. The 
fact is, that House proposal has a lot of tax goodies. There is the 
restoration of the three-martini lunch.
  Many Members thought we freed ourselves from the tax break for the 
three-martini lunch back in 1993. It is back in the House bill.
  This bill has all sorts of other tax goodies for special interests, 
tax goodies for various industries, including the insurance industry, 
the timber interests, the oil and gas industry, for foreign tax 
credits, and others that I think are questionable.
  Out of all those issue that are out there, I say prescription drugs 
for the elderly people are more important than putting into place the 
tax privileges in this bill.
  This motion will put the Senate on record in favor of closing the 
largest gap in Medicare. A vote to reject it is a vote to put a higher 
priority on new tax breaks for the wealthy than on quality medical care 
for senior citizens. I know where the American people stand. It is time 
for the Senate to decide where it stands.
  I hope this motion will be accepted.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. I yield myself 3 minutes. I want to comment on the 
history that our distinguished friend, the senior Senator from 
Massachusetts, makes about the origins of the Medicare program.
  He was the Senator at the time. I was a member of the administration 
at the time and was involved. A basic decision was made, and thank 
goodness it was, that Medicare, medical assistance to the aging, would 
not be a poverty program. It would not be dependent upon income. The 
idea was that programs for the poor inevitably become poor programs. I 
think this has been the case over the years.
  The second point I make deals with 1965 and the years that led up to 
it. The pharmaceutical revolution in ways began with the discovery of 
penicillin in London in the 1920s, and medications of the kind we know 
today have become a whole new phenomenon in medical care. There was a 
time when hospitals were about all you could do for ill people. Now so 
much more can be done, principally through pharmaceuticals.
  Indeed, if you had to make some bizarre choice between providing 
hospital care and providing the full range of pharmaceuticals, one 
could very well choose the latter.
  The Senator spoke of five lifesaving medications which are 
unavailable to people who instead go to hospitals where they can 
receive consolation, but no true treatment.
  This is a very wise and necessary motion. This Senator, for sure, 
will support it.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, I yield such time as I may consume.
  Mr. President, no one in the Senate is more concerned about Medicare 
and the program's beneficiaries than members of the Finance Committee. 
This year alone, our committee has held a dozen hearings looking into 
the needs and future of this important program. We are firm in our 
commitment to strengthen and preserve Medicare for the Americans who 
are now a part of the program, and for those who will depend on it in 
the years ahead.
  One of our areas of focus concerns prescription drug benefits, and we 
appreciate the seriousness with which the senior Senator from 
Massachusetts takes this issue. However, now is not the time and place 
to address this issue.
  The carefully crafted bipartisan Taxpayer Refund Act of 1999 leaves 
over $500 billion of the surplus for Congress to carefully weigh and 
meet the needs and long-term viability of Medicare. In September, we 
will turn our attention to addressing this most important concern.
  But we should not be pressured into simply accepting something that 
requires our most careful and studied attention.
  Testifying before the Finance Committee only last week, Comptroller 
General David M. Walker made it clear that Congress must take great 
care as we address Medicare reform. He reminded us that Congress has 
learned some sobering lessons about moving forward, pressed by 
political expediency to alter such an important program, without 
benefiting from careful study and deliberation.
  ``Effectiveness,'' Comptroller Walker reminded our committee, 
``involves collecting the data necessary to assess impact--separting 
the transitory from the permanent, and the trivial from the 
important.''
  ``Steadfastness is needed,'' Mr. Walker said, ``when particular 
interests pit the primacy of needs against the more global interest of 
making Medicare affordable, sustainable, and effective for current and 
future generations of Americans.
  This makes it all the more important that any new benefit expansion 
be carefully designed to balance needs and affordability both now and 
over the longer term.''
  Mr. President, Congress cannot haphazardly paste one politically 
motivated change after another on the Medicare program and call it 
reform. We must be careful. We must be deliberate. To know how 
important this is, we simply need to harken back to 1988, when 
Congress--again out of politics, and in a rush--pasted together the 
Medicare Catastrophic Coverage Act.
  Within six months of enacting that legislation, Congress and the 
people realized the debacle, and we were forced to repeal it within the 
year.
  So we've been down this road before, Mr. President. A rush to 
legislation that not only failed to serve those whom we intended to 
help, but that actually set back progress more than a decade.
  There is no question that Medicare reform is necessary. And there is 
agreement on both sides of the aisle that prescription drugs for the 
elderly must be a critical component of the reform. But now is not the 
time to address this issue. I can assure you that the committee will 
continue to proceed with Medicare reform as a top priority. We look 
forward to working with Senator Kennedy and others who are concerned 
about this issue. Likewise, we will continue to give the President's 
recent proposal careful consideration.
  By proceeding methodically, but cautiously, Mr. President, Congress 
will construct a reform package that is complete--one that meets the 
pressing needs in the lives of the seniors who depend on the Medicare 
program. The amendment Senator Kennedy offers--as well as the 
President's prescription drug benefit, as it now stands--provides only 
limited coverage to Medicare beneficiaries.

[[Page 18389]]

  By waiting . . . by proceeding constructively . . . and by working in 
a bipartisan effort to reform Medicare, Congress will--in the end--
provide a more complete and lasting reform--reform that will prepare 
the Medicare program for the new millennium.
  This effort does not have to wait long. The Finance Committee intends 
to continue our work on Medicare reform following the August recess.
  I fully intend to include a prescription drug option as part of the 
plan we will offer. At that time, the Senate will be able to more fully 
and carefully examine reform legislation. This will be in the long-term 
interests of everyone.
  I compliment Senator Kennedy on his continuing commitment in 
addressing social needs, but now is not the time to move on it.
  I ask my colleagues to vote against the Kennedy amendment.
  I yield the floor.
  Mr. KENNEDY. I yield to the Senator from Minnesota, 5 minutes.


                         Privilege Of The Floor

  Mr. WELLSTONE. Mr. President, I ask unanimous consent the privilege 
of the floor be granted to David Doleski, a fellow in my office.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. WELLSTONE. Mr. President, let me say to my colleague from 
Delaware, he said about four or five times, ``in the long term.'' That 
is not good enough. The long term is not good enough. When I am in 
Minnesota, and I travel the State, no matter where I go, in town 
meetings, there is a huge turnout of older citizens, of senior 
citizens. In my State of Minnesota there are probably about 800,000 
Medicare recipients, and only 35 percent have any kind of coverage at 
all for prescription drugs --35 percent. Two-thirds of elderly 
Minnesotans have no coverage; two-thirds in Minnesota have no coverage 
at all. It is not uncommon to meet someone who is spending $300 a month 
on a $1,000 monthly income. Mr. President, $300 a month on a $1,000 
monthly income.
  It is also not uncommon to meet with people who will tell you--
actually not in a public meeting. People are a little embarrassed to do 
it. But if you get to meet with people individually--they cut their 
pills in half. The problem is it doesn't give them half the benefit. 
Actually, it can be quite dangerous. Or if they don't cut their pills 
in half, there are people who just do not take them so they can put 
food on the table, or if they go out and buy what they need, then they 
do not put food on the table. I hear my colleagues on the other side 
saying ``in the long run.'' In the long run? What are we waiting for? 
What are we waiting for?
  You are talking about tax cuts. I was on the floor earlier when we 
were discussing the Gramm amendment, which I assume will be voted down. 
But take that one amendment: 60 percent of the benefit goes to the top 
10 percent. The average tax cut for the lowest income earners, the 
lowest 60 percent, earning below $38,000, would be $99. But if you have 
an income of over $300,000, it is a $20,000 tax cut. You are talking 
about $700 billion, $800 billion of tax cuts in the Republican 
proposal, crowding out any kind of investment like this; for example, 
affordable prescription drug costs for the elderly.
  We have another amendment, the Gramm amendment, which is class 
warfare. That is what it is. The people in Minnesota are scratching 
their heads saying: We would love to get some relief, us hard-pressed 
working people, but that is not what the Republican plan is.
  Now we have the Kennedy amendment on the floor, which I fully 
support, that speaks directly to the concerns and circumstances of 
older Americans. In my State of Minnesota, this is critically 
important. Only one-third of senior citizens have any prescription drug 
coverage at all. This is a burdensome cost. This is a health care 
issue. This is a public health issue.
  What made Medicare important--it was a huge step forward in 1965--is 
that it was a universal coverage program. When we extend prescription 
drug benefits to Medicare, we make it a universal care program. For my 
father and my mother, neither of whom are alive today, both of whom had 
Parkinson's disease, without Medicare they would have gone under. They 
never made any money. The kind of drugs they needed, and seniors need, 
for Parkinson's disease--I can talk about other diseases--they cannot 
afford them.
  I hear my good friend from Delaware say ``in the long run.'' The long 
run is too long. We are confronted with the urgency of now. This is a 
clear choice. You are either for the tax cuts, three-martini lunches, 
egregious breaks for large corporations, the vast amount of the money 
going to the highest income citizens, exploding the debt over the next 
10 years and then the next 10 years it gets worse; or why don't we be 
fiscally responsible? Why don't we pay the debt down, make sure we 
support Social Security and Medicare, investment in our children, and 
when we support Medicare, the best thing we could do would be to make 
sure there is prescription drug coverage for elderly Americans.
  I hope there will be 99 or 100 votes for this amendment. There should 
be.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. I yield 10 minutes to Senator Frist.
  The PRESIDING OFFICER. The Senator from Tennessee is recognized.
  Mr. FRIST. Mr. President, I rise to speak against the amendment 
offered by my colleague, the Senator from Massachusetts. The Senator 
from Massachusetts has introduced an amendment which suggests we set 
aside this bill, recommitting it to the committee of jurisdiction, so 
they will incorporate funding for a new prescription drug benefit in 
the existing Medicare program.
  I have several points to make. First of all, I think most important 
is that the Senate, this very body, has already set aside funds for 
Medicare modernization. This has now become a familiar chart on the 
floor of the Senate, but I think it is very important. It goes right to 
the heart of why this amendment should and hopefully will be defeated 
today. This is the plan. The U.S. Congress' use of the surplus, the 
almost $3.3 trillion surplus: Debt reduction, $1.9 trillion; tax cuts, 
$792 billion. We talked about that. But what is most important for this 
particular amendment is the $505 billion that is set aside over the 
next 10 years to specifically address issues such as Medicare 
modernization, including things such as the prescription drugs, which 
I, as a physician, believe is very important that we address as we 
modernize, strengthen, and bring Medicare up to date.
  Let me repeat: The Senate, this very body, has already set aside 
funds for Medicare modernization, including prescription drug coverage.
  First, what have we done? How can I say that with such determination? 
The congressional budget plan has $505 billion over 10 years. Very 
specifically, we say it again and again and again; it is for domestic 
priorities. That money is set aside, aside from the tax cuts, the tax 
relief, and the debt reduction.
  No. 2, the Senate has already specifically, in a reserve fund, set 
aside $90 billion, in a reserve fund, for long-term Medicare reform. 
Again, I refer people to April 15, the day we passed in this very body 
the concurrent resolution for the year 2000, in section 203, reserve 
fund for Medicare. We lay it out. The charts are in the back, in terms 
of coming up with the $92.4 billion over 10 years.
  No. 1, $505 billion is set aside for such things as Medicare 
modernization; No. 2, we specifically set aside $90 billion for 
Medicare modernization in a reserve fund, which I quoted from.
  No. 3, in the President's very plan, which he introduced a couple of 
weeks ago, the net cost of the coverage, he said, for prescription drug 
coverage, was $46 billion for 10 years. That $46 billion is much less 
than the $90 billion we have already put in our reserve fund and is 
only a tenth of the $505 billion we set aside, but we do it right. We 
have a real plan. We do not do it piecemeal. We modernize, update, 
bring to life a system that was very good for 1965, 1970, 1980, 1990, 
but it is not good for the year 2000, 20005, 2010, specifically when 
the demographic shift hits,

[[Page 18390]]

when we have a doubling of the number of seniors when we go forward. 
That is the framework we set forward, and it is what we need to 
address.
  Our job, our challenge now that we have the money set aside --we do 
not need to recommit it, send it back for more dollars and cents--is to 
fix the system inside this framework, and we do it in three ways. We 
need to modernize Medicare benefits, bring it up to date. The 1965 car 
is not up to today's standards and we can modernize it. We 
demonstrated, through a bipartisan plan, the Medicare Commission--I 
will come back to what we actually said. We need to modernize. No. 2, 
we need to strengthen our Medicare commitment, our commitment to the 
seniors, the generation of today, the future generation--we need to 
make sure we can fulfill that commitment. And No. 3, the issue of 
prescription drugs.
  Shortly after I came to the Senate, about 5 years ago, I had a 
patient who was a transplant patient, somebody whom I transplanted. 
When I was running for reelection, he was 64 years of age. When I 
transplanted him, he was about 62. When I was elected in 1965, he had 
Medicare. He had to give up his private plan. His private plan did 
cover prescription drugs. When he got to be 65, because we do not have 
a modern Medicare program there today, he had to give that up.
  What we need is a system that doesn't only focus on prescription 
drugs but modernizes the overall program to match individual patients 
in a system which values choice, values freedom with those specific 
needs. That is what we set out to do in the Bipartisan Commission.
  We need to strengthen our Medicare program so it will be there. We 
all know most young people today do not believe Medicare will be there 
for them. We need to make sure that it is.
  Prescription drugs for our seniors and individuals with 
disabilities--again, somebody with diabetes is going to be on 
prescription drugs later. Someone with chronic heart disease or 
debilitating arthritis needs prescription drugs. It shows the 
inadequacy of our Medicare system today in the fact we do reimburse for 
hospital beds, we reimburse a little bit for preventive care, but not 
enough, and not anything at all for those people who need prescription 
drugs.
  I say this because I am the strongest advocate, or as strong as 
others, that we must make prescription drugs a part of our proposal. 
The Bipartisan Medicare Commission--bipartisan, Democrat, Republican, 
17 members--got together and came up with something that has 
comprehensive Medicare modernization and reform, of which prescription 
drugs is an integral part, to upgrade that machine which is going to be 
serving all of us someday.
  How did we do it?
  No. 1, we provide full Federal funding for immediate prescription 
drug coverage for low-income seniors; that is, up to 135 percent of 
poverty.
  No. 2, we require in the National Bipartisan Commission--I should 
say, our recommendation was approved by a majority of the members, not 
a supermajority, but a majority of members did vote for that--it 
required all plans participating with the Medicare program to make an 
enhanced benefit package available which includes prescription drug 
coverage and protects seniors against unlimited out-of-pocket spending.
  No. 3, in that National Bipartisan Commission, we require the medigap 
programs--all plans--to include prescription drugs, to make those drugs 
available in a policy. There are other prescription drug proposals out 
there that need to be discussed and should be discussed.
  President Clinton put a proposal on the table. That program, I 
believe, is inadequate for a whole host of reasons which I hope we have 
the opportunity to discuss as we go forward.
  It is a little disingenuous to say--and I think in some ways this 
amendment at least implies that--that hard-working families do not 
deserve tax relief today, which we have shown we can give with the 
priorities that have been laid out, until we set aside funds for 
Medicare modernization by just adding prescription drug benefits, 
because we have set that money aside; this body has done that.
  The challenge before us, and the work before us, is to modernize 
Medicare, to strengthen Medicare so that it will be there for the next 
generation, with a focus on the patient, to make it less rigid, more 
comprehensive, have more preventive care, have it be less costly to the 
seniors. We should be able to do that. There are solid proposals before 
us to do that.
  Let me briefly talk about what this Medicare Commission came up with. 
Again, remember that the majority of members supported this proposal. 
We did not have a supermajority.
  The four appointees by the President of the United States voted 
against this proposal, but a majority of members, 10 of the 17, did 
vote in favor of it. What it basically does is set up a Medicare board 
to oversee a group of plans which could be, in many ways, individually 
tailored to the needs of a heart transplant patient or chronic care 
patient, but all having the same core benefits that we have today.
  The prescription drug coverage we proposed and that a majority of 
members of the Bipartisan Commission agreed to is as follows:
  Basically, prescription drugs today are provided for about 28 million 
people. Sixty-five percent of people in Medicare today have some 
prescription drug coverage. How do they get it? Employer-sponsored 
plans, with Medicaid and Medicare--we call for both; it is called dual 
eligible--and medigap insurance.
  The proposal we came up with, and hopefully we are ultimately going 
to pass once we meet that challenge, is prescription drugs provided 
through employer-sponsored plans today, dual eligible today, and 
medigap today. This group provides about 65 percent of all Medicare 
recipients, individuals with disabilities, and senior citizens with 
some coverage. It can be strengthened with some coverage.
  We basically say let's supplement that, let's direct our attention at 
the 35 percent of people who do not, and we do that through focusing on 
low income, up to 135 percent, No. 1, and, No. 2, saying anybody who is 
going to come to the table and participates in a plan--Mr. President, I 
ask for 2 more minutes to complete my remarks.
  Mr. ROTH. I yield 2 more minutes.
  Mr. FRIST. Thus, our proposal, which we have discussed, to fix the 
system will supplement by offering people up to 135 percent complete 
and full coverage, a high option plan for anybody who actually comes to 
the table.
  I present all this today to make the point that, No. 1, the money, 
the budgetary framework, has been set, has been passed by the Senate. 
We set aside the $505 billion specifically in the resolution; the $90 
billion--the President's own plan costs only $46 billion, and we have 
already addressed the problem of the money. The job of the Senate and 
the Congress is to fix the system for the American people. A bipartisan 
proposal that is on the table is the premium support plan.
  Let's look at other plans. Let's not drop that issue. That is 
unnecessary. Supporting the Kennedy amendment does not do that today. 
We need to support freedom for seniors, give that freedom of choice, 
that freedom to match specific needs with a plan. We need to address 
Medicare. We have a plan to do that. We have already set aside the 
resources to do that.
  The political tactics we are witnessing do nothing to modernize 
Medicare, do nothing to focus on that individual patient and the 
quality of care they receive.
  I close by saying that before 2 o'clock or in the next 2 to 3 
minutes, I will be submitting an amendment which addresses the Medicare 
issue.
  The PRESIDING OFFICER. The Senator's time has expired.
  Who yields time?
  Mr. KENNEDY. I yield 6 minutes to the Senator from West Virginia.
  The PRESIDING OFFICER (Mr. Voinovich). The Senator from West Virginia 
is recognized.
  Mr. ROCKEFELLER. Mr. President, I have several points to make. The 
other side has talked constantly about we are going to fix the system. 
We cannot

[[Page 18391]]

do prescription drugs until we fix the system. It is a question totally 
of priorities. I will put a little dose of reality into this.
  No matter what my colleagues on either side of the aisle might think, 
we are not going to reform Medicare this year on a systemic basis. If 
it happens the way the majority party wants, it is going to be vetoed 
by the President. It is not going to happen.
  The question before the Senate on this amendment is, Do we want to 
take the tens of millions of Americans who have no prescription drugs 
and give them the benefit of prescription drugs now through voting for 
the Kennedy amendment, of which I am proud to be a cosponsor, or do we 
want to say, oh, let's wait and fix the system, and then when we fix 
the system, which may be 3, 4, 5, 6 years from now, we will do 
prescription drugs because that is sort of neat and orderly?
  The world does not work like that. The real world of the Congress and 
the White House does not work like that. We are either going to do tax 
cuts as they want to do it over there, or we are going to do 
prescription drugs and maybe some modest tax cuts as we want to do it 
over here. That is the choice that needs to be made.
  The distinguished chairman of the Finance Committee, Senator Roth, 
talked about catastrophic health care. He said beware of that 
experience. My reaction is the opposite. Remember that experience as 
the reason not to back off from making a hard choice. That was one of 
the best bills on health care this Congress ever passed. The Senate did 
not back off on catastrophic health insurance. Three times they tried 
to repeal it in the Senate, and 3 times we had 73 votes to defeat 
repeal because catastrophic health insurance was a good thing for 
seniors. We did not get the message out to seniors. That was our fault. 
But do not say beware of catastrophic health insurance. The House 
backed off. We did not. It was good legislation.
  We are here to do the right thing. The right thing is to pick between 
the priorities. Do we want to wait 4, 5, 6, 8 years to fix Medicare 
until we get a bipartisan consensus? People talk about a bipartisan 
consensus for Medicare reform. It is not here. They talk about the 
Breaux-Thomas commission, the Medicare Commission. Everybody talks 
about the bipartisan thing. It was not bipartisan.
  There were two Democrats who voted for it, yes, but it was not 
bipartisan. There is not a bipartisan consensus on the floor of the 
Senate today of what to do about Medicare, and there will not be one 
until we have some more iterations which I cannot yet explain because I 
am unable to.
  Are we going to stand quietly by while the average senior in West 
Virginia has a gross income, from all sources, of $10,600 a year, and 
from which you then are to subtract $2,000, virtually all on 
prescription drugs or on medical out-of-pocket expenses, leaving that 
senior with $8,600 a year to live all of life? Are we going to let that 
person hang until the Senate, in its ultimate wisdom, comes to a sense 
of what is Medicare reform, and are we going to agree on it?
  My priority is to do prescription drugs now. Pass the Kennedy 
amendment. Do it now. They talk about having a $90 billion reserve. The 
Senator from Tennessee said we have fixed the problem. I am very sorry 
to say that that reserve talks about ``may be spent for,'' so it might 
be prescription drugs, it might be disasters, it might be a whole 
series of things, but there is no Medicare prescription drug benefit 
that is in their plan.
  In fact, if I could put it more boldly, under the Republican tax 
plan, there is no money for Medicare reform. There is no money for 
prescription drugs. It does not exist. I will hear arguments, and 
numbers will be thrown back and forth, but that is the fact. It does 
not exist. That is the reason for the Kennedy amendment--to make us 
pick a priority: Tax cuts, for the most part for people who do not need 
them or, in a very small measure, in a very small amount of money, 
prescription drugs for people who desperately need them, who do not in 
the form of a cliche but in the form of real life, have to pick each 
week whether they are going to eat, have heat in their homes, or have 
prescription drugs.
  I say to the Presiding Officer, I say to my colleagues, try to live 
on $8,600 a year, as our seniors do in West Virginia. You could not do 
it. Prescription drugs are the reason the money gets so scarce for 
them. We can solve that problem by passing the Kennedy amendment. I 
think we have an absolute moral obligation to do so.
  To wait for Medicare reform to be fully formed is a hoax upon those 
people. They do not know that we do not have a consensus on how to 
reform Medicare. They do know that they are hurting. They do know that 
they do not have prescription drugs. And they do know that some of them 
take up to 12 drugs a day, and they cost, and it is coming out of their 
pockets.
  Medicare has no prescription drug benefits. These seniors are not on 
Medicaid; they are on Medicare. So they have nothing. So the money has 
to come out of their pocket. That is wrong in America.
  So the question is the priority. Are we for giving those people 
prescription drugs--a modest amount of money--or are we for simply 
going ahead with the $792 billion tax cut and then saying, well, we 
will just wait until Medicare is reformed someday, and then perhaps we 
will consider prescription drugs? I think the choice is clear.
  I thank the Presiding Officer.
  The PRESIDING OFFICER. Who yields time?
  Mr. ROTH. I yield 2 minutes to the distinguished Senator from 
Louisiana.
  Mr. BREAUX. I thank the chairman of the Finance Committee.
  I will be very brief and comment on the amendment of my good friend, 
the senior Senator from Massachusetts.
  I do not think there is any disagreement that we ought to have 
prescription drugs in the Medicare program. But it is interesting that 
the recommittal motion tells the Finance Committee to report it back in 
3 days. I guess we could go over the weekend and, on Friday, Saturday, 
and Sunday write a prescription drug program and modernize Medicare and 
reform Medicare, but I doubt whether that is humanly possible, unless 
the senior Senator from New York wants to spend the weekend doing all 
of this and finishing it up by Monday morning.
  There is no question that there is a need for prescription drugs in 
the Medicare program. But I say to my colleagues, that is not the way 
to fix Medicare. We have a program that is becoming insolvent. It is 
going broke in the year 2015. Just adding more benefits to the program, 
without reforming the structure of the program, is like having dessert 
before you eat your spinach. It is easy to add more benefits to a 
program. But bear in mind, we have a program that is structurally going 
insolvent. We spend more money today than we take in. Just adding more 
benefits, without taking the time to fundamentally reform the program, 
is not the answer.
  The distinguished chairman of the Finance Committee said he planned 
to actually begin a markup in September on a comprehensive Medicare 
reform bill which will include prescription drugs, doing it in a timely 
fashion. I suggest that after that is reported out, that is the time to 
look at how much money we need, and then pare down the tax cut, combine 
the two, and have something that can be signed into law.
  I think, obviously, we cannot do it in the next 3 days. I think the 
chairman has outlined a program that makes more sense and that I think 
is really doable.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. ROTH. I yield 8 minutes to Senator Domenici.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. Mr. Chairman, fellow Senators, I did not know that 
Senator Breaux was going to come to the floor. I am delighted that he 
has. I want to state how consistent he has been over the months by just 
putting a quote from the distinguished Senator from Louisiana, a 
Democrat, here for everybody to see:


[[Page 18392]]

       Medicare must not be used as a wedge issue any longer. The 
     question before this Congress is not whether to cut taxes or 
     whether to save Medicare. That's not the choice we're facing. 
     I support a tax cut, targeted, and I'm dedicated to saving 
     Medicare. It's not an either/or position.

  That is from a distinguished Senator who is on the committee that 
will do both--will reform Medicare and will write the tax laws. I give 
him a great deal of credit because he is a man of his word when it 
comes to these issues.
  Frankly, it is not correct that it is either Medicare, prescription 
drugs, reform, or tax cuts. The truth of the matter is, Senator Bill 
Frist has just showed you.
  I hear Senator after Senator get up on that side and say there is no 
money for Medicare in this budget, there is no room after the tax cut.
  Let me repeat, I went back and asked the Congressional Budget Office 
to do an analysis and assume that we froze discretionary spending. We 
put in the tax cut, we put in the $1.9 trillion for Social Security, 
and we asked them: How much money can be added to discretionary 
spending and Medicare reform and still live within the estimated 
surplus? And they told us--$505 billion.
  I say to the seniors in this country, I believe you have witnessed 
here on the floor, through the good work of Chairman Bill Roth and the 
Finance Committee--I say to the seniors across America, I have seen 
them produce a tax bill that I believe you will love because you care 
about your sons and daughters; you care about the married members of 
your family. This bill before us stops penalizing marriage for 22 
million American families. I ask the seniors, isn't that a good piece 
of work? It makes child care more available for your grandchildren. 
Isn't that a good piece of work? It makes child care more accessible. 
And guess what. The President plans to veto these--all in the name of 
``we can't afford tax cuts.''
  To be honest with you, the truth of the matter is, when you finish 
with that Congressional Budget Office analysis, you are spending 23.4 
percent of the surplus for tax cuts, you are putting the entire Social 
Security surplus aside, and you still have $505 billion to be used over 
the next decade for high-priority items. So for those who have come to 
the floor and said there is no money, there is $505 billion over the 
next decade. Do you want to use $100 billion of it for Medicare? Some 
say that is too much. The President thought $46 billion was enough. 
That is very interesting. We still have people talking about how much 
money we are going to need to reform Medicare. I don't know how much. I 
trust the Finance Committee, under the leadership of Bill Roth, to 
produce a bipartisan bill. The President had proposed $46 billion as 
the entire amount necessary. Remember, the chart my friend Bill Frist 
put up said there is $505 billion over the next decade.
  Mr. BAUCUS. Will the Senator yield?
  Mr. DOMENICI. I will yield in a little bit. You want to ask about the 
authenticity of my charts. I already explained it and you weren't here.
  Mr. BAUCUS. I want to hear it.
  Mr. DOMENICI. I heard your attack on it last night, but I was home so 
I couldn't come down here.
  Mr. BAUCUS. Well, you stayed away.
  Mr. DOMENICI. Let me finish.
  The President asked for $46 billion for the entire reform package on 
Medicare. What are we talking about? Holding up a tax bill that takes 
care of the married sons and daughters of our senior citizens across 
America. They have children and need all these things that the Tax Code 
provides? They say, we just want to do anything but give them help, so 
we will even hold up their bill, claiming we are really holding it up 
for you seniors because we want to take care of Medicare.
  Frankly, I have nothing but compliments for the distinguished Senator 
from Massachusetts, Mr. Kennedy, because he is one who is concerned 
about this. But I am equally comfortable in saying I am. I think 
Senator Bill Roth of Delaware is concerned about it. I think Senator 
Breaux is concerned about it. Frankly, I believe we are going to have 
plenty of money left over to fix that Medicare problem from that $505 
billion.
  Now, if the Senator wants me to explain this budget, I will explain 
it right now.
  Mr. BAUCUS. I have a question.
  Mr. DOMENICI. That is a CBO number.
  Mr. BAUCUS. The number on your chart that says CBO/Senate Budget 
Committee, that is really a Senate Budget Committee number. That is not 
a CBO number.
  Mr. DOMENICI. Mr. President, the truth of the matter is, we can ask 
the Congressional Budget Office any questions we would like. We asked 
them how much is the surplus, if you freeze discretionary programs at 
this year's level for 10 years. They said these are the numbers.
  Mr. BAUCUS. That is correct. That is CBO.
  Mr. DOMENICI. That is CBO numbers.
  Mr. BAUCUS. If I might ask another question. Basically, the CBO 
baseline we are all working under, House and Senate, is the baseline 
which assumes that after the caps expire by 2002, spending under the 
discretionary caps will proceed at inflation.
  Mr. DOMENICI. That is not true.
  Mr. BAUCUS. It is true. That is the assumption.
  Mr. DOMENICI. That is not true, Senator. I did the budget resolution.
  Mr. BAUCUS. What you have done is, you have gone back to CBO and 
said, OK, let's assume that there is no inflationary increase.
  Mr. DOMENICI. That is right.
  Mr. BAUCUS. Which is not CBO's assumption. But what you have done is, 
in order to show there may be, under your figures, there may be a $500-
, $400 billion in spending, the yellow mark, you went back to CBO and 
said, I need to show a number, that yellow bunch there. What you did 
was, you said, CBO----
  Mr. DOMENICI. Is this off my time?
  Mr. BAUCUS. Just a second. You said, OK, CBO, give me a baseline that 
I want you to produce. What I want you to produce is a baseline that 
shows no inflation after the year 2000 on spending caps up to the rest 
of the 10-year period.
  If you do that, of course, you get that chart. But that is not the 
CBO numbers under which the Senate Finance Committee operated. That is 
not the numbers under which the House operated. That is not the numbers 
under which the rest of us operated. So that is why I am saying we are 
not operating off the same numbers. You produced your own numbers by 
telling CBO to produce them the way you wanted them produced.
  Mr. DOMENICI. Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. A minute of the time yielded.
  Mr. DOMENICI. I ask Senator Roth, may I have 1 additional minute?
  Mr. ROTH. One minute.
  Mr. DOMENICI. Let me assure fellow Senators and explain what this is. 
This is a true assessment of the surplus in total dollars, if you 
assume that for the next 10 years discretionary spending is frozen. I 
did that so we could find out how much new money is there, available to 
spend, because the discretionary programs are not entitled to an 
inflationary add-on. They are entitled to what we add on. If you want 
to know where their numbers came from, they came from the budget 
resolution we produced, which had $181 billion in discretionary 
spending. That was something we came up with. I asked them to take that 
out. And when they took it out, they said: Now you have this much to 
spend. You have $505 billion.
  If you would like to certify that and ask the Congressional Budget 
Office, is this correct, they will tell you absolutely, because we got 
it from them.
  Mr. President, I am not going to answer questions now because I want 
to finish my argument.
  The PRESIDING OFFICER. There is a half minute left under the control 
of the Senator from Delaware. The Senator from New York has 5 minutes 
51 seconds.
  Who yields time?
  Mr. DOMENICI. He just yielded me a half minute.
  The PRESIDING OFFICER. A half minute has been yielded by the Senator 
from Delaware.

[[Page 18393]]


  Mr. DOMENICI. Whatever baseline anybody wants to use, there is 
roughly $405 billion above a freeze available to be spent on 
discretionary spending and on Medicare reform. That is all we try to 
show in this chart. Before you start the chart, you can spend however 
much you want, but I decided to spend none so we could put in 
perspective how much there is that we can spend out of this surplus, 
and these are authentic numbers. They are correct, if you start with 
that assumption.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. KENNEDY. How much time do I have?
  The PRESIDING OFFICER. Five minutes 51 seconds.
  Mr. KENNEDY. I yield a minute to the Senator from Montana.
  Mr. BAUCUS. Mr. President, the point I am making is, those numbers 
are accurate, if you believe the assumptions behind the chart. The 
assumptions behind the chart are no increases, not even inflationary 
adjustment, for discretionary spending over the next 10 years. I think 
that is an unrealistic assumption. And it is, in effect, a reduction of 
some $500 billion over 10 years. If you add in the $127 billion for 
defense, that means, in effect, about a $775 billion reduction in 
domestic spending. So again, he is right, if you make those 
assumptions. I say those assumptions are unrealistic.
  Mr. KENNEDY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, to come back to a very basic and 
fundamental concept, we believe it is as important to give assurances 
to our senior citizens that there will be a prescription drug benefit 
for them as it is to have significant tax breaks. That is what this is 
about.
  Those that oppose us say they have a different conclusion, a 
different priority. They think tax breaks are preferable. Then they 
make other assumptions in terms of what is going to be available at 
some future time.
  I am not going to spend the last few minutes on this dispute, because 
this has been debated over the past few days, but the Wall Street 
Journal, the CBO, and OMB have basically indicated that if we go 
through with the kind of tax cut that is being proposed and advanced by 
our Republican friends, there just won't be resources left to deal with 
the elderly, the children and other priorities.
  I say, why ask the senior citizens to wait? Why should they always be 
the ones who have to wait? Why shouldn't we say that the Senate will 
put aside the amount necessary to afford a good benefit program on 
prescription drugs as part of this legislation?
  We want to give them the assurance that they are going to be 
protected. Why leave it iffy to the seniors? Why are they always the 
ones left behind? That is the question. This is an issue of priority.
  We say, if you are going to go down this road with regard to tax 
breaks that benefit the wealthy, let's make sure we are going to 
allocate some funds for a prescription drug benefit for the senior 
citizens and disabled persons who are on Medicare.
  My friend and colleague from Louisiana said we can't do that over 
this period of time. Well, they are going to have a conference on the 
two tax bills over the weekend. If they can have a conference on these 
two bills over the weekend, they ought to be able to get together and 
allocate sufficient funds for a prescription drug benefit in about half 
an hour. In the Finance Committee, we know they can do that within an 
hour. They can do it forthwith--introduce and report back with funds 
reserved for a benefit program. But we wanted to leave this up to the 
Finance Committee. This should not be a procedural issue, and it is 
not. Those of us who are supporting it are telling every senior citizen 
that we believe they are a priority, that their interests are 
important, and that their health care needs will be met. This isn't 
only an issue for the health care of the senior citizens; this matters 
to their children and grandchildren. They have an interest in the 
health care of their parents and grandparents.
  We ought to be able to have a Finance Committee that can report back 
allocations of resources and say a sufficient amount will be reserved 
for prescription drugs. We will go ahead with the rest, but this is 
reserved for prescription drugs for all of those in Medicare. Let the 
Finance Committee work that process out, either as part of the Medicare 
proposal or as a separate proposal.
  This is what this is about--priorities. It is about priorities. Those 
of us who are supporting it are giving the priorities to our senior 
citizens.
  Finally, how much time do I have remaining?
  The PRESIDING OFFICER. One minute 50 seconds.
  Mr. KENNEDY. Mr. President, I ask unanimous consent a group of 
letters from various groups that support this motion be printed in the 
Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                              The National Council


                                                 on the Aging,

                                    Washington, DC, July 28, 1999.
     Senator Edward Kennedy,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator Kennedy: On behalf of the National Council on 
     the Aging--the nation's first organization formed to 
     represent older Americans and those who serve them--we write 
     to oppose the irresponsible tax cut proposal reported out of 
     the Senate Finance Committee and to support your amendment to 
     dedicate a portion of the tax cuts to a new prescription drug 
     benefit available to all Medicare beneficiaries.
       We are deeply disappointed in the Finance Committee's 
     irresponsible decision to squander virtually the entire non-
     Social Security surplus on a massive tax cut. If this 
     proposal were to become law, it would be impossible to 
     protect and strengthen Medicare for the future. Without 
     surplus or other new revenues, the Medicare program cannot 
     remain strong while adding a meaningful new prescription drug 
     benefit.
       The Finance Committee tax cut proposal ignores the 
     impending retirement of a vast number of baby boomers. With 
     the Medicare population doubling by 2035 and a tax cut that 
     would balloon to almost $3 trillion in the second 10 years, 
     there would be no way to protect America's seniors, ensure 
     future solvency and provide adequate drug coverage. The 
     numbers simply do not add up.
       We are also extremely concerned that such a tax cut would 
     lead to drastic cuts in domestic programs that vulnerable 
     seniors depend on. The cuts would undermine such Older 
     Americans Act programs as meals on wheels, protections 
     against abuse and neglect, and home care services. The 
     proposal clearly assumes that programs like these would be 
     cut significantly.
       The Senate Finance Committee tax cut proposals would rob 
     Medicare of the funds needed for modernization and future 
     solvency and drastically cut programs frail seniors need to 
     remain independent. This massive tax cut is bad medicine for 
     older Americans.
       We deeply appreciate your efforts to attempt to protect and 
     strengthen the Medicare program and its beneficiaries and to 
     add a meaningful new prescription drug benefit.
           Sincerely,
                                                     James Firman,
     President and CEO.
                                  ____



                           National Hispanic Council on Aging,

                                   Washington, DC., July 28, 1999.
     Hon. Edward M. Kennedy,
     Russell Office Building,
     Washington, DC.
       Dear Senator Kennedy: The National Hispanic Council on 
     Aging (NHCoA), its chapters and affiliates, enthusiastically 
     support your amendment to the Budget Reconciliation Bill 
     S1429 that allows for medical prescription drugs for those in 
     need. Elderly, of every economic means, will greatly benefit 
     from this amendment.
       It is our hope that the proposed cuts in taxes bill is not 
     approved. Rather, that these monies are used in a more 
     productive way benefiting those in need in general and 
     elderly in particular.
           Sincerely,
                                           Marta Sotomayor, Ph.D.,
     President.
                                  ____



                                  American Nurses Association,

                                    Washington, DC, July 28, 1999.
     Hon. Edward M. Kennedy,
     U.S. Senate,
     Washington, DC.
       Dear Senator Kennedy: The American Nurses Association, the 
     only full-service professional organization representing the 
     nation's registered nurses through its 53 constituent 
     associations, strongly supports your amendment to S. 1429, 
     the Budget Reconciliation bill now being considered by the 
     Senate, that would direct the development and implementation 
     of a prescription drug benefit for Medicare.

[[Page 18394]]

       ANA believes that enhancing the benefits package available 
     under Medicare, including a prescription drug benefit, would 
     enable beneficiaries to receive earlier, better, and more 
     comprehensive care. The use of part of the projected budget 
     surplus to pay for this benefit is an appropriate use of 
     those funds and is crucial to improving health and outcomes 
     for Medicare beneficiaries.
       We appreciate your leadership on this issue and look 
     forward to continuing our work together to include this 
     amendment in the Budget Reconciliation bill.
           Sincerely,
                                              Marjorie Vanderbilt,
     Director of Government Affairs.
                                  ____



                          National Council of Senior Citizens,

                                 Silver Spring, MD, July 28, 1999.
     Senator Edward M. Kennedy,
     U.S. Senate,
     Washington, DC.
       Dear Senator Kennedy: The National Council of Senior 
     Citizens (NCSC) is following closely the debate on S. 1429, 
     the Finance Committee tax bill. It is important that any tax 
     bill this session allows for the use of some of the expected 
     on-budget surplus to bolster the Medicare program and create 
     a universal Medicare pharmaceutical benefit.
       NCSC, therefore, strongly supports your motion to recommit 
     S. 1429 back to the Finance Committee and to enact a 
     pharmaceutical benefit for all Medicare beneficiaries. NCSC 
     believes that the Congress must use this historic fiscal 
     opportunity assure Medicare's solvency and to meet the 
     pharmaceutical needs of forty million Medicare beneficiaries.
       We urge all members of the Senate to support your motion to 
     recommit.
           Sincerely,
                                                   Steve Protulis,
     Executive Director.
                                  ____

         National Committee to Preserve Social Security and 
           Medicare,
                                    Washington, DC, July 28, 1999.
     Hon. Edward M. Kennedy,
     U.S. Senate,
     Washington, DC.
       Dear Senator Kennedy: On behalf of about five million 
     members and supporters of the National Committee to Preserve 
     Social Security and Medicare, I am pleased to endorse your 
     amendment to the Taxpayer Refund Act of 1999, S. 1429. I 
     understand that your amendment would earmark a portion of 
     projected budget surpluses to establish a universal 
     prescription drug benefit under Medicare.
       Medicare beneficiaries spend nearly three times as much on 
     out of pocket costs as the under 65 population, significantly 
     because of the absence of prescription drugs in the basic 
     benefits package. Three-fourths of Medicare beneficiaries 
     have some chronic health problems, which require ongoing 
     treatment with prescription drugs. Many seniors do not fill 
     prescriptions or skip required doses because of cost 
     considerations.
       It is imperative that we do not squander the opportunity 
     presented by projected surpluses. Our first priority must be 
     to extend Social Security solvency, improve and strengthen 
     Medicare, and pay down the federal debt. Your amendment would 
     modernize Medicare benefits in a way that meets one of the 
     most pressing needs for current and future seniors. We 
     support your amendment and applaud your consistent leadership 
     on this issue.
           Sincerely,
                                                Martha A. McSteen,
     President.
                                  ____



                                          Epilepsy Foundation,

                                      Landover, MD, July 28, 1999.
     Hon. Edward M. Kennedy,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator Kennedy: On behalf of the Epilepsy Foundation, 
     the national voluntary organization that works for people 
     affected by seizures through research, education, advocacy 
     and service, this is to support your efforts to provide 
     funding for a Medicare drug benefit program. As the Senate 
     considers S. 1429, The Budget Reconciliation Bill, it is 
     particularly important to assure that Medicare beneficiaries 
     with epilepsy, for whom out-of-pocket expenses for seizure 
     medications can be significant, have access to prescription 
     medications at an affordable price. We also commend your 
     support for other programs important to individuals with 
     epilepsy who may face limited financial resources, such as 
     Medicaid and Social Security.
       As baby boomers age, there will be increasing numbers of 
     age-related seizure disorders. It is estimated that 61,000 
     new cases of epilepsy occur each year among elderly 
     Americans. By the year 2020, it is projected that one out of 
     every two people developing epilepsy will be over the age of 
     65.
       In addition, many low-income, young, disabled individuals 
     with epilepsy are Medicare beneficiaries. For these 
     individuals, access to prescription drug coverage at an 
     affordable price is difficult.
       I look forward to working with you to ensure that Medicare 
     beneficiaries with epilepsy can continue to afford to follow 
     their prescribed drug therapy.
           Sincerely,
                                                   Eric R. Hargis,
     President and Chief Executive Officer.
                                  ____



                                              Consumers Union,

                                    Washington, DC, July 28, 1999.
     Hon. Edward M. Kennedy,
     U.S. Senate,
     Washington, DC.
       Dear Senator Kennedy: Consumers Union supports your 
     prescription drug amendment which is consistent with our goal 
     of extending affordable prescription drug coverage to all 
     Medicare beneficiaries.
       The need is great. The average Medicare beneficiary uses 18 
     prescriptions each year, and average prescription drug 
     spending is projected to be $1,100 in the year 2000. More 
     than half will spend over $500. Seniors and other Medicare 
     beneficiaries suffer financial hardship because of their out-
     of-pocket prescription drug costs.
       Private prescription drug coverage is inadequate, over-
     priced, and not even available to many beneficiaries who can 
     be denied coverage. Only 24 percent of Medicare beneficiaries 
     have retiree drug coverage, and this number is expected to 
     decrease. Medicare HMO coverage for prescriptions is not 
     available in all geographic areas, and has proven unreliable 
     with many HMO's pulling out of the market. Some medigap 
     policies offer prescription drug coverage, but coverage is 
     very limited and the extra premium charged for a policy with 
     prescription drug coverage is likely to actually exceed the 
     maximum benefit. Our analysis of medigap policies on the 
     market during 1998 (for 75-year-olds) found that the average 
     premium for medigap plan I, which provides at most a $1,250 
     prescription drug benefit, was about $1,850 higher than the 
     average premium for medigap Plan C (which has nearly 
     identical benefits other than the prescription drug benefit). 
     This coverage represents extremely poor value for consumers.
       The potential for prescription drugs to benefit those 
     covered by Medicare has increased substantially since 
     Medicare was enacted. Our nation's thriving economy and our 
     government's dramatically improved budget status make this 
     the right time to take this urgently needed step.
           Sincerely,

                                                 Gail Shearer,

                                 Director, Health Policy Analysis,
     Washington Office.
                                  ____

                                                The Gerontological


                                           Society of America,

                                    Washington, DC, July 28, 1999.
     Hon. Edward M. Kennedy,
     U.S. Senate,
     Washington, DC.
       Dear Senator Kennedy: This letter is written in support of 
     your amendment S. 1429 to the Budget Reconciliation Bill. The 
     Gerontological Society of America, an organization of 6,000 
     professionals in the field of aging, is vitally concerned 
     that the tax cuts as proposed in the current Budget 
     Reconciliation Bill will seriously jeopardize support for 
     prescription drug coverage under Medicare.
       The cost of prescription drugs has increased at an average 
     of 6 percent annually and is the leading factor in today's 
     rising health care costs. This has particular impact on 
     elderly as they are more likely to be using, and even 
     dependent on, multiple prescription drugs.
       I hope you are successful in convincing your colleagues to 
     support this important amendment.
           Sincerely,
                                                  Carol A. Schutz,
     Executive Director.
                                  ____

                                           Consortium for Citizens


                                            With Disabilities,

                                    Washington, DC, July 28, 1999.
     Re Kennedy amendment on prescription drugs.

     Hon. Edward M. Kennedy,
     U.S. Senate,
     Washington, DC.
       Dear Senator Kennedy: We are writing as Co-Chairs of the 
     Health Task Force of the Consortium for Citizens with 
     Disabilities to support your amendment to include and protect 
     sufficient funds within the pending Budger Reconciliation 
     Bill (and within the budget surplus) to allow for the design 
     of a new prescription drug benefit for Medicare 
     beneficiaries.
       CCD is a Washington-based coalition of nearly 100 national 
     organizations representing the more than 54 million people 
     living with disabilities in the United States.
       The five million Medicare beneficiaries with disabilities 
     are dependent on prescription drugs to maintain sufficient 
     function, control disease progression, and prevent secondary 
     medical conditions. It is imperative that Congress both 
     acknowledge the benefit need and implement appropriate 
     budgetary policies to begin to lessen the cost burden on the 
     nation's most vulnerable populations.
           Sincerely,
     Shelley McLane,
       National Association of Protection and Advocacy Systems.
     Jeff Crowley,
       National Association of People with AIDS.
     Bob Griss,
       Center on Disability and Health.
     Kathy McGinley,
       The Arc of the United States.

[[Page 18395]]

     
                                  ____
                                           National Association of


                                       Area Agencies on Aging,

                                    Washington, DC, July 28, 1999.
     Hon. Ted Kennedy,
     U.S. Senate,
     Washington, DC.
       Dear Senator Kennedy, The National Association of Area 
     Agencies on Aging (N4A) supports your amendment to the tax 
     legislation currently on the Senate floor which recognizes 
     the need for a universal prescription drug benefit for 
     Medicare recipients.
       The largest out-of-pocket expenditure for Medicare 
     beneficiaries is for drug coverage. Many beneficiaries are 
     required to pay for their own prescriptions at a time when 
     the cost of medication is rising sharply. Medicare needs to 
     be modernized to recognize the remarkable advances in 
     preventing and treating illnesses through drugs since the 
     program's inception in 1965 and N4A applauds your efforts in 
     this direction.
       N4A is the umbrella organization for the 655 area agencies 
     on aging (AAAs) and 230 Title VI Native American aging 
     programs in the U.S. Through its presence in Washington, 
     D.C., N4A advocates on behalf of the local aging agencies to 
     ensure that needed resources and support services are 
     available to older Americans. We look forward to continuing 
     to work with you on all endeavors that promote the dignity 
     and independence of older Americans.
           Sincerely,
                                                   Janice Jackson,
     Executive Director.
                                  ____

                                        American Thoracic Society,


                                    American Lung Association,

                                    Washington, DC, July 28, 1999.
     Hon. Edward M. Kennedy,
     U.S. Senate, Washington, DC.
       Dear Senator Kennedy; We have learned that during 
     consideration of the Senate tax bill, you intend to offer a 
     motion to recommit the bill to the Senate Finance Committee 
     with instructions for the committee to develop financing for 
     the establishment of a Medicare pharmaceutical benefit. The 
     American Lung Association and its medical section, the 
     American Thoracic Society, strongly support your efforts to 
     move the issue of a Medicare pharmaceutical benefit to 
     forefront of Congressional activity.
       America's seniors need prescription drug coverage under the 
     medicare program. Far too often, Medicare beneficiaries are 
     forced to choose between purchasing the drugs they need or 
     paying for food and housing. This intolerable dilemma is not 
     just a problem for a few low-income seniors. It is a chronic 
     problem being faced by middle class senior citizens.
       While there are a number of difficult issues that must be 
     resolved before Congress can move forward with the creation 
     of a much needed Medicare pharmaceutical benefit, no issue is 
     more difficult than determining how to pay for the new 
     benefit.
       Congress now faces a wonderful opportunity. The expected 
     budget surpluses has created a rare opportunity for Congress 
     to address one of the most glaring inadequacies in the 
     Medicare program, the lack of a drug benefit. Before Congress 
     can responsibly consider any tax cut, Congress must first 
     ensure that federal resources exist to provide prescription 
     drugs to our nation's senior citizens. Recommitting the 
     Senate tax bill to the Senate Finance Committee is an 
     appropriate first step in this process.
       Again, thank you for your leadership on this process.
       Again, thank you for your leadership on this issue.
           Sincerely,
                                                     Fran DuMelle,
     Deputy Managing Director.
                                  ____



                             National Osteoporosis Foundation,

                                    Washington, DC, July 28, 1999.
     Hon. Edward Kennedy,
     U.S. Senate, Washington, DC.
       Dear Senator Kennedy: This is in support of your 
     prescription drug amendment to the tax bill.
       The National Osteoporosis Foundation (NOF), the only non-
     profit, voluntary health organization solely dedicated to 
     eradicating osteoporosis, represents 250,000 members. To NOF 
     it is far more important that seniors receive the protection 
     they need under Medicare than it is for Americans to receive 
     a tax cut. First we need to protect our senior citizens and 
     people with low incomes before we provide tax breaks for 
     people of means.
           Sincerely,
                                              Bente E. Cooney, MSW
                                        Director of Public Policy.

  Mr. KENNEDY. Mr. President, virtually every major organization that 
represents senior citizens or persons with disabilities is in urgent 
support of this particular motion.
  They know what is happening. There isn't a Member who hasn't gone 
home and met with seniors in the state that doesn't know what is 
happening. It is not good enough to say we care about it and we will 
handle it some time in the future. You have a chance to handle it now, 
in the next 15 minutes.
  We have a chance to put the Senate of the United States on record and 
say: OK, we will work the details out now, but we are going to allocate 
the resources for it. We don't have to do as my friend and colleague 
from Tennessee says--that we can wait until after 10 years and see 
where we are; or as our friend from Louisiana said, we can deal with 
this some time in the future.
  The seniors deserve better. They need an answer and they need it now. 
They need a message from the Senate that says we hear you, we know what 
is of concern to those who have made this the great country that it is. 
They deserve this kind of a protection.
  There is an enormous need and incredible consequences. It is a matter 
of life and death for many senior citizens. Let us say that it is at 
least--at least--as important to guarantee that there will be funding 
for prescription drugs as it is for a tax benefit. Many of us believe 
it is more important, but with this motion to recommit the bill we are 
saying it is at least as important as the tax cut bill itself. I hope 
this motion will be accepted.
  Mr. ROTH. Mr. President, has all time on both sides expired?
  The PRESIDING OFFICER. Yes.
  Mr. ROTH. Mr. President, I make a point of order against the 
amendment under section 305 of the Budget Act on the grounds that it is 
not germane.
  Mr. KENNEDY. Mr. President, pursuant to section 904 of the 
Congressional Budget Act of 1974, I move to waive the applicable 
section of that act for consideration of the pending motion.
  I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.


                           Amendment No. 1405

  The PRESIDING OFFICER. Under the previous order, the Senate will 
return to the consideration of the amendment of Senator Gramm of Texas. 
There will be 2 minutes of debate, to be equally divided.
  Mr. ROTH. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. ROTH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                      Unanimous Consent Agreement

  Mr. ROTH. Mr. President, I ask unanimous consent that, 
notwithstanding the filing requirement, it be in order for the manager 
to offer an amendment that has been cleared by both managers.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. MOYNIHAN. Mr. President, it is not a matter of one side of the 
aisle or the other on Senator Gramm's amendment. Now for the first 
time, we find ourselves in complete agreement with the chairman of the 
Finance Committee, that the amendment is a disaster. We don't have to 
characterize the existing proposal, but it is not everything we would 
hope for. That is something even the chairman would dread, and he is 
right to do so. I think we are right in a situation such as this to 
overcome partisanship. It would be wicked, indeed, to join the Senator 
from Texas, and then where would we be? But we won't. I hope on our 
side we will support the chairman of the Finance Committee and show him 
that we share his view of the unacceptable extravagance of the 
proposal, the amendment of the Senator from Texas, which will soon be 
voted on.
  Mr. ROTH. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. SARBANES. Mr. President, will the Senator yield for a question?
  Mr. MOYNIHAN. Yes.
  Mr. SARBANES. I ask the ranking member on the Finance Committee this 
question with respect to the

[[Page 18396]]

Gramm amendment. In the course of the debate, was there any discussion 
on what this amendment would cost--not in the first 10 years but in the 
next 10 years?
  Mr. MOYNIHAN. I think there was not. Were there such a debate and 
discussion, it would have been chilling.
  Mr. SARBANES. This is the great exploding tax cut. I was looking at 
the very document the Senator from Texas himself distributed. It is 
clear that the marginal income tax rate cuts don't go fully into effect 
until the year 2008. By his own figures, it would cost $73 billion in 
the first 5 years, and $451 billion over 10 years; and it is not 
getting into full effect until right near the end of the 10-year 
period. So if you extrapolate out, you are going to have an incredible 
increase in its cost.
  The same thing is true with virtually every provision that is in this 
amendment, with one exception. All of the others get phased in. They 
don't take full effect until close to the end of the 10-year period. 
Then you are given these cost figures which, of course, are over the 
range of the period. So, obviously, in the next 10-year period, these 
tax cuts are going to explode out of sight and put the Nation right 
back into the deficit box. Is that not a reasonable analysis, I ask the 
ranking member?
  Mr. MOYNIHAN. The measure before us, which is moderate by the 
standards of the proposal of the Senator from Texas, would cost in the 
outyears, in the second decade, $3 trillion.
  Mr. SARBANES. Not that of the Senator from Texas, but the other one.
  Mr. MOYNIHAN. Start with the $3 trillion and think what that would 
add.
  Mr. SARBANES. That is right; exactly. It would literally explode out 
of sight.
  Mr. MOYNIHAN. Three trillion dollars is the Department of Treasury 
figure.
  Mr. SARBANES. I thank the Senator.
  Mrs. BOXER. Mr. President, will my colleague yield for a question? 
Will the Senator from New York yield for a question that has to do with 
a parliamentary procedure?
  I wonder if he could enlighten the Senator. Perhaps Senator Roth 
could. I thought we were under a unanimous consent to go to a vote. Has 
that been laid aside?
  Mr. MOYNIHAN. We are delinquent and derelict and behind the times.
  Mrs. BOXER. Is there any way to get us back on schedule and no longer 
delinquent and behind the times?
  Mr. MOYNIHAN. The Senator from California has made her point.
  Mr. ROTH. Mr. President, I make a point of order that a quorum is not 
present.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. ROTH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROTH. Mr. President, I yield the remainder of time on behalf of 
Senator Gramm.
  Mr. MOYNIHAN. Mr. President, I make a point of order against the 
amendment that we are about to vote on under section 305 of the Budget 
Act on the grounds that it is not germane.
  Mrs. HUTCHISON. Mr. President, I move to waive the Budget Act for 
consideration of the Gramm amendment and ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the motion to 
waive the Congressional Budget Act in relation to the Gramm amendment 
No. 1405. The yeas and nays have been ordered, and the clerk will call 
the roll.
  The legislative clerk called the roll.
  The yeas and nays resulted--yeas 46, nays 54, as follows:

                      [Rollcall Vote No. 230 Leg.]

                                YEAS--46

     Abraham
     Allard
     Ashcroft
     Bennett
     Brownback
     Bunning
     Burns
     Campbell
     Cochran
     Coverdell
     Craig
     Crapo
     DeWine
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                                NAYS--54

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Bryan
     Byrd
     Chafee
     Cleland
     Collins
     Conrad
     Daschle
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Roth
     Sarbanes
     Schumer
     Snowe
     Specter
     Torricelli
     Voinovich
     Wellstone
     Wyden
  The PRESIDING OFFICER. On this vote the yeas are 46, the nays are 54. 
Three-fifths of the Senators duly chosen and sworn not having voted in 
the affirmative, the motion is rejected.
  The point of order is sustained and the amendment falls.
  Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
  Mr. NICKLES. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. MOYNIHAN. Mr. President, I do ask we might have order.
  The PRESIDING OFFICER. The Senate will please be in order. The 
Senator from New York.
  Mr. MOYNIHAN. Mr. President, I believe another vote is scheduled.


                           Motion To Recommit

  The PRESIDING OFFICER. The Senate will be in order. There are 2 
minutes evenly divided for the motion submitted by the Senator from 
Massachusetts. Who yields time?
  The Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, can we have order? I will just take one 
moment.
  Mr. President, when the Medicare program was agreed to in 1965, it 
was intended to provide health security for the seniors in this 
country. Now it still is a vital force, but there is a major element 
that is missing, and that is the prescription drug coverage.
  There are no senior citizens, unless they are on Medicaid, who have a 
prescription drug benefit that is reliable, dependable, and affordable. 
This particular motion says we believe, those who support it, that as a 
part of this tax cut there ought to be set aside funding for a 
prescription drug benefit. We do not believe a tax cut has a higher 
priority than providing a prescription drug benefit for our seniors. 
But what we do say is the Finance Committee should set aside sufficient 
funds, and that the program can be developed later in this term. The 
motion ensures that funds will be earmarked to provide our senior 
citizens with a reliable, dependable, affordable prescription drug 
benefit.
  Make such a fund part of this whole program. Do not take a chance 
there will be some funds down the line. Do not ask our seniors to wait 
any further. They have waited long enough. They need this; they depend 
on it. Prescription drugs are a lifeline for our senior citizens.
  I hope this motion will be passed as part of a tax program, and that 
there will be a designated fund available for a prescription drug 
program for all Medicare beneficiaries.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. I yield the time to the distinguished Senator from 
Tennessee.
  The PRESIDING OFFICER. The Senator from Tennessee.
  Mr. FRIST. Mr. President, I rise in opposition to the motion of the 
Senator from Massachusetts for several reasons. First and foremost, 
this very body has already set aside funds specifically for Medicare 
modernization and specifically for inclusion of prescription drug 
coverage. The congressional budget plan has given us the figure of $505 
billion. In our resolution passed just 2 months ago, we have $90 
billion set aside specifically. The President's own proposal, his own 
proposal for Medicare prescription drug coverage, is $46 billion, much 
less than the

[[Page 18397]]

$90 billion we have already directed to this cause.
  We need to focus on fundamental modernization, repair of the Medicare 
system to include prescription drug coverage. That is something that is 
before us, not this issue of money just for prescription drug coverage. 
I urge its defeat.
  The PRESIDING OFFICER (Mr. Fitzgerald). The question is on agreeing 
to the motion to waive the Budget Act with respect to the Kennedy 
motion to recommit S. 1429.
  The yeas and nays have been ordered.
  The clerk will call the roll.
  The legislative assistant called the roll.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
who desire to vote?
  The yeas and nays resulted--yeas 45, nays 55, as follows:

                      [Rollcall Vote No. 231 Leg.]

                                YEAS--45

     Akaka
     Baucus
     Bayh
     Biden
     Bingaman
     Boxer
     Bryan
     Byrd
     Cleland
     Conrad
     Daschle
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Feinstein
     Graham
     Harkin
     Hollings
     Inouye
     Johnson
     Kennedy
     Kerrey
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Mikulski
     Moynihan
     Murray
     Reed
     Reid
     Robb
     Rockefeller
     Sarbanes
     Schumer
     Specter
     Torricelli
     Wellstone
     Wyden

                                NAYS--55

     Abraham
     Allard
     Ashcroft
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Chafee
     Cochran
     Collins
     Coverdell
     Craig
     Crapo
     DeWine
     Domenici
     Enzi
     Fitzgerald
     Frist
     Gorton
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Kyl
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Murkowski
     Nickles
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Stevens
     Thomas
     Thompson
     Thurmond
     Voinovich
     Warner
  The PRESIDING OFFICER. On this vote the yeas are 45, the nays are 55. 
Three-fifths of the Senators duly chosen and sworn not having voted in 
the affirmative, the motion is rejected. The point of order is 
sustained and the motion falls.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, I yield time to the distinguished Senator 
from Rhode Island.
  Mr. STEVENS. Parliamentary inquiry.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. CHAFEE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Rhode Island.


                           Amendment No. 1442

     (Purpose: To make an amendment in the nature of a substitute)

  Mr. CHAFEE. Mr. President, the time in favor of this amendment will 
be controlled by Senator Breaux for both Democrats and Republicans.
  I commend Chairman Roth for his hard work in crafting the Taxpayer 
Refund Act. I was pleased to support that and defend it in the Finance 
Committee. It is a carefully balanced, equitable bill that will provide 
targeted tax relief to all Americans. It has several features that I 
would like to point out.
  First, it gives a generous tax deduction to millions of Americans 
whose employers do not provide health insurance. In other words, those 
who buy insurance through a company, but the company itself does not 
pay for the insurance, this helps make that deductible.
  Second it corrects a flaw in the alternative minimum tax which, if 
left uncorrected, will result in the application of the alternative 
minimum tax to millions of American families who currently don't pay 
it.
  Third, the bill contains some very important environmental and urban 
renewal initiatives. Despite all the meritorious provisions in the bill 
of Senator Roth, I believe $800 billion in tax cuts is too big. What if 
the budget surpluses needed to pay for these reductions don't 
materialize? Does any one of us believe that Congress can or should 
hold discretionary spending to nearly $600 billion below current levels 
over the next decade?
  What about the fact that we are now in the middle of, or perhaps at 
the end of, who knows, the longest burst of economic prosperity in our 
peacetime history? Is that going to continue unabated? Nobody can tell. 
Nobody has a crystal ball that will give an accurate answer.
  So I am simply not comfortable with rebating more than half of the 
projected non-Social Security surplus in tax cuts. That is why, along 
with fellow members of the Finance Committee, Senators Breaux, Jeffords 
and Kerrey, as well as a number of other moderate Senators from both 
sides of the aisle, I have joined in sponsoring a $500 billion 
bipartisan alternative tax cut amendment.
  This bipartisan alternative is a good, solid package. It would 
provide broad-based tax relief for middle income tax payers and 
families. It would increase the standard deduction to $4,350 for joint 
filers, $2,150 for heads of households, and $1,300 for single filers.
  These increases in the standard deduction would have the effect of 
simplifying tax preparation for some 9 million households. Our 
bipartisan alternative contains the historic homeowner credit that I 
mentioned earlier. That is an outstanding provision and certainly will 
be of assistance in curbing urban sprawl.
  If we are serious about passing a tax cut this year, I believe our 
bipartisan alternative is the right way to go. It would provide 
carefully targeted, well-deserved tax relief to the American people but 
for $300 billion less than either the House or Senate bills. There is 
no doubt in my mind that President Clinton will veto an $800 billion 
tax cut package, particularly one that resembles the House-passed bill. 
What is more, his veto will be sustained. All of that puts us right 
back at square one. All of this maneuvering could be avoided by the 
acceptance now of this sensible bipartisan alternative that is being 
proposed. I hope my colleagues will support that bipartisan 
alternative.
  I thank the Chair, and I thank Senator Breaux and yield the remainder 
of my time to Senator Breaux.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, I yield myself 5 minutes.
  Senator Breaux and Senator Chafee have thoughtfully crafted an 
amendment that offers a $500 billion tax cut. As with the alternative 
introduced yesterday by my friend, the distinguished ranking member of 
the Finance Committee, Senator Moynihan, Senator Breaux's amendment 
demonstrates that there is agreement on both sides of the aisle 
concerning the need to give individuals and families a well-deserved 
tax refund from the $3.3 trillion surplus.
  I appreciate the fact that Senator Breaux, with his amendment, offers 
a deeper cut than the alternative introduced yesterday, but I am 
concerned that it still does not go far enough. It does not go far 
enough in providing the much needed relief Americans require to meet 
the necessary and important priorities in their lives. It does not go 
far enough to offer broad-based tax relief that will be necessary to 
gain the bipartisan support needed to pass this bill in the Senate.
  For example, Mr. President, the Breaux amendment does not lower the 
15-percent tax bracket. Instead, it simply expands it by only $2,500 
for individuals and $5,000 for joint returns. And this benefit is only 
available for people who do not itemize. This means that if you take a 
deduction for home mortgage interest you will not receive a tax rate 
cut, under this bill. Additionally, because the 15-percent bracket is 
not reduced, the tax relief is not felt by middle-income taxpayers in 
that bracket, nor is there a reduction for those paying taxes in the 
higher brackets.
  The Taxpayer Refund Act of 1999 cuts the 15 percent rate to 14 
percent and broadens the 14-percent bracket by twice as much as what 
the Breaux amendment would do at the higher 15-percent rate.

[[Page 18398]]

  The Breaux amendment also falls short when it comes to providing 
family tax relief. For example, the Taxpayer Refund Act offers $222 
billion for family tax relief. The Breaux bill only provides $43 
billion. When it comes to providing families with the relief they both 
need and deserve, the amendment offered by Senator Breaux is only 20 
percent of the relief offered in our more complete package.
  As with relief to families, this amendment also comes up short in 
providing health care relief. Where the Taxpayer Refund Act offers $52 
billion in health-related cuts, this amendment offers only $32 billion, 
or roughly $20 billion less. The Shortfall can be seen in specific 
areas such as long-term care, where this amendment would not allow an 
employer to provide such long-term care coverage as part of its 
employee benefits package.
  Another important difference between the Taxpayer Refund Act and this 
amendment is the area of estate tax relief. We have heard eloquent and 
persuasive arguments these past two days concerning how important it is 
that Congress provide American families with relief from death taxes. 
And our legislation offers almost $63 billion in relief. This will help 
countless families save the businesses, farms, and ranches that have 
been built by parents and grandparents.
  It is good for these families, and for America, as it protects their 
work and sacrifice. Unfortunately, this amendment only contains a third 
of the relief that these families would receive from our legislation.
  Mr. President, I compliment Senator Breaux for the work he has done 
on this amendment. It certainly offers more than the alternative that 
the Senate voted against yesterday. Like yesterday's alternative, it 
shows that there is bipartisan support for relief, but it does not go 
far enough. It does not go far enough in the area of family tax relief.
  It does not go far enough in the area of savings and investment. It 
does not provide enough health care tax relief, nor does it provide 
enough relief against death taxes.
  As I said when I spoke against the Democratic alternative yesterday, 
the Taxpayer Refund Act of 1999 is built on the proposition that the 
income Americans earn belongs to them; that when government sets a 
budget and receives revenues in taxes to meet the budget obligations, 
government--by the will of the people--receives what it needs to pay 
the bills; and that when the people have given government more than 
what the budget calls for, well, then that money should be returned to 
the people.
  It's that simple, Mr. President. And with that understanding, 
Congress passed a budget resolution authorizing the Finance Committee 
to cut taxes by $792 billion over 10 years. The Finance Committee, with 
bipartisan support, met that responsibility and, as a result, has 
offered the Taxpayer Refund Act of 1999. What we have offered is a 
broad-based tax relief plan that will benefit all Americans--one that 
is fair, constructive, and empowering.
  Our plan will help restore equity to the tax code and provide 
American families with the relief and resources they need to meet 
pressing concerns. It will help individuals and families save for self-
reliance in retirement. It will help parents prepare for educational 
costs. It will give the self-employed and under-insured the boost they 
need to pay for health insurance. It will begin to restore fairness to 
the tax code by eliminating the marriage tax penalty.
  These are all important goals. And, as with the Democratic 
alternative, this amendment also falls far short of accomplishing all 
that we do with our broad-based plan. This amendment will leave many 
taxpayers without the relief they deserve. For that reason, I encourage 
my colleagues to vote against it.
  Mr. BREAUX addressed the Chair.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Mr. BREAUX. How much time remains?
  The PRESIDING OFFICER. The time does not begin to run on the 
amendment until the amendment is actually called up.
  Mr. BREAUX. Mr. President, I ask for the reporting of the amendment.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Louisiana [Mr. Breaux], for himself, Mr. 
     Chafee, Mr. Kerrey, Mr. Jeffords, Mr. Torricelli, Mr. 
     Specter, Mr. Bayh, Ms. Snowe, Mrs. Lincoln, and Ms. Collins, 
     proposes an amendment numbered 1442.

  Mr. BREAUX. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  The PRESIDING OFFICER. There is 1 hour for the sponsor and 1 hour for 
the opponents.
  Mr. BREAUX. Mr. President, I yield myself 5 minutes.
  Mr. President, I suggest it is time for a reality check by Members of 
both parties as to where we are and what we are attempting to do.
  We in the United States in this period of time are in a very unique, 
and I would also say very unusual, position in the sense that other 
countries around the world would love to have the problem that is 
facing all of us in the Senate this afternoon: We are faced with a 
country that has a $1 trillion surplus.
  That is a problem that most countries would love to have. It is a 
problem because we are now faced with the question of what we are going 
to do with a $1 trillion surplus. Some have said all of it should be 
used in the form of a tax cut and given back to the American people. We 
can argue about how they do that. But, for the moment, let's just say 
they have decided all of it should go for a tax cut. Some on my side of 
the aisle say, no, we can't do that. It should be a very small tax cut, 
and the rest should be reserved for other functions of Government.
  I point out to my colleagues what I think the rest of the American 
people already fully realize. They know if the proposal on that side of 
the aisle--an $800 billion tax cut--should pass and get sent to the 
President, it is clearly going to be vetoed, and nothing will result 
from this other than a debate. We will end up with nothing more than a 
political argument to make against each other. If we pass the 
Republican bill, and it ultimately goes to the President, there will be 
a big ceremony in the White House where he will veto that piece of 
legislation. He will then have a powerful political argument to say the 
Republican Party has wasted the trillion dollar surplus. There are some 
on the Republican side of the aisle who will say that is a great 
argument. The White House and administration will blame the Republicans 
for wasting the trillion dollars and giving an unnecessary and 
unrealistic tax cut that is targeted to the wealthiest people in this 
country. That is a great argument for us.
  While the political parties may have a short-term political gain, I 
suggest that the real losers, if this is what is going to happen, are 
the American people because they end up with nothing --no tax cut, no 
decision on how to spend the surplus, with no money being allocated to 
real Medicare reform, and no pressure to continue to work on a Medicare 
reform program.
  I suggest there is a different way we can look at this problem 
instead of a political opportunity. We can look at it as a policy 
opportunity to do something realistic, and that is what the amendment 
before this body does.
  It is a $500 billion tax cut that is targeted to people who really 
need help in this country. There are some arguments that say the polls 
tell us the people don't want any tax relief. If you explain it 
properly when you go back, people do need help. People in the middle-
income brackets would like to have a greater standard deduction than 
they have now. People on the edge of being kicked up into the 28-
percent bracket would like to stay in the 15-percent bracket and work 
harder and earn more for their family. People would like to see more 
tax assistance for education and help for the 43 million Americans who 
work every day and

[[Page 18399]]

can't afford to buy health insurance because they work for a company 
that doesn't provide them health insurance. We have carefully tailored 
the $500 billion to help those people.
  Our legislation helps people buy health insurance. It helps people 
avoid the ridiculous marriage penalty by eliminating it and increasing 
the standard deduction. That is a tax policy that should have an 
opportunity to become law, because while we spend $500 billion over the 
next 10 years to help people who need help the most, we also reserve 
$500 billion for other priorities of Government, to do something on 
Medicare, which needs to be reformed. The chairman says we will do 
something in September, and that is a very courageous position to take. 
But there will be money to pay for what is needed for Medicare. There 
will be a $500 billion pot of money to go to cover the very necessary 
discretionary spending needs in this country.
  So we are offering something, according to a reality check, that has 
the potential to become law as opposed to being merely a political 
statement on both sides of the aisle. Unfortunately, people in both 
parties have taken the position: It is my way or no way.
  We were sent here not to do political statements and take political 
positions only, but to work together to resolve differences and come to 
an agreement on public policy. I happen to think public policy is good 
politics. But good politics is not necessarily good policy. We have a 
choice today, in the next couple of hours, to determine whether we are 
going to be interested in good politics in the short term, or whether 
we are going to try to work together to reach an agreement that can 
become law and become policy for the American people.
  There are very few things in life that are either all one way or the 
other way. Anybody who has been around for a short period of time knows 
that. Certainly, when we are discussing what to do with $1 trillion, 
there are a lot of good ideas. But we have to conclude that neither 
side is completely right. There has to be a blend of different ideas 
and philosophies in order to come together in a democracy and reach 
something that can become law and, ultimately, good public policy. Then 
the argument will be over success, as opposed to an argument over 
failure. The track we are on now leads us to go back and tell our 
people it was their fault that nothing was done. That is arguing over 
failure as opposed to arguing about success and who was able to bring 
that to the American people.
  Mr. President, I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. ROTH. Mr. President, I yield 10 minutes to the distinguished 
Senator from Minnesota.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. I thank the Senator from Delaware.
  Mr. President, I was listening to my colleague, Senator Breaux from 
Louisiana, and I want to respond to what he said because he said it--
like he says everything--very well, regarding the whole question of 
reality tests and good politics versus good policy.
  I speak against this amendment, not for the sake of good politics but 
for the sake of good policy. I speak against this amendment 
understanding that reality test, as I think about the lives of people 
in our country. I want to say one more time on the floor of the 
Senate--and I have said it a couple of times--that I do not understand 
this kind of bidding war on tax cuts. I understand very targeted tax 
cuts to those citizens who need it the most. I understand very targeted 
tax cuts that speak to the concerns and circumstances of hard-pressed 
working families. But I think the vast majority of people in the United 
States of America--and I think this is the meaning of the poll about 
tax cuts--are saying this: You all are sort of--I don't know what the 
word is--trying to pander to us and you have this argument that you 
have made for years--I am not saying all colleagues for this amendment 
have made this argument for years, but it goes something such as this: 
This money belongs to the people, and we are going to give it back to 
you, whatever there is in surpluses, which, of course, is all based 
upon assumptions we make. And, hopefully, these assumptions will be 
borne out about economic performance.
  I really think the vast majority of people in Minnesota and the vast 
majority of people in the country are saying this belongs not to us but 
to our children and grandchildren, and whatever you have by way of 
surpluses--now we are focusing on the non-Social Security surplus--put 
it into reducing the debt to get the debt off the backs of our 
children. Make sure there will be Social Security and Medicare for our 
children and our grandchildren as it has been there for us; and, 
finally, make sure that our children and grandchildren are going to 
have the same opportunities we have.
  We can't do that. I came to the floor the other day and said about my 
own party's proposal at $300 billion--$200 billion less than $500 
billion--that we can't do all of that and have these tax cuts to the 
tune of $500 billion at the same time. It doesn't add up.
  To use the old Yiddish proverb, ``You can't dance at two weddings at 
the same time.''
  If you look at the non-Social Security surplus, three-quarters of it 
is based upon cuts or the caps in domestic spending.
  We say we are concerned about veterans' health care, we want to have 
community policing, we want to have environmental cleanup, we certainly 
want to make sure we deal with what is becoming a crisis of affordable 
housing, and then all of us are forever and ever and ever talking about 
children and education. We talk about all those people who do not have 
any health insurance. We talk about prescription drug benefits for the 
elderly. How are we going to do all of that at the same time that we 
are going to have $500 billion of tax cuts? We are not.
  With the Democratic proposal the other day on the floor with $300 
billion of tax cuts, we were still several hundred billion dollars 
under where the caps take us. In other words, we were several hundred 
billion dollars--I think close to $300 billion--short of making up the 
cuts in discretionary spending. With the $500 billion it is worse.
  I want to know where the give is going to be.
  In all due respect, as I look at the pattern of our powerlessness in 
America today, it is a very distorted pattern of power. I know the 
Pentagon will get its resources. I know we will make sure that we 
invest in transportation.
  I can just imagine with the squeeze on--that is exactly what you are 
going to have, deep cuts in discretionary spending for a decade, and 
then God knows where this takes us in the next decade--what is going to 
be cut.
  We are going to go from 1 percent Head Start funding--pre-3-year-
olds, Early Head Start funding--to less than 1 percent. We are going to 
go from 40 percent, or a little over 40-percent funding for Head Start, 
ages 2 to 5, to less than 40 percent. We are going to go from barely 
covering 20 percent of affordable child care needs for low-income 
families--much less moderate income and much less working families--to 
less than 20 percent.
  That is the problem with this amendment.
  My colleague from Louisiana said it is a compromise. It is a reality 
test. It is a compromise between the political center of gravity of 
where Republicans are and where Democrats are, but it is not based upon 
where I think the political center of gravity is in the country. I know 
that sounds presumptuous. Maybe it even sounds arrogant. I swear that I 
don't mean it to be. But I really believe the vast majority of people 
in our country are for tax cuts that are very targeted, that speak to 
the concerns and circumstances of really hard-pressed families, and 
they want to see the rest of us deal with Medicare. They want to make 
sure we have Social Security, and people want to see some investment in 
our children. They want to see opportunities for children in this 
country. We can't do it with this.
  We have several hundred billion dollars more--well over $300 billion 
more--of cuts in discretionary spending if we go for their $500 billion 
package. Where

[[Page 18400]]

are we going to cut? You mean to tell me that now we are putting a 
straitjacket on ourselves and boxing ourselves in such a way that we 
are not even going to be able to make any of these kinds of investments 
in health, skills, intellect, and character of our children? We are not 
going to be able to it.
  I don't see this as being any kind of reality test amendment. I think 
this is not at all based upon where most people in the country are. I 
don't think it is based upon what we have to do as a nation.
  I think in the next century we have to grow together. I think in the 
next century, by the year 2030 or 2040 or 2050, we have to make sure 
the next century belongs to our children and our grandchildren. We have 
to make sure they get the best education. We have to make sure they 
have the best skill development. We have to make sure they are healthy. 
We have to make sure they are productive. We have to make sure there is 
less violence in their lives; that they grow up to be independent, 
resourceful, self-reliant, morally responsible and democratic citizens. 
That is what we ought to be doing with whatever kind of surplus we 
have.
  We certainly shouldn't be supporting a proposal with $500 billion of 
tax cuts that will crowd out all of that investment, especially when it 
comes to the most vulnerable citizens in our country.
  I hope this amendment will be voted down.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, I yield 6 minutes to the Senator from 
Oklahoma.
  The PRESIDING OFFICER. The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, first I would like to thank my colleague, 
Senator Roth, for his management of this bill and for bringing this 
bill to the floor of the Senate. I am going to talk preliminarily about 
the bill.
  First, let me say to our colleagues who are offering the $500 billion 
substitute that I compliment them for the fact that they are trying to 
work to reduce taxes. I think that is important. There are several 
provisions they have in their bill that I compliment them for.
  Most of all, I want to talk about the bill that is before us, the 
bill as reported out of the Finance Committee by a vote of 13-7. That 
was a bipartisan vote. I think that is important.
  Again, I think that happened in large part because of the Senator 
from Delaware and because of the content of the bill. I think that 
maybe we spent too much time talking about numbers. Maybe that is 
partly my fault. I like talking about numbers. We have a $3 trillion 
surplus. We are going to give a tax cut of $782 billion. That is about 
25 cents on the dollar.
  We are going to take two-thirds of the surplus and use that for debt 
retirement. That is good.
  Some people say: Wait a minute. You are not reducing the debt enough. 
We reduced the debt more than Clinton's proposal. Maybe that is good. I 
think that is probably good.
  Concerning the tax cut and total of the estimated surplus: Some 
people may say: Maybe the estimates aren't right. Maybe they are too 
optimistic. And even though we are only taking one-fourth of the 
surplus and allowing people to keep it, they don't want to give it back 
to the taxpayers. They'd rather spend it.
  Well, that is not what a tax cut is. A tax cut let's people keep more 
of their money. They do not have to get it back from Washington, DC. Is 
it their money, or is it Washington's money? It is their money. Is it 
not a gift from us. We are taking it from them right now. In some cases 
we are taking too much. In some cases the taxes we are taking from 
people are unfair.
  I am going to talk about that because the bill we have before us 
alleviates some of those problems. It doesn't solve all the problems, 
but it alleviates some of the problems. Is it the best bill imaginable 
and perfect? No. But it does go a giant step toward eliminating 
inequities and injustices in the tax bill. I say ``injustices.'' There 
are some cases in the 1999 Tax Code where the taxes are unfair.
  It is absolutely unfair for a married couple to have to pay more 
taxes than if they were living together and unmarried. It is unfair to 
have a tax penalty for being married--absolutely unfair. That is in the 
Tax Code today.
  The bill of the Senator from Delaware eliminates that. We want to get 
rid of it.
  Unfortunately, that doesn't happen under the Democrats' proposal. Let 
me talk about that for a second.
  Somebody says: Well, you eliminate the marriage penalty. What does 
the House do? The House basically doubles the exemption for single 
people and for couples. That is one way of taking care of the 
exemption. But it doesn't eliminate the fact that a lot of people have 
combined incomes that push them into higher income brackets.
  For example, an individual with a taxable income of $25,000 is taxed 
at 15 percent. Anything above that, they are taxed at 28 percent. That 
is kind of simple.
  Let's say you have two teachers who are married, and they have a 
taxable income of $25,000. If they file as individuals, they are both 
taxed at 15 percent. If they are married, their combined income pushes 
them into a 28-percent tax bracket. They are penalized.
  It just so happens, as it works out, that in this case they are 
penalized $1,400.
  Where did I get that?
  They have a combined income of $50,000. A 28-percent tax bracket 
actually kicks in at $42,000. They have $8,000 that is taxed at a 14-
percent rate. It is higher than what somebody is paying at the 14-
percent rate. Senator Roth's bill moves the bottom rate from 15 to 14.
  The difference between 28 and 14 is 14 percent. Fourteen percent 
times the number of thousands, if it is $10,000, that is $1,400.
  This hypothetical couple pays an additional $1,400 more per year for 
being married. We shouldn't penalize them for that.
  In the bill each couple has the option of being taxed individually. 
If one member of the couple is taxed at 28 percent, fine. It doesn't 
mean the next spouse has to be taxed at that rate as well. Maybe the 
income of that spouse, male or female, might be significantly lower. It 
would be taxed at a lower rate. Why tax them at the highest rate? We 
shouldn't do that. We eliminate that in this bill. That is not 
insignificant.
  The example I gave was a $1,400 differential. CBO says the average 
marriage penalty is $1,400. We should be able to eliminate that, and we 
do eliminate it in this bill. Who benefits? Nineteen million married 
returns would have that inequity eliminated. That is in this bill.
  Let me talk about the 14-percent bracket expansion. I wasn't 
particularly fond of this idea. I thought, why move the 15-percent rate 
to 14 percent? What does that mean? Somebody asked me the other day on 
a radio show: What does that mean to me as a taxpayer? It means we have 
a benefit for all taxpayers. Any taxpayer will benefit. How much do you 
benefit? Individuals, up to $250; and a couple, $430.
  Therefore, a couple who makes up to, I think, $48,000 receives a $430 
benefit. Somebody said the tax benefit in the bill is only 50 cents a 
day. Their numbers are not adding up. The benefit of that is $430 a 
couple.
  I will touch on the bracket expansion. I want to compliment our 
colleagues on the pending amendment. They expand the 15-percent bracket 
up. We have that in this bill, too, under the pending bill authored by 
Chairman Roth. We expand the 15-percent bracket. That means a lot of 
people who are paying 28 percent will pay 15 percent. We increase that 
by $5,000 per couple or $2,500 for an individual. That means a couple 
will save $700. If they have a combined income of $42,000, we save them 
$700 by reducing the rate from 15 to 14. For a couple earning $40,000 
or more will save $1,130 under the bill. That is almost $100 a month.
  I use the test sometimes of my son and his wife. He sells cars, and 
she is a schoolteacher. They have one child. How will this benefit 
them? From

[[Page 18401]]

those two provisions alone, they will save almost $100 a month in 
taxes, and they are a middle-income, tax-paying family. I think that is 
a good provision. When combined with marriage penalty relief, the 
average married couple will realize significant savings through this 
bill.
  For instance, those items together come to $1,100 just in the rate 
reduction and the expansion of the 15-percent rate. Then there is 
$1,400 savings in eliminating the marriage penalty. Now we are talking 
about $2,500 per year for a married couple making $40,000, $50,000, or 
$60,000 a year. That is not insignificant. That is $200 a month.
  We are helping a lot of people. The number of people who would 
benefit from expanding the 15-percent rate upwards, so they don't have 
to pay 28 percent, is a reduction of 13 or 14 percent --13 percent by 
the substitute offered and 14 percent by Chairman Roth's proposal. 
Chairman Roth's proposal says to individuals in that category, we are 
going to cut their rate in half for that additional $5,000. That is a 
significant savings. Add that all together, and we are talking about 
$2,500 for a couple who make $40, $50, or $60,000. That is not 
insignificant.
  Mr. President, 98 million people will benefit from the reduction in 
the 15 to 14 percent income bracket, 80 million who have incomes less 
than $75,000. In other words, it is a tax cut for taxpayers, not 
necessarily targeted the way as some others might like, but it is a tax 
cut that is weighted on the lower end of the tax schedule.
  Moving the 14-percent bracket up, 36 million middle-class people will 
benefit from that provision; 19 million married returns will benefit 
from elimination of the marriage penalties.
  Then there is something else that hardly anybody is talking about. We 
have a provision that eliminates the penalty called alternative minimum 
tax that disallows a lot of the tax credits we have already passed. In 
1997 we passed a tax credit, $500 per child. It was $400 last year, 
$500 this year. That is law. I know a lot of the people arguing against 
the Republican tax bill didn't like it when we passed that in 1997. I 
had an appearance last night with Gene Sperling, and he said the 
President supported the $500 tax credit for a child.
  Maybe a little history would be in order. The President campaigned 
for it in 1992, and he forgot about it in 1993 when he raised taxes on 
all Americans. Not only did he forget about it, but he did a tax 
increase rather than a tax cut. It wasn't until 1995 that the $500 tax 
credit passed again. That was when Republicans took control. We passed 
the bill, and the President vetoed it. We passed it again in 1997, and 
he signed it. Now they are trying to take credit for it. They didn't 
want a tax cut in 1995, they didn't want a tax cut in 1997, but we gave 
it to him and he signed it. Now that is law.
  Because of AMT, a lot of people are not able to take full advantage 
of that tax credit or child care tax credit--13 million families, and I 
tell my colleagues that number is growing every year. Senator Roth's 
amendment has significant relief. My colleagues will be interested to 
know that is $96 billion. Over one-tenth, about 12 percent, of the 
entire tax bill is targeted toward AMT relief on American families. I 
have not heard anybody talk about it. If anybody thinks that provision 
is wrong, offer an amendment to strike it out.
  If anybody thinks the marriage penalty provision, which is $112 
billion--again, probably about 15 percent of this entire package--is 
too generous, if Members don't think we should have marriage penalty 
relief, offer an amendment and take it out. If Members don't think we 
should cut the rate from 15 percent to 14 percent--which is $298 
billion, which is the biggest provision in this entire bill, which is 
three-eighths of the entire bill--if Members don't think it should be 
in there, take it out. I would oppose any such amendments, because 
these provisions are at the heart of this legislation and are what make 
this bill a tax cut for taxpayers on the lowest end of the ladder.
  A lot of people say the Republican package is a tax cut for the rich. 
It is not. Those people have not read the bill. This bill reduces taxes 
for all taxpayers, including people at the lowest end of the economic 
ladder.
  The provisions I discussed are $506 billion out of $792 billion. That 
is over five-eighths of the bill I have already described. I haven't 
heard anybody single out any of those sections and say: that is a bad 
provision, we shouldn't have that provision.
  Let me discuss a couple of other areas in this bill and why we should 
pass the bill. Let me talk about estate taxes. A lot of people are not 
aware of how the amendment of the Senator from Delaware works. It 
replaces the unified credit with an exemption. Most people say: What in 
the world are you talking about? Unified credit, under the existing 
system, says we will credit you so much in taxes, and you don't have to 
pay; but above that, you start paying taxes at whatever rate it is. It 
means if you have a taxable estate, once you start paying taxes, you 
start paying taxes at a 39-percent rate. If you have a taxable estate 
of $1 million, 39 percent goes to the Government.
  What we do by replacing the unified credit with an exemption is, once 
you run out of the exemption, you start paying taxes at the lowest 
rate, which is 18 percent. That is a big difference. That is a big 
difference for estates that are barely taxable. So, if you are over the 
exemption amount--the exemption amount today is $650,000--and you don't 
have to have a lot of property or a lot of wealth to have an estate of 
$650,000, if you get above that, your tax would be 18 percent instead 
of 39 percent. That is a big difference, and I compliment the chairman 
for doing it.
  Frankly, I would like to eliminate the estate taxes and have the 
taxable event not be death but when the property is sold. Senator Kyl 
and others have been advancing that. I think that is an excellent idea. 
You should not be taxing somebody because somebody dies. You should tax 
them when that property is sold. If the people who receive the 
property, the beneficiaries, the family, if they want to keep the 
business and keep the business operating and running, great. If they 
want to sell the business, tax it as a capital gain and tax it at the 
old valuation, at whatever escalation has been in the market value. 
That is the capital gain. That is what the taxable event should be, 
when the property is sold--not because somebody dies.
  Again, the chairman's provision, exchanging the unified credit for an 
exemption, is a giant step towards, basically, bringing about some 
relief in estate taxes which I think is critically important. If you 
believe, as do I, in family-owned businesses, if you believe the 
Government is not entitled to take over half of people's property just 
because they pass away then you should support this bill. Somebody said 
earlier this provision in the bill only benefits the wealthy. I 
disagree strongly with that statement.
  My father, unfortunately, passed away when I was pretty young and we 
had a family-owned business, Nickles Machine Corporation, in Ponca 
City, OK. We had a significant dispute with the IRS for 7 years about 
the valuation of this company. The IRS said: We think it is worth a 
whole lot more and we want you to pay a lot of taxes. My mother did not 
pass away; my brothers and sisters did not pass away--just my father. 
And he was second generation in this business. Yet the Government said: 
We want a chunk of it.
  The estate tax rate today says any estate over $3 million, they want 
55 percent. Why in the world would the Federal Government be entitled 
to take over half of what somebody worked his or her entire life for 
because somebody passed away?
  One of the changes we made in 1981, it has been seldom noticed, but 
one of the great changes we made, we eliminated the inheritance tax 
between spouses so surviving spouses do not have to pay a dime of 
inheritance tax. That is a positive change. I was here and had a little 
something to do with it, and I am very pleased we made that change.
  But it isn't enough. Now, even though we have made that change, when 
the surviving spouse passes away and you have a taxable estate of $3 
million--maybe it is a manufacturing

[[Page 18402]]

company, maybe it is a farm or ranch, maybe it is a restaurant, and it 
happens to be worth $3 million--the Federal Government comes in and 
says: We want half. I absolutely think that is wrong. That is one of 
the many reasons why I think we need a tax cut today. That is one of 
the reasons why I think we need a greater tax cut than the alternative 
proposed by our colleagues that would provide $500 million. I note the 
estate tax relief they have in their provision----
  The PRESIDING OFFICER. The 15 minutes of the Senator has expired.
  Mr. NICKLES. I ask an additional 10 minutes on the amendment.
  The PRESIDING OFFICER. The Senator may proceed.
  Mr. NICKLES. Looking at the provision offered by our colleagues, in 
the substitute they have $19 billion of estate tax relief and the 
estate tax relief offered by the underlying proposal is $63 billion. So 
it does a lot more in estate tax relief in the chairman's bill than 
what is offered in the substitute.
  I happen to believe in estate tax reform very strongly, and not 
because it benefits the wealthy. I happen to believe it is a matter of 
fundamental fairness and freedom. People should be able to work their 
entire life and be able to pass their property on to their kids without 
Uncle Sam coming in and saying that we want half or even over half. The 
chairman's amendment helps make that change.
  Also in the underlying bill, we increase retirement savings. 
Everybody in this room knows we do not save near enough. What we do 
under the underlying bill is we increase IRAs over a 3-year period from 
$2,000 to $5,000. We do that in both the IRAs that are tax exempt going 
in and the Roth IRAs, into which you may put after-tax dollars. That 
means we are allowing people to put in more money to save for their own 
retirement.
  The $2,000 limit goes back for years and has not been indexed for 
inflation. Frankly, we in Congress should encourage savings. We want 
people to be less dependent on Government, more dependent on 
themselves, to be able to save for their retirement. Increasing this 
amount from $2,000 to $5,000 is a giant step in the right direction. 
Again, I compliment the chairman. This provision is in his bill. It is 
not in most of the other bills. I do not believe it is in the 
substitute as well.
  Finally, I want to touch on one other thing, and that is the self-
employed health care deductibility. The chairman's bill says, for self-
employed persons, we are going to allow 100-percent deductibility. We 
had this debate actually when we were debating the Patients' Bill of 
Rights. It was included in the measure we passed on the floor of the 
Senate. I argued then if we want to increase health care access, we 
should at least make the Tax Code equitable, and it is not equitable. 
Major corporations today get to deduct 100 percent of their health care 
costs; self-employed deduct 45 percent. What is right about that? What 
is right about a code that says: Self-employed person, you deduct 45 
percent but GM or any corporation in America, you deduct 100 percent? I 
am offended by that section in the Tax Code and I support this bill for 
making that much needed change. I used to be self-employed. I used to 
run a corporation. A corporation deducts 100 percent, but if you are 
self employed tough luck, you only get to deduct 45 percent.
  Then the chairman's package also has a major expansion for people who 
do not get anything from their employer. If they pay over half their 
health care cost, they get to have an above-the-line deduction for 
their health care expense. Again, why in the world, if we are going to 
use the Tax Code to encourage health care, why do we not let it apply 
to everybody in America? We do not do that today. If you do not work 
for a generous employer who subsidizes your health care, you are out of 
luck. If you are not self-employed, you are out of luck. You have to 
pay for your health care with after-tax dollars. You do not get any 
deduction.
  The chairman's bill changes that inequity and says, yes, you 
eventually get a 100-percent deduction. It phases that in, but 
eventually that person gets a 100-percent deduction for their health 
care cost as well, and they do not have to itemize to get it. All 
taxpayers would get it. Again, this is a giant step in the right 
direction in bringing tax equity in health care costs.
  When we allow people to buy homes and we say you can deduct your 
interest, we do not say you have to work for a generous employer to be 
able to deduct the interest. Everybody gets it. We are free to use the 
Tax Code to encourage health care. It should apply to everybody, and 
again, the chairman's package makes a giant step in that direction.
  The chairman's package does many other things. It allows an extension 
of time for people to be able to deduct their student loans; it allows 
a continued deduction for companies that have educational plans and 
benefits; it has a plan to help in education; it has a plan to help in 
health care; it has a plan to help increase savings and retirement and 
401(k)s; it has a plan to allow people to keep more of their own money; 
it eliminates the marriage penalty.
  I tell my colleagues that those are things we need which will help 
American families. That is not just a tax cut for the wealthy. That is 
not something my colleagues can demagog. They may want to, but if they 
want to demagog, where do they want to cut? Do they want to eliminate 
the permanent R&D tax credit? Do they want to eliminate the self-
employed deductibility? Do they want to eliminate the marriage penalty? 
Do they want to eliminate the reduction in rate from 15 to 14? Do they 
want to eliminate the expansion of the 15-percent tax bracket? I don't 
think so.
  I think the chairman has put together a good package and that 
package, yes, costs $792 billion. I say costs. It is going to allow 
people to keep $792 billion of their own money. They are going to be 
sending in over $3 trillion more than the Federal Government needs in 
the next 10 years. We are saying we are going to let them keep some of 
that themselves. The chairman has crafted this in a way that is going 
to help a lot of middle-income working Americans who are interested in 
health care, who are interested in education, who want to not be 
penalized because they happen to be married.
  So I compliment him for his package. I urge my colleagues, with all 
great respect for the amendment that is pending, I urge them to vote no 
on that amendment because we can do more, and we should do more. The 
American taxpayers deserve more, deserve better. I hope our colleagues 
vote no on the pending amendment and vote yes on final passage, 
hopefully tonight.
  I will mention, as far as procedurally, I hope we can finish this 
bill tonight. It is possible. It will not be easy, and our colleagues 
will have to work together to make that happen, but I hope it will be 
possible for us to have final passage on the underlying amendment later 
tonight.
  I yield the floor. I thank my colleague from Delaware.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Mr. BREAUX. Mr. President, I yield 10 minutes to the distinguished 
cosponsor of the amendment, the Senator from New Jersey.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. TORRICELLI. Mr. President, thank you very much.
  The Senate has had before it three very distinct blueprints for the 
American future, not a tax plan for the remainder of this year or next 
year but blueprints that will dictate many priorities and decisions for 
more than a decade. They are very distinctly different.
  The Senate has before it a Republican tax reduction plan that will 
never become law because the President will never sign it. The Senate 
is considering a Democratic tax reduction plan that will never become 
law because this Congress will never pass it. And there is a bipartisan 
tax reduction plan of $500 billion now before the Senate.
  It is termed a ``bipartisan tax reduction plan,'' but it should be 
better known as the ``October plan,'' because we may spend July and 
August debating our partisan proposals.
  Members of the Senate may not endorse this proposal today, but I 
suggest that by the time we reach October, it is a plan such as this 
that will bring us together.
  This plan, crafted by Senators Breaux, Kerrey, Chafee, Specter, 
Collins, Snowe, Bayh, myself, and a group of others, is based on a 
belief that the Nation should have returned to it as much of its tax 
dollars as possible, while still being prudent to allow the development 
of a surplus, protecting Social Security and other national priorities. 
Reducing taxes is a national priority, but so is hiring 100,000 
teachers, rebuilding American schools, providing for a pharmaceutical 
benefit in Medicare, improving the national infrastructure, and 
reducing the national debt.
  Like any compromise, this plan is designed to accommodate many of 
these

[[Page 18403]]

objectives, and I think we have succeeded. But it is also based on the 
belief that the American people, after 8 years of economic expansion 
that was built on hard work, high taxes, and sacrifices, deserve a 
dividend.
  This $500 billion tax reduction plan is a fair and reasonable 
dividend. This surplus developed for a reason. In 1993, appropriately 
in response to burgeoning deficits, this Congress increased taxes by a 
quarter of a trillion dollars. In the years that followed, American 
businesses produced and American workers produced at unprecedented 
levels. They have provided an economic expansion and also a Government 
surplus, and they deserve now to have some of it returned. That is the 
foundation of this plan. But we accomplish nothing by returning these 
tax revenues if we only prestage a burgeoning deficit in the future or 
we deny other needs in the country as well.
  Tax reduction is an economic imperative, in my judgment, but so is 
education and so is improvement of the national health care system, and 
so is expansion of the national infrastructure. There is before this 
Senate but one balanced plan that can achieve

these tax reduction goals while meeting these balanced national 
objectives, and it is this plan, the ``October plan.''
  This plan is also based on a recognition that even in good economic 
times, it is important to recognize that these are not perfect economic 
times. The United States today faces twin economic problems:
  First, record levels of consumer debt. The current economic expansion 
is threatened by mounting middle-class consumer debt more than any 
other single indicator. Middle-income families with young children are 
shouldering more debt in home mortgages, credit card bills, and 
educational expenses than at any time in our national history.
  This plan is designed to respond to that need by moving 4 million 
Americans, people who earn $50,000, $60,000, $70,000 in family income, 
with young children, and moving them from the 28-percent bracket to the 
15-percent bracket where they belong.
  This Government has no right to go to a family that earns $60,000 and 
$70,000 and struggles every month to educate its children, provide 
housing, clothing, and food, and take 28 percent of that income for the 
Federal Government. I do not believe it was ever our intention.
  Prosperity and inflation moved people into these tax brackets. For a 
long time, some of us lived with the illusion that people who lived at 
these modest incomes somehow had expendable income, as if they were 
living lives of luxury. There is no luxury in American life today on an 
income of $30,000 to $70,000 with children. This bill recognizes that 
fact.
  We also recognize that many senior citizens and many young families 
supplement their incomes by modest savings--people who earn a few 
thousand dollars in capital gains, put a little bit of money in the 
bank, or they invest in the stock market for a little security to 
participate in American growth. The Federal Government should not be 
charging capital gains taxes on people who earn $2,000 and $3,000 a 
year. We should be doing everything we can to encourage these people to 
save for an emergency, prepare for the future, and this bill deals with 
that reality, in response to the fact that the other crisis in American 
economic life today, beyond high consumer debt, is a virtual collapse 
in national savings. This year, the United States has a national 
savings rate of minus 1.2 percent, the lowest rate since the second 
year of the Great Depression. We are the only developed nation in the 
world with a negative savings rate.
  This legislation responds to that reality. We eliminate the capital 
gains taxes on the first few thousand dollars of savings, which, in 
part, takes 4 million taxpayers off the tax rolls entirely--young 
families and probably largely senior citizens who want a little 
security in life. They should pay nothing, and that is what this bill 
provides.
  Those are the twin objectives we have: Reduce consumer debt by 
lowering taxes on the middle class by moving people from the 28-percent 
bracket to the 15-percent bracket; and, second, by encouraging savings, 
both as Senator Roth has done by an expansion of the IRA, and in our 
case from $2,000 to $3,000.
  This Government should be doing everything possible to encourage 
Americans to save money, if not for our larger economic purposes, then 
simply because 50 percent of Americans have no pensions; 60 percent of 
Americans retire only on Social Security. My colleagues and I know why 
there is such enormous pressure on this Congress to increase Social 
Security and other Government benefits: Because people are not saving 
money, and they do not save money because this Government has made it 
economically irrational to do so, and the Tax Code is the answer to 
changing that reality.
  Our bill, I think, is easily defined and explained. It is simply $500 
billion over the course of this next decade. It removes 3 million 
people entirely from the tax rolls by increasing the standard deduction 
and eliminating taxes on modest savings. Three million people, largely 
senior citizens, will pay nothing.
  Second, as I suggested, we move 4 million people from the 28-percent 
tax bracket to the 15-percent tax bracket, meaning that a family of 
four earning $71,000 will now have their taxes arguably reduced in half 
and have money available for their own family needs. For a single 
person earning $37,000, this translates into a $600 tax cut. A family 
earning $71,000, as I suggested, receives a $1,300 tax cut.
  We also do more. We eliminate the marriage penalty entirely in the 
standard deduction. We increase and expand the child care tax credit to 
remove American women from this dilemma where they have to choose 
between going to work to pay the mortgage and knowing their children 
are safe by allowing affordable child care.
  The PRESIDING OFFICER. The time yielded to the Senator from New 
Jersey has expired.
  Mr. TORRICELLI. I close by urging my colleagues to join with me in 
this bipartisan plan for reasonable and affordable tax relief. I yield 
the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. BREAUX addressed the Chair.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Mr. BREAUX. I yield 10 minutes to the Senator from Pennsylvania.
  The PRESIDING OFFICER. The Senator from Pennsylvania is recognized 
for 10 minutes.
  Mr. SPECTER. I thank my colleague from Louisiana.
  Mr. President, I join in cosponsoring this centrist approach. In my 
view, the tax proposal to cut $792 billion over 10 years is too much. 
It may be that the United States would be best served by not having any 
tax cut at all, but it appears we are headed for some tax cut. And a 
group of centrists, so-called moderates, have joined together on the 
proposal which is now on the floor for a tax cut of some $500 billion.
  This same group, in substantial measure, was assembled 2 weeks ago on 
the so-called Patients' Bill of Rights, where the centrists had an 
alternative proposal to the more extreme proposals on the right and on 
the left.
  We have rounded up the so-called ``usual suspects,'' but we have a 
few more; and I think there is some chance that this bill, this 
proposal, this amendment will be adopted, if not today, then perhaps 
ultimately.
  At the outset, I acknowledge the proposition which has been advanced 
by the Chairman of the Federal Reserve, Alan Greenspan: that the 
Government of the United States would be best served if there were to 
be no tax cut at all.
  The projections of the surpluses are highly speculative. If you 
change the interest rate a bit, or if you change the unemployment rate 
a bit, those surpluses would change very dramatically.
  There is a strong argument for the proposition that we would be best 
advised to pay down the national debt. The national debt now stands in 
excess of $5.5 trillion. When the Presiding Officer and I came to the 
Senate, after the 1980 election, the national debt was slightly under 
$1 trillion. Notwithstanding the so-called ``Reaganomics'' of the 
administration of President

[[Page 18404]]

Reagan, by the time he had left office, the national debt was in the 
range of $3 trillion, and it has gone up.
  To reduce the national debt would reduce the carrying costs on the 
interest, and there is a great deal to be said for that. But my sense 
is the temper of the times is that we are going to be looking at a tax 
cut to some extent. If we ameliorate, or reduce the tax cut from the 
proposed $792 billion to $500 billion, then we have more assurances 
that we can take care of other needs of America.
  There is a consensus that the Social Security fund ought to remain 
inviolate, ought to be preserved at all costs. I believe that it is 
true that the Social Security fund will be secure under any of the 
pending proposals. But you can't be entirely certain of that because 
that significant measure depends on the economic forecasts, the 
unemployment rate, and the interest rate.
  Beyond Social Security, there is a commitment to preserve Medicare. A 
lesser tax cut would provide a better guarantee that funds will be 
available for Medicare.
  Then we have the issue of prescription drugs where, again, there is a 
growing sense that this is an issue which has to be taken into account. 
Again, a lesser tax cut gives more flexibility for prescription drugs.
  So when we look at the imponderables and the problems, there is much 
to recommend a lesser tax cut, so that a figure in the $500 billion 
range appears preeminently reasonable.
  Earlier today, about an hour ago, the Senator from Minnesota, Mr. 
Wellstone, said he did not think the majority of the country favored 
any tax cut. Well, it is hard to assess where the majority of the 
country is. What is going to happen in the course of the next 6 weeks, 
probably, presumably, likely, is that a tax cut will come out of the 
Republican Congress. The plan is, if this tax cut is adopted, the 
Senate and House will go to conference, and there will be a resolution 
of the issue by the end of next week, before we start the August 
recess.
  Then there will be an opportunity for Americans to digest the 
positions taken by the Republican Congress, contrasted with the 
position taken by the President's Administration and what the Democrats 
have in mind.
  I believe if the Senate were to enact this amendment on the $500 
billion tax cut, we would be in the position to have some realistic 
negotiations. It is perfectly obvious, at this stage of the proceeding, 
that the aura of politics is very heavy in this Chamber, very heavy in 
the House Chamber, very heavy over all of America--less heavy, frankly, 
outside the beltway.
  During the August recess, as I undertake my open-house town meetings, 
I am anxious to get guidance as to what the Congress ought to do from 
the prevailing wisdom of Pennsylvanians and the wisdom of men and women 
outside of the beltway.
  But I think a tax bill coming out of the Senate at $500 billion would 
set the stage for some serious discussions with the White House, and an 
important aspect of those discussions will be what is going to happen 
to the appropriations bills.
  We are now operating under the 1997 Balanced Budget Act. Speaking for 
my subcommittee, which has jurisdiction over three major Departments--
the Department of Education, the Department of Health and Human 
Services, and the Department of Labor--the allocation of $80 billion is 
totally insufficient when we look at what we had appropriated last 
year, what the inflation rate has been--however small, it is a factor. 
Looking at the financing of the National Institutes of Health, which 
have made such dramatic achievements; the financing for Head Start, 
Healthy Start, and worker safety; that is a matter which has to be 
reconciled, has to be negotiated with the White House during September, 
before we go into October where we have the highly publicized 
possibility of the so-called train wreck.
  But those are factors which have to be taken into account. There 
again, an approach of $500 billion leaves greater flexibility to 
accommodate other pressing needs of the Government.
  Later during the consideration of this tax bill, I will have an 
opportunity to speak about an amendment which I have pending, which is 
the flat tax. That is a proposal to simplify taxes in America so they 
could be filed on a single postcard.
  I regret that this measure has not received greater attention, 
notwithstanding the fact that it was introduced in the House of 
Representatives by Majority Leader Armey in the fall of 1994, and I 
introduced it--the first bill in the Senate--in March of 1995, which 
really provides some very substantial relief on simplicity and breaks 
for the American people. That is not to be, but I will have an 
opportunity a little later to explain, in some detail, the flat tax 
proposal.
  Mr. President, inquiry as to how much time I have remaining of the 10 
minutes allotted.
  The PRESIDING OFFICER. One minute.
  Mr. SPECTER. I thank the Chair.
  In conclusion--the two most popular words of any speech--I believe 
that America ought to be governed from the center; America needs to be 
governed from the center; and America wants to be governed from the 
center.
  Where we have the competing proposals--the one which was defeated 
yesterday, the Democratic proposal at $295 billion; the competing 
proposal of $792 billion--the $500 billion figure will provide more 
flexibility for other needs of America, will move to the center, will 
give better assurances that adequate funding will be available to 
protect Social Security, to provide Medicare reform, to provide 
important programs such as prescription drugs, to provide for the kinds 
of funding necessary for the National Institutes of Health, the other 
important items yet to be resolved under an arrangement with the White 
House on the pending appropriations bills.
  I join my colleagues in urging adoption of the Chafee-Breaux 
proposal.
  The PRESIDING OFFICER. Who yields time?
  Mr. ROTH. Mr. President, I yield 10 minutes to the Senator from 
Alaska.
  The PRESIDING OFFICER. The Senator from Alaska is recognized.
  Mr. MURKOWSKI. I thank the Chair, and I shall not take the full 10 
minutes.
  Mr. BAUCUS. Mr. President, might I get some understanding of the 
order. I wonder if there is some way we could go back and forth.
  Mr. MURKOWSKI. I was under the impression we were talking on 
different sides of the amendment.
  Mr. BAUCUS. If we understand that the next speaker will be the 
Senator from New Jersey, that would be helpful.
  Mr. ROTH. That is correct.
  Mr. BAUCUS. I thank the Chair.
  Mr. MURKOWSKI. Mr. President, the issue before us today is whether we 
should replace the Finance Committee's tax relief bill with a smaller 
$500 billion tax relief bill. I commend the authors of the amendment 
for their effort to provide tax relief to the American people, but I 
believe very strongly that the Finance Committee bill is a better, 
balanced approach.
  Let's examine it for a moment. For example, middle-class families 
would receive far less relief under the $500 billion amendment because 
the 15-percent bracket is not reduced. Moreover, the marriage penalty 
relief in this amendment will not affect the 30 percent of married 
couples who itemize deductions.
  The biggest flaw in the authors' approach is their belief that this 
$500 billion tax cut would be approved by our President. He has stated 
already he would not sign a tax bill, a $500 billion tax bill that cuts 
taxes by more than $300 billion. And the Director of the OMB has 
indicated that a $500 billion tax cut would be vetoed. So we have a 
veto threat.
  We also have a responsibility to the American taxpayer. As a member 
of the Finance Committee, I rise in strong support of the Taxpayer 
Refund Act as proposed by Finance Chairman Roth. I commend his 
chairmanship, the professional staff, and the Joint Tax Committee staff 
who have worked so hard in putting this together. It has been very 
difficult, but it is fair, it is

[[Page 18405]]

balanced, and it is growing in support, as Americans and Members of 
this body recognize its contribution from the standpoint of fairness 
and equity. Everybody shares. Everybody benefits. It is a great 
opportunity for the American people to share in this prosperity 
associated with the surplus.
  The Roth bill gives the overtaxed American family a refund of the 
taxes they are now overpaying to the Federal Government which has 
resulted in the surplus. The Congressional Budget Office projects that 
the total budget surplus over the next 10 years will be $2.9 trillion. 
Nearly $1 trillion--that is, about $996 billion--of that surplus comes 
from overpayments of income and estate taxes. The American people 
should share. They know to whom this refund belongs. It is an 
obligation of this body to give some of it back.
  What Senator Roth and my colleagues on the Finance Committee have 
done in this bill is to take about $791 billion of those tax 
overpayments and return that money to the American people, the hard-
working American taxpayers. All of the $1.9 trillion Social Security 
surplus will be used solely for preserving Social Security. As a result 
of this bill, we will have more than $200 billion available for saving 
Medicare and paying down part of the debt.
  We have heard from the President that he will veto this bill because 
the tax refund is too large, and the liberal Washington press 
mindlessly parrot the President's statement and argue that we should 
not provide such a large refund.
  First of all, the President wasn't very supportive of any kind of a 
refund. He is coming around now. Think of the media, the media that 
parrot an argument that has no foundation, that somehow it is wrong for 
the American people to have a tax refund. Think about that for a 
moment. What is wrong with the American people sharing in this surplus? 
After all, it belongs to them. What do you do if you get a tax refund? 
What do you do if your taxes are reduced? Well, you have a couple of 
alternatives. You can save it, or you can go out and buy something, 
spend something. That is going to increase somebody's inventory. Go out 
and buy a new bicycle; somebody has to put in more bicycles.
  The point is that it addresses an alternative for the American 
people. We should save more. We are going to have an opportunity to 
save more.
  The Democrats automatically jump to a conclusion: Interest rates are 
going to go up. There is no proof of that. There is no indication of 
that. That is scare tactics, Mr. President. What is wrong with the 
American people having more dollars in their jeans to spend or save if 
they wish?
  Mr. KERRY. Will the Senator yield for a question?
  Mr. MURKOWSKI. I will yield at the end of my statement. I will be 
happy to at that time.
  We only have to go back to December of 1980, under the Carter 
administration. Some people have forgotten. Do you remember what the 
inflation rate was? The inflation rate was better than 11 percent. 
Interest on the prime rate in this country was 20.5 percent. Imagine 
that. What was that due to? Partially the oil shock. So here we have an 
opportunity where we can have a significant refund, and the beneficiary 
is the American people.
  The fact is that what the President wants us to do is not to provide 
a tax refund to the American people. Instead, he wants to take that 
surplus to finance $1 trillion in new spending. Despite his claim that 
he wants to cut taxes by $300 billion, CBO has scored the President's 
budget as actually raising taxes by $100 billion over the next 10 
years. In other words, at a time when we are running a real surplus in 
the hundreds of billions of dollars, this President comes along and 
wants to impose even more higher taxes on the American people so he can 
finance a big and growing Government.
  The bill before us should not be vetoed because it provides a tax 
refund to every single American who pays taxes. The lion's share of the 
tax cut, more than $410 billion, results from cutting the 15-percent 
rate to the 14-percent rate and the almost total elimination of the 
marriage penalty. Is that what President Clinton objects to--reducing 
the tax rate paid by the lowest income taxpayer? Or does the President 
object to elimination of the marriage penalty? That must be the case, 
because if our President had his way and we cut taxes by $300 billion, 
we could not eliminate the marriage penalty, we could not cut the rate 
paid by the lowest income earners.
  When the baby boomers are set to retire in 11 years, this bill 
expands retirement incentives, allows increased competition by people 
over 50 years of age.
  I commend the chairman, Mr. Roth, for upping the limit on 
contributions to IRAs to $5,000. It has been over 20 years since we 
raised the $2,000 IRA limit. Upping the limit to $5,000 is long 
overdue, and it is incentive for the American people to save for 
retirement.
  In recent months we have seen that America's savings rate is actually 
a negative number. These incentives could well serve to increase our 
savings rate. Is that what President Clinton objects to--retirement 
savings incentives? Or does the President object to the health care 
provisions in this bill, health care changes that bring a much-needed 
level of equity to the Tax Code?
  Allowing the self-employed to deduct 100 percent of the cost of 
health insurance finally brings small businesses to parity with large 
corporations. What is wrong with that? For the first time in our 
history, under the bill, employees who pay for more than half of their 
own health insurance will be able to take an above-the-line deduction 
for those costs. It sounds fair to me. I thought the President was so 
concerned about the uninsured. Why would he, if he was that concerned, 
veto a tax bill that finally provides health equity to employees and 
small business owners? I ask that question of the President.
  Much overlooked in this bill are the more than $12 billion in 
educational changes that will make it easier for graduates to pay for 
their student loans. In addition, more than $1 billion of this bill 
will help communities construct new schools. Does the President object 
to that?
  The PRESIDING OFFICER. The time of the Senator from Alaska has 
expired.
  Who yields time?
  Mr. MURKOWSKI. I urge support of the Finance Committee chairman's 
bill.
  Mr. BREAUX. Mr. President, I yield 5 minutes to the distinguished 
Senator from Vermont.
  Mr. JEFFORDS. Mr. President, I thank the Senator for yielding the 5 
minutes. We have worked closely together on this bill. I am here to 
recommend passage of it.
  First of all, I commend my chairman, Senator Roth. I support many of 
the provisions in his bill. Many of the provisions in his bill are in 
this bill. I express my sincere hopes that the bill's good provisions 
will stand. I agree with much of what Senator Specter said about some 
of the ramifications if we continue on our present course. This is 
basically ``Roth lite'' as far as the bill goes.
  It is very much modeled after it. It just cuts it back somewhat so we 
can get sort of in the middle.
  This $500 billion centrist alternative represents an attempt by some 
of us to find a middle ground. The Senate finance Committee has 
approved tax cuts of roughly $800 billion. The President has said he 
will veto a bill of that size. The Senate Democrats have proposed tax 
cuts of $300 billion, and the President has signaled his willingness to 
sign a bill with that level of tax cuts.
  The bad news in all this is that the parties are at an impasse. One 
side is dug in at $800 billion; the other will not budge from $300 
billion. The good news is that both sides agree that we can afford and 
achieve some level of tax cut. I certainly do. And since both sides 
agree that a tax cut is appropriate, sooner or later we will have one.
  What those of us sponsoring his centrist amendment are saying is: 
``Let's compromise. Let us take a step toward the middle. Let us settle 
on a figure we can agree on. And let us get this tax

[[Page 18406]]

cut done--sooner, rather than later. If neither side can give ground, 
if we lock ourselves into hard and fast positions, this whole process 
will come grinding to a halt. How the process will ultimately play out 
is anybody's guess. It could mean we have another government shut-down. 
Or it could mean we end up with an omnibus bill like we had last year.
  It does not have to be that way. This should not turn into a game of 
``chicken'' between political parties. But both sides will have to give 
a little.
  In the end, I think we will ultimately end up with a tax bill that is 
somewhere between $300 billion and $800 billion--in other words, around 
$500 billion. I do not see why we can not settle on an acceptable mid-
point now.
  You can get a lot of tax relief with $500 billion. The centrist 
package will provide for broad-based tax relief for most taxpayers. 
Taxpayers who do not itemize deductions will see a big increase in the 
standard deduction. This increase is not just tax relief. It is also 
tax simplification. With a larger standard deduction millions of 
taxpayers will no longer have to itemize their deductions. Taxpayers 
who itemize will also get a break, as the 15-percent bracket will be 
expanded.
  Up to $5,000 that was formerly taxed at 28 percent will now be taxed 
at 15 percent. This 13 percent reduction in tax will mean savings up to 
$650 for married couples.
  Our centrist package also addresses the marriage penalty. It 
eliminates the marriage penalty in the standard deduction, and 
eliminates part of the marriage penalty in the earned income credit. 
Our Tax Code should not punish marriage--especially among the working 
poor. Right now two low-income people who marry often find themselves 
with a smaller earned income credit than they would have had as single 
taxpayers. That shouldn't be.
  This alternative also encourages savings and investment. The first 
$1,500 of capital gains would be tax tree. Again, this is not just tax 
savings; it's also tax simplification. During the tax filing season, 
the complex schedule D was one of the things Vermont taxpayers 
complained about most often. Under our proposal, millions of people 
with capital gains from mutual funds could avoid filing out schedule D.
  Our alternative includes targeted provisions that serve important 
national interests like retirement savings, education, and protection 
of the environment. When people move between jobs it will be easier for 
them to take their pension benefits with them. More people will be able 
to claim the deduction for student loan interest. Long-term care 
insurance would be deductible. The research and experimentation credit 
would be permanent and the low-income housing tax credit would be 
extended. These are but a few of many tax issues addressed in our 
alternative package.
  In the Finance Committee, I voted to move the bill out of committee 
and keep the process going. I applaud Chairman Roth for the reasoned 
approach he has taken in this bill.
  With a projected surplus approaching a trillion dollars, I think we 
can afford some tax relief. I must confess, however, I'm a little 
uneasy with the level of tax cuts in the Finance Committee bill. An 
$800 billion tax cut leaves little margin for error if the surplus 
projections are not correct. An if these projections understate the 
surplus, we can always come back and enact further tax cuts.
  I'm also concerned that an $800 billion tax cut doesn't leave us a 
cushion sufficient to fund a Medicare prescription drug benefit, to pay 
down our national debt or to address other areas of concern, like 
education. I think we should go slower, be a little more cautious. Some 
would call this the conservative approach.
  Still, I want tax cuts. Our $500 billion alternative allows for 
meaningful tax relief, while also leaving a significant chunk of the 
surplus intact for other national priorities.
  Mr. President, the American people are tired of gridlock. They're 
frustrated that compromise is becoming a lost art. We don't need to 
wait for a veto before getting down to serious negotiations. We can get 
this bill done today.
  The PRESIDING OFFICER. Who yields time?
  Mr. ROTH. Mr. President, I yield to the Senator from New Jersey for 5 
minutes.
  The PRESIDING OFFICER. The Senator from New Jersey is recognized.
  Mr. LAUTENBERG. Mr. President, I thank the chairman of the Finance 
Committee. I appreciate this opportunity to state my opposition to the 
Chafee-Breaux amendment, which would provide a $500 billion tax cut.
  The proposal is being put forward by some of the moderate Members of 
this body, and I have tremendous respect for Senators Chafee, Breaux, 
and the other cosponsors. Its sponsors may be moderate, but this 
amendment is not. If you really look at the numbers, I would say it is 
fiscally irresponsible.
  It is always tempting to believe the best solution to a conflict is 
to split the difference. But that is not true when one side is taking 
an extreme position. That is what is happening.
  In this case, splitting the difference would be terrible policy. It 
would force either unreasonable cuts in education, defense, and other 
priorities or, more likely, it would eventually force excessive cuts in 
Medicare and Social Security.
  Supporters of large tax cuts have been coming to the floor arguing 
that we have a $3 trillion surplus to divide up. But that is wrong. I 
have even heard the arguments being made about how well regarded the 
original Finance Committee bill of $792 billion was, and claiming that 
it is the only fair thing to do--to give it back to the people who paid 
the bills in the first place. The fact of the matter is, we are all on 
a mortgage; all of our citizens share a mortgage, all of us in this 
room and outside in the countryside. It is our national debt.
  I don't know any family that, given a chance to get a couple of bucks 
in their pockets--less than $150 in the tax cut for modest-income 
earners of $38,000--would not rather have their mortgage paid off for 
them. That is the condition we ought to be in--paying off our mortgage 
and paying off our national debt, not giving it back in forms that 
produce most of the benefits for people in the highest share of the 
income strata. We were talking about people who are wealthy, who make 
$800,000 a year--by any judgment, they are pretty well off in this 
country--getting $23,000 a year worth of tax cuts in the original bill. 
Now we are in the compromise stage, and we are down at a level that 
still, frankly, doesn't make economic sense.
  It is expected that we are talking about a surplus. Well, first, I 
want to point out it is a projected surplus. There is a big difference. 
Hardly anybody who has looked at CBO's projections truly believes that 
they are without question. To be fair to CBO, even they have 
acknowledged their estimates are uncertain.
  They depend not only on guesses about our economy, but they depend on 
assumptions that the Congress will make drastic cuts in a broad range 
of popular programs from veterans' health care, to education, to law 
enforcement. If Congress merely maintains defense spending at the 
levels requested by President Clinton, all of these other programs 
would have to be cut about 40 percent.
  Alan Greenspan, Chairman of the Federal Reserve, who is really the 
most esteemed spokesman on the economic condition in our country, has 
said: Hey, be careful. The Fed Chairman told the Banking Committee in 
an article from the Washington Post this very day:

       It would be unwise to cut taxes now altogether on the basis 
     of surplus forecasts that could be far off the mark. If 
     Congress goes ahead with a major tax cut, I think it also has 
     to be prepared to cut spending significantly in the event 
     that the forecasts on which they are based are wrong.

  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. LAUTENBERG. I thought I had 10 minutes.
  Mr. ROTH. I yield 2 minutes from the bill.
  Mr. LAUTENBERG. Mr. President, it is less time than I thought I would 
have to speak on this subject. I have

[[Page 18407]]

waited patiently. I guess I will try to wrap it up now.
  The projected surplus is truly a mirage. If Congress were to maintain 
basic Government functions at this year's level, it would be a $1 
trillion non-Social Security surplus, yes, but it would be more like 
one-tenth of that, or $100 billion, by the time we finish with this tax 
cut.
  We are slashing prospectively important domestic programs such as VA 
and other programs, trying to find trick ways to satisfy our obligation 
to the Veterans' Administration and to the Census, which is clearly 
identified in our Constitution as an obligation, now calling it 
``emergency'' spending.
  What we are observing, I think, is some sleight-of-hand work. I hate 
to use that term, but that is what I see, ``cooking the books,'' making 
sure we take whatever forecasts suit the situation the best.
  There is no way to do what we want to do, what we are obliged to do, 
if we are going to give away $500 billion in tax cuts. There are better 
ways to deal with our financial or fiscal condition. Alan Greenspan 
confirms that.
  I hope this Senate will respond to the American people's desire. Get 
rid of the mortgage, pay down the debt, and then talk about tax cuts 
that are targeted specifically to modest-income people.
  Mr. BREAUX. I yield 5 minutes to the distinguished Senator from 
Maine, Ms. Collins.
  Ms. COLLINS. I thank my colleague from Louisiana.
  Mr. President, I rise today in strong support and as a proud 
cosponsor of the Chafee-Breaux bipartisan compromise plan. I commend 
the Senator from Louisiana and the Senator from Rhode Island for their 
leadership in bringing Members together to craft this important 
proposal. This amendment represents a fair, prudent, and responsible 
compromise between and among the competing proposals we have been 
debating. It is a sensible bipartisan plan.
  In crafting this proposal, our bipartisan coalition has been guided 
by several principles. The first is perhaps best summed up by the 
expression, ``Don't count your chickens until they are hatched.'' We 
know, based on CBO estimates for the next 10 years, that we may have a 
projected surplus of $3 trillion. However, $1.9 trillion of that 
surplus is due to a surplus in the Social Security trust fund. I don't 
think we should spend a penny of the Social Security trust fund surplus 
for either tax cuts or for spending increases on non- Social Security-
related programs. That should be reserved for paying Social Security 
benefits and for Social Security reform.
  That leaves roughly $1 trillion to decide how we are going to 
allocate. Our bipartisan coalition believes adopting a more prudent tax 
relief goal of approximately $500 billion over the next 10 years will 
provide millions of families in Maine and across the country with much-
needed tax relief, while at the same time guarding against the 
possibility that the current surplus projections may not be fully 
realized in the years to come. Our proposal allows for additional 
amounts of the public debt to be paid down, as well as reserving extra 
funds that could be used to preserve and protect Medicare, to 
strengthen education, and for other priority programs.
  Our second principle is to target the tax relief we are providing. In 
this time of economic good fortune, we should focus our tax relief on 
hard-working lower-income and middle-income families. Our proposal 
would do just that. It allows for additional public debt to be paid off 
while removing 3 million low-income taxpayers from the tax rolls 
altogether. In addition, it slices the marginal tax rate nearly in half 
for another 4 million Americans.
  The third principle we have adhered to is quite simply pragmatism. In 
order to craft, to pass, and actually enact into law a tax relief bill, 
we must offer a plan that enjoys bipartisan support. Our proposal meets 
this test and in the process offers a blueprint for reasonable tax 
relief that should and could become law. Indeed, I predict that 
ultimately what will be signed into law will be very close to the 
proposal the bipartisan coalition has put forth today.
  In addition to this broad-based tax relief, our proposal includes a 
number of compelling tax relief measures. For example, the amendment 
provides substantial relief for the unfair marriage tax penalty that 
causes many married couples to pay more taxes together than they would 
if they had remained separate. It also contains important health care-
related tax proposals that I, along with many other Senators, have 
advocated for some time. That includes a 100-percent deduction for 
self-employed individuals purchasing their own health insurance, as 
well as the deduction for the purchase of long-term care insurance.
  In addition, our amendment contains valuable estate tax relief 
provisions to help our family businesses and our family farms stay in 
the family. It includes provisions that I sponsored to help families 
save for college education of their children as well as to encourage 
the environmental benefits that come from biomass plants.
  An astute, perhaps even a casual, observer might well notice that our 
bipartisan coalition's plan bears a striking resemblance to the plan 
put forth by the Finance Committee. It is, however, a slimmed down 
version of the Finance Committee bill in that it trims about $300 
billion from the Finance Committee legislation.
  I urge the adoption of the Chafee-Breaux amendment. It seems a good 
middle ground that best provides tax relief in a prudent way for 
American families.
  Mr. ROTH. I yield 6 minutes to the distinguished Senator from 
Illinois.
  The PRESIDING OFFICER. The Senator from Illinois is recognized for 6 
minutes.
  Mr. FITZGERALD. Mr. President, I thank Senator Roth for this time.
  I am pleased to rise in support of the tax relief act that has been 
proposed by Senator Roth and the Senate Finance Committee.
  During this debate which has been going on some 15 hours and several 
days before that, we heard many opponents of tax relief argue that we 
ought to focus on paying down that external national debt, which now 
stands at about $3.6 trillion. Many on the other side have said our 
focus on paying down that national debt should encourage Members to 
support the President's plan, which actually has very limited tax 
relief in it. By the CBO's own estimates, it actually has a $95 billion 
tax increase, and people believe that somehow going with no tax cut in 
the President's plan will pay down more of the national debt. But, in 
fact, if you look at the real numbers and look where the national debt 
will be 10 years out, in the year 2009, you see that Senator Roth's 
plan and the Finance Committee plan pays down more of the national 
debt, the external national debt, than the President's plan which has a 
net tax increase of $95 billion.
  In fact, under the Senate plan that is now before us, the national 
debt will be paid down, the external national debt, will be paid down 
from $3.6 trillion to $l.5 trillion by the year 2009 versus only $1.8 
trillion under the President's plan. In other words, even with the tax 
cuts, we pay more of the external national debt, and we are in a better 
position, therefore, in the future to take care of our ongoing 
obligations for Social Security and Medicare.
  But I want to encourage my colleagues to step back from this whole 
debate. We have heard all sorts of arguments about how much the surplus 
is projected to be--$3 trillion--and their plan will save that amount 
and this plan will cut taxes by this amount. But let us step back from 
that issue and just look at where overall levels of taxation are right 
now in our Nation's history.
  Going back to 1941--this is from the Congressional Research Service--
if you look at the levels of taxes in this country, Federal taxes as a 
percentage of our gross domestic product, you will see that our taxes 
right now are almost at an all-time high. Right now, Federal taxes as a 
percentage of our gross domestic product are 20.6 percent of our 
economy.
  When President Clinton first took office, taxes were 17.8 percent. If 
we were to give the entire $3 trillion surplus

[[Page 18408]]

back in the form of tax cuts, the tax burden would still be 18.8 
percent of the gross domestic product. You have to look back to 1944 
and 1945, when we were in the midst of World War II, to find such high 
levels of taxation on the American people.
  These are the seven heaviest tax burdens in U.S. history. Right now, 
in the year 1999, our tax burden is up here. To get equivalent high tax 
burdens, you have to look to the administration of Franklin Delano 
Roosevelt in 1944, or Harry Truman in 1945 when we were attempting to 
throw Hitler out of Europe, and when we were spending 38 percent of our 
money on our Nation's defense. Today, we are only spending about 23 
percent. By historic standards, our taxes are enormously high. In fact, 
they are unprecedented in our peacetime history, and we ought, 
therefore, to be thinking about tax relief.
  Another thing I would like to point out to you is that right now the 
average family in America is paying nearly 40 percent of its family 
income in combined Federal, State, and local taxes. That 40-percent 
burden means that in families in this country where you have two 
parents who are working, one of them is working for the government. I 
don't happen to think that is right. We need to do what we can to 
alleviate that tax burden on our American families.
  We talk all the time in Washington about government programs that can 
help our families, help our children, improve their education, but all 
too often we ignore the fact that the greatest single reform we could 
have for our kids or for their futures would not be another government 
program but, in fact, more parental involvement in their lives.
  But when you have a confiscatory level of taxation that is taking 
nearly 40 percent of the average family income where parents are 
working two, and sometimes two and a half or even three jobs just to 
pay the cut extracted by Uncle Sam----
  The PRESIDING OFFICER. The time yielded to the Senator has expired.
  Mr. FITZGERALD. Could I request 2 minutes taken from the bill?
  The PRESIDING OFFICER. There are 2 additional minutes yielded by the 
manager.
  Mr. FITZGERALD. In short, families right now in America are spending 
more on taxes than they are on food, housing, and clothing combined. 
The actual tax levels have increased by 35 percent. The combined 
Federal, State, and local tax burden has increased by 35 percent on 
American families since the late 1950s. That tax burden is too high. We 
need to alleviate it.
  I compliment Chairman Roth for what he has done to structure a bill 
that would eliminate that odious marriage tax penalty on 22 million 
American married couples who are penalized for being married. It would 
also give serious major tax relief to people in the lowest tax 
bracket--that 15-percent tax bracket which would be lowered to 14 
percent. That bracket would also be expanded in size so that more 
Americans could pay taxes at that lower level.
  I appreciate the time. I yield the floor.
  Mr. KERRY. Will the Senator yield for a question on the remaining 
time?
  The PRESIDING OFFICER. The Senator's time has expired.
  Who yields time?
  Mr. KERRY. I thought he had additional time.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Mr. BREAUX. Mr. President, I yield 5 minutes to the distinguished 
Senator from Indiana.
  The PRESIDING OFFICER. The Senator from Indiana.
  Mr. BAYH. Mr. President, thank you.
  I am pleased to be on the floor of the Senate as a part of a 
bipartisan group once again--this time to advocate a tax cut for the 
American people that is fiscally responsible, that honors our values, 
and that can actually be done.
  I am disappointed we will not have an opportunity to vote on this 
proposal today because I believe it is in the best interests of the 
American people. Ultimately, I believe that if we are going to ever 
span the partisan chasm that stretches before us, it will be on the 
ground that I and others are staking out here today.
  This proposal is fiscally responsible. It allows for paying down 94 
percent of the publicly held Federal debt--94 percent of the publicly 
held Federal debt. That is fiscally responsible. It, as the other 
proposals would do, extends the life of Social Security to the year 
2053--54 more years--by adding $1.8 trillion to Social Security. That, 
too, is fiscally responsible. It extends the life of Medicare to the 
year 2020, adding $210 billion--allowing for that to extend the life of 
Medicare.
  As my colleague from Louisiana, Senator Breaux, pointed out, on some 
occasions none of the proposals that are before us permanently solve 
every issue of Medicare. All of them simply postpone the day of 
reckoning. Our proposal would do that and give us time for systemic 
reform. But, in the meantime, adding $210 billion to extend the life of 
Medicare is the fiscally responsible thing to do.
  Finally, it allows for $500 billion of tax reductions for the men and 
women of our country, completely removing from the tax rolls 3 million 
hard-working Americans and moving 4 million people from the 28-percent 
tax bracket to the 15-percent tax bracket.
  I have listened to the eloquence of my colleagues, many of whom have 
mentioned the important needs of our Government--and our Government 
does have important needs--many of whom have mentioned the funding 
priorities for Government spending programs which are important.
  I remind all of us about the needs of the American people, of 
families, working men and women. What about their needs too? Many 
working families across my State, even in this time of plenty with a 
strong economy, are having trouble paying the mortgage, putting 
something away for retirement, affording a college education for their 
children. These families--at a time when we are adding $1.8 trillion to 
Social Security, $210 billion for Medicare, and the other for 
discretionary spending--can very much use the $1,000 for an average 
family across my State to help meet their pressing needs. It is the 
right and appropriate thing to do.
  This proposal honors our values--our most basic values--and 
eliminates entirely the marriage penalty. No longer will people be 
penalized by the Federal Tax Code simply because they choose to get 
married. We should encourage marriage. We should not discourage 
marriage.
  This proposal makes child care, care for a sick parent, and health 
insurance for those who are without it more affordable. These are the 
right things to do.
  I think it is important to recognize that we can cherish our values 
and promote them by reducing taxes just as easily and sometimes better 
than through increased public spending.
  This proposal has room for a $45 billion drug benefit under Medicare, 
the same amount of public spending required of the President's 
proposal, and still we would have $180 billion for additional 
discretionary spending over the next 10 years.
  There has been a lot of talk and a good deal of disagreement about 
the appropriate level for discretionary spending increases. I must say, 
with all due respect, I cannot agree with my colleagues in the majority 
because I find the assumptions and accounting upon which their proposal 
is based are suspect at best. They ask us to believe they can hold to 
spending caps over the next 10 years that they have already admitted 
they cannot abide by in this very year. That simply is not possible. 
Yesterday I listened to one of my colleagues on the Senate Banking 
Committee have an amazing colloquy with the Chairman of the Federal 
Reserve Board in which he essentially said, Mr. Chairman, the reason I 
am supporting tax reductions is that I cannot keep from spending 
irresponsibly. He looked at the Chairman of the Federal Reserve and 
almost asked him: Mr. Chairman, stop me before I spend again.
  Colleagues, we have been elected to this body to make tough choices 
and set priorities. I believe we can and

[[Page 18409]]

should. The prescription of the majority is one for increased debt and 
deficit. This is a path I choose not to travel. At the same time, I 
cannot find myself in agreement with those who show charts and list 
figures basically arguing for an inflationary increase for Federal 
spending as far as the eye can see, basically putting Federal spending 
on autopilot. I do not know of any working family in my State who has 
been guaranteed inflationary increases in their family income for 10 
years. Why should we treat the Federal Government any better than 
ordinary citizens? Of course we should not.
  I asked the Chairman of the Federal Reserve yesterday about 
productivity increases. We are seeing amazing productivity increases in 
the private economy. Shouldn't the Government be asked to become more 
efficient and productive as well, thereby decreasing the need for 
annual increases in spending? Of course we need to set priorities and 
make difficult decisions, allowing us to live within our means, just as 
families across my State and country are asked to live within their 
means.
  This is a momentous debate. The consequences of our decisions will 
last for many years to come. I believe we have set the right balance of 
priorities, fiscal responsibility, honoring our values, doing right by 
future generations in a bipartisan way. I appeal to the President and 
my colleagues for support for this measure.
  I yield the floor.
  Mr. ROTH. Mr. President, I yield 5 minutes to Senator Lieberman.
  Mr. LIEBERMAN. Mr. President, I rise to oppose the amendment before 
the Senate introduced by my friends from Rhode Island and Louisiana. 
But in doing so, I rise to oppose all of the amendments that have been 
offered to cut taxes.
  It is particularly difficult for me to rise and speak against this 
amendment offered by this centrist group. It contains some of my 
dearest friends and closest collaborators in the Senate. I have parted 
company with them only after much consternation and consideration. I do 
so because, if they will allow me to say so, I think the centrist 
course we would best follow in this case is to stay right in the middle 
of the road that has brought the American economy to the extraordinary 
point of growth and strength it occupies today, and that is the road of 
fiscal responsibility. It took a lot of hard work to get us to this 
plentiful place that we are enjoying today, with high growth, low 
unemployment, a surprisingly high stock market, and surprisingly low 
inflation.
  I think the Federal Government helped to begin it all by creating the 
climate for sustained economic growth by exercising some real fiscal 
discipline. Then most of the prosperity has come, as it always does in 
America, from the private sector, from millions of businesses and 
individuals, innovating, cooperating, and profiting. Now, as a result, 
for the first time in a generation it looks as if the Federal 
Government may actually go into surplus--if we let it.
  Oscar Wilde once wrote, ``I can resist everything except 
temptation.'' I fear the same may well be said of this Congress as it 
giddily proceeds to spend a surplus that no one knows is really there, 
that would take our Nation back into deficit and endanger the critical 
economic gains we have made over the past several years.
  So I ask, why not stay the course that has raised the standard of 
living of millions of American families? Why not wait for at least 
another year to see if the surplus projections are real, if the economy 
will continue to grow, if Congress is prepared to exercise the required 
spending discipline? That is the question Senator Levin and I will ask 
later on a motion to strike the entire tax cut before us, which would 
mean we would wait a year. It is the question that Senator Hollings 
will ask in an amendment we will offer later which would recommit this 
tax cut to committee.
  I must say, as all of us here, I suppose my reflex is to propose tax 
cuts, not to oppose them. I was very active in support of the tax cuts 
we passed--just 2 years ago. I think sometimes we forget that in this 
debate. Just 2 years ago, I cosponsored the cut in the capital gains 
tax and supported so many of the incentives that the chairman of the 
Finance Committee offered to increase savings in our country. I would 
welcome the opportunity to vote for a balanced, thoughtfully crafted 
tax reduction package such as the one the Senators from Rhode Island 
and Louisiana have offered today if I were convinced we could afford 
it, if I were convinced the money was there to support the tax cut, or, 
in the alternative, if I thought, as Chairman Greenspan has suggested, 
that the economy needed it, needed to be stimulated.
  But the more I have looked at these protections of a $1 trillion 
surplus over the next decade, the more it looks to me like a Potemkin 
surplus--not a real one, a facade with nothing behind it because it is 
based on projections of 2.4-percent growth over the next 10 years, 
which may happen but would extend what is already the longest peacetime 
expansion of our economy in history. It is possible, but I would not 
bank on it, or at least I would not spend in tax cuts the profits of 
such unprecedented projected growth until I knew they were in the bank.
  Of course, both baselines, OMB's and CBO's, assume cuts in spending 
that are massive and unsustainable. These are cuts that few in either 
House would ever support and, in fact, are not supporting right now, as 
Congress simply exceeds the budget almost every day, exceeds the caps 
through transparent accounting gimmicks, calling excess spending 
emergency spending and double counting when necessary.
  In other words, we do not have to wonder whether Congress over the 
next decade will be able to hold the spending line on which the 
surplus, which would fund these tax cuts, is contingent because 
Congress is already proving today that it cannot so control itself. The 
result is that by passing a major tax cut, paid for by a surplus that 
probably will not be there, we would likely incur sizable deficits for 
years to come.
  The PRESIDING OFFICER. The 5 minutes of the Senator have expired.
  Mr. LIEBERMAN. I ask the Senator from Delaware if I might have 2 more 
minutes off the bill.
  Mr. ROTH. I yield 2 more minutes to the Senator.
  Mr. LIEBERMAN. I thank the Senator.
  On top of that, of course, we would leave little or no money 
available for building the solvency of Medicare and Social Security, 
for supporting our national security--defense--and we would thus raise 
the specter of a major tax increase down the line to compensate for our 
profligacy right now.
  It seems quite clear from what Alan Greenspan is saying, if we cut 
taxes now, the Fed will increase interest rates soon thereafter, which 
would put a drag on the economy, slow down business investment, and 
probably lower the stock market, and it would hit average working 
Americans literally where they live, driving up the cost of their 
mortgages, car payments, credit card bills, and student loans to the 
point where it would dwarf any tax benefit most Americans would receive 
from this bill.
  In other words, we would be robbing Paul to pay--Paul, while 
simultaneously robbing our economy of the dynamism we have labored so 
hard to create. And to what purpose? None that I have heard, except to 
return to the American people a surplus that is not going to be there.
  What we need now, I argue, is a little more of the fiscal discipline 
and responsibility that helped bring this economy to the point of great 
growth it is at now.
  I thank the Senator from Delaware, and I yield the floor.
  The PRESIDING OFFICER. The Senator from Louisiana.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Mr. BREAUX. I yield 5 minutes to the distinguished Senator from 
Maine.
  The PRESIDING OFFICER. The Senator from Maine.
  Ms. SNOWE. I thank the Senator. Mr. President, I congratulate 
Senators Breaux, Chafee, Jeffords, and Kerrey for reigniting the 
centrists on

[[Page 18410]]

an issue that certainly is important to the American people.
  It is interesting that we are here today confronted with a major 
issue, and it is not surprising that various Members of this Senate, 
the House, and the President have different positions on an issue of 
such significance. What we have tried to do with the package that has 
been offered by Senator Breaux and Senator Chafee is to bridge the gap 
between what the President has offered, what the House has offered, and 
the package that has been offered by Senator Roth and the Senate 
Finance Committee. We are trying to bring the differences together to 
preserve the viability of a tax cut for the American people.
  Lyndon Johnson once said: The good news is, I see the light at the 
end of the tunnel. The bad news is, it is the light of an oncoming 
train.
  That is the prospect we are facing in Congress with the tax cut 
proposal because all the positions are different and everyone is taking 
a very polarized position on this very important issue.
  I hope our package will be one that can bridge the differences from 
all sides. That is why we have tried to stake out this position so that 
we can have a bipartisan proposal that will avoid that train wreck.
  Over the last few days, we have heard comments from the 
administration and from Members of this body saying there is no room 
for compromise; there is zero room for a consensus. I think that kind 
of intransigence is unacceptable because ultimately it will result in 
no tax cut at all, and that is not in the best interest of the American 
people. We should not reject out of hand the possibility of developing 
a consensus on this issue, and that is what this proposal is all about.
  This proposal is certainly similar to ones that have been offered on 
the floor by the Senate Finance Committee and by Senator Moynihan. So 
it is not a question of substance because if you look at the various 
components of the tax cut package, they certainly exist in all of them.
  It is a matter of size, and that is why we decided that instead of 
the $792 billion package offered by the Senate Finance Committee or the 
President's package of $300 billion, we would come in the middle with 
$500 billion. That represents a consensus upon which I think we can all 
agree. That represents less than 40 percent of the $1.1 trillion 
projected on-budget surplus over the next 10 years, less than 40 
percent.
  It comes in the middle between the President's package and the 
Finance Committee's package. I think that it is eminently sensible, it 
is prudent, and we have to err on the side of economic caution when it 
comes to how much we are going to spend of the projected surpluses over 
the next 10 years because those surpluses are just that, they are 
projections. Some have referred to them as the hypothetical jackpot.
  We have to be particularly cautious about how much we intend to spend 
over the next 10 years from projected surpluses. We want to save the 
additional $300 billion so we can look at Medicare, so we can look at 
prescription drug plans, so we can look at Social Security, and all the 
other issues contained within discretionary spending that we think 
happen to be a priority, or we can create a surplus reserve.
  The PRESIDING OFFICER. The Senator's 5 minutes have expired.
  Ms. SNOWE. I hope, Mr. President, that Members of this body will give 
very careful consideration to the compromise proposal we are offering 
because it keeps open the door of the tax cut for the American people.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Mr. BREAUX. Mr. President, I inquire as to whether the distinguished 
chairman has additional time. We can rotate.
  Mr. ROTH. I yield back the remainder of my time.
  Mr. BREAUX. I yield 5 minutes to my distinguished colleague, Senator 
Landrieu.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Ms. LANDRIEU. I thank the Chair. Mr. President, I rise to support my 
senior colleague from Louisiana and thank him and Senator Chafee for 
bringing us together and for bringing this measure before the Senate 
and before the American people, a measure that, in my mind, is a very 
good starting point for where we need to be and on what we need to be 
focused.
  It does a couple of things of which I am very proud and a couple of 
things for which I believe I ran for the Senate to try to do. One, it 
is very fiscally responsible. It pays down a significant portion of the 
publicly held debt and gives tremendous benefits to the market and to 
our economy because of that savings approach.
  It also sets aside a prudent amount of money, and under the 
leadership of my senior Senator, it enables us to not only throw more 
money at Medicare, which we need to do for prescription drugs, but it 
provides a floor or a framework for us to really put in some systemic 
reforms if we could come to an agreement to strengthen a program that 
is depended on by almost everyone in our Nation.
  It also gives us a starting point and a proposal to reduce taxes, not 
for the very rich, not for those who have already benefited from this 
booming economy, but it gives us an opportunity, through strategic tax 
cuts, to make it possible for more people to enjoy this new historic 
economic boom that we are experiencing.
  It does this in very strategic ways, and I will hit on a few in a 
moment. Before I begin that point, I want to say that I have the 
greatest respect for the Senators from Connecticut and particularly my 
good friend, Senator Joe Lieberman, who just spoke. There is hardly a 
time I ever disagree with him on an issue of this magnitude, but I have 
also looked at the projections underlying the bipartisan plan of 
Senator Breaux and Senator Chafee.
  I have learned through that review that over the last 50 years, the 
average rate of growth has been 3.3 percent. This plan is based on a 
very conservative projection, I believe, of a 2.4-percent growth. I do 
not concede the point that these projections are off. I will concede 
that on the other side, in terms of the spending projections, we are 
tight. But we have never, as Senator Bayh pointed out, spent the 
inflationary standard.
  There is room to pay down our debt, provide for reform of Medicare, 
provide a new and very much needed prescription drug benefit, leave 
room for some reasonable, responsible new spending for programs, and 
give some strategic relief to hard-working American families, families 
that are struggling every day to put their children through school, 
families who are struggling to keep an elderly person at home with the 
added expense so they do not have to live alone or live in a nursing 
home that perhaps is not appropriate for them.
  There are many important parts of this bipartisan plan that help 
average, hard-working families begin to be a part of this new economy.
  One of the things I want to mention that is actually interesting but 
not a part of this plan, and I hope as it is massaged and improved and 
perfected over the next weeks there can be some strategic tax relief to 
encourage low-income families to begin saving, just as we have the Roth 
IRA plan and the traditional IRA plan. Those have really helped a lot 
of middle-income Americans.
  But today there are many Americans who live in Louisiana who do not 
make enough money to set aside $2,000 a year. So there is a 
possibility, through this tax proposal, that we could structure some 
tax relief to enable these lower-income, hard-working Americans, to 
begin savings accounts that can promote their wealth, promote their 
economic fortune, and help them to participate in the new economy.
  The PRESIDING OFFICER. The Senator's 5 minutes have expired.
  Ms. LANDRIEU. If I could have 30 seconds to wrap up.
  So besides the program I have just described, there is family tax 
relief, savings and investments, education--tax relief for small 
businesses; their No. 1 request to us is for some tax relief so they 
can continue to afford insurance for themselves and small businesses 
throughout this country. There

[[Page 18411]]

are many others--tax credits for the renovation of historic homes, and 
some other things that create jobs, stir investment, and give people 
the tools they need to participate in this new economy.
  I thank my senior Senator. I am proud to be a part of this bipartisan 
effort. I ask unanimous consent to be added as a cosponsor of the 
amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BREAUX. Mr. President, as a great political philosopher once 
said: You have to know when to hold them and know when to fold them; 
you have to know when to walk away and you have to know when to run.
  I do not think this is the time to run or to walk away, but neither 
do I think that either of the two parties at this time is supportive of 
the concept that has been offered by our centrist coalition.
  However, while I think that time does not arrive yet today, I think 
some time before the year's end both sides will come to reach an 
agreement that what we have offered on the floor is the right approach 
and one which will allow us to get something done with regard to this 
type of a tax cut and reservation of funds to do what we need to do as 
a government.
  I hereby ask that my amendment at the desk be withdrawn.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 1442) was withdrawn.
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. May I stress the admiration of this Senator, and I 
think many, for the case that the Senator from Louisiana and the 
Senator from Rhode Island have made and their colleagues in the 
centrist coalition.
  I note the trenchant counsel of that philosopher from Bourbon Street: 
When to hold them, when to fold them. I say, it is very clear that 
their time will come again, sooner perhaps than we know.
  With that, I yield 10 minutes to the Senator from Massachusetts.
  Mr. CHAFEE addressed the Chair.
  Mr. MOYNIHAN. Forgive me, sir. I withhold that. I think the Senator 
from Rhode Island wishes to speak.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. CHAFEE. Just briefly, I congratulate my colleague, Senator 
Breaux, from Louisiana, for his presentation and organization of this 
whole effort that we have had. I believe there is going to come a 
time--not tomorrow, not the day after but before long--in which this 
proposal, which he and I and so many others have worked on, is going to 
be accepted by this body. I certainly hope so.
  I thank Senator Moynihan for the kind comments he made about the 
efforts we have made.
  I thank the Chair.
  Mr. MOYNIHAN. Again, I emphasize that this was a bipartisan effort, 
with Senator Chafee on the Republican side. And I say to him, semper 
fi.
  On that note, I yield to Senator John Kerry.
  Mr. KERRY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. I thank the distinguished ranking member.
  Mr. President, I appreciate the hard work and the thinking that went 
into the so-called centrist approach. I would like to associate myself 
with that thinking and with the reasonableness that I think guides most 
of their actions.
  But may I say, respectfully, that something is in the air in 
Washington that I think is clouding people's thinking a little bit, 
about where we are on this whole tax bill.
  I am all for giving a tax cut when you have the money to give as a 
tax cut. But everybody here understands some plain truths. 
Notwithstanding those plain truths, the Senate has in front of it a 
$792 billion tax cut.
  A moment ago we were talking about a $500 billion tax cut. The fact 
is that most of the analysis that is reasonable, dispassionate--and 
certainly not pie-in-the-sky sort of dreaming about the future--
suggests we have nothing near a $1 trillion, let alone $3 trillion, 
surplus.
  Everyone here has accepted the fact that $2 trillion is going to go 
to pay down the debt and protect Social Security, and, indeed, a little 
bit for Medicare, hopefully. But that set aside, whatever prospect 
there is for a surplus is outside of that $2 trillion. The problem is 
that the hard reality already tells us an entirely different story from 
that which Senators are acting on in voting on the size of the tax cut 
on which we are voting.
  We are already breaking the caps. There are appropriations bills that 
everybody knows are being marked up in a fictitious manner with an 
understanding that come September or October there is going to be an 
agreement to change the caps because you cannot meet the appropriations 
bills without changing the caps.
  We are already $30 billion-some over the caps. We are doing it with 
the fiction of emergency spending. We are calling the census an 
emergency spending.
  Everybody knows these games are being played right now. Nevertheless, 
the Senate is poised to act on this fictitious surplus.
  I do not know one Senator who has gone back to their constituents and 
said: We're going to cut veterans' benefits. We're going to cut 
highways. We're going to cut border guards. We're going to cut drug 
fighting. We're going to cut the Coast Guard. Nobody is saying we are 
going to cut these things. But the absolute inescapable reality of this 
budget is that unless you increase the spending of discretionary by 
something reflecting inflation, you are going to cut.
  I heard the Senator from Indiana say: What is it that says we're 
going to go out into the future increasing these budget accounts by 
inflation? The fact is, we have done it every year. We do it. That is 
what happens. It gets more expensive.
  The Government isn't somehow exempt from the inflation figures and 
factors to which the rest of the economy is subject. Prices go up. 
Costs of contracts for the Government go up. Fuel costs go up. 
Insurance--whatever it is. The fact is, we already know what is 
happening to medical costs in the country. Yet everyone knows we are 
not sufficiently laying out the amount of money that it is going to 
cost the Government to do its business. Not withstanding that, we are 
poised to carve out, to fix in concrete a measure of give-back that 
predicates that if you go down that road and you freeze Government at 
the level that the figures are based on, you are going to have a 38-
percent cut, or so, in all of the discretionary budget.
  Tell me the year in which we have not increased defense spending. 
Tell me the year, particularly, that the majority party has not set 
out, as a goal, to increase defense spending. But they did not even 
figure that into the level of spending that we have here.
  This is the reality. If you keep the current accounts at their 
current level, plus inflation--and no one here has said to America they 
are going to reduce those accounts all across the board by X 
percentage--you are going to spend an additional $595 billion. So you 
have to subtract that $595 billion from the so-called $1 trillion that 
has been set aside from the $3 trillion because we are protecting 
Social Security with $2 trillion.
  That leaves about $400 billion. But every year we have had an average 
of $80 billion of emergencies. Are people suggesting there are going to 
be no emergencies next year, even though every year we have had a 
budget there has been an emergency expenditure? Just taking the average 
of $80 billion, you will have an absolute, predictable additional $31 
billion in Social Security Administration costs. Those aren't counted 
into the Republican bill. You will have absolutely $178 billion of 
additional interest rates because of the money you are not paying down 
on the debt. You will have to pay that interest. That is not 
calculated. That is an additional $178 billion. That leaves us 
conceivably with this little red block, not a trillion dollars, but 
this little red

[[Page 18412]]

block, which might amount to $112 billion or so, depending on what we 
do for prescription drugs, for Medicare, and a lot of other issues 
facing America.
  The real choice in front of the Senate is considerably different than 
the fiction we are being fed. I heard the distinguished ranking member 
yesterday talk about the reality that we lived through in the 1980s, 
the creation of fiscal crisis as a means of achieving ideological and 
political goals. I respectfully suggest that what we are looking at is 
a form of Stockman 2. That is what is going on. This is Stockman 2. We 
are going to come in with a tax cut that has no money, that isn't 
predictable, and we are going to create a new crisis in our Government, 
where we are going to face a whole set of choices that a lot of people 
here will love because we know they hate those particular expenditures. 
But they are expenditures that time and again, year in and year out, 
our fellow citizens have said they want us to make. And time and again, 
the Congress, when it has had that great clash with the President, has 
capitulated and made them.
  So this is a remarkable new kind of thinking, where if one big 
mistake is a mistake, we are going to come in and say we will make it a 
lesser mistake, but it is still somehow better thinking. So instead of 
$791 billion, some people would argue we ought to do 500 or 300. The 
fact is, all of those figures are out of sync with the reality of what 
we have in front of us.
  We don't even show a real budget surplus until the year 2006. In the 
year 2006, assuming that you have spending plus some little measure of 
inflation, the way we have traditionally, you have only $29 billion of 
surplus by the year 2006. That is the hard reality.
  I hear my colleagues come to the floor and say: We have the highest 
measure of taxation against our gross domestic product that we have 
ever had. What they don't tell you is the reason it is so high is 
because so many people are cashing in on their capital gains. We 
lowered the capital gains tax. They don't tell you the capital gains 
tax isn't even counted in the measure of the gross domestic product. So 
you have a completely artificial set of numbers, when they come in and 
tell you the tax rate is up.
  That is the way it is supposed to work. That is why we have a 
progressive tax structure. When the economy does brilliantly, you are 
supposed to get a little more money into the Government so that you 
have the ability to do the things that are important for the long-term 
of our country.
  Recently, I had the pleasure of meeting with a number of high-tech 
presidents. And to a person, these people, who are fueling the engine 
of our productivity growth in America and creating the high value-added 
jobs, will tell you they need an America that has a citizenry that is 
educated and capable, that depends on investment. You don't measure the 
debt of this country by the figures that show up on debt. You measure 
the debt of this country by the people who can't access those high 
value-added jobs, who don't have child care and the ability to live 
with clean water and clean air and so forth.
  Mr. President, I think we are measuring things backwards, wrong. I 
think we are on a very dangerous track which will have long-term 
implications for the full measure of the citizens of our country. I 
express that concern as we come, sometime, to a vote on this issue.
  Mr. MOYNIHAN. Mr. President, Senator Bingaman has an amendment he 
will offer.


                           Amendment No. 1462

 (Purpose: To express the sense of the Senate regarding investment in 
                               education)

  Mr. BINGAMAN. I appreciate the courtesy.
  Mr. President, there is an amendment that I believe has been filed. I 
send it to the desk.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The legislative assistant read as follows.

       The Senator from New Mexico [Mr. Bingaman] proposes an 
     amendment numbered 1462.

  Mr. BINGAMAN. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. SENSE OF THE SENATE REGARDING INVESTMENT IN 
                   EDUCATION.

       (a) Findings.--The Senate finds the following:
       (1) The Republican tax plan requires cuts in discretionary 
     spending of $775,000,000,000 over the next 10 years.
       (2) If defense programs are funded at the level requested 
     by the President, funding for domestic programs, including 
     those providing funds for public schools, will have to be cut 
     by at least 38 percent by 2009.
       (3) Such cuts in funding for public schools would deny--
       (A) access to critical early education services to 430,000 
     of the 835,000 young children who would otherwise be served 
     by Head Start in fiscal year 2009;
       (B) services to 5,900,000 children under the program for 
     disadvantaged children under title I of the Elementary and 
     Secondary Education Act of 1965, almost \1/2\ of those who 
     would otherwise be served;
       (C) access to Reading Excellence programs to 480,000 
     children, making those children less likely to reach the goal 
     of being able to read by the end of the third grade; and
       (D) the opportunity to learn in smaller classes in the 
     earlier grades to 1,000,000 children.
       (4) If discretionary cuts are applied across the board, 
     funding under the Individuals With Disabilities Education Act 
     (IDEA) would be cut by $3,400,000,000 by the year 2009, 
     resulting in a reduction in the Federal share of funding, 
     rather than the increase in funding requested by school 
     boards and administrators across the Nation.
       (5) If the Federal share under IDEA is increased from its 
     current level of 10 percent, then other education programs 
     would experience even deeper reductions, denying more 
     children access to services.
       (6) The Pell grant, which benefits nearly 4,000,000 
     students, would have the maximum grant level reduced to 
     $2175, from the current level of $3850.
       (7) Such a level in Pell grants would be the lowest level 
     since 1987, and would deny low and middle income students 
     critical financial aid, increasing the cost of attending 
     college.
       (8) Nearly 500,000 students would be denied the opportunity 
     to work their way through college with the help of the work-
     study program.
       (9) Nearly 500,000 disadvantaged students would be denied 
     extra help in preparing for college through the TRIO and 
     Gear-up programs.
       (b) Sense of the Senate.--It is the sense of the Senate 
     that $132 million should be shifted from tax breaks that 
     disproportionately benefit upper income taxpayers to sustain 
     our investment in public education and prepare children for 
     the 21st Century, including our investment in programs such 
     as IDEA special education, Pell grant, and Head Start, and to 
     fully fund the class size initiative.

  Mr. BINGAMAN. Mr. President, this amendment has a very simple 
purpose. The purpose is to protect the current investment that we are 
making in education.
  The amendment seeks to decrease the tax breaks that 
disproportionately benefit upper-income taxpayers in order to sustain 
the current level of funding for education with an increase, a small 
increase for inflation. If the Republican tax bill we are considering 
is accepted as written, Congress must cut discretionary spending by 
more than $775 billion over the next 10 years. When we say 
discretionary spending, of course, we are talking about domestic 
discretionary spending, which includes education, but we are also 
talking about national defense, what we spend on our military.
  If we say the portion of discretionary spending that is spent on our 
military is likely to be funded at the level requested by the Joint 
Chiefs of Staff, which is very likely--in fact, we usually do better 
than the Joint Chiefs' request--then domestic programs have to be cut 
38 percent. By those ``domestic programs,'' in this amendment I am 
talking about education. If these cuts are spread across the board, it 
would result in very substantial reductions in current educational 
programs.
  Let me show to my colleagues a chart that tries to make the point. I 
think it makes it pretty well.
  It shows with this red line, starting in the year 2000 and going to 
the year 2009, we are spending nearly $34 billion on education in the 
Federal budget. That includes what we spend on education through the 
Education Department but also Head Start. We have included Head Start 
because we consider

[[Page 18413]]

that a program that assists greatly in preparing students for school. 
So we are spending a little below $34 billion this year.
  If you take the Republican plan, as I understand it, and take the 
logical assumption that we are going to have the kind of cut in 
domestic programs we have to have in order to get enough room for this 
size tax cut, then you see that go from $34 billion down to a little 
over $19 billion by the year 2009.
  An education freeze, of course, would keep it right at 34 billion, 
but that would not make any provision for inflation. What we are doing 
in this amendment is saying that the Senate should go on record as 
requesting that the tax cut be reduced by $132 billion so that we have 
room not only to maintain Federal funding for education where it is 
today but also to allow it to increase as inflation increases.
  The Senator from Massachusetts made a very good point a few minutes 
ago: The cost of buying services, of paying utility bills, of doing 
everything goes up for the government as it does for everyone else. It 
certainly goes up for the schools.
  Now, we have not built into this amendment, I should point out, any 
provision for the fact that we are going to have tens and hundreds of 
thousands of new children coming into our school system in the next 10 
years, and we are not proposing increases in education funding to 
account for that. We should be, quite frankly, but we are not. We are 
also not proposing increases for any new education programs. I have 
been hearing Mr. Greenspan's testimony, as I am sure all of my 
colleagues have, and he says: Start no new spending and cut no taxes. 
That is his basic position, to let the surpluses run and let's get our 
fiscal house in order.
  I don't agree with that position. I believe there are some areas in 
our Federal budget where we should increase spending. Education is the 
first priority, as I see it. But if we were to take the Republican plan 
as it is proposed, it would mean that 430,000 of the 835,000 children 
who would otherwise be served by the Head Start program would lose 
services by the time we get to the year 2009. It would mean that more 
than 5.9 million of the 14.6 million children who live in high-poverty 
communities would lose essential education services under title I. The 
title I program is the largest education program we fund here in 
Washington. It would mean that 480,000 of the 1 million students who 
currently are served by the Reading Excellence Program would lose the 
opportunity to learn and to have that additional help by the time they 
complete the third grade. It also means that the chance of increasing 
the Federal share of the cost of the Individuals With Disabilities 
Education Act, IDEA--the line item that we try to fund each year--the 
stated goal of many in this body has been that we should at least go to 
40 percent of what it costs to implement IDEA. But that would be 
clearly impossible under what I understand the Republican tax bill is 
to provide. Instead, we would be forced to cut special education by 
$3.4 billion by the time we get to the 10th year of the Tax Code.
  Pell grants, which currently benefit nearly 4 million students--if we 
assume we are going to continue to provide a grant to 4 million 
students, then you have to slash that from $3,850 per year, which is 
today's level, down to $2,175 by the year 2009. Nearly 500,000 
disadvantaged students who need extra guidance and support through the 
TRIO Program and the GEAR UP Program would also lose that extra help.
  In my home State, these statistics could be brought down to a very 
concrete level. One example would be Head Start. We have about 8,000 
young people in our Head Start Program in my State today, which is 
about half of what we should have; that is, half of those who are 
eligible. We would have about 3,000 fewer if this tax bill were agreed 
to.
  I hope very much that we can get a strong vote of support. I believe 
the American people do not want to see a tax cut adopted at the expense 
of continued support for education as we go into this new century. 
Everyone realizes that our future depends upon how well we can prepare 
young people for the opportunities they will have in their lives. It is 
not responsible for us to be proposing tax cuts that are going to 
prevent us from at least maintaining the level of effort we have today 
in education. That is the difference. That is what we are trying to fix 
in this amendment. I hope very much that we will have a strong vote in 
favor of it.
  Before I yield the floor to my colleagues to speak in favor, I hope, 
of this amendment, let me also say a couple of words about another 
motion I am going to propose and which will be voted on when we get 
into the long list of motions. It is a motion to do something which is 
very modest, as this amendment is very modest. This only involves $132 
billion. We have been talking about trillions for the last 2 days. This 
other motion would be to have the bill go back to the Finance Committee 
with instructions to report back with an amendment providing that an 
additional $100 billion be applied to debt reduction. That is a small 
thing to ask. I think of it more as a tithe than anything else.
  If we are talking about nearly $800 billion in tax reduction over the 
10 years, we ought to say let's go back and at least take $100 billion 
of that, which is surplus that we can anticipate, and commit that to 
debt reduction. That will be another item that I believe is very 
meritorious. I think all Senators should support it. I think it is the 
responsible thing to do. I do it because, in my State, whereas there is 
disagreement about new spending programs and whether we should fund 
those, and where there is disagreement about a lot of other items we 
are debating, there is a strong consensus that we need to make a 
downpayment on debt reduction as part of this reconciliation bill. This 
reconciliation bill is a blueprint for where we intend to go in the 
next 10 years.
  I hope the blueprint we finally adopt shows that we intend to 
maintain funding for education, at least at current levels. I will be 
arguing each year I serve in the Senate that we should be increasing 
funding for education, not cutting. We should at least maintain the 
current level. I also hope we will adopt a roadmap for the next 10 
years that contemplates substantial debt reduction. And I will propose 
this other motion, which we will vote on later in the debate, on that 
subject.
  I see I have some colleagues who wish to speak. I know the Senator 
from Maryland does. Let me yield her 10 minutes to speak on this, or 
the bill, whichever she prefers.
  The PRESIDING OFFICER. The Senator from Maryland is recognized.
  Ms. MIKULSKI. I thank the Chair, and I thank the Senator from New 
Mexico.
  Mr. REID. Will the Senator yield for a unanimous consent request?
  Ms. MIKULSKI. Yes.
  Mr. REID. Mr. President, it has been cleared, as I understand it, on 
the Republican side and over here that all votes will occur when all 
time has been used on whatever amendments have been offered up to that 
time.
  Mr. ROTH. Mr. President, it was brought up to me, but we haven't had 
a chance to get it cleared.
  Mr. REID. Mr President, perhaps we will offer the request in a few 
minutes.
  The PRESIDING OFFICER. The Senator from Maryland.
  Ms. MIKULSKI. Mr. President, later today Senator John Kerry, Senator 
Rockefeller and I will make a motion which protects our senior citizens 
in the wake of the Balanced Budget Act of 1997. I would like to talk 
about this but I also rise to support the amendment offered by the 
Senator from New Mexico, Senator Bingaman. As usual, his amendment is 
well thought out. It brings intellectual rigor, sound public policy, 
and responsible fiscal policy to this debate, and really meets a 
compelling human need.
  How I wish the rest of this debate reflected the Bingaman amendment, 
because I believe we have embarked upon a debate on these tax cuts 
which are, indeed, reckless. I believe the other party is practicing 
very reckless economics. First of all, we don't really have a surplus; 
we have a promissory note of a surplus. No. 2, we are looking at an 
area where we are not sure what

[[Page 18414]]

the projections will be, and we need to be prudent. Therefore, we 
should use the taxpayers' dollars to meet compelling human needs, 
national security, and stay the course in terms of our research and 
development.
  While we are in the midst of debating bloated tax cuts, we have 
marines who are on food stamps. I don't see how we can meet our 
national security commitment, do a tax cut, and have marines on food 
stamps. The marines say ``semper fi''--``always faithful.'' They are 
faithful to the United States and we have to be always faithful to the 
Marine Corps and to the military. Right over there in Quantico, they 
are getting food stamps and they run consignment shops. That is not 
right.
  The Senator from New Mexico offers this excellent amendment that 
says: Stay the course on education.
  When I travel in my own State, people don't come up to me and say: I 
have a marriage penalty. They say: I am married, I have children, and I 
want them to have the same kind of good education I did. Barb, make 
sure we have sound public schools, well-trained teachers, and 
structured afterschool activities. That is what the Bingaman amendment 
does--it lets reserve funds stay the course for our children.
  While we are looking at Senator Bingaman's amendment, there is 
another compelling human need that needs to be addressed. We have to 
reserve certain funds to correct the draconian effects of the Balanced 
Budget Act of 1997 on Medicare. The motion that I am cosponsoring will 
provide $20 billion to fix many of the problems in Medicare 
reimbursement. My colleagues might recall that in 1997 we passed a 
Balanced Budget Act. We were going to save money on Medicare. But we 
went too far in our cuts. HCFA went too far in its regulations. Guess 
where we find ourselves? In my own home State, 34 home health care 
agencies have closed. I have 10 public home health agencies, primarily 
in rural counties, some who travel on snowmobiles to treat home-bound 
patients, and eight have closed because of the budget cuts. There is a 
terrible problem, and we need to go back and correct the draconian cuts 
of the Balanced Budget Act of 1997.
  We also have a situation where we have skilled nursing facilities 
that are teeter-tottering on closing. Some might say: Oh, that is a 
profit-making industry. Stella Morris isn't profit making. Hebrew Home 
isn't profit making. But I will tell you they will now have to find 
funds through private, philanthropic dollars even though the Government 
should be providing funds.
  We have people in my own home State who are being turned away from 
nursing homes because they are so sick, they have such complicated 
illnesses, that the nursing home can't take them because of the skimpy, 
spartan reimbursement policies that are the result of the Balanced 
Budget Act of 1997.
  Some of those spartan reimbursements went to Medicare HMOs. I always 
thought that Medicare HMOs for seniors were a risky proposition because 
our old-timers are sick. They need complicated prescription drugs. I 
thought that these HMOs that were essentially making a profit may have 
some problems. However, these HMOs also provide seniors with extra 
health benefits that they cannot get in regular Medicare, oftentimes 
for no extra money.
  Now, I will tell you that the nonprofit HMO in my own State--Blue 
Cross Blue Shield--is pulling out of 17 rural counties in my State, as 
of 3 weeks ago in 17 counties, and 18,000 people will lose their 
Medicare + Choice HMO. Why? Because Blue Cross Blue Shield is losing $5 
million, and they can't afford to provide services.
  Dear colleagues, I ask you to reexamine the premise under which we 
are operating.
  No. 1, the surplus is not yet available. It is a promissory note. Let 
us move with prudence. Let us meet compelling human needs. Let us meet 
our national security responsibility and stay the course in research 
and development.
  Let's support the Bingaman amendment on education. Let's deal with 
the issues that came from the Balanced Budget Act of 1997. Let's make 
sure our marines aren't on food stamps.
  Let's make sure that those on food stamps and their children have 
access to public education so that in the next generation they won't 
have to be on food stamps.
  Then we truly have been responsible. We are then getting our country 
ready for the millennium.
  I would like to say one final word in closing. I thank the Senator 
from New Mexico for his strong advocacy for veterans, and particularly 
for veterans with disabilities. The Senator knows that we have an 18-
month backlog. He has spoken to me about this.
  In his State, they have billboards complaining about the VA backlog.
  I bring to the Senator's attention that in VA-HUD appropriations, we 
have under this budget allocation a 10-percent cut. We will not be able 
to deal with that backlog.
  In fact, while we are opening tax loopholes, we might even be closing 
veteran hospitals.
  I yield the floor.
  I thank the Senator.
  Mr. BINGAMAN. Mr. President, I thank the Senator from Maryland for 
her very insightful words and her kind comments about me but also for 
her leadership on these key issues.


                         Privilege Of The Floor

  I ask unanimous consent that Kathryn Olsen Senator and Gabe Mandujano 
of my staff be granted floor privileges during the pendency of this 
bill.
  The PRESIDING OFFICER (Mr. Bennett). Without objection, it is so 
ordered.
  Mr. BINGAMAN. Mr. President, I yield 10 minutes to the Senator from 
Rhode Island, Senator Reed.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. REED. Thank you, Mr. President. I thank the Senator from New 
Mexico for yielding the time but also for his farsightedness. He 
recognizes, as the American people recognize, that the key to our 
future is investing in education. His amendment would precisely do 
that. It would sustain our education investment at least at the rate of 
inflation.
  We are here debating what to do with a surplus. This debate is a 
direct result of some very difficult choices we made starting in 1993 
and continuing for the last several years. We now have before us a 
supposed $3 trillion surplus. But we all recognize and agree that $2 
trillion of that is the Social Security account. We are in various ways 
recognizing that we don't want to disturb those accounts. So we are 
really talking about roughly $1 trillion, or $965 billion.
  As the Senator from Massachusetts so eloquently pointed out and so 
accurately pointed out, within that surplus we have already made 
significant commitments.
  One of the problems with the proposals that have been made by the 
Republicans--the almost $800 billion tax cut, or the $500 billion tax 
cut--is that the assumptions they are using have to be seriously 
questioned. They are theoretical assumptions, first, that we will enjoy 
the same kind of economic growth over the next 10 years that we have 
enjoyed recently.
  As Chairman Greenspan pointed out in his appearance both before the 
Senate Banking Committee and the comparable committee in the other 
body, the business cycle has not been repealed. We will run into, 
particularly over a 10-year time span, situations in which projections 
do not provide the resources that we think of today.
  But the second assumption and the one that is of critical importance 
to Senator Bingaman's amendment is the unrealistic assumption that we 
will continue these caps on discretionary spending as we have proposed 
in the 1997 balanced budget amendment.
  These discretionary caps are already constraining what we do. In 
fact, we have already violated these caps. As the Senator from 
Massachusetts suggested, we will probably in October somehow formally 
or informally avoid these caps.
  But the premise of this supposed trillion-dollar surplus is that we 
will live within these caps. You can see from Senator Bingaman's 
presentation that

[[Page 18415]]

if we do not do our investment, education will collapse. We will find 
ourselves underinvesting in education as we have in so many other 
programs.
  The reality is, as was suggested before, that if we, in fact, simply 
fund the President's proposal by the year 2009, we will be spending 38 
percent in domestic discretionary spending. There is no way that we can 
do that. Frankly, the political reality is that there is no way we will 
do that.
  We have to recognize that we will be investing in these programs. We 
have to recognize, as Senator Bingaman has said, that one of our first 
priorities is to continue to invest in education.
  Looking at these Republican proposals, I am reminded of what happened 
in the early 1980s. George Bush, when he was campaigning against 
President Reagan, described his economics as ``voodoo economics.'' It 
turned out to be that way. The supply side theories of cutting taxes 
will stimulate the economy, pay for themselves, and lead to surpluses 
proved dangerously in error during the 1980s.
  Perhaps what we are talking about today when we look at these 
Republican proposals is ``de ja voodoo economics.'' The theory is that 
we will return to the same kind of deficits, the same kind of economic 
instability that plagued us through the late 1980s and into the early 
1990s until we did take some difficult votes in 1993.
  What Senator Bingaman is saying is let's recognize the reality. Let's 
recognize that we have to fund educational programs at least at the 
level of inflation. If we do that, we will have to invest at least 
about $132 billion.
  That is what we should be doing. If we don't do that, we are going to 
lose out tremendously in the title I programs--a Federal program that 
provides assistance and support for low-income students. Frankly, we 
understand the crisis in urban and rural education that this money is 
so effective in dealing with. Without it, urban systems and rural 
systems would be situated even worse. Without it, we would be fostering 
and contributing to two separate and terribly unequal societies. We 
have to keep our commitment to these young people.
  We would also lose opportunities to reform education, for 
professional development programs, for opportunities to have smaller 
class sizes, for opportunities to go ahead and fix crumbling school 
buildings throughout the country. We would do something that all 
Members say we would never want to do, and that is renege once again on 
our commitment to special education.
  I don't know how many times I have been on the floor listening 
particularly to my colleagues on the other side who have been talking 
about how we have to put more money into IDEA, the Individuals with 
Disability Education Act, how we have imposed programs on localities 
promising robust spending, and we have never delivered. If we have not 
delivered on IDEA yet, if these tax proposals pass, we will never have 
a chance to deliver on our contribution to local school systems.
  When we move to the area of higher education and Pell grants, work-
study programs, the new LEAP program, which is an outgrowth of the 
State Student Center Grant Program, all of these provide opportunities 
for Americans to educate themselves beyond high school. We all 
recognize that might be the most critical issue we face as a nation--
educating our citizens to enable them to assume challenging roles in 
the next century.
  Yet we dramatically cut these programs, denying opportunities to 
thousands and thousands of Americans. We say to them again: This is not 
the land of opportunity; this is the land of advantage and affluence. 
Anyone lucky enough to pay for college with their own resources can go 
but don't look to the Government to provide the kind of help provided 
in the last several years.
  All of these cuts lead Members to ask a very simple question for the 
working families of Rhode Island, for the working families of New 
Mexico, for the working families across this country, when they lose 
the Pell grants or see the urban school systems getting less and less 
support and local property taxes going up: are they better off with 
whatever tax cut they receive than these proposed programs? I think 
not.
  One other aspect of the Republican proposal is a terribly distorted 
benefit that goes to the very wealthy at the expense of middle- and 
low-income America. Our constituents know education is the most 
important aspect facing our society. They want Congress to continue to 
support families. They want precisely what the Bingaman education 
amendment does. I believe if we listen to those people who sent us 
here, they will say vote for this amendment. They will say reject this 
deja voodoo economics that is underlying the proposals by the majority 
party. In fact, I hope we respond to that clarion call from our 
constituents.
  I commend and thank the Senator from New Mexico for his efforts and 
for his time.
  I yield the floor.
  Mr. WELLSTONE. Mr. President, I want to speak briefly about my 
support for Senator Bingaman's amendment, which urges restoration of a 
portion of the Republican cuts in several key education programs. There 
is nothing more important to me than doing the absolute best I can--and 
encouraging my colleagues on both sides of the aisle to do the same--to 
push, push as hard as we possibly can to re-order our spending 
priorities so that they better reflect the real concerns and 
circumstances of the lives of those whom we represent who are trying to 
raise and educate their kids, or send them to college.
  Our goal should to be approve a tax plan that will send a clear, 
unmistakable message that this Congress cares about education, that 
this Congress wants to ensure sure that children come to school 
prepared to learn and are given every possible opportunity to grow, to 
succeed, to excel. It is time to end photo op politics. It is easy for 
all of us to get our pictures taken with young children at schools, but 
the question is, have we done enough? The answer: we have not. I 
believe my colleagues' proposal, modest as it is, moves us in the right 
direction. I know there are technical reasons why we couldn't actually 
directly transfer funding for this year in the amendment--an approach 
which I wanted to take--but at least this amendment sends the right 
signal regarding a re-ordering of our priorities.
  I consider this a matter of national security issue, a national 
priority. Making sure that the young are ready to learn is good for our 
democracy, or economy, and our national defense. it is our 
responsibility to make sure that teachers are qualified and equipped 
with the right tools, and that the opportunities for learning will be 
there in the afternoons long after the last class has been dismissed. I 
cannot say forcefully enough: this must be accomplished not at the 
expense or detriment of our children but to their collective advantage.
  I'm behind the proposal to shift these excessive tax breaks to a plan 
that would fully fund the initiative to hire 100,000 qualified teachers 
to reduce class sizes. It's no mystery that smaller class sizes 
translate into greater opportunities for children to get more 
individualized attention.
  We've heard that the size of the Republican tax bill is such that it 
will require significant cuts in crucial education programs. We've 
heard that if defense is funded at the level requested by the 
president, we should anticipate at 38 percent ($180 billion) cut in 
domestic discretionary spending. That is the worst possible news for 
the millions of people who rely on vital initiatives like Title I, Head 
Start, and the Reading Excellence program. Absolutely ludicrous.
  For instance, under this proposal: Nearly 6 million disadvantaged 
children would lose Title I services that help them meet basic academic 
needs; 270,000 summer jobs and training opportunities would be 
eliminated for low-income young people; 375,000 children would be 
denied Head Start services that help them come to school ready-to-
learn; and 549,000 children would be cut from the Reading Excellence 
program, denying them the extra help they need to read well by the 4th 
grade.

[[Page 18416]]

  Mr. President, allow me to share some examples from my own 
experience. Minnesota, like most states, receives only a portion of the 
Title I money it desperately needs as it is. Our current allocation is 
about $88 million. If fully funded, we would receive approximately a 
quarter-billion dollars and over a hundred million additional dollars 
for concentration grants, according to the Minnesota Department of 
Children, Families and Learning. Well, I suppose that's a start. A cut 
of even half a percent on a program like Title I would be disastrous. 
But I can see it coming.
  One-fourth of Minnesota's Title I dollars goes to only two cities, 
either to Minneapolis or St. Paul, because both cities have high 
concentrations of poverty. How can we expect to eliminate the learning 
gaps among our children when so many others are left without 
opportunities or options?
  Right now elementary and secondary education receive on average about 
eight percent of its funding from the federal government. It is 
imperative that we take bold steps to pass a tax measure that will, at 
the absolute least, serve to move us closer to providing the resources 
so badly needed in so many areas of education. But it seems clear we 
will not do that here.
  Another area that I believe is a vital component of our national 
infrastructure is our schools. That is why I am an original cosponsor 
of Senator Robb's school modernization effort that we will hear more 
about later. I think it too is a step in the right direction and I 
honestly believe it's another sure way to say to our kids, ``You 
matter. Your schools matter. Your future matters.'' In Minnesota alone, 
there is a one-point-five billion dollar unmet need for school 
construction. Our average school is over 50 years old. Eighty-five 
percent of Minnesota schools report a need to upgrade or rebuild their 
building just to achieve ``good'' overall condition. Sixty-six percent 
report at least one unsatisfactory environmental factor like air 
quality, ventilation, acoustics, heating, or lighting.
  My staff and I have visited nearly a hundred schools over the past 
eight months and we've heard stories of pathetic conditions throughout 
the state. I know many of you have heard these stories in your own 
states. In my state, for example, Two Harbors High School, which is on 
the north shore of Lake Superior is representative. Two Harbors is a 
thriving community, but each day its students must enter a facility 
that can't meet some of their most basic educational needs. Three 
separate studies were conducted to assess Two Harbors' facilities. The 
studies identified twenty-seven critical needs that are characteristic 
of so many of our schools. The original facility is sixty years old. 
The facility does not comply with the Americans with Disabilities Act. 
There are no teacher offices. The school does not permit the separation 
of middle level and senor high school level students. The list is 
extensive. I know we've heard it all before--the crumbling schools, the 
lousy physical environments, and the resulting distractions that once 
again detract from our children's ability to learn. The question is 
``When are we going to wake up and actually do something about it?''
  Mr. President, I could go on but the time for talk is long past. The 
time for pondering our next move is over. The time to move and to move 
deftly is at hand. My colleagues' proposal urges a major transfer of 
funding that goes straight to the heart of where our priorities ought 
to be. It calls for a real investment in real people, people who truly 
deserve it. Smaller class sizes. Access to quality education at an 
early age. A fairer share for individuals with disabilities. Help for 
low and middle income students who deserve every opportunity to attend 
college.
  These are some of the most fundamental elements in a strong education 
system that values all its children, leaving none of them behind. What 
is the Republican alternative? Denying our children access to the very 
things that would prepare them for healthy, happy, productive lives in 
the 21st century. I urge my colleagues to support this amendment.
  Mr. KENNEDY. Mr. President, we should be doing all we can to help 
improve public schools to ensure a brighter future for children and the 
nation. We should help communities improve teacher training and teacher 
recruitment; reduce class sizes, especially in the early grades; expand 
after-school programs; build new schools, and modernize crumbling and 
overcrowded schools; provide up-to-date-technologies in every 
classroom; and make college more accessible and affordable to all 
families across the country.
  But, the Republicans insist on an excessive tax cut at the expense of 
education and children. We should be making a strong investment in 
education--not undermining education.
  The Republican budget denies 5.9 million children in high-poverty 
communities the extra support they need to meet basic academic 
standards through the Title I program, including 81,547 children in 
Massachusetts. It denies 480,000 children the assistance they need to 
learn to read well by the 4th grade through the Reading Excellence Act. 
It denies more than a million children the opportunity to learn in 
smaller classes where they will get the individual attention they need 
to succeed in school. It denies 430,000 children the Head Start 
services that help them come to school ready to learn. It denies 
215,000 students the after-school and summer school programs they need 
to stay off the streets and out of trouble. It denies 500,000 
disadvantaged students the extra guidance and support they need to 
prepare for college through the TRIO and GEAR-UP programs. It cuts IDEA 
by $3.4 billion, resulting in a reduction in the federal share of the 
funding, rather than the increase requested by school boards and 
administrators across the country.
  The Republican assault on education doesn't stop with young 
children--it affects college students, too. It makes college less 
affordable for nearly 4 million low- and middle-income students--by 
slashing the maximum Pell grant to $2,175, the lowest level since 1987. 
It denies 500,000 students the opportunity to work their way through 
college.
  Education for the nation's children must be a higher priority than 
tax breaks for the rich. The American people tell us that improving 
public schools is one of their top priorities. They support reducing 
class sizes. They support after-school programs to help children learn, 
and to reduce juvenile crime. They agree that every classroom should 
have a well-qualified teacher. They believe technology should be part 
of the classroom. They believe that all children should have the 
opportunity to meet high standards of achievement. They want us to make 
college more accessible and affordable.
  Instead of offering new tax breaks for the wealthy, Congress should 
be addressing the priority education needs of children and families 
across the country--and help all children get a good education.
  Overcrowded classrooms undermine discipline and decrease student 
morale. Students in small classes in the early grades make more rapid 
progress than students in larger classes. The benefits are greatest for 
low-achieving, minority, and low-income children. Smaller classes also 
enable teachers to identify and work effectively with students who have 
learning disabilities, and reduce the need for special education in 
later grades.
  The nation's students deserve modern schools with world-class 
teachers. But too many students in too many schools in too many 
communities across the country fail to achieve that standard. The 
latest international survey of math and science achievement confirms 
the urgent need to raise standards of performance for schools, 
teachers, and students alike. It is shameful that America's twelfth 
graders ranked among the lowest of the 22 nations participating in the 
international survey of math and science.
  The teacher shortage has forced many school districts to hire 
uncertified teachers, or ask certified teachers to teach outside their 
area of expertise. Each year, more than 50,000 under-prepared teachers 
enter the classroom. One in four new teachers does not meet state 
certification requirements. Twelve percent of new

[[Page 18417]]

teachers have had no teacher training at all. Students in inner-city 
schools have only a 50% chance of being taught by a qualified science 
or math teacher. In Massachusetts, 30% of teachers in high-poverty 
schools do not even have a minor degree in their field.
  Another high priority is to meet the need for more after-school 
activities. Each day, 5 million children, many as young as 8 or 9 years 
old, are left home alone after school. Juvenile delinquency peaks in 
the hours between 3 p.m. and 8 p.m. Children left unsupervised are more 
likely to be involved in anti-social activities and destructive 
patterns of behavior.
  We need to do more--not less--to meet workers' needs for additional 
job training opportunities, and to meet families' needs for affordable 
college education. The nation's workers require strong skills to 
compete in the new global economy. According to the Bureau of Labor 
Statistics, 42 percent of all jobs created between 1996-2006 will 
require education beyond high school.
  Education is the key to future earning power. A college graduate 
earns almost twice as much as a high school graduate earns, and close 
to three times what a high school dropout earns.
  Those who complete a post-secondary vocational degree or certificate 
are more likely to be employed than those who do not pursue post-
secondary education. But the average student debt is skyrocketing. In 
1995-96, the average debt for undergraduates who borrowed was almost 
$10,000, an increase of 24 percent just since 1992-93. For graduates of 
four-year schools, the average debt was $12,000. In the 1990s, students 
have borrowed more in student loans than in the three preceding decades 
combined.
  The time is now to do all we can to improve education across the 
country.
  The time is now to meet our commitment to help communities reduce 
class size, so that students get the individual attention they need.
  The time is now to expand after-school opportunities, so that 
constructive alternatives are available to students.
  The time is now to provide greater resources to modernize and expand 
schools to meet the urgent need for up-to-date facilities.
  The time is now to expand support for IDEA, so that more children 
with disabilities receive a high-quality education.
  The time is now to provide better training for current and new 
teachers, so that they are well-prepared to teach to high standards.
  The time is now to increase funding for critical programs to raise 
academic standards for all children.
  The time is now to make college and job training more accessible and 
affordable for all students.
  I urge my colleagues to support Senator Bingaman's Sense of the 
Senate commitment to support increased funding for education. Now is 
the time to do what it takes to give every child a good education.
  Mr. ROTH. I yield to the Senator from Arkansas.
  Mr. HUTCHINSON. Mr. President, I rise in strong opposition to the 
Bingaman amendment. As I read the amendment, it suggests we shift $132 
billion from tax breaks that disproportionately benefit upper-income 
taxpayers to sustain our investment in public education and prepare 
children for the 21st century, including our investment programs such 
as IDEA, special education, Pell grant, Head Start, and to fully fund 
the class size initiative.
  I will comment on every aspect of that particular statement. This 
amendment presents a false choice. It suggests to my colleagues and to 
the American people Members either have to be for tax relief for the 
American people or to be for public education, but Members can't be for 
both. If Members really support public education, then they will want 
to shift $132 billion out of the suggested tax relief and put it into 
various aspects of public education. That is a false choice.
  It proves one thing conclusively, the concern many Members have had 
as we hear the arguments on the other side as they repeatedly say: We 
shouldn't give tax relief to the American people because we need to pay 
down the national debt.
  We have suggested it won't ever go to pay down the national debt but 
any left will immediately be used for more spending. Before the ink is 
even dry from the passage of this tax relief bill, the proposals are 
coming forth in a torrent as to how we should spend the $792 billion 
proposed tax relief package for the American people.
  If we do not pass the $792 billion tax relief, that money will not go 
to paying down the national debt. It will, as already suggested in the 
speeches on the other side in the last few minutes, immediately go into 
more spending.
  IDEA funding is an important issue for school districts across the 
Nation. It is important in Arkansas but not an issue to be addressed by 
reducing the amount of hard-earned dollars that are returned to 
American taxpayers.
  In addition, the Class Size Reduction Program is only in its first 
year. It has not even been authorized. It was first included in last 
year's omnibus appropriations bill and is being considered during this 
year's reauthorization of the Elementary and Secondary Education Act. 
That is where it should be considered. We should not be setting aside 
funds for a program that has never been authorized and has, quite 
frankly, done very little right now in reducing class size across the 
country.
  The Class Size Reduction Program already forces too many regulations 
on to school districts. Many States have already implemented class size 
reduction programs at a level of 19 or 20 students per year. The 
Federal class size program mandates a ratio of 18 students for every 
teacher. This forces States to slightly alter their State plan to 
receive any Federal funding. Many school districts in my home State 
have chosen not to participate in the Class Size Reduction Program 
because of the excessive regulations that govern the use of funds. Any 
school district that does not receive enough funds to hire a new 
teacher must form a consortium in order to do so.
  Given the fact in my home State of Arkansas there are 311 school 
districts, 167 school districts, 54 percent will be forced to form a 
consortium even to hire a single teacher because their allocations are 
less than $20,000. Some school districts, such as Randolph County, 
report they cannot form a consortium and they share a teacher within 
the consortium because of geographic reasons.
  Class size reduction has not proven to be effective unless class size 
is significantly reduced to 12 or 13 students, which is not even 
envisioned in the President's Class Size Reduction Program.
  Class size has been reduced significantly over the past 30 years, 
from 27.4 students per classroom in 1955 to 17 students per classroom 
in 1997, but the interesting thing is, as we have seen this dramatic 
decrease in average class size across the country, we have not seen a 
corresponding increase in academic achievement and standardized tests 
across the country.
  The State of Arkansas will receive about 1.15 new teachers per school 
district, or half a teacher per elementary school. This program has not 
been authorized, and to suggest we will take well-deserved tax relief 
from the American people and put it into a program not yet authorized I 
think fails to make a lot of sense.
  Once again this year we are authorizing the Elementary and Secondary 
Education Act. We have spent months conducting hearings to learn about 
Federal elementary and secondary education policy. We will continue to 
work on ESEA throughout the year. I believe that is the appropriate 
place for class size reduction and many of these other education issues 
to be addressed properly.
  Before we set aside Federal funds that should be rightly returned to 
the taxpayers, we should consider whether we even want this program 
authorized and appropriated in this year's legislation. This is the 
wrong way to do it.
  As I think about the need for IDEA, I support increased funding for 
IDEA. We have done a terrible job in appropriately funding IDEA. But if 
we think about what is being suggested, taking it from tax relief for 
the American people, it is the wrong way to go. In the $3

[[Page 18418]]

trillion surplus, $13 to $14 billion can be found to fully fund IDEA 
without taking it away from tax relief for the American people. IDEA is 
currently funded at $4.3 billion, which is about 10 percent of the cost 
of educating special education students. Therefore, about $17 billion 
would be needed to meet the federally-authorized commitment of 40 
percent. This works out to an appropriation of an additional $13 
billion to fully fund IDEA. I suggest to my colleagues, that $13 
billion can certainly be found in the projected $3 trillion surplus for 
this obligation over the next 10 years.
  This is a wrongheaded amendment, and it is the wrong place to do 
this. But it certainly proves that this $792 billion will not go to 
debt reduction. It will go to extensive additional spending programs.
  I could not vote for this proposed amendment of the distinguished 
Senator from New Mexico, apart from the $132 billion that it suggests 
we take away from tax relief, because it improperly characterizes the 
Republican tax relief package by saying it disproportionately benefits 
upper-income taxpayers. I suggest this is one of the great myths being 
perpetrated about Senator Roth's tax relief package that has been 
produced by the Finance Committee.
  This proposal will reduce the lowest personal income tax rate, the 
lowest rate, from 15 percent to 14 percent, beginning in 2001 and then 
would gradually expand the bracket so more people would pay that lowest 
rate. It would benefit 70 million Americans; 55 percent of Americans 
would benefit from that provision alone. That is not a tax break for 
the wealthy, and I wish my honest and true colleagues on the other side 
would quit characterizing it as such. This amendment should not be 
voted for because it says it ``disproportionately benefits the 
wealthy,'' and it does not.
  In the State of Arkansas there will be 683,000 people, 61 percent of 
the taxpayers in Arkansas, who will receive tax relief from this single 
provision, apart from the marriage penalty, apart from the estate tax 
relief. The single provision of lowering that rate from 15 percent to 
14 percent and expanding the bracket will benefit 61 percent of the 
poorest people in Arkansas.
  So, in all honesty, let's tell the American people the truth. This is 
not a tax break for the wealthy. It is a tax break for hard-working 
Americans who are paying far more than they should be in taxes.
  Under the Clinton administration, taxes have risen to the highest 
level in peacetime, a level of 21 percent of GDP--21 percent. In my 
home State of Arkansas, that amount translates into $7,352 in taxes per 
capita in 1998. I plead with my colleagues, let us not agree to this 
amendment. Let us not begin to dilute that which is already far too 
little relief for hard-working Americans who have a difficult enough 
time making ends meet each month.
  Oh, we can talk about wonderful Federal programs to benefit people, 
and they do. But if we start down that road, there is no stopping 
point. Let's take more of the $800 billion tax cut and let's spend it 
on this program and this program and this program because, after all, 
don't we know best here in Washington? And we do not.
  At the root and at the core of the debate going on in the Senate is 
more than just a debate over a tax package. It is more than a debate 
over how much relief we can provide the American people. It is a debate 
over philosophy. It is a debate whether your faith is in Government and 
your faith is in Washington and your faith is in more taxes and central 
control, or whether your faith is in the people of this country. We 
will do well to put our faith in the people and return that which 
belongs to them in passing the Roth tax cut bill.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. HUTCHINSON. I thank the chairman for yielding me time.
  Mr. BINGAMAN. Mr. President, I yield 10 minutes to the distinguished 
Senator from Massachusetts.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KERRY. Mr. President, I rise also in support of the amendment of 
the Senator from New Mexico. It is a smart amendment. It invests in the 
future of our country by making certain that, at a time when our 
schools all across the Nation do not have the resources necessary to 
prepare students for the future, we will do so as a matter of priority.
  I must say I was struck by the Senator from Arkansas a moment ago. He 
said this benefits not the wealthy but, rather, it benefits 61 percent 
of the people in his State. He was only pointing to one component of 
the program; that is, the lowering of the tax bracket from I think 15 
percent to 14 percent. That is about a $150 billion part of the $791 
billion.
  But when you add in the other parts of the $791 billion, here is 
exactly what happens. In the whole tax package the Republicans are 
giving, the lowest 20 percent of income earners in America will get 
$22, the second 20 percent will get $120, the middle 20 percent will 
get $276, and the top 1 percent gets $22,964. The next 4 percent gets 
$3,400, and the next 15 percent gets $1,500. You have to be in the 
upper-income brackets to get the larger amount.
  The Republicans will always come to the floor and say, Gee, Democrat 
Senator, did you just wake up to the fact that that is how it works? If 
you earn more money, you get more money? If you are a bigger taxpayer, 
you get more money back?
  I understand that. I understand basic mathematics. But basic 
fairness, basic decency, dictates if you are really trying to help the 
lower-income person, you set the figures of the tax break so the person 
with the smaller income gets the bigger amount.
  Why is it that the lowest 20 percent doesn't get $100 and the top 1 
percent gets maybe $1,000 back? It is because that is the way they 
rigged the bill. That is the difference in approach and philosophy. It 
is a difference that fundamentally divides us.
  Let me speak for a moment, if I may, to an issue in one of the 
amendments that will be coming up very shortly, but we will not have 
time to do full measure on it, and that is the question of where we are 
with respect to Medicare. There is an amendment Senators Rockefeller, 
Mikulski, I, and others have introduced to ask the Finance Committee to 
go back and set aside $20 billion, about 3 percent of the total size of 
the tax cut, in order to guarantee that we will undo the damage the 
Balanced Budget Act is currently doing to America's health care system. 
Today, despite the fact that we have a remarkable economy, there are 43 
million individuals in our Nation who do not have health insurance--1 
out of every 6 Americans. Experts anticipate that is going to increase 
by 1.5 million per year.
  For the uninsured, academic health centers, the teaching hospitals of 
our country, have created an enormous safety net. Teaching hospitals 
have stood by to ensure there is care available to everyone in our 
country when it is absolutely needed. Today, at a time when teaching 
hospitals are more important than ever before, the combination of cost 
containment measures imposed by managed care and the effects of the 
Balanced Budget Act in reducing Medicare payments has literally made 
the future of our Nation's academic medical centers unclear.
  I would like my colleagues to think about the impact of what is 
happening today because of the reduction of Medicare reimbursements. At 
the Medical College of Georgia in Augusta, the training facility for 
the State university system's medical school, officials are now raising 
room fees by an average of 28 percent and they are increasing the cost 
of lab tests and other services by 10 percent.
  In Tennessee, Vanderbilt University recently decided it can no longer 
accept Medicare patients from outside the State.
  In March, Massachusetts General Hospital eliminated 130 positions and 
raised prices.
  In New York City, which has the Nation's largest concentration of 
teaching hospitals, city hospitals have cut their staffs by 10 percent 
since 1993.
  In California, Medicare cuts are largely to blame for the loss of 
over

[[Page 18419]]

1,250 jobs at the USFF, Stanford Health Care Network.
  In May, the University of Pennsylvania health system announced it was 
going to lay off 450 people, 9 percent of its total health care 
workforce. Detroit's hospitals have eliminated 4,500 jobs since 
January, but as my colleagues will tell you, the problems associated 
with the Balanced Budget Act are not unique to hospitals. In 
Massachusetts, as of mid-June, 20 home health care agencies have closed 
since late 1997.
  The administration may be busy sort of brushing off some of this as 
the simple corrections of market inefficiencies, but I could not 
disagree more, and I think many of my colleagues would disagree with 
that.
  I do not direct my colleagues' attention to statistics to debate the 
bottom line for health care providers. This has never been a debate 
about the interest of hospitals or nursing homes. It is a debate about 
the fact that if we do not act, we will further reduce the access to 
quality care so critical for our Nation's elderly, our Nation's poor, 
and our Nation's rural communities. It means something to real people. 
In Massachusetts alone, in South Shore, in the last 2 years the South 
Shore Hospital has had to lay off close to 50 of their visiting nurses. 
They have had to close their satellite offices, and their budget is 
more than 40 percent less than they require just to meet the needs of 
elderly and disabled patients. Who suffers as a result of that?
  Let me share with you a real elderly couple, a man and a woman with 
heart disease, lung disease, asthma, and hypertension. The wife of this 
gentleman has heart disease. They are 89 and 90 years old, and one of 
their greatest hopes has been to live together in the home they saved 
for years to buy, living as independently as they can in old age. They 
have been able to do it with the help of a visiting nurse from the 
South Shore Hospital. But now that is gone. Now, because the services 
are being cut because the Medicare reimbursements are so low, the 
impact is that those people can no longer continue to do it.
  I recently received a letter from another constituent named Harlan 
Smith. He says the following:

       Dear Senator Kerry: My 80-year-old father was discharged 
     from my hospital to his home Friday afternoon, and we are 
     meeting with home health care nurses and physical therapists 
     today to plan a strategy for my 80-year-old mother and us to 
     manage him at home. This is ironic since the cuts from the 
     Balanced Budget Act have caused my hospital to cut services 
     to the point where my mother and family now have to hire the 
     required help privately.

  They cannot afford it.
  These days, that story is repeated in countless communities across 
the country. When the Balanced Budget Act of 1997 passed, the 
Congressional Budget Office projected the 335 provisions of the law 
were going to cut Medicare payments by $103 billion over 5 years. But 
today, CBO estimates that Medicare spending is going to drop $205 
billion--a 100-percent increase above what the expectations were 
supposed to be.
  The projected net on-budget surplus for fiscal years 1998 through 
2002 is $100 billion. You are seeing the surplus we will have in the 
country is basically going to come out of the hides of elderly infirm 
patients, people who cannot afford it, hospitals that are being forced 
to close, and medical care that is being reduced.
  When the Balanced Budget Act passed, total Medicare spending 
inflation was expected to drop from almost 10 percent in 1997 to 
approximately 5 percent in the outyears. But in April, the Treasury 
Department reported that total Medicare spending in the first half of 
the year had fallen by over 2 percent.
  In 1999 alone, the BBA was projected to cut Medicare spending by less 
than $16 billion. Instead, we anticipate Medicare spending is going to 
fall by $38 billion in 1999--$22 billion more than was expected. 
Medicare hospital spending is plummeting, and the quality of care is 
plummeting with it.
  When the Balanced Budget Act passed, CBO had projected a 2.5-percent 
increase in part A spending, hospital insurance, for 1999. But 
actually, spending fell almost 5 percent during the first half of the 
year, and the impact on hospitals is clear.
  Total hospital Medicare margins are expected to decline from 4.3 
percent in 1997 to only 0.1 percent this year. We have a fundamental 
crisis. I say to my colleagues on the other side of the aisle, as we 
are busy giving back this tax money, we need to consider the impact on 
our hospitals, on health care, on home health care, and rural 
communities. I beg my colleagues to try to find the money that is going 
to save us from the loss of the crown jewels of the American health 
care system--our teaching hospitals.
  Mr. ROTH. Mr. President, I yield 15 minutes off the bill to the 
distinguished Senator from Pennsylvania.
  The PRESIDING OFFICER. The Senator from Pennsylvania.


                                Flat Tax

  Mr. SPECTER. I thank the Chairman.
  Mr. President, I have sought recognition to talk about my flat tax 
amendment which will be voted on by the Senate either this evening or 
tomorrow.
  The most dramatic way to show what the flat tax is, is to hold up a 
postcard which is an income tax return on the flat tax. This postcard 
will take 15 minutes to fill out. Here is an enlargement of the flat 
tax which lists the identity of the taxpayer, the total compensation, 
personal allowance, number of dependents, two deductions allowed, 
mortgage interest up to $100,000, charitable contributions up to 
$2,500, and then a flat 20-percent tax. It will take 15 minutes on tax 
simplification to fill out this return.
  Contrast that, if you will, with the fact that we have a Tax Code 
with 7.5 million words; a Pledge of Allegiance which has 31 words; the 
Gettysburg Address which has 267 words; the Declaration of 
Independence, about 1,300 words; the Bible with 1,773,000 words; and 
the U.S. Tax Code with 7.5 million words with the pending legislation, 
which I have in my hand, which is another thick book of 443 pages to be 
added.
  In offering an amendment on the flat tax, I have no illusion about 
its passing because the train is in operation to have a tax cut. The 
flat tax would be a total substitute on a comprehensive tax bill which 
would do great things for America.
  First of all, the flat tax would eliminate double taxation so there 
would be no tax on estates. They have already been taxed; all the money 
is going into the estate. There would be no tax on dividends; that has 
all been taxed before it gets into earned surplus. There would be no 
tax on capital gains; that has already been taxed.
  This is a win-win situation for America because it lowers the tax 
burden on the taxpayers in the lower brackets. For example in the 1998 
tax year, the standard deduction is $4,250 for a single taxpayer, 
$6,250 for a head of household and $7,100 for a married couple filing 
jointly, while the personal exemption for individuals and dependents is 
$2,700. Thus, under the current tax code, a family of four which does 
not itemize deductions would pay taxes on all income over $17,900--that 
is personal exemptions of $10,800 and a standard deduction of $7,100. 
By contrast, under my flat tax bill, that same family would receive a 
personal exemption of $27,500, and would pay tax on only income over 
that amount.
  A family of four with $35,000 in income would owe $2,569 in taxes 
under current law, but would only owe $1,500 under this flat tax--that 
is a savings of $1,065. A family of four with $50,000 would have a 
saving of $752.
  Why is this possible? It is possible because the tax loopholes enable 
write-offs to save some $393 billion a year. What is eliminated under 
the flat tax are the loopholes, the deductions in this complicated code 
which can be deciphered, interpreted, and found really only by the 
$500-an-hour lawyers. That money is lost to the taxpayers. $120 billion 
would be saved by the elimination of fraud because of the simplicity of 
the Tax Code, the taxpayer being able to find out exactly what they 
owe.

[[Page 18420]]

  This bill is modeled after legislation organized and written by two 
very distinguished professors of law from Stanford University, 
Professor Hall and Professor Rabushka. Their model was first introduced 
in the Congress in the fall of 1994 by Majority Leader Richard Armey. I 
introduced the flat tax bill--the first one in the Senate--on March 2, 
1995, Senate bill 488. I reintroduced the bill in the 105th Congress, 
and re-reintroduced the bill in this Congress on April 15, 1999--income 
tax day--in a bill denominated S. 822.
  So the bill has been well thought out, has been well documented, as 
being revenue neutral by Professors Hall and Rabushka at 19 percent.
  My bill has added two deductions--one for interest on home mortgages 
for borrowing up to $100,000 for middle-income Americans and a 
deduction for charitable contributions for up to $2,500. These two 
deductions have been obtained because of the practical impossibility of 
having a Tax Code which eliminates those two deductions which is really 
the mainstay of America. But aside from those two modest deductions, it 
is a flat tax.
  One percent has been added on my bill to the Hall-Rabushka formula to 
accommodate $35 billion in losses due to the home interest deduction 
and $13 billion in tax losses due to the deduction on interest on 
charitable contributions. So we have a system which is tax neutral.
  Another major advantage of the flat tax is that it would vastly 
increase productivity because people would no longer be looking to what 
they could save on tax loopholes. Instead, Americans would be devising 
their affairs on what would be most productive, because it would not do 
one any good to construct a tax loophole, diverting a lot of energy to 
try to save taxes, but, instead, the energies of productive Americans 
would be devoted to what is productive and what can be accomplished.
  This model, under Hall-Rabushka, projects that these savings --which 
would be tremendously increased--would far outweigh for the individual 
taxpayer any of the benefits that they would receive at the present 
time.
  Professors Hall and Rabushka project there would be an increase in 
the gross national product of some $2 trillion within 7 years, which 
would be an enormous boon to America.
  As I say, this tax bill is well on the road. The train has left the 
station; and it is not to be derailed by any substitute measure. But I 
do ask my colleagues to seriously consider the flat tax and, if nothing 
more, to cast a protest vote against the existing Tax Code which has 75 
million pages, and the current bill which would add 443 pages to that 
mountainous monstrosity.
  The flat tax is enormously popular with the American people. The 
polls show that 61 percent of Americans favor a flat tax.
  I can personally attest to the fact that in my open house town 
meetings, the reference to the flat tax and the display of this 
postcard tax return is the only applause item in my speech. You might 
attribute that to the dull balance of the speech, but the flat tax is 
an applause producer.
  When people think about the time they spend on their tax returns, and 
the regulatory system, and the complexity of the tax returns, the fact 
that Americans spend 5.4 billion hours filling out tax returns, this is 
an enormously attractive matter.
  I do not believe that the Senate has voted on a flat tax proposal 
yet. We Senators always hear that this group or that group is going to 
be watching a specific vote, and it is going to be a recorded vote on 
the scorecard. I suggest that a vote on the flat tax is going to be a 
vote on the big scorecard for America.
  People do know what the flat tax is. They do have an idea about it. 
It is overwhelmingly popular. 61 percent of the public favors it; 
leaving only 39 percent, most of whom probably do not know about it. 
Anybody who knows about the flat tax, that they could get their tax 
return done on a postcard in 15 minutes, would be very proud to have 
his or her Senator vote in favor of this flat tax.
  In essence, the flat tax would vastly simplify the code. It would 
eliminate most of the 117,000 IRS Internal Revenue Service employees, 
would save most of the $7 billion now spent on the Internal Revenue 
Service, and would be a very strong signal to the Finance Committee in 
the Senate to take up the flat tax seriously. That has not been done.
  It would be a strong signal to the Ways and Means Committee of the 
House of Representatives to take a good look at the flat tax.
  Because Americans will see that they could fill out their tax return 
on a postcard, save the laborious hours and the complications and all 
those letters from the IRA saying, you owe $19.14 cents--which 
taxpayers like myself would rather pay but you can't do that; you have 
to go back through all of your records--the release in productivity, 
the elimination of the capital gains tax, the estate tax, the tax on 
dividends, all of which has been paid.
  Mr. President, I have sought recognition to offer my flat tax 
legislation as an amendment to S. 1429, the Tax Reconciliation bill. I 
had reintroduced this legislation on April 15th, 1999 to provide for a 
flat 20 percent tax on individuals and businesses. In the 104th 
Congress, I was the first Senator to introduce flat tax legislation and 
the first Member of Congress to set forth a deficit-neutral plan for 
dramatically reforming our nation's tax code and replacing it with a 
flatter, fairer plan designed to stimulate economic growth. My flat tax 
legislation was also the first plan to retain limited deductions for 
home mortgage interest and charitable contributions.
  As I traveled around the country and held town hall meetings across 
Pennsylvania and other states, the public support for fundamental tax 
reform was overwhelming. I would point out in those speeches that I 
never leave home without two key documents: (1) my copy of the 
Constitution; and (2) a copy of my 10-line flat tax postcard. I soon 
realized that I needed more than just one copy of my flat tax 
postcard--many people wanted their own postcard so that they could see 
what life in a flat tax world would be like, where tax returns only 
take 15 minutes to fill out and individual taxpayers are no longer 
burdened with double taxation on their dividends, interest, capital 
gains and estates.
  Support for the flat tax is growing as more and more Americans 
embrace the simplicity, fairness and growth potential of flat tax 
reform. An April 17, 1995, edition of Newsweek cited a poll showing 
that 61 percent of Americans favor a flat tax over the current tax 
code. Significantly, a majority of the respondents who favor the flat 
tax preferred my flat tax plan with limited deductions for home 
mortgage interest and charitable contributions. Well before he entered 
the 1996 Republican presidential primary, publisher Steve Forbes opined 
in a March 27, 1995, Forbes editorial about the tremendous appeal and 
potency of my flat tax plan.
  Congress was not immune to public demand for reform. Jack Kemp was 
appointed to head up the National Commission on Economic Growth and Tax 
Reform and the Commission soon came out with its report recognizing the 
value of a fairer, flatter tax code. Mr. Forbes soon introduced a flat 
tax plan of his own, and my fellow candidates in the 1996 Republican 
presidential primary began to embrace similar versions of either a flat 
tax or a consumption-based tax system.
  Unfortunately, the politics of that Presidential campaign denied the 
flat tax a fair hearing and momentum stalled. On October 27, 1995, I 
introduced a Sense of the Senate Resolution calling on my colleagues to 
expedite Congressional adoption of a flat tax. The Resolution, which 
was introduced as an amendment to pending legislation, was not adopted.
  I reintroduced this legislation in the 105th Congress with slight 
modifications to reflect inflation-adjusted increases in the personal 
allowances and dependent allowances. While my flat tax proposal was 
favorably received at town hall meetings in Pennsylvania, Congress 
failed to move forward on any tax reform during the 105th Congress. I 
tried repeatedly to raise the issue with

[[Page 18421]]

leadership and the Finance Committee to no avail. I think the American 
people want this debate to move forward and I think the issue of tax 
reform is ripe for consideration.
  In this period of opportunity as we commence the 106th Session of 
Congress, I am optimistic that public support for tax reform will 
enable us to move forward and adopt this critically important and 
necessary legislation.
  My flat tax legislation will fundamentally revise the present tax 
code, with its myriad rates, deductions, and instructions. This 
legislation would institute a simple, flat 20% tax rate for all 
individuals and businesses. It will allow all taxpayers to file their 
April 15 tax returns on a simple 10-line postcard. This proposal is 
based on three key principles which are critical to an effective and 
equitable taxation system: simplicity, fairness and economic growth.
  Over the years and prior to my legislative efforts on behalf of flat 
tax reform, I have devoted considerable time and attention to analyzing 
our nation's tax code and the policies which underlie it. I began the 
study of the complexities of the tax code 40 years ago as a law student 
at Yale University. I included some tax law as part of my practice in 
my early years as an attorney in Philadelphia. In the spring of 1962, I 
published a law review article in the Villanova Law Review, ``Pension 
and Profit Sharing Plans: Coverage and Operation for Closely Held 
Corporations and Professional Associations,'' 7 Villanova L. Rev. 335, 
which in part focused on the inequity in making tax-exempt retirement 
benefits available to some kinds of businesses but not others. It was 
apparent then, as it is now, that the very complexities of the Internal 
Revenue Code could be used to give unfair advantage to some.
  Before I introduced my flat tax bill early in the 104th Congress, I 
had discussions with Congressman Richard Armey, the House Majority 
Leader, about his flat tax proposal. In fact, I testified with House 
Majority Leader Richard Armey before the Senate Finance and House Ways 
& Means Committees, as well as the Joint Economic Committee and the 
House Small Business Committee on the tremendous benefits of flat tax 
reform. Since then, and both before and after introducing my original 
flat tax bill, my staff and I have studied the flat tax at some length, 
and have engaged in a host of discussions with economists and tax 
experts, including the staff of the Joint Committee on Taxation, to 
evaluate the economic impact and viability of a flat tax. Based on 
those discussions, and on the revenue estimates supplied to us, I have 
concluded that a simple flat tax at a rate of 20 percent on all 
business and personal income can be enacted without reducing federal 
revenues.
  A flat tax will help reduce the size of government and allow ordinary 
citizens to have more influence over how their money is spent because 
they will spend it--not the government. By creating strong incentives 
for savings and investment, the flat tax will have the beneficial 
result of making available larger pools of capital for expansion of the 
private sector of the economy--rather than more tax money for big 
government. This will mean more jobs and, just as important, more 
higher-paying jobs.
  As a matter of federal tax policy, there has been considerable 
controversy over whether tax breaks should be used to stimulate 
particular kinds of economic activity, or whether tax policy should be 
neutral, leaving people to do what they consider best from a purely 
economic point of view. Our current tax code attempts to use tax policy 
to direct economic activity. Yet actions under that code have 
demonstrated that so-called tax breaks are inevitably used as the basis 
for tax shelters which have no real relation to solid economic 
purposes, or to the activities which the tax laws were meant to 
promote. Even when the government responds to particular tax shelters 
with new and often complex revisions of the regulations, clever tax 
experts are able to stay one or two steps ahead of the IRS bureaucrats 
by changing the structure of their business transactions and then 
claiming some legal distinctions between the taxpayer's new approach 
and the revised IRS regulations and precedents.
  Under the massive complexity of the current IRS Code, the battle 
between $500-an-hour tax lawyers and IRS bureaucrats to open and close 
loopholes is a battle the government can never win. Under the flat tax 
bill I offer today, there are no loopholes, and tax avoidance through 
clever manipulations will become a thing of the past.
  The basic model for this legislation comes from a plan created by 
Professors Robert Hall and Alvin Rabushka of the Hoover Institute at 
Stanford University. Their plan envisioned a flat tax with no 
deductions whatever. After considerable reflection, I decided to 
include in the legislation limited deductions for home mortgage 
interest for up to $100,000 in borrowing and charitable contributions 
up to $2,500. While these modifications undercut the pure principle of 
the flat tax by continuing the use of tax policy to promote home buying 
and charitable contributions, I believe that those two deductions are 
so deeply ingrained in the financial planning of American families that 
they should be retained as a matter of fairness and public policy--and 
also political practicality. With those two deductions maintained, 
passage of a modified flat tax will be difficult, but without them, 
probably impossible.
  In my judgment, an indispensable prerequisite to enactment of a 
modified flat tax is revenue neutrality. Professor Hall advised that 
the revenue neutrality of the Hall-Rabushka proposal, which uses a 19% 
rate, is based on a well documented model founded on reliable 
governmental statistics. My legislation raises that rate from 19% to 
20% to accommodate retaining limited home mortgage interest and 
charitable deductions. A preliminary estimate in the 104th Congress by 
the Committee on Joint Taxation places the annual cost of the home 
interest deduction at $35 billion, and the cost of the charitable 
deduction at $13 billion. While the revenue calculation is complicated 
because the Hall-Rabushka proposal encompasses significant revisions to 
business taxes as well as personal income taxes, there is a sound basis 
for concluding that the 1 percent increase in rate would pay for the 
two deductions. Revenue estimates for tax code revisions are difficult 
to obtain and are, at best, judgment calls based on projections from 
fact situations with a myriad of assumed variables. It is possible that 
some modification may be needed at a later date to guarantee revenue 
neutrality.
  This legislation offered today is quite similar to the bill 
introduced in the House by Congressman Armey and in the Senate late in 
1995 by Senator Richard Shelby, which were both in turn modeled after 
the Hall-Rabushka proposal. The flat tax offers great potential for 
enormous economic growth, in keeping with principles articulated so 
well by Jack Kemp. This proposal taxes business revenues fully at their 
source, so that there is no personal taxation on interest, dividends, 
capital gains, gifts or estates. Restructured in this way, the tax code 
can become a powerful incentive for savings and investment--which 
translates into economic growth and expansion, more and better jobs, 
and raising the standard of living for all Americans.
  In the 104th Congress, we took some important steps toward reducing 
the size and cost of government, and this work is ongoing and vitally 
important. But the work of downsizing government is only one side of 
the coin; what we must do at the same time, and with as much energy and 
care, is to grow the private sector. As we reform the welfare programs 
and government bureaucracies of past administrations, we must replace 
those programs with a prosperity that extends to all segments of 
American society through private investment and job creation--which can 
have the additional benefit of producing even lower taxes for Americans 
as economic expansion adds to federal revenues. Just as Americans need 
a tax code that is fair and simple, they also are entitled to tax laws 
designed to foster rather than retard economic growth. The bill I offer 
today embodies those principles.
  My plan, like the Armey-Shelby proposal, is based on the Hall-
Rabushka

[[Page 18422]]

analysis. But my flat tax differs from the Armey-Shelby plan in four 
key respects: First, my bill contains a 20 percent flat tax rate. 
Second, this bill would retain modified deductions for mortgage 
interest and charitable contributions (which will require a 1 percent 
higher tax rate than otherwise). Third, my bill would maintain the 
automatic withholding of taxes from an individual's paycheck. Lastly, 
my bill is designed to be revenue neutral, and thus will not undermine 
our vital efforts to balance the nation's budget.
  The key advantages of this flat tax plan are three-fold: First, it 
will dramatically simplify the payment of taxes. Second, it will remove 
much of the IRS regulatory morass now imposed on individual and 
corporate taxpayers, and allow those taxpayers to devote more of their 
energies to productive pursuits. Third, since it is a plan which 
rewards savings and investment, the flat tax will spur economic growth 
in all sectors of the economy as more money flows into investments and 
savings accounts, and as interest rates drop.
  Under this tax plan, individuals would be taxed at a flat rate of 20 
percent on all income they earn from wages, pensions and salaries. 
Individuals would not be taxed on any capital gains, interest on 
savings, or dividends--since those items will have already been taxed 
as part of the flat tax on business revenue. The flat tax will also 
eliminate all but two of the deductions and exemptions currently 
contained within the tax code. Instead, taxpayers will be entitled to 
``personal allowances'' for themselves and their children. The personal 
allowances are: $10,000 for a single taxpayer; $15,000 for a single 
head of household; $17,500 for a married couple filing jointly; and 
$5,000 per child or dependent. These personal allowances would be 
adjusted annually for inflation after 1999.
  In order to ensure that this flat tax does not unfairly impact low 
income families, the personal allowances contained in my proposal are 
much higher than the standard deduction and personal exemptions allowed 
under the current tax code. For example in the 1998 tax year, the 
standard deduction is $4,250 for a single taxpayer, $6,250 for a head 
of household and $7,100 for a married couple filing jointly, while the 
personal exemption for individuals and dependents is $2,700. Thus, 
under the current tax code, a family of four which does not itemize 
deductions would pay tax on all income over $17,900 (personal 
exemptions of $10,800 and a standard deduction of $7,100). By contrast, 
under my flat tax bill, that same family would receive a personal 
exemption of $27,500, and would pay tax only on income over that 
amount.
  My legislation retains the provisions for the deductibility of 
charitable contributions up to a limit of $2,500 and home mortgage 
interest on up to $100,000 of borrowing. Retention of these key 
deductions will, I believe, enhance the political salability of this 
legislation and allow the debate on the flat tax to move forward. If a 
decision is made to eliminate these deductions, the revenue saved could 
be used to reduce the overall flat tax rate below 20 percent.
  With respect to businesses, the flat tax would also be a flat rate of 
20 percent. My legislation would eliminate the intricate scheme of 
complicated depreciation schedules, deductions, credits, and other 
complexities that go into business taxation in favor of a much-
simplified system that taxes all business revenue less only wages, 
direct expenses and purchases--a system with much less potential for 
fraud, ``creative accounting'' and tax avoidance.
  Businesses would be allowed to expense 100 percent of the cost of 
capital formation, including purchases of capital equipment, structures 
and land, and to do so in the year in which the investments are made. 
The business tax would apply to all money not reinvested in the company 
in the form of employment or capital formation--thus fully taxing 
revenue at the business level and making it inappropriate to re-tax the 
same monies when passed on to investors as dividends or capital gains.
  Let me now turn to a more specific discussion of the advantages of 
the flat tax legislation I am reintroducing today.
  The first major advantage to this flat tax is simplicity. According 
to the Tax Foundation, Americans spend approximately 5.3 billion hours 
each year filling out tax forms. Much of this time is spent burrowing 
through IRS laws and regulations which fill 17,000 pages and have grown 
from 744,000 words in 1955 to 5.6 million words in 1995.
  Whenever the government gets involved in any aspect of our lives, it 
can convert the most simple goal or task into a tangled array of 
complexity, frustration and inefficiency. By way of example, most 
Americans have become familiar with the absurdities of the government's 
military procurement programs. If these programs have taught us 
anything, it is how a simple purchase order for a hammer or a toilet 
seat can mushroom into thousands of words of regulations and 
restrictions when the government gets involved. The Internal Revenue 
Service is certainly no exception. Indeed, it has become a 
distressingly common experience for taxpayers to receive computerized 
print-outs claiming that additional taxes are due, which require 
repeated exchanges of correspondence or personal visits before it is 
determined, as it so often is, that the taxpayer was right in the first 
place.
  The plan offered today would eliminate these kinds of frustrations 
for millions of taxpayers. This flat tax would enable us to scrap the 
great majority of the IRS rules, regulations and instructions and 
delete most of the five million words in the Internal Revenue Code. 
Instead of tens of millions of hours of non-productive time spent in 
compliance with, or avoidance of, the tax code, taxpayers would spend 
only the small amount of time necessary to fill out a postcard-sized 
form. Both business and individual taxpayers would thus find valuable 
hours freed up to engage in productive business activity, or for more 
time with their families, instead of poring over tax tables, schedules 
and regulations.
  The flat tax I have proposed can be calculated just by filling out a 
small postcard which would require a taxpayer only to answer a few easy 
questions. Filing a tax return would become a manageable chore, not a 
seemingly endless nightmare, for most taxpayers.
  Along with the advantage of simplicity, enactment of this flat tax 
bill will help to remove the burden of costly and unnecessary 
government regulation, bureaucracy and red tape from our everyday 
lives. The heavy hand of government bureaucracy is particularly onerous 
in the case of the Internal Revenue Service, which has been able to 
extend its influence into so many aspects of our lives.
  In 1995, the IRS employed 117,000 people, spread out over countless 
offices across the United States. Its budget was in excess of $7 
billion, with over $4 billion spent merely on enforcement. By 
simplifying the tax code and eliminating most of the IRS' vast array of 
rules and regulations, the flat tax would enable us to cut a 
significant portion of the IRS budget, including the bulk of the 
funding now needed for enforcement and administration.
  In addition, a flat tax would allow taxpayers to redirect their time, 
energies and money away from the yearly morass of tax compliance. 
According to the Tax Foundation, in 1996, the private sector spent over 
$150 billion complying with federal tax laws. According to a Tax 
Foundation study, adoption of flat tax reform would cut pre-filing 
compliance costs by over 90 percent.
  Monies spent by businesses and investors in creating tax shelters and 
finding loopholes could be instead directed to productive and job-
creating economic activity. With the adoption of a flat tax, the 
opportunities for fraud and cheating would also be vastly reduced, 
allowing the government to collect, according to some estimates, over 
$120 billion annually.
  The third major advantage to a flat tax is that it will be a 
tremendous spur to economic growth. Harvard economist Dale Jorgenson 
estimates adoption of a flat tax like the one offered today would 
increase future national wealth by over $2 trillion, in present

[[Page 18423]]

value terms, over a seven year period. This translates into over $7,500 
in increased wealth for every man, woman and child in America. This 
growth also means that there will be more jobs--it is estimated that 
the $2 trillion increase in wealth would lead to the creation of 6 
million new jobs.
  The economic principles are fairly straightforward. Our current tax 
system is inefficient; it is biased toward too little savings and too 
much consumption. The flat tax creates substantial incentives for 
savings and investment by eliminating taxation on interest, dividends 
and capital gains--and tax policies which promote capital formation and 
investment are the best vehicle for creation of new and high paying 
jobs, and for a greater prosperity for all Americans.
  It is well recognized that to promote future economic growth, we need 
not only to eliminate the federal government's reliance on deficits and 
borrowed money, but to restore and expand the base of private savings 
and investment that has been the real engine driving American 
prosperity throughout our history. These concepts are related--the 
federal budget deficit soaks up much of what we have saved, leaving 
less for businesses to borrow for investments.
  It is the sum total of savings by all aspects of the U.S. economy 
that represents the pool of all capital available for investment--in 
training, education, research, machinery, physical plant, etc.--and 
that constitutes the real seed of future prosperity. The statistics 
here are daunting. In the 1960s, the net U.S. national savings rate was 
8.2 percent, but it has fallen to a dismal 1.5 percent. Americans save 
at only one-tenth the rate of the Japanese, and only one-fifth the rate 
of the Germans. This is unacceptable and we must do something to 
reverse the trend.
  An analysis of the components of U.S. savings patterns shows that 
although the federal budget deficit is the largest cause of 
``dissavings,'' both personal and business savings rates have declined 
significantly over the past three decades. Thus, to recreate the pool 
of capital stock that is critical to future U.S. growth and prosperity, 
we have to do more than just get rid of the deficit. We have to very 
materially raise our levels of private savings and investment. And we 
have to do so in a way that will not cause additional deficits.
  The less money people save, the less money is available for business 
investment and growth. The current tax system discourages savings and 
investment, because it taxes the interest we earn from our savings 
accounts, the dividends we make from investing in the stock market, and 
the capital gains we make from successful investments in our homes and 
the financial markets. Indeed, under the current law these rewards for 
saving and investment are not only taxed, they are overtaxed--since 
gains due solely to inflation, which represent no real increase in 
value, are taxed as if they were profits to the taxpayer.
  With the limited exceptions of retirement plans and tax free 
municipal bonds, our current tax code does virtually nothing to 
encourage personal savings and investment, or to reward it over 
consumption. This bill will change this system, and address this 
problem. The proposed legislation reverses the current skewed 
incentives by promoting savings and investment by individuals and by 
businesses. Individuals would be able to invest and save their money 
tax-free and reap the benefits of the accumulated value of those 
investments without paying a capital gains tax upon the sale of these 
investments. Businesses would also invest more as the flat tax allowed 
them to expense fully all sums invested in new equipment and technology 
in the year the expense was incurred, rather than dragging out the tax 
benefits for these investments through complicated depreciation 
schedules. With greater investment and a larger pool of savings 
available, interest rates and the costs of investment would also drop, 
spurring even greater economic growth.
  Critics of the flat tax have argued that we cannot afford the revenue 
losses associated with the tremendous savings and investment incentives 
the bill affords to businesses and individuals. Those critics are 
wrong. Not only is this bill carefully crafted to be revenue neutral, 
but historically we have seen that when taxes are cut, revenues 
actually increase, as more taxpayers work harder for a larger share of 
their take-home pay, and investors are more willing to take risks in 
pursuit of rewards that will not get eaten up in taxes.
  As one example, under President Kennedy when individual tax rates 
were lowered, investment incentives including the investment tax credit 
were created and then expanded and depreciation rates were accelerated. 
Yet, between 1962 and 1967, gross annual federal tax receipts grew from 
$99.7 billion to $148 billion--an increase of nearly 50 percent. More 
recently after President Reagan's tax cuts in the early 1980's, 
government tax revenues rose from just under $600 billion in 1981 to 
nearly $1 trillion in 1989. In fact, the Reagan tax cut program helped 
to bring about one of the longest peacetime expansion of the U.S. 
economy in history. There is every reason to believe that the flat tax 
proposed here can do the same--and by maintaining revenue neutrality in 
this flat tax proposal, as we have, we can avoid any increases in 
annual deficits and the national debt.
  In addition to increasing federal revenues by fostering economic 
growth, the flat tax can also add to federal revenues without 
increasing taxes by closing tax loopholes. The Congressional Research 
Service estimates that for fiscal year 1995, individuals sheltered more 
than $393 billion in tax revenue in legal loopholes, and corporations 
sheltered an additional $60 billion. There may well be additional 
monies hidden in quasi-legal or even illegal ``tax shelters.'' Under a 
flat tax system, all tax shelters will disappear and all income will be 
subject to taxation.
  The growth case for a flat tax is compelling. It is even more 
compelling in the case of a tax revision that is simple and 
demonstrably fair.
  By substantially increasing the personal allowances for taxpayers and 
their dependents, this flat tax proposal ensures that poorer taxpayers 
will pay no tax and that taxes will not be regressive for lower and 
middle income taxpayers. At the same time, by closing the hundreds of 
tax loopholes which are currently used by wealthier taxpayers to 
shelter their income and avoid taxes, this flat tax bill will also 
ensure that all Americans pay their fair share.
  The flat tax legislation that I am offering will retain the element 
of progressivity that Americans view as essential to fairness in an 
income tax system. Because of the lower end income exclusions, and the 
capped deductions for home mortgage interest and charitable 
contributions, the effective tax rates under my bill will range from 0% 
for families with incomes under about $30,000 to roughly 20% for the 
highest income groups.
  My proposed legislation demonstrably retains the fairness that must 
be an essential component of the American tax system.
  The proposal that I make today is dramatic, but so are its 
advantages: a taxation system that is simple, fair and designed to 
maximize prosperity for all Americans. A summary of the key advantages 
are:
  Simplicity: A 10-line postcard filing would replace the myriad forms 
and attachments currently required, thus saving Americans up to 5.3 
billion hours they currently spend every year in tax compliance.
  Cuts government: The flat tax would eliminate the lion's share of IRS 
rules, regulations and requirements, which have grown from 744,000 
words in 1955 to 5.6 million words and 12,000 pages currently. It would 
also allow us to slash the mammoth IRS bureaucracy of 117,000 
employees.
  Promotes economic growth: Economists estimate a growth of over $2 
trillion in national wealth over seven years, representing an increase 
of approximately $7,500 in personal wealth for every man, woman and 
child in America. This growth would also lead to the creation of 6 
million new jobs.
  Increases efficiency: Investment decisions would be made on the basis 
of

[[Page 18424]]

productivity rather than simply for tax avoidance, thus leading to even 
greater economic expansion.
  Reduces interest rates: Economic forecasts indicate that interest 
rates would fall substantially, by as much as two points, as the flat 
tax removes many of the current disincentives to savings.
  Lowers compliance costs: Americans would be able to save up to $224 
billion they currently spend every year in tax compliance.
  Decreases fraud: as tax loopholes are eliminated and the tax code is 
simplified, there will be far less opportunity for tax avoidance and 
fraud, which now amounts to over $120 billion in uncollected revenue 
annually.
  Reduces IRS costs: Simplification of the tax code will allow us to 
save significantly on the $7 billion annual budget currently allocated 
to the Internal Revenue Service.
  Professors Hall and Rabushka have projected that within seven years 
of enactment, this type of a flat tax would produce a 6 percent 
increase in output from increased total work in the U.S. economy and 
increased capital formation. The economic growth would mean a $7,500 
increase in the personal income of all Americans.
  No one likes to pay taxes. But Americans will be much more willing to 
pay their taxes under a system that they believe is fair, a system that 
they can understand, and a system that they recognize promotes rather 
than prevents growth and prosperity. The legislation I introduce today 
will afford Americans such a tax system.
  Mr. President, I ask unanimous consent that the charts and exhibits 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                       1999 Individual Tax Return


                   form 1--individual wage tax--1999

       Your first name and initial (if joint return, also give 
     spouse's name and initial): __________
       Your social security
     number: ______
       Home address (number and street including apartment number 
     or rural route): __________
       Spouse's social security
     number: ______
       City, town, or post office, state, and ZIP code: __________

1. Wages, salary, pension and retirement benefits...................1__
2. Personal allowance (enter only one):
    --$17,500 for married filing jointly
    --$10,000 for single
    --$15,000 for single head of household..........................2__
3. Number of dependents, not including spouse, multiplied by $5,000.3__
4. Mortgage interest on debt up to $100,000 for owner-occupied home.4__
5. Cash or equivalent charitable contributions (up to $2,500).......5__
6. Total allowances and dedications (lines 2, 3, 4 and 5)...........6__
7. Taxable compensation (line 1 less line 6, if positive; otherwise 
  zero).............................................................7__
8. Tax (20% of line 7)..............................................8__
9. Tax withheld by employer.........................................9__
10__x or refund due (difference between lines 8 and 9)...............
                                  ____


               ANNUAL TAXES UNDER 20% FLAT TAX FOR MARRIED COUPLE WITH TWO CHILDREN FILING JOINTLY
----------------------------------------------------------------------------------------------------------------
                                                             Personal                  Marginal tax
  Income       Income      Deductible       Charitable     allowance (w/    Taxable        rate       Taxes owed
            mortgage \1\  mtg interest  contributions \1\    children)      income       (percent)
----------------------------------------------------------------------------------------------------------------
   <27,500  ............  ............  .................  ............  ............             0         None
    30,000        60,000         5,400             600           27,500             0             0         None
    40,000        80,000         7,200             800           27,500         4,500           2.3          900
    50,000       100,000         9,000           1,000           27,500        12,500           5.0        2,500
    60,000       120,000         9,000           1,200           27,500        22,300           7.4        4,460
    70,000       140,000         9,000           1,400           27,500        31,200           9.2        6,420
    80,000       160,000         9,000           1,600           27,500        41,900          10.5        8,380
    90,000       180,000         9,000           1,800           27,500        51,700          11.5       10,340
   100,000       200,000         9,000           2,000           27,500        61,500          12.3       12,300
   125,000       250,000         9,000           2,500           27,500        86,000          13.8       17,200
   150,000       300,000         9,000           2,500           27,500       111,000          14.8       22,200
   200,000       400,000         9,000           2,500           27,500       161,000          16.1       32,200
   250,000       500,000         9,000           2,500           27,500       211,000          16.8       42,200
   500,000     1,000,000         9,000           2,500           27,500       461,000          18.4       92,200
 1,000,000     2,000,000         9,000           2,500           27,500       961,000          19.2     192,200
----------------------------------------------------------------------------------------------------------------
\1\ Assumes home mortgage of twice annual income at a rate of 9% and charitable contributions up to 2% of annual
  income.

  
                                  ____
                 Advantages of the 20 Percent Flat Tax

                       (By Senator Arlen Specter)

       Simplicity: A 10-line postcard filing would replace the 
     myriad forms and attachments currently required, thus saving 
     Americans up to 5.3 billion hours they currently spend every 
     year in tax compliance.
       Cuts government: The flat tax would eliminate the lion's 
     share of IRS rules, regulations and requirements, which have 
     grown from 744,000 words in 1955 to 5.6 million words and 
     12,000 pages currently. It would also allow us to slash the 
     mammoth IRS bureaucracy of 117,000 employees.
       Promotes economic growth: Economists estimate a growth of 
     over $2 trillion in national wealth over seven years, 
     representing an increase of approximately $7,500 in personal 
     wealth for every man, woman and child in America. This growth 
     would also lead to the creation of 6 million new jobs.
       Increases efficiency: Investment decisions would be made on 
     the basis of productivity rather than simply for tax 
     avoidance, thus leading to even greater economic expansion.
       Reduces interest rates: Economic forecasts indicate that 
     interest rates would fall substantially, by as much as two 
     points, as the flat tax removes many of the current 
     disincentives to savings.
       Lowers compliance costs: Americans would be able to save up 
     to $593 billion they currently spend every year in tax 
     compliance.
       Decreases fraud: As tax loopholes are eliminated and the 
     tax code is simplified, there will be far less opportunity 
     for tax avoidance and fraud, which now amounts to over $120 
     billion in uncollected revenue annually.
       Reduces IRS costs: Simplification of the tax code will 
     allow us to save significantly on the $7 billion annual 
     budget currently allocated to the Internal Revenue Service.


             Investment Tax Credit For The Biotech Industry

  Mr. SPECTER. In the balance of my allotted time, I will speak briefly 
about another amendment which will be voted on, probably tomorrow. That 
is an investment tax credit for the biotechnology equipment industry.
  In my capacity as chairman of the Senate Subcommittee on Health and 
Human Services, my distinguished ranking member, Senator Harkin, and I 
have the job of allocating funds for the National Institutes of Health. 
They are the crown jewel of the Federal Government--perhaps the only 
jewel of the Federal Government.
  We are facing an extraordinarily difficult time in allocating funding 
because of the allocation for the subcommittee which is far under what 
is necessary to provide the $2 billion which we allocated in increase 
last year.
  In consulting with the biotechnology industry, the one item which 
could bridge the gap would be a 10 percent investment tax credit which 
would stimulate Biotech and would do a tremendous amount for the health 
of Americans.
  In the course of the past few months, stem cells have been discovered 
by Biotech which is a veritable fountain of youth, holding a promise 
for a cure for cancer, Alzheimer's, Parkinson's, and other maladies.
  So I urge my colleagues to take a close look at the investment tax 
credit for the Biotech industry when it comes up.
  I thank the Chair and thank the chairman for yielding me this time 
from the bill and yield the floor.
  Mr. REID. Mr. President, if the manager of the bill will yield for a 
brief statement, as soon as the leaders arrive, I wonder if the next 
speaker would mind being interrupted. We have a unanimous consent 
request we would like to enter and not delay the leader any more than 
necessary. The leader should be coming here soon.
  Mr. ROTH. That is satisfactory. I yield 12 minutes to Senator Inhofe.

[[Page 18425]]


  Mr. INHOFE. I thank the Senator.
  Mr. President, I, like many of my colleagues, have been listening 
intently to all of the debate. I certainly understand that the Senator 
from New Mexico is very sincere when he talks about many of these 
programs that need funding.
  I do think that something has been completely lost in the debate that 
has been taking place on the floor. It is this assumption that if we 
are going to pass a tax reduction, it is going to automatically reduce 
revenues. I think this is one of the fallacies that defies all history, 
and it is one that needs to be talked about at this time.
  I can remember when President Clinton was first elected in 1992. One 
of the first appointments he made was his chief financial adviser, 
Laura Tyson, who was quoted to have said--I believe this is an exact 
quote; certainly the intent is the same--that there is no relationship 
between the level of taxation the Nation pays and the amount of 
economic performance. I think this is ludicrous. I think it defies all 
logic. If you carried that to its logical conclusion, you would say 
let's raise all marginal rates to 100 percent, and everyone is going to 
work as hard as they would have otherwise. Certainly this is not what 
history has shown us.
  One of the interesting things that is so overlooked by many liberals 
and others nowadays is that you can increase revenues by decreasing 
taxes. You have to realize that for every 1-percent increase in 
economic activity, that generates new revenues of $24 billion.
  This was really discovered by accident back in the 1920s. Back in the 
1920s, under two administrations, Warren Harding and Calvin Coolidge, 
there was a guy named Andrew Mellon, who was the Secretary of the 
Treasury under both administrations. It wasn't his understanding at 
that time that he would be able to increase revenues by reducing taxes, 
but this was right after World War I. In World War I, we had tax rates 
that were just unconscionably high--73 percent. So they said, all 
right, the war is over now. Let's reduce our tax rates, and they 
reduced them in three steps during a 9-year period from 73 percent to 
25 percent.
  This chart shows the income tax rate at the time right after the war 
and how they reduced it from 73 percent down to 25 percent. Look what 
happens as the income started rising. It came up from about $700,000 to 
over a billion dollars. It was almost doubled during that period of 
time. I think this speaks for itself. It shocked a lot of people. This 
wasn't some smart economist saying this is the way to increase revenue. 
They weren't even trying to increase revenue. But that is what 
happened.
  Then again in the 1960s, of course, this was not a Republican 
administration. This was the administration of President Kennedy, and 
he made the statement, drawing upon the experience of the 1920s, that 
we have to have more revenues to take care of the obligations that we 
have incurred in Government. He said we need more revenues, and the 
best way to increase revenues is to reduce taxes.
  I say to the Senator from New York, this was not a Republican saying 
this. This is someone whom he knew very well, President Kennedy, back 
in the 1960s.
  So he came along with his tax rate. At that time the highest rate had 
been up at 91 percent, as you see on the chart represented by the green 
line. He reduced them over that period of time down to 70 percent.
  Now, if you make that kind of a reduction in the tax rate and you see 
what has happened during that period of time, during the 1960s, it did 
exactly what the President said it was going to do in anticipating what 
was going to happen to the revenues. President Kennedy knew that, and I 
think many of the people at that time felt this was something that 
twice in history had been proven to be the case.
  Then, of course, along came the 1980s. I can remember in the 1980s 
because I was around at that time. I remember when Ronald Reagan--keep 
in mind this was at a time when we had deficits, not surpluses as we 
have today. He was advocating a sweeping tax relief reduction of about 
$1.6 trillion. I happen to have known personally, as many of my 
colleagues did at that time, Speaker Tip O'Neill. Speaker O'Neill at 
that time was not considered to be one of the stalwarts of the 
conservative movement, but Tip O'Neill said: No, I think that is too 
much. I think to be fiscally responsible, we should reduce taxes only 
by $1.3 trillion.
  Now, keep in mind, this is Tip O'Neill, a Democrat, advocating the 
reduction of taxes by $1.3 trillion. Now we are talking about merely 
reducing them by some $790 billion.
  Mr. President, to repeat, we learned lessons quite by accident during 
the Harding and Coolidge administrations back in the twenties. The 
lessons were that you can actually increase revenues by decreasing 
taxes. We learned in the 1960s when President Kennedy did the same 
thing; we dramatically increased revenues by decreasing taxes. This is 
the most revealing one because there has never been a 10-year period in 
the history of this country where we have had more tax reductions in 
marginal rates than we did in the 1980s.
  On this chart, the green line is the income tax revenues, starting in 
1980, going up here and showing that they increase by two-thirds at a 
time when the reductions in the rates were actually cut by two-thirds.
  I think it needs to be pointed out that there is not a direct 
relationship between the level of taxation and the amount of revenue. 
In fact, the relationship is just the opposite. I think those who are 
saying we don't want to reduce taxes are really saying we don't want to 
reduce revenues. I can understand that. Some people believe Government 
should have more spending power and more control of our everyday lives. 
That is what defines a liberal versus a conservative. I think we are 
trying to do something to really have dramatic cuts to enhance the 
economy. Perhaps one of the benefits of that would be, as history has 
shown, to increase revenues.
  There is one thing you can do if you want to cut down the size of 
Government, and that is to cut some of these programs. It has been my 
experience--having worked at the local level, State level, and now in 
both Houses of Congress--that once a problem exists out there, you form 
a Government agency to deal with the problem. The problem goes away, 
but the agency goes on. In a great speech made in 1965 which was called 
``A Rendezvous With Destiny,'' Ronald Reagan said:

       There is nothing closer to immortality on the face of this 
     earth than a Government agency once formed.

  I believe we need to look at this and realize what has been 
happening, where we are going from here, and what effect the tax cuts 
we are advocating are going to actually have on the economy.
  Another way of looking at it is, in 1993, Bill Clinton actually 
passed, with the support of Congress, the largest single tax increase 
in contemporary history--in the whole history of this country. He 
raised taxes in that one increase by $241 billion over a 5-year period. 
In 1995, 2 years later, President Clinton said:

       People in this room are still mad at me about the budget 
     because you think I raised taxes too much. It might surprise 
     you to know that I think they raised them too much, too.

  I think anybody at that time who was opposed to that largest tax 
increase in the history of this Nation should realize that a way to 
rectify that is to reverse and repeal some of the taxes that were 
increased at that time. We have looked at different taxes that should 
be reduced. I agree with the Senator from Texas that we should reduce 
the marriage penalty. It doesn't make any sense in our society to 
reward people who live together out of wedlock. It doesn't make any 
sense at all, and it creates some of the other problems that we are so 
concerned about.
  I am very concerned about the marginal rate tax, and I think we can 
probably have the effect of increasing revenues by reducing marginal 
rates.
  Thirdly--and this will be in one of the amendments that we vote on, I 
guess, tomorrow; I hoped it would be tonight, but it will be tomorrow--
is the death tax. I suggest to you that I had

[[Page 18426]]

occasion to be out in western Oklahoma talking about the farm crisis 
and about all the things that are happening, I know, in other States 
and in Oklahoma. I am sure they have the same problems out in New 
Mexico. When you talk about repealing the estate tax or the death tax, 
all of a sudden they quit worrying about crop insurance and these 
programs because that is the thing they believe is most critical to the 
small businessman and woman and farmer in America. If there is one 
thing we can do, in all fairness, it would be to vote favorably on that 
when the appropriate time comes.
  I yield the floor.
  Mr. LOTT. Mr. President, we have a unanimous consent agreement that I 
think will be constructive in getting our work completed. It has been 
discussed thoroughly with the Democratic leadership, and I know it is 
going to take some more time tonight and also an effort tomorrow, but I 
think that all things considered, it is the best way to proceed.
  I ask unanimous consent that the vote with respect to the pending 
amendment No. 1462 occur tomorrow morning beginning at 9 a.m, with 15 
minutes for concluding remarks to be equally divided beginning at 8:30 
a.m. on Friday.
  I further ask unanimous consent that the vote with respect to the 
Hutchison amendment on the marriage penalty occur immediately following 
the above-described vote and there also be 15 minutes for concluding 
remarks to be equally divided beginning at 8:45.
  I also ask consent that following the conclusion of debate this 
evening, no further debate time be in order other than the concluding 
time as outlined above.
  I further ask unanimous consent that following the two described 
votes above, the Senate begin the voting sequence with debate on any 
amendment or motion properly filed in the consent agreement of July 29 
limited to 2 minutes equally divided.
  The PRESIDING OFFICER. Is there objection?
  Mr. ROTH. Mr. President, I object.
  Mr. LOTT. Mr. President, may I inquire, what is the problem?
  So we can clarify this, I think just a temporary misunderstanding, I 
suggest the absence of a quorum.
  Mr. DOMENICI. Could I ask a question before you do that?
  Mr. LOTT. I ask to withhold the suggestion of a quorum call.
  Mr. DOMENICI. Might I ask a parliamentary inquiry? How much time 
remains on the 20 hours allowed by law?
  The PRESIDING OFFICER. Two hours 42 minutes.
  Mr. DOMENICI. I thank the Chair.
  Mr. LOTT. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. LOTT. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Sessions). Without objection, it is so 
ordered.
  Mr. LOTT. Mr. President, I renew my unanimous consent request as 
earlier stated.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  Mr. LOTT. Mr. President, in light of this agreement, there will be no 
further votes this evening. The first two votes of tomorrow will begin 
at 9 a.m. A number of votes will occur following those two votes. I 
hope Senators will work with the managers and work with the whips on 
both sides of the aisle. Senator Nickles is here and prepared to work 
with Senators to discuss the seriousness of their amendments. The 
``Tasmanian junior'' here, Harry Reid, is going to be working on the 
Democratic side. Talk with the whips. It is not a very seemly way to do 
business to have repeated votes in the so-called vote-arama. A 
reasonable number is understandable and can be explained sufficiently. 
Senators will be asked not to leave the Chamber in the morning because 
once we start on the series of votes, votes will occur every 10 to 15 
minutes, so we can get at least four done in an hour.
  Mr. REID. Will the Senator yield?
  Mr. LOTT. Yes.
  Mr. REID. I say to the leader and Members of the Senate, the staff 
will be working all night trying to clear all of these amendments. In 
addition, there is no rule that says if you call up your amendment, you 
have to have a recorded vote. We can have voice votes on some 
amendments. Also, on something such as this, people have to determine 
whether they want to offer the amendment that has been filed. Just 
because it was filed doesn't mean you have to offer it.
  Mr. LOTT. You do have options: they can be accepted or taken by voice 
vote or some insist on a recorded vote.
  As I see things, tomorrow we can finish up at 2 or 3 o'clock, or we 
can be here at 5 o'clock tomorrow afternoon. I hope Senators will weigh 
carefully the need for their particular amendment. As far as amendments 
that have not been thoroughly debated in committee, it is awfully hard 
to change the Tax Code in that way. We will try to accommodate Senators 
as best we can.
  Mr. BINGAMAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Mexico is recognized.
  Mr. BINGAMAN. Mr. President, I yield 8 minutes to the Senator from 
New York.
  Mr. SCHUMER. Mr. President, I thank the Senator from New Mexico. I 
rise in support of his amendment. First, I thank him for his leadership 
on educational issues before introducing this amendment. I would like 
to speak for a couple of minutes and talk about another educational 
amendment that will be before us tonight or tomorrow.
  First, on the amendment of the Senator from New Mexico, I have 
generally considered myself a balanced budget type of person and 
Democrat. I backed up the President a few years ago when we had a split 
in our party in the House as to whether to enact a balanced budget, and 
I am glad I did. I am glad I did. That means that one has to be careful 
about spending.
  But if there is one place as we move into the 21st century that we 
should be spending more--not just throwing money at the problem, being 
careful, setting standards, but spending more money--it is the area of 
education.
  As we move into an ideas economy, an ideas-based economy, the most 
important resource our country has is the minds of our young people. It 
is more important than the wealth of the mine, or the fertility of the 
fields, or even the output of the factory, because more and more and 
more wealth is created, jobs are created, and happiness is created by 
how well educated we are by the ideas that our people have.
  To enact the budget plan posed by the other side, as the chart of the 
Senator from New Mexico shows, and cut education funding or to even 
simply freeze education funding, in my judgment, would be a mistake. 
This resolution, which urges this Senate and this Congress and this 
country to spend somewhat more on education, again wisely--I would not 
spend much more on education without imposing standards on teachers and 
standards on promotion, which makes a great deal of sense--I support 
wholeheartedly.
  There is another amendment in the area of education which I am 
introducing along with Senator Snowe of Maine, Senator Bayh of Indiana, 
Senator Smith of Oregon, Senator Wyden of Oregon, and Senator Kohl of 
Wisconsin. It is a bipartisan amendment. We hope this amendment doesn't 
became a football in the various views of reconciliation that we have. 
But it is an amendment that is very simple. It is an amendment to make 
up to $12,000 of college tuition tax deductible and to provide tax 
credit to help those saddled with student loans.
  We have introduced this amendment for two real purposes. The first 
purpose relates to individual families.
  We are talking about tax cuts. But when I talk to my constituents in 
New York, and when I hear about constituents from around the country, 
what is the average person worried about? It is not the exact amount of 
taxes that they pay as much as it is the big financial nugget they have 
to deal with--buying a home in early family life, paying for the kids' 
college in middle

[[Page 18427]]

life, and paying for health care in later life.
  Tonight, as we all go to sleep, there will be millions of Americans 
worrying about how they are going to pay for their kids' college 
education. Tuition has gone up far more than the rate of inflation. In 
fact, if you look at the prices of everything since 1980, tuition has 
gone up more than anything else--even more than health care. I believe 
the number is 250 percent between 1980 and 1995 for middle-income 
families--families that do not really need much other help, families 
that might make $50,000, or $60,000, or $70,000 a year. It seems almost 
unfair, after they struggle to pay that tuition bill, for Uncle Sam to 
take his cut. This bill says that won't happen. This bill says that for 
anyone at the 28-percent bracket or lower. So the numbers will go up 
fairly high--$90,000--for a single head of household, and $105,000 for 
a two-family head of household. You can deduct your tuition.
  We rarely give relief to those in the middle class. Too often many 
people in the middle class--the majority of Americans--think most of 
what we do helps the very poor or the very rich. But this proposal is 
aimed right at what bothers them, and with good reason. It is going to 
be tremendously helpful to millions and millions of Americans who right 
now think they are not getting much out of the tax proposal on either 
side of the aisle.
  There is a second reason to do this; that is, for the good of the 
country. As we move into an ideas economy--as I mentioned in my remarks 
about the amendment of the Senator from New Mexico--education is the 
key. The better educated we are, the better we do as a country. In 
fact, I worry when you look at some of the rankings in terms of 
education when compared to other Western countries.
  But every time a well-prepared, intelligent student isn't able to go 
to the college of his or her choice because of that tuition bill, not 
only does that individual lose, not only does their family lose but 
America loses. Every time we don't use and fulfill the potential of a 
young mind, not only does that person lose, not only does his or her 
family lose but America loses.
  It seems to me, as we move into the 21st century in an ideas-based 
economy, it is almost imperative that we have as many students in as 
good a college as they can academically achieve. Right now that is not 
happening. But in this tax bill, if we were to make tuition deductible 
up to $12,000, it would have a tremendous impetus.
  A couple of other points on the proposal, a bipartisan proposal, made 
by myself and Senators Bayh, Kohl, and Wyden on this side of the aisle, 
and Senators Snowe and Smith on the other side of the aisle:
  No. 1, it is completely offset. So we are not increasing the tax 
bill. We mainly do this by delaying certain things in the existing bill 
for a year.
  No. 2, it does not cut off until, as I said, you move from the 28-
percent bracket and above that. So 90, 95 percent, a huge percentage of 
America's families, would benefit--all but the extremely well-to-do.
  No. 3, tuition is deductible up to $12,000 a year. That is full 
tuition for over 80 percent of all Americans. Even for those who are 
going to a more expensive school, it is a real help in terms of getting 
them there.
  I urge my colleagues to please look at this amendment. It is 
bipartisan. It is not intended to be an amendment that scores political 
points. It is an amendment intended to better this country and help 
middle-class families struggling to send their children to college.
  I urge its adoption by Members on both sides of the aisle.
  I thank the Chair.
  Mr. ROTH. Mr. President, I yield 5 minutes to the distinguished 
Senator from New Mexico.
  The PRESIDING OFFICER. The Senator from New Mexico is recognized.
  Mr. DOMENICI. Thank you, Mr. President. I thank the chairman.
  I say to Senator Bingaman that I would not rise in opposition to his 
amendment if it was not, as I view it, an implication that what I 
propose is going to hurt education.
  Since that is the case, I must tell the Senator that I think he is 
wrong. So I will proceed, as I must, to tell him what we did with 
education and what we can do with education based upon the money that 
is left over after the tax cut is effective.
  I do not know where the chart comes from that the Senator has up 
there. But I would assume it comes from somebody who assumes there is 
no money left over after the tax cut and, therefore, everything will be 
reduced, and over the next 10 years there will be no inflation added to 
any function. If that is the case, it is wrong.
  But if Senators want to look at the budget resolution we prepared, we 
expect they will stand up and say no, there is not enough money in this 
budget for education.
  What we did in that budget resolution, which is not binding--just 
like his resolution here is not binding; it does nothing for 
education--it is a wish list and cuts taxes. It reduces the tax cuts 
substantially. It would be nice if the Senator would tell us which $120 
billion and some he would take out of the tax cut.
  But having said that, let me first start by saying if you want to 
look at a budget resolution that passed the Senate which had $181 
billion in money over a baseline that was frozen for the next decade on 
the discretionary side, and ask what did it provide for education--an 
assumption just like the assumptions of the Senator from New Mexico--I 
would like to tell you what it does.
  In 1999, that function on education had $47 billion in it. By the 
year 2009, it has $60 billion in it. It specifically provided that 
education initiatives receive an added amount of $37 billion over 5 
years, $101 billion over 10 years.
  The Senator from New Mexico, my colleague and my friend, could ask, 
how are you sure that will happen? I am not. Neither am I certain that 
the Senator's sense-of-the-Senate resolution is anything but a wish 
list. How do we know it would happen? If we reduce taxes by the amount 
suggested, there is absolutely nothing to indicate there would be more 
added to education in the appropriations process. It is what the 
Senator thinks they should add; therefore, it is called a sense of the 
Senate.
  Over the decade under the budget resolution adopted, and I am not 
certain it will be implemented because it is not binding, we actually 
vote every year on the appropriated accounts. So all Members know, the 
education function in that budget resolution has $570 billion, an 
average of $57 billion a year, while we are spending $47 billion this 
year.
  I don't know where the other graphs came from that are talking about 
what we are doing to education. Those numbers are from the budget 
resolution.
  Nobody knows at what level education will be funded on the 
discretionary side of the budget of the United States of America 
budget. They will not know any more if Senator Bingaman's sense of the 
Senate passes. They will say we should not cut taxes by $120 billion, 
because if we don't, we might put it in education.
  Having said that, I merely want to look at the budget of the United 
States and the surplus that is created and then start with a freeze on 
everything, including education. And it may be the Senator is starting 
with a freeze and assuming it continues. How much is the surplus? It is 
$3.371 trillion. What do you do with it? We put $1.9 trillion in the 
trust fund for Social Security because it is there. We then say: Let's 
cut taxes in a gradual way over a decade at $792 billion. Then we ask 
how much is left over to spend on discretionary programs and Medicare. 
It turns out to be $505 billion.
  I could not believe under any circumstance that the Congress of the 
United States, be it Republican, Democrat, or whatever, would take that 
$505 billion and spend it on education. I cannot believe that. There 
may be a difference of opinion as to where it is to be spent, but there 
is a whopping lot of money for high-priority items.
  I don't know where the Senator got his numbers. If the numbers were 
legitimate, I would be supporting him. I believe we ought to establish 
a priority for education. If I thought we would

[[Page 18428]]

not have enough money for the education function to be appropriated by 
the appropriators, I might even be saying don't cut taxes that much, 
but I don't think that is the case. I don't think we need to do that. 
There will be money around for education. It will grow dramatically 
because it is a high-priority item, and there is $505 billion over a 
freeze to be allocated for discretionary programs, and somewhere around 
70, 80, or 90 for a Medicare prescription drug reform fix.
  I regret doing this, but I do not think I want New Mexicans to think 
what I propose will destroy education in the manner that this sense of 
the Senate implies. If it did not imply that, I would be for it and I 
would not be speaking.
  Mr. BINGAMAN. Mr. President, I yield myself 4 minutes off of the 
amendment.
  I want to respond to my colleague from New Mexico and indicate I do 
not in any way question his motives, and I certainly do not question 
his understanding of the budget. He is an expert in that. He has 
demonstrated that repeatedly since I have been in the Senate.
  I do think there is a genuine misunderstanding or disagreement about 
what we are talking about in the size of this surplus. I hear my 
colleague say we have, over the next 10 years, $33.371 billion in 
surplus that we have to spend or we have to use for tax reductions. 
That is substantially more than the CBO indicated we had. They said we 
had $2.896 billion. There is a substantial difference there. Taking the 
figure I was given, $2.896 billion, I understand we are using by far 
the largest part of that for this proposed tax cut.
  My colleague says that is not the case, that there is still $505 
billion remaining for Medicare and discretionary programs. I am just 
not clear in my mind where that money comes from. The figures I have 
for the total of the surplus do not allow for that money to be 
available for discretionary programs and Medicare. The figures I have 
received lead me to conclude that there will be major cuts in 
discretionary programs if we are going to adopt a tax cut of this size. 
If there are cuts in discretionary programs, some of those, of course, 
will be defense.
  I believe, based on the time I have spent in the Senate, we will not 
cut defense. I do not support the cuts in defense, and I do not believe 
my colleagues do either. I think we will fund defense and we will fund 
increases in defense in the next 10 years in many respects. That means 
the discretionary domestic spending such as education has to be cut 
even more. That is the concern that caused me to bring this amendment 
to the floor.
  The point was made that I have just put together a sense of the 
Senate which is a wish list. That is in many ways true. I have said the 
Senate should go on record as not wanting to cut the current level of 
funding for education in this bill, and to the extent we need to reduce 
the tax cut in order to ensure we do not cut current levels of funding 
for education, then reduce the tax cut to that extent.
  As I understand the figures, that means a $132 billion reduction in 
the tax cut. That is what I have urged Senators to support.
  Mr. BINGAMAN. I yield 5 minutes to the Senator from Virginia.
  Mr. ROBB. Mr. President, first of all let me thank my distinguished 
colleague from New Mexico for his continued leadership on virtually 
every aspect of education and our public responsibility in that 
particular area. I am pleased to join him on this amendment, and would 
say that I agree completely with my colleague from New Mexico about the 
need to make critical investments in our future. Not only does this tax 
bill fail to ensure the solvency of Social Security and Medicare, it 
provides an inadequate level of investment in education.
  My own State of Virginia has long been proud of its history and 
support of education. You may recall it was a Virginian who is widely 
acknowledged as ``the father of free public schools in America.'' 
Thomas Jefferson's vision to provide a free public education to all 
citizens was designed to preserve a fledgling democracy. But at the 
dawn of a new millennium, a strong and vibrant system of public 
education has many other benefits as well.
  Education breeds opportunity. And it is opportunity that knows no 
class, no gender, no race, no income level, no street address. Because 
when we invest in education, we invest in our people, we invest in the 
economic strength of our communities, and we invest in the 
international competitiveness of our Nation.
  That is why I have always believed that all three levels of 
Government--local, state, and federal--should work together in the area 
of education. That is why I believe that the Federal Government can be 
a constructive partner in education. And that's why I believe this tax 
bill falls short of our responsibility to our nation's children and to 
our nation's future competitiveness. The stakes for our country, and 
all who live here, couldn't be greater.
  Despite these stakes, the tax bill we debate today still falls short 
in its investment in education. In addition to the concerns expressed 
by my friend from New Mexico, I am particularly concerned about the 
inadequate level of school construction assistance provided in this 
bill.
  Mr. President, we know that 14 million children attend schools in 
need of extensive repair or, in some cases, complete replacement. We 
know that 7 million attend schools with safety code violations. And we 
know there are thousands and thousands of trailers in use because of 
school overcrowding--over 3,000 in Virginia alone. Loudon County, 
Virginia, Mr. President will need to build 22 new schools to 
accommodate its enormous growth in student population. My home county 
of Fairfax, VA has capital needs of $1.2 billion over the next ten 
years.
  But it isn't just a Virginia phenomenon; it's a national crisis.
  And we have known about this crisis since 1995, when the GAO informed 
us that our national school repair needs total some $112 billion. We 
have known that we need to build and repair over 6,000 schools across 
the Nation. And yet we are considering a bill today which builds and 
renovates only 200 schools.
  Mr. President, later in our debate, I will offer a motion to recommit 
the tax bill to the Finance Committee to force us to take another look 
at our priorities. I have recently introduced legislation which 
combines various bipartisan school construction proposals, and which I 
hope brings us one step closer to the compromise I know we can reach on 
this issue. I look forward to that debate, but for now I will simply 
say that Senator Bingaman is right: we need to pay more than lip 
service to our most critical societal investment--education. I thank 
the chair and I yield back any time remaining to the Senator from New 
Mexico.
  Mr. BINGAMAN. Mr. President, how much time remains?
  The PRESIDING OFFICER. There remains 5 minutes.
  Mr. BINGAMAN. I yield the remainder of our time to the Senator from 
New Jersey.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. LAUTENBERG. Mr. President, I thank my colleague from the class of 
1982. You are looking at the entire class here, Senator Bingaman and 
me. The Senator and I are the remainder of the class of 1982. We 
thought we were a small class then, but we have gotten smaller and we 
have hung on tenaciously.
  One of the things we agree on is the need to provide the kinds of 
services to our country that we are pledged to, not only morally but by 
law, by laws established over a period of many years, including such 
services as our commitments to the veterans who fought to keep this 
country free, for the schoolchildren who need to get a start in life 
and get on with their own opportunities.
  What we see today in the discussion we have just had, frankly, comes 
as a surprise to me, a surprise because I serve on the Budget Committee 
as the senior Democrat. I looked at the figures. We worked together to 
try to establish a plausible base, a parameter within which to work. 
But what I have heard is we just discovered gold. We

[[Page 18429]]

found $500 billion just laying around. No one else knew it, but it was 
found.
  Since arithmetic is a relatively pure science and everything has to 
add up, one scratches one's head and says: How did we find roughly $500 
billion more? The distinguished chairman, a very wise Member of the 
Senate, an outstanding expert on the budget, found $500 billion that 
could be used to support the tax cut that is proposed at some $790 
billion. Then there are interest costs on that.
  What I come up with, what the numbers say, is that we wind up with a 
budget surplus of $32 billion--$32 billion. That is at the end of 10 
years--$32 billion. The elderly, the baby boomers who are going to be 
retiring at that time, ought to rest easy because they have $32 billion 
that is going to go into helping Social Security stay a little more 
solvent--$32 billion that can be used for other purposes.
  Mr. SARBANES. Will the Senator yield for a question?
  Mr. LAUTENBERG. I will be happy to yield for a question.
  Mr. SARBANES. I would like to ask the Senator about his chart about 
the GOP baseline, if I might.
  Mr. LAUTENBERG. Please.
  Mr. SARBANES. As I understand it, what the Republicans are now 
proposing represents a cut of over $1 trillion below--below what? 
Current spending levels?
  Mr. LAUTENBERG. The baseline that was originally proposed by CBO was 
to have the caps in place until the year 2002, 3 years hence. Then it 
was assumed by the presentations that we have seen and that are here on 
the chart, that now the baseline will decline by virtue of no inflation 
allowable for those years after it--none, zero.
  Mr. SARBANES. None whatever?
  Mr. LAUTENBERG. That is right. If you do that, you take over $400 
billion out of reality, out of the need to provide programs--$419 
billion below CBO's capped baseline.
  If you want to play with a figment of imagination, you can imagine 
maybe it will be less than that. Maybe we will be able to cut out the 
programs for veterans and the other programs that are necessary, just 
cut them and play pretend.
  Mr. SARBANES. As I understand it, it would take a cut of about 40 to 
50 percent in the program levels in order to reach that figure on the 
GOP baseline.
  Mr. LAUTENBERG. The Senator is absolutely right. It would take a cut 
of 50 percent. So that is how we get there. It is a poor way to do 
business.
  The PRESIDING OFFICER. The time of the Senator has expired. Who 
yields time?
  Mr. THOMPSON. With the committee chairman's approval, I yield myself 
10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. THOMPSON. Mr. President, on the amendment there are certain basic 
things we can all agree with about education. I think most of us 
realize the economic prosperity we have today has to do with our 
productivity. Our productivity, in turn, has to do in large part with 
the technological advances we have had, and that, in turn, is based 
upon a well-qualified workforce. The needs for that kind of workforce, 
that kind of background and training in the future, are going to be 
even greater because we are exploding with information in an 
information age for sure.
  There is no question about that. Our economic stability and security 
in the long term in large part is going to depend on the education 
system we have. That, of course, does not necessarily equate to Federal 
spending on education. Unfortunately, for some years now we have seen 
that we have almost an inverse relationship between the amount of 
Federal money spent on education and the quality of education we seem 
to be getting. Nonetheless, we all agree there is a part of this effort 
that should fall on our shoulders. This amendment suggests our budget 
does not address this education problem sufficiently.
  I think it has been a good discussion. I think it is one we ought to 
have. Every time I begin thinking we can have good discussion about 
this, I pick up something, such as the Daily Report for Executives of 
July 29 that is entitled, ``GOP Tax Plan Would Hurt Schools, President 
And Administration Aides Say.''

       Clinton told representatives of Boys and Girls Nation at 
     the White House that the Republican tax plan would eliminate 
     funds to help 480,000 children learn to read.

  On and on for other things. I know when I came to Washington, one of 
the main things I wanted to do was keep children from reading. We spend 
a lot of time, we stay up late at night, figuring out how we can keep 
kids from learning to read. The President is just verifying this with 
these young people.
  I hope the President, as badly as he is misleading them, has more 
credibility with the young people of this Nation than I think he has.
  Now we hear about cuts. We have been hearing about cuts of 30 
percent, cuts of 40 percent, and now cuts of 50 percent. People must 
wonder what is going on. Senator Domenici says that is not accurate. He 
points out that although we have a baseline freeze after the spending 
caps are lifted, there is an additional $505 billion in our budget 
proposal that can be used for whatever discretionary spending this 
President and this Congress decide they want to spend it on.
  How do we come up with these cuts? It is a Washington, DC, cut. A 
Washington, DC, cut is when you project out what you want spending to 
be, and then any spending that is less than that constitutes a cut. It 
is not a real cut. It is an increase, but it is less than what the 
projection would be.
  If you are going by that kind of rationale, then the President is 
proposing cuts up to 26 percent, if you figure in his Social Security 
plan, because he does not really keep up with the projections that are 
being argued.
  Go back to 1991 and project increases from 1991 up to today. Look and 
see what that is. It has been about 4.2 percent during that period of 
time. What the other side is doing is projecting that out ad infinitum. 
If we cut back any of those programs, even though the dollar is an 
increase, it is less than what they projected it ought to be, so that 
constitutes a cut.
  The fact is, if we did what our colleagues on the other side suggest, 
we would lock in basically the projected increases we would have--
inflation plus--we would lock those in, basically making them, I 
suppose, mandatory programs instead of discretionary programs. We would 
not do what Congress is supposed to do, and that is sit down and decide 
what our priorities are, what programs should be cut, and what programs 
should not be cut.
  Obviously, many of us think some programs should be increased. We are 
hearing a lot now about our hospital programs, our children's 
hospitals, veterans, certainly military in some respects. Certainly, 
there are going to have to be some increases as we go along, but I 
think the primary point I want to make is that there are also going to 
have to be some decreases. There are going to have to be some cuts.
  Those are the kinds of things we are going to have to decide. We 
cannot decide here in advance, because some projection is not reached, 
that we are going to cut a particular program to keep kids from 
reading--pick your own favorite program, the worst thing you can come 
up with, and say that particular program is going to be cut. That is 
not true. That is not accurate. That does not represent what the 
situation is.
  Again, we have to decide what is going to be cut. We have to decide 
what is going to be increased, taking a baseline, taking a freeze, not 
including inflation, and adding $505 billion to it over 10 years.
  Why do I say that some things ought to be cut? One of the things--I 
guess the primary thing--we are supposed to be doing in the 
Governmental Affairs Committee is seeing how our Government is 
operating. We spend an awful lot of time in oversight in that committee 
which I chair. We see agencies, Departments of Government, year after 
year come before us and they have been delineated by the GAO as prime 
objects of waste, fraud, and abuse. They are on

[[Page 18430]]

the list year after year, but we keep funding these programs. We keep 
increasing the funding for these programs, whether they are working or 
not. There are billions of dollars of scarce resources diverted from 
their intended purposes many times in waste, fraud, and abuse.
  The President in his budget does not find one agency, that I can 
determine, that he believes could be operated more efficiently or in 
which money could be spent better. All of these programs deserve an 
increase by definition. They are Federal Government programs. They 
deserve an increase. If you want to reduce funding for a Department or 
an agency, then you can pick the program on the other side they say you 
are cutting.
  The honest truth is that no one knows really how much the Federal 
Government loses annually cumulatively to waste, fraud, abuse, and 
error. One reason is that most agencies do not keep track of such 
losses. We try to keep track for them, as best we can.
  Here are a few things we have learned: The Health Care Financing 
Administration made erroneous Medicare payments that siphoned off 
between 7 and 14 percent of the overall Medicare budget, $12 billion to 
$24 billion, depending on which year you are talking about. In 1997, it 
was $24 billion. In 1998, they improved; it was only $12 billion.
  The Supplemental Security Income Program--cumulative overpayments of 
$3.3 billion, including newly detected overpayments of $1.2 billion 
just last year.
  The Department of Housing and Urban Development made overpayments in 
its rent subsidy program of almost $1 billion.
  The Department of Agriculture made overpayments in its Food Stamp 
Program that amounted to about $1 billion, or 5 percent of the total 
program.
  I have others here. The Federal tax debt. We have Federal tax debt 
and nontax debt delinquencies, money owed to the Government, not 
collected, of $150 billion. I have other items. I mentioned the 
Medicare payments.
  The Department of Energy: Through 1980 to 1996, the Department of 
Energy terminated before completion 31 major systems acquisition 
projects after expenditures of over $10 billion. They spent $10 billion 
and then terminated the projects; $10 billion was essentially wasted.
  Defense contract overpayments: No one knows how much the Government 
overpays each year in contracts for goods and services. However, during 
the recent 5-year period, defense contractors returned $4.6 billion in 
overpayments to the Department of Defense.
  Earned income tax credit, $4.4 billion.
  I mentioned SSI.
  Student loan defaults, $3.3 billion.
  Food stamp overpayments, rent subsidy.
  A total of $196 billion.
  I yield myself another 5 minutes.
  Mr. President, $196 billion, and that is just on the waste, fraud, 
and abuse side. This is what is going on with regard to our Government 
now and these agencies across our Government.
  Look at the cross-cutting and the duplication, the hundreds of 
programs that are all designed to do the same thing. The left hand of 
Government does not know what the right hand is doing. No one is taking 
action to sort through this morass to find out which programs are 
working and are not. They keep being refunded every year at the full 
amount or an increased amount.
  According to the GAO, in program area after program area, unfocused 
and uncoordinated cross-cutting programs waste scarce funds, confuse 
and frustrate taxpayers and other program customers, and limit overall 
program effectiveness.
  Last year Congress tried to address the number of education programs. 
We are all for education. We are all for spending education money 
wisely. We have $505 billion of discretionary spending set aside, some 
of which we can spend on education. But we found out there were 39 
Federal agencies running more than 760 education programs at a cost of 
$100 billion a year. Is that effective use of taxpayers' money?
  One example is homelessness where 50 Federal programs, run by eight 
agencies, seek to provide services to homeless people. We have eight 
agencies--the Departments of Agriculture, Health and Human Services, 
Housing, Urban Development, Education, Labor, Veterans Affairs--and two 
independent agencies--FEMA and the Social Security Administration--all 
running these programs, overlapping, duplicating with $1.2 billion in 
obligated funds addressing the homeless. GAO found these programs 
provide many of the same services, such as housing, health care, job 
training, and transportation, and more than 20 programs operated by 
four different agencies, offsetting housing, such as emergency 
shelters, transitional housing, and other housing assistance.
  In another report, the GAO identified 26 Federal grants at a cost of 
approximately $28 million that exist to help evaluate the effectiveness 
of various school-based violence programs. I know that is something 
that the Presiding Officer and I have talked about many times, as to 
how we get our arms around this. But $28 million to evaluate these 
violence programs in schools, to see which of them are doing any good? 
At least three Federal Departments--Education, Health and Human 
Services, and Justice --support school-based violence prevention 
research and programs.
  However, GAO found that these individual Departments have not mounted 
a comprehensive strategy for addressing school violence. They are just 
all kind of out there doing their own thing--getting some money, coming 
to Congress, saying: My goodness, you can't cut back on this. You have 
to give us some money. We fund these various programs that are all out 
there doing their own things--uncoordinated--obviously, wasting a good 
deal of money.
  It is not that you do not want the effort made; it is that you want 
to have the effort made with a little common sense and not take 
people's hard-earned money and throw it down a rat hole.
  We have a fragmented Federal approach to ensure the safety and 
quality of the Nation's food. As many as 12 different agencies 
administer over 35 inefficient programs, putting the American public at 
greater danger of foodborne illnesses. But there have been virtually no 
decreases for nonmilitary discretionary programs in the President's 
budget.
  This is supposed to be part of our job. That is why we passed the 
Performance and Results Act. These agencies are now supposed to come to 
us in Congress and tell us of the effectiveness of their programs. I 
assume that because we want that information, we want to do something 
with it, and what we want to do with that information is not use it to 
continue to fund these Departments that are wasting money and 
permitting fraud to be perpetrated upon us to the tune of billions and 
billions of dollars.
  Some of these programs are mandatory spending programs. Some of them 
are discretionary spending programs. But it is all money that would 
have been in those Departments had it not been siphoned off, had it not 
been stolen, had it not been wasted. It would have been reflected in 
the budgetary requests when they came before us. The requests would be 
less, and we would be giving them less money if they were operating 
halfway the way they are supposed to.
  My point is, again, this idea that our friends on the other side of 
the aisle have, that they want to have this projected rate of increase 
that we can't deviate from at all, is a notion that would go against 
every basic precept of efficiency and the proper functioning of 
Government.
  I yield myself another 3 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. THOMPSON. We need to, as we go along, take that $505 billion that 
our budget sets aside for these programs and have every one of them 
come up here and justify themselves. Some of them need increases. Some 
of them need cuts. In my opinion, some of them need total elimination, 
and I make no apologies for that.

[[Page 18431]]

  But the idea that we are cutting this, and we are cutting that, and 
we are going to keep people from reading, the President of the United 
States telling these young boys and girls that we are going to cut 
480,000 children from learning to read, that is kind of a new low. We 
do not know really what to do any more with this stuff. The first thing 
you do is get kind of angry, and then you are just kind of sad, shaking 
your head, that that sort of stuff is coming out of the White House.
  So let's get back to the facts. Let's get back to reality. We can 
have a good debate as to how much money we ought to spend on these 
programs. That is what we ought to do. But let's not try to convince 
the American people that we have made a determination that somewhere in 
our budget we are cutting kids off from learning to read or that we are 
doing any of these other things--any of these other scare tactics that 
are always used by people who think that the American people are not 
quite as smart as they really are.
  I yield the floor.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. Who yields time?
  Several Senators addressed the Chair.
  Mr. ROTH. I yield 10 minutes to the Senator from Pennsylvania.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SANTORUM. I thank the Chair and thank the chairman for yielding 
me time.
  I rise to talk about two amendments--not the Bingaman amendment--two 
amendments that I have added to the list of 100-some amendments. I hope 
that we can accept one of them. We are working very hard to get that 
done. I have agreed to enter into a colloquy with the chairman on 
another one. I would hope that we will work in conference.


                   The American Community Renewal Act

  The amendment that I have agreed to enter into a colloquy with the 
Senator from Delaware on is the American Community Renewal Act. The 
American Community Renewal Act is part of the House bill. It was one of 
the centerpieces of the House bill and one that I very strongly support 
as chairman of the Renewal Alliance, which is a group of Senators and 
Congressmen who have been advocating nongovernmental solutions to the 
problems that face our inner cities and impoverished rural areas.
  It is important for us, when we pass a tax bill that provides tax 
relief to taxpayers, as we should, that we look to those who do not pay 
taxes and see what we can do to help lift them into the sometimes 
beleaguered status of taxpayers.
  It is important for us to be able to reach down into those 
communities that are struggling. I have many of them in my State. We 
work very hard in communities, from Philadelphia to smaller towns like 
Chester and McKeesport, and work with community groups, nonprofits that 
are out there trying to make a difference, working with the local 
officials in trying to provide economic opportunity, as well as 
cultural renewal for the communities that are in blight.
  The American Community Renewal Act, I believe, is the right message 
for those communities, is the right direction, and that is through 
empowerment and through working with the local faith-based and local 
community development organizations, helping them pull themselves out 
of the difficult situations they find themselves in.
  The American Community Renewal Act has two parts. No. 1, it provides 
for a charitable tax credit. This is a State-based tax credit. It 
allows for Federal block grant funds to be used by States to provide a 
tax credit to individual taxpayers who give money to nonprofits that 
spend over 75 percent of their money helping low-income individuals. So 
this is a way for the Government, instead of spending more money on 
Federal or State programs, to take the money that the Federal 
Government gives to run Federal programs and say: Let's give it 
directly, unaltered, untainted, directly to those organizations--many 
of them faith-based--that really are out there on the front line, 
compassionate organizations that are out there across the table from 
people who are in need, people who have problems.
  They are not behind a bulletproof glass at a welfare office passing 
out checks if you have the right number on your card. These are people 
who are in the trenches who are making a difference, who are 
transforming lives every single day, and doing it not because they get 
paid to do it or because there is a Federal law they have to do it; 
they do it because they love their neighbor.
  Those organizations have been lifted up recently by the Vice 
President, by Governor George Bush, and many others running for 
President. They are lifted up because they found that--you know what?--
faith works. There is a very utilitarian reason to do this--it works 
best; it is cheapest--but that is not the best reason. The best reason 
to do this is because it transforms lives. It does not just give people 
a better job or get them off drugs. It transforms their spirit, which 
is the best thing needed in America's poorest communities.
  What we do with the charitable tax credit is, I believe, the most 
transformational thing we can do in this tax bill.
  The second part of the American Community Renewal Act targets not the 
soul but the economy. How do we create jobs so when we transform people 
they can get into productive work, not taking a bus out to the suburbs 
to work in a mall, but transform their own communities with home 
ownership and economic opportunity and entrepreneurial investment.
  We provide for 100 renewal communities, targeted with progrowth 
incentives, tax benefits, regulatory relief, savings accounts, 
brownfield cleanups, a comprehensive approach to inner cities. And at 
least 20 percent of these communities have to be in rural areas. This 
is in the House bill. This is where the House stepped up and said, yes, 
we are for tax relief. We have overpaid, but we will not leave any 
American behind. We are going to reach down and make sure every 
American has the opportunity to be a taxpayer, to contribute to the 
economic future of this country.
  A renewal community must do some things. It is not just a handout to 
the community. They have to commit to reduce local tax rates and reduce 
fees within the zones. So yes, we are going to provide some incentives, 
but they have to do the same. They have to partner with us. The States 
have to eliminate State and local sales taxes, waive local and State 
occupational licensing regulations and other barriers to entry for 
entrepreneurs in these poor communities where it is so hard.
  It is a lot harder to put up a store front in an area where crime is 
high, where the services are not as good, than it to set up one in the 
suburbs. It is a lot more expensive. It is harder to get employees, 
harder to maintain security, harder to get people to come into your 
establishment. So they need some help. This is the kind of help we want 
to partner with. We will provide some incentives, the locals, the 
State. It is a partnership. Let's really work together to make this 
happen.
  I fervently hope when we bring this bill out of conference that the 
American Community Renewal Act will be a part of that so we show, as I 
believe this bill does, show that we care about all Americans in 
providing relief, yes, tax relief, but relief from the difficult times 
that many Americans are going through in our inner cities and poor 
rural areas.
  The second bill I am going to be talking about, which we have 
introduced and I hope we can get adopted, is a very simple provision.
  Before I start, in this bill--I congratulate the chairman--is a 
raising of the low-income housing tax credit allocation. The current 
cap, $1.25 per capita per State, was established in 1986 and has never 
been raised. Due to inflation, credits under the current allocation 
have lost about 50 percent of their value. The chairman's bill raises 
the allocation to $1.75 per capita over a 5-year period. The low-income 
housing tax credit is the largest and, I think,

[[Page 18432]]

most efficient housing program because it marries public and private 
resources of production in rehab of affordable housing, rental housing 
that we have in America. It is a tremendous success.
  My amendment to the chairman's bill is based on legislation which 
raises the cap and indexes it for inflation. This legislation already 
has 70 cosponsors in the Senate. The only piece left out of the 
chaiman's bill is an indexing of that per capita allocation from the 
year 2006 on. That costs a whopping $43 million, not a big ticket item. 
And frankly, we pay for it. In fact, as the chairman will be delighted, 
we more than pay for it in the amendment that we have. So there is 
extra money around for other things that may be done. We think this is 
a high priority.
  We think, again, we have to provide affordable housing. This is a 
program that works. This is a program that has bipartisan support and 
something that can say to people, as we have in this bill already, say 
to people who may not be big taxpayers and get big tax relief that we 
are going to provide some relief in the form of better affordable 
housing, more affordable housing for those who may not be taxpayers now 
but hopefully, through the efforts here in reducing taxes, getting this 
economy--not getting it but continuing this economy to grow in the 
future, we will participate in that.
  This is one of those step-ups, by providing quality, affordable 
private housing, rental housing, which has, again, been an incredibly 
successful program.
  I hope, again, that we can include the amendment on the low-income 
housing tax credit in this bill and go to conference with that here in 
the Senate bill. Secondly, I implore the chairman that when we get to 
conference to include the American Community Renewal Act to make sure 
that every American has the opportunity to rise.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. BAUCUS. Mr. President, I yield 10 minutes off the bill to the 
Senator from New Jersey.
  The PRESIDING OFFICER. The Senator from New Jersey.
  Mr. LAUTENBERG. I thank my friend and colleague from Montana.
  Mr. President, tomorrow I will be offering an amendment on behalf of 
myself and Senator Feingold. This amendment is very simple. It directs 
the Finance Committee to change the bill so that it does not raid 
Social Security surpluses in any year to pay for tax breaks.
  The motion stands for a very simple proposition. Social Security 
surpluses should be used for Social Security, not for broad-scale tax 
breaks that primarily benefit special interests and wealthy 
individuals, not for tax breaks that disproportionately benefit the 
wealthy, not for anything that would make it more difficult for baby 
boomers and other Americans to enjoy a secure retirement.
  This ought not to be a controversial proposition. After all, both 
parties have been arguing along the same lines for most of this year. 
Democrats created a lockbox to prevent Social Security surpluses from 
being used for other purposes and to protect Medicare, and the 
Republicans vowed to support that concept. But actually, the lockbox 
proposal that was introduced by the Republicans has a huge loophole and 
does nothing for Medicare.
  Medicare is perhaps the most important program that exists in this 
country. Medicare is for the elderly. Medicare is the one program that 
people have to have standing by in case an illness strikes, which is an 
occurrence that is not infrequent when one reaches 65 or retirement 
age. Medicare can prevent a catastrophic illness, but also can prevent 
a catastrophic financial problem. So we support extending Medicare for 
as long as we possibly can, and the projection now is that though 
Medicare would be insolvent in 2015, we see an opportunity to extend it 
to 2027.
  There did seem to be broad agreement from both parties that Social 
Security surpluses should not be touched for any other purpose, that 
they should be used only to reduce publicly held debt. I was surprised, 
to put it mildly, to discover that the Republican tax bill before us 
actually spends Social Security surpluses. Deny it they might--and one 
need not be a mathematician; the arithmetic is pretty simple to see--
but, in fact, the bill before us spends Social Security surpluses in 
each of the second 5 years after the bill's enactment. It starts in 
2005.
  This chart explains the problems. Consider, for example, what happens 
beginning in 2005 under this legislation. The non-Social Security 
surplus that year will be $88.6 billion. But this bill, the way it is 
laid out, would cost $89.9 billion. In other words, this bill would use 
$1.3 billion in Social Security surpluses that very year, 2005, not a 
long way away. But the damage doesn't stop there.
  This legislation would increase debt, and that would lead to higher 
interest costs. In 2005 alone, these additional interest costs would 
eat up another $10.9 billion of Social Security surpluses. So the raid 
on Social Security that year would equal $12.3 billion. This is after 
the promise that Social Security is sacred: Touch not a hair on that 
Social Security reserve that we are saving for the elderly, which we 
promised them would be theirs. When we finally have a chance to 
guarantee its solvency, that promise, frankly, was an empty promise.
  Look at the numbers. If you consider both the direct revenue losses 
and the additional interest costs, this bill would raid Social Security 
surpluses in each of the second 5 years after enactment. We are talking 
about 10 years from now. The raid in 2006 would take $5.7 billion. That 
would increase to $10.2 billion in 2007, to $24 billion in 2008, and 
$23.4 billion in the year 2009.
  This is inconsistent with the Republicans' own lockbox. It would 
violate a principle that is meant to protect all Americans who are 
depending on Social Security for their retirement. These are people who 
spend their lives working hard, playing by the rules, contributing 
their FICA taxes to the Social Security trust fund. In fact, millions 
of seniors depend on Social Security just to make ends meet, no luxury 
included there. Many of these people have high medical expenses. It is 
a natural phenomenon. Thank goodness we are living longer, but in that 
living illnesses do occur. Some have trouble getting around; they are 
physically impaired. Many are really struggling. It is Social Security 
that keeps them out of poverty. For these people, saving Social 
Security is not just an abstract principle, a slogan; it is critical to 
their very existence.
  That is important to remember. It is important to remember that the 
number of Social Security beneficiaries will grow by 37 percent between 
now and 2015. By 2014, Social Security taxes will no longer be 
sufficient to cover monthly expenses. So we need to prepare. At a 
minimum, that means not using Social Security surpluses for anything 
else.
  I know how my friends on the Republican side will react to this. When 
confronted with these numbers, they will have to admit that this bill 
spends Social Security surpluses. But that is not really a problem, 
they will say, because years and years down the road Congress will 
somehow or other cut programs such as education and the environment to 
make up the difference.
  That is an empty promise, an empty lockbox, it is completely 
unenforceable, and it has zero credibility. Consider how deep these 
cuts would have to be. Let's assume the Republican Congress funds 
defense programs only at the levels proposed by President Clinton. 
After 10 years, domestic needs--everything from education, to 
environmental protection, to the FBI--would have to be cut by roughly 
40 percent. Is that credible? A 40-percent cut in student aid? A 40-
percent cut in health research? A 40-percent cut in veterans' programs? 
That always gets to me because the promises made when they are 
recruiting, when people sign up, are that we will make sure you have 
medical care through the rest of your life--except they cut the 
funding.
  There may be a few Republicans who would support cuts such as that. 
But there is no way cuts that size would ever win a majority. It would 
be foolish to assume otherwise.

[[Page 18433]]

  My motion is simple. It tells the Finance Committee to go back and 
fix this bill so that it doesn't use Social Security surpluses in any 
year, bring it back to the Senate within 3 days, and then let's 
consider it. I don't think it is asking much. It is not going to hurt 
anybody if the Senate waits another 3 days before resuming work on this 
bill. But lots of people will be hurt if the Senate abandons its 
principles and uses Social Security surpluses for tax breaks that 
disproportionately benefit the wealthy and special interests. That 
would be a serious mistake.
  I urge my colleagues to support this motion when it is in front of 
you. Let's fix this bill and protect Social Security surpluses. Let's 
keep the promise we made to the baby boomers, those who will be 
retiring, that Social Security will be extended as far as we are 
physically able to do so.
  I yield the floor.
  Mr. ROTH. Mr. President, I yield the remaining 6 minutes we have on 
the amendment to the Senator from New Mexico.
  Mr. DOMENICI. Mr. President, there won't be time tomorrow to say what 
I am saying tonight. That is why I came down. I congratulate the 
Senator from Delaware, Senator Roth, and the Finance Committee for a 
fine job.
  First of all, I am kind of infuriated, but I will keep my emotions 
down. The President of the United States has gone beyond what anybody 
would believe when today, in front of a bunch of young people, he as 
much as said the Republican plan will make sure you don't even learn 
how to read. That is disgraceful because the truth of the matter is, if 
the Congress wants to spend more money on education after this tax cut, 
there is plenty of money to do it. If the President is persuasive 
enough next year, he can get more money for education because there is 
more money to spend.
  The second thing is not at that level for me, but Senator Lautenberg 
is just flat wrong. Do you know who was spending the Social Security 
surplus? The President was. In fact, he even sent to us his first 
proposal and said, only save 62 percent of it, spend the rest of it. He 
said, we will save it over 15 years, so don't worry year by year about 
putting it in the trust fund. We challenged him on that. He came back 
in his midsession review and said: Republicans, you are right: Let's 
put 100 percent in. So we put 100 percent in the lockbox, into 
security. So I don't understand what Senator Lautenberg is talking 
about.
  Having said that, let me talk about this bill because it is a very 
masterful bill, considering where we are. First, there is no question 
that marriage, saving for retirement, and dying should not be taxable 
events as we enter the new century. If there is anything we have 
learned, it is that we need to enhance and praise marriage, not punish 
it. We need to encourage saving for retirement, and we should not tax 
the event of dying. Isn't it wonderful that we have fixed all of those 
to a great extent in this bill? What is the matter with that?
  Mr. President, that is what you are going to be vetoing when you veto 
this bill.
  Alternative minimum tax. That is, the alternative minimum tax should 
not turn the child care credit, education credit, HOPE education tax 
credit, and foster care credits into phantom tax relief, not worth the 
paper they were written on because an old alternative minimum tax, 
adopted during the oil boom, would make these credits unusable, so when 
you hear these funny words, ``Let's fix the alternative minimum tax,'' 
it is hundreds and hundreds of thousands of middle-income Americans who 
thought we gave them an education credit, who thought we gave them a 
child care credit, only to find that now the alternative minimum tax 
takes it away. That has been fixed.
  Taxes are too high if measured by what is needed to fund the 
Government. They are too high if measured historically. The average 
family is paying twice what they paid in 1985. The tax burden is 54 
percent heavier when measured from President Bill Clinton's first day 
in office to the end of 1999. He may take a lot of credit for other 
things, but that is a fact. Despite these record increases, the 
administration's 2000 budget proposes another $170 billion in new 
taxes. Unbelievable.
  Broad-based tax relief. The Senate bill starts off with broad-based 
relief, lowering the bottom brackets for everyone in our families 
across America, and then in the bill, after lowering the rate to 14, 
they raise the brackets by $10,000. That means that millions more 
Americans will be paying the lowest possible rate.
  This bill provides significant family relief, although not as much as 
my good friend from Texas would like on the marriage penalty.
  I ask our seniors across America, as the President tries to frighten 
them into thinking we are harming them on Medicare and Social Security 
when that is not the truth, wouldn't you like it if your sons and 
daughters who are paying a marriage penalty because they are married 
are treated like other citizens instead of punished? I believe senior 
citizens would be very grateful for that for their children--the 
millions across America.
  Child care: I think the seniors who they are trying to frighten to 
death because they want an issue and not a solution would be thrilled 
to know that Chairman Bill Roth and his Finance Committee made it 
easier for their grandchildren to be taken care of under child care and 
the enormous costs that it imposes on a family. We have made it more 
accessible, and we have made more advantageous tax laws.
  Their Tax Code is notorious for giving a tax break on the one hand 
and then taking it away on the other. That is the alternative minimum 
tax, and it works in that fashion. This bill that has been put before 
the Senate protects the child credit, and it protects education 
credits.
  Mr. President, and fellow Senators, there is much more that can be 
said about it. I suggest that this bill will do more for millions of 
Americans.
  Taxes are too high if measured by what is needed to fund government.
  Taxes are too high if measured by historical benchmarks. The average 
family is paying twice what they paid in 1985.
  The tax burden is 54 percent heavier when measured from President 
Clinton's first day in office to the end of 1999. Despite these record 
increases, the Administration's 2000 budget proposes another $170 
billion in new taxes.
  The Senate bill starts out with broad-based tax relief. Lowering the 
bottom bracket gives a tax cut to every taxpaying family. The bill 
lowers the rate to 14 percent. I would have liked to see it go even 
lower.
  The bill also widens the lowest bracket so that more people can earn 
more money without being forced into the 28 percent bracket. This 
change will return 4 million Americans to the lowest bracket. It will 
return 151,000 New Mexicans to the lowest bracket and at the same time 
another 83,000 New Mexicans will see their taxes cut.
  This bill also provides significant family tax relief.
  Saying ``I do'' at the altar has meant paying on average $1,400 more 
on April 15. Marriage shouldn't be a taxable event. This bill corrects 
this inequity for 19 million American families.
  As more and more women have entered the work force, one of the 
fastest growing family expenses is child care. In New Mexico, the 
annual cost can run from $3,133 to $5,200 per child. This bill 
increases the child care credit from 30 to 50 percent for families 
earning less than $30,000, and expands the eligibility for the credit 
to all families. With the credit increase and the eligibility 
expansion, as many as 68,000 New Mexico families will be eligible for 
either a bigger credit or first-time eligibility.
  The tax code is notorious for giving a tax break with one hand and 
taking it way in the other. The Alternative Minimum Tax, AMT, works in 
this fashion. This bill protects the child care credit, education 
credits, day care and other norefundable tax credits from being 
rendered unusable by the AMT. When the AMT was created in 1986, 140,000 
people had to pay it. But by 2008:
  There will be 40.6 million Families eligible for dependent child 
credits but 24.8 million of those families would receive zero or less 
than the full credit as a result of the AMT.

[[Page 18434]]

  There will be 49 million familes with nonrefundable credits--all 
credits except EITC--and 33.9 million of them will receive zero or less 
than the full credits as a result of the AMT.
  There will be 16 million families eligible for HOPE and lifetime 
learning credits, but 11.3 million would receive zero or less than the 
full credits as a result of the AMT.
  The bill recognizes that all family expenditures are not equal. This 
tax bill recognizes that education is important and provides $12 
billion over ten years in tax relief. The bill includes education 
savings accounts to help 14.3 million families. Seventy percent of 
these education tax benefits goes to families with incomes less than 
$75,000. It makes employer provided education assistance permanent. In 
this ever changing technology-driven world, it is essential that 
workers pursue life long learning and complete graduate degrees. The 
bill also makes it easier and cheaper for school construction. There 
are more than 1,700 schools in New Mexico that I hope will be helped by 
this initiative.
  In New Mexico there are 331,815 public school students. It would be 
wonderful if New Mexican--parents and grandparents started as soon as 
this bill is signed into law to open an account for each of these 
331,815 children. There would be no better investment in America's 
future and these education accounts should help families meet that 
goal.
  When it comes to health care, the Tax Code doesn't discriminate based 
upon who you are, but rather upon who you work for. Families shouldn't 
receive disparate tax treatment determined by who you work for. It 
isn't fair that one worker has health care purchased with pre-tax 
dollars; while the sole proprietor or the employee of a small business 
has to pay for health care with after-tax dollars.
  This bill provides 100 percent deductibility for health insurance for 
the self-employed. It also provides an above-the-line deduction that 
will phase in from 25 percent to 100 percent for every taxpaying 
American family. There are 43.3 million uninsured people in America, 
plus 10.2 million who have access to health insurance but decline to 
participate because of the high cost. This is a big problem in New 
Mexico. There are 340,000 uninsured New Mexicans where someone in the 
family works.
  The bill provides generational equity by providing a child care and a 
long term care credit. One in four families care for an elderly 
relative. This bill provides a tax credit and an extra exemption for 
the in home care giver.
  Expensing is the most efficient way of reducing the cost of capital 
for new investment. The bill provides $5,000 worth of new efficiency 
for every small business by increasing the amount that can be written 
off in the year the investment is made. A tax policy that allows 
capital investments to be deductible in the year they are made 
maximizes productivity, economic growth and job creation. When a 
company doesn't have to calculate depreciation it saves 43 hours a year 
in tax preparation. If we adopted a system of expensing we could save 
106 million hours a year in tax and recordkeeping. We would also lower 
the cost of capital by about one-third.
  This bill takes significant steps to reduce the estate and gift tax . 
The bill would lower the top rate to 50 percent, double the gift tax 
exclusion and get rid of the generation skipping transfer tax which can 
impose taxes as high as 80 percent when a gift is left to a grandchild.
  Milton Friedman said and I agree, ``The estate tax sends a bad 
message to savers, to wit: that it is o.k. to spend your money on wine, 
women and song, but don't try to save it for your kids. The moral 
absurdity of the tax is surpassed only by its economic irrationality.''
  The death tax is also one of the most unpopular taxes. While most 
Americans will never pay it, 70 percent believe it is one of the most 
unfair taxes.
  Its damage to the economy is worse than its unpopular reputation. The 
Tax Foundation found that today's estate tax rates (ranging from 18 to 
55 percent) have the same disincentive effect on entrepreneurs as 
doubling the current income tax rates. NFIB called it the ``greatest 
burden on our nation's most successful small businesses.''
  This bill makes a major stride. It makes the R&E credit permanent.
  With a $3.2 trillion surplus, the only responsible, legitimate course 
of action is a tax cut.
  Foolish are they who argue against tax cuts. They say to working 
families, ``I know what to do with your money better than you do. Give 
it to me so I can spend it for you.''
  The tax burden is high. People work until May 11, of each year to pay 
their taxes. It is the highest tax burden since WWII. People pay more 
in taxes than they spend on food, shelter and education.
  The Senate tax plan is an excellent plan that moves us toward lower, 
flatter, simplier taxes. It moves our tax system toward taxing income 
that is consumed and not income that is earned, saved and invested.
  It's the same old debate: one party wants to give the money to 
programs; we want to give the money to people.
  A government big enough to give you everything is a government that 
takes everything away with a big tax bite. I can't imagine anything 
more frightening to the average taxpayer than the sight of grand 
government schemer rushing towards a trillion dollar pile of extra tax 
payer dollars.
  Republicans say it is the best of times for a tax cut; the Democrats 
say it is the worst. Everyone quotes Chairman Greenspan. When Greenspan 
is deciphered the oracle is that a tax cut is better than spending all 
the money.
  If the surplus were a dollar 2 quarters would go for Social Security 
reform; one quarter for high priority spending --education, research, 
and defense.
  With the first three quarters we can save social security, reform 
medicare, provide adequate funding for domestic and defense spending 
and pay down the national the debt.
  The remaining quarter is for tax cuts.
  The Taxpayer Refund Act before the Senate is the best of plans. It 
lowers rates. It encourages savings. It eliminates the worst of a bad 
tax code by eliminating the marriage penalty; killing the death tax and 
ending the Alternative Minimum tax to rescue the full benefit of the 
child care, foster care, education, and other needed tax credits for 
families who otherwise unavoidably would end up in the AMT.
  If not tax cuts now, then when? The Democrats say--not ever.
  I say, If not tax cuts now, then what? The President's plan answers: 
Spend it all. Grow government!
  The Senate plan is synchronized to our business cycle and the 
condition of the economy. Congress' budget allocates 75 percent of the 
projected surpluses over the next 10 years for paying down the debt. 
This ensures our long-term fiscal virility.
  Even with our tax cut, our surpluses will climb steadily as a share 
of GDP and our national debt will be paid off--falling dramatically 
from 40 percent of GDP this year to only 12 percent by 2009. our plan 
lowers the level of debt more than the President's plan, keeps 
government from growing out of control and gives the American people 
some of their hard earned money back in the form or a well-thought out 
tax cut.
  The PRESIDING OFFICER. All time has expired.
  Mr. DOMENICI. I yield the floor.
  Mr. ROTH. Mr. President, I ask that we temporarily set aside the 
amendment before us.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROTH. Mr. President, we are now opening up to the next amendment.
  The PRESIDING OFFICER. The Senator from Texas.


                           Amendment No. 1472

    (Purpose: To provide for the relief of the marriage tax penalty 
           beginning in the year 2001 and for other purposes)

  Mrs. HUTCHISON. Mr. President, I call up amendment No. 1472.
  The PRESIDING OFFICER. The clerk will report.
  The legislative assistant read as follows:

       The Senator from Texas (Mrs. Hutchison), for herself, Mr. 
     Ashcroft, and Mr. Brownback, proposes an amendment numbered 
     1472.


[[Page 18435]]

  Mrs. HUTCHISON. Mr. President, I ask unanimous consent that reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       (1) On page 15, line 14, insert the following to paragraph 
     (c):
       (A) Twice the dollar amount in effect under subparagraph 
     (C) in the case of--
       (I) a joint return for married individuals not filing a 
     combined return under 6013A, or
       (ii) a surviving spouse (as defined in section 2(a)),
       On page 15, line 14, insert the following new paragraph (d) 
     and reorder the remaining paragraphs accordingly:
       (d) Phase-In.--In the case of taxable years before January 
     1, 2004--
       (A) paragraph (2)(A) shall be applied by substituting for 
     ``twice''--
       (I) ``1.778 times'' in the case of taxable years beginning 
     during 2001 and 2002
       (ii) ``1.889 times'' in the case of the taxable year 2003.
       (2) Alternative Minimum Tax: Modifications to Section 206:
       On page 32, line 3--
       Strike ``1998'' and insert ``2000.''
       On page 32, line 14--
       Strike ``2004'' and insert ``2006.''
       (3) AGI Limitations on Contributions to the Roth IRA: 
     Modification to Sections 302:
       On page 38, line 18, strike ``2000'' and insert ``2002''
       (4) Gift Tax Exclusion: Modification to Section 721:
       On page 236, line 11, strike all of Section 721 and insert 
     the following new section:

     ``SECTION 721. INCREASE IN ANNUAL GIFT EXCLUSION.

       (a) In General.--Section 2503 (b) (relating to exclusions 
     from gifts) is amended--
       (1) by striking ``$10,000'' and inserting ``$20,000.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to gifts made after December 31, 2004.''
       (5) Charitable Contributions for Individuals Who Do Not 
     Itemize: Modifications to Section 808
       On page 262, strike lines 15 through 17 and insert the 
     following new paragraph:
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001 and ending before January 1, 2004.
       (6) International Tax Provisions: Modifications to Sections 
     901 and 902:
       On page 275, line 12, strike ``2003'' and insert ``2004''.
       On page 278, line 13, strike ``2002'' and insert ``2004''.

  Mrs. HUTCHISON. Mr. President, this amendment is cosponsored by 
Senator Ashcroft of Missouri and Senator Brownback of Kansas.
  This is an amendment that, very simply, moves the marriage penalty 
provisions from taking effect in 2005 to giving an early effect 
starting in 2001. By beginning to phase in the doubling of the standard 
deduction, we give married couples relief from the marriage tax penalty 
that I have to say I think is the most unfair part of the Tax Code in 
the Internal Revenue Code that we have in our country.
  It isn't that anybody ever meant to have a marriage tax penalty. 
Congress didn't enact one. But it was a consequence that was unintended 
and unexpected when there were changes in the brackets in the Tax Code. 
We are going to correct it with this amendment. We are going to do it 
earlier than is in the bill.
  I think Senator Roth and Senator Moynihan did a terrific job. They 
had a very difficult time, particularly because they were quite 
responsible in saying we were not going to have tax cuts except as we 
have a surplus that comes from income tax deductions.
  The first decision the Finance Committee made was to say: We are 
setting aside Social Security. We are not going to touch it.
  If we were to spend the Social Security surplus, we could have a lot 
more tax cuts a lot faster. But they were right. They said: No, we are 
not going to do that. Social Security was off the table.
  We have smaller tax cuts in the early years because we are dealing 
with income tax deductions that should go back to the people who earned 
it. They sent too much to Washington and we want to return it to them.
  The question is, What is the most important of the tax cuts and the 
least we can give? Senator Ashcroft, Senator Brownback, and I believe 
the marriage tax penalty is the highest priority for relief.
  We are offering this amendment by delaying a few of the other tax 
cuts until later. We don't change any of the tax cuts in this bill. We 
do not eliminate any of them. I support all of them. But we say the 
highest priority is the marriage tax penalty relief and everything else 
can be delayed a little bit to give hard-working American families that 
relief.
  We are talking about a schoolteacher who makes $33,000 a year and a 
football coach who makes $41,000 a year. They are paying taxes, when 
they are single, in the 15-percent tax bracket. They get married. Guess 
what. They go into the 28-percent tax bracket at a time when they need 
their money the most.
  We have almost doubled their tax bracket just because they have 
gotten married. Not only that, we don't even give them double the 
standard deduction. Instead of $4,300, and $4,300 when they were both 
single, they now together get $7,200. All we are going to do is phase 
in $8,600 in the standard deduction right up front. We are going to 
delay a few other things to let that happen.
  In 2005, the real marriage tax penalty kicks in because that is the 
first time we have the money to let people file as singles when they 
are married. That is the best marriage tax penalty reduction of all 
because it eliminates it. That is simply what the amendment does.
  I commend Senator Roth for all of the effort he took to be 
responsible with this tax cut bill. This tax cut bill has across-the-
board rate reductions that help every taxpayer in America, expands the 
tax brackets for middle-income taxpayers, and a number of positive 
pension provisions that are particularly helpful for women.
  I spoke to Senator Roth about the inequity for women in the 
workplace, because women have children and they have to lay off a few 
months. Some choose to lay off for six years until their children go to 
school. Some choose to lay off 18 years.
  Women live longer. They are in and out of the workplace more--that is 
a fact--and they get penalized not only in their working years, but 
they get penalized in their retirement years. That is not fair.
  This bill attempts to give them catchup provisions for their 
pensions. It is a great part of this bill. I support it totally.
  We also have increases in charitable giving. This is a provision of 
mine that was put in this bill by Senator Roth. It allows a person to 
roll over IRA contributions to charities without tax consequences. If a 
person has saved and done the right thing and sees that they are not 
going to need their IRA money, they can give it to charity without tax 
consequences. That is in this bill.
  We are helping farmers with risk accounts in this bill, so that 
farmers will be able to plan and put aside money tax free until they 
need it in bad times. Heaven knows, the farmers of this country have 
seen bad times. We have $12 billion in education tax relief.
  Mr. President, this is a good bill. It is a balanced bill. It has 
marriage tax penalty relief, but it is in 2005. That is my only real 
concern about the fairness of this bill.
  Senator Ashcroft, Senator Brownback, and I want to phase in some of 
the other tax cuts a little bit further down the road and say to the 40 
million American married couples who are being penalized because they 
are married, we believe it is the highest priority to give relief. That 
is what we are saying in our amendment.
  How much time remains?
  The PRESIDING OFFICER (Mr. Enzi). Thirty-four and a half minutes.
  Mrs. HUTCHISON. Senator Brownback has been a leader in this effort. 
We have been fighting for this for a long time. I am very pleased he is 
with us on this amendment. We made some tough choices, but we think it 
is the right priority to send.
  I yield 12 minutes to Senator Brownback.
  Mr. BROWNBACK. I thank the Senator from Texas. She has been the 
leader on this issue. I am delighted to be working with her on such an 
important issue. I also thank the chairman of the committee for 
recognizing the importance of eliminating the marriage penalty. We 
moved this up; this is the highest priority.

[[Page 18436]]

  I want to tell Members why I think it is the highest priority in the 
words of people who have been interviewed and who have paid the 
marriage penalties. In the Wichita Eagle on Sunday, Kyle and Lynn 
Schudy stated they rediscovered the cost of true love this April, April 
15. Their total cost of true love came to $1,823. That is how much the 
extra income tax was for this Prairie Village couple in their early 
thirties. That is what they paid last year because they are married and 
filed jointly instead of single and living together. They found that 
was the cost of true love.
  I don't know that we can make a much better case for eliminating the 
marriage penalty than the voices across America who have stated what 
they are paying in this marriage penalty.
  Listen to this from Tennessee:

       My wife and I got married on January 1, 1997. We were going 
     to have a Christmas wedding last year but after talking to my 
     accountant, who saw that instead of both of us getting money 
     back on our taxes we would have to pay in. So we postponed 
     it. Now after getting married we have to have more taken out 
     of our checks just to break even and not get a refund. We got 
     penalized for getting married and that is not right.

  I don't know that it can be any clearer than what some of these 
families have said.
  From Maryland, Mark Patterson:

       My wife and I decided to have a family and get married. All 
     we were concerned about was the love we had for each other.

  That sounds like a pretty good start.

       After 8 years of marriage and two children we found all we 
     worry about now is how to come up with enough money to put a 
     roof over our head, eat and have good day care for our 
     children. I am sick about the huge chunks of money taken out 
     of every pay check by Uncle Sam just because we are married.

  Mr. SESSIONS. Will the Senator yield for a question?
  Mr. BROWNBACK. If he will state his marriage penalty, I yield.
  Mr. SESSIONS. I received a communication from an individual who was 
divorced in January and found out, had they divorced in December, they 
would have saved almost $2,000 in taxes.
  My question to the Senator: Does that mean the Federal Government is 
subsidizing divorce?
  Mr. BROWNBACK. Some would draw that conclusion.
  Clearly, we are taxing marriage. We are taxing the fundamental 
institution around which we build values. That is not right, as the 
people in the letters from across America state.
  Here is another letter from Ohio:

       No person who legitimately supports family values could be 
     against this bill of eliminating the marriage penalty. The 
     marriage penalty is but another example of how in the past 40 
     years the Federal Government has enacted policies that have 
     broken down the fundamental institutions that were the 
     strength of this country from the start.

  A woman writes:

       My boy friend, Darryl and I have been living together for 
     quite some time. We would very much like to get married. We 
     both work at Ford Electronics in Crothersville, IN, and make 
     less than $10 an hour, but work over time when available and 
     Darryl does farming on the side. I cannot tell you how 
     disgusted we both are over this tax issue. If we get married 
     not only would I forfeit my $900 refund check, we would be 
     writing a check for $2,800.
       This was figured by an accountant at H&R Block at New 
     Castle. There is nothing right about this after we 
     continually hear the government preach to us about family 
     values. Nothing new about the hypocrites in Washington. Why 
     not do away with the current tax system?

  These are voices from across America.
  This is from Houston, TX:

       If we are really interested in putting children first, why 
     would this country penalize the very situation [marriage] 
     where kids do best? When parents are truly committed to each 
     other through their marriage vows, their children's outcomes 
     are enhanced.

  Yet we tax it and penalize it to the average of $1,400 per married 
couple of the 21 million American married couples who pay this tax.
  I am sure this evolved and nobody maliciously said we will tax 
married couples. The fact remains, we tax marriage, and it must stop. 
We have the chance now to actually do that.
  Another point I want to make about this: The institution of marriage 
in America is in serious trouble.
  I ask unanimous consent to have printed in the Record the Washington 
Post article of July 2 of this year titled ``For Better or Worse, 
Marriage Hits a Low.''
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the Washington Post, July 2, 1999]

                For Better or Worse, Marriage Hits a Low

                        (By Michael A. Fletcher)

       Americans are less likely to marry than ever before, 
     according to a new study, and fewer people who do marry 
     report being ``very happy'' in their marriages.
       The report, released yesterday by Rutgers University's 
     National Marriage Project and touted as a benchmark 
     compilation of statistics and surveys, found that the 
     nation's marriage rate has dipped by 43 percent in the past 
     four decades--from 87.5 marriages per 1,000 unmarried women 
     in 1960 to 49.7 marriages in 1996--leaving it at its lowest 
     point in recorded history.
       The percentage of married people who reported being ``very 
     happy'' in their marriages fell from 53.5 in 1973-76 to 37.8 
     in 1996.
       The historically low marriage rate, coupled with a soaring 
     divorce rate, has dramatically altered attitudes toward one 
     of society's most fundamental institutions. Although 
     Americans still cherish the ideal of marriage, increasing 
     numbers of young adults, particularly young women, are 
     pessimistic about finding a lasting marriage partner and are 
     far more accepting than in the past of alternatives to 
     marriage, including single parenthood and living together 
     with a partner outside of marriage, according to the report.
       ``Young people today want successful marriages, but they 
     are increasingly anxious and pessimistic about their chances 
     for achieving that goal,'' said Barbara Dafoe Whitehead, co-
     director of the National Marriage Project.
       Funded by Rutgers in conjunction with several private 
     foundations, the project is a research institute that tracks 
     social indicators related to marriage--an area of study its 
     directors contend is frequently overlooked.
       ``Nobody is focusing on marriage,'' said David Popenoe, the 
     project's other co-director. ``It is not in the national 
     debate.''
       Rather than directly examining Americans' attitudes toward 
     marriage, researchers have tended to focus on the flip side 
     of the coin, tracking social trends such as the increases in 
     divorce, out-of-wedlock births and single-parent households 
     over the past two decades. In the immediate post-World War II 
     generation, 80 percent of children grew up in a family with 
     two biological parents. That number has dipped to 60 percent.
       Before declining slightly in recent years, the divorce rate 
     had soared more than 30 percent since 1970. Today, nearly 
     half of U.S. marriages are projected to end in divorce or 
     permanent separation.
       These changes have ignited a national grass-roots movement 
     to discourage divorce and promote marriage. Many states are 
     reexamining their no-fault divorce laws, and at least two 
     states, Louisiana and Arizona, have instituted ``covenant 
     marriages,'' which require marriage counseling if a 
     relationship falters and narrowly restrict grounds for 
     divorce. ``Marriage education,'' a term that entered the 
     national lexicon less than a decade ago, has become a growing 
     concern.
       Last year in Florida, legislators passed a law requiring 
     marriage education skills to be taught in high schools. In 
     addition, adults preparing for marriage in Florida receive a 
     substantial discount on their marriage licenses if they 
     choose to take a marriage education course.
       ``People are so distressed about the state of marriage in 
     America,'' said Diane Sollee, founder of the Coalition for 
     Marriage, Family and Couples Education. Her District-based 
     group is hosting a conference in Arlington this week that is 
     being attended by 1,000 people seeking marriage education 
     training.
       ``We think about marriage counseling in terms of therapy,'' 
     she added, ``But we realize that we can teach skills to 
     people to make their marriages strong. What distinguishes 
     marriages that go the distance from those that end in divorce 
     isn't whether couples disagree, but certain behaviors between 
     them.''
       The National Marriage Project report blames the declining 
     marriage rate on people postponing marriage until later in 
     life and on more couples deciding to live together outside of 
     marriage. According to the report, nearly half of people ages 
     25 to 40 have at some point set up a joint household with a 
     member of the opposite sex outside of marriage.
       As a result, the report's authors argued, marriage is no 
     longer the presumed route from adolescence to adulthood and 
     has lost much of its significance as a rite of passage. 
     Moreover, marriage is far less likely to be associated with 
     first sexual experiences, particularly for women, the report 
     said. Whereas 90 percent of women born between 1933 and 1942 
     were either virgins when they married or had premarital sex 
     only with their eventual husbands, now more than half of 
     girls

[[Page 18437]]

     have sexual intercourse by age 17, and on average they are 
     sexually active for about eight years before getting married.
       These changes in marriage patterns have contributed to new 
     attitudes toward the institution. Although the percentage of 
     teenagers who said that having a good marriage and family 
     life was ``extremely important'' to them has increased 
     modestly in the past two decades, the percentage who said 
     they expected to stay married to the same person for life has 
     decreased slightly. More dramatically, the percentage of 
     teenage girls who said having a child out of wedlock is a 
     ``worthwhile lifestyle'' increased from 33 percent to 53 
     percent in the past two decades.
       Whereas the report's findings led its authors to conclude 
     that ``the institution of marriage is in serious trouble,'' 
     other researchers who track marriage trends said there also 
     was reason for optimism. For one, they note that demographers 
     predict that 85 percent of young people will marry at some 
     point in their lives, a substantial figure, even though it is 
     smaller than the 94 percent that pertained in 1960.
       ``There is some evidence that marriage is in trouble,'' 
     said Kristin Moore, senior scholar for Child Trends, a 
     nonprofit research organization that tracks trends in family 
     and child well-being. ``But there is also much evidence that 
     marriage remains highly valued.''

  Mr. BROWNBACK. It says:

       Americans are less likely to marry than ever before, 
     according to a new study, and fewer people who do marry 
     report being ``very happy'' in their marriages.
       This report, released yesterday by Rutger University's 
     National Marriage Project and touted as a benchmark 
     compilation of statistics and surveys, found that the 
     nation's marriage rate has dipped by 43 percent in the past 
     four decades. . . .

  We have a chart of the result from the Rutger study. In 1960, per 
1,000 women age 15 and over, between 85 and 90 percent per year were 
getting married, and now it is below 50 percent, a 43-percent fall-off 
in people getting married.
  The writers of the study stated this about the institution of 
marriage, the foundational unit upon which we build family values and 
pass them on to the next generation:

       Key social indicators suggest a substantial weakening of 
     the institution of marriage.

  This is serious. I daresay that probably in this next Presidential 
campaign, ``family values'' may be the two words said most often as we 
worry, fret, and are concerned about what is happening to our children 
and our society and in this culture.
  Can anybody in this room, in this august body, therefore say it is OK 
to tax the fundamental institution that helps most in building family 
values, that we tax the U.S. institution of marriage, that we make 21 
million American couples annually pay on average to the tune of $1,400 
just for the privilege of being married when we are so worried about 
the values in the country? How can we vote against this?
  I am delighted the chairman has put this in the bill. I am happy we 
are trying, and I hope we will be successful, in moving this up 
earlier, so once and for all we can stop taxing the institution of 
marriage. We have to stop doing that.
  When marriage as an institution breaks down, children suffer. The 
past few decades have seen a huge increase in out-of-wedlock births and 
divorce, a combination which has substantially undermined the well-
being of children in virtually all areas, all places of life.
  Some people can struggle heroically and help build up the families, 
and certainly nobody is here to castigate others. We are saying this is 
a tax that is wrong. It is wrong for virtually every reason. It taxes a 
fundamental family-value-building institution. It penalizes people whom 
we should be rewarding. Study after study has shown children do best 
when they grow up in a stable home, raised by two parents who are 
committed to each other.
  Newlyweds face enough challenges without paying punitive damages in 
the form of the marriage tax. The last thing the Federal Government 
should do is penalize the institution that is the foundational unit of 
passing on to the next generation morals and family values, and yet we 
do it. We have done it for a number of years.
  We must give the people back a tax cut. I will support the overall 
effort to give back in tax cuts the nearly $800 billion. I think we 
should do that. But clearly our top priority in this effort must be 
eliminating this bad--this worst tax that we have, worst for its effect 
on the institution of marriage. We must give the American people the 
growth rebate they deserve and return this overpayment. The first tax 
we must cut is this marriage penalty tax. It is going to be expensive. 
It is important. It is expensive to couples who pay this tax all the 
time, on average $1,400 per year per couple.
  With that, I have a number of other things to share, but I think it 
is simply time we do away with this tax. I am delighted to join the 
Senator from Texas and the Senator from Missouri in their efforts, in 
our efforts to do this. I applaud the chairman for building this into 
the tax cut. I am hopeful we can do this earlier. I would like us to 
even do income splitting. We are not going to be able to do it today. 
With that, I yield back to the Senator from Texas.
  Mrs. HUTCHISON. Mr. President, I say to the Senator from Kansas that 
we can do income splitting down the road as well because, in fact, it 
is very important that we give every married couple the best shake we 
can give them; that treats them totally fair. Whether they are a two-
income-earner couple or a one-income-earner couple, we want them to 
have the same treatment that they would have under any other 
circumstance.
  So I do support income splitting. I think after we get the money 
accumulated in the surplus we will be able to give them much more 
relief, real relief, in fact elimination of the penalty. That is the 
goal of all of us.
  I yield 12 minutes also to Senator Ashcroft. Senator Ashcroft has 
been fighting along with Senator Brownback and myself, side by side, on 
this issue. Ever since he came to the Senate it has been one of his 
highest priorities. I am so appreciative that he has been the stalwart 
soldier on the marriage tax penalty that he has because I think we are 
going to win this victory in the end.
  I yield 12 minutes to Senator Ashcroft.
  The PRESIDING OFFICER. The Senator from Missouri.
  Mr. ASHCROFT. Mr. President, I thank the Senator from Texas for her 
leadership in this respect. She has understood the challenge, the 
special challenge that comes to families as a result of this pernicious 
discrimination in our Tax Code. She has fought long and hard for its 
removal. I am honored to be a participant as a cosponsor of this 
amendment with her and Senator Brownback.
  I also thank the chairman of the Finance Committee, Senator Roth, who 
understood the fundamental value that is expressed in neutralizing the 
tax policy toward families. I say ``neutralizing.'' I really mean that, 
in the sense that we have been at war with families in our Tax Code. 
Mr. President, 21 million American couples, 42 million Americans, are 
spending an average of $1,400 per year more, each couple, because of 
the marriage penalty. It makes it tough for that couple to make choices 
that they ought to be able to make to benefit their families. So I 
thank the chairman of the Finance Committee, Senator Roth, for placing 
this in the bill, for seeing to it that this category of remediation, 
this effort to repair an injury to the very fabric of America's 
culture, is included in this tax measure.
  We would not be here this evening with the capacity to say we want to 
accelerate that remedy, that we want to provide this antidote to a 
malady which has been afflicting the American culture, we could not 
move it up in the bill had it not been there in the first place. I 
commend him.
  I would like to just take us, for a minute, back to some very 
substantial fundamentals about America. I think the first of those 
fundamentals is that this is a culture where the most important things 
are not in Government. The most important things are not in the 
institutions of Government, not in the corporate responsibility of 
Government. The most important things are with individuals. This is a 
society that honors great freedom and expects great responsibility.
  America has prospered. America is distinguished from, different from, 
differentiated from, we are different from

[[Page 18438]]

other countries, other cultures. We have gone farther, we have soared 
father, for that reason. We expect individuals to do things for 
themselves; not to be reliant, always, on Government, but, where 
possible, to build the sense of independence, responsibility, judgment, 
self-reliance that makes Americans unique in the community we call the 
world.
  When you believe the future of America is dependent upon that spirit, 
you have to ask yourself what are we going to fund in America? Are we 
going to fund the bureaucracy and the institution or are we going to 
fund the family and individuals? Are we going to give families the 
opportunity to take care of themselves or are we going to give all the 
resources to the sort of second best alternative?
  I do not think there is a Member of this Chamber who would say it is 
ever better to have a vast Government program than it is to have a good 
family. I just do not think we have anyone who believes that because we 
know the family is the best Department of Education, it is the best 
Department of Health, it is the best teacher of responsibility and 
character, which is as important as anything else. It is where it 
really must happen.
  Yet our Tax Code has been sweeping the resources away from this 
essential institution of the culture, the family, into the coffers of 
the Government, and plan B, the second priority, the sort of safety 
net, has gotten all the resources. We have left in an anemic place the 
family, which ought to be doing the front-line defense. It would be 
similar to giving all the guns and weapons to the rear guard and not 
having the guys on the front line with any bullets. It is time to load 
the resources into the families, at least to give them a fair shake. It 
is just a fundamental part of America. We believe families are 
important. If we really get our job done in the families of America, 
Government will not really have much responsibility and much problem.
  If we destroy the families of America, there is no amount of 
Government that will solve our problems.
  So here we have a choice. Are we going to endow families with the 
resources they create, they earn? Are we going to let them keep some of 
those resources or, when they form these durable, lasting, persistent 
bonds and a relationship that teaches people how to rely on each other, 
to live with each other, how to be individually responsible and self-
reliant, are we going to take that institution and continue to punish 
it? Or are we going to wake up and say: Hello, it is time for us to say 
about families we are going to let the families have some of the 
resources which they earn and they should keep.
  I do not think it is a hard question. It is pretty simple. The 
proverbial rocket scientist is not needed here. It is an anomaly of our 
tax law. It is unfair to say the Congress at some point went forward to 
try to hurt families. But in this topsy-turvy tax environment that has 
grown by just a snippet here and a little piece there and a few hundred 
thousand words there--this Tax Code was, what, 750,000 words in 1955 
and it is 5 million words now. You would have a hard time reading it if 
you started at birth and read as fast as Evelyn Woods to get through 
the thing before the end of your life.
  So we have a situation where this code has grown up and it 
discriminates against families. It hurts families, and we have a great 
opportunity now, thanks to the chairman of the committee who placed 
this concept of remediating this pathology right here in this bill.
  I predict Members on both sides of the aisle are going to say: We 
want to vote in favor of marriages; it is time to correct this 
inadvertent, but very damaging, prejudice against marriage in the Tax 
Code.
  That is where we ought to be. No one in this Chamber believes that 
Government is more important than families. No one believes that our 
front line, in terms of developing this culture, is so unimportant that 
we ought to load all the resources to the guys at the back of the 
operation. We ought to put some of our ammunition in the hands of the 
front line.
  Let's let families, let's let parents, who make these kinds of 
lasting commitments to each other and to their children, build an 
America tomorrow which has all the promise of the America you and I 
inherited.
  I will add that it is not a great tradition in America to 
discriminate against marriage. This has happened in the Tax Code as our 
tax bite on the American family has accelerated with the growth of 
social programs. It was not until the sixties that we had anything of a 
marriage penalty, and it began to get worse and worse until now, as I 
have indicated, $29 billion a year is what Government takes from 
families as it robs 21 million families of about $1,400 per couple, and 
it sweeps that money away from the families into the Government, into 
the bureaucracy, into the plan B, the second best, yes, important 
safety net. Yes, we need it, but let's not deprive the first line of 
this culture's conditions for greatness--the families--let's not 
deprive them of the resources they ought to have.
  I thank Senator Roth, chairman of the Finance Committee, for placing 
this concept in the bill. I thank Senator Hutchison from Texas for 
having been alert to this since before I came to the Senate. She was 
working hard in this respect. I am always delighted to be a part of any 
measure with Senator Brownback whose sensitivity to the values and the 
need for character in this culture is unsurpassed.
  I do not think Government should be dictating our culture and 
pounding in values, but, on the other hand, our Government should not 
be at war with our values, and it is time for us to call a peace 
conference around the kitchen table of America and say to husbands and 
wives: You have a very important job to do, and we want you to have the 
resources to do that job. We must eliminate the marriage penalty, and 
this bill, with the Hutchison-Brownback-Ashcroft amendment, can get 
that down.
  I reserve the remainder of the time and yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. ROTH. I am happy to yield 5 minutes to the Senator from Montana.
  Mr. BAUCUS. Mr. President, I congratulate the Senator from Texas for 
her amendment. It is a good amendment. It does deal with an inequity in 
the code clearly, simply. I congratulate her, too, because she is 
taking the course that we in the Democratic alternative took in trying 
to address this problem when we proposed to raise the standard 
deduction as well to address essentially the marriage tax penalty.
  It is interesting; there is a marriage tax penalty today, but there 
is also a marriage tax bonus. Basically, the rule of thumb is 70-30. 
That is, if there is more than a 70-30 percent differential between the 
income of each spouse, then there is a marriage bonus; that is, you get 
a tax bonus for marriages as opposed to a penalty.
  The penalty situation arises roughly when the 70-30 starts to narrow 
down, is less of a differential, and when both spouses are earning a 
similar income. That is what we are addressing here, the penalty side, 
because more couples have both spouses working. It is interesting to 
note, there is a bonus for getting married today if the differential is 
roughly between 70-30.
  The amendment the Senator from Texas is offering goes part way to 
eliminate the marriage tax penalty. Our Democratic alternative actually 
went a lot further. She raises the standard deduction by about $1,400, 
and the Democratic alternative raised the standard deduction for 
married couples by about $4,300.
  In addition, in our proposal we began to eliminate the marriage tax 
penalty for itemizers; that is, for couples who itemize. The amendment 
before us deals only with couples who use the standard deduction. There 
are some couples who still itemize in the Tax Code, and it is our hope 
that we could address, eliminate, as you would, the marriage tax 
penalty not only for couples who use the standard deduction but also 
for couples who itemize.
  Also, we in the Democratic alternative raised the standard deduction 
not only for married couples but also for singles. We thought the 
standard

[[Page 18439]]

deduction should go up quite a bit higher than it now is for singles.
  The long and short of it is, this amendment goes part way in raising 
the standard deduction. We proposed to go a lot further in raising the 
standard deduction, but the net effect is to help begin to eliminate 
the marriage tax penalty by raising the standard deduction for married 
couples. It is our hope that maybe a little bit later the Senator from 
Texas would, since she sees the wisdom in our proposal, go a little 
further and agree to other provisions that we in the Democratic 
alternative have suggested.
  I do not think this really is a matter that requires a lot of debate. 
I believe most Senators agree this is a good amendment. It begins to 
eliminate the penalty married couples pay. It is our suggestion we also 
address the marriage tax penalty for couples who itemize because that 
would begin to complete the elimination of the marriage tax penalty. 
Again, I hope that occurs at some reasonable future date.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Delaware.
  Mr. ROTH. Mr. President, I yield myself such time as I may use.
  First of all, I congratulate the distinguished Senator from Texas for 
her leadership in this most important matter. I know that as I return 
to my State of Delaware and talk to people there, it is a matter of 
real unhappiness and dissatisfaction that there is this marriage 
penalty. Obviously, for that reason, it is very desirable that we 
correct it as quickly as possible.
  Mrs. HUTCHISON. Will the Senator yield?
  Mr. ROTH. I will be happy to yield.
  Mrs. HUTCHISON. I appreciate the fact that the committee made a 
priority of the marriage tax penalty. The real marriage tax relief is 
in the bill in the year 2005 in the responsible timeframe. That was 
actually the first year you could do it because you cannot phase that 
in. I appreciate the effort that was made.
  My amendment just doubles the standard deduction earlier. The Senator 
from Delaware has been working with me on the floor, as has Senator 
Baucus. I very much appreciate their helping me work through this so 
that we are going to have the early relief on the standard deduction 
now in the year 2001, starting the phase-in to 2005 when we are going 
to give the real relief, which the chairman had in the bill originally. 
I give him the credit for that, and I appreciate his remarks very much.
  Mr. ROTH. I appreciate the remarks of the Senator from Texas.
  One of the frustrating things of putting a bill together, although I 
have to admit it is a very interesting challenge that I much enjoy, is 
the fact that there are so many things I believe should be done for the 
American family. It is frustrating that there are limitations as to 
what we can do. I agree with the distinguished Senator that nothing is 
more important than eliminating this marriage penalty. Obviously, the 
sooner we can do it, the better off we are. I thank her for her 
leadership.
  For the information of all Senators, I do want to make clear that my 
concern with the pending amendment had been that it would put us out of 
compliance with our reconciliation instructions. I was also concerned 
that the earlier version of the amendment would have relied heavily on 
delaying the AMT relief. And this delay would hit middle-income 
Americans very hard.
  But now we understand, of course, that the Senator from Texas will 
offer a modification to the filed amendment which will alleviate this 
offset problem. For that I am very grateful. With these changes, I just 
say, I look forward to working with the Senator from Texas on having 
this amendment enacted.
  Mr. President, I yield the floor.
  Would the Senator like some more time?
  Mrs. HUTCHISON. Mr. President, I would just like to reserve the 
remainder of my time for the modification when it is ready, which I 
understand will be in the next 15 to 30 minutes.
  So I yield now and will reclaim that time when we have the corrected 
amendment.
  Mr. ROTH. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROTH. Mr. President, I yield 5 minutes to the Senator from 
Montana.
  The PRESIDING OFFICER. The Senator from Montana is recognized.
  Mr. BAUCUS. Mr. President, I think there is another dimension to this 
tax bill which I think is important for us to address. It is not only 
tax reduction in the amount of the reduction and not only the 
composition of the reduction, it is also whether we are making this Tax 
Code even more complex.
  If there is anything we hear from our people at home, it is that this 
Tax Code is much too complex; it is just a mess. I see the Presiding 
Officer, who has deep experience in this, is nodding his head in 
agreement. We all know that he is right.
  Regrettably, when Congress passes tax legislation, we tend not to pay 
much attention to whether this adds further complexity to the code. We 
rarely pay any attention to that.
  Frankly, I take some pride in that I pushed for the provision of the 
law last year that directs the IRS, in conjunction with the Joint Tax 
Committee, to come up with a complexity analysis of new provisions that 
the Congress enacts. We did not get this analysis until after the 
Finance Committee reported out its bill, but we did get it, finally.
  I have with me a letter from Charles Rossotti, the Commissioner of 
the IRS, to Ms. Lindy Paull, who is the Chief of Staff of the Joint 
Committee on Taxation, which is a brief analysis of the additional 
complexity that the bill before us would cost.
  Just by way of example, we are here today trying to correct a problem 
by providing relief for the marriage tax penalty. This marriage tax 
penalty is where a couple pays a higher net tax when both couples earn 
about the same amount of money. The underlying bill before us today 
attempts to address that problem, but in a way which is very complex.
  The amendment offered by the Senator from Texas is a much more crude 
way to deal with alleviating the marriage tax penalty by raising the 
standard deduction by a significant amount, an approach that we took in 
our Democratic alternative bill, too, where we would raise the standard 
deduction even more. But to give you an example of the additional 
complexity that this bill would cause in trying to resolve the marriage 
tax penalty, let me just state the following items which I hope we will 
get worked out as this bill progresses.
  Essentially, taxpayers would have to fill out two forms or the 1040 
would have to have more columns and many more items, because 
essentially couples would have to fill out their 1040 in many ways 
twice--one as if married, and then separate, as if joint filers, 
attempting to determine which is less in that tax, and so forth.
  Then there is the question of allocation of personal exemptions: When 
you file separately, who gets the personal exemptions, the additional 
personal exemption for children, and so forth, and who doesn't.
  Then there is the question of large medical payments, the medical 
deduction, which, as the Presiding Officer knows better than anybody 
else in the Chamber, is about 700 percent of adjusted gross income. And 
then the question is, How is that allocated--one spouse or do both 
spouses get it or whatnot?
  There is a lot of additional complexity that couples would face under 
the underlying bill. All of this is not glamorous stuff. It doesn't get 
headlines. It is not in the evening news. It is my hope that as we 
undertake the work in this body, as well as in the other body, to 
reduce taxes, and we try to do it in a fair way, we also do it in a way 
that is less complex, not more complex.

[[Page 18440]]

  As this bill stands tonight, with respect to the marriage tax penalty 
relief, it is going to be much more complex for taxpayers, for 
individual taxpayers, whether they file separately, particularly for 
married taxpayers trying to determine how to deal with the solution we 
have so far drafted with respect to the marriage tax penalty.
  I ask unanimous consent to have printed in the Record a letter and a 
short document from Commissioner Rossotti to the Joint Tax Committee 
which begins to outline some of the additional complexities this bill 
will cause.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                       Department of the Treasury,


                                     Internal Revenue Service,

                                    Washington, DC, July 22, 1999.
     Ms. Lindy L. Paull,
     Chief of Staff, Joint Committee on Taxation, Washington, DC.
       Dear Ms. Paull: Attached are the Internal Revenue Service's 
     (IRS) comments on the eight provisions from the Senate 
     Committee on Finance markup of the ``Taxpayer Refund Act of 
     1999'' that you identified for complexity analysis in your 
     letter of July 20, 1999. The comments are based on the Joint 
     Committee on Taxation staff description (JCX-46-99) of the 
     provisions and, in the case of marriage penalty relief, the 
     statutory language for a similar item provided in H.R. 2656, 
     introduced by Mr. Weller in the 105th Congress.
       Due to the short turnaround time, our comments are 
     provisional and subject to change upon a more complete and 
     in-depth analysis of the provisions.
           Sincerely,
                                              Charles O. Rossotti.
       Attachment

  IRS Comments on Eight Tax Provisions of the Tax Refund Act of 1999 
                   Identified for Complexity Analysis


   Reduce 15 Percent Income Tax Rate to 14 Percent Beginning in 2001

       The tax rate change mandated by this provision would be 
     incorporated in the tax tables and tax rate schedules during 
     IRS' annual update of these items. The provision would 
     require changes to the tax rates shown in the 2001 
     instructions for Forms 1040, 1040A, 1040EZ, 1040NR, 1040NR-
     EZ, and 1041, and on Forms 1040-ES, W-4V, and 8814 for 2001. 
     No new forms would be required. Programming changes would be 
     required to reflect the 14 percent rate.


    increase width of 14 percent bracket by $2,000 beginning in 2005

       The increase in the width of the 14 percent bracket would 
     be incorporated in the tax tables and tax rate scheduling 
     during IRS' annual update of these items. The provision would 
     require changes to the rates shown in the 2005 instructions 
     for Forms 1040, 1040A, 1040EZ, 1040NR, 1040NR-EZ, and 1041, 
     and on the Forms 1040-ES for 2005. No new forms would be 
     required. Programming changes would be required to reflect 
     the expanded 14 percent bracket.


       marriage penalty relief for joint filers beginning in 2005

                                 forms

       The following form changes would be necessary to implement 
     this provision. The changes noted for Form 1040EZ could 
     affect the scannability of the form.
       1. A new line and check box would be added to the 2005 
     Forms 1040, 1040A, and 1040EZ for married taxpayers to 
     indicate they are filing single returns on a combined form.
       2. Three new schedules would be developed (for 1040 filers, 
     1040 filers, and 1040EZ filers) with columns for each spouse 
     to separately report the information required to determine 
     his or her total income, adjusted gross income (AGI), taxable 
     income, and tax before nonrefundable credits. This 
     information is shown on the following lines of the 1999 
     forms: Form 1040, lines 7 through 40; Form 1040A, lines 7 
     through 25; and Form 1040EZ, lines 1 through 6, and line 10. 
     The new schedules would also show the couple's combined AGI 
     and combined tax before nonrefundable credits. The combined 
     tax would also be entered on the appropriate line of the 
     couple's 1040 return and the rest of that return would be 
     completed as if a joint return has been filed.
       Based on the 1999 forms, the new schedule for Form 1040 
     filers would have a total of 82 entry spaces. The schedule 
     for Form 1040A filers would have a total of 46 entry spaces, 
     and the one for 1040EZ filers would have a total of 16 entry 
     spaces. The new schedules would contain calculations 
     involving multiplication. The instructions for the new 
     schedules would be between 2 and 5 pages.
       If credits are to be determined as if the spouses had filed 
     a joint return (as indicated in JCX-46-99), a third 
     computation of AGI and tax before nonrefundable credits would 
     be necessary. The AGI and tax would be computed as if a joint 
     return had been filed. The reason for this additional 
     computation is because some credits are affected by AGI and 
     may also be limited by the regular tax liability. These items 
     would not necessarily be the same as the two spouse's 
     combined AGIs and tax. To eliminate this third computation, 
     the provision relating to credits should be changed to 
     specify that the couples' combined AGI and tax are to be used 
     in figuring the amount of any credit.
       3. A new four-line, two-column worksheet would be developed 
     for each spouse to compute his or her applicable percentage 
     for purposes of determining the deductions, such as the 
     deduction for exemptions, that are required to be allocated 
     based on each spouse's share of the combined AGIs. This 
     worksheet would be included in the instructions for the new 
     schedules.
       4. The 2005 TeleFile Record would be revised to permit its 
     use by married taxpayers choosing the combined filing status. 
     Based on the 1999 TeleFile Tax Record, this would require the 
     addition of 10 entry spaces.
       5. The provision would require many electing taxpayers to 
     complete two separate Schedules A, B, D, and E, or Forms 4797 
     (and possibly other schedules/forms) to determine the amounts 
     to enter on the new schedule. In general, two separate 
     schedules/forms will be required where both spouses have 
     items that affect the schedule/forms.
       IRS understands that rules clarifying the application of 
     the election for AMT purposes will be forthcoming. The above 
     does not reflect the additional form changes that would be 
     needed to integrate the election with the alternative minimum 
     tax.


                  processing, programming, compliance

       The marriage penalty election would impact most aspects of 
     IRS operations.
       The form changes needed to implement the provision would 
     increase the time it takes the IRS to process a 1040 on which 
     the election is made and issue a refund, as well as increase 
     the cost of processing the return. Devoting additional time 
     and resources to the processing of electing returns could 
     delay the processing of other returns and the issuance of 
     other refunds.
       The complexity of this provision would likely cause an 
     increase in the number of taxpayers who use a paid preparer 
     and discourage the use by taxpayers of e-file programs such 
     as Telefile and On-Line Filing. The error rate among those 
     who do prepare their own returns would also increase. During 
     processing, these returns would have to be sent to Error 
     Resolution for correction. This could result in additional 
     taxpayer contacts, delays in the issuing of refunds, and 
     additional costs to the IRS. The provision would also 
     increase the number of amended returns which would have to be 
     examined and processed.
       The IRS would have to make substantial changes to its IRM 
     procedures for processing marriage penalty election returns 
     and train the service center in those procedures.
       The added complexity would also increase the number of 
     taxpayers who would seek assistance either over the toll-free 
     lines or at the walk-in sites. The number of taxpayers 
     seeking assistance about the marriage penalty election could 
     reduce the opportunity for other taxpayers to get assistance. 
     The IRS would have to make substantial changes to the 
     customer service IRM and would have to train the Customer 
     Service Representatives to enable them to assist taxpayers in 
     these complex provisions.
       The rules for allocating income and deductions between 
     spouses, which are in part based on state property law, would 
     cause confusion and errors by taxpayers. In many instances, 
     mis-allocations could only be detected on examination. The 
     IRS would have to develop new examination procedures and 
     train its examiners in the law and the new procedures. The 
     marriage penalty election could also affect the resolution of 
     examination cases involving the innocent spouse provisions.
       This provision would require major systemic programming 
     changes to IRS' computation process. This provision would 
     affect many of our tax systems including Integrated 
     Submission and Remittance Processing (ISRP), Error Resolution 
     System (ERS), Generalized Unpostable Framework (GUF), 
     Generalized Mainline Framework (GMF), Federal Tax Deposits 
     (FTDs), SCRIPS, MasterFile, Electronic Filing, and TeleFile. 
     It is estimated that at least 50 staff years and 
     approximately $5,000,000 in contractor costs would be needed 
     to make the necessary programming changes.


                        alternative minimum tax

       Since the provision regarding personal credits and the AMT 
     is the same as that applicable to 1998 tax years, and 
     reflected in the 1988 tax forms, no form or programming 
     changes would be needed to implement the provision provided 
     it is enacted in the near future. If enactment is delayed, 
     the IRS will have to begin taking steps to re-institute the 
     pre-1998 rules for 1999 tax years. It is critical that this 
     provision be enacted as soon as possible to avoid costly and 
     unnecessary programming changes and to minimize the impact on 
     timely distribution of the 1999 tax packages. In addition, a 
     return to pre-1998 law would significantly increase the 
     complexity of these credits.
       The provision relating to the deduction for personal 
     exemptions would eliminate the nine line AMT worksheet in the 
     Form 1040A instructions for 2005. This provision would not 
     affect the number of lines on the 2005 Form 6251 or the AMT 
     worksheet in the 2005 Form 1040 instructions.

[[Page 18441]]




                   individual retirement arrangements

       This provision would require a change to the dollar limit 
     specified in the Form 1040, Form 1040A, Form 8606, and Form 
     5329 instructions for 2001 through 2005 and possibly in 
     future years. The change would also be reflected in the Form 
     1040-ES for all applicable years. No new forms or additional 
     lines would be required. Programming changes would be needed 
     to reflect the increased contribution limits.
       IRS would need to provide guidance to financial 
     institutions that sponsor IRAs on how to take into account 
     the higher contribution limits (currently all sponsors 
     utilize IRS approved documents). In addition, the following 
     model IRA and Roth IRA documents that are issued by the 
     Assistant Commissioner (EPEO) would need to be modified to 
     take into account the increased contribution limits:
       Form 5305, Individual Retirement Trust Account.
       Form 5305-A, Individual Retirement Custodial Account.
       Form 5305-R, Roth Individual Retirement Account.
       Form 5305-RA, Roth Individual Retirement Custodial Account.
       Form 5305-RB, Roth Individual Retirement Annuity 
     Endorsement.


          increase deduction for self-employed to 100 percent

       This provision would eliminate one line from the self-
     employed health insurance deduction worksheet contained in 
     the 2000 instructions for Forms 1040 and 1040NR. This 
     worksheet is currently four lines. The Form 1040-ES for 2000 
     would also reflect the provision. No new forms would be 
     required.


               repeal futa surtax after december 31, 2004

       The provision would require a change to the FUTA tax rate 
     on Forms 940, 940-EZ, 940-PR and Schedule H of Form 1040 for 
     2005. The rate would be reduced from 6.2 percent to 6.0 
     percent. No new forms would be required. Programming changes 
     would be necessary to reflect the reduced FUTA rate.


  allow non-itemizers to deduct up to $50 ($100 for joint returns) of 
               charitable contributions for 2000 and 2001

       Assuming the deduction is allowed in determining adjusted 
     gross income (unlike the 1982-86 deduction for non-
     itemizers), the following changes would be necessary to 
     implement this provision:
       1. One line would be added to the adjustments section of 
     Forms 1040, 1040A, 1040NR, and 1040NR-EZ for 2000 and 2001.
       2. Two new lines would be added to Form 1040EZ for 2000 and 
     2001 (one for the deduction and one to subtract the deduction 
     from total income to arrive at adjusted gross income). This 
     change could affect the scanability of the form.
       Ensuring compliance with the above-the-line charitable 
     deduction would be difficult. The only means of verifying 
     amounts deducted would be through examination, which is not 
     practical because of the small amounts involved.
       No new forms would be required.

  Mr. President, I yield 10 minutes to the Senator from Iowa.
  The PRESIDING OFFICER. The Senator from Iowa is recognized for 10 
minutes.
  Mr. HARKIN. I thank the Senator from Montana for yielding.
  Mr. President, I will talk about the bill itself, but I also want to 
talk about an amendment that I intend to offer tomorrow, sponsored by 
myself, Senator Leahy, Senator Reid of Nevada, Senator Kennedy, and 
Senator Wellstone. It has to do with pensions.
  Current law prevents companies from reducing pension benefits which a 
worker has already earned. However, there is a new phenomenon going on. 
Companies are now changing to so-called cash balance plans which can 
save the companies millions of dollars in pension costs each year by 
allowing them to take a substantial cut out of their employees' 
pensions.
  Employees generally receive three kinds of benefits from working. 
They get direct wages, health benefits, and pensions. So reducing an 
employee's pension years after it is earned should be no more legal 
than denying a worker wages after the work has been performed.
  Under traditional defined benefit plans, the worker gets a pension 
based on the length of employment and the average pay of the last few 
years of service. The pension is based on a preset formula using those 
key factors rather than on the amount in an employee's pension account.
  Under some cash balance plans, payments to workers do not start until 
the value of their pension has reduced to the lower level of the cash 
balance plan. This is a term of art that they call wearaway. In fact, 
under a number of cash balance plans, some older workers receive no 
pension benefit contributions for as long as 5 or more years, while 
younger workers, workmates working right alongside them who started 
under the cash balance plan, receive regular contributions during those 
years.
  So what does this really mean to real people in the real world? Well, 
two Chase Manhattan banking employees hired an actuary to calculate 
their future pensions after Chase Manhattan's predecessor, Chemical 
Bank, converted to a cash balance plan. The actuary estimated that 
their future pensions had been cut by 45 percent. John Healy, one of 
the workers, said, ``I would have had to work about 10 more years 
before I broke even.''
  In another case, Ispat Inland, Inc., a Chicago steel company, 
converted to a cash balance plan on January 1. Paul Schroeder, a 44-
year-old engineer who has worked for Ispat for 19 years, calculated it 
would take him as long as 13 years of additional work to acquire 
additional pension benefits. So this practice stands to hurt millions 
of older workers.
  Frankly, I consider it age discrimination. After all, a new employee, 
usually younger, effectively receives greater pay for the same work in 
the form of money put into the pension plan. In other words, you have 
two people working side by side. As I said, they get their wages. They 
also get their pensions. But if one is not getting any pensions, he is 
basically getting less pay.
  The amendment we are offering tomorrow would prevent the wearaway. It 
would require a company to add to the pension benefits of older workers 
in the same way that they add to the benefits of younger workers.
  I will make it clear that my amendment does not stop companies from 
modifying their plans. It does not stop them from converting to cash 
balance plans, and it doesn't stop them from improving the portability. 
It simply prevents employers from cutting the benefits of older workers 
by thousands of dollars a year, compared to what happens to a younger 
worker.
  My amendment just says that a company cannot discriminate against 
long-time workers by not putting money into their pension account just 
because they earn pension benefits under a prior plan. Workers would 
get whatever they are entitled to receive under the terms of their old 
pension plan as well as all they are entitled to under the new plan for 
the period that their pension fell under that plan. The total benefit 
would be the sum of the two.
  In closing, my amendment is supported by the National Council of 
Senior Citizens, the National Committee to Preserve Social Security, 
the AARP, the AFL-CIO, the Pension Rights Center, Business and 
Professional Women USA, the Older Women's League, and the Women's 
Pension Project.
  Older workers across America have been paying into pension plans 
throughout their working years anticipating the secure retirement which 
is their due. Now, as more Americans than ever before in history 
approach retirement, we are seeing a disturbing trend by employers to 
cut their pension benefits.
  I urge the Senate to support our amendment.
  Let me shift for just a second, in whatever time I have remaining, to 
say that I am going to vote against this tax bill for three reasons: It 
is fiscally irresponsible, it widens the gap between the rich and the 
poor, and it really robs our children.
  My friends on the Republican side make it sound so simple. They say: 
Look, we have this enormous surplus. It means people are paying too 
much in taxes. Let's give it all back in a tax cut.
  Well, if only it were that easy. First of all, we don't have those 
surpluses yet. They are anticipated, but they are not here. Again, I 
remember back in 1981 when we were told by some that we could cut taxes 
and increase military spending and we wouldn't have a deficit. Well, 
the deficit almost quadrupled during the 1980s. The public debt more 
than quadrupled. We simply put the American people on a credit card.
  Finally, in 1993, Congress got serious. We took the lead in stopping 
the hemorrhaging. So now we have turned it

[[Page 18442]]

around. We have gone from an annual deficit of $290 billion to a 
surplus of about $120 billion, created 18.9 million new jobs. 
Unemployment is at 29-year lows. The rate of inflation is the lowest it 
has been since the Kennedy administration. Our GNP is growing at a 
great rate. We are beginning to pay down the $5.6 trillion debt saddled 
on our kids.
  My friends on the Republican side rejected that deficit reduction 
bill in 1993. Not one single Republican voted for it.
  I remember when Senator Gramm of Texas said:

       . . . if we adopt this bill, the American economy is going 
     to get weaker, not stronger. The deficit, 4 years from today, 
     will be higher than it is today and not lower. . .. When all 
     is said and done, people will pay more taxes, the economy 
     will create fewer jobs, Government will spend more money, and 
     the American people will be worse off.

  That was in 1993. Obviously, my friend from Texas could not have been 
more wrong in his assessment.
  But now we have this big tax cut before us based on paper 
projections. But we also find the gap between the rich and poor is 
growing even wider. At a time when we need to ensure the future for our 
children, we are going to take it away from them.
  This is the way I look at it. We built up this huge debt in the 
1980s. Who made out from that? Look at all the statistics. Upper-income 
people made a lot of money in the 1980s and secured more wealth. More 
assets went to fewer and fewer people in this country and, thus, the 
gap between the rich and poor widened. We have slain the dragon of 
deficits and we are now going to have some surpluses. It seems to me it 
is our responsibility to take that money and lift the heavy debt burden 
off of our kids and grandkids--$5.5 trillion of debt. We owe it to our 
children and grandchildren.
  I keep hearing a lot of my friends on the Republican side say: Well, 
this isn't our money; it is your money; we should give it back to you, 
the people today that are paying taxes; give it back. Of course, most 
of it goes back to the upper 5 percent of income earners in America. 
But I look upon it in a different way. The huge debt we ran up in the 
1980s is going to be a burden on our kids and grandkids. The very 
wealthy people who made out in the 1980s are now going to get a big tax 
cut. It seems to me that what we need to do is take that money and say, 
no, you know who this money belongs to? It belongs to our kids and 
grandkids. We better be paying off our debts so they are not saddled 
with it when they grow up.
  Let's secure Social Security. We keep hearing the hue and cry all the 
time that young people don't think Social Security is going to be there 
for them. Well, this is our chance to make sure they know it is going 
to be there for them, and also that we secure Medicare. We then can 
take and reduce the debt on our kids, invest in education, so that our 
kids will have a growing economy and be more productive in the future. 
That is what we ought to be doing with this--not giving it back to 
people who already have too much.
  I must tell you, I have a lot of friends and I know a lot of people 
who have a lot of money. We all have rich friends, people who have made 
a lot of money. I have yet to have any one of them ever tell me that 
they desperately need a tax break. Mostly, what they tell me is: Pay 
down the debt, invest in education, save Social Security for our kids.
  That is what we ought to be doing. The top 1 percent of the taxpayers 
are the ones that make out the most in the tax cut by the Republicans.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. HARKIN. I ask unanimous consent for 2 more minutes.
  Mr. BAUCUS. I yield 2 more minutes to the Senator.
  Mr. HARKIN. Since 1980, the average after-tax income of the top 1 
percent of American families has increased by 72 percent. The income of 
the poorest fifth of American families has declined by 16 percent. If 
the Republican tax bill becomes law, corporate limousines will line up 
in front of the Capitol with their trunks open. The top 1 percent will 
haul the money away in the trunks of their limousines.
  I have always said there is nothing wrong with making money in 
America. There is nothing wrong with being rich. There is nothing wrong 
with having a nicer house, a bigger car, and all the better amenities 
of life. That is a big part of the American dream. But I believe when 
you make it to the top, and others make it to the top, and I make it to 
the top, it is the responsibility of Government to make sure we leave 
the ladder down there for others to climb, too. The Republican tax 
bill, basically, says to the wealthy in this country: You have it made. 
Don't worry about anybody else. You made it to the top. Now you can 
pull up the ladder behind you and we are going to help you. The 
Government will help you pull the ladder up behind you.
  President Clinton has talked often about the bridge to the 21st 
century, and we have a good construct of it: Unemployment is low, GNP 
is going up, debt is going down. But if only a few people cross that 
bridge, it will become a dividing line. That is why we don't need this 
tax bill. We need to bring people together, not divide us even more, as 
this tax bill would do.
  The PRESIDING OFFICER. The time of the Senator has expired.
  Who yields time?
  Mr. ROTH. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, I yield 10 minutes to the Senator from 
Iowa.
  The PRESIDING OFFICER. Only 7 minutes 20 seconds remain.
  Mr. BAUCUS. I yield 7 minutes 20 seconds to the Senator from Iowa.
  Mr. HARKIN. I will not talk that long. I thank the manager.
  Mr. President, I will talk about another motion I will have to 
recommit the bill with instructions tomorrow when it comes up. This has 
to do with funding for the National Institutes of Health.
  Just 2\1/2\ years ago, the Senate went on record, 98-0, committing to 
double the budget of the National Institutes of Health over 5 years. 
But this tax bill shortchanges America's health and reneges on the 
Senate's promise, by forcing cuts of up to 38 percent in discretionary 
health programs.
  Earlier this evening, my friend and colleague from Pennsylvania, 
Senator Specter, talked about NIH being the ``crown jewel'' of our 
Government. Indeed, I agree with him. It is. But we said we were going 
to double the budget. Yet now, because of this tax bill, we are going 
to be faced with huge cuts. We can't even get our appropriations bill 
on the floor because we are $8 billion to $10 billion below what we had 
last year, and yet we are going to give a big tax break to the 
wealthiest in our society.
  We have to invest in this medical research--Alzheimer's and arthritis 
to cancer, diabetes, and spinal cord injury. We are on the verge of 
breakthroughs in all of these areas. Now is not the time to back off; 
now is the time to invest in biomedical research.
  If we were able to just simply delay the onset of Alzheimer's in 
individuals by 5 years, the savings would be $50 billion a year. We 
would have no problems in Medicare if we just delayed the onset of 
Alzheimer's by 5 years.
  My amendment is going to be very simple. It makes good on the promise 
the Senator made, 89-0, to double the NIH budget over 5 years. The 
amendment returns the tax bill to the Committee on Finance, with 
instructions that the committee report back to the full Senate within 3 
days with an amendment to provide an additional $13 billion for the NIH 
over 5 years. Funding for this would be provided by reducing or 
delaying specific tax cuts in the bill, so long as those tax cuts that 
benefit moderate- or middle-income taxpayers are not reduced.
  Again, I commend this amendment. It is sponsored, again, by myself, 
Senator Kennedy, Senator Mikulski, and Senator Murray to again make 
good on our promise to make sure we put the necessary funding in 
biomedical research at the NIH.

[[Page 18443]]

  I yield to the manager, if the manager would like to have the time 
back. I will be glad to yield back whatever time I have remaining.
  Mr. BAUCUS. Mr. President, how much time remains on our side?
  The PRESIDING OFFICER. Four minutes.
  Mr. BAUCUS. Thank you, Mr. President.
  I would like to emphasize a point that I made earlier about 
complexity. The tax bill passed by the other body reduces capital 
gains. Without getting into whether they should or should not be 
reduced, the effective date is July 1, 1999, which adds tremendous 
additional complexities to the code--to accountants, who have to add in 
more lines, and for programmers in their computers to adjust to the 
IRS.
  The preliminary analysis is that there are many more pages for the 
capital gains increase schedule than currently is required. It is 
immense. Add to that Y2K. This provision goes into law on July 1. I am 
just addressing the complexity. I am not talking about the merits.
  Then the IRS--who knows? It may well have to go back and retest their 
Y2K program to see if it works again with these additional items that 
are plugged in.
  I very much hope the conferees on their tax bill, in working with the 
President when this bill is finally put together, pay much more 
attention to the complexity than they have in the past. Just bear down 
on that because if we hear anything from the taxpayers, it is the 
additional complexity of the code. We have an obligation not to add 
additional complexity.
  In my experience in all of the debate on all of the tax bills, we 
have to cut a little bit here and raise some more revenue. We are going 
to add a little bit over here, with not one second of attention to 
whether or not this adds additional complexity to the taxpayers.
  We have had IRS hearings on the problems the IRS has caused the 
taxpayers. There is some truth to that. The IRS has been a little bit 
too draconian in some ways in some of the proceedings that it has 
brought against taxpayers. They have been a bit rough.
  But mark my words. Most of the complexity is caused by Congress. Most 
of it is caused by Congress. We are a little two-faced around here. We 
like to say: Oh boy, we are helping taxpayers reducing taxes--and at 
the same time we are increasing complexity. We don't talk about that. 
But we have an obligation to address both tax reduction as well as 
complexity.
  I very much hope we live up to our responsibility and address that 
because it is a huge problem. No wonder Americans want a flat tax. It 
is the complexity.
  On the other hand, I might ask myself and each of you, how do you 
address the marriage tax penalty with a national tax? Americans want 
both simplicity and equity. We all want both simplicity and equity. Of 
course, those are enemies of each other. The more something is simple, 
the more someone else claims it is inequitable and applies to them. The 
more we try to deal with them to make it more equitable, the less 
simple the code becomes. But nevertheless we have an obligation. I very 
much hope we address it and solve it.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. FRIST. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. FRIST. I ask unanimous consent to speak for 10 minutes as in 
morning business.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, I will not object. But there comes a point 
when we have to wrap things up tonight. In the earlier conversation 
with the Senator it was a different amount of time we agreed to.
  Mr. FRIST. Mr. President, I thought we were waiting for legislative 
language. I will be happy to speak for however many minutes I can. I 
was under the understanding it would be about 10 minutes before we had 
legislative language to close, but I will be happy to be more brief.
  Mr. BAUCUS. I will not object.
  Mr. FRIST. Mr. President, I will speak for 5 minutes by unanimous 
consent?
  The PRESIDING OFFICER. Without objection, it is so ordered.


                          THE MEDICARE PROGRAM

  Mr. FRIST. Mr. President, we have not discussed an amendment which we 
will be voting on tomorrow. It has not been discussed yet at all. It 
has to do with the very important issue that we voted on today, in 
terms of another amendment. That is what we are going to do in this 
body to address a fundamental problem. It has to do with Medicare, the 
fact that we have a Medicare system which is not going to be solvent 
long-term. It is a very costly system where, if you are a senior, and 
you have health care expenses, only about 48 percent of those are paid 
by the Medicare Program. It is a very costly system for seniors and 
individuals with disabilities. It is a very rigid system. It is a 
system that is not comprehensive. Much preventive care is not covered, 
prescription drugs are not covered at all--outpatient prescription 
drugs. It needs to be modernized. We talked a bit about that today.
  The real question is why we cannot take a new benefit and just add it 
to the overall Medicare system. The gist of the amendment tomorrow is 
that, yes, we need prescription drug coverage, but we must incorporate 
that new benefit, which needs to be there, in an overall modernization 
plan for Medicare.
  The question is, why? Let me focus on this one chart. On the right 
half of this chart, the red bar takes an average over the last 5 or 6 
years, an average annual increase in all health care. The red bar is in 
drug expenditures. They have gone up 11 percent every year. The green 
bar is the annual growth in all health care expenditures in our health 
care system.
  The real point of this graph is that every year overall drug 
expenditures, in the aggregate, go up about twice as fast as other 
health care costs. Thus if we are going to add a new benefit onto 
overall health care costs, something that is growing at 5 percent, we 
need to be very sure we do not run into the same problem we have in 
certain fields such as home health care. Home health care was a benefit 
in Medicare that was growing 17 percent a year. It could not be 
tolerated in the overall Medicare system because of cost.
  Then we, with the heavy hand of Government, came in and slashed home 
health care 2 years ago. In many ways that was devastating to patients, 
to the quality of health care, to people who were depending on 
venipuncture to have blood drawn on a regular basis. Therefore, I think 
it is very important we recognize, because drugs are a different 
entity, if we are going to add that benefit, we need to do it in the 
realm of overall reform of Medicare and modernization.
  This shows prescription drug expenditures in the aggregate since 1965 
have increased--not quite exponentially, but you can see in 1993, 1995, 
1996, from about $55 billion up to about $80 billion. So before we take 
this entity and put it in Medicare, because Medicare is already going 
bankrupt, we need to look at the overall picture. It includes 
hospitals, includes doctors, prescription drugs, chronic care and acute 
care.
  There is a proposal that has been put forth by the National 
Bipartisan Medicare Commission appointed by the President of the United 
States, appointed by our leadership in the Senate and in the House. We 
came up with the proposal that is essentially this: The premium support 
model, the Breaux-Thomas bill. This proposal did look at overall 
Medicare, hospitals, physician reimbursement, and prescription drugs, 
and came up with this model. The details of the model do not matter, 
but I do want to stress that 10 of the 17 Members, in a bipartisan way, 
did put this forward as a proposal--again, to show Medicare can be 
modernized.
  The point with prescription drugs in Medicare--remember, as an 
outpatient, prescription drugs are not covered in

[[Page 18444]]

Medicare at all. You have to go outside the system. But of the about 36 
million people enrolled in Medicare, two-thirds do have some coverage, 
one-third do not have coverage. Therefore, in that Bipartisan 
Commission, which we put forward and worked out over the course of the 
year, we said let's first focus right now as we modernize and 
strengthen Medicare, improve its solvency, make it less costly, less 
rigid, let's at least address this 35 percent as a first step. The 65 
percent who are covered are covered in lots of different ways.
  Since my time is up, I will yield the floor and simply close with 
this point. We will be offering an amendment tomorrow which says: Yes, 
prescription drugs, but let's do it in the context of overall Medicare 
reform.
  I yield the floor.
  Mr. BAUCUS. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative assistant proceeded to call the roll.
  Mrs. HUTCHISON. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                    Amendment No. 1472, As Modified

  Mrs. HUTCHISON. Mr. President, I ask unanimous consent that amendment 
No. 1472 be modified with the changes that are now at the desk.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
amendment is so modified.
  The amendment (No. 1472), as modified, is as follows:

       On page 10, line 6, strike ``2004'' and insert ``2005''.
       On page 10, strike the matter between lines 19 and 20, and 
     insert:

                                                             Applicable
``Calendar year:                                         dollar amount:
  2006 or 2007..............................................$4,000 ....

  2008 and thereafter......................................$5,000. ....

       On page 11, strike the matter before line 1, and insert:

                                                             Applicable
``Calendar year:                                         dollar amount:
  2006 or 2007..............................................$2,000 ....

  2008 and thereafter......................................$2,500. ....

       On page 11, line 3, strike ``2007'' and insert ``2008''.
       On page 11, line 11, strike ``2006'' and insert ``2007''.
       On page 32, between lines 14 and 15, insert:

     SEC. __. ELIMINATION OF MARRIAGE PENALTY IN STANDARD 
                   DEDUCTION.

       (a) In General.--Paragraph (2) of section 63(c) (relating 
     to standard deduction) is amended--
       (1) by striking ``$5,000'' in subparagraph (A) and 
     inserting ``twice the dollar amount in effect under 
     subparagraph (C) for the taxable year'',
       (2) by adding ``or'' at the end of subparagraph (B),
       (3) by striking ``in the case of'' and all that follows in 
     subparagraph (C) and inserting ``in any other case.'', and
       (4) by striking subparagraph (D).
       (b) Phase-in.--Subsection (c) of section 63 is amended by 
     adding at the end the following new paragraph:
       ``(7) Phase-in of increase in basic standard deduction.--In 
     the case of taxable years beginning before January 1, 2008--
       ``(A) paragraph (2)(A) shall be applied by substituting for 
     `twice'--
       ``(i) `1.702 times' in the case of taxable years beginning 
     during 2001,
       ``(ii) `1.75 times' in the case of taxable years beginning 
     during 2002,
       ``(iii) `1.796 times' in the case of taxable years 
     beginning during 2003,
       ``(iv) `1.837 times' in the case of taxable years beginning 
     during 2004,
       ``(v) `1.88 times' in the case of taxable years beginning 
     during 2005,
       ``(vi) `1.917 times' in the case of taxable years beginning 
     during 2006, and
       ``(vii) `1.959 times' in the case of taxable years 
     beginning during 2007, and
       ``(B) the basic standard deduction for a married individual 
     filing a separate return shall be one-half of the amount 
     applicable under paragraph (2)(A).
     If any amount determined under subparagraph (A) is not a 
     multiple of $50, such amount shall be rounded to the next 
     lowest multiple of $50.''.
       (c) Technical Amendments.--
       (1) Subparagraph (B) of section 1(f)(6) is amended by 
     striking ``(other than with'' and all that follows through 
     ``shall be applied'' and inserting ``(other than with respect 
     to sections 63(c)(4) and 151(d)(4)(A)) shall be applied''.
       (2) Paragraph (4) of section 63(c) is amended by adding at 
     the end the following flush sentence:

     ``The preceding sentence shall not apply to the amount 
     referred to in paragraph (2)(A).''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.
       On page 38, line 18, strike ``2000'' and insert ``2002''.
       On page 236, strike line 12 through the matter following 
     line 21, and insert:
       (a) In General.--Section 2503(b) (relating to exclusions 
     from gifts) is amended--
       (1) by striking the following:
       ``(b) Exclusions From Gifts.--
       ``(1) In general.--In the case of gifts'',
       (2) by inserting the following:
       ``(b) Exclusions From Gifts.--In the case of gifts'',
       (3) by striking paragraph (2), and
       (4) by striking ``$10,000'' and inserting ``$20,000''.
       On page 237, line 3, strike ``2000'' and insert ``2004''.
       On page 270, line 18, strike ``2003'' and insert ``2004''.
       On page 273, line 21, strike ``2003'' and insert ``2004''.
       On page 275, line 12, strike ``2003'' and insert ``2004''.
       On page 277, line 13, strike ``2003'' and insert ``2005''.
       On page 278, line 13, strike ``2002'' and insert ``2004''.

  Mrs. HUTCHISON. I thank the Chair.
  Mr. President, I will not delay because I believe we are about to 
wrap up, and I will have 15 minutes equally divided tomorrow. This is a 
significant victory. I appreciate so much Chairman Roth and Senator 
Baucus, who is here on behalf of Senator Moynihan, working with me on 
this amendment.
  The bottom line is, by delaying a few other very important tax cuts, 
we have been able to put at the top of our priority list $6 billion 
more in marriage tax penalty relief for the 43 million people in this 
country who are suffering just because they are married. That is not 
right. We have been needing to correct this for years. You should not 
have to choose between love or money in America, and yet 22 million 
American couples are doing just that.
  This amendment will take part of the marriage tax relief and put it 
up, starting in 2001, so there will be immediate relief phased in to 
give couples that opportunity to save more of the money they earn to 
spend as they choose because, in fact, if they were not married, they 
would be paying that much less in taxes. But they are married. We want 
to encourage them to do that, if that is what they want to do, and we 
certainly should not be penalizing them.
  Tomorrow I will talk about what is in the amendment, what it does, 
but tonight I want to say thank you to Senator Roth and to Senator 
Baucus for working with us. This is a significant improvement in the 
bill because it will give married couples throughout our country the 
relief they deserve.
  I thank the Chair. I yield the floor.
  Mr. BAUCUS. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative assistant proceeded to call the roll.
  Mr. ROTH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROTH. Mr. President, I ask unanimous consent that prior to the 
vote on or in relation to amendment No. 1472 it be in order for Senator 
Hutchison to further modify her amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.


        Amendment Nos. 1388, 1411, 1412, 1446 and 1455, En Bloc

  Mr. ROTH. Mr. President, I have a series of five amendments which 
have been cleared on both sides. I ask unanimous consent that these 
amendments be agreed to, en bloc, the motion to reconsider be laid upon 
the table, and that any statements relating to these amendments be 
printed in the Record.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendments (Nos. 1388, 1411, 1412, 1446 and 1455) were agreed to, 
en bloc, as follows:


                           AMENDMENT NO. 1388

        (Purpose: Making technical corrections to the Saver Act)

       At the end of title XIV, insert:

     SEC. __. TECHNICAL CORRECTIONS TO SAVER ACT.

       Section 517 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1147) is amended--
       (1) in subsection (a), by striking ``2001 and 2005 on or 
     after September 1 of each year involved'' and inserting 
     ``2001, 2005, and 2009 in the month of September of each year 
     involved'';

[[Page 18445]]

       (2) in subsection (b), by adding at the end the following 
     new sentence: ``To effectuate the purposes of this paragraph, 
     the Secretary may enter into a cooperative agreement, 
     pursuant to the Federal Grant and Cooperative Agreement Act 
     of 1977 (31 U.S.C. 6301 et seq.), with the American Savings 
     Education Council.'';
       (3) in subsection (e)(2)--
       (A) by striking ``Committee on Labor and Human Resources'' 
     in subparagraph (B) and inserting ``Committee on Health, 
     Education, Labor, and Pensions'';
       (B) by striking subparagraph (D) and inserting the 
     following:
       ``(D) the Chairman and Ranking Member of the Subcommittee 
     on Labor, Health and Human Services, and Education of the 
     Committee on Appropriations of the House of Representatives 
     and the Chairman and Ranking Member of the Subcommittee on 
     Labor, Health and Human Services, and Education of the 
     Committee on Appropriations of the Senate;'';
       (C) by redesignating subparagraph (G) as subparagraph (J); 
     and
       (D) by inserting after subparagraph (F) the following new 
     subparagraphs:
       ``(G) the Chairman and Ranking Member of the Committee on 
     Finance of the Senate;
       ``(H) the Chairman and Ranking Member of the Committee on 
     Ways and Means of the House of Representatives;
       ``(I) the Chairman and Ranking Member of the Subcommittee 
     on Employer-Employee Relations of the Committee on Education 
     and the Workforce of the House of Representatives; and'';
       (4) in subsection (e)(3)(A)--
       (A) by striking ``There shall be no more than 200 
     additional participants.'' and inserting ``The participants 
     in the National Summit shall also include additional 
     participants appointed under this subparagraph.'';
       (B) by striking ``one-half shall be appointed by the 
     President,'' in clause (i) and inserting ``not more than 100 
     participants shall be appointed under this clause by the 
     President,'', and by striking ``and'' at the end of clause 
     (i);
       (C) by striking ``one-half shall be appointed by the 
     elected leaders of Congress'' in clause (ii) and inserting 
     ``not more than 100 participants shall be appointed under 
     this clause by the elected leaders of Congress'', and by 
     striking the period at the end of clause (ii) and inserting 
     ``; and''; and
       (D) by adding at the end the following new clause:
       ``(iii) The President, in consultation with the elected 
     leaders of Congress referred to in subsection (a), may 
     appoint under this clause additional participants to the 
     National Summit. The number of such additional participants 
     appointed under this clause may not exceed the lesser of 3 
     percent of the total number of all additional participants 
     appointed under this paragraph, or 10. Such additional 
     participants shall be appointed from persons nominated by the 
     organization referred to in subsection (b)(2) which is made 
     up of private sector businesses and associations partnered 
     with Government entities to promote long term financial 
     security in retirement through savings and with which the 
     Secretary is required thereunder to consult and cooperate and 
     shall not be Federal, State, or local government 
     employees.'';
       (5) in subsection (e)(3)(B), by striking ``January 31, 
     1998'' in subparagraph (B) and inserting ``May 1, 2001, May 
     1, 2005, and May 1, 2009, for each of the subsequent summits, 
     respectively'';
       (6) in subsection (f)(1)(C), by inserting ``, no later than 
     90 days prior to the date of the commencement of the National 
     Summit,'' after ``comment'' in paragraph (1)(C);
       (7) in subsection (g), by inserting ``, in consultation 
     with the congressional leaders specified in subsection 
     (e)(2),'' after ``report'';
       (8) in subsection (i)--
       (A) by striking ``beginning on or after October 1, 1997'' 
     in paragraph (1) and inserting ``2001, 2005, and 2009''; and
       (B) by adding at the end the following new paragraph:
       ``(3) Reception and representation authority.--The 
     Secretary is hereby granted reception and representation 
     authority limited specifically to the events at the National 
     Summit. The Secretary shall use any private contributions 
     received in connection with the National Summit prior to 
     using funds appropriated for purposes of the National Summit 
     pursuant to this paragraph.''; and
       (9) in subsection (k)--
       (A) by striking ``shall enter into a contract on a sole-
     source basis'' and inserting ``may enter into a contract on a 
     sole-source basis''; and
       (B) by striking ``fiscal year 1998'' and inserting ``fiscal 
     years 2001, 2005, and 2009''.
                                  ____



                           AMENDMENT NO. 1411

  (Purpose: To provide that no Federal income tax shall be imposed on 
 amounts received, and lands recovered, by Holocaust victims or their 
                                 heirs)

       At the end of title XI, insert the following:

     SEC. __. NO FEDERAL INCOME TAX ON AMOUNTS AND LANDS RECEIVED 
                   BY HOLOCAUST VICTIMS OR THEIR HEIRS.

       (a) In General.--For purposes of the Internal Revenue Code 
     of 1986, gross income shall not include--
       (1) any amount received by an individual (or any heir of 
     the individual)--
       (A) from the Swiss Humanitarian Fund established by the 
     Government of Switzerland or from any similar fund 
     established by any foreign country, or
       (B) as a result of the settlement of the action entitled 
     ``In re Holocaust Victims' Asset Litigation'', (E.D. NY), 
     C.A. No. 96-4849, or as a result of any similar action; and
       (2) the value of any land (including structures thereon) 
     recovered by an individual (or any heir of the individual) 
     from a government of a foreign country as a result of a 
     settlement of a claim arising out of the confiscation of such 
     land in connection with the Holocaust.
       (b) Effective Date.--This section shall apply to any amount 
     received before, on, or after the date of the enactment of 
     this Act.
                                  ____



                           AMENDMENT NO. 1412

                    (Purpose: To add a short title)

       On page 193, after line 23, add:
       (h) Short Title.--This section may be cited as the 
     ``Collegiate Learning and Student Savings (CLASS) Act''.
                                  ____



                    AMENDMENT NO. 1466, AS MODIFIED

 (Purpose: To eliminate the 2-percent floor on miscellaneous itemized 
    deductions for qualified professional development expenses and 
 incidental expenses of elementary and secondary school teachers, and 
                          for other purposes)

       On page 371, between lines 16 and 17, insert the following:

     SEC. __. 2-PERCENT FLOOR ON MISCELLANEOUS ITEMIZED DEDUCTIONS 
                   NOT TO APPLY TO QUALIFIED PROFESSIONAL 
                   DEVELOPMENT EXPENSES AND QUALIFIED INCIDENTAL 
                   EXPENSES OF ELEMENTARY AND SECONDARY SCHOOL 
                   TEACHERS.

       (a) Qualified Professional Development Expenses 
     Deduction.--
       (1) In general.--Section 67(b) (defining miscellaneous 
     itemized deductions) is amended by striking ``and'' at the 
     end of paragraph (11), by striking the period at the end of 
     paragraph (12) and inserting ``, and'', and by adding at the 
     end the following new paragraph:
       ``(13) any deduction allowable for the qualified 
     professional development expenses of an eligible teacher.''
       (2) Definitions.--Section 67 (relating to 2-percent floor 
     on miscellaneous itemized deductions) is amended by adding at 
     the end the following new subsection:
       ``(g) Qualified Professional Development Expenses of 
     Eligible Teachers.--For purposes of subsection (b)(13)--
       ``(1) Qualified professional development expenses.--
       ``(A) In general.--The term `qualified professional 
     development expenses' means expenses--
       ``(i) for tuition, fees, books, supplies, equipment, and 
     transportation required for the enrollment or attendance of 
     an individual in a qualified course of instruction, and
       ``(ii) with respect to which a deduction is allowable under 
     section 162 (determined without regard to this section).
       ``(B) Qualified course of instruction.--The term `qualified 
     course of instruction' means a course of instruction which--
       ``(i) is--

       ``(I) at an institution of higher education (as defined in 
     section 481 of the Higher Education Act of 1965 (20 U.S.C. 
     1088), as in effect on the date of the enactment of this 
     subsection), or
       ``(II) a professional conference, and

       ``(ii) is part of a program of professional development 
     which is approved and certified by the appropriate local 
     educational agency as furthering the individual's teaching 
     skills.
       ``(C) Local educational agency.--The term `local 
     educational agency' has the meaning given such term by 
     section 14101 of the Elementary and Secondary Education Act 
     of 1965, as so in effect.
       ``(2) Eligible teacher.--
       ``(A) In general.--The term `eligible teacher' means an 
     individual who is a kindergarten through grade 12 classroom 
     teacher, instructor, counselor, aide, or principal in an 
     elementary or secondary school.
       ``(B) Elementary or secondary school.--The terms 
     `elementary school' and `secondary school' have the meanings 
     given such terms by section 14101 of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 8801), as so in 
     effect.''
       (3) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000, and ending before December 31, 2004.
       (b) Qualified Incidental Expenses.--
       (1) In general.--Section 67(g)(1)(A), as added by 
     subsection (a)(2), is amended by striking ``and'' at the end 
     of clause (i), by redesignating clause (ii) as clause (iii), 
     and by inserting after clause (i) the following new clause:
       ``(ii) for qualified incidental expenses, and''.
       (2) Definition.--Section 67(g), as added by subsection 
     (a)(2), is amended by adding at the end the following new 
     paragraph:

[[Page 18446]]

       ``(3) Qualified incidental expenses.--
       ``(A) In general.--The term `qualified incidental expenses' 
     means expenses paid or incurred by an eligible teacher in an 
     amount not to exceed $125 for any taxable year for books, 
     supplies, and equipment related to instruction, teaching, or 
     other educational job-related activities of such eligible 
     teacher.
       ``(B) Special rule for homeschooling.--Such term shall 
     include expenses described in subparagraph (A) in connection 
     with education provided by homeschooling if the requirements 
     of any applicable State or local law are met with respect to 
     such education.''
       (3) Effective date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000, and ending before December 31, 2004.
                                  ____



                           AMENDMENT NO. 1455

  (Purpose: To amend the Internal Revenue Code of 1986 to expand the 
 deduction for computer donations to schools and to allow a tax credit 
             for donated computers, and for other purposes)

       On page 371, between lines 16 and 17, insert:

     SEC. __. EXPANSION OF DEDUCTION FOR COMPUTER DONATIONS TO 
                   SCHOOLS.

       (a) Extension of Age of Eligible Computers.--Section 
     170(e)(6)(B)(ii) (defining qualified elementary or secondary 
     educational contribution) is amended--
       (1) by striking ``2 years'' and inserting ``3 years'', and
       (2) by inserting ``for the taxpayer's own use'' after 
     ``constructed by the taxpayer''.
       (b) Reacquired Computers Eligible for Donation.--
       (1) In general.--Section 170(e)(6)(B)(iii) (defining 
     qualified elementary or secondary educational contribution) 
     is amended by inserting ``, the person from whom the donor 
     reacquires the property,'' after ``the donor''.
       (2) Conforming amendment.--Section 170(e)(6)(B)(ii) is 
     amended by inserting ``or reaquired'' after ``acquired''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to contributions made in taxable years ending 
     after the date of the enactment of this Act.

     SEC. __. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS AND SENIOR 
                   CENTERS.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits), as amended 
     by this Act, is amended by adding at the end the following:

     ``SEC. 45E. CREDIT FOR COMPUTER DONATIONS TO SCHOOLS AND 
                   SENIOR CENTERS.

       ``(a) General Rule.--For purposes of section 38, the 
     computer donation credit determined under this section is an 
     amount equal to 30 percent of the qualified computer 
     contributions made by the taxpayer during the taxable year.
       ``(b) Qualified Computer Contribution.--For purposes of 
     this section, the term `qualified computer contribution' has 
     the meaning given the term `qualified elementary or secondary 
     educational contribution' by section 170(e)(6)(B), except 
     that--
       ``(1) such term shall include the contribution of a 
     computer (as defined in section 168(i)(2)(B)(ii)) only if 
     computer software (as defined in section 197(e)(3)(B)) that 
     serves as a computer operating system has been lawfully 
     installed in such computer, and
       ``(2) for purposes of clauses (i) and (iv) of section 
     170(e)(6)(B), such term shall include the contribution of 
     computer technology or equipment to multipurpose senior 
     centers (as defined in section 102(35) of the Older Americans 
     Act of 1965 (42 U.S.C. 3002(35)) to be used by individuals 
     who have attained 60 years of age to improve job skills in 
     computers.
       ``(c) Increased Percentage for Contributions to Entities in 
     Empowerment Zones, Enterprise Communities, and Indian 
     Reservations.--In the case of a qualified computer 
     contribution to an entity located in an empowerment zone or 
     enterprise community designated under section 1391 or an 
     Indian reservation (as defined in section 168(j)(6)), 
     subsection (a) shall be applied by substituting `50 percent' 
     for `30 percent'.
       ``(d) Certain Rules Made Applicable.--For purposes of this 
     section, rules similar to the rules of paragraphs (1) and (2) 
     of section 41(f) and of section 170(e)(6)(A) shall apply.
       ``(e) Termination.--This section shall not apply to taxable 
     years beginning on or after the date which is 3 years after 
     the date of the enactment of the New Millennium Classrooms 
     Act.''
       (b) Current Year Business Credit Calculation.--Section 
     38(b) (relating to current year business credit), as amended 
     by this Act, is amended by striking ``plus'' at the end of 
     paragraph (12), by striking the period at the end of 
     paragraph (13) and inserting ``, plus'', and by adding at the 
     end the following:
       ``(14) the computer donation credit determined under 
     section 45E(a).''
       (c) Disallowance of Deduction by Amount of Credit.--Section 
     280C (relating to certain expenses for which credits are 
     allowable) is amended by adding at the end the following:
       ``(d) Credit for Computer Donations.--No deduction shall be 
     allowed for that portion of the qualified computer 
     contributions (as defined in section 45E(b)) made during the 
     taxable year that is equal to the amount of credit determined 
     for the taxable year under section 45E(a). In the case of a 
     corporation which is a member of a controlled group of 
     corporations (within the meaning of section 52(a)) or a trade 
     or business which is treated as being under common control 
     with other trades or businesses (within the meaning of 
     section 52(b)), this subsection shall be applied under rules 
     prescribed by the Secretary similar to the rules applicable 
     under subsections (a) and (b) of section 52.''
       (d) Limitation on Carryback.--Subsection (d) of section 39 
     (relating to carryback and carryforward of unused credits) is 
     amended by adding at the end the following:
       ``(9) No carryback of computer donation credit before 
     effective date.--No amount of unused business credit 
     available under section 45E may be carried back to a taxable 
     year beginning on or before the date of the enactment of this 
     paragraph.''
       (e) Clerical Amendment.--The table of sections for subpart 
     D of part IV of subchapter A of chapter 1, as amended by this 
     Act, is amended by inserting after the item relating to 
     section 45D the following:

``Sec. 45E. Credit for computer donations to schools and senior 
              centers.''

       (f) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to contributions 
     made in taxable years beginning after the date of the 
     enactment of this Act.
       (2) Certain contributions.--The amendments made by this 
     section shall apply to contributions made to an organization 
     or entity not described in section 45E(c) of the Internal 
     Revenue Code of 1986, as added by subsection (a), in taxable 
     years beginning after the date that is one year after the 
     date of the enactment of this Act.

  Mr. COVERDELL. Mr. President, I would like to discuss an amendment 
that Senators Torricelli, McCain, Craig, and I would like to offer--
expansion of education savings accounts. Under our provision, parents, 
relatives, friends--anyone--would be allowed to contribute up to $2,000 
per year, after tax, into an account where the proceeds could be 
withdrawn tax-free to pay for a child's K-12 education expenses.
  Right now, the law allows parents to contribute up to $500 per year 
for a child's college education. We increase that amount to $2,000 per 
year and allow for tax-free withdrawals for K-12 educational expenses, 
as well.
  Last Congress, this legislation passed the Senate with bipartisan 
majorities on two separate occasions. The bill passed with a vote of 56 
to 43; while the conference report passed with a vote of 59 to 36.
  On each occasion, the chairman of the Finance Committee supported the 
measure, and was in large part responsible for its successful passage.
  Unfortunately, despite the bipartisan support for the bill, the 
opponents of this legislation ultimately prevailed and it was vetoed by 
President Clinton.
  Because the House-passed tax-relief measure contains this provision, 
I would like to withdraw our amendment and ask the chairman of the 
Finance Committee, Senator Roth, to support the House position on this 
issue during the upcoming House-Senate conference negotiations.
  Mr. ROTH. Thank you, Senator Coverdell. As you are aware, I have been 
a supporter of this legislation in the past, and I will continue to 
support this legislation in the future.
  This bipartisan proposal is an outstanding example of our ability to 
use the tax code, to help millions of middle class American families 
across the country. By using the tax code to encourage families to save 
for their children's education needs and expenses, we all benefit. The 
expansion of the education IRA will result in greater opportunities for 
every American child and their families. With education savings 
accounts, 14 million families--over 20 million kids--will take 
advantage of the expanded education IRAs, generating billions of 
dollars in education savings that might otherwise not exist. It is an 
outstanding way to provide families new and innovative options in 
education.
  Because this legislation has the support of a bipartisan majority of 
the Senate and is contained in the House-passed bill, I believe it 
should be given every consideration by the conferees during the 
negotiations of the conference report.
  Mr. SARBANES. Mr. President, I rise in opposition to the Budget 
Reconciliation bill that is before us today. This bill would spend 
nearly all of the on-budget surplus projected by the Congressional 
Budget Office over the next

[[Page 18447]]

ten years and would use none of this projected surplus to protect the 
Social Security system, shore up Medicare, or give senior citizens the 
prescription drug benefits they so desperately need. Instead of taking 
this opportunity to invest in the future of America at the threshold of 
the 21st century, Republicans want to enact deep and unreasonable tax 
cuts that largely benefit the wealthy.
  One major problem with basing a decade's worth of budgetary decisions 
on a projected surplus is that we have no way of knowing what will 
happen in the next ten years to affect these projections. Consider that 
just three years ago, when we enacted the Balanced Budget Act of 1997, 
there were forecasts of large deficits stretching into the future. This 
year, both the Congressional Budget Office and the Office of Management 
and Budget are projecting large surpluses over the same period. This 
turnabout should illustrate clearly that there is a large element of 
uncertainty in any economic projection, and that large scale shifts in 
tax policy that would tie our hands in the event of an economic 
downturn are, at the very least, unwise.
  Furthermore, the surplus estimates are based on the assumption that 
the Federal government will adhere to the spending caps enacted in the 
Balanced Budget Act of 1997. The Leadership in both Houses has admitted 
that this is not a realistic assumption: a number of appropriations 
bills will not be able to pass unless their funding is restored to pre-
cap levels. Already this year, appropriators are eyeing the projected 
budget surpluses to help fund large appropriations bills. And, as 
difficult as these spending caps have been for appropriators this year, 
the spending caps in future years call for even more drastic cuts.
  We are in the midst of the longest peacetime economic expansion in 
history. This remarkable turnaround has come about in large part 
because of deficit reduction efforts which began with legislation 
proposed by the Administration and enacted by the Congress in 1993 - 
without a single Republican vote. Thanks to these efforts, we have been 
able to achieve record low levels of unemployment while at the same 
time maintaining dramatically low levels of inflation. Tax cuts of the 
magnitude put forward by the Majority would be unwise and potentially 
destabilizing in an economy that has strong growth, low unemployment 
and dramatically low levels of inflation.
  The real question before us today is whether we are going to take 
advantage of this opportunity to exercise responsible fiscal policy. If 
we begin to stimulate the economy with a tax cut at the very time that 
unemployment is at unprecedented low levels, we run the risk of 
reigniting inflation. If we start over-stimulating the economy, the 
Federal Reserve will surely raise interest rates to keep inflation in 
check and we will be right back in the box we faced prior to this 
recovery.
  It is my strongly held view that any surplus realized over the next 
ten years should be seen as an opportunity to pay down the Nation's 
debt, invest in our Nation's future, and shore up vital programs. The 
Republican tax plan would squander this unprecedented opportunity to 
ensure that the Federal government will meet its obligations after the 
baby boomers retire and beyond.
  The Republican plan does nothing to preserve the integrity of the 
Social Security trust fund. The Social Security program is one of this 
Nation's greatest achievements. For more than 60 years, we have ensured 
that our senior citizens have a means of support in retirement after a 
lifetime of hard work. We must honor this commitment and ensure that 
seniors who count on Social Security receive their benefits.
  The Republican tax plan would set aside no new resources for the 
Medicare program--the plan does nothing to extend the solvency of the 
Medicare trust fund or provide prescription drug benefits. The 
President's proposal to enact a modest prescription drug benefit for 
Medicare would cost $46 billion over the next ten years--less than 6 
percent of the total cost of the Republican tax proposal.
  Beyond Social Security and Medicare, this projected budget surplus 
could allow us to invest in the country's infrastructure. We should 
invest in schools to provide our children with the best possible 
education; we should improve our Nation's highways and infrastructure; 
we should invest in America's workers to train them for the 21st 
century; we should continue to put more police officers on the streets 
and give them the resources they need to bring crime rates down; and we 
should protect our environment and natural resources.
  While I am not opposed to passing legislation that uses a portion of 
the projected surplus to cut taxes, such cuts must be responsible, and 
we should ensure that America's hard-working families who are 
struggling to take part in the Nation's prosperity benefit first.
  Mr. President, we are embarking on an extremely important decision in 
terms of the future course of the 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 infrastructure. We can shore up Social Security, 
address the problems in the Medicare program, and bring down the 
Federal debt. We can also implement targeted tax cuts that help 
strengthen our families.
  All of these things are possible, but we cannot, for the sake of our 
future economic prosperity, go to extremes. The Republican proposal is 
an extreme proposal. Subjected to analysis, it does not stand up. I 
strongly oppose this proposal and I urge my colleagues to reject it.
  Mr. KENNEDY. Mr. President, I am in strong support of Senator Robb's 
amendment to recommit the tax bill to instruct the Finance Committee to 
make a $5.7 billion investment in rebuilding and modernizing the 
nation's schools. I commend Senator Robb for his leadership on this 
issue and I urge my colleagues to support this sensible legislation 
that is necessary to help the nation meet the critical need to 
modernize and rebuild crumbling and overcrowded schools.
  Schools, communities, and governments at every level have to do more 
to improve student achievement. Schools need smaller classes, 
particularly in the early grades. They need stronger parent 
involvement. They need well-trained teachers in the classroom who keep 
up with current developments in their field and the best teaching 
practices. They need after-school instruction for students who need 
extra help, and after-school programs to engage students in 
construction activities. They need safe, modern facilities with up-to-
date technology.
  But, this investment can't succeed when roofs are crumbling and 
children are in overcrowded classrooms. Sending children to 
dilapidated, overcrowded facilities sends a message to these children. 
It tells them they don't matter. No CEO would tolerate a leaky ceiling 
in the board room, and no teacher should have to tolerate it in the 
classroom. We need to do all we can to ensure that children are 
learning in safe, modern school buildings.
  Renovation, rehabilitation, and modernization will allow schools to 
correct problems that prevent them from offering an environment 
conducive to learning. Researchers have documented a clear link between 
school building conditions and student learning. A study by Virginia 
Polytechnic Institute and State University in 1996 compared test scores 
of students in substandard and above-standard buildings, and found that 
students in better buildings with access to modern technology do better 
in their academic work then those without these problems.
  Nearly one third of all public schools are more than 50 years old. 14 
million children in a third of the nation's schools are learning in 
substandard buildings, and half of the schools have at least one 
unsatisfactory environmental condition. The problems with ailing school 
buildings aren't the problems of the inner city alone. They exist in 
almost every community, whether urban, rural, or suburban.
  In addition to modernizing and renovating dilapidated schools, 
communities need to build new schools in

[[Page 18448]]

order to keep pace with rising enrollments and to reduce class sizes. 
Elementary and secondary school enrollment has reached an all-time high 
again this year of 53 million students, and will continue to grow.
  The Department of Education estimates that 2,400 new public schools 
will be needed by 2003, to accommodate rising enrollments. The General 
Accounting Office estimates that it will cost communities $112 billion 
to repair and modernize the nation's schools. Congress should lend a 
helping hand and do all we can to help schools and communities across 
the country meet this challenge.
  In Massachusetts, 41 percent of schools report that at least one 
building needs extensive repairs or should be replaced. 80 percent of 
schools report at least one unsatisfactory environmental factor. 48 
percent have inadequate heating, ventilation, or air conditioning. And 
36 percent report inadequate plumbing systems.
  This past year, I visited Everett Elementary School in Dorchester, 
Massachusetts. The school is experiencing serious overcrowding. The 
average class size is 28 students. The principal of the school gave up 
her office and moved into a closet in the hall in order to accommodate 
the rising enrollment. When the school needs the multi-purpose 
auditorium/library, the rolling bookcases are moved to the basement, 
and the library has to close for the rest of the day.
  In Fitchburg, Massachusetts, enrollments are rising by 200 students a 
year. Educators there would like to reduce class size, extend special 
education and bilingual education programs, and hire new teachers, but 
the school system does not have the facilities or resources to 
accomplish these important goals. Instead, Fitchburg has been forced to 
construct four portable facilities--and a fifth is under construction--
to deal with overcrowding.
  Forrest Grove Middle School in Worcester, Massachusetts, is at full 
capacity with 750 students. As enrollments rise, they expect an 
additional 150 students, forcing them to rent rooms at a local church 
to alleviate overcrowding. The schools in Olathe, Kansas are growing at 
a rate of 500-1,000 students a year, which is equivalent to about one 
new school per year.
  Two cafeterias at Bladensburg High School in Prince Georges County, 
Virginia were recently closed because they were infested with mice and 
roaches. A teacher commented, ``It's disgusting. It causes chaos when 
the mice run around the room.'' At an elementary school in Montgomery, 
Alabama, a ceiling which had been damaged by leaking water collapsed 
only 40 minutes after the children had left for the day.
  In Ramona, California, where overcrowding is a serious problem, one 
elementary school is composed entirely of portable buildings. It has 
neither a cafeteria nor an auditorium, and a single relocatable room is 
used as a library, computer lab, music room, and art room.
  In Silver Spring, Maryland, a second-grade reading class has to 
squeeze through a narrow corridor with a sink on one side into a space 
about 14 feet wide by 15 feet long.
  Schools are trying to meet their needs, but they can't do it alone. 
The federal government should join with state and local governments and 
community organizations to ensure that all children have the 
opportunity to get a good education in a safe and up-to-date school 
building.
  Children need and deserve a good education in order to succeed in 
life. But they cannot obtain that education if school roofs are falling 
down around them, sewage is backing up through faulty plumbing, 
asbestos is flaking off the walls and ceilings, schools lack computers 
and modern technology, and classrooms are overcrowded. We need to 
invest more to help states and communities rebuild crumbling schools, 
modernize old buildings, and expand facilities to accommodate reduced 
class sizes.
  Senator Robb's bill offers school districts the necessary flexibility 
and assistance to get the job done. Under this proposal, states will be 
able to put together a school financing package which best meets their 
needs. It offers states and school districts five choices from a menu 
of school construction financing components. It gives states and 
communities the authority to offer zero-interest school modernization 
bonds. It also offers other tax incentives to enhance the ability of 
communities to rebuild their schools, including private activity bonds, 
advance refunding, elimination of arbitrage rebates for small issuers, 
and Federal Home Loan Bank guarantees on school construction bonds.
  I urge my colleagues to support Senator Robb's amendment. The time is 
now to do all we can to help rebuild and modernize public schools, so 
that all children can succeed in safe, technologically-equipped 
schools.
  Mr. ROCKEFELLER. Mr. President, I rise today to discuss the Balanced 
Budget Act of 1997 and its impact on providers and beneficiaries' 
access to health care services. Congress has a responsibility to 
address problems with the BBA for providers, especially those in rural 
areas. I believe it is important that we keep one thought in mind 
during the course of this debate--we debated all these changes to help 
our seniors. They are, and should remain, at the forefront of these 
discussions.
  The BBA made the most significant modifications to Medicare in the 
history of the program. It signified a change in policy designed to pay 
more reasonable prices and increase overall efficiency. There is no 
doubt that these were needed reforms enacted to protect and preserve 
the program for future generations. However, in light of the magnitude 
of the changes, we need to make some adjustments to compensate for 
unforeseen consequences.
  It is clear that in rural areas like West Virginia, the impact of the 
BBA on beneficiaries and providers is much more dramatic than in many 
other parts of the country. Medicare payments make up a larger 
proportion of rural hospitals' revenues and rural hospitals have lower 
hospital margins in general. Thus, West Virginia hospitals, like many 
other rural hospitals, have little to fall back on when federal 
Medicare payments are cut.
  Since rural hospitals are often local safety net providers with low, 
and sometimes negative, margins, payment reductions may mean financial 
jeopardy for rural hospitals and consequently, reduced access to care 
for rural beneficiaries.
  It is not yet clear whether Medicare payment rates will take into 
account the severity or complexity of patients' illnesses. Under the 
current law, caring for the chronically ill or those with complex 
medical conditions can push these health care facilities closer to the 
brink of bankruptcy. Rural facilities are especially concerned because 
they do not treat a large enough volume of patents to counterbalance 
the costs of a few very sick ones.
  We cannot afford to lose providers without endangering the well-being 
of our citizens. Therefore, it is imperative that we take action to 
make sure that the problems we're facing today do not become a crisis 
that we'll have to face in the near future.
  I would like to note that this body has voted on one facet of this 
issue earlier this year. The Senate budget resolution included an 
amendment, which was passed by voice-vote, that directed attention to 
the impact of the BBA on hospital care. Specifically, the amendment 
expressed the sense of the Senate that we should consider the extent to 
which the BBA has had adverse effects on access to hospital care and 
provided additional budget authority to address the unintended 
consequences.
  Today, I am offering an amendment with my colleagues from 
Massachusetts and Maryland, Senators Kerry and Mikulski, that takes the 
next step in providing for the additional needs of our health care 
delivery system, especially in rural areas. The ``Medicare Quality 
Assurance and Continued Access'' amendment would amend a small portion 
of the tax cut for a comprehensive package of assistance to Medicare 
providers.
  Mr. President, I am not advocating that we undo the BBA. However, we 
must address the inequities that resulted from its enactment, 
particularly when it comes to making certain our seniors get the care 
they need.

[[Page 18449]]

  We have commitment to those who came before us and sacrificed so much 
to make this nation what it is today. Today, we have the opportunity to 
honor that commitment, and I urge my colleagues to do so by supporting 
changes to the Balanced Budget Act.
  Mrs. FEINSTEIN. Mr. President, I rise to address the amendment on 
low-income housing tax credit to be offered by my colleague from 
Pennsylvania, of which I am a cosponsor.
  This issue--affordable housing--is of great importance in my state of 
California, as it is for much of the nation. Low income families in San 
Francisco, San Diego, and cities across the country are finding it 
harder and harder to find affordable housing for rent.
  The low-income housing tax credit is a great help. Since 1987, state 
agencies have allocated over $3 billion in housing credits to help 
finance nearly one million apartments for low income families.
  The current housing credit cap--$1.25 for each resident of a state--
has not been adjusted since the program's inception. Annual cap growth 
is limited to the increase in state population, which has been less 
than five percent nationwide over the past decade. During the same time 
period, inflation has eroded the housing credit's purchasing power by 
nearly 50 percent, as measured by the Consumer Price Index.
  The budget reconciliation bill increase the credit cap to $1.75 over 
five years. This is an important step, but it's not enough. Senator 
Santorum and I have proposed this amendment to index the low-income 
housing tax credit cap for inflation.
  The estimated cost to index the cap for inflation is $43 million over 
ten years. It is my understanding the cost has been fully offset. It is 
important to see that the housing tax credit will not depreciate over 
time.
  By not indexing the credit for inflation over the past 13 years, it 
has eroded by between 40 and 45 percent. Costs to build and 
rehabilitate affordable housing developments have continued to climb, 
requiring more credit per project in order to achieve economic 
feasibility. As a result, less and less affordable housing is made 
available under the credit.
  Assuming an inflation factor of just three percent, California would 
have an additional $1.23 million in the first year of indexing. This 
would produce approximately 150 more affordable apartments in 
California annually.
  Nationwide, demand for housing credits outstrips supply by more than 
three to one. In California, it's four to one. According to the Center 
on Budget and Policy Priorities, 90 percent of renters in Los Angeles 
pay more than 30 percent of their monthly income on rent. Seventy-three 
percent spend more than 50 percent of their income on rent.
  In the city of San Diego, the affordable housing situation is not 
much better. There, 106,000 families spend more than 30 percent of 
their income on rent, and 57,000 families spend more than 50 percent on 
rental housing.
  In the San Francisco Bay Area, the situation is even worse. The 
average family pays roughly 58 percent of its monthly income on rent. 
We need to aggressively work to fix this shortage. We need to ensure 
the tax credit will remain a workable incentive for home builders 
nationwide. I urge my colleagues to join me in support of this 
amendment.
  Mr. BURNS. Mr. President, I will offer an amendment that will help to 
keep our Nation's air clean and healthy. This amendment will provide a 
tax credit for our Nation's energy producers to produce an 
environmentally-friendly and energy-efficient alternative fuel using 
otherwise unusable waste products and natural resources.
  This proposal would provide for a biomass coal tax credit and offer 
an incentive for the Nation's energy producers to construct facilities 
that would process low-grade, high-moisture, coal. We have large 
supplies of this type of coal in our nation.
  This proposal provides half of the credit that is being allowed to 
produce electricity using biomass and wind power. This is a production 
tax credit you can only claim the credit if you produce the qualified 
product.
  However, it has been determined that in order for companies to use 
this credit, they need to have an idea that the credit is going to be 
available for an extended number of years. Otherwise the costs of 
building the facilities to provide this environmentally-friendly and 
energy-efficient fuels would be cost prohibitive.
  The marketplace demands a premium, low pollutant coal, to meet the 
nations needs and in response to the Clean Air Act and the Kyoto 
Protocol. We cannot jeopardize America's competitiveness by complying 
with Kyoto's costs on our consumers and markets.
  Providing this tax credit marks the beginning of a new industry. 
Based on current market pressures resulting from deregulation and 
environmental regulations, numerous companies are interested in 
constructing these facilities. This is a tax credit that will help to 
clean our Nation's air and keep our skies blue.
  I yield the floor.
  Mr. KENNEDY. Mr. President, members on both sides of the aisle have 
spent a great deal of time over the past two years talking about child 
care. We've introduced dozens of bills. We've held extensive hearings. 
We know the difficulties facing countless families across the nation in 
obtaining affordable, quality care for their children.
  We've emphasized the scientific research that confirms again and 
again that quality early childhood support is necessary for proper 
brain development of infants and toddlers. We've called for significant 
additional investments in the nation's children when they are very 
young, so that all children can benefit from healthy growth and 
development. The alternative is unacceptable because it means far 
higher costs in the long run, and because it denies many thousands of 
children the opportunity to enter school ready to learn.
  For all the talk, there has been far too little action. We have 
severely underfunded the Child Care and Development Block Grants to the 
states. Only one in ten children who qualify for federal assistance 
actually receives it. When states run out of funds, they place many of 
the remaining children on waiting lists. Today, over two hundred 
thousands children who need a safe and stimulating environment while 
their parents work are on waiting lists instead. At a hearing held this 
week, Senators from both parties called this a national disgrace, and I 
could not agree more.
  Many of those who have taken jobs under welfare reform are parents 
who can only find minimum wage employment. At today's low minimum wage, 
full time work pays only $10,712 in wages a year. Yet child care for 
one child costs thousands of dollars a year. Without adequate child 
care assistance, it is irresponsible to demand that parents leave their 
infants and toddlers without adequate care. Yet that is the consequence 
of our refusal to fully fund the Child Care and Development Block 
Grant.
  With the amendment of Senator Dodd and Senator Jeffords, we can begin 
to deal more effectively with this serious problem. The amendment 
represents concrete progress in fulfilling the nation's commitment to 
children. It would give states the additional resources they need to 
support quality child care in their communities. In this time of 
enormous prosperity, it is not only the right thing to do--it is a wise 
investment for this nation's future.
  Mrs. MURRAY. Mr. President, I join with the Senator from Florida in 
urging my colleagues to do the right thing. Our priorities are out of 
order. We must remember that we have all committed to saving Social 
Security and Medicare. These should be our priorities. We should be 
debating reforms that save these essential income security programs 
instead of deciding how to squander a protected surplus that may never 
materialize.
  This tax bill is a serious threat to women. By ignoring the looming 
crisis facing both Social Security and Medicare, we are jeopardizing 
the financial security of older women. If we fail to reform both Social 
Security and Medicare, we will force more older women into poverty. The 
progressive structure of both programs guarantees that for

[[Page 18450]]

millions of older women, their golden years are not spent living far 
below the poverty level.
  The bottom line is that Social Security and Medicare are women's 
issues. They are the most important domestic programs for women. By 
failing to allocate part of the projected surplus to saving these 
programs and instead acting for short term gratification, we place the 
issues important to women and families behind the special interests of 
DC lobbyists.
  Why am I here today fighting for an amendment that simply says we 
will not squander the projected surplus until we have reformed Social 
Security and Medicare for the long term? Because I am here fighting for 
families and fighting for some economic peace of mind for older women. 
Without Social Security benefits, the elderly poverty rate among women 
would be 52.2 percent and among widows would be 60.6 percent. Instead 
12 percent of all Social Security recipients live in poverty. While I 
still cannot accept even 12 percent, I do not want to be part of 
pushing more than 50 percent of older women into poverty.
  Women are far more dependent on Social Security for their retirement 
income than are men. Three-quarters of unmarried and widowed elderly 
women rely on Social Security for more than half of their income. 
Fifty-eight percent of all Social Security recipients are women. Tell 
me women do not have a vital stake in this debate.
  I am not saying we cannot have tax relief targeted to working 
families. We could have tax relief targeted to help more Americans save 
for retirement. However, we cannot jeopardize or gamble with the future 
economic security of millions of women. We have to tackle Social 
Security and Medicare reform first.
  I know such reform will require heavy lifting. It will require us to 
invest potential surplus funds in the well-being of older Americans. I 
am committed to this reform. I am willing to sit down and tackle these 
tough assignments. What I am not willing to do is to watch my 
colleagues ignore the economic importance of both Social Security and 
Medicare for women.
  A tax cut is not what most women are looking for. They want pay 
equity, economic opportunity, and retirement security. Women currently 
start out several economic steps behind men. We know that women today 
earn 74 cents for every dollar men earn. We know that women, on 
average, take a total of 11.5 years out of the work force to care for 
their families. We know that women often outlive their retirement 
savings. And, we know that more women live with chronic and disabling 
illnesses. This in part explains why women are more than twice as 
likely as men to live in poverty at age 65.
  This amendment does not kill a tax cut. It will force us to make the 
tough decisions and to tackle the difficult job of reforming Social 
Security and Medicare. But, more important, it will provide greater 
economic security to women than any instant gratification tax cut ever 
would. Please do not force elderly women to pay the price for our 
misguided priorities.
  Mr. BUNNING. Mr. President, I rise in support of the Taxpayer Refund 
Act and urge my colleagues to vote for it.
  I actually prefer the tax bill that was considered and approved in 
the House of Representatives and I support the conservative substitute 
tax bill that was offered earlier today.
  I prefer these alternatives because they cut taxes across the Board 
which I think is appropriate. They reduce the marriage penalty more 
adequately which I think is essential.
  They make further reductions in the capital gains tax which I think 
is good for the economy. They totally phase out the death tax instead 
of just reducing it which I think is just a matter of fairness.
  However, even though I think that the Taxpayer Refund Act could be 
improved--and I hope that it is improved during conference--it is 
vitally important that we keep the process moving and send a tax cut 
bill to conference.
  During this debate, we've seen a great many charts and graphs 
outlining all the figures and projections under the Sun. It's almost 
like watching a Ross Perot commercial.
  But when we get to the bottom line in this debate, we aren't talking 
about figures and projections at all. We are talking about two 
different philosophies of government.
  We are talking about two different philosophies of who the money 
really belongs to.
  Does the money that is generated by the income tax and the payroll 
tax belong to the people--or does it belong to the Federal Government. 
That's the argument today.
  And the differences here are very clear cut and distinct.
  The President and his supporters believe that the money paid into the 
Federal treasury belongs to the Government.
  We are told that over the next 10 years we will have $1.1 trillion 
more than we need in general revenues to fund the Federal Government. A 
trillion dollars is a lot of money.
  But the President and his supporters say that all that money belongs 
to the Government and that we should hold onto it just in case Congress 
or the President can find new ways to spend it.
  I can guarantee that if we let the Government hold onto that money--
somebody will find a way to spend it.
  On the other side of the coin, Republicans say that if taxes are 
bringing in more money than we need to run the Government, we should 
give it back to the people so they can determine how to spend it.
  That's what this debate is all about. Whose money is it?
  The President and the Democrat leadership say that tax cuts are 
irresponsible and risky--that they would jeopardize Social Security, 
Medicare and essential government services.
  But our budget and our tax bill and our Social Security lockbox 
proposal which the Democrats here in the Senate keep rejecting all 
guarantee that the Government cannot touch the Social Security 
surpluses over the next 10 years.
  The Republican proposals all clearly protect Social Security--we lock 
up that money so it can't be spent--so that it reduces the public debt.
  But the Democrats in this body keep voting against the lock box which 
would guarantee that Social Security surpluses cannot be spend. So, it 
is not the Republican tax bill that threatens Social Security. It is 
Democrat reluctance to make a binding commitment not to spend Social 
Security surpluses.
  Yes, something needs to be done to strengthen and protect Medicae--
but it is not the Republican tax bill which threatens this important 
program.
  Medicare needs systemic reform--we all know that--and it was the 
President--not the Republicans or the Republican tax bill--who killed 
the bipartisan commission recommendations which were designed to give 
us a starting point for real Medicare reform.
  So, no, this debate is not about Social Security--it is not about 
Medicare. It is about who the money belongs to.
  I believe that it belongs to the working Americans who pay the 
freight. When the projections tell us that we are going to take in over 
a trillion dollars more than we need, it means that the taxpayers are 
paying too much and we should give it back.
  It's that simple.
  That's what this debate is all about.
  We have an opportunity today to return some tax money to the 
taxpayers of this Nation. It is a matter of fairness--it is a matter of 
honesty--and it is a simple matter of respect.
  We can protect Social Security and Medicare and we can reduce the 
public debt and, yes, we can cut taxes at the same time.
  And we should cut taxes--because, Mr. President, I'm one of those who 
believe that the money belongs to the people--not the Government.
  Mr. BINGAMAN. Mr. President, I'm not going to take a lot of the 
Senate's time, but I want to speak briefly about an amendment I have 
filed to this tax bill. My amendment, number 1391, promotes the use of 
small, efficient distributed electronic power generation systems in 
residential, industrial and commercial applications.
  I believe distruted generating technologies are the future of our 
electric

[[Page 18451]]

power industry. Already, the first microturbines and fuel cells are 
being installed in homes and businesses. Renewable technologies, like 
wind and solar, are bringing power to isolated areas that are not 
connected to the electrical power grid. These remote applications are 
very common in my state of New Mexico.
  Mr. President, my amendment has two parts. The first part provides a 
much needed tax clarification concerning small, distributed electric 
power technologies, such as high-efficiency microturbines and fuel 
cells. The current tax law discourages the use of these technologies in 
commerical buildings by requiring a straight-lined depreciation over a 
39-year lifetime. However, the same technology, if used in different 
application, has a shorter depreciation schedule. My amendment would 
make clear that these advanced electric power systems would have a 15-
year depreciation schedule when used for power generation.
  The second part of my amendment provides an 8-percent investment tax 
credit for systems that produce both heat energy and electrical power. 
The tax credit would apply only to systems that meet a strict 60-
percent overall energy efficient requirement. This provision will help 
increase the Nation's energy efficiency by encouraging investment in 
these highly efficient systems.
  Last month the Energy and Natural Resources Committee held a hearing 
on distributed power generation. The hearing made clear that 
technologies such as microturbines, fuel cells, and the various 
renewable resources can provide many practical benefits, including 
reduced dependence on high-tension power transmission lines, higher 
energy efficiency, lower costs, increased reliability, and reduced 
emissions. Moreover, by combining the production of heat and electric 
power in one package, overall efficiencies of up to 90 percent can be 
achieved.
  Though I believe my amendment is important and would provide 
significant economic, reliability, and environmental benefits, I am not 
going to call it up for one very simple reason: This tax bill isn't 
going anywhere. The Senate will soon pass this bill, but the President 
is not going to sign it. In a few weeks, when the Senate comes back 
with a more sensible package of tax legislation, I hope my amendment 
will be incorporated in a bill that we can pass and send to the 
President for his signature.
  The incentives for distributed generating technologies in my 
amendment will go a long way to realizing the best future for electric 
power generation and efficient use of energy. I hope we can pass them 
in the next tax bill.
  Mr. MACK. Mr. President, I would like to talk a few minutes about one 
particular provision in the tax bill we are debating, the extension of 
the Research & Development tax credit. Last week the Finance Committee 
took an historic step, and reported a bill which would have made the 
R&D tax credit a permanent feature of our tax code. Yesterday, 
unfortunately, every single member of the minority voted to sunset the 
provisions of the tax bill, so instead of a permanent R&D tax credit, 
we have a ten-year extension.
  Though the actions of our colleagues across the aisle prevented us 
from having a permanent R&D tax credit, I am pleased that the on-again, 
off-again nature of the credit will not undermine America's innovators 
for the next decade. I have long supported federal policies to increase 
the nation's R&D investment because of the central importance of 
scientific research to the health and well-being of our people, its 
positive contribution to our economic growth and our higher standard of 
living, and the improvements which add to our quality of life.
  Both business and government play important and complementary roles 
in making sure that America continues to lead the world in research and 
innovation. The federal role in R&D is focused on investment in long-
term basic research. I will continue to do my best to increase federal 
R&D spending on basic research, particularly on biomedical research 
which leads to huge benefits to all Americans.
  Today, private industry plays the largest role in the nation's 
research effort, funding 65% of all R&D. Industry's role makes it clear 
. . . that if overall R&D is to increase, we must pursue policies which 
create a good business climate for firms to pursue long-term increases 
in their R&D budgets. We want America's leading-edge companies to hire 
new scientists, invest in new technologies and new research 
facilities--and the R&D tax credit provides that crucial incentive.
  To see the benefits of R&D, look no further than America's economic 
performance today. We are in the eighth consecutive year of non-
inflationary growth, and technology industries deserve a large share of 
the credit. In fact, high-tech industries have accounted for about one-
third of real GDP growth in recent years.
  Advancements from R&D lead to a huge number of improvements to our 
quality of life. The most dramatic impact of R&D on our quality of life 
is evident in biomedical research and health care. Here are some 
examples of the payoff to medical R&D:
  It used to be that patients with kidney failure had to undergo 
frequent transfusions, which are expensive, carry substantial risks, 
and leave many patients anemic. Many kidney patients had to cut back on 
work or quit their jobs, or go on public assistance. Through extensive 
R&D, one of America's top biotech companies created a new drug that 
allows the body to create red blood cells again and enables people to 
restore their energy. In the past decade, this drug has helped millions 
to remain productive. It has reduced transfusions in the United States 
by nearly one-fifth, and fewer people have contracted blood-born 
disease.
  Another example of the real-life benefits from R&D is the new class 
of drugs, developed in the late 1980s, which are giving millions of 
people who suffer from depression a new lease on life. Because of these 
new depression drugs, the cost of treating depression in the United 
States has plummeted--expensive psychiatric care and in-patient stays, 
which many could not afford, are now disappearing in favor of these new 
treatments.
  There are two telecommunications companies which invested in R&D to 
create new technologies to bring state-of-the-art medicine to 
previously underserved and remote locations. These new technologies 
allow transfer of high-resolution photographs, radiological images, 
sounds, and medical records from leading medical centers to physicians 
and patients in remote locations.
  These are just a few of hundreds of great success stories coming out 
of America's medical research labs--successes coming from companies 
responding to the R&D tax credit incentive. These examples make clear 
that R&D is not simply a dollars and cents issue. Federal R&D policy 
makes improvements to the quality of life across-the-board for all 
Americans.
  The R&D tax credit has proven its effectiveness. Numerous studies 
during the past decade have found that each dollar of tax credits 
generates between $1 and $2 of additional R&D. Therefore, taxpayers are 
getting a solid return on their investment in terms of greater economic 
growth, a higher standard of living, and in numerous cases--a longer 
and healthier life span.
  As chairman of the Joint Economic Committee, last month, along with 
Senator Bennett, I hosted a high-tech summit which brought together 
business leaders from all across the high technology industries. One 
issue everyone seemed to agree on was that a permanent R&D tax credit 
would advance the development of new technologies, leading to 
breakthroughs which benefit the environment, increase transportation 
safety, treat serious illnesses and save lives. And on top of all this, 
a Coopers & Lybrand study found that a permanent extension to the 
credit would raise American incomes due to higher productivity growth 
and contribute substantially to our economic growth.
  The R&D tax credit has proven its worth many times over. Mr. 
President, though I am pleased we have extended R&D for 10 years, it is 
my hope that

[[Page 18452]]

the R&D tax credit will one day be a permanent fixture in our Tax Code 
so it can spur innovation and economic growth throughout the next 
millennium.
  Mrs. FEINSTEIN. Mr. President, although I have a great deal of 
respect for the chairman of the Senate Finance Committee, close 
examination of the Taxpayer Refund Act of 1999 has led me to conclude 
that the $792 billion Republican tax bill passed out of the Finance 
Committee is too much too soon and could well have serious adverse 
effects on federal priorities and the national economy.
  The Republican tax plan would devote virtually the entire projected 
non-Social Security surplus over the next ten years--some $932 billion 
out of $964 billion, according to the CBO--to tax cuts. That would 
leave just $32 billion for everything else--Medicare needs, defense, 
health care, education, combating crime, everything else that the 
government does. Clearly, that is not sustainable.
  In fact, the Republican plan may well lead to substantial deficits 
unless the Congress and the President are willing to not only keep the 
present caps, but to tighten them even further.
  By devoting 97 percent of a surplus that has not yet been generated 
to tax cuts and to the additional interest costs of not reducing the 
debt--$932 billion--the Republican plan creates a great risk that we 
will return to the era of deficits and rising debt.
  When I first came to the Senate in 1993, the Federal budget deficit 
was $290 billion, and expected to continue for the foreseeable future.
  Through the imposition of tough fiscal discipline--and by making 
tough budgetary choices--we have now managed to bring the federal 
budget back in balance. We should not now precipitously put these gains 
at risk.
  If we abandon the fiscal discipline and responsibility that have 
allowed us to get to where we are today--our economy growing and our 
budget in balance--we will once again find ourselves running up annual 
deficits in the tens of billions of dollars.
  The bottom line is that the Republican plan is too much, too soon, 
too fast. It:
  Spends money which Congress does not yet have. This surplus has not 
yet materialized and will not until next year--assuming projections are 
correct, which they may not be. What happens if there is a military 
need? What happens if there are large national disasters? What happens 
if the economy slows down? Answer: All surplus projections are in the 
wastebasket.
  In fact, the projected surpluses which have set off the tax-relief 
movement may never materialize. It will only come about if the economy 
continues to grow and if Congress cuts spending even more deeply.
  The Republican plan does nothing to protect Medicare. No budget 
resources are set aside for Medicare solvency. And by giving nearly all 
the surplus outside of Social Security's need to tax cuts, the 
Republican plan does nothing to extend the solvency of Medicare trust 
fund, which will be bankrupt by 2015.
  Nor does it provide coverage for prescription drug benefits to be 
added. As a matter of fact, they are made impossible.
  The Republican plan endangers virtually all domestic program 
priorities, forcing cuts of close to 40 percent in domestic spending 
over the next decade. The Republican plan would commit the nation to 
major cuts in military readiness, education, healthcare, and crime-
fighting, just to name a few areas.
  In fact, under this plan, to avoid deficits, domestic spending will 
have to be cut an additional 23 percent by 2009. But if defense 
programs are to be funded at the level recommended by the Joint 
Chiefs--as I believe they should be--then domestic spending will have 
to be cut by 38 percent. Cuts of this magnitude would:
  Reduce Head Start services over one-third, from the 835,000 children 
who would otherwise be served to 460,000.
  It would slash Title I, Education for the Disadvantaged, programs, 
denying 4 million children in high poverty communities throughout this 
nation (from the 14.6 million projected) access to key educational 
services necessary to improve their future prospects.
  It would cut the National Institutes of Health budget by $8.6 billion 
from the current baseline, which would endanger NIH's ability to fund 
new research grants. It would gut the cancer program and certainly 
prevent the doubling of funding for cancer research as this body has 
supported by a vote of 98-0 in 1997 in a Sense of the Senate.
  It would cut Superfund cleanup funds by $870 million, eliminating all 
new federally-led clean-ups due to begin in 2009, and making it 
difficult, if not impossible, to meet the EPA's 900-site cleanup goal 
in 2002.
  There are 96 Superfund sites in California on the National Priority 
Cleanup List, including Iron Mountain near Redding and the San Gabriel 
Valley site in Los Angeles county. Construction is underway at just 38 
percent of these sites. The Republican tax plan may put continued work 
on these sites in jeopardy.
  The Republican plan cuts to the Immigration and Naturalization 
Service could result in a reduction of over 6,000 Border Patrol Agents 
(from the number projected); cuts to the FBI could result in a 
reduction of over 6,000 FBI agents (from the number projected).
  Does not eliminate publicly held debt. Today, public debt stands at 
$3.6 trillion. We have an opportunity to eliminate this public debt 
entirely by 2015--critical if we wish to keep interest rates low--if we 
stick with a fiscally responsible approach.
  I represent the most populous state in the union. Most important 
issues before the Senate produce letters and e-mail in excess of 10,000 
a week, and often 20,000 or 30,000. Yet, I have received remarkably few 
letters urging tax cuts. And those letters that I have received--109 
last week--have been equally split. In fact, only one person has 
written to me saying that it is vital for their survival that the 
massive Republican tax package be passed.
  I would like to read from some of the letters that I have received, 
to give my colleagues a sense of what the people of California are 
thinking about this issue.
  A letter I received from a woman in Berkeley sums up much of this 
debate quite well, and is reflective of much of the mail I have 
received. And it is further testament to the fact that the American 
people are often more wise then many of their elected leaders. This 
letter reads:

       I am very concerned about proposed tax cuts and urge you to 
     be cautious!
       First, we really do not know if the proposed surplus will 
     be there in the next 15 years.
       Second, we have enormous debt, and, in my mind, the major 
     portion of the surplus should be used to pay down our debt. 
     This would be a boom to baby boomers, etc since their 
     ``invested'' surplus Social Security taxes are already spent. 
     Talk about ``family value''--pay your debt first.
       Third, Social Security, Medicare, and child services all 
     need financial attention.
       Please do not vote for a large tax cut. It is not the right 
     thing for our national financial future.

  For those of my colleagues who may be quick to dismiss a letter 
coming from Berkeley, I also received a note from a couple in Sonoma 
which read: ``We are two registered Republicans who would prefer no tax 
cut. Pay off the national debt and lower interest rates thereby. Also 
secure Social Security and improve healthcare for everyone.''
  A man in San Diego wrote:

       I want the national debt payed down. I want Social Security 
     and Medicare shored up. I don't want more government 
     spending. If we can do that and get a tax cut fine. If we 
     can't fine. I don't want to depend on your economist's 
     estimates of overages, since we know their abilities are 
     mediocre at best!

  And from an e-mail from Aptos:

       I am opposed to the recent large tax break legislation in 
     the House. We need instead to be paying down the debt and 
     saving tax cuts for when they are truly needed. The more we 
     pay off our national debt, the more of our hard earned tax 
     dollars will actually go to programs, not debt repayment, and 
     the more we will be able to afford true tax cuts in the 
     future. Lets not spend our future away.

  In fact, I believe that if our colleagues on the other side of the 
aisle were willing to put partisan posturing

[[Page 18453]]

behind them, a responsible tax cut would be possible within the context 
of the budget plan proposed by the President.
  I support the Administration in setting aside 62 percent of the 
surplus for Social Security, some $3.5 trillion over 15 years. It 
extends the program's solvency to 2053, and eliminates publically held 
debt by 2015. This means that the ``baby boomer'' generation's Social 
Security is protected.
  I support extending the solvency of Medicare from 2015 to 2027 by 
dedicating 13.5 percent of the surplus, some $794 billion over 15 years 
to Medicare. This is vital if there is to be a solvent system. It is 
mandatory if addressing a change in benefits is contemplated.
  Finally, I strongly support itemizing 2.5 percent of the surplus, or 
$156 billion over 15 years for education, and 6 percent of the surplus 
or $366 billion over ten years for various discretionary programs such 
as defense, veterans affairs, research, agriculture, and environmental 
protection.
  That would leave $271 billion over the next ten years which could be 
utilized as a tax cut.
  Indeed, that is why I worked with my colleague from Iowa, Senator 
Grassley, to put together and introduce earlier this year a moderate 
bill that provides needed tax relief for working families while fitting 
within the budget framework set out by the President to protect Social 
Security and Medicare.
  The Grassley-Feinstein plan would cost $271 billion over ten years. 
It provides a $61.4 billion cut in the marriage penalty; a 100 percent 
deduction for health insurance expenses and a tax credit for long-term 
care ($117 billion over ten years); an increase in the low-income 
housing credit ($6.6 billion over ten years); tax credits for child 
care and education, including help for stay at home parents, with the 
HOPE college credit, and with student loan interest payments ($32.3 
billion over ten years); and it helps our economy continue to grow by 
making permanent the R&D tax credit ($27.4 billion over ten years).
  In fact, it is much like the Democratic plan. It is a common sense, 
bipartisan approach.
  Of all the tax cuts that have been proposed, I believe the one that 
would be of the most help to the American people would be marriage 
penalty relief.
  It makes sense for social reasons: It reinforces the important 
institutions of family and marriage.
  And it makes sense for economic reasons: It eliminates what many of 
us see as a vast inconsistency in our tax law, that two people could 
find that they pay more in taxes if they are married then if they stay 
single. It makes no sense.
  Another approach to this tax relief question would be to simply 
eliminate the marriage penalty outright, starting in 2002, and allow 
married couples to file either individually or jointly at their option. 
This would cost some $234 billion for the eight years.
  A tax relief plan which starts with a $234 billion cut in the 
marriage penalty would also allow us to include other important 
provisions. I would support including an immediate increase in the low-
income housing tax credit, indexing that credit to inflation, which 
would cost $6 billion over ten years. The low-income housing tax credit 
is critical for financing housing for low income families. I would also 
support the permanent extension of the R&D tax credit,which costs some 
$27.4 billion over ten years, and provides an important incentive for 
U.S. companies to continue to develop the cutting-edge technologies of 
the 21st century.
  So, the complete elimination of the marriage tax, the low-income 
housing credit, and the R&D credit would total some $269 billion over 
the next years, well within the $271 billion cap.
  Unfortunately, the Republican plan passed by the Finance Committee is 
neither common sense nor bipartisan.
  It is a tax plan which will endanger the federal budget, places 
Medicare at risk, force deep and unnecessary cuts in important domestic 
priorities, and may undermine the long-term health of the U.S. economy. 
It is unwise, and I urge my colleagues to think long and hard before 
plunging headlong and heedless down this path of fiscal 
irresponsibility.
  Congress has an unprecedented opportunity to put our fiscal house in 
order. We can protect Social Security and Medicare, meet other domestic 
and international priorities, and eliminate the federal debt. And we 
can provide the American people with significant and much needed tax 
relief. This is not some pie in the sky scenario, but a realistic 
appraisal of what we can do if we are willing to move beyond partisan 
posturing and politics as usual, and do what is right for the American 
people.

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