[Congressional Record (Bound Edition), Volume 146 (2000), Part 1]
[Senate]
[Pages 1441-1446]
[From the U.S. Government Publishing Office, www.gpo.gov]



              AFFORDABLE EDUCATION ACT OF 1999--Continued

  Mr. GRAMS. Mr. President, I come to the floor today in support of S. 
1134. I would like to make a couple of brief remarks as we consider 
this very important piece of legislation, the Affordable Education Act. 
This is a bill that would expand the right for parents to save money 
for their children's education without incurring a tax liability. Very 
simply, allowing parents to put some money aside to help their 
children's education, and do it without incurring tax liability, is a 
win-win situation.
  The proposed new education savings account would allow families to 
contribute up to $2,000 per year in a savings account for a variety of 
public or private education-related expenses. Current law allows 
parents to save up to $500 per year for their children's college 
education without penalty. However, the expanded education savings 
accounts would allow parents to save more tax-free, and the money could 
also be used for children's kindergarten through 12th grade education 
expenses as well as college. These education savings accounts help 
working families, and deserve the support of this body.
  I would like to provide a Minnesota perspective on this debate, 
because we can learn from what has happened in my home state with a 
similar education initiative. S. 1134 is similar to a tax break for 
working families instituted in Minnesota by former Governor Arne 
Carlson.
  Governor Carlson and grassroots organizations in Minnesota fought for 
and won an education tax credit, enacted in 1997, which, like Mr. 
Coverdell's bill, can be used by parents to offset the cost of certain 
expenses made in the education of K-12 students in public, private or 
home schools. Thanks to Governor Carlson's initiative, low and moderate 
income families in Minnesota can receive up to a $1,000 per child tax 
credit for qualifying expenses such as tutoring, after-school or summer 
academic programs, music lessons, textbooks, and instructional 
materials--to allow the children these educational opportunities. 
Families with higher incomes are not eligible for the tax credit, but 
can still claim a tax deduction for similar education expenses.
  When the legislation was proposed, various polls rated support for 
the tax credit and tax deduction package between 58 percent and 72 
percent of the population of Minnesota. They supported this concept. 
Support for the tax credit and deduction has remained. In 1999, the law 
was expanded to raise the income threshold for eligibility for the tax 
credit to permit even more families to participate. The 1999 bill to 
expand the tax credit eligibility was passed with bipartisan support--
in fact, you could even call it ``tripartisan'' support, since Governor 
Ventura signed it into law. About 150,000 families are expected to take 
advantage of the tax credit and deduction this year.
  So in Minnesota, families have simultaneously been provided real tax 
relief and real opportunities to expand the education opportunities for 
children. And 3 years after the initiative was passed into law, the sky 
has not fallen in Minnesota, it is not a mortal wound to public 
education--in fact it helps students in public schools as well as 
private schools--and again, it became popular enough that the 
legislative subsequently expanded eligibility for the tax credit.
  Today in the Senate, we have the opportunity to enact similar 
legislation that helps parents help save money to ensure that their 
children will get a quality education. Parents should always be in the 
driver's seat when it comes to education decisions, and this bill 
simply empowers them to do more to help their kids get ahead. S. 1134 
deserves our support.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Voinovich). The Senator from 
Massachusetts.
  Mr. KERRY. Mr. President, there has been a long discussion here. I do 
not know if I am the last in the course of the afternoon. If I am, I 
apologize profusely to those who are enduring until we are released, 
but I would like to share some thoughts regarding this bill, if I may. 
We are not sure what the status will be tomorrow morning with respect 
to debate or opportunity to comment on it.
  I just heard the Senator from Minnesota say the sky is not falling 
in. It is not the end of public education for the small amount of 
experiments that have taken place in Minnesota. I am sure that is 
absolutely true, looking at the amount of money involved, maybe $7 a 
year to a family using it for K-12, because once they have put whatever 
money aside they could in order to take advantage of K-12, the amount 
of interest buildup is not that great. So obviously we are not talking 
about the grandest sums of money. That is not what is really at stake.
  In point of fact, the small amount of money is, in and of itself, an 
argument

[[Page 1442]]

against doing what we are doing because it barely makes a difference to 
most of these families--though our colleagues who are advocating it 
argue that whatever difference it makes, it is worth trying to make 
that difference. But that obscures what is really at stake here. It 
obscures the very significant, large issues about what the Senate ought 
to be doing, about what the real priorities of education in the country 
are, and about the inappropriateness of the underlying principle on 
which this bill is based.
  So it does not matter how much money, whether it is $10, $20, $30. It 
is a question of whether or not we are addressing the real concerns of 
education; whether or not this is what the Senate ought to be doing as 
its first act of speaking on the issue of education in the year 2000. 
It is astonishing to me that given the breadth of the education needs 
of the country, and given everybody's acceptance that education is 
perhaps the single most important issue to the Nation, here we are, 
when we could spend weeks on the critical issue of a broad-based 
approach to education, we have one little tidbit, one little piece of 
bait hanging out there as a statement of where our colleagues on the 
other side of the aisle seem to want to come from with respect to the 
larger issue of education itself.
  What am I talking about? In the legislation, on page 5, where it 
talks about a qualified elementary and secondary education expense, it 
says specifically that this can go to anyone who is:

       . . . an elementary or secondary school student at a 
     public, private or religious school. . . .

  This is an enormous transition for the United States of America 
because what we are talking about is a first-time extension of a 
significant tax approach to secondary and elementary school, private, 
and religious education. We have historically always drawn a critical 
line between higher education and secondary and elementary education. 
We do that for a lot of different reasons, not the least of which is 
that the Federal Government has never assumed fundamental 
responsibility as a national priority, if you will, for every person in 
America going on to higher education. Though we hope it, we want it, we 
encourage it, we have Pell grants, we have student loans, we have all 
kinds of ways in which we encourage people to do that, but we do not 
have the breadth of touch on the students because of the great breadth 
of educational opportunity that has grown up privately in the country.
  That is not true in public education, which has been a commitment for 
secondary and elementary schoolchildren since this country's founding 
when Thomas Jefferson first talked about the pillars of education; 
since the days when we first made our commitment to a public education 
system that would help serve as the great melting pot/equalizer, if you 
will, by which we help to bind the country together as a country. That 
was going to happen, not through divisions of wealth but, rather, 
through people knowing that by every child in America sharing in the 
opportunities of public education we would build that kind of country.
  All of us understand the educational system we have today is not 
performing, in some places, in the way we desire. It is, I might add, 
performing an awful lot better in a lot more places than many people 
want to admit. The fact is, there are some stunningly capable, 
extraordinary public schools across this country. They are providing 
students for the best universities in the Nation.
  What we need to talk about on the floor of the Senate is how we are 
going to empower every public school in the country to be able to 
replicate the best practices that take place at those other 
extraordinary public schools, or, I might add, at a private school, or 
at a religious school. But we do not fund it, and that is what this 
legislation seeks to do.
  It is called the Affordable Education Act. I am not sure why it is 
called the Affordable Education Act because only those who can already 
afford to send their kids to a parochial or to a charter school or some 
other kind of school really are going to benefit from it. It is hardly 
going to be affordable to the families for whom the question of 
affordability is most important. It is certainly not going to be 
affordable even for those families who are already making savings 
because the amount of money they are allowed to put away hardly makes 
anything affordable. Finally, it really is not affordable because it 
applies to so few kids.
  Ninety percent of the children in America go to school in public 
schools, and nothing in this act is going to alter that one iota. 
Ninety percent of the kids in America go to school in public schools. 
What we really ought to call this act is the Alternative to Public 
Education Act because that is really what it seeks to do. It seeks to 
establish a new principle by which we can come back each year and begin 
to build up the amount of money that some will fight for to put into 
savings accounts so that ultimately it will grow to a sufficient amount 
that, indeed, will become the alternative to public education for those 
who have the ability to make that choice or, for various reasons of 
abandonment of the public school system, are encouraged to do so as the 
only way to send their kids, in their judgment, somewhere that will 
make a difference.
  What we ought to be talking about in this Chamber today--in fact, 
every day until we complete the task--is how we are going to guarantee 
that every school within the public school system has a fair 
opportunity to make of itself what schools in the richest communities 
make or schools which are the beneficiaries of remarkable endowments or 
parents in various parts of the country who have enormous sums of money 
and, in some cases, schools which are not necessarily dependent on a 
significant amount of money but which have a core group of parents and 
students which allows them to behave in a way that is different from 
some schools in the inner cities or in rural areas where it is much 
tougher to build that kind of support.
  The question the Senate ought to be debating is why we are not here 
as our first act trying to guarantee the real promise of America, which 
is to make certain that all of our children have an opportunity to go 
to schools that will make a difference in their lives on the positive 
side of the ledger.
  We have been around this sometime before in the Senate, and it grows 
increasingly frustrating as we continually come back with these 
scatter-shot, little tidbit efforts. I know my colleague from Georgia 
does not view it as a tidbit. I know this is important to him 
personally. I know it is important to some colleagues on the other side 
of the aisle. But you cannot look me or anyone else in the eye and 
suggest this can pretend to be a comprehensive approach to the 
education needs of this country. If it is not, you cannot convince me 
that this is where we ought to begin the debate about what we are going 
to do to fix the schools in the country.
  I have come to the floor and said this to my colleague from Georgia. 
I do not understand it. I know no one is going to accuse me of not 
being here long enough to understand it. I think I have a pretty good 
sense of how the politics of these issues work, and I still am 
frustrated and do not understand it because I do not think we are 
always that far off. Yet we continually keep talking past each other.
  I heard the Senator from New Mexico, Mr. Domenici, argue that we 
ought to have a very significant increase in the amount of money we put 
into education. I am confident that when he was Governor, the Chair 
understood full well the difficulties of some of the urban centers of 
the State he represents on how hard it is, based on a low tax base, to 
provide for computers or provide for sports programs in the afternoons 
or for libraries that stay open or afterschool programs or remedial 
programs for kids who are having trouble learning. These things do cost 
money.
  The fact is, there are communities in our country that do not have a 
tax base to go to. Yet we have an agrarian-based structure that 
suggests we still ought to have a school system working on

[[Page 1443]]

those old hours as well as on the old funding mechanism.
  Where does the money come from? The money comes from property taxes, 
except to the degree they get money from the State treasury in either 
some form of education reform or other disbursement. For too many 
communities, they have zero ability.
  In our State, we had the same tax revolution everybody else in the 
country had. We had a limit on the amount property taxes can be 
increased--and properly so, I might add. There are a lot of families on 
fixed incomes. There are a lot of senior citizens who have paid for 
their homes who do not have the income stream to support an increase in 
revenue. There are a lot of young families starting out who do not have 
the ability to find the extra cash-flow to pay for the property tax 
increase that might be necessary to adequately fund a really excellent 
school system.
  What do we do? We merrily go down the road ourselves ignoring this 
fundamental reality.
  I am with my colleagues on the other side of the fence. I do not want 
to throw money down a dark hole. I do not want to give money to a 
school system that is layered with politics, or has an inability to 
hold the teachers accountable, or does not have a structure that 
involves parents and has accountability of what kids are learning. I do 
not think anybody in the Senate wants to do that.
  So I am having difficulty understanding why it is we cannot find a 
formula by which we are prepared to put some money into the system 
requiring those systems to embrace real reform, leaving up to those 
systems--and this is important--the determination of how they will get 
their kids to the end goal of a superlative education.
  I do not think the Federal Government ought to run that. I do not 
think we ought to come trotting in with some new mandate and tell 
people, if you do not do this--that is not what this is about. We are 
only 7 percent of the budget of schools across this country.
  Moreover, it is a steadfast principle that none of us wants to break 
that somehow the Federal Government ought to be involved in running the 
schools. We do not want that. I do not want that. I believe in local 
control, but local control has to mean also local empowerment, local 
capacity, local ability to do some of these things.
  None of our colleagues can ignore the fact that if you are a young 
law student getting out of law school, one of the better law schools in 
the Nation, and you go to work in Boston or New York, you are going to 
start out now at $140,000 with the top law firms. Right out of law 
school, you can earn as much as a Senator, which may not be an 
appropriate measurement of anything, but that is what we are valuing.
  A teacher comes out of college with $50,000 to $100,000 of loans, 
which they are required to start paying back the minute they go to 
work. They are going to start at $22,000, $21,000, $23,000, maybe work 
their way into the thirties after they have 15 years and a master's 
degree, and, depending on the school system, they can be at some school 
systems where they can get into the sixties, but with most of them they 
are in the forties after almost a career of service.
  How do we turn to any student saddled with those loans in college and 
say: Ignore all those dot coms where you can earn 60,000 bucks almost 
right out of school, ignore the opportunities of the marketplace where 
there is 4-percent unemployment and you have this extraordinary gap in 
all the technological fields where the greatest restraint on growth to 
our Nation is going to be the lack of an available skilled labor pool, 
and we are going to say to kids who are facing that kind of job market: 
Come teach and be a pauper; come teach, but forget the notion that you 
can share in that cape cottage or buy that extra car or have a longer 
vacation; you are going to just eke it out, you are going to just make 
it, but we expect you to raise your family the same way everybody else 
does and to live by the rules, and so forth and so on.
  Are we crazy? We have lost all sense of proportion if we are not 
willing to try to recognize that if you are going to value teaching, 
you have to value teaching. That means valuing it by putting a fair 
market value on the people you want to have teach.
  Does that mean that in exchange for that fair market value, you had 
better get your return? You bet it does. Does that mean accountability? 
Yes. Does that mean if you are not doing the job properly, you ought to 
be able to be fired? Yes. Does that mean you may have to work longer 
hours in return for that? Yes, it does.
  I do not understand why we cannot come to some kind of an agreement 
that liberates every school system to go out and be the best it can be, 
and to let parents have choice, and have competition within the public 
school system. I am all for that. That is the best form of 
accountability there is in America--competition.
  I have seen this happen. I have gone to many blue ribbon schools and 
have said: Why is this a blue ribbon school? What is it about this 
school that makes it a place where parents are clamoring to put their 
kids, but you go 10 blocks away and there is a school nobody wants to 
go to? You can very quickly pinpoint real, tangible reasons those 
differences exist.
  Generally it begins with the principal. There is a great principal in 
every blue ribbon school I have visited. One of the great deficits in 
America today is our lack of capacity to attract, in some of the more 
complicated systems, the principals we really need in the context of 
modern education. Once again, that is a reflection of the money 
involved. It is a reflection of the school system, the structure, and 
other kinds of things.
  But we ought to be on the floor of the Senate with a comprehensive 
approach as to how we attract young corporate chieftains, who are able 
to retire today with extraordinary wealth, to perhaps come in and be 
the principal of a school for a short period of time, lending their 
expertise. Ex-military officers, who retire after 20, 25 years, and are 
still young and have great talents in leadership, could help to manage.
  I forget the name of the general out in Seattle who passed away a 
year and a half to 2 years ago who did an extraordinary job of doing 
just that. He became beloved in the school system because of the 
leadership skills he brought to the task.
  We should have a national effort geared to try to attract people and 
pull them into these jobs. If we did that, we could begin to create 
energy in our schools where they competed with each other. As the 
parents say: I want to go over to the Driscoll school. I think what has 
happened over there at that Bartlett school is not working for my kid, 
but over at the other school all the parents are raving about the 
school system. The kids are doing better in their homework. They seem 
to have more discipline. All of a sudden, the schools are going to 
reverberate with parents making that kind of choice.
  This isn't novel. There are a lot of places in the country where that 
is happening today. It is working. There are many other ways in which 
we could have a greater level of accountability in our school system. 
All of this underscores what the real debate ought to be.
  I am also astonished that we are quick to come to the floor of the 
Senate to put more money into tougher sentencing. We will put people 
away for longer periods of time in jail. We will build more jails. We 
provided more assistance in the crime bill to do that. All of those 
things are important. But isn't it equally important to try to prevent 
some of those kids from falling into those kinds of troubled lives when 
it makes a difference?
  We know, to an absolute certainty, that the time when most of these 
kids get into trouble is in the afternoon when they are out of school, 
unsupervised, and they go back to apartments or houses where there is 
no adult until 6 or 7 o'clock in the evening.
  I believe it was almost 8 or 9 years ago that the Carnegie Foundation 
did an extensive study pinpointing most of the difficulties teenagers 
had in the afterschool hours--unwanted pregnancies, drug 
experimentation, trouble

[[Page 1444]]

on the street corners. All of these things have occurred because they 
were not in school and because schools did not have the afterschool 
programs necessary to provide the value-oriented structure they need.
  Ask any child psychologist in the United States of America, ask any 
penologist in the United States of America, and they will tell you 
children need structure. When you release kids at 1:30 or 2 o'clock in 
the afternoon to almost a half a day of no structure, you are inviting 
the kinds of problems we have invited in the last years. It would be 
much cheaper to invest in long-term education, afterschool programs, 
early childhood education, et cetera, than to build $50,000- to 
$75,000-a-year prison cells for the people we have allowed to slip 
through the cracks.
  People say: Do we really allow them to slip through the cracks? Let 
me tell you, I have visited some schools where kids have dropped out. 
In America, it used to be that you had a truancy system. If you dropped 
out or you left your school for a couple of days, teachers actually 
cared about it. They said: Wait a minute. Johnny is not here today. 
Where is he? Somebody went after him to find out what was going on.
  Today, in cities all across America, a kid may not show up for 
school, and nobody does anything about it. Parents do not even know the 
kid did not show up. There is no money for truant officers? There is no 
money to track anybody? There is no way to do that? What do you mean? 
We are the richest country on the face of this planet. We have created 
more wealth in the last 10 years than at any time in American history. 
We have 460-plus billionaires in America today. We have had a surplus 
now for the second year in a row. We are sitting around toying with 
whether or not we are going to give seven bucks a year to people who 
already have money so they can send their kid to a religious school or 
a private school. What are we doing?
  This place is losing its relevancy to the real problems of America if 
we cannot start at the beginning. The beginning is this broad-based 
problem that exists with respect to education in America. It is 
rampant. We understand that. How can our colleagues not come to the 
floor and say: It really does make a difference whether a teacher is 
being asked to teach 35 kids, 40 kids, 30 kids, 28 kids, or 18 kids.
  I have talked to first-grade teachers who tell me they have kids 
coming into the first grade today who cannot do the things kids used to 
do when they went to the first grade. They cannot do simple shapes. 
They cannot recognize colors. They cannot do early numbers. The teacher 
has to take that kid and somehow mainstream that child while managing 
the educational life of all the other kids in the classroom. I 
challenge any of my colleagues to do that for a day or two and see how 
they feel at the end of that effort. When you shortchange that teaching 
capacity, you are shortchanging every kid in the classroom. It has 
lasting impact.
  I will give you another example. Not so long ago, I visited the 
Castle Square Early Child Development Center in Boston. There are 67 
kids--infants and toddlers--who are in the Early Child Development 
Center. Of those 67 kids, I think 98 percent are the sons and daughters 
of single parents. That is a cycle we are trying to break. We do not 
want to pass that on to the next generation. The best way not to pass 
it on to the next generation is to guarantee kids have the kind of 
structure that makes a difference in their lives. But for the 67 kids 
who were in the early child development center, there were 550 on the 
waiting list. Maybe 5, maybe 10 of the 550 will be lucky enough to 
cross the threshold of that child development center before they have 
to report for the first grade.
  Under the law of the land, you are supposed to report for the first 
grade ready to learn. But as we are learning, too many of these kids 
come to the first grade and are not ready to learn. So we have built a 
deficit into the system before we even begin. Then we turn around and 
respond by saying: The roof is falling in on the public education 
system of America. What are we going to do about it? Well, we are going 
to give kids an opportunity to go somewhere else. Where? To a private 
school, to a parochial school, to a charter school?
  Mr. President, there aren't enough places in private schools, in 
parochial schools or charter schools in this country to save a 
generation of American children. We can't build those schools fast 
enough. There aren't enough seats. So we can talk about that as an 
alternative all we want. It is no alternative.
  The alternative is to fix the public school system where 90 percent 
of the kids in this country go to school. Again and again, I say it, 90 
percent. If we had the most ambitious program my colleagues on the 
other side of the aisle could design to have a voucher or to create 
some alternative, we couldn't take care of 5 to 10 percent of America's 
children, let alone 90 percent. If we want to fill those high-tech 
jobs, if we want America to match the increased focus of Asia, Europe, 
Latin America, and other countries on education as their primary need 
with respect to the digital divide and the economies of the future, if 
we are going to do that, we have to pay attention to the educational 
opportunities afforded to our youngest children at the earliest stages 
of life. It is incomprehensible to me that we can't find the capacity 
to make certain that those 550 kids can all get the kind of early input 
they need so we can alleviate some of the crises in our school system 
by sending kids to school ready to learn.
  All of this is part of a mosaic: early child education, early 
maternal input. Whether a mother is able to properly provide nutrition 
for a child affects a child's learning ability. All of these things do. 
It is very fashionable by many in the Senate to say that is the 
responsibility of parents. Yes, it is. It is the responsibility of 
parents. I agree. But what do you do when there aren't any parents? 
What do you do when there is only one parent who is working two to 
three jobs in order to make ends meet because that is also what we want 
them to do in America? They can't find the adequate child care. They 
don't have grandma and grandpa living in the house anymore. That is 
another change in America. People don't live that way anymore in the 
United States. So we don't have that great continuum that came down 
through generations that used to be the great teaching mechanism. But 
that is gone now. We have empty households.
  So what do we do? We can talk about family. We can talk about values. 
We can also talk about the other great teachers. Religion is one of the 
other great teachers, absolutely. But without the parents, too many of 
these kids don't have that either. If they are dropping out of school, 
they don't have the other great teacher. So we have millions of kids, 
literally, around the United States of America who don't have any of 
the three great teachers in life. They don't have the family teacher, 
they don't have the organized religious teacher, and they don't have 
the teacher teacher in school because they are at risk in dropping out.
  How do we fill the gap? We don't. We are debating whether or not to 
fill a nonexistent gap, to give some money to people who have already 
made a choice to send their kids to these schools. That is who most 
benefit by the legislation on the floor of the Senate. The people who 
benefit by this legislation are people who can save that kind of money. 
They are the people whose kids are probably already in a religious 
school or a private school. They are the kids who are already availing 
themselves of those benefits.
  I am not saying to my colleague there is no value in providing relief 
for one of those parents. That is why we voted for tax relief. That is 
why we provide student loans. We do lots of things to provide that kind 
of relief. I am all for that. But let us get our priorities straight.
  It seems to me the first obligation of the Senate is to come here 
embracing an overall concept. I might add to my colleague from Georgia, 
here we are being asked to spend $1-plus billion, $2 billion. It is as 
in a vacuum. I am being asked to give $2 billion to parents

[[Page 1445]]

whose kids may go to religious or private schools without even knowing 
that the rest of the budget is going to be for any of the other things 
I have talked about. Are they going to be cut? Are we going to have 
less money for after school? Are we going to have less money for 
chapter 1? How much money are we going to have in the School Lunch 
Program this year? How much money will we have for Head Start? If I 
have to cut those or can't have as much as we ought to have, would we 
then take this $2 billion and put it elsewhere?
  This is simply not timely. It is not appropriate. I hope it is not a 
statement of the full measure of priority of our colleagues on the 
other side of the aisle. I hope it is not.
  There are other colleagues waiting to speak. I have gone on longer 
than I had intended. I hope this year can be a year in which the Senate 
can find its way to a comprehensive, across-the-aisle dialog, to bring 
ourselves together in a spirit of compromise. So far the only 
compromise I have seen with respect to the so-called Straight A's plan 
and the approach of our friends has been on our side of the fence. It 
is my hope we can have that real dialog.
  I look forward to it and thank the Chair.
  The PRESIDING OFFICER. The Senator from Georgia.
  Mr. COVERDELL. Mr. President, I am going to try to confine my remarks 
to the proposal before the Senate. I will make a couple of comments 
regarding my good colleague from Massachusetts.
  First of all, I say to him, this $7 routine is exceedingly 
misleading. Two or three of his colleagues have used that. If $7 is all 
we are talking about, then, A, why get worked up about it? And, B, if 
$7 per year is the only advantage out of this account, which is four 
times what the President proposed, then I guess the President's 
proposal was only worth $2.25.
  Mr. KERRY. Will the Senator yield for an answer?
  Mr. COVERDELL. Surely.
  Mr. KERRY. I said in my comments that the amount of money is really 
not the key. I said I throw away the $7 as not particularly moving. But 
the $7 comes from the Joint Tax Committee estimate.
  Mr. COVERDELL. I have seen that. But my point is, if that is the 
case, it is worth four times the President's proposal.
  Mr. KERRY. I don't agree with everything President Clinton does or 
has done.
  Mr. COVERDELL. I understand. I will read you another comment, the 
remarks as prepared for delivery by Vice President Al Gore to the 
Minnesota Community Technical College, where he says:

       Here is my idea: We should create new 401(k) accounts like 
     the 401(k) plans that help you save for retirement, but these 
     accounts will allow employers and employees to contribute up 
     to $2,500 for each working person to pay for college or job 
     training expenses, money that you can save and withdraw tax 
     free. You could use this account for yourself, your spouse, 
     even your child's college tuition.

  That is identical to the proposal that is before us.
  Mr. KERRY. Mr. President, may I respond?
  Mr. COVERDELL. Sure.
  Mr. KERRY. Mr. President, let me underscore that distinction to my 
friend. The Vice President, No. 1, laid out the most comprehensive plan 
set forward by anybody running for President of the United States. He 
set forward a plan that included $115 million for a trust fund over 10 
years. He set forward a plan to attract principals, to deal with 
teachers' pay, and with standards. It was a broad-based plan, and the 
section that the Senator from Georgia refers to does not apply to 
private secondary and elementary schools. It is college and job 
training.
  Historically--and I drew this distinction--the Congress of the United 
States has always drawn a distinction between the higher education 
structure and the secondary and elementary structure. The problems I 
cited are precisely the reason why you need to have a broad-based 
approach before you throw any piecemeal legislation out there.
  Mr. COVERDELL. Mr. President, let me address that as well because the 
Senator has made much of this today, as have others. This is, of 
course, a piece of legislation from the Finance Committee. It has been 
vetted three times before the Senate. It has been passed by the Senate 
with 59 votes. It is cosponsored by Robert Torricelli of New Jersey and 
about 10 other Democrats. So it is bipartisan with broad support. It in 
no way suggests that there won't be a full debate occurring on the 
issue when the reauthorization of the Elementary and Secondary 
Education Act comes before us, which will be probably spring because 
there is not consensus on that committee. I am not on that committee, 
and I don't know if the Senator is or not. This comes from the Finance 
Committee and it is one component of what can be done. It is tax 
policy. It is characterized as if some little piece is going to somehow 
corrupt or become a hurdle in front of the broader discussion that will 
come with this other legislation. I find that pretty difficult to 
comprehend, particularly in light of the fact of previous Senate 
actions on the legislation.
  I think it unfair to characterize this as a piece of legislation 
designed for private schools and that it somehow avoids public schools. 
That is just not so. The same sources of information the Senator has 
been quoting would have us understand that the education savings 
account will primarily benefit public schools but not just public 
schools. Seventy percent of the families who open these accounts--and I 
might point this out; the Senator covered it, too. He doesn't consider 
this the broad base and neither do I. But it does affect 14 million 
families and 20 million children, which is right at half--5 million 
less than half--of the entire population--seventy percent of those 
families' children are in public schools; 30 percent are in private 
schools. The division of the money is 50/50.
  In other words, half the money that this generates flows to public 
schools and half to private or, I assume, home. That is not 
insignificant. That is about $12 billion that we don't have to 
appropriate. It is voluntarily brought forward, involving those 
families with their children and their needs. It is not appropriate to 
characterize that as a program designed for private schools. Will 
parents who have children in private schools use it? Yes, they will 
probably tend to use it more, which is why half the money goes there. I 
think, though, in terms of causing someone to change schools, there is 
an implication there will be no place for them to go. It is not meant 
to make people change.
  Mr. KERRY. I appreciate that my friend from Georgia is fairminded, 
and we always engage in good dialog. I appreciate that. First, we are 
sent here to make choices about priorities for the country.
  Mr. COVERDELL. Right.
  Mr. KERRY. Now, when I see chapter 1 unfunded, or I see urban centers 
where they don't have computers, and I see so many kids in so many 
parts of the country whose families can't afford any of the amenities 
that make a difference, I find it very hard as a matter of choice to 
suggest that even that 50 percent is appropriately spent.
  Now, I am not arguing with the Senator. I am not suggesting to him or 
saying that some family in public school may not benefit from this. I 
understand some public schools have uniform codes and a parent may be 
able to go buy a portion of the uniform. I don't know how much $7 a 
year is going to do. If you are doing it K through 12, that is the 
interest. The only benefit under the Finance Committee rule is the tax 
benefit of the tax-free interest savings. So you can withdraw the money 
you have put into the savings account, but all you are really getting 
the benefit on is the tax-free component. Say you put $500 in there and 
you have to draw it out in 2 years at 6 percent, or 5 percent, which is 
what they are earning nowadays--these things aren't even marketable; 
none of the major houses are marketing them, so you are going to earn 
base interest on it and you are not going to get much money as a 
consequence of that. So when you have very few resources, I

[[Page 1446]]

say to the Senator, what is the justification?
  Mr. COVERDELL. The Senator makes my point. There is so little 
invested on our part to cause them to do so much. I am stunned that 
people would be concerned. For this type of investment, why would we 
not want to produce the $12 billion in new resources that we don't have 
to appropriate? People do it on their own--not to mention the 
connection that occurs between the parent and the student.
  Mr. KERRY. Mr. President, I say to my colleague--and he knows this 
full well--there are Members of the Senate who basically have been 
fighting for years to create sort of a full-fledged support system, 
through the Federal Government, for education and/or for schools 
outside the public school structure. That has been a great fight in the 
Senate.
  What I said is it is not the $7 that is critical here; it is the 
principle. If we adopt in the Senate a notion that we are going to now 
in the United States have a full-fledged support system for parochial 
schools and religious schools through the elementary and secondary 
level, that is new. Once we have made it $7, you are going to come 
back--or someone is--and say we haven't given them enough; we have to 
give them $500 because that is more meaningful. Of course, if we were 
willing to support either private or religious schools previously, what 
would stop us from giving them more money now? That is what this fight 
is about; it is not about the $7. Although, as a matter of choice, I 
don't see why it is we reward people who are already capable of sending 
their kids to these places and have made that choice versus the people 
who are having the hardest time making ends meet.
  Mr. COVERDELL. Mr. President, 70 percent of all these funds go to 
families of middle income or lower income.
  Mr. KERRY. As I have said, the real fight is the issue of this 
concept.
  Mr. COVERDELL. I can accept it on those terms, but I don't believe 
the fact we have not taxed that account to be an appropriation of the 
U.S. Treasury in support of a private or parochial school. We have just 
not collected the tax; there has been no constitutional challenge or 
discussion about it. That just won't flow. If we have decided to grant 
accounts that people's own money goes into and have decided we are not 
going to tax the interest on it, there is no way in the world that 
anybody would find that that is a subsidy of parochial education.
  Mr. KERRY. Mr. President, my friend knows full well that the famous 
teacher Stanley Surrey, I think at Harvard Law, coined the phrase ``tax 
expenditure.'' We make choices in the Senate that if you forego a tax 
you expect to collect, it is an expenditure. Now, that is a well-known 
principle in terms of how we operate.
  Mr. COVERDELL. It is also a fine line that does not in any way 
suggest we are making an appropriation. I accept the fact that you 
might argue, as Senator Wellstone did earlier, that it is money that 
wasn't sent to Washington and you prefer it be sent here so we can be 
involved with the distribution of it.
  Mr. KERRY. Mr. President, I believe my friend will acknowledge, as he 
has already--I think he said that a majority of this benefit will go to 
families in private schools.
  Mr. COVERDELL. No, I didn't. I said that 70 percent of the families 
are in public schools. Then I said the distribution would be 50-50. The 
reason for that is parents who have children in the private schools are 
paying higher costs. They are paying, of course, the taxes for the 
public schools as well, and will probably have an incentive to save 
more. I think that is probably so. I sort of think that while 70 
percent are in public schools, the distribution of 50-50 will probably 
be the case.
  Mr. KERRY. Mr. President, if I may again just quickly say the Joint 
Tax Committee tells us that they arrive at an assessment where under 
the legislation of the Senator from Georgia, 52 percent of the tax 
benefit will go to taxpayers with children in private schools.
  Mr. COVERDELL. If the Senator is drawing the line of the 2-percent 
difference and somehow that makes the point----
  Mr. KERRY. Fifty percent.
  Mr. COVERDELL. I will accept that argument.
  Mr. KERRY. For the purposes of this, let us say it is 50 percent. I 
don't understand the public policy rationale for 50 percent of this 
benefit that we are going to grant going to private schools when 90 
percent of America's children are in public schools, and of that 90 
percent, the vast majority are poorer than those 52 percent who are 
going to get the benefit. It just doesn't make sense.
  Mr. COVERDELL. It makes sense to the majority of the Senate, and I 
hope it will be so again.
  In that we are now waiting for the Senator from Oregon, if I might 
close this out.
  Mr. KERRY. Mr. President, I thank my colleague for the dialog. It has 
been helpful. I always appreciate having it with him.
  I thank the Chair.
  Mr. COVERDELL. As I do.
  Mr. President, this debate will continue tomorrow.
  I want to reiterate that the tax savings account helps 14 million 
families and 20 million children. It provides for employer incentives 
to educate their employees. One million employees will benefit. It 
helps students who are in States with prepaid tuition plans because we 
do not tax them. That will be 1 million students who will benefit from 
the savings tuition provision. It adopts the proposal of Senator Graham 
of Florida and Senator Sessions of Alabama on State tuition and on 
school construction.
  Go across the face of education insofar as the Finance Committee is 
concerned. It deals with tax policy. We are not the education 
committee. We are making the Tax Code friendlier to States, 
communities, parents, employers, employees, and students to get a 
better education, 70 percent which will go to families of middle income 
of $75,000 or less. It is the same means test the President used when 
he created the HOPE scholarship along with the Congress. The only thing 
we do is make it four times more powerful than the President's 
proposal.
  As I said, I sort of reel from time to time when they try to make it 
insignificant, but then it becomes a huge debate. They contradict 
themselves. If this is only worth ``$7 a year'' and is 
``insignificant,'' then the President's proposal is only worth $2.25 
because it is one-fourth the value of these accounts.

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