[Congressional Record (Bound Edition), Volume 146 (2000), Part 10]
[Senate]
[Pages 13662-13695]
[From the U.S. Government Publishing Office, www.gpo.gov]



              DEATH TAX ELIMINATION ACT--MOTION TO PROCEED

  Mr. WELLSTONE. Mr. President, let me, first of all, mention to 
colleagues when we look at this estate tax bill, the Center on Budget 
and Policy Priorities--and I think their work has been impeccable--
points out that fewer than 1.9 percent of the 2.3 million people who 
died in 1997 had any tax levied on their estates. We are talking about 
1.9 percent.
  This repeal that my colleagues on the other side of the aisle are 
proposing helps the wealthiest 2 percent of Americans. I ask unanimous 
consent the full study from the Center on Budget and Policy Priorities 
be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

    [From the Center on Budget and Policy Priorities, June 21, 2000]

       Estate Tax Repeal: A Windfall for the Wealthiest Americans

                     (By Iris J. Lav and James Sly)


                                summary

       On June 9 the House passed legislation that would repeal 
     the federal estate, gift, and generation-skipping transfer 
     tax by 2010. The Senate is expected to consider estate tax 
     repeal in July.
       Repealing the estate tax would provide a massive windfall 
     for some of the country's wealthiest families.
       In 1997, the estates of fewer than 43,000 people--fewer 
     than 1.9 percent of the 2.3 million people who died that 
     year--had to pay any estate tax. The Joint Committee on 
     Taxation projects that the percentage of people who die whose 
     estates will be subject to estate tax will remain at about 
     two percent for the foreseeable future. In other words, 98 of 
     every 1,000 people who die face no estate tax whatsoever.
       To be subject to tax, the size of an estate must exceed 
     $675,000 in 2000. The estate tax exemption is rising to $1 
     million by 2006. Note than an estate of any size may be 
     bequeathed to a spouse free of estate tax.
       Each member of a married couple is entitled to the basic 
     $675,000 exemption. Thus, a couple can effectively exempt 
     $1.35 million from the estate tax in 2000, rising to $2 
     million by 2006.
       The vast bulk of estate taxes are paid on very large 
     estate. In 1997, some 2,400 estate--the largest five percent 
     of estates that were of sufficient size to be taxable--paid 
     nearly half of all estate taxes. These were estates with 
     assets exceeding $5 million. This means about half of the 
     estate tax was paid by the estates of the wealthiest one of 
     every 1,000 people who died.
       If the estate tax had been repealed, each of these 2,400 
     estates with assets exceeding $5 million would have received 
     a tax-cut windfall in 1997 that averaged more than $3.4 
     million.
       As these statistics make clear, the estates of a tiny 
     fraction of the people who die each year--those with very 
     large amounts of wealth--pay the bulk of all estate taxes.
       Moreover, a recent Treasury Department study shows that 
     almost no estate tax is paid by middle-income people. Most of 
     the estate taxes are paid on the estates of people who, in 
     addition to having very substantial wealth, still had high 
     incomes around the time they died. The study found that 91 
     percent of all estate taxes are paid by the estate of people 
     whose annual incomes exceeded $190,000 around the time of 
     their death. Less than one percent of estate taxes are paid 
     by the lowest-income 80 percent of the population, those with 
     incomes below $100,000.


                   small businesses and family farms

       Very few people leave a taxable estate that includes a 
     family business or farm. Only six of every 10,000 people who 
     die leave a taxable estate in which a family business or farm 
     forms the majority of the estate.
       Nevertheless, it often is claimed that repeal of the estate 
     tax is necessary to save family businesses and farms--that 
     is, to assure they do not have to be liquidated to pay estate 
     taxes. In reality, only a small fraction of the estate tax is 
     paid on small family businesses and farms. Current estate tax 
     law already includes sizable special tax breaks for family 
     businesses and farms.
       To the extent that problems may remain in the taxation of 
     small family-owned businesses and farms under the estate tax, 
     those problems could be specifically identified and addressed 
     at a modest cost to Treasury. Wholesale repeal of the estate 
     tax is not needed for this purpose.
       Farms and family-owned business assets account for less 
     than four percent of all assets in taxable estates valued at 
     less than $5 million. Only a small fraction of the estate tax 
     is paid on the value of farms and small family businesses.
       Family-owned businesses and farms are eligible for special 
     treatment under current law, including a higher exemption. 
     The total exemption for most estates that include a family-
     owned business is $1.3 million in 2000, rather than $675,000. 
     A couple can exempt up to $2.6 million of an estate that 
     includes a family-owned business or farm.
       Still another feature of current law allows deferral of 
     estate tax payments for up to 14 years when the value of a 
     family-owned business or farm accounts for at least 35 
     percent of an estate, with interest charged at rates 
     substantially below market rates.
       Claims that family-owned businesses have to be liquidated 
     to pay estate taxes imply that most of the value of the 
     estate is tied up in the businesses. But businesses or farms 
     constitute the majority of the assets in very few estates 
     that include family-owned businesses or farms. A Treasury 
     Department analysis of data for 1998 shows that in only 776 
     of the 47,482 estates that were taxable that year--or just 
     1.6 percent of taxable estates--did family-owned businesses 
     assets

[[Page 13663]]

     (such as closely held stock, non-corporate businesses, or 
     partnerships) equal at least half of the gross estate. In 
     only 642 estates--1.4 percent of the taxable estates--did 
     farm assets, or farm assets and farm real estate, equal at 
     least half of the gross estate.
       Furthermore, the law can easily be changed to exempt from 
     the estate tax a substantially larger amount of assets 
     related to family-owned farms or businesses, and this can be 
     done without repealing or making other sweeping changes in 
     the estate tax. When the House considered the estate tax on 
     June 9, Ways and Means Committee ranking member Charles 
     Rangel offered an alternative that would have exempted the 
     first $2 million of a family-owned business for an individual 
     and $4 million for a couple, without requiring any estate 
     planning.


       effective estate tax rates much lower than marginal rates

       The estate tax is levied at graduated rates depending on 
     the size of the estate; the highest tax rate is 55 percent. 
     This sometimes leads people to conclude that when someone 
     dies, half of their estate will go to the government.
       It normally is not the case, however, that half of an 
     estate is taxed away. Effective tax rates for estates of all 
     sizes are much lower than the marginal tax rate of 55 
     percent. On average for all taxable estates in 1997, estate 
     taxes represented 17 percent of the gross value of the 
     estate. A combination of permitted exemptions, deductions, 
     and credits, together with estate planning strategies, 
     reduced the effective tax rate to less than one-third of the 
     55 percent top marginal tax rate.


              repeal of the estate tax carries a high cost

       Repealing the estate tax would be very costly. According to 
     the Joint Committee on Taxation, the House bill would cost 
     $105 billion over the first 10 years, as it phases in slowly. 
     Once the proposal was fully in effect--and the estate tax had 
     been repealed--the proposal would cost about $50 billion a 
     year. The cost of the proposal in the second 10 years--from 
     2011 to 2020--would be nearly six times the cost for 2001-
     2010.
       Under the House bill, the estate tax would be reduced 
     gradually over the next decade, leading to full repeal in 
     calendar year 2010. Under current law, CBO projects the 
     estate tax will bring in $48 billion a year by 2010.
       In the 10 years between 2011 and 2020, the estate tax 
     likely would bring in at least $620 billion under current 
     law. The House bill includes a provision, relating to the 
     valuation of capital assets when a person dies, that would 
     offset a small portion of the revenue loss from repeal of the 
     estate tax. The offsetting revenue gain is likely to be in 
     the range of $5 billion to $10 billion a year.
       The net effect of the House bill when fully phased in thus 
     would be a revenue loss likely exceeding half a trillion 
     dollars over 10 years.
       The very high cost of repeal would be felt fully in the 
     second decade of this century. That is the period when the 
     baby boomers begin to retire in large numbers, substantially 
     increasing the costs of programs such as Social Security, 
     Medicare, and Medicaid. Repealing the estate tax would 
     subsequently reduce the funds available to help meet these 
     costs and to facilitate reforms of Social Security and 
     Medicare that would extend the solvency of those programs, as 
     well as to meet other priority needs such as improving 
     educational opportunities, expanding health insurance 
     coverage, and reducing child poverty. It also would leave 
     fewer funds for tax cut targeted on average working families.


              most estate taxes are paid by large estates

       Most estate taxes are paid by large estates rather than by 
     small family-owned farms and businesses. As noted above, the 
     first $675,000 of an estate is exempt from taxation in 2000, 
     with the exemption scheduled to rise to $1 million by 2006. 
     In addition, an unlimited amount of property can be 
     bequeathed to a spouse free of estate tax.
       Moreover, each member of a married couple is entitled to 
     the basic $675,000 exemption. A number of simple estate 
     planning devices are available under the law, the net effect 
     of which is to double the amount a couple can exempt from 
     estate taxation. Thus, a couple can effectively exempt $1.35 
     million from estate tax in 2000, rising to $2 million by 
     2006.
       As a result of these exemptions and other provisions, such 
     as unlimited deductions for charitable giving, only about two 
     percent of all deaths result in estate tax liability. Of the 
     2.3 million people who died in 1997, for example, fewer than 
     43,000 had to pay any estate tax.
       Of those estates that are taxable, the largest pay most of 
     the estate tax. An analysis by IRS of the 42,901 taxable 
     estates filing in 1997 showed that the 5.4 percent of taxable 
     estates with gross value exceeding $5 million paid 49 percent 
     of total estate taxes. In other words, about half the estate 
     tax was paid by the estates of just 2,400 people--about one 
     out of every 1,000 people who died. The 15 percent of taxable 
     estates with gross value exceeding $2.5 million paid nearly 
     70 percent of total estate taxes.
       The average estate tax payment for the 2,400 taxable 
     estates with assets exceeding $5 million in 1997 was $3.47 
     million. If the estate tax had been fully repealed for 1997 
     filers, the 2,400 wealthiest people who died thus would have 
     received a tax-cut windfall averaging about $3.5 million 
     each. A few hundred of the very wealthiest people who left 
     estates exceeding $20 million would have received a tax-cut 
     windfall of more than $10 million each.


                 estate tax payers also are high-income

       A new analysis by the Treasury Department looks at the 
     annual income of decedents who pay estate taxes. The Treasury 
     analysis finds that virtually all estate taxes--99 percent--
     are paid on the estates of people who were in the highest 20 
     percent of the income distribution at the time of their 
     death. Some 91 percent of all estate taxes are paid on the 
     estates of individuals who had annual incomes of more than 
     $190,000 around the time of their death.


     effective tax rate on estates is far lower than marginal rates

       It often is claimed that estate tax rates are too high and 
     that the government should not be taking as much as half of a 
     person's lifetime savings when he or she dies. The assertion 
     that the government takes half of a person's estate stems 
     from the fact that the estate tax is levied at graduated 
     rates, with the highest marginal rate of 55 percent applying 
     to estates with a value exceeding $3 million.
       Data on estate taxes actually paid, however, show that 
     estate taxes represent one-sixth the value of the average 
     estate, not one-half. As shown in Table 1, estate taxes paid 
     equaled 17 percent of the gross value of taxable estates for 
     which estate tax returns were filed in 1997. The smallest and 
     the largest estates had the lowest effective tax rates. In 
     estates valued between $2.5 million and $20 million, the 
     effective tax rate was approximately one-quarter of the 
     amount of the gross estate.


  small businesses and farms make up only a small fraction of taxable 
                                estates

       IRS data show that farms and small, family-owned businesses 
     make up only a small proportion of taxable estates. Farm 
     property, regardless of size, accounted for about one-quarter 
     of one percent of all assets included in taxable estates in 
     1997. Family-owned business assets, such as closely-held 
     stocks, limited partnerships, and non-corporate businesses, 
     accounted for less than four percent of the value of all 
     taxable estates of less than $5 million. (Farm and family-
     owned business assets together accounted for about 10 percent 
     of all assets in all estates and less than four percent of 
     the value of taxable estates of less than $5 million.)
       Of particular significance is a Treasury Department 
     tabulation of 1998 data. It shows that in only 776 out of the 
     47,482 taxable estates that year did family-owned business 
     assets (closely held stock, non-corporate businesses, or 
     partnerships) equal at least half of the gross estate. 
     Similarly, on only 642 out of these 47,482 taxable estates 
     did farm assets or farm assets and farm real estate equal at 
     least half the gross estate. Thus, for 1,418 estates out of 
     the approximately 2.3 million people who died that year--or 
     six out of every 10,000 people who died--did family-owned 
     businesses or farms form the majority of the estate. The 
     Treasury analysis found that estates that included these 
     assets paid less than one percent of all estate taxes.
       Most farms have relatively modest value. The Agriculture 
     Department estimates that in 1998, fewer than six percent of 
     all farms had a net worth in excess of $1.3 million, the 
     amount of an estate that is completely exempt if the estate 
     includes a family-owned farm. Only 1.5 percent of farms have 
     net worth over $3 million.


smaller, family-owned business already eligible for favorable treatment

       Family-owned businesses and farms already are eligible for 
     special treatment under current law.
       Under current law, family-owned businesses and farms may be 
     valued in a special way that reflects the current use to 
     which that property is put, rather than its market value. 
     This provision generally reduces the value that is counted 
     for purposes of estate tax; the reduction in value can be as 
     much as $770,000 in 2000. This amount is indexed annually for 
     inflation.
       To use the special valuation, the decedent or other family 
     members must have participated in the business for a number 
     of years before the decedent's death, and family members must 
     continue to operate the business or farm for the following 10 
     years. This assures that the benefit of this special 
     valuation goes to relatively smaller businesses and farms 
     than are family owned and operated.
       The amount of an estate that is exempt from taxation is 
     higher for family-owned businesses and farms than for other 
     types of estates. Instead of the $675,000 exemption (which 
     rises to $1 million in 2006), the 1997 tax law increased the 
     total exemption for most estates that include family-owned 
     businesses to $1.3 million.
       In addition, when the value of a family-owned business or 
     farm accounts for at least 35 percent of an estate, current 
     law allows deferral of taxation. The tax payable on such an 
     estate may be stretched over up to 14 years, including 
     deferral of annual interest payments for five years, followed 
     by up to 10

[[Page 13664]]

     annual installments of principal and interest.


       is it difficult to qualify as a ``family-owned'' business?

       Proponents of estate tax repeal often claim that increasing 
     the exemption for family-owned businesses is not a sufficient 
     remedy, because the law makes it too hard to qualify for 
     treatment as a family-owned business. In fact, the definition 
     of a family-owned business is very expansive so long as the 
     family owns and operates the business and intends to continue 
     doing so.
       If a business is wholly owned and operated by the person 
     who died, it easily qualifies for treatment as a family-owned 
     business under current estate tax law. Otherwise, there are 
     two key factors that determine whether the business or farm 
     qualifies as a family-owned business.
       The first factor is the relationship of the person who died 
     to others who own a share in the business or help run it. For 
     purposes of the estate tax, the term ``family'' is quite 
     broad; it includes, for example, grandchildren and great-
     grandchildren and their spouses as well as nieces and nephews 
     and their spouses.
       The second consideration is whether the family actually 
     owns and operates the business.
       The family must own at least 50 percent of the business. 
     However, if more than one family owns the business, the 
     family of the person who died may own as little as 30 percent 
     of the business.
       Either the person who died or any family member (as family 
     member is broadly defined) must have owned and materially 
     participated in the business for at least five of the 
     previous eight years. In general, material participation 
     means working at the business and taking part in management 
     decisions.
       Businesses that manufacture or sell a product, provide a 
     service, or engage in farming qualify for the special 
     treatment. A business that is solely a holding company for 
     managing other investments would not qualify.
       The company cannot be publicly-traded. If stock in the 
     business has been publicly-traded within three years of the 
     person's death, the business does not qualify as family-
     owned.
       The heirs also must continue to operate the business for a 
     period of time. In the decade after the person's death, each 
     qualified heir or a member of his or her family must 
     materially participate in the business for at least five of 
     any eight consecutive years. If three siblings inherit a 
     business, for example, the test would be met if any one of 
     them participated. It also would be met if one sibling's 
     daughter were the only participant.
       If payments are deferred and paid over time in 
     installments, a below-market interest rate of just two 
     percent applies to the tax attributable to the first 
     $1,030,000 in value of a closely held (family) farm or 
     business. There also is a preferential rate on the tax 
     attributed to the remaining value of the family farm or 
     business.


estate tax relief for family farms and small businesses can have modest 
                                  cost

       There are a number of ways the estate tax burden could be 
     substantially relieved for these family businesses and farms 
     without repealing or making fundamental changes in the rest 
     of the estate tax. A proposal offered in the House Rep. 
     Charles Rangel, the ranking minority member of the Ways and 
     Means Committee, as an alternative to repealing the estate 
     tax included such a provision.
       A provision in the Rangel proposal would have raised the 
     exclusion for family-owned farms and small businesses from 
     $1.3 million to $2 million. It also would have allowed the 
     transfer of any unused portion of the exclusion between 
     spouses. As a result, a married couple with a farm or small 
     business interest would receive a $4 million exclusion. 
     (Under current law, a couple can receive a $2.6 million 
     exclusion for a farm or small business interest if they 
     engage in some estate tax planning. The Rangel provision 
     would have provided the $4 million exclusion without the need 
     for estate tax planning.)
       This type of substantial additional tax relief for family 
     owned farms and businesses carries a cost that is only a tiny 
     fraction of the cost of fully repealing the estate tax. This 
     provision would cost about $2 billion a year, compared to the 
     approximately $50 billion-a-year cost of the Archer proposal 
     when fully in effect.


              repealing the estate tax carries a high cost

       The Joint Committee on Taxation estimates that the bill the 
     House passed to reduce and ultimately eliminate the estate 
     tax would cost $104.5 billion over the 10-year period from 
     2001 through 2010. Full repeal of the estate tax would be 
     effective for people who die in 2010 and years after that. 
     The full revenue effect from repealing the estate tax would 
     not be felt until two to three years after that, because 
     estate taxes are rarely paid in the year of death; it takes 
     two to three years to settle an estate and file the estate-
     tax return. As a result, the cost of repealing the estate tax 
     is not reflected in any year in the 10-year period covered by 
     the revenue estimate for the bill.


       repealing the estate tax would reduce charitable bequests

       Current estate tax law includes an unlimited charitable 
     deduction; no estate tax is due on funds bequeathed to 
     charities. For the largest estates that are subject to the 55 
     percent marginal estate tax rate, each additional $1,000 
     given to charity reduces estate taxes by $550.
       In 1997, more than 15,500 estates took advantage of this 
     provision, making--and deducting--donations worth more than 
     $14 billion. (This includes the charitable deductions taken 
     by all estates required to file estate tax returns in 1997, 
     some of which were taxable and some of which had sufficient 
     total deductions and credits to eliminate estate tax 
     liability.)
       The charitable deduction is most heavily used by the 
     largest estates. In 1997, charitable deductions equaled 30 
     percent of the total gross assets of taxable estates valued 
     over $20 million, as compared to about three percent of the 
     assets of smaller estates. Over half of the taxable estates 
     of more than $20 million took a deduction for charitable 
     bequests in 1997; these estates gave a total of $7.5 billion 
     to charity, averaging more than $41 million in donations per 
     estate. This is one of the reasons the effective estate tax 
     rates are lower for estates valued at $20 million or more 
     than for estates valued between $1 million and $20 million. 
     (See Table 1.)
       The research on the effect of the estate tax on charitable 
     giving has consistently shown that levying estate taxes 
     increases the amount of charitable bequests. The most recent 
     study, by Treasury Department economist David Joulfaian, 
     analyzed the tax returns of people who died in 1992. 
     Joulfaian found that eliminating the estate tax would reduce 
     charitable bequests by about 12 percent overall. Had there 
     been no estate tax in 1997, charities thus would likely have 
     received about $1.7 billion less in bequests than they did.
       The actual loss to charity is likely to be greater than is 
     implied by looking solely at bequests, however, because some 
     people with significant estates make charitable contributions 
     while they still are alive with the intention of reducing 
     both their income taxes and the amount of their assets on 
     which the estate tax will be levied. If a person gives to 
     charity through the popular device known as a charitable 
     remainder trust, for example, the assets do not show up in 
     the estate tax statistics. Under a charitable remainder 
     trust, the person transfers assets to the trust. The trust 
     provides the person a stream of income for the remainder of 
     his or her life, and whatever remains in the trust at the end 
     of the person's life goes to charity. The person gets an 
     immediate income tax deduction for the amount that will go to 
     charity, computed based on his or her life expectancy (as 
     determined actuarially). In addition, amounts transferred in 
     this manner are considered to have been transferred prior to 
     death and are not included in the estate when the donor dies. 
     In 1997, a total of 82,176 charitable remainder trusts were 
     in existence, containing assets totaling $60.5 billion. 
     Charitable remainder trusts are just one example of 
     charitable donations that may take place toward the end of 
     life that reduce both income taxes and estate taxes.
       Under current law, CBO projects the estate tax will bring 
     in $48 billion a year by 2010. In the 10 years between 2011 
     and 2020, the estate tax likely would bring in at least $620 
     billion under current law. Repealing the estate tax 
     consequently would result in the loss of the entire $620 
     billion over the 10-year period. The House bill also includes 
     a provision relating to the valuation of capital assets when 
     a person dies that would offset a small portion of the 
     revenue loss from repeal of the estate tax; the offsetting 
     revenue gain is likely to be in the range of $5 billion to 
     $10 billion a year. Thus, the net effect of the House bill, 
     when fully phased in, would be a revenue loss likely to 
     exceed half a trillion dollars over the 10-year period from 
     2011 through 2020.

  Mr. WELLSTONE. Last week, President Clinton pointed out the cost of 
this repeal, helping the top wealthiest 2 percent of our population. It 
amounts to $100 billion over the first 10 years and then $750 billion 
over the next decade.
  I will speak for some period of time, and I know other Senators will 
speak as well, about what we could be doing and should be doing instead 
of repealing this inheritance tax helping the top 2 percent of the 
population.
  Instead of this repeal helping the top 2 percent of the population, 
we could help renew our national vow of equal opportunity for every 
child. We could start by making sure families in our country are helped 
with affordable child care. I can't think of a more important issue, 
especially for younger working families. I don't know how many times in 
Minnesota, or anywhere I go in the country, I have people coming up to 
me--maybe they make $40,000 a year or $35,000 a year, and the child 
care expenses range anywhere from $6,000 a year to $12,000 a year. We 
could have a refundable tax credit. It could

[[Page 13665]]

be for families under $30,000. You could put it on a sliding fee scale 
basis. We could go up to $30,000, $40,000, $50,000 a year, which would 
help families afford child care. Why don't we do that?
  The Federal Government--that means the Senate, that means the House 
of Representatives--could be a real player in pre-K education. By the 
way, child care--whether a family provider, whether in a child care 
center, or whether or not a child is at home with a parent--is all 
about education. Those children who are able to receive developmental 
child care, who were nurtured, who were intellectually stimulated, will 
come to kindergarten ready to learn and they will do well.
  For many families, and not only low-income families, this is a 
salient issue. The way this is drafted right now, going to the 
wealthiest 2 percent of Americans, we could--and I intend to have an 
amendment that focuses on this--have some tax credits that go to 
families so they can afford child care.
  This is an emergency situation in many of our States. At best, 20 
percent of the children in 20 percent of these families are receiving 
any help whatsoever. There was a powerful piece in the Washington Post 
last weekend talking about the fact that not only can families not 
afford this, but there is almost a 40-percent turnover of child care 
providers every year.
  I ask unanimous consent that this article, ``Burdened Families Look 
for Child Care Aid,'' be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                [From the Washington Post, July 6, 2000]

               Burdened Families Look for Child-Care Aid

                          (By Dale Russakoff)

       Woodbridge, N.J.--Debra Harris, a single mother, quit her 
     $34,000-a-year job as an occupational therapist for the 
     summer because she can't afford full-time care for her two 
     children.
       Kathy Popino, a receptionist, and her electrician husband 
     have gone into debt to keep their toddler and 8-year-old in 
     child care at the YMCA, after a bad experience with a lower-
     priced home caregiver.
       Mary O'Mara, a computer network administrator, and her 
     husband, a factory worker, have junked the conventional 
     wisdom of ``pay your mortgage first.'' They sometimes pay a 
     late fee on their home loan to cover child care first, lest 
     they lose coveted spaces in a center they trust.
       Child care is in slow-motion crisis for middle-income 
     families, and Middlesex County, N.J., is in the thick of it. 
     With three of four mothers working outside the home--near the 
     national average--this swath of suburbs dramatizes the cost 
     to working families of the national political consensus that 
     child care is a private, not public, responsibility.
       For 30 years, politicians have promised to shift the burden 
     for families in the middle, with little result. Vice 
     President Gore recently called for tens of billions of 
     dollars in spending and tax breaks over a decade to improve 
     care from infancy through adolescence--a proposal advocates 
     called impressive in its reach, but short on resources and 
     details.
       Texas Gov. George W. Bush has proposed initiatives only for 
     the poor, saying working families can apply his proposed 
     income tax cut to child care bills.
       Would-be beneficiaries here had a feeling they'd heard that 
     before.
       ``I was so hopeful when the Clintons came in,'' said 
     Popino, 34. ``I saw Hillary as a working mom's best friend. I 
     remember she said, `It takes a village.' Okay, it's been 
     eight years. When are they going to get to my village?''
       The politics of welfare reform has focused national 
     attention and money on the vast child care needs of women in 
     poverty, which remain unmet. And the economic boom is helping 
     affluent families pay full-time nannies or the $800- to 
     $1,000-a-month fees at new, high-quality centers.
       But with a record 64 percent of mothers of preschoolers now 
     employed, and day care ranked by the Census Bureau as the 
     biggest expense of young families after food and housing, 
     officials say middle-income families routinely are priced out 
     of licensed centers and homes. The median income for families 
     with two children is $45,500 annually, according to the 
     Census Bureau.
       ``Basically, we have a market that isn't working,'' said 
     Lynn White, executive director of the National Child Care 
     Association, which represents 7,000 providers.
       In a booming economy in which almost any job pays better, 
     day care centers now lose a third to more than half of their 
     staffs each year, and licensed home caregivers have quit in 
     droves, according to national surveys.
       The average starting wage for assistant day care teachers 
     nationally rose 1 cent in eight years--to $6 an hour. Weekly 
     tuition at centers in six cities rose 19 percent to 83 
     percent in the same period, as states tightened regulations.
       Most industrialized countries invested heavily in early-
     childhood care as women surged into the work force in the 
     1970s, but Congress and a succession of presidents left the 
     system here mostly to the marketplace, directly subsidizing 
     only the poorest of the poor.
       A federal child care tax credit, enacted in 1976, saves 
     working families $3 billion, but advocates say it has fallen 
     far behind inflation. (It saved Debra Harris $980 last year, 
     leaving her cost at more than $7,000.)
       When the military faced the same crisis of quality, 
     affordability and supply a decade ago, Congress took a 
     strikingly different approach. It financed a multibillion-
     dollar reform in the name of retaining top recruits and 
     investing in future ones.
       The result was a system of tightly enforced, high-quality 
     standards for day care, home care and before- and after-
     school care. It included continual training of workers and 
     more generous pay and benefits.
       Advocates hail the system as a model. With 200,000 children 
     in care, it costs an average of $7,200 a child, which the 
     government subsidizes by income.
       ``The best chance a family has to be guaranteed affordable 
     and high-quality care in this country is to join the 
     military,'' concluded an analysis by the National Women's Law 
     Center.
       Debra Harris used to drop her kids at Pumpkin Patch Child 
     Development Center in working-class Avenel every morning at 7 
     in a weathered Ford Escort. She popped buttered bagels in the 
     center's microwave for their breakfasts before heading to 
     Jersey City, where she was a school occupational therapist.
       A bus took Whitney, 9, and Frankie, 7, to school and 
     brought them back at day's end to Pumpkin Patch, which they 
     complained was cramped and a bit boring. Their mother 
     considered it the safest and best care she could afford.
       This summer, though, Whitney and Frankie's needs would have 
     grown before- and after-school care (total: $440 a month) to 
     full-day care at Pumpkin Patch's camp (total: $1,400 a 
     month). Harris recently went back over the match, incredulous 
     at the results.
       ``I can make $25 an hour on a per-diem basis,'' she said. 
     ``If I work 40 hours a week, that's $4,000 a month, $3,200 
     after taxes. If I take out $1,400 for my mortgage and $1,400 
     for full-time day care, that leaves $400--$100 a week to buy 
     food and gas, pay bills, go to the shore on the weekend. This 
     is crazy!''
       So Harris decided to quit her job for the summer, find 
     part-time work and draw down her savings.
       At 30, Harris prides herself on providing for her children 
     ``without ever using the welfare system, thank God,'' despite 
     difficulties that include an ex-husband who is more than 
     $6,000 behind in child support, according to her records.
       Child care was never easier when she was married, and not 
     just because of her husband's paycheck, Harris said. Early in 
     their marriage, they were stationed in Germany with the Air 
     Force and had access to German-subsidized child care. They 
     paid $40 a month per child for full-time care in a stately, 
     19th-century building within walking distance of their home.
       ``I find it really discouraging that my own government says 
     I shouldn't need help with child care,'' Harris said. ``Now 
     is when I really need some help.''
       The first time Washington tried to help--and failed--was 
     1971. Congress passed a $2 billion program to help 
     communities develop child care for working families, but 
     President Richard M. Nixon vetoed it as ill-conceived, 
     writing in his veto message that it would ``commit the vast 
     moral authority of the National Government to the side of 
     communal approaches to child-rearing over . . . the family-
     centered approach.''
       Mothers of school-age children kept going to work anyway. 
     In 1947, 27 percent was employed at least part time; in 1960, 
     it was 43 percent; in 1980, 64 percent; in 1998, 78 percent. 
     State governments took the lead in setting child care 
     standards, which vary dramatically, as do fees and quality.
       In the late 1980's, with the number of children in care 
     surging, Congress again took up the cause of middle-income as 
     well as poor families. The resulting Act for Better 
     Childcare, signed by then-President George Bush in 1990, 
     vastly increased aid to the poor, whose needs were the most 
     urgent. But middle-income families were left out.
       Poor families' needs became even more pressing in 1996 with 
     the passage of welfare reform, which sent women from 
     assistance rolls to the work force. A federal child care 
     block grant aimed at families making up to 85 percent of a 
     state's median income is going overwhelmingly to families in 
     or near poverty, reaching only 1 in 10 eligible children, 
     according to the U.S. Department of Health and Human 
     Services.
       In 1988, President Clinton moved to expand the child care 
     tax credit but was blocked by Republicans who said it 
     slighted mothers who stayed home with their children.

[[Page 13666]]

       This election year could be different, several analysts 
     said. Although most voters care less about child care than 
     Social Security and taxes, the issue rates highest with women 
     younger than 50, particularly those under 30, a crucial 
     voting bloc for both Bush and Gore.
       Unlike 1996, when these women were solidly for Clinton, 
     their concerns now have political cachet, according to Andes 
     Kohut of the Pew Research Center for the People and the 
     Press.
       At the same time, advocates are linking quality child care 
     to school readiness, hoping to tap into the national focus on 
     education. They emphasize that the government subsidizes 
     higher education for all families, but not ``early ed,'' as 
     they call child care, which hits young families, who have 
     fewer resources.
       Another political impetus comes from recent reports of the 
     U.S. military program's success. Newspaper editorials in 
     almost every region of the country asked why the civilian 
     world can't have the same quality child care.
       Kathy Popino has been asking for years. Her husband, 
     Warren, was in the Coast Guard when their son, Matthew, was 
     born, and they paid $75 a month--subsidized by the Department 
     of Defense--to a home caregiver trained by the DOD. ``She was 
     wonderful. The military inspected all the time,'' Popino 
     said.
       When Warren left the Coast Guard to become an electrician, 
     they moved to Metuchen, N.J., but couldn't find licensed care 
     at even twice that price. They opted for an unlicensed home 
     caregiver who cared for Matthew for $80 a month, along with 
     two other children.
       But Matthew, then 2, began crying nights, and ``his 
     personality did a 180,'' Kathy said. Unable to sleep herself 
     or concentrate at work, Kathy moved him to a state-of-the-art 
     KinderCare Learning Center they couldn't afford. ``Visa 
     became our best friend,'' she said.
       Ultimately, they moved him to the YMCA, where they now pay 
     about $800 a month for high-quality, full-time care for 
     Gillian, 1\1/2\, and after-school care for Matthew, 8. The 
     program there includes weekly swim lessons, daily sports and 
     homework help in spacious, sun-filled rooms.
       In the process, Popino has developed a keen class 
     consciousness. ``When summer camp starts, you pay every 
     Monday, and everybody who pays with credit cards walks out to 
     our used cars we owe money on. The people paying by check 
     walk out and get in their new Lexus,'' she said.
       The Y's fees are lower than prices at similar, for-profit 
     centers, but cost pressures are rising as the labor market 
     tightens. Child care director Rose Cushing said turnover 
     rates are well over 30 percent, even with the agency paying 
     health benefits to its teachers.
       Twenty minutes south on U.S. Route 1, at Pumpkin Patch, 
     where fees, teacher pay and the facilities are more modest, 
     proprietor Michelle Alling has held on to four of her head 
     teachers for five years, mainly because of their loyalty to 
     the children.
       On a recent morning, as one teacher baked chocolate-chip 
     cookies with flour-blotched 3- and 4-year-olds, Alling 
     acknowledged that they all desperately needed higher wages.
       But ``then you have families literally handing you their 
     entire paycheck,'' she said, ``and where does it come from?''
       Mary O'Mara, the mother who sometimes makes ends meet by 
     paying late fees on her mortgage, said politicians who look 
     past this issue must live in a different world than hers. She 
     wishes she could show them what she showed her mother, who 
     used to tell her to relax and stay home with her children.
       ``I sat her down with a calculator, and I gave her a 
     month's worth of bills--food, mortgage, child care, 
     gasoline,'' O'Mara said. ``There was almost nothing left, and 
     that's with two middle-class incomes.
       ``She looked at me like she didn't believe it. She said, `I 
     didn't realize how tough it was out there.' ''
  Mr. WELLSTONE. Mr. President, instead of the repeal of the 
inheritance tax going to the wealthiest 2 percent, we could provide 
some tax credit assistance for working families so they could better 
afford child care for their children. Why can't we do that?
  The evidence is irrefutable. The evidence is irreducible. These are 
the critically important years. Families in our States tell us how 
important this is. What are we doing moving forward on repealing an 
inheritance tax for the wealthiest 2 percent of Americans, not 
targeting it to family farmers and small businesses but across the 
board, instead of using some of this money--$100 billion over the first 
10 years, but $750 billion over the second 10 years--to make sure 
families in our country can afford good child care for their children?
  By the way, even when I talk about tax credits invested in affordable 
child care, it breaks my heart because this will not even be near 
enough. The truth is, we have to get serious about good developmental 
child care, and that means men and women who work in this field should 
not make $8 an hour or $6 an hour with no benefits at all, but we 
should value the work of adults who work with children; that we not 
continue to pay men and women who work in child care centers half of 
what we pay men and women who work in zoos taking care of animals.
  As a Senator from Minnesota, I am absolutely confident that I am 
reflecting the priorities of Minnesotans when I say repeal of this 
estate tax, now crafted in such a way that it goes to the wealthiest 2 
percent of Americans, is hardly a priority for people in Minnesota or 
people in the country. I would prefer to see us make the investment in 
child care. I intend to offer an amendment that deals with additional 
tax credits which will provide help for working families.
  I will not use statistics, but every Senator, Democratic and 
Republican, knows intuitively that in today's economy, one of the most 
important indicators of whether or not a young person--or not such 
young person, since many of our students are no longer 18 and 19 living 
in a dorm but they are 40 and 50 years of age going back to school--can 
succeed is whether or not they are able to complete higher education. 
Yet we have this huge gap between the number of young people, or not 
such young people, from low- and moderate-income backgrounds who are 
able to complete college versus those who come from upper-income or 
upper-middle-income families, and it is because of the cost of higher 
education.
  We have not fully funded the Pell Grant Program where we get the most 
bang for the buck, and when we passed the Hope Scholarship Program and 
said there would be a $1,500 tax credit for students to afford the 
first 2 years of school, it was not a refundable tax credit. So for a 
lot of the students in the community colleges in Minnesota, if they 
come from families with incomes under $30,000 a year, $28,000 a year, 
they do not get any benefit because it is not a refundable tax credit.
  What could we be doing instead of moving forward on an agenda that 
repeals this inheritance tax that benefits the wealthiest 2 percent of 
the population? What we could do instead is provide refundable tax 
credits for our students so they can afford to go on to colleges and 
universities and do better for themselves and do better for their 
children. I say better for their children because, again, I have 
reached the conclusion, having spent a lot of time on campuses in 
Minnesota, that the nontraditional students have become the traditional 
students, and probably the majority of our students are now in their 
thirties and forties with children going back to school so they can do 
better for their kids.
  Are we committed to education? Here is where we could be a player. 
Instead of repeal of this estate tax that the majority party wants us 
to move forward on, why are we not talking about a commitment to 
education? Why are we not, as Senators, making a difference where we 
can make a difference?
  Yes, we can make a difference in kindergarten through 12th grade, but 
we can make a huge difference, it is our role to make a difference 
prekindergarten: to make a commitment to affordable child care so 
children coming into kindergarten are ready to learn; to make sure 
every child has an opportunity to do well; to make sure our students 
can go on and afford higher education so they can do better by 
themselves.
  Why are we not making this commitment to education? What are we doing 
out here, trying to move forward this piece of legislation that is 
going to cost $100 billion over the first decade and then up to $750 
billion over the next decade, with all of this money and all of these 
benefits flowing, roughly speaking, to the wealthiest 2 percent of the 
population? I have a bill, as does Barney Frank in the House of 
Representatives, that basically says: What we can do is agree that we 
are talking about, by definition, very wealthy Americans; that we are 
trying to repeal this inheritance tax. We are saying--and I quote 
Barney Frank--``If you're old, rich, and dead, we're with

[[Page 13667]]

you. If you're old, sick, and middle class, you're out of luck.'' I do 
not know that I would put it quite that way, but basically we could 
take this $750 billion over the second 10 years, $100 billion over the 
first 10 years, and finance prescription drug benefits so seniors will 
be able to afford prescription drugs.
  I come from a State where fully 65 percent of senior citizens have no 
prescription drug coverage at all. All of us can talk about people who 
are spending up to $300, $400, $500 a month to cover prescription drug 
costs, and maybe their total monthly budget right now, based upon what 
benefits they have, is $1,000 or $1,200. We can talk about people who 
cut pills in half, though that is dangerous. We can talk about people 
who are faced with the choice: Can I afford prescription drugs or can I 
afford to eat but not both?
  What in the world are we doing trying to proceed on a piece of 
legislation which is not at all targeted, which provides huge benefits, 
which basically busts our budget and robs our ability to invest in 
other decisive areas that are so important to people in our States and 
provides the benefits to the wealthiest 2 percent?
  This debate is really a debate about our priorities and, and I will 
draw a bit from the Center on Budget and Policy Priorities: In 1997, 
the estates of fewer than 43,000 people--fewer than 1.9 percent of the 
2.3 million people who died that year--had to pay any estate tax. That 
is 1.9 percent, roughly speaking, among the wealthiest 2 percent in the 
United States of America. It is going to cost us $100 billion over the 
first 10 years, and it is going to cost us $750 billion over the next 
10 years.
  You know what. If we had an unlimited amount of money, and we did not 
have other needs--such as affordable child care, making sure we have 
health security for families, making sure people have a pension, making 
sure young people and not so young people can go on and afford higher 
education, and making sure families can do well by their kids so they 
can do well by their country--I might be all for it.
  But what about these other decisive needs? Don't they come first?
  Mrs. BOXER. Will the Senator yield for a question?
  Mr. WELLSTONE. I would be pleased to yield.
  Mrs. BOXER. One of our colleagues was saying he was visited by an 
extremely successful gentleman who was worth in the hundreds of 
millions of dollars, perhaps as much as $1 billion. The gentleman was 
discussing with this particular Senator this repeal of the estate tax 
for the wealthiest in our Nation, for the billionaires, if you will, 
for the most wealthy among us. This very wealthy person was making the 
point that he was not for this repeal for the very wealthy.
  He said we could fix it for some of the family farmers, the small 
businesses, with which, by the way, Democrats on the whole have agreed. 
But he said: Do you know how I made my money? A lot of people have 
worked for me. He said: Those people have worked really hard for me. 
They didn't grow up to be millionaires. They got up every day, and they 
worked for my business. He said, in a sense, if his children had to pay 
some of the inheritance back, and we took the funds here and put them 
into education and job training and health care and prescription drugs, 
he would feel pretty good about it.
  Now, granted, this is a type of a person you do not run into that 
often. Most people are not that selfless. But I think that gentleman 
really put it out there for us to contemplate.
  This is the greatest nation in the world. With a good idea, people 
can come up from poverty and they can make it to the top. Their heirs 
perhaps may not be that hard working, but maybe they are. But the fact 
is, this gentleman has focused on this, to say to this great country: I 
want to see it continue to be great. There is a notion about that, that 
this gentleman, I believe, has focused upon.
  I offer that up to my friend because he points out how much work we 
have to do for ordinary people who get up and face problems every day. 
It seems to me to be a very small price to pay, for very few people at 
the very top who have, in a sense, made it mostly because of these 
hard-working people, that their estates give back a little bit to this 
great country to defend itself, to be able to afford to educate its 
young, et cetera. I want my friend to just comment on that.
  Mr. WELLSTONE. Mr. President, I thank the Senator from California. I 
actually would like to comment on her point in two ways.
  First of all, let me point out, right now the total exemption for 
most estates that include a family-owned business is $1.3 million in 
2000. That is what it has gone up to. A couple can exempt up to $2.6 
million of an estate that includes a family-owned business or farm.
  I would have no problem further targeting that. I do not think my 
colleague from California would, either. But the proposal out on the 
floor by the Republican majority--a sort of across-the-board repeal 
that amounts to $850 billion of lost revenue over the next 20 years--
has to be considered alongside what we are about as a nation, what we 
are about as a people. I think the Senator from California speaks to 
the whole question of community.
  My definition of community is that we all do better when we all do 
better. The interesting thing is that many people in Minnesota who are 
economically very successful--I do not know if they are the wealthiest 
2 percent; I can think of some for whom I think I can speak who would 
say: Look, in all due respect, in terms of the scheme of your 
priorities, my gosh, get it right first for children. Get it right by 
way of helping families and helping children. Get it right by investing 
in education.
  We now have 44 million people with no health insurance whatsoever. We 
have probably twice that number who are underinsured. We have senior 
citizens for which Medicare does not pay for prescription drug benefits 
in many of our States, or cover very little of it, who are faced with 
those expenses. We have a lot of elderly people--we do not talk about 
this much--who are terrified that they are going to have to go to the 
poorhouse before anybody will help them with catastrophic expenses, if, 
God forbid, they can't live at home.
  Right now--my colleague from Wisconsin knows this well; this has been 
one of his priorities--we have not put anywhere near the resources we 
should put into assisted living so people can stay at home and live as 
near a normal circumstance as possible. That is a big family issue.
  Let's think about this for a moment. From little children--under 4 
feet tall, who are beautiful, all of them--to people who are elderly 
and are having a hard time paying their health care bills, and 
especially at the very end of their lives, who are frail and are 
wondering can they stay at home and live with dignity and wondering who 
will help them, or if, God forbid, they have to be in a nursing home 
because of Alzheimer's disease or whatever the case may be, that across 
the board we have not made the investment.
  There is a lot we need to do as a nation. These are important 
priorities, not only for our country, not only for California or 
Minnesota. That isn't the right way to say it. These are important 
family values. I say to Senator Boxer from California, what I am asking 
is: Where are our priorities that focus on family values?
  To me, it is a family value to come out and talk about tax credits or 
a direct investment of money to make sure child care is affordable. It 
is a family value to make sure people, at the end of their lives, or 
toward the end of their lives, who have worked hard and have built this 
country, should not have to be in terror that there won't be anybody to 
help them stay at home, or, if they are in a nursing home, nobody to 
help them with their expenses.
  The United States of America--I love this country--is the only 
country where you have to go to the poorhouse before you are eligible 
for any help--Medicaid, Medicare assistance. Clearly, as a nation, in 
terms of our own priorities, we are going to have to start valuing the 
work of adults who work with children. We are going to have to start 
valuing the work of adults who work

[[Page 13668]]

with elderly people. We pay them $6 or $7 or $8 an hour, with no health 
care benefits. This cannot be done on the cheap.
  We have all these challenges. We are talking about $100 billion the 
first 10 years, and then the second 10 years, $750 billion. That is 
what this costs to provide a blank check benefit to the wealthiest 2 
percent of the population.
  We have all these challenges before us in terms of Medicare, in terms 
of Social Security, in terms of making sure there is health security 
for families, in terms of making sure we get it right for our kids. 
They are the ones who we are going to be asking a lot of by the year 
2020.
  In the words of Rabbi Hillel: If not now, when? If we can't invest in 
our children now, when will we? If we can't invest in the health and 
the skills and the intellect of our children now, when will we ever do 
that?
  So I say to my colleagues, I just mention one amendment which I hope 
to be able to bring to the floor on this bill, which will talk about 
rather than all of these benefits just going to the wealthiest 2 
percent, how about an additional refundable tax credit to help families 
afford child care expenses?
  I say to my colleague from California, and other colleagues as well, 
I am for patient protection, I am for passing legislation that provides 
not only patient protection but provides caregivers protection. 
Demoralized caregivers are not good caregivers. I think doctors and 
nurses ought to be in the kind of position to practice medicine the way 
they thought they could when they were in nursing or medical school.
  But the other issue is all the people who fall between the cracks who 
have no health security. I am amazed that universal health care 
coverage is not back on the table. I do not believe for a moment that 
the United States of America, the wealthiest country in the world, with 
a booming economy, and record surpluses at the moment, cannot provide 
health security for American citizens, for families in this country.
  You can't have it all ways. If my Republican colleagues want to come 
out and say their priority is to provide a great tax benefit for the 
wealthiest 2 percent of the population, which is going to cost us $850 
billion over the next 20 years, then not only are we not going to be 
able to do right by Medicare, not only are we not going to be able to 
provide prescription drug costs, but we are not even going to begin to 
be able to talk about how we reach the goal of health security for 
every American citizen, for all the families in this country.
  What are our priorities? Instead of moving forward on this piece of 
legislation, we ought to be focusing on health security for American 
citizens. Not that we need to look to the polls to give us guidance, 
but not surprisingly, along with education, health security for 
families and citizens, emerge as top issues.
  I will mention two other issues in terms of what we could be doing 
and what we should be doing, instead of repealing the estate tax 
blanket repeal, across the board, benefits going to the wealthiest 2 
percent of the population. I think I speak for every Senator, Democrat 
and Republican, on this one. In 1997, we passed what was called the 
Balanced Budget Act. Some people voted for it; some people voted 
against it. I am glad I voted against it. Different people vote 
different ways. If it wasn't then, it is crystal clear now that what we 
have done to the Medicare reimbursement by so dramatically cutting it 
has had a catastrophic effect on our hospitals and on our nursing 
homes, especially in our rural communities.
  I attended a recent gathering at White Hospital in Hoyt Lakes, up on 
the Iron Range. Hospitals in a State such as Minnesota, where we don't 
have the fat in the system, do not make excessive profits at all. They 
are going to go under. We are going to have more and more hospital 
closings. These hospitals are community institutions. These hospitals 
are important to communities, not only because rural America doesn't do 
well; when people are trying to decide if they want to live in a rural 
community, they want to know whether they can afford to live in the 
community: will there be a job at a decent wage? Can they afford to 
farm? Are they going to get a decent price?
  The second thing they want to know is whether they want to live in a 
rural community. If they don't have good health care and good 
education, they are not going to do it.
  Last year, we said we fixed this problem. We restored about 10 
percent of the cuts. Again, I am not now talking about universal health 
care coverage, although I believe our country must embrace this idea. I 
will introduce a bill next week, working with the Service Employees 
International Union. It is a decentralized health insurance program. I 
like it a lot. I want to get it back on the agenda. I think it is 
important that we have a constituency to fight for it in the country.
  I am not even talking about prescription drug benefits. I am not even 
talking about major reform. I am saying, I don't know how in the world 
we go forward with this kind of across-the-board blanket repeal with 
the benefits going to the wealthiest 2 percent of the population when 
we aren't even getting it right in terms of getting the reimbursement 
that our health care providers actually deserve back in our States.
  I will mention one other issue. Senator Feingold is here on the 
floor, along with Senator Boxer, Senator Reid, and Senator Burns. 
Instead of going forward with this tax scheme, why aren't we dealing 
with a core issue: reform. Why aren't we debating campaign finance 
reform? There is probably a pretty strong correlation. Some of the 
programs I have talked about and some of the values I have talked 
about, the people who would most benefit are not the heavy hitters, not 
the givers. They are not the investors and big contributors. Clearly, 
the wealthiest 2 percent of the population are among the ranks of the 
biggest givers, although there is not a one-to-one correlation. 
Clearly, at the very top, many people I know in Minnesota and I think 
around the country think we ought to get our priorities straight. We 
ought to start with some of the priorities I have talked about.
  Why aren't we dealing with reform? When are we going to get to 
dealing with the ways in which money has come to dominate politics? 
There is the McCain-Feingold bill. There is the clean money/clean 
election efforts in different States. I have introduced that 
legislation. One of the things I would like to do is to at least change 
three words of the Federal election code which would enable States, if 
they want to, to apply clean money/clean election to Federal races. If 
the State of Wisconsin or Minnesota said it would like to apply this to 
State legislative races but also to Federal races, it ought to be able 
to do that.
  Whatever your own preference, I think people in our country are 
begging us to move forward on a reform agenda and to give them a 
political process in which they can believe. I think citizens in our 
country are yearning for politicians they can believe. They are 
yearning for a Senate and House of Representatives in which they can 
believe. They are yearning for a political process in which they can 
participate. Right now there is so much disillusionment and 
disengagement, it should worry all of us who believe in public service. 
I can't think of anything we could do that would be more important than 
to pass significant, substantive campaign finance reform, instead of a 
tax scheme in its present form providing the benefits to the wealthiest 
2 percent.
  Couldn't we be talking about campaign finance reform? Couldn't we be 
talking about renewing democracy in America? Couldn't we be talking 
about how to restore confidence in the Government and the political 
process? Couldn't we be talking about renewing our national vow of 
equal opportunity for every child and affordable child care? Couldn't 
we be talking about how to help families do well by their kids so they 
can do well by our country and could do well by our States? Couldn't we 
be talking about how to help men and women who want to go on to higher 
education afford higher education?

[[Page 13669]]

Couldn't we be talking about making sure elderly people can afford 
prescription drugs? Couldn't we be talking about how to have more 
health security for people in our country? So many citizens fall in 
between the cracks; so many citizens feel so insecure. Couldn't we be 
talking about all of that and more with a booming economy and record 
surpluses? Couldn't we now get some resources back in the communities 
so our families could do better, so our children could do better, so 
that we all would be doing better because we all would be doing better, 
which is what a community is about? I think we could. That is where we 
ought to be focusing.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. REID. Will the Senator from Montana yield for a unanimous consent 
request?
  Mr. BURNS. I will yield.
  Mr. REID. Mr. President, I have been advised by the two managers of 
the Interior appropriations bill--and this has been approved by the two 
leaders--that we would ask all Members to notify their respective 
Cloakrooms and/or Senator Byrd or Senator Gorton that by 6 o'clock 
tonight they should get all their amendments to either the Cloakroom or 
to the two leaders. It will be a finite list of amendments. Then the 
two leaders, the two managers of the bill can work through that and at 
some time have the actual amendments in their hands. I ask unanimous 
consent that that be the case.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Montana.
  Mr. BURNS. Mr. President, I listened with great interest to my friend 
from Minnesota on this issue. I am not really sure if he was talking 
about families or not. The standard of living that this country enjoys 
has to be attributed in part to parents, moms and dads, grandmas and 
grandpas, and their ability to pass on some of their wealth to the next 
generation.
  We all work hard for our kids. I don't know of a parent who doesn't 
work for their kids in this country. While we were doing that, we 
elevated the standard of living and the wealth of this country for more 
people than any other society on the face of the planet.
  I didn't come from very wealthy folks.
  My dad was a small farmer in Missouri with 160 acres, two rocks, and 
one dirt. But last year, I lost one of my elderly aunts, a sister to my 
father. In her estate, I inherited only one thing in the will--a 1991 
Lincoln Town Car. I have never owned a Lincoln in my life. But you know 
what happened to that old car? It was sold in the estate sale to pay 
for the taxes. I was mad. Well, I am not saying we are doing badly now; 
what I am saying is, forget about the top 2 percent that the other side 
talks about because they don't pay estate taxes, folks. They have CPAs 
and lawyers. They can set aside trusts and do a lot of things to guard 
their fortunes and pass it on to the next generation of the family. It 
is the middle who gets hit. It is the man and wife who started off as a 
young couple and built a business. They pass on, the Government taxes 
it again after it has been taxed all of those years.
  So how much do you want these folks to give? We could have been 
talking about a lot of things today. We could have already had an H-1B 
visa bill, which is being blocked by the other side. They didn't like a 
lockbox for Social Security. They didn't like education reform, so they 
blocked that too.
  Now we are talking about a simple estate tax. To give you an idea, I 
have some good friends who live up in the middle part of Montana, and 
they are not wealthy, either. But this is who gets hurt. This is real 
stuff, not pie in the sky. This is not philosophical. This is plain old 
middle America.
  These folks lost their father and were given, starting in 1991, 
estate taxes of $4,584.81. Then they started making regular payments. 
In 1992, $13,000; in 1993, $15,000; in 1994, $14,000; in 1995, $14,000; 
in 1996, $16,000; in 1997, $15,000; in 1998, $12,000; in 1999, $12,000, 
and they have another payment coming up this December. They have been 
paying on this for their father who has been dead for 13 years. These 
aren't wealthy people. I know them personally. That is who this falls 
on. The top 2 percent? That is a myth and everyone should know it.
  Some folks in Polson, MT, have a series of small theaters. They are 
in little bitty towns in Montana. They are scared to death of this 
thing. They are getting to the age now where they are starting to 
worry. They have to set up some ways to shield themselves, but they are 
finding out that being that small, they can't. That is what we are 
talking about.
  I ask unanimous consent that a letter sent to me, dated July 10, 
2000, be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                                    July 10, 2000.
       Dear Senator Burns: Please eliminate the estate tax. My 
     husband and I and our children have worked for thirty years 
     to build a stable family business which provides us with a 
     modest living. We expected to pass it on to our grown 
     children who are working with us, but upon our death they 
     will be forced to sell pay the estate tax.
       We own movie theaters in seven small towns in Montana and 
     one is in Idaho, populations ranging from 2,500 to 10,000. We 
     purchased the first one in 1971 a few months before our 
     youngest daughter was born and the last theater was in 1992. 
     It has been a family business, our daughters grew-up in the 
     theater business, earning their first money selling popcorn. 
     Now our oldest daughter and her husband are working full time 
     as film booker and general manager. We would like to leave 
     this operating business to our children, but it will not be 
     possible if they must pay an estate tax on the appraised 
     value of the business and buildings it has taken us years to 
     accumulate and renovate.
       The income of our business could not support the extra 
     expense of the estate tax. The theater business is similar to 
     other small business and farms where the value of the land, 
     buildings, and equipment does not equate with the small 
     profit derived from it. A huge tax on the value of the 
     business is an extra expense the business can not pay. 
     Therefore, upon our death, the theaters must be sold to pay 
     the taxes.
       When this business, our family has built, is sold it will 
     leave our son-in-law and daughter with no means of support 
     after devoting half their life to the company. They will be 
     forced to start over at middle age. Yes, they will have some 
     money, the amount remaining after taxes, real-estate, 
     accountants, and lawyers fees, but certainly not enough to 
     support them through old age. if the operation is not 
     disrupted they can continue to be a stable tax payer and 
     employer. I would also expect they would continue to provide 
     quality movie theaters and possibly add more theaters in 
     other small towns.
       Please, this family has worked thirty years to build a 
     profitable stable business we expected to continue into the 
     next generations, please eliminate the Estate Tax.
           Sincerely,
                                                  Ayron Pickerill.

  Should we be talking about this? Yes. Should we be talking about an 
energy spike? Yes. I have a situation in Montana where I have one 
concentrator that concentrates copper ore. They were shut down because 
of an electricity spike because of a policy of not allowing 
construction or the ability to generate more electricity. Maybe we 
better start talking about that. Yet some would embrace a policy to 
tear down the hydrodams on the Snake River and the Columbia River. 
Maybe we should start talking about that because that is going to throw 
a lot of moms and dads out of work. A lot of grandmas and grandpas 
aren't going to like that, either.
  Who it hits is the small farmer. I can look around this body and I 
see my good friend from Wisconsin, where there are small farms over 
there; most of them are in the dairy business. They feed a few cattle, 
and they have hogs and a few sheep. They will find it very difficult to 
pass that along to their next of kin without paying a big tax. Why? 
Because during all this time we have been told of this great economic 
boom--and it has been on paper--rural America has not participated. 
Prices on the farm have not been that frisky, and they are not this 
year, either. What happens is that you are land rich and cash poor. 
Should something happen to the principal on that farm, it will probably 
sell at the steps. They will have to give it up to pay the estate taxes 
because, as land has gone up in value, just because of the demand for 
the land, not for what it will produce, it will have to sell.

[[Page 13670]]

  If you want open areas and you want to protect the environment, do 
away with this estate tax and allow the open areas of America to stay 
open areas of America. As I have stated before, the truly wealthy do 
not pay that tax because they have CPAs and lawyers. They have an army 
of folks. They make sure they won't ever have to pay this tax. So it 
falls on the middle.
  Large estates are still subject to capital gains. The other side 
won't talk about capital gains reform. Nonetheless, the large estates 
is where capital gains fall. Study after study shows that this tax 
imposes significant costs on the economy in terms of lower economic 
growth and less job creation. We are hurting enough in Montana.
  We have to get our agriculture out of the doldrums. We have to be 
able to build an estate with a future, with the ability to give it to 
the next generation, letting it grow again, because we are a small 
business in Montana. I guess I am worrying about the folks who are on 
the land because I have participated in some of those sales. I am an 
auctioneer and proud of it. I never had the handle of being a lawyer--
only an old cowboy who sputters numbers pretty well. I have sold out 
those folks and I know what they feel like. In fact, I sold out one, 
and when the sale was over and the settlement was all done, I gave them 
back my commission because, had I not done that, they would not have 
had anything.
  If you want to do something for the children of this country, you 
ought to do something for education. If you want to do something about 
the quality of life in your sundown years, then allow estates to grow 
and allow them to be passed on to the next generation. We all work for 
our kids. That is what we are talking about. We are talking about a 
value we have had in this country since its inception. That is why we 
have grown. That is why we have more people who enjoy the good life in 
this society than in any other society.
  That is what it is all about. We have a way in times of surplus of 
building even more wealth in your hometown rather than the wealth in 
Washington, DC. That wealth is in a bureaucracy that produces nothing. 
Let communities build. Don't jerk that money out of those communities. 
Let it grow. Let it grow at home. Let's pass this bill.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Crapo). The Senator from California is 
recognized.
  Mrs. BOXER. Mr. President, I believe under a previous order I will be 
next to speak.
  The PRESIDING OFFICER. The Senator is correct.
  Mrs. BOXER. Thank you very much.
  Mr. President, I hope people have been listening to this debate today 
because, frankly, I think it has been an important one so far. There 
are many people who are students of politics, and sometimes they get 
lost in what one party stands for versus what another party stands for. 
I think when you listen to these debates on the floor, many times you 
won't get the differences. But I think today you will get the 
differences between the parties. I think that is important. Regardless 
of what side you agree with, I think you need to know where people 
stand.
  One of the absolute rights of the majority in the Senate--regardless 
of whether it is Republicans in charge, which is what we have now, or 
the Democrats, which we had when I first arrived here--is that the 
leaders have the very strong ability to set the agenda. That is one of 
the good things you get when you are in the leadership. You get to 
decide what you want to come to the floor. You get to take a look at 
the array of issues with which we deal, whether it is education or the 
environment or whether it is our children or our elderly or 
prescription drug benefits or Patients' Bill of Rights or pro-business 
legislation--whatever it is that you believe are the most important 
things. You get to decide which one of those things should come before 
the Senate.
  As our majority leader has said many times, we are pressed for time. 
We have very few days remaining in this legislative agenda. We are in 
an election year. In many ways that limits our ability because of the 
press of time and the need to go to conventions, et cetera.
  I think what this majority chooses to bring before us says a lot 
about who they are, whose side they are on, and in what they believe. 
The way my side of the aisle--the Democratic side of the aisle--
responds to that agenda says a lot about who we are, whose side we are 
on, what we believe in, and for what we are going to fight. Today is a 
perfect day to draw the contrast.
  Senator Lott has chosen to put before us a repeal of the estate tax. 
I think you need to look at what that really means. What does it cost 
us in hard, cold dollars to repeal the estate tax? The answer is almost 
$1 trillion over 20 years.
  Who in our society benefits from this repeal? What else could we do 
with that money if we decided to put this particular issue perhaps a 
little bit lower down on the priority list?
  Once you look at all of these questions, I believe you will get a 
clear distinction of where the Democratic Party is and where the 
Republican Party is. I think that is good. You may come out supporting 
the Democratic Party, thinking they are on your side, or you may come 
out supporting the Republican Party and say they are on your side. That 
is what politics is all about. That is what debating is all about. But 
most important to me is that there are these defining differences and 
there is one of those defining differences.
  Senator Burns spoke about how repealing the estate tax is going to 
help ordinary Americans, and how important it is to help ordinary 
Americans.
  I say to him that if he looks at the estate tax today, there are some 
inequities we can fix, and that we should fix that deal with family 
farms and smaller businesses and individuals. But to repeal the entire 
estate tax is helping those at the very top of the ladder. When I say 
top of the ladder, I mean those earning hundreds of millions of dollars 
and whose estates are worth hundreds of millions of dollars--perhaps 
into the billions of dollars.
  If that is considered helping the ordinary person, then I guess I 
don't get it because when I travel around my State, the ordinary people 
and the average person are working really hard every day. Do you know 
what they are bringing home? They are bringing home $30,000 a year, 
$40,000 a year. And in California where we have to earn more, we have 
couples working. If they really do well, they may bring in $60,000, 
$70,000, or $80,000 a year. They are struggling at that range to buy a 
home. They are struggling at that range to find child care that is 
affordable and that is quality. They are struggling to help their 
parents meet their medical bills, yes, their pharmaceutical costs or 
perhaps long-term care or college tuition. They are struggling.
  I say to my friends on the other side of the aisle that to couch this 
repeal of the estate tax as helping the average person is terribly 
misleading. Let me tell you why.
  Right now, we have an estate tax that essentially says to a couple: 
You are exempted if you are worth up to about $1 million. It is exactly 
$1.2 million. You are exempt. There is an argument to be made that is 
not high enough given the value of housing, and so on. I can see why 
that ought to be raised.
  The Democrats have an alternative. We raise it to $4 million for a 
couple so that in the future, children of couples who leave an estate 
of $4 million would have to pay nothing but only under $4 million. Do 
you know how many estates? That is a very small number of estates. 
Probably a percent and a half or so.
  We say to farmers and small businesses: Yes, we understand the 
problem. We are going to increase the exemption for you from $2.6 
million for a couple to $8 million per couple by 2010. So we are saying 
that to the small farmer and the businesspeople who for $8 million or 
less there is no estate taxes. Yes, it is going to cost something for 
our proposal, if we were offering it, because right now we haven't even 
gotten an agreement from the majority that we can offer our 
alternative. But it would cost $61 billion over 10 years compared to 
$105 billion

[[Page 13671]]

over 10 years on the Republican side. It would cost over the next 10 
years $300 billion compared to $750 billion.
  The interesting thing is in our plan we essentially exempt almost 
everybody, except the very tiptop of the wealth scale. Yes, the Donald 
Trumps, the Leona Helmsleys, the Bill Gates of the world, who did so 
well in this the greatest country of all. Yes, their heirs may have to 
pay something to help the people who want the same chance they had. 
Because what do we do with the estate tax? It goes into defending our 
country. It goes into educating our people. It goes into health 
research to find a cure for Alzheimer's. The people at the very top of 
the ladder who I talk to say: You know, Barbara, you have a lot of work 
to do. One of them isn't worrying about me. I am good. I am OK. My 
heirs can pay a little bit. It is OK.
  But what do the Republicans do? They want to repeal the estate tax--
not just for the small family farms, as we want to, and the small 
businesses and make sure that if they are worth $8 million they don't 
have to pay anything. They want to protect the people who are worth $10 
million, $12 million, 20, 30, 40, 50, 60, 70, 80, 100, 200. Do I hear 
more? Yes, I do because there is no top. If you are worth $1 billion, 
your estate doesn't have to pay anything under their proposal.
  To stand here and say that is protecting ordinary people--the average 
American--is just not true. I would prefer, if this was an honest 
statement, to say that we are going to help the richest people in this 
country because that is what they are doing. That is what they are 
doing.
  This is an honest statement: Helping the richest people in this 
country who are worth $1 billion, $2 billion. You name it; there is no 
cap. To do that, it will cost $850 billion over the next 20 years.
  We can fix the problem with the estate tax for less than half of 
that, and we can do some wonderful things with the rest of the funds 
that we save. What can we do? Why don't we look at the Tax Code. Why 
don't we understand that people who send kids to college have a very 
big expense. They could use a little help with a tax deduction or a tax 
credit.
  I held a hearing on the crisis in quality child care. In California 
today--and I assume it is similar in Nevada--for every five kids who 
need quality child care, only one can get a slot. It is so expensive 
that people are saying they have to choose between paying their 
mortgage late and being assessed a late fee and paying child care.
  Mr. REID. Will the Senator yield?
  Mrs. BOXER. I am happy to yield to the Senator.
  Mr. REID. I was in San Francisco recently and saw a headline in the 
newspaper that in San Francisco, nannies--people who take care of 
kids--are being paid an average of $60,000 a year.
  Mrs. BOXER. It is out of control.
  Mr. REID. What does that do to people who work for $30,000 a year who 
have a child or children? It makes it impossible.
  Mrs. BOXER. We had testimony from parents and teachers who said 
sometimes parents are dropping their kids off at places where one would 
not want to drop a pet off, let alone a child.
  Mr. REID. If the Senator will yield for another question, the Senator 
from California has led the Congress in afterschool programs. We need 
more money for afterschool programs. Some people have no money for the 
2 or 3 hours after their child gets out of school and they get home. So 
we have latchkey kids, kids running in gangs.
  Is that where it goes bad?
  Mrs. BOXER. The Senator is absolutely correct. My friend is right. We 
tried so desperately in this Senate to simply get the funding for 
afterschool care up to the President's level. We failed.
  Where were my friends who say they are fighting to repeal the estate 
tax, to help ordinary people? Where were they when I had a chance to 
take another million kids off the waiting list and put them into 
afterschool care so they wouldn't join gangs? They could not find the 
funds for that.
  That is why I think this debate we are having today, I say to my 
assistant Democratic leader, is so important. It is all about 
priorities. The other side gets the chance to set the agenda. They 
overlook the people who need child care. They overlook the people who 
need afterschool. They do not want to do school construction. They do 
not want smaller class sizes. They do not want a real Patients' Bill of 
Rights. They do not want a guaranteed prescription drug benefit. Any 
don't even look at other tax breaks that are going to help people who 
send their kids to college with a tuition tax break.
  They come out here, with their hearts full, and fight for the 
wealthiest people in this country. It is a fact.
  Mr. REID. If the Senator will yield for another question, does the 
Senator recall how much money she was begging for on the elementary and 
secondary education bill, as well as on other occasions for afterschool 
programs? Remember how little that was?
  Mrs. BOXER. Initially, it was little. Now we are simply asking for 
the President's level, which would be a couple hundred million dollars. 
I say to my friend, it is a lot less than this bill loses over the 20-
year period.
  Mr. REID. I further say to the Senator, as I understand it, in the 
second 10 years of this bill, we are talking not about millions; we are 
talking about billions. We are talking $750 billion.
  The Senator is saying if we had the Cadillac of afterschool programs, 
it would cost $200 million?
  Mrs. BOXER. If we had another $200 million, that would help reduce 
this waiting list. We were not able to get any increase whatever out of 
this particular Congress this year.
  Mr. REID. I say to my friend, for each child who is kept from 
graduating from school, does the Senator recognize the cost on our 
society when that child drops out of school?
  Mr. President, 3,000 children drop out of school each day. It costs 
our society untold suffering. That child unable to graduate from high 
school is less than they could be. It adds to the cost of the criminal 
justice system. It adds to the cost of the welfare system. It adds to 
the cost ultimately of the education system. Is the Senator also aware 
that 84 percent of the people who are in prisons in America today have 
no high school education?
  Mrs. BOXER. I was not aware it was 84 percent, but my friend has been 
a leader on the whole issue of dropouts. His point is well taken.
  We are looking at $850 billion over the next 20 years, just on this 
tax break, and they have others they will come up with, that are not 
capped, also, that will give to the top people. Yet they don't want to 
spend money on what will really make our society strong.
  The point the Senator makes is so correct because I remember in the 
days I was in the House with the Senator, tracking the costs of a high 
school dropout to society every year. It was hundreds of millions of 
dollars in the course of their lifetime.
  The Senator is exactly right, if we are talking about crime, if we 
are talking about drug abuse, if we are talking about alcohol abuse, if 
we are talking about people who are not productive, who cannot hold 
down jobs, who feel undervalued because they don't have a high school 
education. These are the competing priorities.
  It amazes me how our friends can come with so much passion for the 
Donald Trumps, for the Leona Helmsleys, for the people who make all 
this money, and not have even a speck of compassion, it seems to me, 
for ordinary people.
  Mr. REID. Will the Senator yield?
  Mrs. BOXER. I am happy to yield to the Senator.
  Mr. REID. The Senator recognizes that the minority, the Democrats, 
recognize this, and we want to increase the size of the estates that 
are not subject to the inheritance tax.
  Mrs. BOXER. That is correct.
  Mr. REID. It would increase the general exemption from $1.35 million 
per couple to $2 million per couple in 2 years, by the year 2002; and 
$4 million per couple by the year 2010.
  Mrs. BOXER. I spoke about that.
  Mr. REID. Is the Senator aware this makes just a few estates every 
year even subject to the tax?

[[Page 13672]]


  Mrs. BOXER. Exactly. We move also on the exemption for farms and 
small businesses, and we go up to $8 million per couple by 2010 on that 
ladder, as well.
  We are only talking about extremely large estates and a tiny 
percentage of people in this country. It is in the hundreds, really, 
who will wind up paying any type of estate tax--only those who have 
made it so big that, yes, maybe they can just give back a little bit to 
this country to pay for the defense of this country.
  Mr. REID. As I understand the Senator, the Senator is saying the 
minority wants to raise the exemption of the estate tax. We want to, in 
effect, exclude most every small business and small farm in America 
from the estate tax.
  Mrs. BOXER. That is correct.
  Mr. REID. In addition to that, we are saying the really rich in this 
country, rather than give them a tax break, we should look at giving a 
tuition tax credit for people who want to send their children to 
college.
  Mrs. BOXER. Exactly.
  Mr. REID. We believe there should be some slack cut for child care 
programs that we have discussed on the Senate floor. And it would not 
be a bad idea to do something with afterschool programs and a number of 
other areas that help the working men and women of this country, and 
not the super rich--and I mean super rich. We are talking about a tax 
for not a millionaire, not a multimillionaire tax, but we are looking 
at maybe a billionaire tax.
  Mrs. BOXER. That is what we are essentially saying. We really are 
saying that. That is why I say the question, whose side are you on, is 
very relevant to this debate.
  We recognize the fact there has been inflation. We need to take 
another look at this estate tax. We are willing to make sure we help 
our family farmers. We want to help our small businesses. We want to 
help our individuals so their kids do not find themselves in a bind 
when they inherit the wealth from their families. We are willing to do 
that. We know President Clinton is willing to sign such a bill. We know 
he is going to veto the Republican version because he believes it is 
unfair to the middle class. He believes it is unfair.
  What we are saying is we can take care of the problem and help those 
who have kids in college or who have kids in day care. We can give a 
prescription drug benefit that is guaranteed through Medicare to our 
seniors. We can do all these things and still have enough to do some 
debt reduction and a little bit for afterschool programs. That is how 
expensive this repeal is.
  Mr. REID. Under the Senator's time, will she yield for another 
question?
  Mrs. BOXER. Yes, I will be happy to yield.
  Mr. REID. The Senator represents by far the largest populated State 
in the country, 33, 34 million people.
  Mrs. BOXER. That is right.
  Mr. REID. Its neighbor, the State of Nevada, the State I represent, 
has approximately 2 million people. The State of Nevada, under the old 
formula, does the Senator understand, has only 308 taxable estates?
  Mrs. BOXER. Yes, 308.
  Mr. REID. Mr. President, 308.
  The other thing I ask the Senator is every State--I should not say 
every State because I am not certain it is true but I believe it is 
true--every State in the Union has an inheritance tax; if not every 
State, virtually every State. The State of Nevada 10 years ago passed 
its own inheritance tax.
  Does the Senator realize there is an offset; that is, of the Federal 
tax that is collected, if a State has an inheritance tax of its own, it 
comes out first and goes to the State of Nevada or the State of 
California, for example, rather than the Federal Government?
  Mrs. BOXER. Yes, 25 percent of the tax, as I understand it, goes back 
to our States.
  Mr. REID. I ask the Senator if she knows, as I said, a portion of the 
estate tax goes to the States via estate tax credits as a 
revenuesharing provision with the States? In Nevada, 100 percent of the 
amount received through this estate tax credit is used for education, 
50 percent is used for State university support, and 50 percent is used 
for elementary and secondary education. I ask my friend: Is it more 
important that we continue that, paid by only a fraction of the people 
in this country? In Nevada, instead of 308, under the new formula, it 
would be probably less than 100 estates, maybe closer to 70 estates.
  The question is, Isn't it better we have--and I do not mean to 
denigrate him because he has done good things for the country; Bill 
Gates is worth $70 billion. If some misfortune overtook Bill Gates, 
shouldn't that huge estate pay some amount of money for education to 
the people of the State of Washington?
  Mrs. BOXER. I answer that question in this way: I was discussing with 
another Senator a conversation he had with a very wealthy man who had 
made hundreds of millions, perhaps billions, of dollars, in the course 
of his lifetime in this country. Maybe this person is unusually kind 
and good hearted.
  This person was saying to him: This great country made it possible 
for me to have this kind of accumulation of wealth, which is far beyond 
what any of my heirs need to have.
  He can take care of his heirs for generations to come.
  He said: But I have to admit that I earned all this money because a 
lot of folks worked for me, and those people got up every day. They did 
not become millionaires, but they did fine, and I want to make sure 
that, yes, I can help their kids.
  That is what happens with an estate tax. How do we spend it? We 
defend the country for those kids. We help with education. We help with 
health research. We may find the cure for Alzheimer's for one of Bill 
Gates' future generations because of the funds we are able to put into 
health research.
  Our friends on the other side of the aisle, in the name of helping 
ordinary people, are ignoring the fact that the Democratic 
alternative--which at this point we do not have permission to offer but 
I am very hopeful we will get that chance; it would be wonderful; they 
can support our alternative. They can ease the burden on the small 
family farms. They can ease the burden on the small businesses. They 
can ease the burden on couples who have accumulated wealth through, 
say, buying a house, for example, which went up greatly in value, such 
as they have in California. I do not want those kids to have to sell 
the home. That is why I am supporting the Democratic alternative.
  We have an excellent alternative that costs less than half of what 
theirs does and allows us to help people pay for college. It will help 
grandmas and grandpas get prescription drugs. If our friends on the 
other side of the aisle really want a bill to become law, they should 
join hands with us because President Clinton said he will sign that 
bill. He will not sign the bill that he believes is helping people who 
are worth billions of dollars.
  Mr. REID. Will the Senator yield for another question?
  Mrs. BOXER. I will be happy to yield.
  Mr. REID. Even in Silicon Valley, where there has been tremendous 
success and which has been the driving force of the high-tech industry, 
with the expensive homes, the Democratic version would help people 
there, wouldn't it?
  Mrs. BOXER. I believe so.
  Mr. REID. Of course it would, I say to my friend, because even though 
the estates there are bigger than a lot of places, we are talking about 
raising this to millions of dollars.
  Mrs. BOXER. Exactly.
  Mr. REID. Four million dollars.
  Mrs. BOXER. All the people who need the help will be helped under the 
Democratic alternative.
  Mr. REID. I say to my friend, even the very rich will be helped; 
isn't that true?
  Mrs. BOXER. There is no doubt about it. If you define wealthy as $5 
million, $6 million, $7 million, you are not going to have to pay 
anything if you are handing down a business, and up to $4 million for 
just the normal family exemption.
  I say to my friend, another point I think we have not made strongly 
enough is that it is estimated by people on the Finance Committee that 
the Republican plan could discourage $250 billion in charitable 
contributions over 10

[[Page 13673]]

years. Why is that? We know people look at their estate planning and 
they look at different ways they are going to handle it. They say: OK, 
I will give so much to Uncle Sam, but I also want to give some to my 
favorite charities.
  The charities are up in arms about this. My friends on the other side 
of the aisle are often saying how important the role of charities are, 
and they are right; they are very important. Yet we have estimates that 
say the drain on charitable pursuits could go down $250 billion. That 
is not good news for those folks out there who run the community 
symphonies and the ballets and the various nonprofits.
  If we proceed with the Democratic alternative, we will be easing the 
burden on the people who need the burden eased; it is costing less than 
half of what the Republican plan will cost; it is saying to the 
wealthiest among us--and I am talking about the superwealthiest, as my 
friends put it--we want you to do well, but we know you understand the 
facts of life which are if we take this kind of money out of the 
Federal Government, we cannot do enough for our child care tax credits 
and for our afterschool programs. We cannot do enough for those in the 
middle class who are sending their kids to college. That costs a lot.
  The fact is, we have other things we can do that can bring much more 
relief to ordinary, average American families.
  I am going to close the way I opened, and that is to reiterate that I 
think this debate today has been a very important debate. It is true we 
are taking some time here, but many times people complain they do not 
see the differences between the parties; they do not understand what we 
stand for.
  If they did nothing more than to look at the Democratic alternative, 
which cures a problem but is fair in its reach, if they did nothing 
more than take a look at the things that we still need to do, the 
unfinished business around here, to help our people--if I have to hear 
one more story about a patient in California who tells me that she 
cannot afford her prescription drugs, when I know we have the 
resources; just look at the Republican proposal--if you just exempted 
those who need it, you would have enough left over to take care of the 
grandma and the grandpa and the person sending their kid to college and 
the person struggling to pay for child care; we would have enough to do 
the things we need to do.
  I hope the American people will take heed of this debate because in 
the end it is whose side are you on. I think at the end of the debate 
they can truly answer the question: Whose side are the Republicans on? 
The Donald Trumps, the Leona Helmsleys. Whose side are the Democrats 
on? Ordinary working, middle-class families are who we want to help.
  I yield to my friend for a question.
  Mr. REID. As I understand it, what the Senator is saying is, yes, we 
Democrats are willing to lower the taxes on the wealthy, but we do not 
want to take them away completely?
  Mrs. BOXER. Exactly right. We are simply looking at the wealthy 
people, who we believe are not being treated fairly because perhaps 
their wealth is tied up in a family farm, in a small business, in a 
private home, and we say, fair enough, we do not want to see your 
family be forced to sell these assets. We do not want that to happen. 
In our alternative, we take care of this. But we do it in a way that is 
fiscally responsible, that leaves enough to take care of the pressing 
needs of our people, which everybody seems to think we have--
prescription drugs, afterschool care, making sure that our kids get a 
decent quality education. Frankly, if we can just be moderate in our 
approach, we can do all of those things and come out on the side of 
ordinary Americans and be proud of ourselves.
  I only hope that as this debate moves forward, the Democrats have a 
right to offer our alternative, and that some of our friends on the 
other side of the aisle will recognize that if they join with us, we 
will have a bill that is fair, that is good, that can take care of our 
other needs, and that the President will sign into law.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. GRAMS. Mr. President, I rise this afternoon in strong support of 
the House legislation that would repeal the death tax for working 
Americans. I support this bill because death taxes are just basically, 
bottom line, anti-American, antifamily, antieconomic, and antijob 
growth. The death taxes are just plain unfair. They are unjust, and 
they must be eliminated.
  I know our friends on the other side of the aisle are just so 
enamored by being able to take some dollars from somebody so they can 
direct them to the causes they believe are the best. They want to 
direct where the money goes. They are saying we should take these 
dollars from these individuals or these families or these groups and 
bring it to Washington so we can decide in Washington how the money 
should be spent--not the individual who earned the money, not the trust 
funds that they might set up.
  They always throw around the names of Bill Gates, Donald Trump, and 
Leona Helmsley. I do not see anything wrong with what they have done 
and what they have contributed. But somehow if they want to direct or 
control their money, even after death, somehow my friends on the other 
side of the aisle have a problem with that. In fact, if I am not 
mistaken, I think Mr. Gates has already set up a huge trust fund of 
about $20 billion to be given to charitable causes.
  I hear over there that there would be a reduction in charitable 
giving. So somehow, if the Government took less of the money from you 
in taxes, you, in turn, would say: I have more money now, so I am going 
to give less to charity, or somehow, if the Government takes more from 
you in taxes, you are going to be more charitable with the little bit 
you have left.
  I think the real debate here is, again, fairness, equity, and who is 
going to control or direct the money. Are we going to listen and have 
it all directed from here; That somehow they know better how to spend 
the money? They want to generate, control, and grow more Government, 
that it is more efficient, can deliver better services, and is more 
fair to Americans.
  To me, this is nothing but greed on behalf of some politicians who 
want to control people. As I said, even after they are dead, they want 
to take even more money from them.
  But their estates give back just a ``little bit'' in taxes. I do not 
call 55 percent of everything you worked for, and managed to save, put 
away, a ``little bit.'' Fifty-five percent--give back a ``little bit.'' 
Or the heirs should be happy to get half of the estate that your family 
has worked for, for nothing. You have probably been a part of it. And 
then after death, the Government can come in and grab 55 percent, and 
you should be happy because you get what is left over. Don't say 
anything. Just sit there and be happy because the Federal Government, 
in all its wisdom, is going to direct those dollars to the best causes 
and, indirectly, somehow they are going to benefit you and every other 
American.
  There might be waste, fraud, and abuse going through the systems we 
have today, but if we only pump a little more money into it, or if we 
can only create more Government, somehow this is better than allowing 
an individual to decide how that money is going to be spent, what 
charities that individual wants to give to, what educational programs 
they want to support. But, no, somehow it is better if it comes to 
Washington.
  But as you know, the Federal death tax is similar to the income tax. 
It was first imposed as just a temporary measure to finance World War 
I. Ronald Reagan said: There is nothing more permanent than a temporary 
Government program.
  This is just a great example. The excise tax on the telephone--that 
was just repealed here a little while ago--imposed 100 years ago as a 
temporary tax is another great example.
  Here is a temporary tax to help finance World War I. It was 
temporary. But once people get their hands on the money, they somehow 
believe they have more of a right to your labor than you do, that 
somehow they have more of a right to the money that you have worked for 
or generated than you do.

[[Page 13674]]

  Why? When death taxes became permanent in 1916, estates under $9 
million--that is in today's dollars--were not taxed at all. Death taxes 
later evolved to supposedly prevent the buildup of inherited wealth. 
The Government wanted to prevent the buildup of inherited wealth.
  This idea of social engineering has made the death taxes, which now 
range from 37 percent to 55 percent, substantially higher than any 
other Federal taxes. The lowest estate tax rate is almost as high as 
the highest income tax rate, which is now, thanks to President Bill 
Clinton and the Democratic bill passed in 1993, the highest income tax 
rate, 39.6 percent.
  Keep in mind the death taxes are levied on earnings and assets that 
have already been subject to income, payroll taxes, and other taxes at 
the Federal and State level. In other words, you have worked all your 
life. You have paid taxes up front on your income, on your profits. 
This is moneys that you have taken home after taxes, where you built an 
estate and somehow now they believe that you should pay just a ``little 
bit'' more--just a ``little bit''--and, oh, by the way, only on the 
most wealthy in this country. If you have a farmer with $1 million out 
there driving a 1975 pickup, and he happens to die unexpectedly, he is 
among those wealthy individuals that we talk about.
  Yes, they throw around the names of Bill Gates and Donald Trump, as 
if somehow they are bad people, but what they do is they try to 
camouflage the real reason for this bill, and that is, to get their 
hands on additional moneys. Despite the efforts by liberals, deaths 
taxes have failed to accomplish their stated purposes and instead have 
created inequality and injustice that hurts millions of Americans. 
Instead, this is one of the most expensive taxes imposed, and it does 
some of the most damage on the individuals who this money is taken 
from.
  In fact, I think there are studies out there that have said, if we 
eliminated the inheritance tax, the estate tax, the death tax, that it 
would almost be a wash to the Federal Treasury because it costs 
billions of dollars today to administer because of all the audits and 
everything that has to be done.
  It is costing billions of dollars to impose this tax. Then when we 
look at the damage it does to farms, to small businesses, to 
individuals, jobs that are lost, businesses that are lost, tax dollars 
that are lost, of course, in the process, the Government comes out 
probably a loser. There are many who would bet that if we could 
eliminate this death tax today, it would not affect the revenues and, 
in fact, we would probably have even larger economic growth; that the 
revenues to the Federal Treasury would be even larger because of it.
  It is a punitive, mean-spirited, unfair, unjust, antijob, 
antieconomic tax that the other side of the aisle seems to like to 
impose on Americans, successful Americans or Americans just trying to 
hang on to their farm or their small business.
  Let me give a few examples of how death taxes are hurting working 
Americans. My good friends on the other side of the aisle say they 
don't want to hear any more of these stories, but we have a lot of 
these stories because they affect millions of Americans every year.
  John Batey of Tennessee runs a 500-acre family farm that has been a 
part of the Batey family for about 192 years. John has spent all of his 
life on his family's farm and, as most other farmers, he plans to be a 
good steward of the land, to save and to build his assets and some day 
leave the farm to his children.
  After the death of his father 5 years ago and the death of his mother 
last June, John began to settle his parents' estate. As he was about to 
take over the family farm, the IRS sent him a death tax bill for a 
quarter of a million dollars, on a 500-acre farm in Tennessee, a 
quarter of a million dollar tax bite. The value of the farmland had 
increased significantly, but the death tax exemption has never been 
indexed. John had no choice but to sell some other assets. He also had 
to dip into their life savings and even borrow money to pay Uncle Sam.
  Now, when we talk about wanting to have a prescription drug benefit, 
everything else, what kind of a financial shape has it put this family 
in? It has taken them from being able to pay and make due for 
themselves and exposed them to financial ruin and the need possibly of 
having to come to the Government begging for help because we have taken 
all their money. Now they are in debt, have less of their assets, and 
their savings are gone so they can pay Uncle Sam this unfair, unjust 
death tax. Somehow the big spenders in Washington needed that money 
more than John and his family needed it for their own well-being.
  The story of Lee Ann Goddard Ferris, who testified during the Senate 
Finance Committee hearing, is another disheartening story. This isn't 
the Bill Gates of the world. This isn't Donald Trump, Leona Helmsley. 
This is Lee Ann Goddard Ferris. Her family owns a cattle ranch in Idaho 
which prospered through 60 years of hard work by her grandfather and 
father. By the way, they accumulated this after they paid the taxes on 
all of their income up to this point. In the fall of 1993, her father 
was accidentally killed when his clothing got caught in farm machinery. 
The unexpected death was devastating on the family, but so was the news 
from their attorney. Later on he told them: There is no way you can 
keep this place, absolutely no way. They said: Well, how can this be? 
We own the land. We have no debt. We lost my father, but now how are we 
going to lose the ranch? We don't have a mortgage on this place.
  According to Lee Ann, in her testimony before the Finance Committee:

       Our attorney proceeded to pencil out the estate taxes . . . 
     and we all sat back in total shock.

  When their mother dies, the lawyer told the family, estate taxes will 
be $3.3 million. I know that is just a little bit, just giving back a 
little bit of what has been generated by Washington and this great 
economy, not by the hard work of millions and millions of Americans. 
You didn't do anything to create this economy. It all came out of here, 
out of Washington. You have benefited from it because of the 
benevolence and the wisdom out of Washington, not your hard work, not 
your brainpower, but Washington created this environment. We have heard 
this on the floor, that because Washington has done this, you have been 
the one who has taken advantage of it. So you should give back just a 
little bit to help, $3.3 million for a family in Idaho from a cattle 
ranch, just a little bit.
  According to Ferris, the family had to sell off a parcel of land. 
They did this so they could buy a $1 million life insurance policy for 
her mother in the event that she should suddenly die. That would pay 
off one-third of the estate tax. The question still is, How will they 
handle the remaining $2 million? They already had to sell some assets 
to go out and buy this huge insurance policy. That only takes care of 
33 percent. Who will pay the remaining $2 million? Ferris says she 
doesn't know. When her mother passes away, they are going to have to 
figure out another way of paying the other $2 million. Will that be in 
the sale of more of their assets, selling off more of the farm, 
basically driving them off the land and putting them somewhere else?
  Timothy Scanlan, from my State of Minnesota, owns a family business. 
His family has built their business over the last 80 years. Their 
business has created many jobs. It has offered fine products. Again, 
they have paid taxes all their lives on everything. You are taxed to 
death the way it is now; the estate tax just finishes the job. They 
paid taxes, and they have never asked the Government for a handout. 
When his father and mother died a few years ago, the estates tax took 
nearly 60 percent of the value of his family business. Mr. Scanlan 
says:

       I am now trying to plan for the fourth generation to take 
     over. As of today, it can't be done. We've worked so hard to 
     create something good that we've created a company that has 
     so much value that we would have to sell it in order to pay 
     the taxes. Families, companies and farmers like us are a 
     small minority working hard for generations only to have our 
     government tax us out of our family business.


[[Page 13675]]


  This isn't Bill Gates. This isn't Donald Trump. This isn't Leona 
Helmsley. These are average Americans.
  There are many more stories such as these clearly showing that the 
death tax has hurt hard-working Americans the most. Not the rich; the 
rich can hire the lawyers. They can hire the estate planners to avoid 
all these taxes. We are not talking about tax relief for the wealthy, 
as some claim. I am not here trying to defend the wealthy. They are 
going to take care of themselves. It might cost them a couple million 
dollars to go out and hire people to set up the shelters they need. 
They will do that.
  Why are we doing this? Why are we costing millions of dollars in the 
private sector, billions of dollars in the public sector to try to levy 
an unfair, unjust, antieconomic tax that hurts millions of Americans?
  Realizing this injustice, the Republican-controlled Congress began to 
provide death tax relief in 1997 to farmers and small business owners 
by increasing the exemption from $600,000 to $1.2 million. When I 
talked about how increasing taxes of the Federal Government or 
eliminating the estate tax would almost be a wash, statistics show that 
about one-third of the surpluses we enjoy today are the direct result 
of the tax cuts in 1997. It means if we can reduce taxes, the economy 
grows. The economic pie gets bigger. The economic opportunities are 
better. The wages can improve. But, no, if you tax something, you get 
less of it. If that is what we want to do, continue to tax Americans 
into submission with these death taxes and having to break up or sell 
their businesses and farms, that is exactly what this unfair tax does.
  There are crocodile tears about how if we can only collect this 
money, how much good can we do with this. Washington can do so much 
good. Just let us collect this tax, just a little bit of it--by the 
way, 55 percent--let us collect it, and we will continue these great 
Government programs. In fact, we will even create some new ones to go 
along with them.
  Last year, we passed the Taxpayers Refund Act. For the first time 
ever, we voted to completely repeal the Federal death tax. Despite the 
fact that the President's own White House conference on small business 
made death tax repeal a top legislative priority, President Clinton 
vetoed this tax relief legislation.
  When I travel around the State of Minnesota, I talk to hundreds of 
farmers. The one thing they tell me would help them most is the repeal 
of the death tax.
  The average age of the majority of the farmers in Minnesota is 58. 
Within 10 years, there is going to be a tremendous shift of wealth of 
farmland and farm assets in Minnesota. Right now a lot of those assets 
are going to go to the Government, and it is going to drive the next 
generation off the farm because they won't be able to afford to do it.
  I don't know where those farm assets are going to end up, but, 
because of this unfair tax, the majority of farmers in Minnesota tell 
me that would be their No. 1 priority. If we want to help rural 
America, if we want to help rural Minnesota, rural Wisconsin, the best 
thing we could do is help these farmers by getting rid of this death 
tax to allow them to pass their assets from generation to generation.
  But again, despite the fact that the President's White House 
Conference on Small Business made the death tax repeal a top 
legislative priority, President Clinton vetoed this tax relief 
legislation. This is an administration that does not want to give one 
dime in tax relief--not one dime. In fact, the President's own bill 
that he submitted this year, which had a tax relief component included, 
would actually raise taxes this year by $9 billion. That is the 
President's version of tax relief. We will raise your taxes $9 billion 
this year. That is real tax relief.
  Here is another example of a President who doesn't want less taxes 
but more taxes. It is supported by our good friends on the other side 
of the aisle.
  Our Democratic colleagues insist that a cut in the death tax is a tax 
cut for the rich, and they ``can hardly justify a costly tax cut that 
benefits some of the wealthiest taxpayers.''
  That is simply wrong. As I said earlier, it is the family farms and 
the small business owners whom the death tax particularly harms; it is 
not the rich. That is just cover, a smokescreen. That is the magician 
saying: Look at this hand, not at what I am doing here with this other 
hand. Concentrate on the super rich, but don't worry about the average 
middle-income taxpayer or small businesses.
  A typical family farm could be valued at several million dollars due 
to land appreciation and the expensive farm equipment needed. I have 
said so many times that a farmer can die and can be worth $2 million or 
$3 million, but it is all in assets, value, and equipment. He has 
probably never driven a new pickup in his life and has worn his gloves 
until he can't hold them anymore. Yet, when he dies, he is a 
millionaire who should ``give just a little bit back.'' Don't pass on 
the family farm; let Washington have it.
  Many farms may never even earn a penny of profit. When the head of 
the household dies, the family can't come up with the money for estate 
taxes. They don't have a quarter million dollars in cash-flow. 
Everything they have is normally invested in the farm, in the assets 
and equipment. But they have to come up with money to pay the estate 
tax, and that means they have to sell equipment or land--in other 
words, break up the family farm.
  This is the main reason we lose about 1,000 family farms each year in 
my State of Minnesota alone. They are driven out of business because of 
the estate tax. Are these rich people? No, they are hard-working 
Americans. I strongly believe Government policies should not punish 
those who have worked hard and been out there building up farms and 
businesses. There are many compelling reasons to end this unfair and 
unjust death tax:
  First, the American dream is to work hard and make life better for 
their children. Here, if you work hard and put everything into it, you 
break your back to do it, if you are successful, they are going to 
penalize you. You may have built a business from the ground up, brick 
by brick, acre by acre, founded on persistence and determination, but 
if you are successful, they are going to break you.
  Years of hard work eventually pay off. Their business thrives, farms 
prosper, and when the time comes to retire or leave the world, they are 
proud to pass something on to their children. But, wait, there is the 
tax man. By allowing them to build upon the success their parents and 
grandparents had achieved, they know they have given their children a 
good head start--again, until the tax collector steps in to demand 
Washington's share, taking up to 55 percent of the estate. As the 
witness said earlier in her testimony before the Finance Committee, her 
attorney said, ``There is no way you can continue to operate this farm 
because you have to pay the taxes.''
  Once the Federal Government has finished taking its portion of the 
estate, few family businesses and farms can survive. Their heirs may be 
forced to sell off all or part of the business --again, just to satisfy 
the tax bill. All of the years of hard work poured into the creation of 
a piece of security for their family and their future evaporates. Oh, 
no, this is only for the rich, for the wealthiest. Again, that is a 
smokescreen to divert your attention, saying: Good, tax the rich 
people. But those ``rich'' people are many, many Americans--not a few 
but many average Americans.
  Newt Gingrich once said, ``You should not have to visit the 
undertaker and the tax man on the same day.''
  I think Mr. Gingrich was right. Research shows that 70 percent of 
family businesses do not survive through the second generation. Eighty-
seven percent don't make it through the third generation. The death tax 
is a major factor contributing to the demise of family businesses and, 
as I said earlier, family farms. Nine out of ten successors whose 
family-owned businesses failed within 3 years of the principal owner's 
death said it was trouble paying the estate taxes that contributed to 
the company's demise.

[[Page 13676]]

  I think Senator Burns earlier talked about the year after year after 
year of payments a family had to make to the Government--$14,000 a 
year, $15,000 a year, $17,000 a year, and their dad had died 13 years 
earlier. So they were still trying to make a profit and pay the bills 
and then pay the tax man over and above their other taxes.
  In fact, under the current tax system, it is cheaper to sell the 
family-owned business before death--cheaper to sell it before you die--
rather than pass the business on to one's heirs. That is what happens a 
lot of times. You can't afford to die, so you have to sell the business 
beforehand so you can pay less taxes, and you help your family more 
than by waiting until you die.
  No growing business can remain competitive in a tax regime that 
imposes tax rates as high as 55 percent upon the death of the founder 
or owner. Clearly, the Nation's estate tax laws penalize those who have 
worked the hardest to get ahead. Instead of encouraging family-owned 
businesses, the Federal Government has enacted tax policies that are a 
barrier to a better economy and better jobs.
  A good question would be: On what moral ground should the Federal 
death tax be allowed to continue to punish hard-working Americans? If a 
death tax is unfair on somebody with a $500,000 estate, or a $50,000 
estate, or if it is unfair to somebody with a $2 million estate--and 
now our good friends on the other side of the aisle say we will even 
grow that to $10 million--if it is unfair to a $10 million estate, how 
can it become fair or morally right on anything above that? On what 
moral ground should the Federal death tax be allowed to continue?
  Revenue from death taxes accounts for about 1 percent of Federal tax 
receipts. But the real loss to the Federal Treasury could be much 
greater. It takes 65 cents to collect every dollar. Again, I told you 
it is a very expensive tax to go out and try to collect because of all 
of the auditing and everything that has to be done. So it takes 65 
cents to collect a dollar. If we take in $20 billion a year, we have 
spent about $13 billion to collect it. It is an unfair tax, an immoral 
tax, which can drive these families out of business; and we lose even 
more revenue in lost jobs, lost productivity, not to mention the 
revenue loss from payroll, income, and other taxes when businesses are 
destroyed and those jobs are lost.
  The death tax provisions are so complicated that family-owned 
businesses must spend approximately $33,138 over 6.5 years on 
attorneys, accountants, and financial experts to assist in estate 
planning.
  Eliminating the estate tax would have a nominal impact on 
Washington's $1.8 trillion budget. When you look at the money we would 
save and the additional tax revenues, we could probably gain from the 
payroll and other taxes--and, again, this could be a wash--and we don't 
disrupt or destroy businesses, lives, and jobs.
  But by encouraging savings, investing, and the establishment of more 
family-run businesses, the economic benefits for average Americans 
would be tremendous. There are many average Americans out there losing 
their jobs every time one of these businesses has to close or have 
assets sold off. So it disrupts many people, not just the owners of the 
business, but many who rely on the business for a livelihood to support 
their families.
  Research shows that repeal of death taxes will create more than 
275,000 jobs in the next 10 years. It will create 275,000 jobs if we 
can get rid of the death tax. We heard one claim that somehow there 
would be a reduction in charitable giving. So, somehow, if the 
Government takes less, you are not going to give as much to your 
favorite charity. I think if you had more money in your pocket at the 
end of the year, you might give more.
  Americans are the most charitable people in the world, giving tens of 
billions of dollars a year. But the Government wants to take some of 
that because the Government, again, can be more benevolent or 
charitable with your money.
  I wrote this point down, too. The Democrats said, ``We want to 
help.'' Who? How? By taking money from some people so they can decide 
how to disburse it to others, rather than letting the individuals who 
own the assets make the decisions on charitable giving, whether to 
their schools, or their alma mater, churches, groups in their 
community, the Boy Scouts. Billions of dollars a year are distributed 
this way in charitable giving.
  I don't think we need the Government to step in and say: No, we can 
do that better.
  Again, research shows that repeal of death taxes will create more 
than 275,000 jobs in the next 10 years; that it will increase the gross 
domestic product by more than $1 trillion; and it could increase 
capital stock by $1.7 trillion.
  It sounds to me as if there is another side of this argument --that 
getting rid of this unfair, unjust, and immoral tax would actually be 
an economic benefit to millions of Americans and to the Federal 
Government, for one. With such economic growth, Federal revenues would 
grow higher as well. Even Washington would benefit if we could get rid 
of this tax. But they can't see past the blinds. They say: No, we have 
to continue to penalize these people; we have to continue to take their 
money; we dare not to do that.
  Congress can and should help working Americans keep their family 
assets by eliminating the damaging estate tax. I strongly urge my 
colleagues to vote to repeal this tax.
  In the next few weeks, the Senate will be considering other important 
legislation to provide meaningful tax relief for working Americans, 
such as marriage penalty tax relief. I believe all of these efforts are 
critical to help ease the tax burden on American families against the 
marriage penalty.
  Why do they call it a penalty? It is an unfair tax because, if a 
couple decides to get married, the Government wants to take more money 
unfairly. It is unjust. The estate tax is not different.
  I know President Clinton said one time at a news conference a couple 
of years back, well, it might be an unfair tax but Washington needs the 
money--something in that respect. I am not quoting him word for word. 
But that was the gist of it; that somehow Washington needed the money 
even though it was unfair to take it, or it wasn't the right means of 
extracting more money from Americans, but somehow Washington needed it. 
Now we need even more because Washington can do better.
  I believe all of these efforts, however, are critical. If we can get 
rid of the death tax and help to ease or eliminate the marriage penalty 
tax, it would help ease the tax burden on American families.
  I again quote these numbers. It says here that research shows the 
repeal of the death tax will create more than 275,000 jobs in the next 
10 years. It will increase our gross domestic product by more than $1 
trillion. It will increase capital stock by $1.7 trillion. There would 
be a lot of financial advantages.
  I also hope in the second reconciliation legislation Congress can 
consider and pass tax relief for American seniors by repealing all of 
the taxes on their retirement benefits.
  Again, this administration and this President decided to increase 
taxes on the senior citizens receiving Social Security. They increased 
their taxes in 1993. That is another tax that I think we should repeal.
  We talk about seniors not having enough money; that they have to 
decide between meals and medicine. They have to do that because 
Washington has decided to take more of their money. We need to repeal 
that tax on our senior citizens as well.
  I challenge President Clinton to sign these tax relief measures into 
law so the American people can keep a little more of their own money 
for their own priorities and so they can make the decisions on how that 
should be done.
  Again, I strongly urge my colleagues to vote in support of repealing 
the estate tax--the death tax--along with these other taxes to give 
Americans the ability to keep a little more of their hard-earned money.
  I thank the President. I yield the floor.
  The PRESIDING OFFICER (Mr. DeWine). The Senator from Wisconsin.

[[Page 13677]]


  Mr. FEINGOLD. Mr. President, as you know, this is one of those days 
that you actually look forward to when you are running for the Senate. 
I had an opportunity to be on the floor for virtually the entire debate 
today concerning the estate tax. It is actually a very welcome debate. 
But let me be clear. Democrats, as well as Republicans, welcome the 
opportunity to eliminate the estate tax for middle-income Americans and 
families who own small businesses and family farms.
  We, on this side of the aisle, believe that we can completely abolish 
the estate tax for the overwhelming majority of American families who 
this tax affects at a fraction of the cost of the Republican proposal. 
Why is that? It is because, unfortunately, the Republican proposal 
focuses so much of the revenue that is available on the superwealthy.
  When Senators give examples, as they have done today, they are often 
using one kind of example that the Democratic alternative would take 
care of, but their proposal actually spends great amounts of revenue on 
people who are actually not in the same position as the families which 
various Senators have described.
  For example, the Senator from Montana, Senator Burns, came out and 
very appropriately referred to the various Wisconsin farmers, dairy 
farmers, hog farmers, and feed farmers. He said this was the purpose of 
the repeal of the estate tax. But the fact is, you don't need to 
completely repeal the estate tax for everyone in the United States of 
America in order to take care of the problem of every family farmer in 
Wisconsin with regard to the estate tax. In fact, most of them don't 
face an estate tax at all given the exemptions under current law.
  So this notion that somehow the Democrats are against taking care of 
the problems of farmers who are land rich and cash poor is simply 
untrue. It is not the Democratic position. In fact, it is just the 
opposite.
  Senator Grams of Minnesota comes out and gives the example of the 
family from Idaho that faces a $3.3 million tax burden on the estate 
tax. He fails to point out that, under the Conrad-Moynihan proposal, 
that family would get at least substantial estate tax relief, and, we 
believe, although we would have to check it, perhaps a complete 
exemption from the estate tax. So the very example that the Senators 
from the other side of the aisle have used do not support their point. 
Those examples would be taken care of, I believe, under the Conrad-
Moynihan proposal.
  It is really a bit of a bait-and-switch approach. You come out and 
give the very appropriate examples of families who may need some estate 
tax relief, but the actual proposal spends a great deal of available 
revenue in this country on folks who, frankly, are not as desperately 
in need of this kind of relief.
  This debate is very welcome because it gives us a chance to talk 
about what is most important. This motion to proceed allows us an 
opportunity to actually contrast the majority's priorities with those 
of the American people. This is a thread that has gone through the 
comments today of many of us on our side of the aisle--Senator Dorgan 
of North Dakota, to Senator Wellstone, to Senator Boxer. They pointed 
out that this is a great chance to talk about what the priorities are 
for the American people.
  That is another thing I imagined I would have a chance to do when I 
came to the Senate. We like to deal in specific subjects and try to 
give a little expertise and show that we know something specific. But 
there are also days when we come out and, say, take this subject and 
that subject and compare them and see what is the most important thing 
for the American people. Fortunately, the debate today has allowed that 
opportunity.
  By moving to this bill and by trying to pass this bill the way it is 
written with not just sensible estate tax reform but massive tax cuts 
for the extremely wealthy, the majority makes clear that it favors tax 
cuts for the very wealthy above anything else.
  No, the majority's priorities are not those of working Americans.
  Let me begin by discussing the estate tax, and why the majority's 
plan to completely repeal the estate tax is wrong.
  To begin with, the estate tax affects only the wealthiest property 
holders. In 1997, only 42,901 estates paid the tax. That is the 
wealthiest 1.9 percent. People are already exempt from the tax in 98 
out of 100 cases. Let me repeat that. Already, under current law, 98 
out of 100 cases are completely exempt from the Federal estate tax.
  This year individual estates up to $675,000 are exempt from taxation, 
and each spouse in a couple can claim that $675,000 exemption. So a 
couple can already, under current law, effectively exempt $1.35 million 
from the tax. To add to that, Congress has already enacted useful 
expansions of the exemption that have not yet taken effect.
  By 2006, individual estates up to $1 million will be exempt and, 
therefore, couples will be able to exempt $2 million in tax. Had those 
exemptions been in effect in 1997, more than 44 percent of the estates 
that paid tax--remembering that most of them didn't pay tax in the 
first place anyway at that point--those still paying tax in 1997 would 
have been completely exempt.
  In 1997, Congress also raised the exemption for family farms and 
small businesses, the ones that the Senators on the other side of the 
aisle have cited needing relief. In 1997, we raised the exemption for 
the family farm and small businesses to $1.3 million for an individual 
and $2.6 million for a couple. Small businesses and farms can also 
exclude part of the value of real property used in their operations. 
Those very few businesses and farms that are still subject to tax can 
pay it in installments over 14 years at below market interest rates.
  In 1997, Congress went a long way toward making the estate tax less 
of a burden. Already in 1997, the superwealthy were paying most of the 
estate tax. The wealthiest 1 in 1,000 with estates larger than $5 
million paid half the estate tax that year. That is why the Republican 
idea--and this is the Republican idea not to cut the estate tax, as 
they will say when they are giving their example--the Republican idea 
is to repeal the estate tax completely. That is tilted too heavily to 
the very wealthy. The Republican estate tax repeal would give the 
wealthiest 2,400 estates, the ones that now pay half the estate tax, an 
average tax cut just on the estate tax of $3.4 million each. Remember, 
we are talking about a situation where 98 out of 100 people get zero, 
nothing, from this estate tax cut.
  Last month, Forbes magazine estimated that Mr. Bill Gates is 
personally worth about $60 billion. If, heaven forbid, Mr. and Mrs. 
Gates were to pass away and the Republican bill was fully in effect, if 
they otherwise would have paid the same average effective tax rate that 
the largest estates paid in 1997, then, believe it or not, this bill 
would give Bill Gates' heirs alone, just for those people in that 
family inheriting the money, an $8.4 billion tax break; $8.4 billion in 
revenue that we currently collect would go to this one family.
  Think of how hard we worked on this Senate floor in bill after bill 
to find savings in deficit reductions that would somehow come together 
to reach that large figure, $8.4 billion. Think of how hard we debated 
programs and tax cuts that cost much less than $8.4 billion. Is the 
$8.4 billion tax cut for the family of Bill Gates the highest and best 
use of whatever budget surplus we may have? That is why Democrats can 
eliminate the estate tax for the vast majority of estates at a fraction 
of the cost.
  As I noted, 44 percent of estates that paid tax in 1997 would have 
been completely exempt from tax if the exemption were raised to $1 
million. Fully 85 percent of the estates would have paid no tax if the 
exemption had been raised to $2.5 million.
  Senators Conrad and Moynihan have been working on a proposal that 
will eliminate the estate tax for most people for whom it would apply 
today, and to do so for substantially less cost than the majority's 
bill. I think the Democratic alternative is a good substitute. We ought 
to pass it. We ought to send it to the President for his signature.

[[Page 13678]]

  If the majority fails to adopt that reasonable amendment, however, we 
will have others. One of the reasons I welcome this debate is because I 
am looking forward to offering an amendment that will try something 
else, that will simply maintain the estate tax on estates of $20 
million or more. We are talking about estates of $20 million. We are 
certainly no longer talking about upper-middle-income families. We are 
talking about estates of $20 million. I don't think we are talking 
anymore about small businesses the way most people understand that 
term. In 1997, there were only 329 estates in the country that amounted 
to more than $20 million. But those 329 estates are worth $25 billion. 
We are talking about estates that average $75 million each. The 
majority's estate tax bill gives the heirs of estates such as those 329 
multimillionaire estates a tax cut that averages $10.5 million each.
  I am looking forward to this debate to see if the majority can at 
least keep itself from giving this massive tax cut, averaging $10.5 
million each, to the wealthiest 1 in 10,000. We will see.
  The point of amendments such as these is that an estate tax for the 
superwealthy does, in fact, serve some important social purposes. Yes, 
some sensible reforms are in order to increase the exemption to the 
estate tax for middle-income Americans, and certainly to address the 
special needs of small businesses and farmers. But the majority's 
position is too extreme. We live in a time of an increasing 
concentration of wealth. Last September, the Wall Street Journal 
reported in 1997 the Nation's wealthiest 10 percent owned 73 percent of 
the Nation's net worth. That is up from 68 percent in 1983. With the 
stock market boom of the 1990s, the wealthiest have done very well, 
indeed.
  Those who hold this great wealth are in a better position to shoulder 
some of the costs of our society. An estate tax for the superwealthy 
makes them help out. It is ironic, just when the very wealthiest are 
doing as well as they have since the gilded age, the Republicans decide 
that the very wealthy deserve--and what we most need to do--is another 
tax break. An estate tax for the superwealthy also serves as a backstop 
to the income tax, ensuring that some income on which income tax is 
deferred or avoided is ultimately subject to at least some tax.
  For example, because the income tax law steps up the basis of per 
capita gains on the value of a piece of property at the time of 
inheritance, no one pays income tax on capital gains that an individual 
built up on property the individual owns at the time of death, and, 
therefore, the estate tax provides the worthwhile social purpose, I 
believe, that the superwealthy have to at least make up for some of 
that.
  I think there is a worthy point that has been debated a little bit in 
the last hour. An estate tax for the superwealthy does encourage 
charitable giving as Senator Boxer from California pointed out. A 
complete repeal of the estate tax would land a devastating blow on 
colleges, churches, museums, and other charitable institutions that 
rely on donors to leave gifts. The majority's repeal of the estate 
could well reduce charitable gifts and bequests by $6 billion annually.
  The majority bill would be immensely expensive. The Joint Committee 
on Taxation projects that the majority bill would cost $105 billion 
over 10 years. Because the bill is phased in slowly over 10 years, its 
cost would actually explode even more in the second 10 years. When 
fully phased in, the bill would cost at least $50 billion a year, or 
more than $500 billion a decade. In fact, the Treasury Department says 
the figure would be about $750 billion over the decade.
  Are tax cuts for the superwealthy the first place that we as a Nation 
want to spend more than half a trillion or three-quarters of a trillion 
dollars of the surplus?
  Yes, it is true; some of the speakers on the other side have said 
America's economy is still strong. The Nation is enjoying the longest 
economic expansion in its history. Unemployment is at lowest in three 
decades, and home ownership is at the highest rate on record at 67 
percent.
  Several causes contributed to the current economic expansion, and it 
cannot be denied that a key contributor to our booming economy has been 
the Government's fiscal responsibility since 1993. I am very proud of 
that, as are many Members. The first tough vote I took was to support 
the President's deficit reduction plan in 1993. It worked, and it 
worked very well.
  This responsible fiscal policy means that the Government has borrowed 
less from the public than it otherwise would have, and will have paid 
down $300 billion in publicly-debt held by October of this year. The 
Government no longer crowds out private borrowers from the credit 
market. The Government no longer bids up the price of borrowing--that 
is, interest rates--to finance its huge debt.
  Because of our fiscal responsibility, interest rates are, so far, 
lower than they otherwise would be. Because of our fiscal 
responsibility, millions of American have saved money on their 
mortgages, car loans, and student loans. Because of our fiscal 
responsibility, businesses large and small have found it easier to 
invest and spur yet more new growth.
  Massive tax cuts like the one before us today I think pose the 
greatest single threat to that responsible fiscal policy, and to the 
strong economy to which it has contributed. It is no secret and it has 
been essentially admitted to by the previous speaker, the Senator from 
Minnesota: The majority intends to pass--in one bill after another--a 
massive tax cut plan reminiscent of the early 1980s.
  The majority leader said as much in a Republican radio address over 
the recess. After rattling off a series of tax cuts, the majority 
leader said, ``Put all this together and we call it `First Things 
First' ''
  I think it is supremely ironic that the majority leader chose to use 
those exact words, ``first things first,'' for in so doing, he echoed 
what President Clinton said in his 1998 State of the Union Address, 
when he said, ``What should we do with this projected surplus? I have a 
simple four-word answer: Save Social Security first.''
  That is, after all, what this debate is about: What should come 
first?
  As I and other Democrats have said, and demonstrated by our votes, we 
support estate tax reform for middle-income Americans, small 
businesses, and family farmers. But as we debate what ``first things'' 
should come first, shouldn't we remember our commitments to Social 
Security and Medicare?
  In the decade of 2011 to 2020, just as the costs of the bill before 
us today will begin to explode, the baby boom generation will begin to 
retire in numbers. Social Security's trustees project that, starting in 
2015, the cost of Social Security benefits will exceed payroll tax 
revenues. Under the trustees' projections, this annual cash deficit 
will continue to grow. By 2037, the Social Security trust fund will 
have consumed all of its assets. Similarly, by 2025, the Medicare 
Hospital Insurance Trust Fund will have consumed all of its assets.
  I almost hesitate to say this, but when I look at the young people in 
front of me who work so hard for us every day, they are the ones who 
will not get their Social Security if we are not responsible, if we do 
not make sure we put first things first.
  According to the trustees, we can fix the Social Security program so 
that it will remain solvent for 75 years if we make changes now in 
either taxes or benefits equivalent to less than 2 percent of our 
payroll taxes. But if we wait until 2037, we will need to make changes 
equal to an increase in the payroll tax rate of 5.4 percentage points. 
We have a choice of small changes now or big changes later.
  That is why it makes sense to see to our long-term obligations for 
Social Security and Medicare before we enact either tax cuts or yes, 
spending measures that would spend whatever that surplus might be. 
Before we enter into new obligations, we need to steward the people's 
resources to meet the commitments we already have.
  I will tell you, when I think of Social Security, the generations 
that come after us, that is commitment No. 1.

[[Page 13679]]

  Which is putting first things first: saving Social Security and 
Medicare or cutting estate taxes for the very rich?
  As part of updating Medicare for the 21st century, we have to ensure 
that our elderly have access to lifesaving prescription drugs. Three 
out of five Medicare beneficiaries make do without dependable 
prescription drug coverage. We on this side of the aisle believe that 
it is a priority to create a voluntary Medicare prescription drug 
benefit that is accessible and affordable for all beneficiaries.
  Which is putting first things first: helping provide needed 
medications for our elderly or cutting estate taxes for the very 
wealthy?
  We on this side of the aisle believe that one of our Nation's most 
pressing unmet needs is the acute and growing demand for help with 
long-term care. I have worked on this issue more than any other issue 
in my 18 years in public office. Our Nation's population is aging: 
Today, 4 million Americans are over 85 years old. By 2030, more than 
twice as many--9 million Americans--will be. Already today, 54 million 
Americans--one in five--live with some kind of disability. One in ten 
copes with a severe disability. In four out of five cases, a family 
member serves as that disabled person's primary helper, and, believe 
me, serves under a heavy burden in doing so. If the majority allows us 
to offer amendments, I will join with others on this side of the aisle 
in an amendment that will take some of the money that the majority 
would use to cut taxes for the superwealthy and use it to help make tax 
benefits available to these hard-working and financially strapped 
helpers.
  Again, which is putting first things first: helping people to provide 
long-term care for elderly and disabled family members or cutting 
estate taxes for the very wealthy?
  It seems that more and more these days, we see legislation like that 
before us today that benefits the very wealthy. At the same time, 
Senators feel increasing pressure to raise larger and larger sums of 
money from wealthy contributors. Observers could be forgiven for 
linking the two phenomena. Observers could reasonably wonder whether 
the contact Senators increasingly have with wealthy contributors could 
perhaps lead Senators increasingly to continually believe that the 
problems of the very wealthy are the problems to which we must respond 
first.
  The problem has only become worse with the large amounts of soft 
money being raised to get around the campaign finance laws. As the 
Supreme Court concluded in its decision this January in Nixon v. Shrink 
Missouri Government PAC: ``[T]here is little reason to doubt that 
sometimes large contributions will work actual corruption of our 
political system, and no reason to question the existence of a 
corresponding suspicion among voters.''
  A number of us believe that it continues to be a matter of great 
urgency to stop this corrupting influence of soft money in our 
elections. We feel that in order to get our priorities right, we need 
to get our house in order. Although it was undeniably a good thing to 
reform disclosure of contributions by organizations that do business 
under section 527 of the tax code, as we just did, that is by no means 
enough. Those of us fighting for campaign finance reform will forego no 
opportunity to offer an amendment to ban corrupting soft money once and 
for all.
  On that point, as we all know, only the tiniest fraction of the 
American people will be affected by this tax legislation before us 
today. But the American people also understand that those wealthy 
enough to be subject to estate taxes tend to have great political 
power.
  Those wealthy interests are able to make unlimited political 
contributions, and they are represented in Washington by influential 
lobbyists that have pushed hard to get this bill to the floor.
  The estate tax is one of those issues where political money seems to 
have an impact on the legislative outcome. That is why I want to 
quickly Call the Bankroll on some of the interests behind this bill, to 
give my colleagues and the public a sense of the huge amount of money 
at stake here. I talked about taxes, but now I am talking about 
political contributions.
  Take for instance the National Federation of Independent Business. 
Repeal of the inheritance tax is one of the federation's top 
priorities, and the federation is considered one of the most powerful 
organizations in town.
  They have the might of PAC and soft money contributions behind them.
  NFIB's PAC has given more than $441,000 in PAC money through June 1 
of this election cycle, according to the Center for Responsive 
Politics. That is on top of the incredible $1.2 million in PAC 
contributions NFIB doled out during the 1997-1998 election cycle.
  NFIB has also given soft money during the first 18 months of the 
current election cycle--just over $30,000 so far.
  Then there is the Food Marketing Institute, which represents 
supermarkets, and has also made a powerful push to bring this bill to 
the floor.
  Behind that push was the weight of significant PAC and soft money 
contributions, which I am sure is not a surprise to anybody.
  Through June 1st of this election cycle, the Food Marketing Institute 
has given more than $241,000 in PAC donations to candidates, after it 
made more than a half million in PAC donations during the previous 
cycle.
  FMI is also an active soft money donor, with more than $156,000 in 
soft money to the parties since the beginning of this cycle through 
June 1st of this year.
  On top of these wealthy associations, there are countless wealthy 
individuals who want to see the estate tax repealed. They are that tiny 
fraction of Americans who would benefit by the difference between the 
Republican approach and the more modest and appropriate Democratic 
approach.
  These folks want an end to the estate tax, and they are also able to 
give unlimited soft money to the political parties to get their point 
across.
  Then there is the most interesting player in the push to repeal the 
estate tax--the mystery donors.
  That is right, we don't know who is funding one of the major efforts 
to end the so-called death tax.
  We don't know because the group paying for it is one of those 
secretive 527 groups.
  The group is called The Committee for New American Leadership, and 
was founded, I am told, by former House Speaker Newt Gingrich. The 
committee, identified in news reports as a 527 ``stealth PAC,'' has 
been very busy pushing for the repeal of the estate tax, but nobody 
knows who is footing the bill for those efforts.
  As I stand here today, these mystery donors are having a lot to say 
about what gets debated in the Senate, and we have no way of really 
knowing who they are, or how much they gave. But thankfully, all of 
that may be changing.
  Thanks to the passage of the 527 disclosure bill, which the President 
almost immediately signed into law, from here on in we will know a lot 
more about who is writing the check to the Committee for New American 
Leadership, and the donors to every other stealth PAC that hid behind a 
tax loophole to evade public scrutiny.
  So, reformers won a victory with passage of the 527 disclosure bill, 
and we are just getting started. We are going to keep pushing until we 
address the other gaping loopholes in the campaign finance law that 
allow wealthy interests spend unlimited amounts of money to push for 
bills like this one, which serve the interests of the wealthy few at 
the expense of most Americans.
  Mr. President, again, to return to the central question, I ask: Which 
is putting first things first: ensuring honest elections, or cutting 
estate taxes for the very wealthy?
  The majority shows by proceeding to this bill that it wants to help 
out those who have benefitted most in the latest economic boom. But the 
week before last, the business group the Conference Board released a 
report that said:

       Working full-time and year-round is, for more and more 
     Americans, not enough.

  The report, called ``Does a Rising Tide Lift All Boats?'' finds that 
Americans holding full-time jobs in the 1990s

[[Page 13680]]

were just as likely to fall into poverty as Americans working full-time 
in the 1980s, and more likely to fall into poverty than full-time 
workers were in the 1970s. As The Wall Street Journal reported, 
economists attribute the problem in part to the erosion of the value of 
the minimum wage, which was in today's dollars worth about $7 in 1969, 
compared with the current minimum wage of $5.15 an hour.
  We on this side of the aisle believe that it is a priority to enact 
an increase in the income of working Americans making the minimum wage. 
The majority appears to believe that a tax cut for the very wealthy 
should be addressed first.
  So which is putting first things first: enacting a raise for working 
people making the minimum wage, or cutting estate taxes for the very 
wealthy?
  Even if we chose to confine ourselves strictly to cut taxes, should 
our highest priority for tax cuts be the very wealthiest 2 percent of 
the population? The majority shows by proceeding to this bill that it 
favors tax cuts for the super-wealthy before tax cuts for anyone else.
  We on this side of the aisle believe that it is a priority to cut 
taxes for working families struggling to stay out of poverty--families 
who have some of the highest marginal tax rates in our tax system. The 
majority's bill would give tax cuts to fewer than 43,000 upper-income 
taxpayers a year. In contrast, the President's proposal to expand the 
Earned Income Tax Credit to reward work and family would provide tax 
relief for 7 million working families, providing up to $1,155 in 
additional tax relief a family.
  Among other things, the President's EITC proposal would increase 
benefits for working families with three or more children. The poverty 
rate for children in these larger families remains a stunning 29 
percent, more than double the poverty rate among children in smaller 
families. A decade ago, a bipartisan group of Wisconsin State 
legislators enacted a substantially larger State EITC for families with 
three or more children, and it has helped to lift thousands of 
Wisconsin families from poverty.
  Which is putting first things first: helping the kids in 7 million 
working families keep out of poverty, or cutting estate taxes for the 
children who stand to inherit from the very wealthy?
  This Senator believes that it is a priority to simplify taxes and 
free people from paying income taxes altogether. One way to do this 
would be to expand the standard deduction. That would reduce tax 
liability for millions of working Americans. If the majority ever gives 
us a chance to offer amendments, I intend to offer such an amendment on 
tax legislation this year. Right now, 7 in 10 taxpayers take the 
standard deduction instead of itemizing. Expanding the standard 
deduction would make it worthwhile for even more Americans to use that 
easier method and avoid the difficult and cumbersome itemization forms. 
As well, expanding the standard deduction would free millions of 
middle-income working Americans from having any income tax liability at 
all.
  So again, which is putting first things first: freeing millions of 
middle-income Americans from the income tax, or cutting estate taxes 
for the very wealthy?
  Simplifying taxes generally should be a priority. Some have proposed 
that modest investors in mutual funds should be exempted from filling 
out the complicated capital gains schedule. Some have suggested 
streamlining the complicated child credit. Some have proposed further 
simplifying the Nanny Tax by raising the threshold for filing. These 
modest steps would relieve millions of middle-income taxpayers from 
needlessly complex and time-consuming tax forms, but they would also 
cost money.
  So which is putting first things first: simplifying income taxes for 
millions of middle-income taxpayers, or, again, cutting estate taxes 
for a few hundred of the very wealthy?
  Senators on both sides of the aisle believe that we should repeal the 
telephone tax for residential users. Pretty much everyone pays the 
telephone tax. Mr. President, 94 percent of American households have 
telephone service. And remember, fewer than 2 percent, even under 
current law, pay the estate tax. If the majority allows us to offer 
amendments, I will join with others on this side of the aisle in an 
amendment that will take some of the money that the majority would use 
to cut taxes for the super-wealthy and use it to repeal the telephone 
tax for residential users.
  Now, the majority also wants to eliminate the telephone tax for 
businesses, which is just a tax cut for people who own stock in those 
businesses--not the most progressive of tax cuts--but cutting taxes on 
residential telephone users is among the more progressive tax cuts that 
one could imagine this Congress passing. But the schedule betrays the 
majority's priorities.
  Which is putting first things first: repealing a residential 
telephone tax that nearly everyone pays, or repealing estate taxes that 
only very wealthiest 2 percent pay?
  Senators on both sides of the aisle believe that it is a priority to 
help working American families to save. The President's proposal last 
year to encourage retirement savings through what he called USA 
Accounts made some sense. Similarly, this year, Vice President Gore's 
new Retirement Savings Plus accounts--voluntary, tax-free personal 
savings accounts separate from Social Security but with a Government 
match--are also a pretty good idea. Both USA Accounts and Retirement 
Savings Plus would help millions of middle-income Americans to save and 
build resources for retirement.
  So again, when you look at that issue, which is putting first thing 
first: helping working American families to save, or cutting estate 
taxes for the very wealthy?
  As I said at the outset, this is really a welcome debate. Because the 
majority's desire to increase tax breaks for the very wealthy paints so 
stark a contrast to the many ways by which Senators on this side of the 
aisle really do want to help working Americans.
  This is not an example of class warfare. To point out what is going 
on, that is not what this is at all. In fact, what is class warfare is 
to maintain taxes on the vast majority of working Americans while 
cutting taxes only for the very wealthy Americans.
  I have taken some time on this occasion to contrast the majority's 
priorities with those of the American people because the majority 
leader has made all too clear that he does not intend to allow a fair 
and full debate of this estate tax bill. I have made this case on the 
motion to proceed rather than waiting for the bill itself because, if 
the majority leader follows what has become his regular practice, he 
will, in all likelihood, file cloture on the bill as soon as we get to 
it.
  Mr. President, I have said this before at much greater length, but I 
will say it again--others have said it better--this is not how the 
Senate was meant to work. This is the place where the Government was 
intended to consider policies fully and fairly.
  The majority leader's all-too-rapid resort to cloture deprives 
Senators from debating priorities such as those I have discussed today, 
and so many more. That is why I have taken time during this debate on 
the motion to proceed, which is not where we normally have this sort of 
debate, to warn, before the majority leader files his cloture motion, 
against the dangers of invoking cloture on the estate tax bill.
  This is a major bill. If enacted, it would take more than half a 
trillion dollars, maybe three-quarters of a trillion dollars a decade 
that would otherwise have gone to paying down the debt and put it in 
the hands of the very few wealthiest members of society. It would be 
neither fitting nor appropriate to effect the transfer of more than 
half a trillion dollars without a full and fair debate.
  And that is why we must debate this motion fully today. For if there 
is a remedy for the majority leader's abuse of the cloture process, it 
is a more rigorous use of the cloture process when it is abused.
  New York's Governor Al Smith said in 1933, ``All the ills of 
democracy can be cured by more democracy.'' To paraphrase Governor 
Smith, the cure for

[[Page 13681]]

not honoring the spirit of the Senate's rules is to honor the Senate's 
rules to the letter.
  Thus, if the majority lseader wants all the benefits of the cloture 
rule, then he will have to bear all the costs of the cloture rule, as 
well. If the majority leader lays down a cloture motion, he should be 
prepared to have the full 30 hours of debate on the matter on which the 
Senate invokes cloture. If the Senate invokes cloture, it should expect 
to have to remain on the matter on which has invoked cloture.
  Let's cut to the chase. The majority is moving to this complete 
repeal of the estate tax at least in part as a purely political 
gesture. The Administration has stated in so many words that the 
President would veto this bill. The majority apparently wants the veto 
and the issue more than it wants a good law that would eliminate estate 
taxes for the overwhelming majority of those who pay it.
  Such a compromise is available if the majority is willing to take it. 
The majority need only adopt Senator Conrad's and Senator Moynihan's 
substitute, and we can have meaningful estate tax reform this year.
  But if the majority does not do so, then we will debate this bill at 
length and vote on a series of amendments.
  Mr. REID. Will the Senator yield for a question?
  Mr. FEINGOLD. I will yield.
  Mr. REID. I say this in the form of a question because I want to 
focus on one part of the Senator's speech. I know this is not an easy 
question to answer because it is coming from somebody I am going to try 
to compliment and applaud. Does the Senator recognize how appreciative 
the rest of the Senators are on the Democratic side for his leadership 
in exposing what is wrong with campaign finance on the Federal level in 
America? Is the Senator aware of how much we appreciate the work he has 
done?
  Mr. FEINGOLD. I certainly know that the Senator from Nevada talks to 
me about this issue every chance he gets. I appreciate it. He has been 
one of the persons who has made it possible for us to raise this issue 
on the Senate floor. I appreciate the opportunity to occasionally come 
to the floor and point out, when we are on a particular bill, all the 
big soft money contributions that are behind some of these bills. It is 
part of the story that the public needs to know.
  Mr. REID. How many people are in the State of Wisconsin?
  Mr. FEINGOLD. Over 5 million.
  Mr. REID. In the State of Nevada, we have about 2 million people. The 
last Senate election I was involved in, less than 2 years ago, in the 
small State of Nevada, in which at that time there weren't 2 million 
people, the two candidates, the Republican candidate and Democratic 
candidate, spent over $20 million. Is the Senator aware of that?
  Mr. FEINGOLD. I believe the Senator has shared that with me before, 
but it is a horrifying number for any State, let alone a State the size 
of Nevada.
  Mr. REID. That doesn't count independent expenditures. No one knows 
what they are.
  Mr. FEINGOLD. We know about some of them, but there are whole 
categories, such as these 527s, we are not even sure where they came 
from or exactly how much is being spent.
  Mr. REID. Again, I hope the Senator from Wisconsin understands the 
great contribution he has made to the Senate, to the State of 
Wisconsin, and the American people for not letting this issue die.
  Mr. FEINGOLD. I thank the Senator from Nevada. That kind of 
encouragement is helpful because it is sometimes a lonely issue. What I 
have found most effective in talking to people, if you mention the 
issue of campaign finance reform in general, to use that term, or in 
the abstract, it is clear to people you are trying to do something that 
is important. But if you want to make it concrete for them, you have to 
show the connection between all that money and particular bills coming 
through here that really don't belong here. This is a great example, 
the estate tax. The idea that we give this huge tax break to a very few 
people when there are all these other priorities raises the question in 
people's minds: Why would elected officials do such a thing? I believe 
part of the answer is there is just too much money behind this bill.
  Mr. REID. I want to ask two additional questions on the Senator's 
time. First of all, is the Senator aware that this matter now before 
the Senate has not had 1 minute of hearings in the Senate before the 
Finance Committee, the committee of jurisdiction?
  Mr. FEINGOLD. I was not aware it was quite that bad. I knew it had 
been very little. It came straight through from the House, as I 
understand.
  Mr. REID. I think in the same breath we mention the Senator from 
Wisconsin, it is fair to also talk about a real lone ranger, for lack 
of a better description, on the other side. That is the Senator from 
Arizona, John McCain, who has stood shoulder to shoulder with the 
Senator from Wisconsin. He has not had the support of his Republican 
colleagues as Senator Feingold has had on the Democratic side. Does the 
Senator from Wisconsin agree that the Senator from Arizona has shown 
courage not only as a prisoner of war and as a fighter pilot but also 
his courage on this issue of campaign finance?
  Mr. FEINGOLD. All of us who work on the issue with him consider him 
our commander, in effect. We, of course, are well aware not only of the 
fact that he worked so hard on this issue for years before his 
Presidential campaign, but he is also doing a tremendous job of 
channeling enthusiasm from his campaign into actually getting things 
done on campaign finance on the floor. That is how the 527s got 
through. Thanks to my colleagues from the other side of the aisle, 
about whom we often have to talk in less than positive terms on the 
campaign finance issue, almost every one of them supported us at least 
on that issue. We are hoping that will lead to a momentum to actually 
ban soft money and go beyond that. I thank the Senator from Nevada for 
his questions.
  To conclude, we will vote on priorities. We will vote on which is 
putting first things first: paying down the debt to help Social 
Security and Medicare or cutting taxes for the super-wealthy.
  We will afford the majority a number of opportunities to let us know 
how wealthy one has to be before even the majority considers one 
superwealthy. As I said earlier, I am looking forward to offering an 
amendment that would simply maintain the estate tax on estates of $20 
million or more, and preserve those funds to pay down the debt to help 
Social Security and Medicare.
  But if that amendment should not succeed, then I look forward to 
offering an amendment that would simply maintain the estate tax on 
estates of $100 million or more, and preserve those funds to pay down 
the debt to help Social Security and Medicare. If the majority does not 
consider estates of $20 million to be the super-wealthy, then perhaps 
they will agree that those worth $100 million are superwealthy.
  If that amendment should not succeed, then I could have another that 
would maintain the estate tax on estates of a billion dollars or more, 
and preserve those funds to pay down the debt to help Social Security 
and Medicare. If the majority does not consider estates of $20 million 
to be the superwealthy, and does not consider estates of $100 million 
to be superwealthy, then perhaps they will agree that those worth a 
billion dollars deserve the title ``superwealthy.''
  Ironically, some will then charge us on this side of the aisle with 
holding up the estate tax bill. But it is not we, but the majority who 
are thwarting the enactment of estate tax relief by clinging to their 
extreme repeal plan.
  The choice for the majority is clear: The majority can persist in the 
political exercise of advancing the extreme bill that we are 
considering today. Or they can enact fiscally-responsible estate tax 
reform with overwhelming bipartisan majorities.
  The opportunity is theirs to take, or to squander.
  The PRESIDING OFFICER. The Senator from Nevada.
  Mr. REID. Mr. President, I ask unanimous consent that the order of 
speaking be that Senator Sessions be recognized for 15 minutes, Senator 
Kyl for 15 minutes, and following that, Senator Murkowski for 10 
minutes. Then we

[[Page 13682]]

would go to a Democrat at that time. I ask unanimous consent that be 
the order.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. As a matter of parliamentary procedure, I ask the Chair 
this: I direct this comment more to the staff through the Chair. Maybe 
they can find out the leader's intention. Are we going to keep working 
after 6:30, or are we going to defense? We have a number of speakers 
lined up. When we learn what is going to happen, we can better arrange 
the order of speakers.
  The PRESIDING OFFICER. The Senator from Alabama is recognized.
  Mr. SESSIONS. Mr. President, I believe it is time for us to quit 
nibbling around the edges and to eliminate the estate tax on the 
American people. It is an abysmal tax. It is an unfair tax. It taxes 
people on money they have already made. They pay taxes on that money. 
Then, after that, they may invest and buy property. When they die, the 
tax man reaches in and grabs up to 55 percent of the value of that 
estate. That is an astounding fact. The Federal Government is taking 55 
percent from people for this tax. A majority of the people who have an 
estate have to go through the estate tax computation. It is an unfair 
tax.
  I believe we ought to reduce taxes across the board. I was a leader 
and fought hard for the $500-per-child tax credit for middle-income 
American families. I think that was one of the finest things we ever 
did. It provided $1,500 in extra money --without taxes--for a family of 
three. That is $100-plus a month they can spend on their children. I 
supported equality in making insurance premiums deductible that don't 
apply to small businesses. We fought for the capital gains tax 
reduction. People said that was a tax for the rich. When we reduced the 
capital gains tax, more people were willing to buy, sell, and trade 
properties, stocks, and other things, and they paid more taxes. 
Revenues to the Government went up.
  We will talk about the marriage penalty. It is absolutely 
unjustifiable to raise taxes on a couple who are married by $1,400 a 
year--$100 a month for a man and woman who are out working. When they 
get married, they have to pay more in taxes than if they lived single. 
It pays a bonus, in effect, for people who get a divorce. That is not 
the kind of public policy we ought to have. I want us to remember that 
nearly 70 percent of the American people oppose this estate tax. They 
know it is unfair and it ought to be eliminated.
  I want to share a few insights into this subject, other than 
discussing the matter in general. I have had the opportunity to meet 
with people from Alabama--environmental experts--who shared with me 
that with regard to landowners and timber owners, the estate tax is one 
of the single most damaging environmental pieces of legislation that 
exists. They tell me that routinely, people who inherit timber land and 
property who owe large amounts of taxes have to go out and prematurely 
clear-cut the timber on the property and sell it to pay the estate tax. 
When you are talking about a 55-percent tax, what are you going to do 
if you are the widow or child of a person who worked and saved all his 
life and did everything right? You have to sell off the property or cut 
the timber--every stick of it--to pay the tax man in Washington. That 
is not good for families and for the environment.
  The estate tax hurts farmers. Farmers are particularly property 
wealthy, but cash poor. They take what they have and plow it back into 
their land and equipment. When they die, they may have a very large tax 
burden. Perhaps they are making only a small amount on each acre they 
farm, but they are making an income from it. But maybe the problem is 
the land now is next to an interstate and the land now would be good 
for a motel and they want to value it at $100,000 an acre. All of a 
sudden, they are multimillionaires, and the family is hit for $1 
million or $2 million or $5 million in taxes.
  The farmers in this country are universally opposed to this tax. 
Every farm organization in my State tells me every time I meet with 
them, ``Eliminate this estate tax, Jeff, whatever you do. That is 
rotten and we need to get rid of it.'' That is driving the issue before 
us today.
  This tax savages small business. Every generation of farmers and 
small businesspeople have a debt. That business or family must absorb 
the cost of paying the estate tax. No such tax falls on the large, mega 
corporations, the giant international, multinational corporations. They 
never die. They never pay this tax. But every generation of small 
business has to face it. Every generation of farmers has to face it. Is 
it any wonder why large paper companies can buy up thousands of acres 
of land that have to be sold off by farming families who can't afford 
to pay the taxes on it, and then they never pay that tax? This is not a 
good tax for this country. It is wrong for this country. It punishes 
middle America, those who have done the right things by saving and 
accumulating some wealth.
  This kills off competition. I know the story of an autoparts company. 
The family had built up an autoparts dealership. They had maybe as many 
as 27 stores; they were all about the State. You could see those 
companies there and they were growing. All of a sudden, the father who 
owned the company died, and they were faced with a huge tax burden. 
What could they do? They could borrow millions of dollars to pay the 
tax man, they could sell off a large part of their stores but lose the 
advantages of scale that they were gaining by growing and getting 
competitive with bigger companies, or they could sell out. The company 
family had to make a decision.
  They sold the company to a major national autoparts company, and 
everybody would recognize their name. That large company would never be 
faced with that kind of capital crisis as a result of a death. But the 
smaller companies are. Maybe, just maybe, that 27-store autoparts 
company would have continued to be able to grow. Maybe, just maybe, 
they would not have had to shut down the distribution center in the 
small town in Alabama, as they did when it sold out to the big 
corporation. Maybe they could have grown and become a competitor to the 
major parts company distributing in this country and provided more 
competition, driving down the price of autoparts for the average 
American citizen who is out to buy what he needs to fix his automobile, 
truck, or farm equipment.
  I think this thing has to be viewed in the overall context of how it 
impacts economic growth and competition in this country. I believe we 
need to make sure that we have not ingrained in our law a tax that 
reaches down, and when you have a big bush, a big growth of a plant 
that is growing big, maybe it is a Wal-Mart or Kmart or maybe a Car 
Quest, and it is getting bigger and bigger, and this little plant grows 
up and starts competing with it and gets a little sunlight and starts 
getting bigger, all of a sudden, somebody comes out and cuts the top 
off of it. That is what the estate tax does; it cuts the top off of 
small businesses. It savages them and makes them less competitive 
against the international, multinational, mega corporations. It is an 
anticompetitive act.
  I believe we ought to do something about it. It brings in less than 2 
percent of the income to this country. I reject this demagogic attack 
that because somebody made $20 million, they are somehow evil and rich 
and ought to be made to pay a huge amount of tax on that money. Well, 
it was said the Republicans are for this bill. It is a Republican idea 
and that is all bad. But in the House, even though those Democratic 
Representatives were under the most intense pressure from their 
leadership to hang to the party line, 65 of them rejected the pressure 
and stood firm and voted to completely eliminate this tax.
  I think that shows it is not limited to a Republican idea. It is a 
broad bipartisan idea that has the overwhelming support of the American 
people. We only do it on estates of $20 million or more. I want to talk 
about that directly.
  They say: Well, for an estate of $75 million, we ought to have no 
sympathy

[[Page 13683]]

for them. We ought not to feel any concern that the tax man takes 55 
percent of it. What is 55 percent of $75 million? It is $40 million. 
Who says it is fair to take $40 million of an estate that somebody has 
worked all of their life to build up with after-tax money, and you are 
just going to rip it out and send it to Washington? I don't believe 
that is just.
  Again, those are the kinds of companies and businesses that are 
getting competitive. They have the ability to compete in the 
marketplace. If we savage them, we are knocking down small industries 
and businesses that might be competitive against the established order.
  I think it is healthy for America to have growing companies worth 
$100 million or $150 million. I see no need to attack them when we 
don't attack Wal-Mart, Kmart, or GM, and Nestle's, and those kinds of 
companies.
  Now we hear this talk about Social Security. Oh, yes, if we vote to 
eliminate the estate tax, we are going to oppose Social Security.
  Let me tell you that we are going to protect Social Security. We are 
not going to allow Social Security to fail. We support it on this side 
of the aisle. We fought aggressively for a lockbox to lock up any 
Social Security surplus and guarantee it would not be spent by the big 
spenders that are here. The Democrats across the aisle opposed it and 
would not allow us to pass that bill. We set it aside anyway. But we 
don't have the protection to do it year after year as we would if we 
had passed a lockbox.
  Why wouldn't they support that, if they like Social Security so much? 
The reason is they want more money to spend, spend, spend. That is the 
mentality--spend, spend, spend; ask for more votes for the people to 
whom you give money, and keep them in power year after year. By the 
way, we know more in Washington how to spend your money than you do.
  Make no mistake, this is a classic case of taxes and who has the 
power. You give more money to the Federal Government and have less for 
yourself. Then the Government is empowered and you are diminished.
  We ought to ask ourselves: How is it that the percentage of the total 
gross domestic product that goes to the Federal Government since 
President Clinton took over in 1992 has gone from 17.9 percent to 20.7 
percent, higher than at the peak of World War II?
  To say we can't conduct our business, take care of the needs of this 
country, and keep that tax rate from rising every year and the rising 
percentage of money going every year to Washington is a mistake. It is 
a fundamental choice that we as Americans have to make. Will we 
continue to allow the erosion of the independence, freedom, and 
autonomy of individual American citizens to be eroded in favor of a 
bloated and growing political Washington establishment?
  Those are the choices we are dealing with. We ought to eliminate bad 
taxes. This estate tax is one of the worst. It costs an incredible 
amount for the Federal Government to collect. It costs an incredible 
amount for the families who have to go through the estate tax process 
to have to try to figure out ways to create trusts and so forth to 
minimize it. It is extremely painful to families. It brings in less 
than 2 percent of our national budget. Let's get rid of the tax. Let's 
not keep it anymore. Let us reject this cause that we are going to 
eliminate it for some but we are going to keep it on these other groups 
that make $20 million because they are evil, and we can take 55 percent 
of their money; that is all right. I don't believe that is a legitimate 
principle on which to operate.
  I believe the tax rate ought to be fair. We have increased our 
Federal maximum tax rate on the wealthy now to 39 percent of what they 
make. That is a high amount--39 percent of everything somebody makes at 
the margin. Why do we now need to reach into the grave and take out 
what they have accumulated after paying those taxes?
  I think we are going to eliminate this tax sooner or later. The 
American people support it overwhelmingly. The farmers and the small 
business groups support the elimination. So do the American people.
  I would like to express my appreciation to Senator Jon Kyl for his 
leadership in consistently, effectively, and brilliantly promoting this 
legislation from the beginning.
  We are at a point where we are going to bring it up for a vote. We 
had to have cloture to get it here. I appreciate that the majority 
leader has favored that. I look forward to hearing the Senator from 
Arizona's remarks at this time.
  The PRESIDING OFFICER (Mr. Smith of Oregon). The Senator from Arizona 
is recognized.
  Mr. KYL. Thank you, Mr. President. I thank the Senator from Alabama 
for his kind remarks.
  Mr. President, I heard some astonishing claims this morning and 
somewhat this afternoon. I would like to try to respond to some of the 
things that have been said by some of our friends on the other side of 
the aisle.
  Let me, first of all, note for those who might be watching this that 
the primary object of those on the minority side is to stop us from 
having a vote on the repeal of the death tax. That is the last thing in 
the world they want. That is why they are trying to confuse the issue 
by suggesting that they want to offer all kinds of amendments that have 
nothing whatsoever to do with the death tax in order to prevent us from 
ever getting to a vote on the death tax.
  When we keep talking about cloture, I will explain to those who 
aren't familiar with Senate terms that it is required because the 
distinguished minority leader will not reach an agreement with the 
majority leader on the terms under which we could bring this up for a 
vote. So we have to get 60 Senators who will agree to finally bring 
this matter to a close so we can actually have a vote. That will be a 
very important vote. Whether or not we get 60 votes, we don't know. But 
I am counting on a great deal of bipartisan support because we have 
bipartisan support in the House of Representatives which voted 
overwhelmingly for H.R. 8, which is the bill before us. There are nine 
Democratic sponsors of the Kyl-Kerrey bill, which is part of H.R. 8. 
That is the bill we introduced to repeal the death tax which was then 
incorporated in the House bill.
  Just a quick reminder that the House bill and what we are debating 
here today will reduce the rates over a 10-year period and in the tenth 
year repeal the estate tax altogether by, in effect, replacing it with 
a capital gains tax. That is one of the points I will get to later. We 
are not forgoing all of this revenue, as people on the other side of 
the aisle have argued.
  Actually, the taxes that will be collected when property is 
eventually sold and taxed under capital gains is just about the same 
amount that would be collected under the death tax. Anyway, chances are 
there won't be much revenue lost, even if that is a concern in this era 
of many hundred-billion-dollar surpluses. I want to start with those 
particular comments.
  As I said, I was astonished by some of the claims made here. Let me 
mention two:
  One by the Senator from North Dakota, Mr. Dorgan, who in effect said 
that the estate tax should be imposed on successful people as the price 
for the privilege of living in America and making a lot of money.
  That turns the American dream on its head. The American dream, as I 
understand it, and as folks with whom I have talked in Arizona 
understand, is being able to work hard, to save, to invest, and to be 
able to create a situation where the next generation can have a little 
better opportunity than you had. That is the American dream. We all 
live for that, for our kids and our grandkids. It is exactly the 
opposite as expressed by some on the other side--that if you are 
successful, by golly, the Government is going to come in and take it 
all from you. No, excuse me--take half it from you when you die. First, 
they are not taking it from you. They are taking from your employees, 
from your kids, and from your grandkids. That is not fair. That is not 
the American dream.
  The Senator from California, Mrs. Boxer, employing some of the new

[[Page 13684]]

Gore rhetoric, said it all boils down to a question of, Whose side are 
you on? Well, I will accept that challenge. Whose side are we on here?
  Mr. President, I have a list of about 100 different organizations 
that strongly favor the repeal of the estate tax. I ask unanimous 
consent that this list be printed in the Record.
  There being no objection, the list was ordered to be printed in the 
Record, as follows:

              Family Business Estate Tax Coalition Members

       Air Conditioning Contractors of America.
       Akin, Gump, Strauss, Hauer & Feld, LLP.
       American Alliance of Family Business.
       American Bakers Association.
       American Consulting Engineers Council.
       American Dental Association.
       American Family Business Institute.
       American Farm Bureau Federation.
       American Forest & Paper Association.
       American Horse Council.
       American Hotel and Motel Association.
       American Institute of Certified Public Accountants.
       American International Automobile Dealers Association.
       American Sheep Industry Association.
       American Soybean Association.
       American Supply Association and American Warehouse 
     Association.
       American Trucking Association.
       American Vintners Association.
       American Wholesale Marketers Association.
       The Association For Manufacturing Technology.
       Amway Corporation.
       Arnold & Porter.
       Associated Builders and Contractors.
       Associated Equipment Distributors.
       Associated Equipment Distributors.
       Associated Specialty Contractors.
       Boland & Madigan, Inc.
       Building Service Contractors Association International.
       Chwat and Company, Inc.
       Clark & Weinstock.
       Collier, Shannon, Rill & Scott.
       Communicating for Agriculture.
       Davis & Harman.
       Duffy Wall & Associates.
       Families Against Confiscatory Estate & Inheritance Taxes.
       Farm Credit Council.
       Florists' Transworld Delivery Association.
       Food Distributors International.
       Food Marketing Institute.
       Forest Industries Council on Taxation.
       Guest & Associates, LLC.
       Hallmark Cards, Inc.
       Hogan & Hartsen.
       12AAK Walton League.
       Wildlife Society.
       Quail Unlimited.
       Wildlife Management Institute.
       International Association of Fish & Wildlife Agencies.
       Hooper, Hooper, Owen & Gould.
       Independent Bakers Association.
       Independent Bankers Association of America.
       Independent Forest Product Association.
       Independent Insurance Agents of America.
       Independent Petroleum Association of America.
       Institute of Certified Financial Planners.
       International Council of Shopping Centers.
       International Warehouse Logistics Association.
       Lake States Lumber Association.
       Land Trust Alliance.
       Marine Retailers Association of America.
       McKevitt & Schneier.
       Miller & Chevalier.
       Mullenholtz & Brimsek.
       National Association of Plumbing-Heating-Cooling 
     Contractors.
       National Association of Conveniences Stores.
       National Association of Realtors.
       National Association of Wheat Growers.
       National Association of Manufacturers.
       National Association of Wheat Growers.
       National Association of Music Merchants.
       National Association of Wholesaler-Distributors.
       National Association of State Departments of Agriculture.
       National Association of Temporary and Staffing Services.
       National Association of the Remodeling Industry.
       National Association of Home Builders of the United States.
       National Association of Beverage Retailers.
       National Automatic Merchandising Association.
       National Automobile Dealers Association.
       National Beer Wholesalers Association.
       National Cattlemen's Beef Association.
       National Corn Growers Association.
       National Cotton Council of America.
       National Council of Farm Cooperatives.
       National Electrical Contractors Association.
       National Electrical Contractors Association Incorporated.
       National Farmers Union.
       National Federation of Independent Business.
       National Funeral of Independent Business.
       National Funeral Directors Association.
       National Grange.
       National Grocers Association.
       National Hardwood Lumber Association.
       National Licensed Beverage Association.
       National Marine Manufacturers Association.
       National Milk Producers Federation.
       National Newspaper Association.
       National Pork Producers Council.
       National Precast Concrete Association.
       National Restaurant Association.
       National Retail Federation.
       National Roofing Contractors Association.
       National Rural Electric Cooperative Association.
       National Small Business United.
       National Telephone Cooperative Association.
       National Tooling & Machining Association.
       Neece, Cator, McGahey & Associates.
       Newsletter Publishers Association.
       Newspaper Association of America.
       North American Equipment Dealers Association.
       Northwest Woodland Owners Council.
       O'Brien Calio.
       Patton Boggs, LLP.
       Petroleum Marketers Association of America.
       Printing Industries of America.
       Rae Evans & Associates.
       Reed, Smith, Shaw & McClay.
       Safeguard America's Family Enterprises.
       Sheet Metal and Air Conditioning Contractor's National 
     Association.
       Small Business Legislative Council.
       Southeastern Lumber Manufacturers Association.
       Steptoe and Johnson.
       Sullivan & Cromwell.
       Tax Foundation, Inc.
       Texas and Southwestern Cattle Raisers Association.
       The Associated General Contractors of America.
       The Employee Stock Ownership Plan Association.
       The Heritage Foundation.
       The Jefferson Group, Inc.
       The Society of American Florists.
       Tire Association of North America.
       U.S. Apple Association.
       U.S. Business & Industrial Council.
       U.S. Chamber of Commerce.
       U.S. Telephone Association.
       United Fresh Fruits and Vegetable Association.
       United States Business and Industrial Council.
       Washington Council, P.C.
       Wine and Spirits Wholesalers.
       Wine and Spirits Wholesalers of America.
       Wine Institute.
       Harry C. Alford, Jr., President & CEO, National Black 
     Chamber of Commerce.
       Peter Homer, President & CEO, National Indian Business 
     Association.
       Ricardo C. Byrd, Executive Director, National Association 
     of Neighborhoods.
       John White, President, Texas Conference of Black Mayors.
       U.S. Hispanic Chamber of Commerce.

  Mr. KYL. I will not read the entire list. It includes not only 
organizations that we are familiar with such as the American Farmer 
Bureau Federation, the National Federation of Independent Business, the 
National Newspapers Association, the Small Business Legislative 
Council, and groups similar to that. It also includes groups such as 
the National Black Chamber of Commerce, the National Indian Business 
Association, the National Association of Neighborhoods, U.S. Hispanic 
Chamber of Commerce, the Texas Conference of Black Mayors. Also, 
environmental organizations such as the Wildlife Society, the Isaak 
Walton League, Wildlife Management Institute, International Association 
of Fish and Wildlife Agencies, and more.
  Whose side are you on? We are on the side of the American people who 
believe, by percentages of 70 to 80 percent, the death tax ought to be 
repealed. That is whose side we are on. If we could ask the American 
people, 70 percent to 80 percent of whom believe this ought to be 
repealed, how do they vote, they vote to repeal it. That is whose side 
we are on.
  The second point was, we should soak the rich; after all, they can 
afford it. There was a suggestion by Senator Feingold a moment ago 
that, after all, this property never gets taxed unless we can tax it at 
the time of death. That is not what this bill says. We replace the 
death tax with the capital gains tax. Death is taken out of the 
equation. There is no tax when someone dies. But when the heirs decide 
to sell the property, if they ever do, they pay a capital gains tax, as 
the original owner would. They pay it on the basis of the original 
owner's cost in that.
  This is why, according to the President's own budget, the Analytical 
Perspective of the Budget of the United

[[Page 13685]]

States, for this next fiscal year, notes that the step-up basis of 
capital gains on at death--the current law--in effect costs the Federal 
Government almost $153 billion over a 5-year period. That is about the 
tax collections from the inheritance tax.
  While I am not suggesting this is going to be a complete wash, I am 
suggesting there is not going to be all that much revenue lost to the 
Treasury, if you are concerned about that and with multihundreds of 
billions of dollars of surplus. I am not concerned about revenue to the 
Treasury. If that is your concern, be not concerned. According to the 
President's own budget, the step-up in basis loses the Federal 
Government about $153 billion. If you calculate the amount of the 
estate tax that will be collected over 5 years, it is not a great deal 
more than that.
  What is this business of step-up in basis? Senator Feingold said this 
property is never taxed and that is why we have to have a death tax. It 
is taxed. First, your income is taxed. You are then going to buy things 
with it. You buy stock; you will invest in other kinds of investment. 
Of course, you spend a great deal of it. Whatever you spend, you are 
spending with after-tax dollars. It has already been taxed. However, if 
you want to tax it again, the fair way to tax it again is not at death, 
over which the decedent has no control, but rather as a capital gain by 
the individual or people who end up selling the asset, if and when they 
sell. That is an economic decision taking tax consequences into 
account. That is what we do here.
  I am afraid some on the other side have not read the bill. What it 
does is, in effect, replace the estate tax with a capital gains tax. 
But a 20-percent capital gains rate is a whole lot better than a 55-
percent death tax rate. The voluntary decision to sell the property and 
accept that tax burden is a whole lot more fair than having to pay the 
tax at death. This is not property that is not being taxed and, in 
fact, it is taxed as a result of the way we have structured this 
legislation.
  Let me make another point about soaking the rich. It is simply not 
the case that it is the wealthiest estates that are paying most of the 
estate tax. I ask unanimous consent that an op-ed piece by Bruce 
Bartlett, appearing in the Washington Times, be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

               [From the Washington Times, June 19, 2000]

                    The Real Rap on Death and Taxes

                          (By Bruce Bartlett)

       On June 9, the U.S. House of Representatives voted to 
     abolish the estate and gift tax in the year 2010. 
     Predictably, liberals denounced the action in the strongest 
     possible terms. Bill Clinton called it ``costly, 
     irresponsible and regressive.'' The New York Times said, 
     ``Seldom have so many voted for a gargantuan tax cut for so 
     few.'' Robert McIntyre of the far-left Citizens for Tax 
     Justice told CBS News that supporters of repeal have done 
     nothing but lie about their plan, which he views as nothing 
     but a giveaway to the ultrawealthy.
       The truth is that the burden of the estate tax falls 
     primarily on modest estates, not those of the Bill Gates and 
     Warren Buffets of the world. The latest data from the 
     Internal Revenue Service tell the story. In 1997, more than 
     50 percent of all estate and gift taxes were collected from 
     estates under $5 million. Only 20 percent came from the very 
     wealthy, those with estates of more than $20 million.
       Furthermore, the effective tax rate (net tax as a share of 
     gross estate) is significantly higher for estates between $5 
     million and $20 million than on those of more than $20 
     million. An estate between $2.5 million and $5 million 
     actually pays a higher rate than that paid by estates of more 
     than $20 million--15 percent for the former and 11.8 percent 
     for the latter.
       How can this be the case when estate tax rates are steeply 
     progressive, taxing estates of more than $3 million at a 55 
     percent rate? The answer is that estate planning can 
     eliminate the tax if someone wants to spend sufficient time 
     and money setting up trusts and organizing one's affairs for 
     that purpose. Those with great wealth are far more likely to 
     engage in estate planning than a farmer, small businessman or 
     someone with a modest stock portfolio. Hence, the heaviest 
     burden of the estate tax falls not on the very wealthy, but 
     the slightly well-to-do.
       The government gets more than two-thirds of all estate tax 
     revenue from estates under $10 million. The idea that taxing 
     the stuffing out of such estates does anything to equalize 
     the distribution of wealth in America is ludicrous. All it 
     does is prevent those with modest assets from becoming 
     wealthy. Academic research has shown that estate taxes 
     squeeze vital liquidity out of small businesses, often 
     forcing them to sell out to larger competitors. Thus the 
     estate tax makes it more difficult for small firms to grow 
     and become large.
       Of course, the same people who support high estate taxes 
     also support aggressive use of the antitrust laws to break up 
     big businesses like Microsoft because they lack competition. 
     Yet the estate tax destroys many potential competitors in 
     their cribs, before they are strong enough to challenge 
     entrenched corporate elites.
       One could, perhaps, make a case for a heavy estate tax if 
     there were evidence a large share of the nation's wealthiest 
     families got that way through inheritances. But this, in 
     fact, is not the case in America and never has been. A 1961 
     study by the Brookings Institution found that only 6 percent 
     of the wealthy acquired most of their assets through 
     inheritance. Sixty-two percent reported no inheritances 
     whatsoever.
       A 1995 study by the Rand Corp. got similar results. It 
     found that among the top 5 percent of households, ranked by 
     wealth, inheritances accounted for just 8 percent of assets. 
     A 1998 study by U.S. Trust Corp. found that among the 
     wealthiest 1 percent of Americans, inheritances were a 
     significant source of wealth for just 10 percent of them.
       The truth is that most of the wealthy in America--even the 
     billionaires--made it themselves. They weren't born with 
     silver spoons in their mouths, living off the industry of 
     their parents or grandparents. Most of the very wealthy got 
     that way because they started businesses and took enormous 
     risks that paid off. According to the latest Forbes 400 list 
     of America's wealthiest people, 251 were self-made.
       And among the modestly wealthy, with fortunes in the low 
     seven digits, many got that way simply because they saved and 
     invested for retirement the way all financial advisers say 
     people should. The T. Rowe Price website, for example, 
     advises that people need $20 in saving for every $1 they will 
     need in retirement over and above Social Security. This means 
     that to have $50,000 per year in retirement income a couple 
     will need $1 million in assets.
       It simply defies logic to tell people they need to save for 
     retirement and then punish them for doing so by threatening 
     to confiscate their estates after death. And it is absurd to 
     tell such people they are the unworthy rich, who merely won 
     life's lottery, when every penny they have came from their 
     own hard work and investment. Yet that is what those fighting 
     estate tax repeal are doing.
       If it were only the very wealthy supporting estate tax 
     repeal, there is no way estate tax repeal would have garnered 
     279 votes, including 65 Democrats. It is precisely because 
     the estate tax is more of a tax on the middle class than the 
     left believes it to be that the repeal effort has gotten so 
     far. It is not Bill Gates and Warren Buffet out there pushing 
     for repeal, but ordinary Americans who just don't want the 
     Internal Revenue Service to be their estate's primary 
     beneficiary.

  Mr. KYL. I will read from part of this piece. He is a senior fellow 
with the National Center for Policy Analysis.

       The latest data from the Internal Revenue Service tells the 
     story. In 1997, more than 50 percent of all estate and gift 
     taxes were collected from estates under $5 million. Only 20 
     percent came from the very wealthy--those with estates more 
     than $20 million.

  He goes on:

       An estate between $2.5 million and $5 million actually pays 
     a higher rate than that paid by estates of more than $20 
     million--15 percent for the former and only 11.8 for the 
     later.

  How can this be, he asks, when estate tax rates are steeply 
progressive, taxing estates of more than $3 million at a 55-percent 
rate? The answer is, that estate planning can eliminate the tax if 
someone wants to spend enough money and enough time in setting up 
trusts and organizing one's affairs for that purpose.
  Those with more wealth obviously take advantage of that, whereas the 
small farmer, the small businessman or someone with a modest stock 
portfolio is not going to do it, and, in fact, doesn't, according to 
the statistics. The Government gets more than two-thirds of all estate 
tax revenue from the estates under $10 million. The idea that taxing 
the stuffing out of such estates does anything to equalize the 
distribution of wealth in America, he says, is ludicrous. All it does 
is prevent those with modest assets from becoming wealthy. Academic 
research has shown that estate taxes squeeze vital liquidity out of 
small businesses, often forcing them to sell out to larger competitors.
  I told the story earlier in this debate about a family in Arizona in 
which that is precisely what happened.

[[Page 13686]]

  Thus, he concludes, the estate tax makes it more difficult for small 
firms to grow and become large.
  He makes another point:

       One could, perhaps, make a case for a heavy estate tax if 
     there were evidence that a large share of the nation's 
     wealthiest families got that way through inheritances. But 
     this, in fact, is not the case in America and never has been. 
     A 1961 study by the Brookings Institution found that only 6 
     percent of the wealthy acquired most of their assets through 
     inheritance. Sixty-two percent reported no inheritance 
     whatsoever.
       A 1995 study by the Rand Corp. got similar results. They 
     found among the top 5 percent of households, ranked by 
     wealth, inheritance accounted for just 8 percent of assets. A 
     1998 study by U.S. Trust Corp. found among the wealthiest 1 
     percent of Americans' inheritances were a significant source 
     of wealth for just 10 percent of them.

  He concludes his piece with this:

       It simply defies logic to tell people they need to save for 
     retirement and then punish them for doing so by threatening 
     to confiscate their estates after death. It is absurd to tell 
     such people that they are the unworthy rich who merely won 
     life's lottery, when every penny they have has come from 
     their own hard work and investment. Yet that is what those 
     fighting estate tax repeal are doing.
       It is precisely because the estate tax is more of a tax on 
     the middle-class that the left believes it to be that the 
     repeal effort has gotten so far.

  It seems to me, that the argument we have to keep this because it is 
important to soak the rich flies in the face of the studies I have 
cited. It is not the rich, in fact, who are getting soaked.
  There has also been a suggestion, and Senator Dorgan made the point, 
there are all kinds of ideas for how to spend the money collected by 
this tax. I am sure those who like to tax and spend, who like to 
redistribute wealth, who believe in the liberal class warfare rhetoric, 
will find lots of ways to spend money. As I pointed out, we already 
have a huge surplus. This doesn't even make a dent in it.
  Their argument is, therefore, we ought to be voting on other issues 
rather than voting on this. One of them was we should vote on the 
Patients' Bill of Rights. We already voted on the Patients' Bill of 
Rights. The other side lost. They don't like to accept the fact they 
lost, but it is called accept majority rule. That is what democracy is 
all about.
  They also want to vote on drug benefits. We are going to have votes 
on drug benefits.
  Everybody in America understands that you do things in order. The 
House passed the estate tax repeal. It is now before the Senate. Let's 
get it done and then we can take up that other legislation the other 
side wants to take up. It will be taken up. Let's do this now.
  What is the reason not to? It all boils down to politics. That is the 
unfortunate proposition.
  There is another point I find very interesting.
  The PRESIDING OFFICER. The Senator has 2 minutes remaining.
  Mr. KYL. Mr. President, I will make this point briefly. One of the 
alternatives suggested by the other side is to increase the amount of 
the exemption. The problem with that is there has never been a way to 
define who qualifies for the exemption in a simple enough way for it to 
be effective. In fact, we have a lot of tax experts who point out that 
few people are able to take advantage of the exemption today because it 
is just too difficult with which to comply.
  In fact, the American Bar Association condemned it because it, in 
effect, created too much malpractice risk for lawyers who could not 
figure out how to make it work for their clients. It is considered the 
most dangerous section of the tax law because of the risk of 
malpractice claims.
  I point out that currently there are 149 tax cases that have been 
decided and reported involving issues relating to section 2032A. The 
IRS has challenged the validity of section 2032A in estate planning, 
and the IRS has won approximately two-thirds of those cases.
  Now section 2057, the successor, is the most dangerous and, if 
changed as suggested here, is going to be even worse, but it will, of 
course, create billions of dollars in legal and accounting fees. That 
is not what we should be all about, Mr. President. We should be about 
saving money for those who would no longer have to spend all of these 
millions of dollars to plan against the possibility of the estate tax. 
That is a huge amount of money that could be saved, about as much as is 
paid in estate taxes, by the way, and we can get back to a situation 
which is fair; namely, there will be a tax, but it will be a tax when 
the property is sold, not when the death occurs.
  That is the basic fairness of this proposition. That is why I urge my 
colleagues to vote for cloture so we can vote for H.R. 8 and repeal 
this unfair death tax.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Alaska is recognized for 10 minutes.
  Mr. MURKOWSKI. Mr. President, I compliment my friend from Arizona for 
his forthright address on this very important subject that certainly 
needs to be resolved by this body.
  As we continue the debate on repealing the death tax, there is a 
fundamental question to which we all must respond: Should the Federal 
Government have the right to confiscate as much as 60 percent of the 
assets that an individual or family business has built over a lifetime?
  That is what this debate is all about, not the class warfare 
arguments we have heard from the other side, to a degree.
  In my view, whether the estate tax is 60 percent or 40 percent or 20 
percent, the estate tax is morally indefensible. It causes businesses 
that have been developed over a lifetime of hard work and sacrifice to 
be broken up just so Uncle Sam can take what some think is the 
Government's rightful share of that business.
  I ask another question: Why do we have an estate tax? It may be 
interesting to go into the background. The reason is quite simple. Up 
until 1913, the Federal Government was primarily financed by tariffs. 
Estate taxes were periodically imposed to primarily finance wars or the 
threat of a war. For example, to finance the Spanish-American War, the 
Federal Government imposed a temporary estate tax in 1898. It was 
repealed in 1902. With the advent of World War I and the drop in tariff 
revenue, Congress adopted an estate tax with rates ranging from 1 
percent to 10 percent.
  What must be recognized about the estate taxes adopted in the 19th 
and early 20th centuries is the simple fact that there were no Federal 
income taxes to finance the Federal Government at that time. So the 
Government looked at estate taxes. As a result, all of the wealth that 
accumulated in estates had never before been taxed.
  By contrast, when an individual dies today, his or her estate 
consists of assets that have been built with aftertax money. The 
elderly woman who dies with several hundred thousand dollars worth of 
Treasury notes in her estate has paid Federal income taxes every single 
year on those notes. The businesses that have been built up over a 
lifetime have paid income taxes and, in many cases, have paid corporate 
taxes to the Federal Government. Why, after accumulating wealth and 
having paid income taxes on that wealth, does the Federal Government 
have the right to confiscate that wealth? I do not think it has that 
right.
  While I believe this is a moral question, I also look at the 
realities of estate planning and conclude that when confronted with an 
unfair and confiscatory tax system, Americans overwhelmingly reject the 
idea that the Government has such a right.
  With proper estate planning, it is clear that many Americans can 
structure their affairs in such a way that they can entirely avoid 
paying any estate taxes. In fact, of the estates valued at more than 
$600,000, more than half, or 55 percent, paid not a single dollar in 
estate taxes. Of the richest Americans, those with estates valued over 
$20 million, nearly one-third paid no estate tax.
  It seems to this Senator that the estate tax has become a bonanza for 
estate planners and tax accountants and an unfair and onerous burden to 
the small businesses and farmers of America who do not have the 
resources nor

[[Page 13687]]

the time to take advantage of sophisticated estate planning schemes. As 
a result, more than 60 percent of the burden of the estate tax falls on 
estates valued at $5 million or less.
  As my colleagues know, the primary asset in many of these smaller 
estates is the family business, whether a small retail or wholesale 
operation or a family farm. When it comes time to pay the estate tax, 
many of these family businesses are forced to liquidate a portion of 
the business or even, in some cases, the businesses themselves; or sell 
the farm to basically pay the taxes. That is unconscionable especially 
when it has taken decades to build a business.
  The ability to pass on the assets that have been built up over a 
generation to another generation is made unrealistic by the tax burden 
associated with the estate tax and, in the case of those who have not 
been fortunate enough to do estate planning, many of these people feel 
they have been unjustly penalized by their Government, and I agree with 
them. When it comes time to pay the estate tax, many of these family 
businesses, as I have indicated, are forced to liquidate.
  The other option for many of these businesses is to saddle a business 
with a large debt to pay the tax. This only heightens the cash-flow 
problems that many small businesses confront as a matter of everyday 
activity.
  Of course, when sophisticated estate planning is available, many of 
these small business estate problems would undoubtedly go away, but 
then we as policymakers should ask ourselves: What is the sense in 
constructing a tax that primarily produces a livelihood to those who 
can advise others on how to avoid the tax?
  I will repeat that because I think it bears a little reflection. We 
as policymakers really must ask ourselves: What is the sense in 
constructing a tax that primarily provides a livelihood to those who 
can advise others on how to avoid the tax? It is a bit ironic.
  The time for the death tax has passed. I hope we will not see a 
filibuster of this measure that will help maintain the growth and 
development of our dynamic economy and protect the small businesses 
that are the backbone of our Nation.
  Seeing no other Senator seeking recognition, 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. DURBIN. 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. DURBIN. Mr. President, I understand under the previous agreement 
that I have up to 1 hour in debate at this point?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. DURBIN. Mr. President, for those who are following the Senate 
proceedings, they are probably aware of the fact that we are involved 
in something called a motion to proceed, which is basically an 
introduction or a leadup to a debate on an issue.
  We are proceeding to an issue on the question of the estate tax. The 
estate tax has been around, I think, since President Theodore Roosevelt 
in the last century. It is a source of revenue for the Federal 
Government that is imposed on the estates of some people after they 
pass away.
  It is the position of the Republican majority that when you come to 
reforming the Tax Code of America, the first and highest priority is to 
deal with the estate tax. The basis for that statement on my part is 
the fact that it is the first matter of any consequence in terms of its 
cost that is being brought to the floor of the Senate by the Republican 
leadership.
  So they believe, looking at the Tax Code--that affects literally 
every American, every individual, every family, every business--and 
searching out an inequity in it, that the estate tax is the source of 
an inequity, an unfairness, and it should be the first thing that we 
address if we are going to reform the Tax Code.
  That is an interesting observation because when you consider how many 
Americans are affected by the estate tax, it turns out that they are 
literally very few in number.
  In 1997, the estates of fewer than 43,000 people in America had to 
pay any Federal estate tax. That is 43,000 people out of 2.3 million 
who passed away in that year. So less than 2 percent--1.9 percent--of 
the estates of those passing away in the year 1997 had any obligation 
to pay the Federal estate tax--43,000 people.
  What the Republicans have suggested as a way to eliminate this estate 
tax is to take money out of our anticipated surplus in the budget to 
make sure that those 43,000 in the future will not have to pay any 
estate tax.
  What does this cost us out of the surplus? In the first 10 years or 
so, the estimates are somewhere in the $100-$150 billion range. But in 
the next 10-year period of time, it grows dramatically, and the cost of 
this tax relief for literally 1.9 percent of the people who die in a 
given year is some $750 billion.
  Mr. LOTT. Mr. President, will the Senator yield?
  Mr. DURBIN. I am happy to yield to the majority leader.
  Mr. LOTT. I apologize for the interruption, but I was going to make 
an inquiry about the time schedule. I heard the Senator indicate he had 
1 hour under an agreement. Are there other time agreements that have 
been entered into on each side?
  Under the rule, you can get up to an hour. So we never got a time 
limitation?
  Then, also, I believe earlier we had indicated we would go to the 
Department of Defense authorization bill tonight between 6:30 but not 
later than 7 o'clock. Has there been any agreement with regard to that?
  The PRESIDING OFFICER. The Chair is not aware of one.
  Mr. LOTT. I thank the Senator for yielding so that I could get some 
feel for the time. I will discuss it with the leadership on the other 
side. I still hope that while we have had debate on both sides today, 
for the most part on the death tax issue, we would still be able to 
keep our verbal commitment to Senator Warner and Senator Levin that not 
later than 7 o'clock tonight we will go to the DOD authorization bill 
and see if we can make some progress on that.
  Again, I appreciate the Senator for allowing me to interrupt him to 
get a clarification on that. I thank the Senator.
  Mr. DURBIN. Mr. President, I was happy to yield to the majority 
leader to clarify the procedure.
  Back to the point I was making. We are dealing with an estate tax 
that affects very few Americans--people in higher income categories. 
The decision has been made by the Republican leadership in the House of 
Representatives and the Senate that if we are going to change the Tax 
Code as it affects any American, any individual, any family, any 
business, the first and highest--obviously one of the most expensive--
priority is to eliminate this estate tax.
  I find that curious because I think if you went to the American 
people and said to them: When it comes to the taxes that you are likely 
to pay in your life and those that you believe are particularly unfair, 
would you believe that the estate tax ranks high on that list? It is 
not likely they would. They may object to taxes in general. They may 
object to this tax in particular. But the likelihood that the average 
American, even one who has done pretty well in life, is going to end up 
paying the Federal estate tax is minimal. Less than 2 percent of those 
who die each year pay the tax. If a spouse dies and leaves all the 
property to another spouse, there is no taxable event--no Federal 
estate tax is paid.
  When you consider the fact that 98 out of every 100 people who die 
each year face no Federal estate tax, the obvious question is, Why is 
this the highest priority when it comes to the Republican agenda for 
tax reform? Wouldn't you think it would be a tax that would help out a 
lot more people than, say, 43,000 in 1997, some of the wealthiest 
people in our country? Wouldn't you think it might be a tax that 
affects the payroll tax that hundreds of thousands of workers pay each

[[Page 13688]]

week? Or taxes that businesses pay? Or changing our Tax Code so a 
businessman can offer health insurance to his employee, for example? 
No, it is not. It turns out, when they drew up their list of 
priorities, the Republican leadership came to the conclusion that the 
most important group to single out for assistance would be the 
wealthiest among us, with this estate tax.
  I might tell you, this is not a cheap, inexpensive undertaking. To 
think we are going to spend some $750 billion for this estate tax 
reform that is being asked for by the Republican side means, frankly, 
that money will not be there to be spent for other purposes, which is 
the reason I am on the floor tonight to discuss this estate tax in the 
context of choices that are to be made, decisions that are to be made. 
When the Republicans drew up the line of Americans who needed help the 
most, they put in the front of the line, in the first place in the 
line, the wealthiest in our country. That is not new. That is what 
George W. Bush has proposed when it comes to tax cuts: First help the 
wealthiest. When it comes to their agenda on the floor of the Senate, 
the Republican leadership has said: Before you do anything else, help 
the wealthiest people in our society.
  Frankly, I come to this argument with a different perspective. I 
believe our obligation is to the entire Nation, not only to those who 
are financially articulate; those who are the largest contributors; 
those who have made the most of their lives by making the most of their 
income. It appears that I see this somewhat differently than those who 
are on the Republican side of the aisle.
  Let me concede at the outset that the estate tax should be changed. 
The estate tax, as it is currently written, has not kept pace with 
reality. We have not increased the exemption under that estate tax as 
we should have, and we on the Democratic side are going to propose, as 
part of a reform of the estate tax, something I think will be of great 
assistance to the vast majority of families who are barely qualifying 
to pay an estate tax.
  This is what we are going to propose on the Democratic side. We are 
going to increase the general exemption from $1.35 million per couple 
to $2 million per couple by 2002, and $4 million by 2010. That means 
that by 2010, if your estate is worth $4 million, you will not pay a 
penny in Federal estate tax. How many people will be eliminated from 
Federal estate tax liability because of the Democratic proposal? Two-
thirds of the estates currently subject to tax would not be subject. So 
we are really taking those who are on the lower end of liability and 
removing that liability.
  We go a step further because there is a legitimate concern in 
Illinois and around the country that many family farms, for example, 
cannot be passed on by a surviving spouse to the children; family 
businesses, small businesses that have been created cannot be passed on 
to children to carry on. I am sensitive to that. I have met a lot of 
farmers and a lot of businesspeople who have said: This is something we 
built our lives around, our family built their lives around. Then when 
we die, the value of the business is such we could not leave it to our 
kids.
  I think we have to find a way to deal with it. The Democratic 
alternative does. Let me tell you how. We increase the family-owned 
business exemption from $2.6 million per couple to twice that of the 
general exemption of $4 million per couple by 2002; $8 million by 2010. 
The net result of it is this: This will remove virtually all family-
owned farms from liability under the estate tax and 75 percent of 
family-owned businesses from the estate tax rolls.
  I think this is a realistic and honest reform of the estate tax. I 
can go back to my home State of Illinois and say, for individuals as 
well as family farms and small businesses, we heard their pleas for 
assistance and relief and we responded in a way that I can defend. The 
cost of our approach, over a 20-year period, is some $300 billion. The 
cost of the Republican approach is $750 billion because, you see, they 
go all the way. They take the tax off virtually everyone. So if people 
have been so fortunate, living in this country, prospering in this 
country, to die with estates that are worth billions of dollars, then, 
frankly, the Republicans say they should not owe this country a nickel; 
at this point we are going to take the tax off of them; we are going to 
give them a tax break.
  Let me show some charts to illustrate this tax and its impact. This 
is estates subject to the current estate tax--97 percent of the current 
nonfarm, non-small business estates pay no estate tax; 3 percent of 
small businesses and family farms might face some liability. So it is a 
tax, as I indicated earlier, that affects very few.
  Look at this, too, in terms of the share of the estate tax burden. 
The bottom 98 percent of people who pass away in this country pay zero 
in Federal estate tax. The top one-tenth of the wealthiest 1 percent of 
estates in America pay 50 percent. We are talking about the highest 
rollers in America, the people who have done the best, who would end up 
paying over 50 percent of the income that comes to this country from 
estate taxes. Those are the people the Republicans say should be first 
in line when we talk about tax relief.
  I see it a different way. Let me tell you some of the things we might 
consider doing instead of providing this kind of tax relief to people 
who are in such high-income categories.
  We could take the difference between the Democratic and Republican 
plan, some $450 billion over 20 years, and pay down our publicly held 
national debt. I think that is of value to everybody in this country, 
rich and poor alike, families, individuals, businesses--big business 
and small business. Why? As the Government borrows money to pay down 
its debt, it is money taken out of the system that could have been used 
for the creation of businesses and capital creation. As the Government 
borrows money, it competes for available funds in the marketplace and 
raises interest rates. As we pay down our national debt, we reduce the 
burden of taxpayers to service that debt and, frankly, give to our 
children the very best legacy. We do not leave them the mortgage that 
we incurred for our debts during our lifetime.
  Many of us believe that is a more responsible thing to do than to 
give a tax break under the estate tax to the wealthiest people in this 
country. The Republicans disagree. They say the highest priority is not 
bringing down our national debt; the highest priority tax relief is for 
people who are literally making millions of dollars a year.
  Let me give an example. The Republican estate tax bill gives the 
Forbes magazine's 400 richest Americans, read this now, a $250 billion 
windfall tax break. Money that could have been spent to reduce our 
national debt, to say to future generations we are going to take that 
burden off your shoulders--instead is being given to literally the 
wealthiest people in America.
  That is the idea of tax justice being propounded on the Republican 
side of the aisle. I don't think it works. I don't think it is 
consistent with the values and ethics of most American families.
  There are other things that can be done and may not be accomplished 
because of this Republican strategy to eliminate the estate tax in its 
entirety. Let me address one that is so very important to so many 
people. It is the prescription drug benefit under Medicare. When the 
Medicare program was created in the 1960s, President Lyndon Johnson did 
something which literally changed America. He decided, with the help of 
the Democratic Congress, that we would create a health insurance plan 
for the elderly and disabled in America.
  At that point in time, they were on their own. If they had the 
resources to pay for health insurance, or they were wealthy enough not 
to care, they were taken care of. But the vast majority of people going 
into retirement were really vulnerable. They no longer had a paycheck--
maybe a Social Security check, but they had little else to turn to. 
When they faced a huge hospital bill or a doctor bill, they were on 
their own. So we created Medicare.
  As good as Medicare has been--and it is a proven success because 
seniors are living longer--it didn't include prescription drugs. You 
know what that means today? When you go to a doctor

[[Page 13689]]

and say, ``I don't feel well,'' the doctor says, ``Let me write out a 
prescription. Take the pills and see if it helps.'' So you go to the 
drug store and get the medicine. Maybe it will help, and in most cases 
it does. But the cost of those drugs continues to increase. A lot of 
seniors on fixed incomes can't afford to pay for the prescription 
drugs.
  I have had hearings in the State of Illinois, and people have told 
stories that are sad but true, where they have had to make hard 
choices. There were seniors who were literally deciding whether or not 
to fill their prescriptions or to fill their grocery orders; seniors 
who would go into a supermarket and go to the pharmacy first to decide 
whether or not they could afford their medicine before they shopped for 
food; seniors who didn't fill prescriptions because they couldn't 
afford it, or they may take half a pill instead of what they were 
supposed to take because they couldn't afford to pay for the full 
prescription. That is a reality of life in America today.
  When the Republicans say our highest priority has to be the 
elimination of an estate tax, which means a $250 billion windfall tax 
break to the 400 richest Americans, I think they have it all wrong. I 
think our highest priority should be a prescription drug benefit. After 
we have paid down this national debt, we should take a portion of it 
and put it in a prescription drug benefit under Medicare. That will 
help more people. It is certainly going to improve the quality of their 
lives.
  If I had to list my highest priority after paying down the national 
debt, it would be to help with the prescription drug benefit. Now, the 
Republicans in the House proposed their own version of a prescription 
drug benefit. It is clearly something supported by the drug companies 
and pharmaceutical industry because it would allow them to continue to 
charge their high prices. What it would say is that basically they 
would subsidize people buying insurance to pay for their prescription 
drugs. But when you take a close look at it, it falls apart.
  First off, the insurance industry doesn't offer that kind of 
prescription drug insurance by itself. If they do, it is extremely 
expensive. The reason they don't offer it is something called ``adverse 
selection.'' If you happen to be very ill and need prescription drugs, 
you would go and try to buy such a policy. Of course, insurance works 
when people who are buying the insurance include not only those who 
need a payout immediately, but those who are going to pay premiums 
regularly until they do. Well, for that reason, the insurance industry 
already has said the Republican plan is not likely to ever result in 
any help to any senior citizens.
  Plus, there are a lot of people who have misgivings about turning 
over prescription drugs and their future to insurance companies. They 
can recall what many of these same insurance companies did when it came 
to HMOs and managed care. They forgot about the patient and even forgot 
about the doctor. We had insurance clerks making decisions on health 
care. Frankly, the losers ended up being patients and their families.
  I recall going to a hospital in Springfield, IL, and doing rounds 
with a local doctor. He made a decision that a woman should stay in the 
hospital over the weekend before important and delicate brain surgery 
on Monday. He had to call the insurance company in Nebraska and ask for 
permission for her to stay in the hospital. The insurance company clerk 
said: No, send her home. The surgery is not until Monday.
  He said: She is elderly and frail, and she loses her balance; I don't 
want her to hurt herself, and I want her here Monday for this important 
surgery.
  The insurance clerk was overruling the doctor. The doctor hung up the 
phone and said: Leave her in the hospital and I will appeal this later 
on.
  That is the kind of insurance company situation the Republicans want 
to turn to when it comes to prescription drugs. They want these same 
insurance companies to decide whether or not you get your prescription 
drugs filled. Well, we have seen what they have done with managed care 
and with HMOs. It is no wonder that a lot of Americans are skeptical 
about the Republican approach to this. They would much rather see a 
plan for prescription drugs under Medicare, one that is universal and 
covers everybody. Medicare currently covers everybody. I also recall 
that in the last couple years some 1.3 million seniors have seen their 
Medicare HMO plans canceled by the insurance companies. So they are 
high and dry and are looking for insurance coverage.
  When the Republicans say we can trust the insurance companies when it 
comes to prescription drugs and health care, human experience tells us 
otherwise. These companies make decisions based on the bottom line 
profit. These companies will cut off people in terms of their coverage 
when they no longer think they are turning a profit, and they will 
leave the people high and dry.
  The other thing that is fundamentally flawed in the Republican 
approach on prescription drug benefits is they don't even address the 
question of pricing. You can create a prescription drug benefit that 
looks beautiful on paper. It will be easy to sit down with any number 
of Americans and come to that conclusion. But if you don't address the 
increasing cost of prescription drugs, it is a guarantee that that 
benefit and that program will fail. The Republicans do not even address 
that.
  If we bring this program under Medicare, as the Democrats have 
suggested, we will have bargaining power. What is that worth when it 
comes to prescription drug benefits? You have heard stories, as I have, 
about people who go to Canada and buy the same drugs for a fraction of 
the cost in the United States. They are exactly the same drugs, made in 
the U.S., approved by the Federal Government, sent to Canada, where 
they charge a fraction of the cost. Why is this? It is because of the 
bargaining power of the Canadian Government. They sit down with the 
drug companies and they say: We are not going to agree to a price 
increase every month or to the prices going through the roof. If you 
want your drugs as part of our health care system in Canada, you will 
keep the prices under control.
  Do you know what. The same drug companies--American drug companies--
do just that. They keep prices under control in Canada, but they charge 
Americans skyrocketing drug prices.
  The Republican plan on prescription drug benefits doesn't even 
address this. If you don't address the pricing of drugs, frankly, you 
are offering no benefit whatsoever--no prescription drug benefits. Do 
Americans want it? You bet they do, in overwhelming numbers. That is a 
high priority. But to take a look at this, the highest priority for the 
Republican leadership in the Senate is not prescription drug benefits 
for the elderly and disabled; it is the elimination of the estate tax, 
which gives the Forbes magazine 400 richest American families a $250 
billion windfall tax break.
  Which would help America more? Prescription drug benefits so seniors 
can remain independent and strong and healthy for a longer period of 
time or a windfall tax break to the wealthiest people in this country? 
I think the answer is obvious. But it really betrays the statement from 
the Republican side that they are in tune with the American people when 
they would come up with an estate tax change of such magnitude and 
which is so generous to the wealthiest among us, when the American 
people are looking for something much different from this Congress.
  We want to make sure the drug benefit is available to everybody. We 
want to make sure you have your choice, that your doctor will be able 
to prescribe the necessary drugs for you and that they will be filled. 
We want to make sure that it is done under Medicare.
  We think the effort of the Republicans to take this out of Medicare 
may be the beginning effort to basically tear down Medicare. This has 
never been a program the Republicans have cheered over. When we want to 
try to protect Medicare, it is usually a lonely voice on the Senate 
floor. They have not been willing to come forward. They

[[Page 13690]]

understand it was a creation of Democratic leadership, and I guess they 
are not listening to their seniors and disabled at home who understand 
the critical importance of this program.
  There are other things we can be doing in terms of the Tax Code that 
would help real people and families. One of them is the full 
deductibility of health insurance. The fact that self-employed people 
in this country cannot fully deduct their health insurance premiums is 
what I consider one of the major injustices in the Tax Code. If you 
start a small business and you want to provide health insurance for 
yourself, your family, or for some of your employees, you might find 
yourself in a position where you cannot deduct the full cost of the 
health insurance premiums from your taxes. Large corporations can; 
small businesses can't. Big corporations can do it; family farmers 
cannot.
  That doesn't make any sense. It is unjust. It is a loophole in the 
Tax Code which should be changed to protect the small businessman and 
to protect the family farmer and the people who work for them.
  If I draw up a list of priorities when it comes to tax reform, I 
don't start off with the 400 richest Americans and give them a $250 
billion windfall tax break. Instead, I deal with real families, real 
businesses, and real people who are trying to find health insurance to 
cover members of their family.
  I also think we should be considering a tax credit for small 
businesses that offer health insurance to their employees. We know in 
America that there are some 4 million people who have no health 
insurance whatsoever. I think that is a scandal. Frankly, in a nation 
as prosperous as we are and at a time when we are talking about 
literally trillion-dollar surpluses, it is incredible to me that we 
don't have the political will on a bipartisan basis to start talking 
about health insurance coverage for all sorts of American families and 
businesses. But we haven't done it. Instead, we hear from the 
Republican side of the aisle that before we talk about health 
insurance, before we start talking about tax credits to businesses, 
before we start talking about prescription drugs, let's take care of 
the richest people in America. That is their highest priority. That is 
the group they put on the front of the line. We see it differently on 
the Democratic side. We believe there are things we can do to improve 
the quality of life of many people.
  Let me also tell you about another proposal on which I prepared 
legislation. It is called caregivers insurance. We have a plan now for 
children across America. Many of the States are implementing it. If 
children don't have health insurance, we help States pay for that 
health insurance. That is a good plan. I voted for it. I supported it. 
I think we should extend it to the next phase--to what I call 
caregivers insurance. When I make reference to caregivers, I am talking 
about people who work in day-care centers, those who are literally in 
charge of our children and grandchildren every single day. The people 
who work for a minimum wage, or slightly more, have no benefits. There 
is massive turnover in their jobs. I think we ought to be talking about 
extending health insurance for those caregivers in day-care centers, 
those who work in personal attendance of the disabled, home health care 
workers who take care of people so they can stay home and not have to 
go to nursing homes, and for those working in convalescent nursing 
homes.
  Those are caregivers who have very little benefits. Yet we trust them 
with our parents, with our grandparents, with our children, and 
grandchildren.
  I think that is the kind of thing many American people would like to 
see. It will help them pay for child care. It won't raise the cost. We 
will provide the health insurance through a program of our own at the 
Federal level. I would like to vote on it. I think it would be well 
received. I might not get that chance because the vote we will face in 
the next few days is whether or not, instead of helping caregivers who 
get up and go to work every day and take care of our kids and parents, 
we are going to give to the 400 richest Americans a $250 billion 
windfall tax break with the Republican proposal to eliminate the estate 
tax.
  Mr. DORGAN. Mr. President, I wonder if the Senator from Illinois will 
yield.
  Mr. DURBIN. I would be happy to yield.
  Mr. DORGAN. Mr. President, I was interested in the discussion offered 
by the Senator from Illinois. In fact, I was interested in the 
discussion earlier by the Senator from Arizona, Mr. Kyl, who was 
complaining about some comments I made earlier in the day.
  As I understand the Senator from Illinois, he indicated earlier--and 
I did earlier today as well--that he would support an amendment that 
would effectively say we will repeal the estate tax for all small 
businesses and family farms up to $8 million. So there is no 
disagreement in this Chamber on that. We will repeal the estate tax for 
those estates up to $8 million. The difference is the majority party 
says that is not enough. We want to repeal the estate tax for estates 
over $8 million as well.
  The Senator from Illinois seems to be saying, as I said this morning, 
that the loss of revenue by repealing the estate tax for the wealthiest 
estates in this country is something that ought to be measured against 
other alternatives, such as providing a tax cut for middle-income 
people, for example, or a range of investments that might be made to 
strengthen this country.
  The Senator from Arizona, I noted, was saying: Well, people who think 
like that are big-spending liberals.
  Who are the real big spenders? They are the folks who say: You know, 
we ought to spend money by deciding that a $1 billion estate should be 
relieved of the burden of having any estate tax at all, and decide that 
relieving an estate tax burden from the largest estates in this country 
is more important than investment in education, it is more important 
than a middle-income tax cut, it is more important than paying down the 
Federal debt.
  Who are the big spenders, I ask the Senator from Illinois?
  Mr. DURBIN. I think the Senator hit the nail on the head. What the 
Republicans are prepared to do is spend our surplus by providing tax 
breaks for the wealthy people in this country. The Senator and I happen 
to see it differently. We believe we can reform the estate tax and 
basically protect small businesses, family farms, and estates of people 
leaving $8 million, and still have money left for valid programs in 
this country. It will help a lot of working families and family 
farmers.
  Mr. DORGAN. Isn't it a fact, more than reforming the estate tax, that 
the Senator from Illinois and the Senator from North Dakota and others 
would say let's effectively repeal the estate tax for estates up to $8 
million for small businesses or family farms? In fact, the Senator from 
Illinois is saying let's repeal the estate tax to that level. But he 
doesn't want to go the next step as proposed by the majority party of 
saying no, that is important to do, but let's do something that is even 
more important. Let's make sure the repeal of the estate tax burden 
applies to people who leave estates of hundreds of millions of dollars.
  Is that a priority? It seems to me that it ought to be measured 
against a range of other things that we ought to do.
  I just make the point that I always smile a little when I hear these 
pejoratives about big spenders. It is sort of yesterday's news. It so 
happens that folks standing on this side of this Chamber are the ones 
who cast the tough votes that put this country back on track of getting 
rid of the burgeoning Federal deficits a few years ago when there was 
well over $300 billion in Federal deficits, and now, of course, to 
balance the budget. We cast the tough votes to do that. I don't need to 
hear much from people about who the big spenders are. We put this 
country back on track.
  There are those who insist the largest estates in America should be 
relieved of their estate tax burdens and are suggesting that those of 
us who believe there are other alternatives that might be more 
appropriate--more middle-income tax relief, or other things--are called 
big spenders. I think that is

[[Page 13691]]

yesterday's language in a wornout discussion.
  Mr. DURBIN. I thank the Senator from North Dakota.
  Mr. LOTT. Mr. President, will the Senator yield?
  Mr. DURBIN. Without losing the floor, I would be happy to yield to 
the majority leader.
  Mr. LOTT. I thank the Senator from Illinois for yielding this time 
for a unanimous consent request.


                   Interior Appropriations Amendments

  Mr. President, I ask unanimous consent that the following amendments 
be the only first-degree amendments in order to the Interior 
appropriations bill and subject to relevant second-degree amendments.
  Those amendments are as follows:

       B. Smith, Relevant;
       B. Smith, Relevant;
       Snowe, Relevant;
       Snowe, Relevant;
       Gramm, Relevant;
       Helms, Relevant;
       Abraham, Gas tax;
       Inhofe, NEA;
       Collins, Salmon;
       Collins, SPRO authority;
       Ashcroft, Methamphetamine Lab cleanup;
       Sessions, Rosa Parks Library;
       Sessions, Bonsecor Wild Life Refuge;
       Sessions, Indian gambling;
       Roth, Lewis Maritime Museum;
       Crapo, Back country air stripes;
       Brownback, Historic markers;
       Thomas, Funding for payment in lieu of taxes;
       Warner, Louis & Clark expedition bicentennial celebration;
       Warner, Fish and Wildlife land purchase;
       Grams, Windstorm expenses;
       Hatch, Four corners monument;
       Gorton, Technical;
       Gorton, Technical;
       Gorton, Relevant;
       Gorton, Relevant;
       Gorton, Relevant;
       Gorton, Relevant;
       Gorton, Relevant;
       Craig, Roadless area rule making;
       Domenici, Hazardous fuels reduction;
       Domenici; Forest Service operations;
       Domenici, New Mexico water;
       Domenici, Park Service construction;
       Grassley, Management of Mississippi River Island;
       Grassley, Fish and Wildlife land exchange;
       Grassley, Mississippi River Island land exchange;
       Stevens, Relevant;
       Stevens, Relevant;
       Stevens, Direct conveyance of homestead to Dick Redmon;
       Stevens, Direct payment to city of Cray;
       Stevens, Accrual of interest on escrow;
       Stevens, Subsistence dollars to Alaska
       Stevens, Modify Weatherization Program;
       Lott, Relevant to any on list;
       Baucus, Forest Service funding;
       Baucus, relevant;
       Baucus, relevant;
       Bingaman, Hazardous fuels;
       Bingaman, Four Corners (w/Hatch);
       Boxer, Pesticide use in National Parks;
       Breaux/Landrieu
       Cane River National Heritage area;
       Bryan, Timber Sales;
       Bryan, Forest Service land conveyance;
       Bryd, Manager's amendment;
       Bryd, DoE reprograming;
       Bryd, Relevant to any on the list;
       Conrad, Relevant;
       Conrad, Relevant;
       Daschle, Funds for United Sioux Tribes;
       Daschle, Relevant to any on the list;
       Dodd, Relevant;
       Dorgan, Relevant;
       Dorgan, Relevant;
       Dorgan, Relevant;
       Durbin, Strike section 116 grazing permits;
       Durbin, Wildlife Refugee in Kankakee River Basin;
       Edwards, Land acquisition;
       Edwards, USGS flood gauges;
       Edwards, Drug control on public lands;
       Edwards, Crime control on public lands;
       Edwards, Relevant;
       Feingold, Relevant;
       Feingold, Relevant;
       Feingold, Relevant;
       Feingold, Relevant;
       Feingold, Relevant;
       Feinstein, Sequoia National Monument;
       Feinstein, Relevant;
       Johnson, Relevant;
       Johnson, Relevant;
       Johnson, Relevant;
       Kerrey, Relevant;
       Kerry, American Rivers--Sec. 326;
       Landrieu, National Center for Technology and Training;
       Landrieu, Oakland Cemetery funding;
       Levin, Land acquisition, NPS;
       Levin, NPS operations;
       Lieberman, Northeast Home Heating Oil;
       Reed, NEA;
       Reed, Weatherization;
       Reid, Relevant to any on list;
       Torricelli-Reed, Urban parks;
       and, Wellstone, #3772 Minnesota Forest;

  The PRESIDING OFFICER (Mr. Brownback). Is there objection?
  Without objection, it is so ordered.


                  DEPARTMENT OF DEFENSE AUTHORIZATION

  Mr. LOTT. Mr. President, I ask unanimous consent that no later than 
6:30 p.m. tonight, notwithstanding rule XXII, the Senate resume 
consideration of the Department of Defense authorization bill. I 
further ask unanimous consent that any votes ordered with respect to 
the amendments offered and debated tonight occur beginning at 11:30 
a.m. on Wednesday, with no second-degree amendments in order, where 
applicable, and 2 minutes prior to each vote for explanation, and that 
there be 2 hours prior to the 11:30 a.m. votes to be equally divided 
prior to proceeding to H.R. 8.
  To sum up, we would complete the remaining debate time between now 
and 6:30 on the death tax issue. Then we would go to the Department of 
Defense authorization bill for debate on amendments tonight. Those 
votes on amendments, if any are required, would occur at 11:30.
  When we come in at 9:30 tomorrow, we would have 2 more hours for 
debate time on the estate tax/death tax issue with no second degrees in 
order, and there will be 2 minutes prior to each recorded vote at 
11:30, prior to the vote.
  Mr. REID. Reserving the right to object, Mr. President, first of all, 
we are advised that we have a number of Senators who will have 15 
minutes each to speak in the morning. I don't think we need to agree to 
the motion. We consent to going to H.R. 8, if that is OK with the 
leader.
  Mr. LOTT. Prior to the agreeing to the amendments, to proceed, which 
could be done.
  Mr. REID. We want to do it by consent rather than agreeing to the 
motion.
  Mr. LOTT. Mr. President, I modify it to say that there will be 2 
hours prior to 11:30 a.m., with 2 minutes equally divided before votes 
to be equally divided as we go to H.R. 8.
  Mr. REID. Reserving the right to object, we just received a phone 
call. I think this is a good agreement, but I need to call a Senator. I 
say to the leader, if I handle this, the leader doesn't need to be on 
the floor and I can agree to the unanimous consent request proposed.
  Mr. LOTT. I withhold my unanimous consent request at this time. I 
apologize for interrupting speakers. If Senator Reid can make this call 
and we can renew this request momentarily, I would like to do it. I 
need to go to a retirement event for Senators and House Members. 
Hopefully, we can complete this momentarily.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. As I mentioned earlier, the issue before the Senate is 
the Republican proposal to abolish the estate tax. This is a tax which 
is paid by less than 2 percent of the people who die in America. Those 
who pay it are in the very highest income categories. When the 
Republican leadership put together its list of priorities of the most 
important things to be done under the Tax Code, they said the first and 
most important thing to do, and one of the most expensive things we can 
do, is to relieve the wealthiest people in America from paying an 
estate tax. That, to me, raises a question of priorities.
  Who will be first in line on the Republican side of the aisle to 
benefit from this congressional action? According to the Republican 
leaders, the first in line will be the people who are first in line in 
the world--the wealthiest in this country, the wealthiest who will 
benefit from the elimination of this estate tax.
  The New York Times editorial on June 11 of this year summarizes the 
impact of this Republican proposal:

       Seldom have so many voted for a gargantuan tax cut for so 
     few. Abolishing the estate tax would have severe 
     consequences. When fully phased in, the bill would cost about 
     $50 billion a year. Repeal would also threaten the Nation's 
     finest universities and museums. Wealthy families no longer 
     facing estate tax cuts might well decide to leave more money 
     to their families, and less to charity.
       The Democrats offered a more than reasonable alternative. 
     Yet the House swatted the

[[Page 13692]]

     alternative aside, demonstrating that a large majority of 
     Members were less concerned with rescuing family farms and 
     businesses than with enriching their wealthiest supporters.

  Another editorial worth making part of the Record is from USA Today 
on June 9:

       But behind the caterwauling about the ``death tax'' the 
     truth is quite different. Most people will never be affected 
     by inheritance taxes: 98 percent of all estates aren't big 
     enough to be liable. Even among the elite 2 percent, very few 
     are farmers and small businesses. But there are better ways 
     to spend $50 billion a year than handing it to the heirs of 
     the wealthiest people in the country. Take your pick: Middle 
     class tax cuts, improved health benefits for seniors or 
     paying down the national debt for starters.

  That is what this is about.
  The question we have to ask ourselves, Whose side are we on? Are we 
on the side of the wealthiest people in this country in terms of 
helping them out or will we be on the side of businesses, family farms, 
and families who are struggling to get by?
  Another topic we are debating that relates to this debate on the 
estate tax is something called an H-1B visa.
  Mr. LOTT. I apologize.
  Mr. DURBIN. I am happy to yield to the majority leader.
  Mr. LOTT. Mr. President, I renew my unanimous consent request.
  The PRESIDING OFFICER. Is there objection?
  Mr. REID. No objection.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN. The H-1B visa is a request by many people in private 
industry to increase the number of those who can come into the United 
States by the tens of thousands to fill well-paying, highly skilled 
jobs. The argument of these businesses is that they can't find workers 
in America with the skills necessary. We find these arguments coming 
out of Silicon Valley and similar high-tech areas. They just cannot 
find skilled American workers to fill the jobs. They ask us to change 
the law and allow immigrants to come from other countries to fill these 
jobs. They have a legitimate concern.
  Many Members believe we should do something to help them. If the 
alternative to bringing in people working in this country is shipping 
the jobs overseas, that certainly doesn't do our economy any good. 
Isn't it interesting that we are considering the shortages in skilled 
workers and allowing immigrants to come in to fill these jobs, instead 
of discussing as part of a program a way to improve education and 
training in America so we have these skilled workers?
  If we are going to improve that education and training, it will cost 
money. Instead of putting the money into education to help kids go to 
college and to get special skills, the Republicans think we should put 
the money into tax relief for the wealthiest people in this country. 
That is the reprise we hear over and over again on the Republican side: 
Just make the wealthiest people in this country wealthier and America 
will be a better place to live.
  I think the wealthy people can take care of themselves. They do 
pretty well. The people who need a helping hand are families trying to 
put their kids through school.
  One of the tax benefits which most of us on the Democratic side 
support, one that has been proposed by President Clinton, allows 
working families to deduct the cost of college education from their 
taxes. That means if we have a tuition bill of $10,000, the Federal 
Government will basically help pay for college education expenses up 
to, say, $2,800 a year. That is a direct helping hand from the 
Government. It doesn't go to the wealthiest among us but to people who 
are struggling to make sure their kids have a better chance in this 
world than they had.
  I have often thought to myself, when a new child is born into a 
family, after everybody has come around and admired the child and tried 
to figure out if he or she looks like mom or dad or grandma or grandpa, 
one of the things usually said is: Boy, by the time this little one 
reaches college age, how will we ever afford to pay for it? That is a 
real conversation I have heard over and over again.
  Seldom, if ever--in fact, never--have I heard families say, boy, this 
little one here, I am worried about how much of my estate I will be 
able to leave when I die. People think in terms of the needs of the 
living. And the needs of the living include college education. On the 
Republican side, this is not a priority. It is certainly not as 
important a priority as giving a tax break to those with the most 
extensive and largest estates in America.
  I can recall back in the late 1950s when the Russians launched 
Sputnik. There was a fear in the United States that they had a 
scientific advantage on the U.S. and that this advantage that launched 
the satellite into space might lead to a military superiority. Congress 
decided for one of the first times in its history to provide direct 
assistance to students. We created something known as the National 
Defense Education Act. The reason I recall that so fondly is because I 
happened to be one of the beneficiaries of that Federal program. It was 
a loan program. You could borrow money to go to college, complete your 
degree, and pay it back to the Government. It was the best deal I ever 
had. I like to think the money I received was money well spent for me 
and my family and perhaps for the country.
  Isn't this a time in our history where we ought to be stepping back 
and, instead of trying to come up with an estate tax break for the 
wealthiest families in America, shouldn't we be thinking about ways to 
help families across America pay for college education and training so 
we in America have a workforce ready for the 21st century? I think 
education should be the first priority when it comes to tax breaks. I 
don't think the first priority should be the estate tax repeal that the 
Republicans have proposed. I think the wealthiest among us, as I said 
earlier, can take care of themselves. If we can find ways to help 
families pay for college education, then I think we will be doing 
something meaningful, something that is responsive to families, to what 
families across America are looking for. As I said earlier, the basic 
question is, Whose side are we on in Congress?
  I also find it interesting that we have the time, whatever it takes, 
to spend debating and passing tax relief for wealthy Americans, but no 
time to address the question of an increase in the minimum wage. There 
are 350,000 people in my home State of Illinois who got up this morning 
and went to work making a minimum wage. Some of them are teenagers in 
their first jobs, but, sadly, many of them are folks who are working 
one, two, and three jobs trying to keep the families together. For 
years, literally for years, the Democrats have been asking for an 
increase in the minimum wage across America. Mr. President, $5.15 an 
hour is not enough. It is not enough to raise yourself, let alone a 
family. Unfortunately, the Republicans have opposed our efforts to 
increase the minimum wage by $1 over a 2-year period of time.
  They say they are fearful of the impact it might have if we give 
people something closer to a living wage, but they obviously have no 
fear in spending $750 billion in a tax break for the wealthiest among 
us, people who are literally making, on average, over $190,000 a year 
in the year of their death. Those are the ones the Republicans believe 
need help from Congress. Those who get up every morning and go to work, 
cleaning tables in a restaurant, making the food in the kitchens, 
making the beds in the motels, watching our kids in day-care centers, 
the Republicans believe they do not need an increase in their minimum 
wage.
  What a difference in priorities. I would put those folks who are 
working hard for America and doing the right thing in the front of the 
line. The Republicans put the wealthiest, those who have made the most 
in this great country of ours, as the highest priority when it comes to 
action by Congress.
  Time and again, when given choices between increasing health care for 
workers and their families, giving tax benefits to small businesses so 
they can offer health insurance, giving people the means to pay for the 
college education of their kids, offering such things as long-term care 
insurance or

[[Page 13693]]

help for the care of their aging parents, the Republicans have said: 
No, it is not on our priority list. Our priority list starts with the 
wealthiest people in America, the people who Forbes magazine identified 
as the 400 richest families in America who would benefit from the 
Republican estate tax repeal to the tune of $250 billion. That is where 
they believe we should spend the money.
  Frankly, that is what elections are all about. Those of us on the 
Democratic side who believe we can have a better Nation, that we can 
take our anticipated surplus and invest it in the people of this 
country, think the Republicans are fundamentally wrong. We can reform 
the estate tax, we can exempt the vast majority of families, over 99 
percent of the families in America, we can exempt virtually two-thirds 
or more of those who are currently paying the tax, and we can exempt 
family farms and small businesses--75 percent are currently paying the 
tax--and do it in a way where we will have money left to invest in 
education and health care. No, the Republicans, frankly, say every 
penny has to go to the wealthiest people in this country.
  We ought to keep a running score on the proposals on the Republican 
side and what they are going to cost. This one is worth about $750 
billion. If I am not mistaken, the George W. Bush tax cut for wealthy 
people--a separate tax cut--is worth over $1 trillion, and the George 
W. Bush proposal to privatize Social Security will cost some $800 
billion and have benefits reduced under Social Security. To that 
extent, this gives us an idea of how the Republicans time and time 
again want to spend the surplus which we are now enjoying in this 
country. That is something many of us think is very shortsighted.
  The President's belief, and one I share, is that the first commitment 
of any surplus should be in paying down the national debt so we carry 
less of a burden for paying interest on that debt and less of a burden 
for our children. We should take that money in our surplus and invest 
it in Social Security and Medicare so they are strong for a long time 
to come, and then target tax cuts to middle-income families, those who 
are struggling, as I said, to pay for basic expenses, whether it is day 
care, college education, or long-term care for their parents.
  That is the difference in philosophy. That is the choice in the 
election year. For the Republicans, the first group in line will always 
be the wealthiest among us. That is their party. That is in what they 
believe. They think if the wealthy are treated right, America is a much 
better place to live. A lot of us believe differently. We think 
investing in our people is a much better investment.
  I want to speak for a moment about prescription drugs, too, because I 
said earlier this is a priority among Democrats, Republicans, and 
Independents alike. They believe prescription drug benefits should be 
passed by this Congress. The Republican answer to that is the same 
answer they came up with on a Patients' Bill of Rights: They turned to 
the insurance industry and said to insurance companies: How can we make 
some money for you in terms of a Patients' Bill of Rights pricing?
  They came up with this notion we would somehow subsidize insurance 
plans to pay for prescription drugs. I think Americans are skeptical of 
that approach. They understand the Democratic approach which would use 
the Medicare system, which would be universal, and is a tried-and-true 
system under Medicare to provide benefits to families across America 
and would give the Medicare system bargaining power to keep drug prices 
under control.
  The Republicans want to subsidize insurance companies. It is no 
surprise Americans are skeptical of whether those insurance companies 
will be responsive to the needs of families when it comes to 
prescription drugs. That is why we have a serious difference between 
the two parties on this issue. The Republican bill does not give 
seniors a choice of guaranteeing coverage under Medicare. That is the 
most important single thing that seniors ask for: guaranteed 
prescription drug coverage under Medicare. The Republican plan does not 
respond to that.
  The Republican plan also provides subsidies to insurance companies, 
and yet there is no guarantee that the insurance companies will even 
offer the coverage, and they will not be offering a Medicare-type plan.
  The Republican approach on prescription drugs does nothing about fair 
prices. As I said earlier, the pharmaceutical companies must be 
cheering this idea. The Government is going to subsidize some sort of 
insurance scheme to pay for prescription drugs, and yet the prices 
continue to go through the roof. We understand that such a plan will 
never work. What insurance company is going to sign up to pay your 
prescription drugs with no guarantee of any control on price? The 
Republicans, obviously, are insensitive to the price issue.
  In addition to accessibility to prescription drugs insurance, price 
is also important. Americans understand that drugs in Canada, made in 
the United States, sell for a fraction of the cost. One can take the 
same pill and order it at the veterinarian for one's dog and go across 
the street and order it for oneself and find a dramatic difference in 
cost. It is because the drug companies are gaming the system, and they 
are very open about it. They are going to charge the highest price to 
those who will pay it, and those who will pay for it in our country are 
the Medicare beneficiaries--the seniors and disabled.
  Once again, Republicans have failed to respond to the basic need in 
this country: a prescription drug benefit. It is no surprise the 
Republicans do want to use the Medicare system as the Democrats have 
proposed. We believe we can provide to seniors the choice of a 
guaranteed prescription drug coverage under Medicare, but the 
Republicans are opposed to that. They have been critical of Medicare 
since its creation. They have talked about privatizing this benefit of 
prescription drugs, leading many to believe that ultimately they are 
hoping to privatize Medicare.
  When we tried, incidentally, to privatize a portion of Medicare 
recently--we said to Medicare recipients: You can buy an HMO plan--the 
insurance companies, after a year or two, turned around and said they 
were not going to write coverage anymore. It has happened in Illinois 
and across the country and a million seniors have been left high and 
dry by an insurance market that is driven almost exclusively by profit.
  That is, unfortunately, where the Republicans have turned again, to 
the insurance industry, to try to provide some help with prescription 
drugs. It is not going to work, and the American people know better. 
They are going to hold this Congress accountable. If the best we can 
come up with is the estate tax relief for the wealthiest estates in 
America and nothing when it comes to prescription drug benefits, then 
we have failed the most basic test, and that is whether we respond to 
the common need in this country. The common need clearly is for a 
prescription drug benefit, as well as a Patients' Bill of Rights so you 
can go to your doctor with confidence, and when that doctor makes a 
decision about you and your family's health, it is not going to be 
overruled by someone who works for an insurance company.
  Those are the basics: Minimum wage, prescription drug benefit, 
Patients' Bill of Rights. These are things Republicans have not added 
to their list of priorities. No, their highest priority when it comes 
to spending and tax relief still turns out to be the wealthiest people 
in America. We believe that is wrongheaded. It does not take into 
account the folks who built this country and made it strong for so many 
years.
  I conclude by saying this estate tax is really a test of the 
priorities of the political parties. Who will be the first in line in 
the U.S. Congress for help? Who would you turn to first with $750 
billion to provide some equity under the Tax Code? Which group of 
Americans would you single as needing the most help? The Republicans 
have answered those questions with the repeal of the estate tax. They 
believe the people who need the help the most are the folks who have 
the most in America. I do not believe that is what America is all 
about.
  I yield the floor.

[[Page 13694]]

  The PRESIDING OFFICER. The Senator's time has expired.
  The Senator from Maine.
  Ms. COLLINS. On behalf of the majority leader, I ask unanimous 
consent that notwithstanding the DOD authorization bill, I be 
recognized for up to 12 minutes for debate on the estate tax issue.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The Senator from Maine may proceed.
  Ms. COLLINS. Mr. President, it is disappointing to hear the rhetoric 
from some of my colleagues on the other side of the aisle, implying 
that if we give our family farmers and our family business owners much 
needed relief from confiscatory death taxes that we will somehow not be 
able to afford prescription drug coverage for our senior citizens, or 
education for our children. That is simply not true. It is 
disheartening to hear these distortions from some of my colleagues.
  I rise today as a longtime supporter of death tax relief for family-
owned businesses and farms. In fact, the very first bill I introduced 
as a Senator in 1997 was to provide targeted estate tax relief for our 
family-owned businesses. I was very pleased when key elements of my 
legislation were incorporated into the 1997 tax reform bill.
  I first became interested in this issue in my role as director of the 
Center for Family Business at Husson College in Bangor, ME, where I 
served prior to coming to the Senate. The center sponsored a seminar on 
how a family business should plan to pass a business on from generation 
to generation. It soon became very clear to me that a major obstacle to 
this goal, and a significant reason why so few family businesses 
survive to the second, third, or fourth generation, is the onerous 
estate tax.
  To illustrate this fact, let me share with my colleagues the story of 
Judy Vallee of Portland, ME. Ms. Vallee's father started a restaurant 
in Portland, ME. He worked very hard. The whole family worked hard. 
Eventually he was able to build his business from one restaurant in 
Portland, ME, to a chain of 25 restaurants up and down the east coast.
  Unfortunately, he died. The family was hit with a whopping estate tax 
bill of about $1 million--a bill they simply did not have the cash to 
pay because their assets were tied up in these restaurants. The result 
was the dismantling of this business, this very successful family 
business, which Mr. Vallee had labored a lifetime to build.
  The ultimate result was that the family was forced to sell off all 
the restaurants but the one they started with in Portland. That is 
simply wrong. It is unfair when our tax policy forces a family to 
dismantle a lifetime of work. It is unfair that a parent cannot pass on 
to the next generation the fruits of that hard work.
  The need for death tax relief is something that small businesses and 
farmers tell me about every time I am back home in Maine. And that is 
every weekend. I recently talked with auto dealers from all over the 
State, including an auto dealer in Bangor, ME, who has built a 
successful business that he very much wants to leave to his sons.
  I have also talked with funeral directors, with bakery owners, with 
lumber dealers--with a host of businesses of all sizes and kinds 
throughout the State--who simply have the goal of working hard, 
creating jobs, building their businesses, and being able to leave those 
businesses to the next generation. Many of these businesses are capital 
intensive but cash poor. That is why they are hit so hard when the 
owner dies and they are subjected to onerous estate tax rates.
  In many small towns throughout the State of Maine, these family 
businesses are the heart and the soul of the community. They are the 
businesses that support the United Way, sponsor the Little League team, 
and contribute generously to other local community-based charities. 
They are the businesses that are always there to help because they 
employ their friends, their neighbors, and their family members. They 
are so closely linked to the economy of the small towns in which they 
exist.
  I know that small business owners across the State of Maine were so 
pleased to see the House of Representatives approve H.R. 8 last month 
with such a strong bipartisan vote. I stress, the vote was, indeed, 
broad based and bipartisan. A total of 65 House Democrats--both 
moderate and liberal Members--constituting more than 30 percent of the 
entire House Democratic caucus, joined Republicans in voting for the 
bill.
  Here in the Senate there is also broad bipartisan support for the 
death tax relief bill introduced by my friend and colleague, Senator 
Jon Kyl, who has been such a leader in this effort.
  As a matter of sound, long-term tax policy, H.R. 8 seeks to make a 
very fundamental and noteworthy change to the Tax Code. It recognizes 
that it is the sale of the asset, not the death of the owner, that 
should trigger a Federal tax. H.R. 8 would establish the principle that 
if family members inherit assets or property--a family business or a 
farm, for example--the Federal Government would tax those assets when 
they are sold by the heirs by imposing a capital gains tax.
  Furthermore, the legislation before us would allow the Government to 
use the decedent's basis for determining the taxable amount of the 
inherited assets. So if a family businessperson dies and leaves the 
assets and property of their business to his or her children, they can 
continue running the business if they choose to do so without having to 
worry about the Federal Government's death tax bill forcing them to 
break up the business or sell the farm. This change would represent a 
giant step forward for many small businesses and family farms 
throughout Maine and the country.
  There are two other points that I want to make about the impact of 
the death tax. The first is that it has a very unfortunate impact on 
jobs. The National Association of Women Business Owners, a group I was 
pleased to work with in my time with the Small Business Administration, 
has written a letter endorsing passage of this legislation. This 
organization surveyed many of its members and found that, on average, 
39 jobs per business, or 11,000 jobs of those businesses surveyed, have 
already been lost due to the planning and the payment of the death tax. 
You can multiply that death tax time and again to see the deleterious 
impact of the death tax on job creation.
  I know a bag manufacturer in northern Maine who told me that he 
spends tens of thousands of dollars each year on life insurance in 
order to be prepared in case he dies so that his family would not be 
hit by the estate tax. That is money he would like to invest right back 
into his business in order to hire more people or to buy new equipment 
or to expand his company. But instead, he is having to divert this 
money into planning for the estate tax. That is a point that is missed 
by my colleagues on the other side of the aisle.
  They claim that only 2 percent of the people are affected by the 
estate tax. In fact, it is so many more than that because of businesses 
that spend tens of thousands of dollars each year on life insurance or 
estate tax planning in order to avoid the imposition of the death tax.
  The second point that I want to make is the impact of the death tax 
on the concentration of economic power in this country. I think this is 
an issue that has been largely overlooked in this debate.
  When a small business is sold because the children cannot afford to 
pay the death tax, it is usually sold to a large out-of-State 
corporation which is not subject to the death tax. When that happens, 
it generally results in layoffs for local employees, diminished 
commitment to the community, and a greater concentration of economic 
power. Surely, we should not want that to be the result of our Federal 
tax policy.
  The time has come for Congress to act this year to provide overdue 
death tax relief to our Nation's small businesses and family farms.
  In doing so, we will take a giant step forward in making our tax 
policy far fairer. No longer will it be the death of

[[Page 13695]]

an owner that triggers the imposition of tax but, rather, the sale of 
the asset when income is realized. That makes so much more sense as a 
matter of tax policy. We will also be telling people who have worked so 
hard over a lifetime to build their business that we, too, believe in 
the American dream.
  I yield back any time I may have remaining, and I yield the floor.

                          ____________________