[Congressional Record (Bound Edition), Volume 146 (2000), Part 17]
[Senate]
[Pages 25406-25412]
[From the U.S. Government Publishing Office, www.gpo.gov]



                          THE OMNIBUS TAX BILL

  Mr. FEINGOLD. Mr. President, I rise now to oppose yet another 
monstrous product that this majority has loosed on the Senate, this one 
an omnibus tax bill. In a number of speeches this year, as early as 
this May, I have tried to raise objections to the procedures that the 
majority is employing in this session of the Senate. It is proverbial 
that ``a bad tree cannot bear good fruit.'' If any more proof were 
needed that these procedures are bad, the fruit of this tax bill 
provides it.
  Let me begin by recounting how bad the tree is that bore this bill. 
The procedures that the majority has employed to bring this bill to the 
floor are egregious. And when the majority employs the procedures that 
it has on this bill, it is not surprising that they yield such an 
unattractive outcome. What has happened? A small number of Senators and 
Congressmen, all from one party, have cooked up this bill behind closed 
doors. Of the bill's major provisions, none has enjoyed consideration 
on the Senate floor. The majority leadership has then shoveled the 
contents of this back-room agreement into a conference on a 
comparatively minor Small Business Administration loan measure. When 
the fruit of such a process has, as this bill has, experienced no 
discussion, no vetting, and no amendment, it cannot help but have some 
rotten parts to it.
  And there is much that is rotten about this bill. It would spend, Mr. 
President, a significant amount of the

[[Page 25407]]

surplus--about a quarter of a trillion dollars--before, before having 
taken any steps to save Social Security, or to reform Medicare, or to 
lock away on-budget surpluses to pay down the debt. Now, Mr. President, 
there are of course some provisions in this bill that I would support. 
But first and foremost, it is irresponsible to spend this much of the 
projected surpluses before having taken a single step to address our 
long-term fiscal responsibilities.
  And so, Mr. President, I ask unanimous consent that an editorial on 
this point that appeared in the Washington Post entitled ``Say Goodbye 
to the Surplus'' be printed in the Record at the conclusion of my 
remarks.
  The PRESIDING OFFICER. Without objection, so ordered.
  (See exhibit 1.)
  Mr. FEINGOLD. Thank you, Mr. President.
  Beyond that, Mr. President, this bill is also blighted by its lack of 
fairness. As have so many of the other fruits of this majority, this 
tax bill would disproportionately favor the very wealthy. When we as 
Senators decide on tax policy, we must ask ourselves: With a limited 
amount of surplus available, whose taxes should we cut first? Should 
tax relief go first to the wealthiest among us? The majority answers 
``yes'' every time. Instead of the Robin-Hood-in-reverse priorities of 
the majority, we should instead be seeking to direct tax relief first 
to those who need it most: the hard-working American middle-income 
family.
  According to an analysis prepared by the Institute on Taxation and 
Economic Policy, 64 percent of the benefits of this tax bill would go 
to the top one-fifth of the income distribution. And less than a fifth 
of the benefits of this tax bill would go to the bottom 60 percent of 
the population--one-fifth of the benefit to three-fifths of the people.
  Mr. President, I ask unanimous consent that an executive summary of a 
policy paper on this bill prepared by the Center on Budget and Policy 
Priorities entitled ``Leadership's Tax Plan Reinforces Inequities in 
Health and Pension Coverage'' be printed in the Record at the 
conclusion of my remarks. The entire text of this policy paper can be 
found at http://www.cbpp.org/10-26-00tax.htm
  The PRESIDING OFFICER. Without objection, so ordered.
  (See exhibit 2.)
  Mr. FEINGOLD. Thank you, Mr. President.
  And now, let me take a few moments to address particular sections of 
the bill. And let me begin with the health care provisions of this 
bill, which, at $88 billion for the tax provisions alone, account for 
what is actually the largest component of this bill. We can all agree 
that health care should be a priority. But the health tax provisions of 
this bill are structured so that the vast majority of middle-income 
Americans will not be able to benefit from them.
  This is so because the health tax provisions in this bill operate 
exclusively through the mechanism of tax deductions, instead of tax 
credits. Thus, Mr. President, it would provide no benefit for families 
of four making up to $32,000, and actually provide precious little 
benefit for families making up to $50,000. Those at the top of the 
income scale are not those who are having the most difficulty getting 
health insurance or paying for long-term care.
  Indeed, the health care insurance deduction in this bill could 
actually reduce health care coverage. That is because the presence of 
the deduction might encourage private employers to drop health care 
coverage at the workplace.
  Mr. President, I'd like to ask unanimous consent that an executive 
summary of a policy paper on this point prepared by the Center on 
Budget and Policy Priorities entitled ``Health Insurance Deduction of 
Little Help to the Uninsured'' be printed in the Record at the 
conclusion of my remarks. The full text of this policy paper can be 
found at http://www.cbpp.org/8-30-00tax2.htm
  The PRESIDING OFFICER. Without objection, so ordered.
  (See Exhibit 3.)
  Mr. FEINGOLD. Thank you, Mr. President.
  Among its health provisions, this bill also includes spending 
legislation to restore health care cuts made in the Balanced Budget Act 
of 1997. I strongly oppose the provisions in the Medicare provider 
payment restoration bill that disproportionately allocate scarce 
Medicare resources towards Medicare health maintenance organizations--
HMOs--and away from beneficiary and health care provider needs.
  The Medicare HMO program already treats our Wisconsin seniors 
unfairly. I cannot support increasing payments to a system that treats 
Wisconsin's seniors like second class citizens. Not only are these 
increased payments unjustifiable, they would raise payments without any 
accountability provisions that would ensure there is actually planned 
participation in States like Wisconsin.
  Congress should not dedicate over one-third of its Medicare spending 
to Medicare HMOs, when only 15 percent of Medicare beneficiaries are 
enrolled in HMOs.
  Instead of supporting HMOs, I strongly favor provisions that would 
support Wisconsin's seniors by preserving care through hospitals, home 
health care agencies, hospices, and other providers. The home health 
care provisions--I know firsthand from many conversations around the 
state--are especially inadequate, and do little to address the needs of 
rural beneficiaries and the most medically complex patients.
  Let me turn now to the pension provisions, which, at $64 billion, 
make up the next largest part of the bill. The official estimates of 
the costs of these provisions are large, but they understate what will 
be the true costs of the bill. That is because the bill's so-called 
Roth IRA provisions, which allow taxpayers to pay some taxes now to 
avoid paying more taxes later, bring funds into the Treasury in the 
early years at the expense of the outyears. The bill's costs will thus 
likely expand when fully phased in, and will likely grow particularly 
in just those years when the baby boom generation is retiring and we 
most need the resources to actually keep Social Security and Medicare 
solvent.
  The bill's pension provisions expand individual retirement accounts 
or IRAs. Among other things, it raises the amount that individuals may 
contribute to IRAs, raises the maximum income for those who may 
contribute to an IRA, raises the maximum income for those who may 
convert a traditional IRA into a Roth IRA, and allows individuals over 
age 50 to make larger catchup contributions. The bill makes similar 
changes in 401(k) plans, raising the amount that individuals may 
contribute to 401(k)s, allowing deferral of 401(k) tax treatment as 
with a Roth IRA, and allowing individuals over age 50 to make larger 
catchup 401(k) contributions.
  Taken as a whole, these changes that I just listed would manifestly 
benefit the bestoff among us. A recent Treasury study found that just 
four percent of eligible taxpayers--largely the most affluent people 
eligible--make the maximum $2,000 contribution to IRAs under the 
existing law. By definition, these would be the only people within 
current income limits who would benefit from raising the contribution 
limit. And by definition, only those above current income limits would 
benefit from lifting the income limits. According to the Institute on 
Taxation and Economic Policy analysis, more than three-fourths of the 
benefits of the bill's pension and IRA provisions would go to the fifth 
of the population with the highest incomes.
  The bill's proponents claim that the bill would also increase 
savings. But this claim is almost Orwellian. Lifting these limits would 
actually decrease saving, for three reasons.
  First, by making it easier for wealthy business owners to do tax-
favored saving as individuals, the bill would decrease their incentives 
to set up business-wide, business-wide 401(k) or pension plans to get 
those tax benefits. As a former Assistant Secretary of the Treasury 
testified:

       Currently, a small business owner who wants to save $5,000 
     or more for retirement on a tax-favored basis generally would 
     choose to adopt an employer plan. However, if the IRA limit 
     were raised to $5,000, the owner could save that amount--or 
     jointly with the owner's spouse, $10,000--on a tax-preferred 
     basis without adopting a plan for

[[Page 25408]]

     employees. Therefore, higher IRA limits could reduce interest 
     in employer retirement plans, particularly among owners of 
     small businesses. If this happens, higher IRA limits would 
     work at cross purposes with other proposals that attempt to 
     increase coverage among employees of small businesses.

  That is what the former Assistant Secretary for Tax Policy said. By 
depriving lower- and moderate-income employees of opportunities for 
tax-favored saving, the higher IRA limits would thus decrease saving by 
those employees.
  Second, the savings contributed by high-income savers would tend to 
be money that they would have saved anyway. Rather than cause new 
saving among higher-income savers, the higher limits would merely 
substitute tax-favored saving for fully-taxed saving. Rather than 
increase saving among this group, the bill would thus just cut taxes 
for these higher-income savers.
  And third, because the bill is not paid for and therefore spends 
surplus money, it reduces the surplus and thus reduces the amount by 
which the Government pays down the debt. When the Government pays down 
debt, it contributes to national savings. And thus by reducing the 
amount by which the Government pays down debt, the bill will worsen 
national savings.
  When the Finance Committee considered a pension bill earlier this 
year, it did include a provision that might have helped increase 
saving, Mr. President. That section, championed by Democratic Members 
of the Finance Committee, would have actually provided a matching 
credit, a matching credit, for saving by low- and moderate-income 
savers making up to $50,000 for a couple. The provision was still 
deeply flawed, in my view, because it was not refundable, and therefore 
it was of no use to families of four making up to $32,000. But if 
Government action is to encourage increased private saving, it needs to 
be directed--as that credit was--to low- and moderate-income people, 
who are not saving now.
  What has the majority done? The majority has stripped this bill of 
that proposal. The majority has deleted from the bill that section most 
likely to increase private saving.
  As well, the bill includes many offensive individual pension 
provisions.
  Current law imposes additional requirements on plans that primarily 
benefit an employer's key employees, what are called ``top-heavy 
plans.'' These additional requirements provide more rapid vesting and 
minimum employer contributions for plan participants who are not key 
employees. The bill would relax these rules for top heavy plans in a 
number of ways. For example, fewer family members would be counted for 
the determination of whether a plan was top-heavy. This change in the 
bill would allow plans to provide greater benefits to owners and their 
families without providing minimum benefits and more-rapid vesting to 
rank-and-file workers.
  The bill raises the limit on the amount of income that may be 
considered compensation for purposes of contributions to 401(k) 
accounts. This change would allow an employer who wanted to save a 
fixed amount each year to reduce the percentage contribution that all 
employees could make to their 401(k)s.
  As I noted at the outset, the bill's Roth IRAs shift tax receipts 
from the distant future into the near future. They are thus fiscally 
very risky, as they drain tax revenues from the Government during the 
retirement years of the baby boom generation, while giving us a false 
sense of additional revenues now. And they also benefit the very 
wealthiest among us.
  Thus, the pension provisions of this bill would particularly benefit 
the very wealthiest. And I would assert that it is not a coincidence--I 
am afraid it is not a coincidence--that some of the most powerful 
wealthy interests in our campaign finance system are today pushing for 
this so-called pension ``reform.'' I would like to take a moment to 
direct my colleagues' attention to these big donors.
  It is time again to ``call the bankroll.'' As I have said, this 
legislation doesn't benefit average working Americans who are counting 
on their pension when they retire, so exactly whom does it benefit? I 
think ``calling the bankroll'' could answer this.
  I would like to do a truly comprehensive ``calling of the bankroll'' 
here, but that would be almost impossible. There are just too many 
wealthy interests behind this tax bill: financial interests, insurance 
companies, and labor unions, just to name a few. We could be here all 
day, or all week, if I tried to cover all those contributions. So in 
the interest of time, I will just review the unlimited soft money 
contributions of some of the interests pushing for this bill.
  The figures I am about to cite come from the Center for Responsive 
Politics. They include contributions through the first 15 months of the 
election cycle, and in some cases include contributions given more 
recently in the cycle.
  Some of the biggest investment and finance firms are supporting 
passage of this bill.
  For example, Merrill Lynch, its executives and subsidiaries, have 
given more than $915,000 in soft money, according to the Center for 
Responsive Politics.
  That's just one company.
  Mr. President, I have other examples I will cite regarding the 
``calling of the bankroll.'' American Express, its executives and 
subsidiaries have given more than $312,000 in soft money so far in this 
election cycle. And Fidelity Investments and its executives have given 
at least $258,000 in soft money to date.
  The American Benefits Council, which is strongly supporting this 
bill, sent around a list of supporters of provisions of the 
legislation. That list includes still more big donors.
  The American Council of Life Insurers and its executives have given 
more than $260,000 to the parties' soft money warchests during the 
period.
  The U.S. Chamber of Commerce and affiliated chambers of commerce have 
given more than $110,000 in soft money during the period.
  The list also included many of the nation's labor unions, which are 
also pushing for some of the provisions of this bill, including: 
American Federation of Teachers, which has given at least $820,000 so 
far during this election cycle; and the International Brotherhood of 
Electrical Workers, which has given more than $853,000 in soft money 
during the period.
  Regrettably, many of these institutions will see a return on their 
campaign finance investment in the pension provisions of this bill. 
More regrettably still, the working family is not likely to see much of 
any benefit at all.
  Mr. President, I am troubled, as well, that the school construction 
projects in this bill--being paid for, in part, with Federal tax 
credits for the bondholders--will not be subject to the Davis-Bacon 
Act. The Davis-Bacon Act ensures that construction workers on Federal 
construction sites get paid a fair wage for a days' work by requiring 
that those workers be paid the local prevailing wage.
  The worker protections embodied in the Davis-Bacon Act are essential, 
and one specific set of Federal construction projects--and the workers 
who build them--should not be deprived of these protections. I am 
deeply concerned that some in this body are attempting to alter the 
protections under the Davis-Bacon Act without a substantive debate.
  Yes, Mr. President, this bill does include a long-overdue increase in 
the minimum wage. I have long supported that increase. Congress should 
have passed it two years ago, and we should have passed it in a 
straightforward bill, clean of tax give-aways.
  Sadly, it has become the habit of this majority to extract a series 
of tax subsidies in exchange for a minimum wage increase. And what is 
worse is that the cost of these subsidies is increasing. In 1996, the 
Congress had to pass $20 billion in tax cuts to get an increase in the 
minimum wage. Sadly, the cost of that minimum wage increase in terms of 
tax subsidies extracted has grown exponentially.
  Another section of this bill would reinstate and expand the Foreign 
Sales Corporation--or FSC--export tax subsidy. We ought to be skeptical 
of subsidies, whether provided through the

[[Page 25409]]

tax code, through appropriated programs, or through entitlements. In 
general, the best policy is to let free markets work. The FSC export 
tax subsidy does not do that.
  While the FSC export tax subsidy may provide a very small benefit to 
certain firms that produce exports or that produce goods abroad, it 
also triggers increases in U.S. imports, so that its net effect on our 
balance of trade is probably negligible. As the Congressional Research 
Service explains, the FSC tax subsidy increases foreign purchases of 
U.S. exports, but to buy the U.S. products, foreigners require more 
dollars. That, in turn, increases demand for U.S. dollars, driving up 
the price of the dollar in foreign exchange markets and making U.S. 
exports more expensive. This partly offsets the effect of the FSC in 
increasing U.S. exports. This effect also makes imports to the United 
States cheaper, which causes U.S. imports to increase.
  The bottom line, Mr. President, is that while some firms may enjoy 
increased export sales, other firms will lose business and jobs because 
of increased imports.
  This special tax subsidy thus has benefits and costs. The firms that 
qualify for this export subsidy gain a benefit, of course, but so too 
do foreign consumers. CRS notes that the FSC tax subsidy produces a 
transfer of economic welfare from the United States to consumers abroad 
when part of the tax benefit is passed on to foreign consumers as 
reduced prices for U.S. goods. U.S. taxpayers are paying to keep these 
exports cheap for foreign consumers.
  But there are other costs, as well. First, and perhaps most 
obviously, the billions of dollars we spend through the FSC export tax 
subsidy could otherwise be used to lower the tax burden on businesses 
and individuals, or to lower the level of our massive national debt. 
And as with other special tax breaks, the FSC export tax subsidy 
distorts the marketplace, and makes our economy less efficient.
  There is also an additional and potentially huge cost that may be 
imposed on American firms and workers because of this FSC subsidy: what 
amounts to a possible multi-billion dollar tax imposed by the World 
Trade Organization on American products that are purchased in European 
Union countries that could mean lost business and jobs.
  I am no fan of the World Trade Organization. I opposed the 1994 
legislation that implemented the most recent General Agreement on 
Tariffs and Trade, or GATT, in large part because it created this 
undemocratic, unaccountable, often secretive international organization 
known as the World Trade Organization or WTO.
  As my colleagues know, the reason we are considering changes to the 
FSC export tax subsidy is because of a WTO ruling that this tax break 
is an illegal subsidy. If we fail to change our tax laws to comply with 
this ruling, we can expect billions in punitive tariffs to be levied 
against American goods exported to the European Union.
  While the FSC tax subsidy may be bad tax policy, it is our tax 
policy--a policy arrived at through the elected representatives of the 
people of this Nation. The ability of some international bureaucracy to 
effectively impose punitive taxes or tariffs on American goods should 
offend us all. Unfortunately, that is what we face because of the 
action Congress took in 1994 to ratify the GATT, and unless we 
eliminate the FSC export tax subsidy, American firms and American 
workers are at risk.
  Regrettably, the proposed expansion of the FSC may not remove this 
threat. Mr. President, I have grave concerns that the WTO will see this 
expanded tax break as little more than a reconfiguration of the 
existing tax subsidy for exports. At a briefing for Senate staff on 
this issue, the Treasury Department conceded that not a single business 
currently able to use this export subsidy will lose its tax break. 
Indeed, the export tax subsidy has been expanded to provide an even 
larger subsidy for foreign military sales.
  If the WTO rules that this change does not comply with its previous 
ruling, our businesses and workers will face billions in punitive 
tariffs on the goods they produce. That is what is at stake here. The 
proponents of this legislation are willing to risk billions in tariffs 
on American goods rather than eliminate this questionable tax 
expenditure.
  It would be better economic policy and better fiscal policy simply to 
repeal the FSC altogether.
  I am particularly troubled, Mr. President, by the provision of the 
FSC export tax subsidy section of this bill that would actually double 
the current tax benefit for arms sales.
  That is right, Mr. President, this bill would double the tax benefit 
currently enjoyed by U.S. companies that sell weapons abroad.
  Had the Senate been able to consider this bill under the Senate's 
regular procedures, I would have joined in an amendment by the Senator 
from Minnesota, Mr. Wellstone, that would have sought to correct this 
problem by reinstating the current tax benefit for arms sales.
  United States arms manufacturers continue to lead the world in 
conventional arms sales to developing countries, both in terms of arms 
transfer agreements and in terms of arms delivered to the countries of 
the developing world. Conventional arms sales include such items as 
aircraft, tanks, complete weapons systems, spare parts, upgrades for 
previously purchased items, and munitions; as well as training and 
support services for the items purchased.
  This August, the Congressional Research Service released its annual 
report, Conventional Arms Transfers to Developing Nations. This 79-page 
report details the worldwide arms transfer business conducted with 
developing nations from 1992 through 1999. During that eight-year 
period, the United States entered into arms-transfer agreements with 
developing nations worth in excess of $62.7 billion. Our nearest 
competitor, France, entered into agreements with developing nations 
worth just about half of that total, $31.6 billion.
  During that same eight-year period, the United States delivered arms 
worth in excess of $84 billion to the countries of the developing 
world. The United Kingdom ranked a distant second with deliveries 
totaling $37.7 billion--less than half the value of the arms delivered 
by the United States.
  And those numbers represent only the arms agreements and deliveries 
with the countries of the developing world. When we add in the arms 
agreements and deliveries to our worldwide customers, the numbers rise 
even higher. During the same period, the United States also ranked 
first in worldwide arms transfer agreements with an astonishing $104 
billion dollars worth of agreements. Russia comes in a distant second 
with $31.2 billion in worldwide arms transfer agreements.
  And during those eight years, the United States delivered a total of 
more than $124 billion worth of arms worldwide. Russia again came in 
second with $21.6 billion in deliveries.
  In both instances--arms transfer agreements and arms actually 
delivered--the vast majority of United States arms transactions were 
conducted with the countries of the developing world.
  As you can see from these numbers, Mr. President, the United States 
has no real competitors in the arms transfer business. And the United 
States will continue to lead the world in arms sales into the 
foreseeable future, because those who would buy arms want to buy them 
from American manufacturers. It is that simple. These companies are 
already making millions and millions of dollars from these sales each 
year. And they are already receiving substantial tax benefits. There is 
no need to double that benefit.
  In fact, as I noted earlier with regard to the entire FSC export tax 
subsidy, I would argue that we should actually be talking about 
eliminating this benefit entirely. At the very least, we should 
maintain the current level--we should not double this subsidy.
  This 100 percent increase in the tax benefit for arms sales is 
opposed by such groups as the Council for a Liveable World Education 
Fund, the General Board of Church and Society of

[[Page 25410]]

the United Methodist Church, the Justice and Witness Ministries of the 
United Church of Christ, NETWORK, the Church of the Brethren, the 
Friends Committee on National Legislation, the National Council of 
Churches of Christ in the USA, the Mennonite Central Committee, and the 
Maryknoll Mission Association of the Faithful.
  The world is already a very dangerous place. The Congress should not 
be increasing the subsidy for U.S. companies to sell weapons abroad.
  Make no mistake about the importance of this piece of legislation to 
arms manufacturers and other business interests who would benefit from 
the various tax subsidies contained in this bill. As you know, wealthy 
interests don't just sit idly by on the sidelines waiting for us to act 
on this kind of legislation. They lobby to insert favorable provisions 
into a bill, and once they secure a special deal, they lobby to keep it 
in the bill. And when I say ``lobbying,'' I mean more than a visit or a 
phone call to staff--I mean campaign contributions, Mr. President, 
millions upon millions of dollars worth.
  As we discuss the legislation before us, we cannot ignore the 
presence of powerful monied interests. I have often likened campaign 
contributions to an 800-pound gorilla that's in this chamber every 
day--nobody talks about him, but he cannot be ignored. On this issue as 
well, I refuse to ignore the 800 pound gorilla who's throwing his 
weight around in our political process. Instead I choose to Call the 
Bankroll, to inform my colleagues and the public of the contributions 
made by wealthy interests seeking to influence what we do here on this 
floor.
  On this provision of the bill, I feel it is once again very important 
to take a moment to review the campaign contributions of the defense 
industry. As I have said, this bill would double the tax benefit 
currently enjoyed by U.S. companies that sell weapons abroad. This bill 
means a huge bonanza for arms manufacturers. It is only appropriate to 
take a look at the bonanza of contributions they have provided to the 
political parties.
  Many members of the Business Roundtable, an organization which has 
urged the passage of this legislation, are some of the biggest arms 
manufacturers in the U.S., and some of the biggest political donors. 
I'd like to review the contributions of some of these companies. These 
figures are for contributions through at least the first 15 months of 
the election cycle, and in some cases include contributions given more 
recently in the cycle.
  Lockheed Martin, its executives and subsidiaries have given more than 
$861,000 in soft money, and more than $881,000 in PAC money so far 
during this election cycle.
  United Technologies and its subsidiaries have given more than 
$293,000 in soft money and more than $240,000 in PAC money during the 
period.
  During that period, Raytheon has given more than $251,000 in soft 
money to the parties and more than $397,000 in PAC money to Federal 
candidates.
  Textron has contributed more than $173,000 in soft money and more 
than $205,000 in PAC money.
  And last but not least, Boeing has given more than $583,000 in soft 
money since the election cycle began, and more than $593,000 in PAC 
contributions.
  Mr. President, these defense companies are getting a one hundred 
percent increase in an already unnecessary tax break, and frankly I 
wonder why. I wonder why we would double a tax break for the defense 
industry, when we haven't passed a Patient's Bill of Rights, when we 
haven't provided Medicare coverage for prescription drugs, and when we 
haven't passed so many other important measures that Americans really 
care about.
  Sadly, it appears that there is a pretty simple way to figure out why 
we dole out corporate tax breaks while we neglect the priorities of the 
American people. All you have to do is follow the dollar.
  Mr. President, this bill thus amply proves the adage that ``a bad 
tree cannot bear good fruit.'' We should revise the procedures that 
allow such a monstrosity to be loaded into a conference report on an 
unrelated matter. And we should reject this bill, whose rotten 
provisions outnumber its sound ones.

                               Exhibit 1

               [From The Washington Post, Oct. 26, 2000]

                       Say Goodbye to the Surplus

       Congressional Republicans reached agreement yesterday on 
     the contents of the tax cut bill they intend to send the 
     president before adjourning. They suggest it's a relatively 
     minor measure, but it's not. If it becomes law atop all the 
     spending increases also agreed to in this session, Congress 
     and the president will have used up, before the election, 
     well over a third of the projected budget surplus--the $2.2 
     trillion over 10 years in other than Social Security funds--
     that the presidential candidates are so busily distending on 
     the campaign trail. It's an astonishing display of lack of 
     discipline and misplaced priorities.
       The president sent a letter implying that he might sign the 
     tax bill even while objecting to major parts. He ought 
     instead to veto it if congressional Democrats won't block it 
     first. As with the other Republican tax cuts he vetoed 
     earlier in the year, this would cost too much--an estimated 
     quarter-trillion dollars over the 10 years--and too much of 
     the money would go to the part of the population least in 
     need.
       In the name of increasing access to health care, the 
     legislation would grant a new tax deduction to people who buy 
     their own insurance. The deduction would mainly benefit those 
     in the top tax brackets who tend already to be insured. The 
     president observed that, far from increasing access, it would 
     have the perverse effect of inducing employers to drop 
     insurance they now maintain for their employees. Among much 
     else, the bill would also increase the amounts that can be 
     contributed annually to tax-favored retirement accounts, a 
     step that by definition benefits only those who can afford to 
     save the maximum now.
       The health insurance deduction was part of the Republicans' 
     price for the $1-an-hour increase in the minimum wage that 
     the bill also contains. The price is too high. Also in the 
     bill will be so-called Medicare givebacks, increases in 
     payments to providers that the president earlier objected 
     were tilted in favor of managed care companies already 
     overpaid. This is on balance a bad bill dusted with 
     confectioner's sugar and offered up at year's end on a take-
     it-or-leave-it basis. The right response would be to vote it 
     down.
                                  ____


                               Exhibit 2

                                                  Center on Budget


                                        and Policy Priorities,

                                 Washington, DC, October 26, 2000.

   Leadership's Tax Plan Reinforces Inequities in Health and Pension 
                                Coverage


   tax cuts primarily benefit high-income household and could reduce 
    health and pension coverage for low- and moderate-income workers

       Congress will shortly consider a significant tax package 
     developed by the House and Senate Republican leadership. 
     Despite some beneficial provisions in the bill, such as the 
     $1 increase in the minimum wage phases-in over the next two 
     years, the bill's tax provisions will primarily benefit 
     those-with high incomes. In developing the package, the 
     leadership dropped bipartisan provisions--such as the 
     retirement savings tax credit and the small business tax 
     credit adopted by the Senate Finance Committee and the 
     Medicaid access provisions adopted by the House Commerce 
     Committee--that could have benefitted low- and middle-income 
     workers. Rather, they retained provisions benefiting 
     primarily those that already have health insurance and 
     pension coverage. Even more worrisome is that some of these 
     provisions could make it more difficult for low- and 
     moderate-income workers to get health insurance and pension 
     coverage through their jobs.
       The Joint Committee on Taxation estimates the cost of the 
     package to be $240 billion over 10 years. But when combined 
     with anticipated discretionary appropriations, the repeal of 
     the telephone excise tax, new health benefits for military 
     retires, and Medicare give-backs as well as the resulting 
     interest costs, this bill brings the 10-year cost recent of 
     congressional actions to close to $1 trillion (see box at the 
     end of the paper). This Congress will therefore use a 
     substantial share of the available surplus without addressing 
     key priorities, such as reducing the ranks of the uninsured 
     or funding prescription drug benefits. The benefits of the 
     leadership's plan remain focused on these who have benefitted 
     the most from the economic boom, offering little to those who 
     continue to struggle to get ahead.
       Nearly two-thirds of the tax cuts in the bill go to the 20 
     percent of taxpayers with the highest incomes. The top five 
     percent of taxpayers receive a greater share of the tax cuts 
     than the bottom 80 percent. Thus the benefits of the bill are 
     concentrated on those that already have high rates of health 
     insurance and pension coverage. These estimates were 
     calculated by the Institute for Taxation and Economic Policy.
       The bill's health insurance deduction is expensive and 
     poorly targeted. This deduction is most valuable to those in 
     the highest tax

[[Page 25411]]

     brackets, yet those most in need of coverage have no tax 
     liability or are in the lowest (15 percent) bracket. 
     Taxpayers with incomes too low to pay income taxes would 
     receive no assistance from this deduction. For most taxpayers 
     in the 15 percent bracket, the 15-cents-on-the-dollar subsidy 
     that the deduction provides is unlikely to be sufficient to 
     make costly health insurance affordable.
       According to the Joint Tax Committee, approximately 94 
     percent of the cost of the health insurance tax deduction 
     would go to subsidize taxpayers that already have health 
     insurance, with only 6 percent of the tax benefits going to 
     further the goal of extending health insurance coverage to 
     the uninsured.
       The Council of Economic Advisers, among other researchers, 
     found that tax deductions are a very inefficient way of 
     extending coverage to the uninsured. A more cost-effective 
     approach is the Administration's FamilyCare plan, which, at a 
     lower cost, would provide coverage to more than twice the 
     number of uninsured than the proposed tax deduction.
       Because the health care tax deduction would provide a far 
     deeper percentage subsidy for purchasing health insurance to 
     higher-paid business owners and executives than to lower-wage 
     earners, it could encourage some small business owners to 
     drop group coverage (or not to institute it in the first 
     place) and to rely on the deduction for their own coverage. 
     As a result, some workers could be forced to buy more costly 
     and less comprehensive insurance on the individual market, 
     and the ranks of the uninsured and under-insured could rise.
       The bill also includes tax deductions for long-term care 
     insurance and long-term care expenses that would provide the 
     largest benefit to higher-income taxpayers. Most low- and 
     middle-income taxpayers would get no more than a 15 percent 
     subsidy; this is too little to enable most of these families 
     to afford costs related to long-term care.
       Most of the bill's pension benefits would accrue to higher-
     income workers who already enjoy high rates of pension 
     coverage. An analysis by the Institute for Taxation and 
     Economic Policy of the bill's pension and IRA provisions 
     found that 77 percent of the benefits would go to the 20 
     percent of Americans with the highest incomes. In sharp 
     contrast, the bottom 60 percent of the population would 
     receive less than five percent of these tax benefits.
       Moreover, the bill would likely lead to reductions in 
     pension coverage for some low- and middle-income workers and 
     employees of small businesses. For instance, it would weaken 
     ``non-discrimination'' and ``top-heavy'' rules that ensure 
     company pension plans treat low-income workers fairly and are 
     not skewed in favor of highly compensated workers. It also 
     increases the IRA contribution limits to $5,000, which could 
     make IRAs more attractive than company pension plans for 
     owners of small businesses, possibly leading them to drop 
     plans that benefit their workers.

                               Exhibit 3

                                              Center on Budget and


                                            Policy Priorities,

                         Washington, DC, Revised October 18, 2000.

       Health Insurance Deduction of Little Help to the Uninsured

                   (By Joel Friedman and Iris J. Lav)

       House Speaker Dennis Hastert held a press conference last 
     week in which he called for including in the minimum-wage 
     package a new tax deduction for health insurance premiums. 
     The deduction would be available to taxpayers that pay at 
     least 50 percent of the cost of their health insurance.
       This proposal, which would cost nearly $11 billion a year 
     in fiscal year 2010, is a poorly targeted and expensive way 
     to help the uninsured obtain coverage. Those most in need 
     would receive little or no subsidy to help them buy 
     insurance. Moreover, the proposal could have the effect of 
     raising the cost of insurance for some workers.
       According to an analysis by the Joint Committee on 
     Taxation, approximately 94 percent of the cost of the 
     Speaker's tax deduction would go to subsidize taxpayers that 
     already have health insurance, with only 6 percent of the tax 
     benefits going to further his stated goal of extending health 
     insurance coverage to the uninsured.
       The proposed tax deduction is most valuable to high-income 
     taxpayers, who are in the higher tax brackets. Nine of every 
     10 people without health insurance, however, have no tax 
     liability or are in the lowest (15 percent) tax bracket. 
     Taxpayers with incomes too low to pay income taxes would 
     receive no assistance in purchasing insurance from this 
     deduction. For most taxpayers in the 15 percent bracket, the 
     15-cents-on-the-dollar subsidy that the deduction provides is 
     unlikely to be sufficient to make insurance affordable.
       Because the deduction provides a far-deeper percentage 
     subsidy for the purchase of insurance to higher-income 
     business owners and executives than to lower-income wage 
     earners, it could encourage small business owners to drop, or 
     fail to institute, group coverage and to rely instead on this 
     deduction to help defray the cost of their own coverage. As a 
     result, some workers could be forced to buy more costly and 
     less comprehensive insurance on the individual market, and 
     the ranks of the uninsured and underinsured could increase.
       New research shows that a far more cost effective way to 
     assist the uninsured, particularly uninsured children, would 
     be to extend publicly-funded health insurance coverage to 
     low-income parents. The Administrator's FamilyCare plan 
     relies on this approach. At his press conference, however, 
     the Speaker inappropriately compared his proposal to the 
     Administration's small business health insurance tax credit. 
     The Administration's tax credit is a very small scale 
     proposal compared to the Hastert tax deduction. The Speaker's 
     proposal costs $10.9 billion a year by 2010, while the 
     Administration's small business tax credit would cost just 
     $319 million over 10 years, according to JCT. The more-
     appropriate comparison would have been to the 
     Administration's FamilyCare plan, which the Congressional 
     Budget Office estimates would cost $8.7 billion in 2010.
       Available estimates show that the FamilyCare approach would 
     result in a substantially larger number of currently 
     uninsured people obtaining insurance coverage than would the 
     Speaker's proposed tax deduction. This is the case despite 
     the somewhat lower annual cost of the FamilyCare plan, when 
     both proposals are fully in effect.
       A recent report by the Council of Economic Advisers 
     concludes that tax deductions will do little to improve tax 
     health insurance coverage and that approaches like FamilyCare 
     are better at targeting the uninsured.

  Mr. REID. Will the Senator from Wisconsin yield for a question?
  Mr. President, I would want the question to be on my time, not on 
his, because he has been given 30 minutes.
  May I ask the Senator a question?
  Mr. FEINGOLD. I yield for a question.
  Mr. REID. Prior to asking a question, I personally appreciate what 
the Senator from Wisconsin has done on campaign finance reform. Would 
he think it is a fair statement to say one of the gross failures of 
this Congress is that we have done nothing to get the money out of 
politics?
  Mr. FEINGOLD. Mr. President, it is just a shame that we have managed 
to get to the year 2000 election without having any significant action 
on campaign finance reform. We did take the first tiny step in the 
right direction on a strong bipartisan vote by doing something about 
disclosure by these 527 groups that were sort of a scam in the making, 
but we did not address the need to ban soft money which the 
overwhelming majority of both Houses support and the President is ready 
to sign. It is a glaring failure of this Congress.
  Everybody else in the country knows, including those who supported 
the campaign of the Senator from Arizona for President on the 
Republican side, that soft money is a real cancer on the system. But 
somehow, again, the Congress is behind the people. I can't help but 
note, in answer to the question, that we are going to make a very 
important decision in the next few days on who the next President of 
the United States should be. The candidate of the Democratic Party, Al 
Gore, has pledged to make the McCain-Feingold ban on soft money the 
first piece of domestic legislation he will introduce, and he has 
pledged to work for it and sign it when Congress passes it. The 
candidate for the Republicans, Governor Bush, apparently is prepared to 
veto it.
  So the tragedy, in answer to the question, of this Congress not 
acting is that if somehow Mr. Gore is not elected, we may finally get 
the 60 votes we need to break the filibuster but we will have a 
President who is not ready to do something about the corrosive and 
corrupting influence of money in politics. Of course, the Senator knows 
from my work on this, that I consider this to be one of the two or 
three greatest problems in our society. We just have to do something 
about the corrupting effect of money on our political and legislative 
system.
  Mr. REID. I have a final question. It is not a complicated issue, is 
it? The fact is, one of the things the Senator wants to do is keep 
corporate money out of politics; that is, have a corporation not be 
able to write large corporate checks or small corporate checks; keep 
corporate money out of politics, as was the law early last century. 
Isn't that right?
  Mr. FEINGOLD. Mr. President, that is absolutely right. Let me make it 
clear, the ban on soft money that Senator McCain, I, and a majority of 
this

[[Page 25412]]

body support, bans corporate contributions, union contributions, and 
unlimited individual contributions. It is fair and balanced.
  The Senator from Nevada is absolutely right. People who might be 
listening to this discussion might say: Well, these kinds of 
contributions have always been allowed anyway. That is not true. These 
kinds of unlimited contributions by corporations, unions, and 
individuals really didn't exist for purposes of these television ads 
until 5, 6 years ago. This is a new corrupting influence on our system, 
the likes of which has not been seen since the turn of the last 
century. I refer to the turn from the 19th to the 20th century. In 
answer to the question of the Senator from Nevada, that is what led to 
the 1907 Tillman Act which prohibited contributions by corporations in 
connection with federal elections, and then, when the unions came into 
their prominence in the middle part of the century, the Taft-Hartley 
Act said unions also must be prohibited from giving contributions.
  All we are trying to do is put the genie back in the bottle. 
Unlimited contributions have always been considered inappropriate in 
our system of government, and shame on this Congress that we can't see 
the worst corrupting influence in 100 years and that we didn't, before 
the turn of the century, shut it down, because it must be shut down.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. REID. Will the Senator yield for a unanimous consent request?
  Mr. HATCH. I am happy to.
  Mr. REID. I ask unanimous consent that following the remarks of the 
Senator from Utah, the Senator from Illinois be recognized for 15 
minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________