[Congressional Record (Bound Edition), Volume 147 (2001), Part 2]
[Senate]
[Pages 1566-1567]
[From the U.S. Government Publishing Office, www.gpo.gov]



                           FISCAL DISCIPLINE

  Mr. LIEBERMAN. Mr. President, this is an important day in the 107th 
session of Congress. This is the day on which President Bush will send 
us his tax proposals. Our response to them will determine, I believe, 
the strength of our economy and the security of each and every American 
for years to come.
  In response to the proposal the President will send us, I believe we 
will all be tested--each of us individually, the institution of 
Congress, and, indeed, the American people whose opinions will 
influence what we do. I think, therefore, we have to think long and 
hard about what we do.
  I have looked at the proposal President Bush is going to send us 
today. And with all respect, I believe President Bush's tax proposal is 
a mistake because it does not reflect the best American values of 
thrift and discipline. I also believe President Bush's tax proposal is 
ultimately fiscally irresponsible because it spends money in a 
projected surplus we have no reason to have absolute confidence we will 
have and, therefore, not only threatens to take America back down the 
drain to debt, to deficits, to higher interest rates and higher 
unemployment but threatens to make impossible the kinds of measured 
investments we need to make in our people's future, including our 
national security, the education of our children, and the health care 
of all Americans.
  So I think it is time for us, on these tax-and-spending matters, to 
slow down. If I might paraphrase a Simon and Garfunkel classic: It is 
time for us to slow down and not move too fast because we have to make 
the good economy last. What I see around us, in response to the 
President's proposal, is quite the opposite of discipline.
  I fear we are going to end up in a race to see who can give more 
away, which will ultimately result in a position that the American 
people will not be able to take care of themselves. I want to speak 
about this for a moment or two.
  We have learned some lessons--or should have--over the last several 
years about how we created the economic growth that most American 
families are enjoying today. Government does not create jobs; the 
private sector does. But Government can create the environment in which 
the private sector can thrive by the way we conduct ourselves.
  It seems to me, if we look back over history, though the investments 
we make in education and training are important, the most important 
thing the Federal Government can do is to keep its books in balance 
and, hopefully, to have a little bit of a surplus. That creates the 
confidence and the stability which encourages the private sector to 
invest, to innovate, to create jobs, to grow.
  The tax plan which President Bush is sending to Congress today 
ignores those lessons. The administration's massive $2 trillion tax 
program--because it is not just the $1.6 trillion, if you add on the 
necessary alteration in the alternative minimum tax and lost interest 
earnings as a result of that tax plan, it comes to more than $2 
trillion--that massive $2 trillion tax program misunderstands our 
unprecedented economic expansion and why we got there and is not the 
right way to deal with the current economic slowdown that worries us.
  As a so-called new Democrat and, indeed, I might add, as a New 
Englander, I believe in tax cuts.
  I have supported them in the past. I will support them again this 
year. But they have to be done in the context of a balanced fiscal 
program. The President's proposal absorbs most of the projected surplus 
for tax cuts, a surplus which, I repeat, is just a projection, not a 
reality. It is as if someone told the average American or the average 
American small business person: We think you are probably going to make 
this much money in the next 10 years, and then that individual American 
or that individual American small business person immediately goes out

[[Page 1567]]

and spends all that money. No one sensibly would do that. We who have 
the privilege and responsibility of leading this country should not 
allow the American Government to do that.
  A better framework, one truly reflective of our national values and 
priorities, would be to divide the projected surplus into parts: One 
part for deficit reduction, not only for deficit reduction but as a 
hedge against the possibility that the surplus projections do not 
materialize; another part for broad-based progressive tax cuts; and a 
final part for targeted investments in our future: in our defense, in 
our national security, in our education, and in our health care.
  My own preference for that division would be to put half of the 
projected surplus for debt reduction in a rainy day fund, one-quarter 
for tax cuts, and one-quarter for targeted spending increases. Others 
would divide it in equal thirds. That is acceptable, certainly 
preferable to what the President is sending us today.
  Our top priority must remain debt reduction. Let us not forget, as 
good as the times are now, we still have a national debt of more than 
$3.1 trillion which, if we do not act responsibly, will burden the 
future, not just of our Nation but of our children and our 
grandchildren.
  Our economy is slowing down--it is still pretty healthy but slowing 
down--from the extraordinary rate of growth we have enjoyed for several 
years. Last week, it is important to note, the consumer confidence 
index reported a 20-percent decline from a year ago, falling to its 
lowest level in 4 years. Obviously, many consumers are getting nervous 
about the economy's slowing growth and what it portends for their 
future and our future as a nation.
  That presents us with a warning about how we should act with this 
surplus, but it also gives us an opportunity. Washington can quickly 
rally consumer confidence, I think most importantly, by continued debt 
reduction, staying the course, because that means lower interest rates. 
That means lower interest payments on cars, homes, student loans, and 
credit card debt. Lower interest payments also mean greater purchasing 
power.
  In short, continuing to pay down the debt and thereby keeping 
interest rates low amounts to an indirect tax cut and an economic 
stimulus now that will actually put more money into the pockets of more 
Americans more quickly than anything else we can do.
  Let me talk about the opportunity for tax cuts, which we have if we 
do this responsibly and right. The American people have earned a tax 
cut. In fact, as good as the economy has been in recent years, there 
are millions and millions of Americans who need a tax cut to make the 
way for themselves and their families. The question we have to ask 
ourselves is, What is the most constructive and fair way to return part 
of the surplus to those who helped create it? After all, the surplus 
comes from the revenues that people pay our Government. The revenues 
that people pay our Government have gone up because the economy has 
improved. The economy has improved because of the investment and 
innovation and hard work of the American people.
  The answer here is to construct and adopt a broad-based, progressive 
tax cut, one that is directed at the middle class, which is, after all, 
the backbone of our society and our economy. Let me suggest three 
possibilities to do this in a fiscally responsible way.
  First, let us remember that almost three-quarters of all working 
Americans actually pay more in payroll taxes, have more taken out of 
their paychecks in payroll taxes, than they pay in income taxes. Why 
not help them by cutting that tax on work and thereby adopt a payroll 
tax credit? For instance, working families could receive an annual 
refundable income tax credit equal to a percentage of what they pay in 
Social Security taxes, without affecting what they have invested for 
retirement.
  Another possibility that is being discussed is to use tax credits, or 
the money available to establish what, in effect, would be a national 
401(k), by matching private retirement savings and encouraging actually 
depositing money for retirement beyond Social Security in special 
accounts for all working Americans. That would allow people to keep 
more of their own money while supplementing Social Security for their 
retirement.
  A third reasonable, balanced, broad-based, progressive tax 
alternative is to give every American taxpayer a refund, a flat dollar 
amount, as a dividend, to reflect the growing budget surplus and the 
hard work that went into creating it.
  Each of these three possible proposals--and you can only adopt one of 
them in a fiscally responsible way--would have a great impact on those 
who need tax relief the most.
  Incidentally, if we do it right, there will be some money left over 
for tax cuts for business, tax cuts to encourage investment and 
innovation, tax cuts that can help small businesses, particularly, work 
their way into the new information age, high-tech economy. That might 
include another round of capital gains tax cuts.
  Briefly, on the question of spending, because I think we have the 
opportunity to make some investments in a limited, restrained, and 
targeted way, none is more important than education. President Bush has 
made a very thoughtful proposal on education reform which is not 
tremendously unlike proposals that many of us have made.
  We can talk about good ideas for education reform, but unless we have 
some money left over to actually invest in the education of our 
children, those ideas won't matter. The same is true of our national 
defense. Last year, then-Governor Bush quite often said that our 
military was strapped, it was becoming weak, and that help was on the 
way. He has now said more recently to the military: Don't expect an 
increase this year.
  But more to the point, if we spend as much on his tax proposal, there 
is no way we will have the money we need to invest in strengthening our 
military and keeping our Nation secure over the next decade.
  The bottom line is this: Fiscal discipline has played a critical role 
in the growth of our surplus. It would be foolish to forget that as 
quickly as these surpluses materialize, they can disappear. That is why 
we should follow a cautious approach to the surplus assumptions and 
projections and a balanced approach to the policies that are based on 
those assumptions.
  The best way to keep America's prosperity going is with a balanced 
program in which we distribute this surplus the American people have 
earned to debt reduction, sensible broad-based tax cuts, and targeted 
spending increases.
  That is the best way to secure America's future and improve the lives 
of the American people. I thank the Chair and yield the floor.
  The PRESIDING OFFICER. The Chair recognizes the Senator from 
Arkansas, Mr. Hutchinson.

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