[Congressional Record (Bound Edition), Volume 147 (2001), Part 2]
[Senate]
[Pages 1684-1686]
[From the U.S. Government Publishing Office, www.gpo.gov]



                              THE TAX CUT

  Mr. BINGAMAN. Mr. President, I want to take a few moments to talk 
about the proposed tax cut that is, of course, the main focus of a lot 
of our attention in the Congress since the President sent us the tax 
cut proposal this last week, and give some thoughts as to my 
perspective on it at this point. I am sure that perspective will evolve 
as we get closer to actual consideration of the bill on the Senate 
floor. But I wanted to talk about how I see it at this point.
  I think there are four obvious questions we need to ask about this 
tax cut proposal. First, should we have a tax cut? That may be the 
easiest question for all of us, but it is a legitimate question. 
Second, is the President's proposal the right size of tax cut in total, 
his $1.6 trillion proposal? Third, is it structured appropriately in 
order to accomplish what we want to accomplish for our economy? The 
fourth obvious question is, does the President's proposal constitute a 
fair distribution of the benefits from this proposed tax cut?
  Let me take a few minutes to deal with each of these. First of all, 
should we have a tax cut at this point in our Nation's history? To me, 
the answer is clearly yes. We can afford to have a tax cut because we 
are now projecting substantial surpluses, whereas most of the time I 
have served in the Senate, we have been dealing with deficits, not with 
surpluses. But we now have a surplus and a projected surplus; 
therefore, we can afford a tax cut.

[[Page 1685]]

  Second, if we do properly structure this tax cut and do it quickly, 
pass it quickly and send it to the President for signature, it could 
stimulate the economy at a time when our Nation may need a real 
stimulus, perhaps as early as this summer or early this fall.
  Those are reasons why I believe a tax cut is appropriate.
  The second question I posed was, was the President's proposed $1.6 
trillion the right size of a tax cut at this time.
  I have some real doubts about that. And my answer has to be at this 
stage based on what I currently know and what I think all of us 
currently know. I think the answer has to be that it is not the right 
size; it is too large.
  The answer to the question has to be no. We should downsize the 
proposed tax cut before we enact anything here in the Senate.
  Why do I say this? Let me give a few reasons.
  First, there is a tremendous amount of uncertainty at this particular 
point about where our economy is headed. Last Thursday I saw a report 
in the New York Times reporting that many States expect a reduction in 
their State sales tax receipts, indicating a slowdown in sales. Of 
course, the States are much more dependent upon sales tax receipts than 
the Federal Government.
  Many States that were awash with cash a few months ago now are 
preparing for budget cuts. They are seeing their projected surpluses at 
the State level evaporate as they see the expected revenue coming in 
from these sales taxes to be reduced. At the same time, the 
administration and the Federal Reserve Board are warning about a 
slowdown in the economy. I know Chairman Greenspan is speaking again 
today. I believe he testifies before the Banking Committee, and I 
imagine that he will, once again, make the point that he made to the 
Budget Committee a couple of weeks ago, which is that we have a very 
slow growth economy at this particular moment; there has been a 
substantial downturn in economic activity.
  All of this adds to the uncertainty, as I see it, and gives us more 
reason to hold off on locking in a very large tax cut until we get a 
better sense of where we are.
  A second reason is, when you look at the numbers and the size of the 
projected tax cut, you have to become concerned about, if we go with 
this large of a tax cut, whether we will have the funds necessary to 
pay down the debt.
  The remaining actions people in my State tell me they would like to 
see us take, if we have the funds, are a prescription drug benefit and 
increased defense spending.
  President Bush is going to military installations this week talking 
about how we need to put more into national defense. The question is, 
Can we afford that if we go with this very large tax cut, and increased 
funding for education, and for a variety of needs that we have in this 
country?
  I thought the best exposition I have seen and the best description of 
the problem and the best reasoned argument against the size of the tax 
cut was in the New York Times op-ed piece that Bob Rubin, our former 
Secretary of the Treasury, wrote. I thought it was extremely 
insightful. Let me read a paragraph.
  He says the serious threat of the proposed tax cut to fiscal 
soundness becomes apparent when you look at the numbers a little more 
closely. The surplus of $5.6 trillion as projected by the Congressional 
Budget Office is roughly $2.1 trillion after deducting Social Security 
and Medicare surpluses; as many Members of Congress in both parties 
have advocated, making realistic adjustments to better represent future 
spending on discretionary programs and tax revenues.
  He says we have a $1.2 trillion surplus that we are talking about 
having available for a tax cut. He said since the proposed tax cut 
would cost $2 or $2.2 trillion if an alternative minimum tax adjustment 
is included, it would entirely use up the remaining surplus with no 
additional debt reduction. That leaves nothing for special programs 
that already have broad support--such as the prescription drug benefit, 
or greater increased defense spending for a missile defense system, or 
other purposes, or additional tax cuts, all of which are sure to happen 
this year, or over the next few years.
  These spending increases and the additional tax cuts could well cost 
between $500 to $1 trillion leading to a deficit under this analysis of 
the Congressional Budget Office projections.
  My answer to the second question has to be that we cannot afford this 
size tax cut.
  The third question that I posed is what the President's proposed tax 
cut should be to accomplish what we want for our economy.
  Again, I think the answer has to be no.
  The reality when you look at the President's proposal is that this 
tax cut is not intended or designed or structured to provide tax relief 
to anyone in the near future. It is instead intended and designed and 
structured to provide tax relief in the distant future.
  The administration has argued that we need this tax cut to give the 
economy a boost at a time when we most need it, and when our economy 
most needs it. But the truth is, it provides absolutely no tax relief 
in 2001. It provides only $21 billion of tax relief in the year 2002.
  The tax cut proposal we have been sent by the President is 
backloaded. It is a much, much larger tax cut in future years--5 or 10 
years from now--than it is this year. In fact, there is no tax cut this 
year as proposed by the President. In my view, the structuring of this 
tax cut as well as its size is flawed.
  The final question that I believe needs to be asked, and undoubtedly 
will be asked and answered many times in different ways by all of us, 
is, is the President proposing a fair distribution of the benefits of 
the tax cut.
  Again, my answer has to be no. The proposal the President sent us is 
heavily weighted to help those with higher incomes.
  I was reading a magazine that arrived at our house last night--the 
U.S. News & World Report. They had a chart depicting how benefits from 
the Bush tax plan stack up. I was just trying to analyze that chart.
  They take a single person, with no children, with a $25,000 adjusted 
gross income and then they go up to $300,000 adjusted gross income, and 
a married couple with one spouse working and two children. They go 
through a variety of possible taxpayer situations and try to analyze 
how much actual tax relief will be available.
  According to their calculation, under the Bush plan, an individual 
who is earning $25,000 a year adjusted gross income, would get $60 in 
tax relief the first year that this is in effect. That would be 2002. 
You get a $60 cut in your taxes.
  If you take the person who has a $300,000 income, what about their 
situation? They would get $25,679 in tax relief that first year.
  You say: Well, what is wrong with that? A person with an income of 
$25,000 is earning one-twelfth of what the person with an income of 
$300,000 is earning. The tax cut for the person earning $25,000 would 
be one forty-second as large as the tax cut the person earning $300,000 
would receive.
  Then if you look at the figures 5 years out after their tax cut 
really begins to substantially impact, the person earning $25,000 would 
get a $300-per-year tax cut. The person earning $300,000 would get 
nearly $10,000 in tax cuts, or 32 times as much tax of a cut as the 
person who is earning $25,000.
  I have tried to get some statistics also on the impact of the 
President's proposal in my State, to work those up and try to 
understand how the people whom I represent would be affected. Of 
course, some of it is not that clear. But if you look at the 
demographic breakdown of the Bush tax cut as it affects the New Mexico 
taxpayers, the inequity is fairly stark.
  Based on the statistics that were supplied in the Wall Street Journal 
last Thursday, while only roughly 4 percent of the Bush tax cut will be 
going to the bottom half of the people who file tax returns in my 
State, nearly half the benefits of the tax cut will go to fewer than 4 
percent of the wealthiest individuals in my State.

[[Page 1686]]

  On the issue of eliminating the estate tax--part of what the 
President has proposed is to have no estate tax in the future--in 1998, 
in New Mexico, to give a clear impression as to whom this benefits, 
there were 166 estates that paid estate tax. If, instead of repealing 
the estate tax, we would increase the current exemption from the 
$675,000 to $2.5 million, which is one of the proposals some of us have 
embraced, then there would be 26 of those estates that would have paid 
estate tax in my State in that year under that changed law.
  At a time when the administration is asking charities and private 
citizens to do more for their communities, we are eliminating one of 
the largest tax advantages for charitable contributions by wealthy 
individuals, if we, in fact, eliminate the estate and gift tax.
  There is serious doubt as to whether this proposed tax cut is fair in 
its distribution of benefits, and we need to study that. We need to try 
to come up with something that is more fair, something that will 
benefit average working families in the country. We should move quickly 
to try to enact a tax cut because that will help us economically, but 
we should not move so quickly that we do not take the time to change 
what has been sent to us by the President and come up with the right 
size tax cut, which, as I say, would be substantially less than the 
$1.6 trillion. We should take the time to be sure it is structured in a 
way that the benefit is realized this year, a significant portion of 
the benefit, so Americans can take money home this year and see 
benefits in their own checking accounts.
  We should alter what the President has sent us to make it more 
equitable. We should see to it that average working families and 
individuals get their fair share of whatever tax cut is enacted. This 
tax cut is not designed to appropriately distribute those benefits. It 
is something that will require substantial work. I hope we can do that.
  One of the unfortunate things about our political process is that 
oftentimes candidates for public office make proposals and get locked 
into political positions long before they are elected to the office and 
in a position to actually try to work for the enactment of those 
positions. That is what has happened in this case. President Bush 
adopted his proposal for a $1.6 trillion tax cut well over a year ago 
when he was in the primaries running against Steve Forbes. There was a 
lot of competition within the Republican Party to see who could propose 
the larger tax cut.
  President Bush proposed a very large one, and he has stuck to that in 
spite of the fact that our circumstances have changed, in spite of the 
fact that the economy today is not the robust economy we had a year 
ago, and in spite of the fact that there are real uncertainties about 
where we are going.
  I hope we will take the time to analyze what the President sent. I 
hope we will also take the time to revise it so that we can better 
serve the people of this country by giving them a tax cut from which 
they can benefit quickly, a tax cut that most Americans will consider 
fair. I believe that is in the best interest of the country and that is 
clearly what our constituents have sent us here to do.
  I yield the floor and suggest the absence of quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DORGAN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Thomas). Without objection, it is so 
ordered.
  Mr. DORGAN. Mr. President, I ask unanimous consent to speak in 
morning business for 15 minutes, after which I ask unanimous consent 
that Senator Boxer be recognized for 15 minutes.
  The PRESIDING OFFICER. Under the previous order, the time of the 
Senator is under the control of the Democratic leader until 11 o'clock, 
and at such time, for those who wish to use it, the time is allocated 
to the Republican leader.
  Mrs. BOXER. Mr. President, I ask--if no one is here at 11--whether 
the Democrats could speak until the Republicans come at that time.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mrs. BOXER. Thank you so much.
  Mr. DORGAN. Mr. President, I withdraw my request.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. DORGAN. Mr. President, I ask unanimous consent to speak until 11 
o'clock.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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