[Congressional Record (Bound Edition), Volume 147 (2001), Part 2]
[Senate]
[Pages 1704-1707]
[From the U.S. Government Publishing Office, www.gpo.gov]



                    THE PRESIDENT'S PROPOSED TAX CUT

  Mr. DURBIN. Mr. President, thank you for this opportunity to address 
the issue of the moment, which is the tax cut. It is an issue many of 
us have followed closely for a long period of time. Some of us who have 
served here for a period can recall it wasn't that long ago we were 
dealing with a terrible deficit on an annual basis that started 
accumulating a national debt in record numbers. What was the beginning 
of this national debt? Well, you have to go back to, I guess, President 
George Washington when we started spending more than we had. Over the 
years, the debt accumulated.
  In the early 1980s, the national debt in America started 
skyrocketing. We started adding more deficits each year than at any 
time in our history. In a short period of time--10 or 12 years--we 
ended up finding the national debt of this country at the highest 
levels in our history. It caused great alarm, as it should have, not 
only in Congress, but across the Nation, and a concern among people as 
to whether or not this would have a negative impact on our economy. Of 
course, if the Government spends more money than it brings in, it has 
to borrow the money to spend and then pay interest on the money 
borrowed. We found ourselves, each year, paying more and more interest 
on this old debt.
  The mortgage on America was getting larger and larger and larger. 
Today, it is at $5.7 trillion. That is a frightening number which, when 
I came to Congress 20 years ago, would have been unthinkable. Yet it 
has happened in that period of time. But the good news to be delivered 
is that we have finally turned the corner. For the first time over the 
last several years, we have been generating annual surpluses. Our 
economy is strong. More people are working and they are building homes 
and buying cars and buying appliances. Businesses are more profitable. 
Individuals have done well with investments, and America is a more 
prosperous Nation. For the last 9 years, we have seen unparalleled 
economic prosperity. But we have to recall, as we sit here in the year 
2001, that this is a recent turn of events. Only a few years ago, 4 
years ago, my Republican colleagues came to the floor asking to amend 
the Constitution of the United States with a balanced budget amendment 
because they thought it was impossible for Congress to get the deficits 
under control.
  Well, the economy was helped. Congress did the right thing and the 
economy has moved forward to the betterment of millions of American 
families.
  In this time of prosperity and peace comes a new President, George W. 
Bush, who suggests we should take the surpluses we anticipate, not this 
year but for the next 10 years, and spend them. On what would he spend 
them? Tax cuts--tax cuts in a plan that he has proposed in this 
campaign and has since proposed after the inauguration which would 
reduce the tax burden of many Americans--not all, but many Americans.
  You will have to excuse me if I suggest that the President needs to 
reflect that it wasn't that long ago when his father was President that 
things were a lot different in America, when we were really struggling 
with an economy that was building up annual deficits and adding to the 
national debt. It hasn't been that long ago. In fact, go back

[[Page 1705]]

about 10 years and you will see we appeared to finally be turning the 
corner.
  I wonder if 10 years ago, as President George Bush, the first, 
finished his term in office, he would have been able to predict what 
America would look like for his son, President George W. Bush. I don't 
think so. Even the best economists could not project 10 years ahead 
what the next President Bush would face.
  In fact, as I said on the floor this morning, the best economists 
looked at our deficit and suggested 5 years ago this year we would be 
running a $320 billion deficit. That was their best opinion based on 
the information they had. They were wrong. We are running a $270 
billion surplus. They missed it by $590 billion, just 5 years ago.
  The point I am trying to make is this: The best economists in 
America, using the best information available, are often wrong. They 
come before our committees on a regular basis and make prophesies and 
predictions that turn out to be just flat wrong. If you think there is 
something wrong with people talking to agencies of government, or if 
you happen to be an investor yourself, you know their newsletters give 
advice every day of every week, and a lot of it is just wrong. They 
guess wrong about next week, let alone next month or next year.
  The reason I bring this up is that President George W. Bush's tax cut 
proposal is based on projections of what the American economy is going 
to look like, not next year but literally 10 years from now. The 
President wants to commit us to a tax cut that will literally spend 
surpluses which his economists imagine will occur 9 or 10 years from 
now. That, to me, is not sound public policy.
  In addition, keep in mind that the national debt, the national 
mortgage I talked about earlier, is still there. It is $5.7 trillion. 
That is a debt which most families in America do not get up in the 
morning and worry about, nor should they, but it is there.
  We as policymakers in Washington have a responsibility to deal with 
it in a sensible way. We have to remind the families across America 
that though things are going very well in this country, we literally 
collect $1 billion a day in taxes from families, individuals, and 
businesses across our country just to pay interest on old debt--$361 
billion a year collected in taxes by the Federal Government, taken from 
hard-working Americans, not to build a classroom, not to hire someone 
to be part of our national space program, not to make a stronger 
national defense or to build a highway, but to pay interest to the bond 
holders of America's debt.
  Excuse me if I do not make this point clear, but if you had a 
surplus, wouldn't you want to retire the mortgage first before you 
decided you were going to put another addition on the house or buy a 
new house or have a big party? That is part of this debate. If we are 
going to deal with the surplus in America and the good times in 
America, let us do it in a sensible and sane way, and let us dedicate 
ourselves to paying down this national debt.
  Many have said what a great gift to give to our children, a tax cut. 
That is a great gift to give to a child, but isn't it a greater gift 
for us to retire America's mortgage, to say that this national debt 
should be taken care of? I think it is.
  Secondly, if we do that, it is a sensible commitment of the surplus 
on an annual basis. If we have the surplus, as we hope we will, we 
retire the debt with it. If we do not have it or go into a recession or 
bad times, then clearly we have not made a commitment with which we 
cannot live. But if we pass a tax cut, change our Tax Code, I can tell 
you from having served in the House and Senate, it is extremely 
difficult to change. Once it is in place, we can find ourselves a few 
years from now facing new deficits, more red ink, and adding to the 
national debt.
  I do not want America to go down that road again. I believe we should 
support a policy which has a focus on paying down the national debt. I 
believe, even if we do that, we will still have resources over the next 
10 years for a tax cut.
  I support a tax cut. I think it makes sense. The question is, how 
large a tax cut. When we take a look at the proposal from President 
Bush of a $2.6 trillion tax cut, after we figure out how much of a 
surplus we are likely to have over the next 10 years, we find that the 
President is committing 96 percent of this projected surplus to tax 
cuts.
  One can argue as to whether there will be a surplus, but assuming for 
a moment that every penny of the surplus which we imagine and prophesy 
today is there, the President wants to take 96 percent of it and put it 
in a tax cut.
  That leaves 4 percent of the surplus--only 4 percent of this 
projected surplus--for a variety of other things which Americans 
believe, and I believe, are critically important for our country. Let 
me go through them so there is no doubt that when we talk about 
spending in the future, we are talking about investments that most 
American families understand should be part of our national budget.
  I talked about debt reduction. Frankly, $100 billion over 10 years 
dedicated to debt reduction--long-term debt reduction--is not enough. 
We need to put enough into it so that national debt is reduced as close 
to zero as humanly possible.
  I thought both parties agreed on a prescription drug benefit for the 
elderly and disabled in this country, but President Bush's tax cut plan 
leaves us no resources to do that; in other words, helping people who 
are senior citizens who need prescription drugs to stay healthy, 
independent, strong, and out of the hospitals and nursing homes, which 
everybody in the last campaign said we agree on, when it comes to the 
President's proposal for a tax cut, and find there is no money left for 
prescription drugs, and no money left for education.
  The President has had some great speeches and great public 
appearances over the past several weeks talking about new Federal 
commitments to education. I applaud those remarks. It is sound policy. 
If America is going to be strong in the 21st century, our schools have 
to be strong, our kids have to have the best education to compete in a 
very global, competitive economy.
  Let's take a look at what the President leaves from the surplus for 
education. Hardly anything. When it comes to education, frankly, he is 
shortchanging kids in the future to provide a tax cut today.
  He is talking about increasing spending for defense. The national 
missile defense is a multi-billion-dollar program to protect America, 
and yet the President does not leave money from the surplus for that 
purpose.
  Expanding health care, with over 40 million uninsured Americans--it 
is a national disgrace that so many people do not have the security of 
a good health insurance plan--the President leaves no money from this 
surplus to even address that issue.
  I had a conversation with my wife over the weekend. We were talking 
about the problems and perils of people who are trying to move from job 
to job and wonder if they will have health insurance coverage. In a 
nation this prosperous, in a nation with such a rich tradition of 
caring for others, how can we continue to ignore the millions of people 
who have literally no health insurance protection whatsoever?
  Heartbreaking stories are received in my office from my home State of 
Illinois and across the Nation. Those stories will go unheeded, that 
problem will go unaddressed, if we devote 96 percent of any projected 
surplus to a tax cut.
  The same thing is true for agriculture. Over the last 3 years, we 
have had agricultural crises across the Midwest and across the Nation. 
We have responded to them. The President leaves no money in 
anticipation of those even occurring over the next 10 years. I pray 
they will not, but I bet they will. And if they do occur, we had better 
have the resources so that America's agriculture, its farmers, can 
sustain a bad year and live to plant again.
  Medicare reform, Social Security reform, the President does not 
provide for these. For him it is the tax cut, 96 percent of all the 
surplus for the tax

[[Page 1706]]

cut, to the exclusion, to the detriment, of many other things.
  When we take a look at the surplus projections of the Congressional 
Budget Office, we also realize that we are not going to see most of it 
until 5 years out, if it is going to cost us $2.6 trillion for the 
total tax cut. Take a look at when the money starts coming in. It is 
not until 2007 that we see most of this projected surplus appearing. We 
are talking 5 or 6 years from now. So all of the guesses about whether 
we will have $2.6 trillion are grounded on an assumption of the state 
of America's economy in the years 2007-2011. The economists, as good as 
they are, and the computers, as fast as they are, are not that good to 
tell us what this surplus is likely to be.
  Sadly, because the President has proposed these massive tax cuts, 
without the surplus, again, we find that the President is going to be 
raiding Social Security and Medicare surpluses. He has even proposed 
this privatization plan for Social Security. If he goes forward with 
that, it is going to cost us another $1.3 trillion over the next 10 
years, taking more money from Social Security.
  There is also a very serious question as to who will be receiving the 
President's projected tax cuts, and this is one about which I feel very 
strongly. I believe we should have a tax cut. It should be fair to all 
Americans. It should be part of a responsible and honest budget that 
balances priorities across the spectrum for America's families, and, 
most of all, it should be a tax cut that strengthens our economy, not 
weakens it. It should be a tax cut that will allow America's families 
to succeed.
  Yet when we take a look at the kind of tax cuts proposed by President 
Bush, we find, again, they are lopsided. The President has proposed if 
we are to have this massive $2.6 trillion tax cut, 42.6 percent of this 
tax cut should go to people in the top 1 percent of wage earners. Those 
are people in America with incomes over $300,000 a year. If you are 
making over $300,000 a year, you are in the top 1 percent, you have an 
average income of $900,000 a year, and your tax break by President 
Bush's calculation is about $46,000 a year.
  Sadly, for 80 percent of Americans who have incomes below $64,900, 
only 29 percent of the tax cuts head in that direction. For those 
making less than $39,000 a year, the President's average tax cut 
amounts to about $227. They have made this point over and over again: 
For the top 1 percent, the highest wage earners in America, there is a 
tax cut large enough to buy a Lexus. For those in the lower 60 percent 
income in America, there is a tax cut large enough to buy a muffler for 
a car--probably not a muffler for a Lexus.
  Some say, wait, the reason the rich get so much of the tax cut is 
that they pay so much in taxes so they should receive more in terms of 
the tax cut. Hold on. Look at this. The total Federal taxes paid by the 
top 1 percent of wage earners in America account for 21 percent of all 
the taxes collected. The President gives to that group, those making 
the top 1 percent income, 43 percent of the tax cut, twice the tax cut 
for their tax burden. Keep in mind, these are people who are making at 
least $25,000 a month, if not $75,000 a month. The President says these 
are the ones most deserving of a tax cut.
  I disagree. I know what is going on in my home State and I bet in the 
State of Kansas and many others. There are people now struggling with 
heating bills, paying hundreds of dollars a month for natural gas and 
other sources of heat for their homes. I see them, I run into them when 
I am back in Illinois. I get letters, e-mails, and telephone calls 
about the problems they face. I think to myself, if you are going to 
have a tax cut, for goodness' sake, remember those folks, remember the 
people who are trying to struggle and pay these bills. They are the 
ones who need a tax cut much more than someone who is earning $25,000 a 
month.
  If you are making $39,000 a year and your heating bill goes up in 
your home from $250 to $400 a month, you will notice it. If you were 
making $25,000 a month, would you even notice it? When we talk about 
tax cuts, let us focus on helping families who really deserve a helping 
hand.
  Another area that comes to mind immediately is the question of paying 
for a college education. The cost of a college education continues to 
skyrocket much faster than the pace of inflation. What we find is that 
many middle-income families who want to give their sons and daughters 
the very best cannot afford it. I think we ought to focus on a tax cut 
that helps those families, that says, for example, you can deduct the 
cost of a college education up to, say, $10,000 or $12,000 a year from 
your family's income tax. That makes sense to me. I think it encourages 
more families to send their sons and daughters off to school.
  It comes down to this: On this side of the aisle, on the Democratic 
side of the aisle, we believe, first, there should be a tax cut after 
we admit our obligation to pay down the national debt in a responsible 
way. Whatever surplus we have, I believe, should first be dedicated to 
paying down that debt so our children do not have to carry that burden. 
Then the tax cut--if there is to be one, and I believe we can have 
one-- should be sensible, it should be one that is not dangerous or 
risky to the economy, and it should focus the tax assistance to the 
families who need it the most, those who are in the middle-income 
category, struggling to pay the bills. The wealthiest of the wealthy 
will do just fine. We have to focus on families struggling to make ends 
meet and struggling to realize that American dream.
  In addition to that, we can never overlook our obligation with this 
surplus and with each year's budget to Social Security and to Medicare, 
to health care, and to education. It would be a sad commentary if, 
after all we have been through over the last 20 years, we found 
ourselves once again entertaining the thoughts of a tax cut that this 
Nation cannot afford, at a level which we cannot sustain, based on 
promises we cannot prove. That is exactly what we are doing now.
  The President's tax cut is music to the ears of many voters, but 
those who step back and take a look at the situation say to most 
Members of Congress: Of course I want a tax cut. If you are going to 
give a tax cut, give it to me and my family. We can figure out how to 
spend it. If you say to them, Is a tax cut more important to you than 
eliminating and retiring our national debt once and for all, most 
Americans say: No, put that debt behind us. If this is a chance to do 
it, get rid of America's national mortgage.
  If you give citizens another choice: Would you prefer a tax cut for 
your family or would you rather see us invest in education in America, 
to make sure that our schools are modern, the technology is up to date, 
and your kids are taught by the very best men and women available to 
teach in America, that is an easy choice for most families: Put it in 
education first.
  What about health care? Should we focus on a prescription drug 
benefit under Medicare or a tax cut of $46,000 a year for the upper 1 
percent of American wage earners? That is an easy call for most 
families: Put it into a prescription drug benefit that is universal and 
affordable, under Medicare.
  When you bring it down to the real choices we face, not just a tax 
cut or nothing, but a tax cut that is sensible and one that 
accommodates retiring the national debt, investing in America's 
families, making sure they can continue to succeed, I think the choice 
is going to be clear.
  We made a mistake in 1980 with the new President Reagan supply side 
economics, the aptly named Laffer curve. All of the things suggested--
if you just kept cutting taxes, America would prosper--didn't work. As 
a consequence of that bad decision and the beginning of that Presidency 
with all the euphoria of the Reagan years, we started a chain of 
deficits which literally crippled America.
  Finally, we are out from under that burden. On a bipartisan basis we 
should learn a lesson. The lesson is this: The people of this country 
understand priorities very well. They understand the lyric call of a 
tax cut may make great music on the nightly news, but there is

[[Page 1707]]

a lot more to governing America than just being popular and saying 
popular things.
  You have to speak straight to the American people, be sensible with 
them, tell them that the tax cut President Bush has proposed is, 
frankly, not good for this country in the long term. We cannot base 
this tax cut on projections of what America will look like 5, 6, 7, 8, 
9, 10 years from now, and be wrong, and find ourself back in deficits. 
We cannot push a tax cut which inordinately rewards the wealthiest in 
this country and ignores some 23 million Americans who receive 
literally no tax benefit from the President's tax cut proposal. We 
can't be backing a tax cut that is so large that it raids the Social 
Security trust fund and endangers the future of Medicare. And we 
certainly cannot back a tax cut that ends up making certain that we in 
America are spending more and more money to provide tax relief to the 
wealthiest among us and ignoring these important priorities such as 
education, defense, health care coverage, Medicare reform, and Social 
Security reform.
  Alan Greenspan is a man I respect very much. He came to the Hill last 
week and made a statement about the future of this economy. He has made 
some good predictions in the past. He suggested we should consider a 
tax cut. I think he is right. But he also said, if you read his 
statement very carefully: Don't get carried away; do it in a sensible 
fashion; do it in a way that will keep America moving forward.
  It is now up to this Chamber, and the 99 other men and women who will 
gather here and debate over the next several weeks, to be honest with 
the American people. Perhaps not the most popular statements but the 
most sensible statements will tell us that a tax cut is not the be all 
and end all, not the goal for everything in America. What is most 
important is that we create an economy where American families can 
succeed. I think we have that opportunity. I hope we don't lose it.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Smith of Oregon). The clerk will call the 
roll.
  The legislative clerk proceeded to call the roll.
  Mr. NICKLES. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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