[Congressional Record (Bound Edition), Volume 147 (2001), Part 20]
[Extensions of Remarks]
[Page 27983]
[From the U.S. Government Publishing Office, www.gpo.gov]



        RESIST A BILL WITH TAX CUTS THAT WOULD DRAIN THE SURPLUS

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                        HON. JOHN M. SPRATT, JR.

                           of south carolina

                    in the house of representatives

                      Wednesday, December 19, 2001

  Mr. SPRATT. Mr. Speaker, a year ago, economists surveyed the future 
and saw nothing but surpluses: $5.6 trillion over the next ten years. 
Today, the ten-year surplus is at $2.6 trillion and falling, and 
virtually all that's left comes from Social Security. When the 
President submits next year's budget, an updated economic forecast will 
come with it, and the surplus will officially shrink again.
  the Director of the Office of Management and Budget, Mitchell 
Daniels, blames the economy, extra spending, the fight against 
terrorism--everything but tax cuts. All of these have an impact, but 
over ten years, the Bush tax cuts take a toll of $1.7 trillion on the 
budget, and account for 55% of the depletion in the surplus--and this 
is just the toll of tax cuts already passed. Marking time is a little-
noticed agenda of highly probable, politically compelling tax cuts that 
could wipe out much of the remaining surplus.
  At the top of this agenda, awaiting a fix, is the alternative minimum 
tax (AMT). Last year only 1.5 million individual taxpayers had to deal 
with the AMT, but due to inflation, rising incomes, and an unindexed 
exemption, the AMT will become a household acronym to millions of 
middle-income Americans.
  Before enactment of the Bush tax cuts, the number of individual 
taxpayers affected by the AMT was expected to mushroom to 17.5 million 
by 2010. The Bush tax act created new tax benefits without 
corresponding adjustments to the AMT, at least not after 2004. As a 
result, the number of taxpayers affected by the AMT will double by 
2010, grow to 35.5 million--or to one in every three individual 
taxpayers. When these folks find that tax benefits are extended in one 
part of the code only to be retracted in another, they will protest 
bitterly, and in time Congress is certain to fix the AMT so that it 
does not come down on middle-income taxpayers. The cost of confining 
the AMT to its ambit before the Bush tax cuts would be about $268 
billion over 2003-12. But this would leave more than 17 million 
taxpayers facing the AMT. If taxable income exempt from the AMT were 
indexed at last year's level, those affected in 2010 could be limited 
to about 8 million, but at a heavy cost, a further revenue loss of $241 
billion.
  Just as probable as some fix to the AMT is the renewal of tax 
benefits set to expire. The tax code is full of short-lived benefits. 
CBO and OMB do not try to divine what Congress will do when these 
deductions and credits reach the end of their legislated lives. They 
simply assume that expiring provisions will not be renewed. But these 
are popular tax benefits, and they are almost always renewed. The 
revenues forgone by renewing the most prominent tax benefits from 2003 
through 2012 would be about $174 billion.
  This, however, omits the largest expiring provision. In an effort to 
shoehorn as many tax cuts as possible into a package limited to $1.35 
trillion, congressional Republicans put a ``sunset'' in their tax bill, 
terminating all of the cuts by the end of 2010. They obviously do not 
intend for the sun to set on their tax cuts. They stuck in a 
``repealer'' to diminish the apparent size of the tax bill, knowing 
that Congress will be hard-pressed to repeal tax cuts already in place. 
In time, the ``repealer'' itself will probably be repealed. If so, the 
revenue loss will be $373 billion over 2003-2012.
  When each of these actions is taken into account, an additional $1 
trillion in revenue losses has to be deducted from the budget between 
2003 and 2012, along with an additional $143 billion in debt service. 
The impact on the budget, all told, comes to $1.2 trillion.
  This dashes any hope that the nation can repay its publicly held debt 
before the baby boomers retire. It also puts the ``stimulus package'' 
in context. Disdaining the vanishing surplus and the agenda of tax cuts 
to come, Republicans on the Ways and Means Committee brought forth a 
stimulus package full of tax cuts with doubtful effects on the economy, 
but with a clear impact on the surplus, reducing it by $250 billion 
over the next ten years. If this bill became law, it would push the 
overall price of the pending tax-cut agenda to almost $3.5 trillion and 
wipe out what remains of the surplus.
  The projection of ten-year surpluses soaring toward $6 trillion left 
in its wake a sense of euphoria, a feeling that we could have it all. 
It's clear now that we can't, but in the meantime, out-sized tax cuts 
have overridden other priorities, like prescription drug coverage under 
Medicare. If we want to put the economy and the budget back on path, 
there is an axiom worth recalling from the days of intractable 
deficits: When you find yourself in a hole, the first rule is to quit 
digging. That's why we should resist a bill with tax cuts that would 
drain the surplus without stimulating the economy.

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