[Congressional Record (Bound Edition), Volume 147 (2001), Part 7]
[Senate]
[Pages 9147-9174]
[From the U.S. Government Publishing Office, www.gpo.gov]



 RESTORING EARNINGS TO LIFT INDIVIDUALS AND EMPOWER FAMILIES (RELIEF) 
                         ACT OF 2001--Continued


                           Amendment No. 789

  Mr. GRASSLEY. Madam President, I send a managers' amendment to the 
desk. It has been agreed to by the two managers. I ask unanimous 
consent the amendment be agreed to, the motion to reconsider be laid 
upon the table, and any statements regarding these amendments be 
printed in the Record.
  The PRESIDING OFFICER. The clerk will report the amendment.
  The legislative clerk read as follows:

       The Senator from Iowa [Mr. Grassley], for himself and Mr. 
     Baucus, proposes an amendment numbered 789.

  Mr. GRASSLEY. I ask unanimous consent that further reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted and Proposed.'')
  Mr. LEAHY. Madam President, I am pleased the managers' amendment 
includes language identical to S. 694, the Artist-Museum Partnership 
Act, I introduced with Senator Bennett earlier this year. I would like 
to thank Senator Bennett for his leadership on this issue and also 
would like to thank Senators Bingaman, Cochran, Daschle, Dodd, 
Domenici, Jeffords, Johnson, Kennedy, Lieberman, Lincoln, Reid, and 
Warner for cosponsoring this bill.
  This bipartisan legislation will enable our country to keep cherished 
art works in the United States and preserve them in our public 
institutions, while erasing an inequity in our Tax Code that currently 
serves as a disincentive for artists to donate their works to museums 
and libraries. Our bill would allow artists, writers and composers who 
donate works to museums and libraries to take a tax deduction equal to 
the fair market value of the work. This is something that collectors 
who make similar donations are already able to do.
  There is an inequality in the current tax law where artists who 
donate self-created works are only able to deduct the cost of supplies 
such as canvas, pen, paper, ink. This is unfair to artists and it hurts 
museums and libraries, large and small, that are dedicated to 
preserving works for posterity.
  In my State of Vermont, we are incredibly proud of the great works 
produced by hundreds of local artists who choose to live and work in 
the Green Mountain State. Displaying their creations in museums and 
libraries helps develop a sense of pride among Vermonters and 
strengthens a bond with Vermont, its landscape, its beauty and its 
cultural heritage. Anyone who has gazed at a painting in a museum or 
examined an original manuscript or composition, and has gained a 
greater understanding of both the artist and the subject as a result, 
knows the tremendous value of these works. I would like to see more of 
them, not fewer, preserved in Vermont and across the country.
  I thank the Chairman and ranking member of the Finance Committee for 
including this legislation in the managers package. I hope that the 
provision will be retained by the Conference Committee.
  Mr. NELSON of Florida. Madam President, the Boxer-Nelson of Florida 
amendment seeks to safeguard public health and improve our nation's 
drinking water by aiding water companies to secure tax-exempt bond to 
comply with the 10 parts per billion arsenic drinking water standard.
  Ironically, we offer this amendment today, May 23, 2001, one day 
after Environmental Protection Agency finalized its decision to delay 
implementation of a new arsenic standard until February 22, 2002.
  Thus, the 1942 arsenic standard of 50 parts per billion, a standard 
put in place before arsenic was known to cause cancer, remains the 
standard for our nation's drinking water.
  This is true despite the scientific data which shows that the 50 
parts per billion standard could result in one additional case of 
cancer for every 100 people consuming drinking water.
  The EPA knows arsenic is dangerous. In fact, the EPA has found 
another danger associated with arsenic in addition to cancer: genetic 
alteration of our DNA. In April of this year, a team of EPA scientists 
published a report in ``Chemical Research Toxicology'' that 
demonstrates that in addition to causing cancer, arsenic can induce 
genetic alterations to human DNA.
  The risks associated with arsenic are widely known not just in this 
country, but throughout the world. For that reason, the European Union 
and the World Health Organization have endorsed the 10 parts per 
billion standard.
  Costs did not prevent the European Union or the World Health 
Organization from protecting their citizenry from the risks associated 
with arsenic. Costs should not prevent the United States either.
  Mr. CRAIG. Mr. President, I am very pleased that the tax 
reconciliation package we have passed today contains an amendment that 
I offered along with Senator Landrieu. That amendment is the text of 
the Hope for Children Act, which we introduced back in January as S. 
148.
  I greatly appreciate the consideration this amendment has received 
from Chairman Grassley, who has long been a leader in the area of 
adoption and foster care. He and Senator Baucus, along with the staff 
of the Finance Committee, have been extremely responsive to me and my 
staff as we worked through this amendment, and I thank them for their 
support of America's adopting families.
  As my colleagues know, this legislation will continue and improve on 
two current tax provisions that are helping so many Americans who seek 
to form families through adoption: the adoption tax credit and the 
exclusion for employer-provided adoption benefits. These provisions are 
due to expire at the end of this year, and the Hope for Children Act 
will remove that sunset. It will also double the basic tax credit and 
exclusion, to $10,000. For a family adopting a child with special 
needs, the current credit of $6,000 will rise to $10,000; perhaps more 
important to these families, their credit will no longer be tied to 
cumbersome and inflexible IRS regulations that exclude a wide range of 
legitimate adoption expenses related to children with special needs. 
Our legislation will also make it possible for more families to qualify 
for the full credit and exclusion, by lifting the cap on income 
eligibility.
  These are sound, necessary measures that truly help families. The 
Senate should be proud they are a part of our tax reconciliation 
package, and I hope they will be preserved in the upcoming conference 
with the House of Representatives. It is important to note that just 
last week, the House unanimously passed its version of the Hope

[[Page 9148]]

for Children Act, H.R. 622. While that action suggests there is a 
consensus supporting the adoption tax credit, I strongly believe the 
Senate's version of that language is preferable, and I encourage the 
Senate's conferees to work to keep the Senate language intact.
  Mr. President, there are still hundreds of thousands of children in 
this country and around the world who are waiting for permanent, safe, 
loving families. It is these children who are the focus of the Hope for 
Children Act, and it is on behalf of these children that I thank all my 
colleagues for supporting an amendment that will help make the promise 
of adoption a reality. I look forward to seeing this language preserved 
by the conference, adopted by the House and Senate, and sent to 
President Bush to be signed into law.
  Mr. GRASSLEY. I renew my request, Madam President.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment (No. 789) was agreed to.


                      Unanimous-Consent Agreement

  Mr. GRASSLEY. Madam President, I ask unanimous consent no additional 
amendments to the pending reconciliation bill be in order other than 
consideration of the Collins-Warner amendment. I ask further consent 
that, following the disposition of the amendment described above, the 
bill be advanced to third reading, and a vote occur on passage, all 
without any intervening action, motion, or debate.
  Finally, I ask, following the vote, the Senate insist on its 
amendments, request a conference with the House, and the Chair be 
authorized to appoint conferees on the part of the Senate, those 
conferees being: Senators Grassley, Hatch, Murkowski, Nickles, Gramm, 
Baucus, Rockefeller, Daschle, and Breaux.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                      unanimous-consent agreement

  Mr. GRASSLEY. I have one more unanimous-consent request, Madam 
President. I ask unanimous consent that, following that, on Wednesday, 
following the passage of H.R. 1836, there be 1 hour of morning business 
equally divided between the two leaders or their designees. I further 
ask consent that, following that time, the Senate then proceed to 
executive session and the Committee on Foreign Relations be discharged 
from further consideration of the nomination of Senator Howard Baker to 
be Ambassador to Japan. I further ask consent that the Senate then 
proceed to its consideration and there then be up to 2 hours for debate 
on the nomination, to be equally divided between the chairman and 
ranking member of the committee.
  Finally, following the use or yielding back of time, that the Senate 
proceed to a vote on the nomination and, following that vote, the 
motion to reconsider be laid upon the table, the President be 
immediately notified of the Senate's action, and that the Senate then 
resume legislative session.
  The PRESIDING OFFICER. Is there objection?
  Mr. BYRD. Madam President, reserving the right to object.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. BYRD. Did I understand the last request to be that the nomination 
of Howard Baker to be Ambassador to Japan take place tomorrow?
  Mr. GRASSLEY. Today.
  Mr. BYRD. Very well. I was going to make the recommendation it be 
done today.
  I thank the Senator.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  There are now 2 minutes evenly divided on the Collins-Warner 
amendment No. 675.
  Who yields time?
  The Senator from Maine.


                     Amendment No. 675, As Modified

  Ms. COLLINS. Madam President, on behalf of Senator Warner and myself, 
I send a modification of amendment No. 675 to the desk.
  The PRESIDING OFFICER. Without objection, the amendment is so 
modified.
  Amendment No. 675, as modified, is as follows:

    (Purpose: To provide an above-the-line deduction for qualified 
 professional development expenses of elementary and secondary school 
  teachers and to allow a credit against income tax to elementary and 
       secondary school teachers who provide classroom materials)

       At the end of title IV, add the following:

             Subtitle E--Miscellaneous Education Provisions

     SEC. 441. SHORT TITLE.

       This subtitle may be cited as the ``Teacher Relief Act of 
     2001''.

     SEC. 442. ABOVE-THE-LINE DEDUCTION FOR QUALIFIED PROFESSIONAL 
                   DEVELOPMENT EXPENSES OF ELEMENTARY AND 
                   SECONDARY SCHOOL TEACHERS.

       (a) Deduction Allowed.--Part VII of subchapter B of chapter 
     1 (relating to additional itemized deductions for 
     individuals), as amended by section 431(a), is amended by 
     redesignating section 223 as section 224 and by inserting 
     after section 222 the following new section:

     ``SEC. 223. QUALIFIED PROFESSIONAL DEVELOPMENT EXPENSES.

       ``(a) Allowance of Deduction.--In the case of an eligible 
     educator, there shall be allowed as a deduction an amount 
     equal to the qualified professional development expenses paid 
     or incurred by the taxpayer during the taxable year.
       ``(b) Maximum Deduction.--The deduction allowed under 
     subsection (a) for any taxable year shall not exceed $500.
       ``(c) Qualified Professional Development Expenses of 
     Eligible Educators.--For purposes of this section--
       ``(1) Qualified professional development expenses.--
       ``(A) In general.--The term `qualified professional 
     development expenses' means expenses for tuition, fees, 
     books, supplies, equipment, and transportation required for 
     the enrollment or attendance of an individual in a qualified 
     course of instruction.
       ``(B) Qualified course of instruction.--The term `qualified 
     course of instruction' means a course of instruction which--
       ``(i) is--

       ``(I) directly related to the curriculum and academic 
     subjects in which an eligible educator provides instruction,
       ``(II) designed to enhance the ability of an eligible 
     educator to understand and use State standards for the 
     academic subjects in which such educator provides 
     instruction,
       ``(III) designed to provide instruction in how to teach 
     children with different learning styles, particularly 
     children with disabilities and children with special learning 
     needs (including children who are gifted and talented), or
       ``(IV) designed to provide instruction in how best to 
     discipline children in the classroom and identify early and 
     appropriate interventions to help children described in 
     subclause (III) to learn,

       ``(ii) is tied to--

       ``(I) challenging State or local content standards and 
     student performance standards, or
       ``(II) strategies and programs that demonstrate 
     effectiveness in increasing student academic achievement and 
     student performance, or substantially increasing the 
     knowledge and teaching skills of an eligible educator,

       ``(iii) is of sufficient intensity and duration to have a 
     positive and lasting impact on the performance of an eligible 
     educator in the classroom (which shall not include 1-day or 
     short-term workshops and conferences), except that this 
     clause shall not apply to an activity if such activity is 1 
     component described in a long-term comprehensive professional 
     development plan established by an eligible educator and the 
     educator's supervisor based upon an assessment of the needs 
     of the educator, the students of the educator, and the local 
     educational agency involved, and
       ``(iv) is part of a program of professional development 
     which is approved and certified by the appropriate local 
     educational agency as furthering the goals of the preceding 
     clauses.
       ``(C) Local educational agency.--The term `local 
     educational agency' has the meaning given such term by 
     section 14101 of the Elementary and Secondary Education Act 
     of 1965, as in effect on the date of the enactment of this 
     section.
       ``(2) Eligible educator.--
       ``(A) In general.--The term `eligible educator' means an 
     individual who is a kindergarten through grade 12 teacher, 
     instructor, counselor, principal, or aide in an elementary or 
     secondary school for at least 900 hours during a school year.
       ``(B) Elementary or secondary school.--The terms 
     `elementary school' and `secondary school' have the meanings 
     given such terms by section 14101 of the Elementary and 
     Secondary Education Act of 1965 (20 U.S.C. 8801), as so in 
     effect.
       ``(d) Denial of Double Benefit.--
       ``(1) In general.--No other deduction or credit shall be 
     allowed under this chapter for any amount taken into account 
     for which a deduction is allowed under this section.
       ``(2) Coordination with exclusions.--A deduction shall be 
     allowed under subsection (a) for qualified professional 
     development expenses only to the extent the amount of such

[[Page 9149]]

     expenses exceeds the amount excludable under section 135, 
     529(c)(1), or 530(d)(2) for the taxable year.''.
       (b) Deduction Allowed in Computing Adjusted Gross Income.--
     Section 62(a), as amended by section 431(b), is amended by 
     inserting after paragraph (18) the following new paragraph:
       ``(19) Qualified professional development expenses.--The 
     deduction allowed by section 223.''.
       (c) Conforming Amendments.--
       (1) Sections 86(b)(2), 135(c)(4), 137(b)(3), and 219(g)(3) 
     are each amended by inserting ``223,'' after ``221,''.
       (2) Section 221(b)(2)(C) is amended by inserting ``223,'' 
     before ``911''.
       (3) Section 469(i)(3)(E) is amended by striking ``and 221'' 
     and inserting ``, 221, and 223''.
       (4) The table of sections for part VII of subchapter B of 
     chapter 1, as amended by section 431(c), is amended by 
     striking the item relating to section 223 and inserting the 
     following new items:

``Sec. 223. Qualified professional development expenses.
``Sec. 224. Cross reference.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001, and shall expire on December 31, 2005.

     SEC. 442. CREDIT TO ELEMENTARY AND SECONDARY SCHOOL TEACHERS 
                   WHO PROVIDE CLASSROOM MATERIALS.

       (a) In General.--Subpart B of part IV of subchapter A of 
     chapter 1 (relating to other credits) is amended by adding at 
     the end the following new section:

     ``SEC. 30B. CREDIT TO ELEMENTARY AND SECONDARY SCHOOL 
                   TEACHERS WHO PROVIDE CLASSROOM MATERIALS.

       ``(a) Allowance of Credit.--In the case of an eligible 
     educator, there shall be allowed as a credit against the tax 
     imposed by this chapter for the taxable year an amount equal 
     to 50 percent of the qualified elementary and secondary 
     education expenses which are paid or incurred by the taxpayer 
     during such taxable year.
       ``(b) Maximum Credit.--The credit allowed by subsection (a) 
     for any taxable year shall not exceed $250.
       ``(c) Definitions.--
       ``(1) Eligible educator.--The term `eligible educator' has 
     the same meaning given such term in section 223(c).
       ``(2) Qualified elementary and secondary education 
     expenses.--The term `qualified elementary and secondary 
     education expenses' means expenses for books, supplies (other 
     than nonathletic supplies for courses of instruction in 
     health or physical education), computer equipment (including 
     related software and services) and other equipment, and 
     supplementary materials used by an eligible educator in the 
     classroom.
       ``(3) Elementary or secondary school.--The term `elementary 
     or secondary school' means any school which provides 
     elementary education or secondary education (through grade 
     12), as determined under State law.
       ``(d) Special Rules.--
       ``(1) Denial of double benefit.--No deduction shall be 
     allowed under this chapter for any expense for which credit 
     is allowed under this section.
       ``(2) Application with other credits.--The credit allowable 
     under subsection (a) for any taxable year shall not exceed 
     the excess (if any) of--
       ``(A) the regular tax for the taxable year, reduced by the 
     sum of the credits allowable under subpart A and the 
     preceding sections of this subpart, over
       ``(B) the tentative minimum tax for the taxable year.
       ``(e) Election To Have Credit Not Apply.--A taxpayer may 
     elect to have this section not apply for any taxable year.''.
       (b) Clerical Amendment.--The table of sections for subpart 
     B of part IV of subchapter A of chapter 1 is amended by 
     adding at the end the following new item:

``Sec. 30B. Credit to elementary and secondary school teachers who 
              provide classroom materials.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001, and shall expire on December 31, 2005.

  Ms. COLLINS. The modifications have been agreed to by the amendment 
sponsors and the Chair and ranking member of the Committee on Finance, 
whom we thank for their valuable assistance. I understand there are now 
2 minutes divided?
  The PRESIDING OFFICER. The Senator is correct.
  Ms. COLLINS. I would appreciate being notified when I have used 30 
seconds, so Senator Warner, the coauthor of this amendment, can have 
the remaining 30 seconds.
  The PRESIDING OFFICER. The Senator will be notified.
  Ms. COLLINS. Mr. President, the Collins/Warner teacher relief 
amendment would support the expenditures of teachers who strive for 
excellence beyond the constraints of what their schools can provide. 
Our amendment enjoys the bipartisan support of several of our 
colleagues, including Senators Landrieu, Cochran, Allen, Gordon Smith, 
Harkin, Mikulski, Jack Reed, DeWine, Hutchinson, Dodd, and Enzi as well 
as the endorsement of the National Education Association, American 
Federation of Teachers, American Association of School Administrators, 
National School Boards Association, National Association of State 
Boards of Education, Council for Exceptional Children, National Center 
for Learning Disabilities, and the National Board for Professional 
Teaching Standards support the Collins/Warner Teacher Relief Amendment 
of 2001. I ask unanimous consent these support letters be printed in 
the Record.
  There being no objection, the material ordered to be printed in the 
Record, as follows:

                               National Education Association,

                                     Washington, DC, May 16, 2001.
     Senator Susan Collins,
     U.S. Senate,
     Washington, DC.
       Dear Senator Collins: On behalf of the National Education 
     Association's (NEA) 2.6 million members, we would like to 
     express our support for your amendment to the Senate tax bill 
     to provide tax benefits for educators' professional 
     development and classroom supply expenses.
       As you know, teacher quality is the single most critical 
     factor in maximizing student achievement. Ongoing 
     professional development is essential to ensure that teachers 
     stay up-to-date on the skills and knowledge necessary to 
     prepare students for the challenges of the 21st century. Your 
     proposed tax deduction for professional development expenses 
     will make a critical difference in helping educators access 
     quality training.
       We are also very pleased that your amendment would provide 
     a tax credit for educators who reach into their own pockets 
     to pay for necessary classroom materials, including books, 
     pencils, paper, and art supplies. A 1996 NEA study found that 
     the average K-12 teacher spent over $400 a year out of 
     personal funds for classroom supplies. For teachers earning 
     modest salaries, the purchase of classroom supplies 
     represents a considerable expense for which they often must 
     sacrifice other personal needs.
       We thank you for your leadership in introducing this 
     important amendment and look forward to continuing to work 
     with you to support our nation's educators.
           Sincerely,
                                           Mary Elizabeth Teasley,
     Director of Government Relations.
                                  ____

                                   National Board for Professional


                              Teaching StandardsTM,

                                      Arlington, VA, May 21, 2001.
     Hon. Susan Collins,
     U.S. Senate,
     Washington, DC.
       Dear Senator Collins: The National Board for Professional 
     Teaching Standards (NBPTS) is pleased to lend its support to 
     the Teacher Relief Act of 2001 as an amendment to H.R. 1836, 
     the Tax Reconciliation Bill. As you know, National Board 
     Certification is one of the most demanding and prestigious 
     voluntary professional development programs available to our 
     nation's teachers. The tax deductions proposed in the Teacher 
     Support Act of 2001 would provide much needed financial 
     relief to teachers seeking to improve their teaching 
     practice.
       National Board Certified Teachers (NBCTs) are the best 
     example of quality teaching and National Board Certification 
     reflects the highest standards in professional development 
     and assessment. Allowing teachers to deduct professional 
     development expenses, such as those associated with National 
     Board Certification, is an important supplement to the 
     policies and programs of states and school districts that 
     support the mission of the NBPTS to establish high and 
     rigorous standards for what accomplished teachers should know 
     and be able to do.
       We look forward to continuing our work with you in 
     promoting the vital link between high quality professional 
     development and higher student achievement.
           Sincerely,
                                                     Betty Castor,
     President.
                                  ____

         National Association of


                                    State Boards of Education,

                                     Alexandria, VA, May 21, 2001.
     Hon. Susan Collins,
     U.S. Senate,
     Washington, DC.
       Dear Senator Collins: We are writing to applaud your 
     efforts to provide tax benefits for elementary and secondary 
     school teachers through the Teacher Relief Act, which will be 
     offered as an amendment to S. 1, the Better Education for 
     Students and Teachers Act (BEST). Teachers are the most 
     influential school-based factor in a student's academic 
     success. Your legislation will not only facilitate better 
     trained teachers, but reward teachers for their classroom 
     investments.
       Quality professional development activities can 
     significantly increase student learning and improve teaching 
     practice. Allowing

[[Page 9150]]

     K-12 teachers a $500 annual tax deduction for professional 
     development expenses is a straightforward solution to help 
     promote on-going teacher training that is individually 
     directed and designed. It is one important element in 
     realizing the ultimate goal of effective and comprehensive 
     professional development programs.
       In addition to their time, teachers also pay for a 
     significant amount of their classroom and instructional 
     materials out of their own pockets. Because these expenses 
     are frequently not reimbursed, they constitute an educational 
     donation that is too often overlook. Your proposal addresses 
     this fact by providing teachers with a 50% tax credit (up to 
     $250 annually) for out of pocket classroom expenses that will 
     financially reimburse teachers and enrich students' classroom 
     settings.
       We appreciate your efforts and attention to address this 
     critical situation. NASBE looks forward to working with your 
     office to enact federal initiatives benefiting the 
     instructional needs of America's teachers.
           Sincerely,
                                                   David Griffith,
     Director of Governmental Affairs.
                                  ____

                                              American Association


                                     of School Administrators,

                                                     May 17, 2001.
     Senator Susan Collins,
     Russell Senate Office Building,
     Washington, DC.
       Dear Senator Collins: On behalf of the American Association 
     of School Administrators, representing more than 14,000 
     public school superintendents and school system leaders, we 
     would like to express our strong support for the Collins/
     Warner/Landrieu teacher tax credit amendment (amendment 
     #675).
       Passage of the Teacher Relief Act would provide teachers 
     with two well-deserved benefits: a tax deduction for 
     professional development and a tax credit for out-of-pocket 
     classroom expenses. Together with Senators John Warner and 
     Mary Landrieu you have outlined a solution to a critical 
     problem facing teachers and educational professionals: the 
     lack of reimbursement for excess expenses incurred by 
     teachers. All too often schools lack the funds to provide 
     teachers with adequate classroom supplies or continuing 
     education. Dedicated teachers frequently opt to pay for 
     books, paper, supplies, and professional development with 
     their own money. Ideally we should not be asking our teachers 
     to make such a burdensome financial sacrifice; the least we 
     can do is make sure that those teachers are partially 
     reimbursed for their expenses.
       The Collins/Warner/Landrieu amendment should not be thought 
     of as a tax benefit for teachers; it should be thought of as 
     educational reform. The Teacher Relief Act helps guarantee 
     that America's children are taught by qualified professionals 
     in well-equipped classrooms. Thank you for your continuing 
     support of public education.
           Sincerely,
                                                     Jordan Cross,
                                           Legislative Specialist.

  In fact, the tax deductions proposed in the Teacher Support Act of 
2001 would provide much-needed financial relief to teachers seeking to 
improve their teaching practice through advanced course work, and 
assist those teachers seeking advanced certification, such as the 
National Board or additional educational endorsements.
  In the midst of the education and tax debates, we are asking our 
colleagues in the Senate now to overlook the selfless efforts of 
teachers and the financial sacrifices they make to improve their 
instructional skills and the classrooms in which they teach.
  Senator Warner deserves enormous credit for focusing the Senate's 
attention, through a sense-of-the-Senate resolution to the education 
bill, on the need to provide tax relief for our teachers.
  Senator Warner's sense-of-the-Senate resolution which I was proud to 
cosponsor, passed by a vote of 95-3.
  Our amendment would first allow teachers, teacher's aides, 
principals, and counselors to take an above-the-line tax deduction for 
their professional development expenses.
  Second, the bill would grant educators a tax credit of up to $250 for 
books, supplies, and equipment they purchase for their students. The 
tax credit would be established at 50 percent of such expenditures, so 
for every dollar in supplies a teacher spent, the teacher would receive 
50 cents of tax relief.
  I greatly admire the many educators who have voluntarily reached deep 
into their pockets to pay for additional training and course work for 
themselves, and also to finance additional supplies and materials for 
their students. By enacting these modest changes to our Tax Code, we 
can encourage educators to continue to take the formal course work in 
the subject matter which they teach and to avail themselves of other 
professional development opportunities.
  The relief that our Tax Code now provides to teachers is simply not 
sufficient. By and large, most teachers do not benefit from the current 
provisions that allow for limited deductibility of professional 
development and classroom expenses. Teachers, out of their own 
generosity, are reaching deep into their pockets to improve their 
teaching.
  Now, under the current law, the problem is that teachers do not reach 
a sufficient level to be able to deduct the costs of their professional 
development and classroom supplies. By allowing teachers to take the 
above-the-line deduction for professional development expenses and a 
credit for classroom expenses paid out of pocket, our amendment takes a 
fair, progressive approach that will provide a modicum of relief to our 
Nation's schoolteachers.
  I should note that most of our colleagues have already voted for very 
similar legislation. Last year, Senator Kyl, Senator Coverdell, and I 
offered a similar amendment to the Affordable Education Act, which was 
adopted unanimously.
  President Bush has eloquently stated: ``Teachers sometimes lead with 
their hearts and pay with their wallets.''
  Our amendment makes it a priority to reimburse educators for just a 
small part of what they invest in the futures of our children.
  I hope our colleagues will join us in support of this important 
legislation.
  The PRESIDING OFFICER (Mr. Carper). The Senator from Virginia.
  Mr. WARNER. I join my distinguished colleague from Maine in a 
bipartisan effort with Senators Dodd, Mikulski, Harkin, and others. 
They have joined with us. This is not political. This is an amendment 
done for persons who teach our children. They simply take dollars out 
of their pocket and expend them for necessities in the classroom. All 
we are doing--it is not tax relief, a tax break--is returning those 
dollars to their pockets.
  The education of our children can be no stronger than those to whom 
we entrust that educational responsibility. Let us recognize them with 
this very simple yet, I think, straightforward and heartfelt expression 
of the Senate.
  I thank the managers. I believe they are about to say they are 
accepting the amendment. Could we have a rollcall vote for it?
  The PRESIDING OFFICER. The time of the Senator has expired.
  Mr. GRASSLEY. Mr. President, Senators have modified their amendment 
considerably from its original language. We urge Members on both sides 
of the aisle to vote aye.
  I yield the remainder of my time.
  The PRESIDING OFFICER. All time is yielded back. The question is on 
agreeing to the amendment. The yeas and nays are ordered. The clerk 
will call the roll.
  The result was announced--yeas 98, nays 2, as follows:

                      [Rollcall Vote No. 164 Leg.]

                                YEAS--98

     Akaka
     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Breaux
     Brownback
     Bunning
     Burns
     Byrd
     Campbell
     Cantwell
     Carnahan
     Carper
     Chafee
     Cleland
     Clinton
     Cochran
     Collins
     Conrad
     Corzine
     Craig
     Crapo
     Daschle
     Dayton
     DeWine
     Dodd
     Domenici
     Dorgan
     Durbin
     Edwards
     Ensign
     Enzi
     Feinstein
     Fitzgerald
     Frist
     Graham
     Gramm
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Helms
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Kyl
     Landrieu
     Leahy
     Levin
     Lieberman
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Mikulski
     Miller
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Reed
     Reid
     Roberts
     Rockefeller
     Santorum
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stabenow
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner
     Wellstone
     Wyden

[[Page 9151]]



                                NAYS--2

     Feingold 
     Nickles 
       
  The amendment (No. 675), as modified, was agreed to.
  Mr. BAUCUS. Mr. President, I move to reconsider the vote.
  Mr. ENZI. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  The PRESIDING OFFICER (Mr. Warner). The Senator from Montana is 
recognized.


                           Amendment No. 787

  Mr. BAUCUS. Mr. President, on behalf of Senator Kerry, I offer 
amendment No. 787. We neglected to put it in the package. It promotes 
tax simplification by expanding the current IRS demonstration project 
which combines State and Federal employment tax for reporting on a 
single form.
  I ask unanimous consent that the amendment be taken up and adopted.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will report.
  The legislative clerk read as follows:

       The Senator from Montana [Mr. Baucus], for Mr. Kerry, 
     proposes an amendment numbered 787.

  Mr. BAUCUS. Mr. President, I ask unanimous consent reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

 (Purpose: To permit the disclosure of certain tax information by the 
  Secretary of the Treasury to facilitate combined Federal and State 
           employment tax reporting, and for other purposes)

       On page 314, after line 21, add the following:

     SEC. __. DISCLOSURE OF TAX INFORMATION TO FACILITATE COMBINED 
                   EMPLOYMENT TAX REPORTING.

       Section 6103(d)(5) is amended to read as follows:
       ``(5) Disclosure for combined employment tax reporting.--
     The Secretary may disclose taxpayer identity information and 
     signatures to any agency, body, or commission of any State 
     for the purpose of carrying out with such agency, body, or 
     commission a combined Federal and State employment tax 
     reporting program approved by the Secretary. Subsections 
     (a)(2) and (p)(4) and sections 7213 and 7213A shall not apply 
     with respect to disclosures or inspections made pursuant to 
     this paragraph.''.

  THE PRESIDING OFFICER. The question is on agreeing to the amendment.
  The amendment (No. 787) was agreed to.
  The PRESIDING OFFICER. The question is on the engrossment of the 
amendments and third reading of the bill.
  The amendments were ordered to be engrossed and the bill to be read a 
third time.
  The bill was read a third time.


                                the eitc

  Mrs. LINCOLN. Mr. President, I rise to engage the chairman of the 
Finance Committee in a colloquy regarding the earned income tax credit 
otherwise known as the EITC. I thank the Chairman for including my 
provisions expanding the EITC in the tax bill. It has come to my 
attention, however, that the EITC has a detrimental impact on the small 
U.S. Territories that are subject to tax laws that automatically mirror 
our Federal tax laws. As a result, these small Territories, like the 
U.S. Virgin Islands, end up absorbing the entire cost of the EITC, 
which they can ill afford. The burden of this unfunded Federal mandate 
is exacerbated because these small Territories will also lose needed 
revenues as a result of the mirror effect of the income tax rate 
reductions mandated by this bill.
  However, the problem can be mitigated by an agreement between the 
Treasury Department and the interested territorial governments to 
permit these governments to require that employers advance 60 percent 
of EITC payments to employees as currently permitted under Section 3507 
of the Internal Revenue Code and the allow the employer to deduct these 
advance payments from FICA taxes the employer currently remits to the 
U.S. Treasury, as permitted by Section 3507, not from withholding taxes 
the employer remits to the territorial government. The remaining 40 
percent of the EITC payments would continue to be paid by the 
territorial governments upon filing of an eligible employee's tax 
return. I believe that no substantive amendment to the Internal Revenue 
Code is necessary to allow for such an agreement.
  I would like the chairman of the Fiance Committee to include report 
language in the final tax conference report that directs the Treasury 
Department to enter into such an agreement with any territorial 
government that would like to do so.
  Mr. GRASSLEY. I understand the concerns raised by the Senator from 
Arkansas and will attempt to address this issue in conference.


           taxation of special needs trusts for the disabled

  Mr. FRIST. Mr. President, I had intended to introduce an amendment to 
modify the taxation of so-called ``special needs trusts'' for disabled 
persons. The problem that cries out for change was first brought to my 
attention by a Tennessee constituent who has been contributing funds 
annually to a special trust for a disabled child. Under current law, 
the income from such trusts is taxed at very high rates because the tax 
writers were concerned about possible abusive use of such trusts. After 
discussion with the two managers of the bill, I am persuaded that we 
can work together to craft a better solution to this problem than the 
one I was prepared to propose. Therefore, with the understanding that 
we can work together in coming months to develop a better answer, I 
will not seek a vote on my amendment at this time.
  Mr. GRASSLEY. Mr. President, I thank the Senator from Tennessee for 
his willingness to work with us to craft a solution to a very real 
problem. He shares with the Ranking Member and I a long history of 
concern for American taxpayers struggling with the overwhelming expense 
and other demands of severely disabled relatives. As the Senator knows, 
Special Needs Trusts, also known as Supplemental Needs Trusts, are a 
common estate planning tool for assisting in the planning for the long-
term financial needs of the disabled.
  The Senator and others have helped bring to our attention the fact 
that these trusts are unduly burdened by the current trust tax 
requirements of Section 1(e) of the Internal Revenue Code. We recognize 
that these Special Needs Trusts will receive some relief under the 
Relief Act of 2001, but that more help is necessary. Therefore, I 
commit myself to the Senator from Tennessee to work with him and others 
to craft a solution to reduce the income tax burden imposed on special 
needs trusts and, simultaneously, to improve the lot of affected 
disabled Americans.
  Mr. BAUCUS. Mr. President, I look forward to joining my colleagues 
from Tennessee and Iowa in working on this matter. I also hope our 
effort will give us an opportunity to address the problem of structured 
settlements, which are also funding mechanisms for the disabled. As the 
chairman knows, I have been trying to fix the structured settlement 
problem for a long time, and I welcome this chance to fix the two 
matters together.
  Mr. TORRICELLI. Mr. President, I rise to bring my colleagues' 
attention to an important issue which affects the men and women who are 
charged with enforcing our nation's tax laws. While I am withdrawing my 
amendment to the tax reconciliation bill which affects Section 1203 of 
the IRS Restructuring and Reform Act, I hope that bringing this issue 
to the attention of the Senate, will allow us to address this important 
issue at a later time.
  Section 1203 of the IRS Restructuring and Reform Act outlines 10 
infractions for which IRS employees must be removed from employment. 
These areas of misconduct have become known as the ``Ten Deadly Sins''. 
As of last year, a total of 109 violations of any of the ten 
infractions outlined in Section 1203 had been substantiated. Of those 
109 infractions, 102 were of Section 1203(b)(8), which subjects 
employees to mandatory termination for failure to file their federal 
tax return on time.
  I believe that all IRS employees should be required to file their tax 
returns on time and abide by the IRS Rules of Conduct. I also strongly 
believe that those who do not abide by

[[Page 9152]]

the Rules of Conduct should be held accountable for their actions. 
However, it would seem that mandatory dismissal, rather than 
supervisory discretion in applying penalties for these infractions, is 
unduly harsh. This point becomes clear when we learn that IRS employees 
have been and continue to face the loss of their jobs for filing their 
income tax returns late, even when they have a tax refund coming to 
them. There are no other taxpayers who are subject to any penalty for 
the late filing of a tax return with a refund due.
  Close to a thousand charges have been filed against IRS employees 
under section 1203(b)(6), which subjects employees to mandatory 
terminations for ``harassment of, or retaliations against, a 
taxpayer.'' The latest data available shows that of the 830 
investigations of these charges completed by the Inspector General for 
Tax Administration, none have been substantiated. Yet even though it 
appears that the overwhelming majority of these charges filed have been 
unfounded, the employees themselves must live under the constant fear 
of losing their jobs for sometimes more than a year, while the 
investigation of these charges goes on.
  It would not be an overstatement to say that Section 1203 is having a 
chilling effect on the ability of employees at the IRS to perform their 
jobs. This notion is reflected in the fact that there has been a 
steadily declining audit-rate of non-compliant taxpayers. Making a 
minor change in the current law, as my amendment does, will do much to 
enable the overwhelming majority of honest, hardworking IRS agents to 
perform their duties in an efficient and professional manner.
  I believe that my proposal strikes a reasonable balance which will 
permit IRS employees to do their jobs better, but will also maintain 
termination as a punishment for an employee who willfully harasses a 
taxpayer. As we continue to debate this reconciliation bill, which will 
make hundreds of changes to the tax code, I hope that we will make sure 
that the employees who we entrust to enforce these new laws are given 
the tools to do what they need to do.
  While I now withdraw my amendment, I hope that this issue can be 
discussed by this chamber in the very near future.
  Mr. FEINGOLD. Mr. President, I regret that I opposed a number of 
amendments to this legislation that I might otherwise support because 
they are not adequately offset.
  The legislation before us already puts us at risk of raiding the 
Medicare and Social Security Trust Funds. We spent much of the past 8 
years working to climb out of a deficit ditch, and this bill steers us 
right back toward it.
  This is not authorizing legislation subject to the further scrutiny 
of an appropriations process. Unlike other measures that come before 
us, this bill and the amendments to it have a direct and immediate 
impact on our budget.
  A number of amendments have been offered to this measure that, while 
laudatory in their goals, further aggravate the fiscal position in 
which the underlying bill puts us. Without language offsetting the cost 
of the proposal, the amendments only add to the already fiscally 
irresponsible cost of the bill.
  For that reason, I have opposed many otherwise worthy amendments.
  Mr. LIEBERMAN. Mr. President, I was pleased to cosponsor Senator 
Schumer's amendment which was offered last week to help families with 
the cost of college tuition. Although the amendment did not pass, I 
wanted to state for the record the reasons for my support.
  The decisions we make today must reflect the enduring values we hold 
as a society. Two of those values are the ideas of opportunity and 
equality for every citizen. In today's complicated society, opportunity 
and equality depend in large part upon the level of a person's 
education. In other words, the more and the better an education one 
gets, the greater the chances that person will succeed economically. 
The College Board tells us that ``while the cost of college may be 
imposing to many families, the cost associated with not going to 
college is likely to be much greater.'' Indeed, over a lifetime, the 
gap in earning potential between a high school diploma and a college 
degree exceeds $1 million.
  In addition, higher education is absolutely central to our ability to 
maintain our nation's global competitiveness. Highly trained, skilled 
workers making good wages are the engine that powers our economy, both 
because of the work they do and the revenue they generate as buyers and 
sellers of goods and services.
  Yet, the cost of higher education is an increasing burden for 
American families. Since 1980, tuition at both public and private four-
year colleges has increased on average more than 115 percent over 
inflation. A middle-income family spends an average of 17 percent of 
its annual income to send a child to a four-year public college today. 
If the family sends a child to a private college, the cost increases to 
an average of 44 percent of the family's income.
  A family's financial status should not be the determining factor in 
whether a young person joins society with the advantages of higher 
education or not. Yet, families are understandably anxious about 
whether they will be able to provide their children with that 
educational advantage. They are similarly anxious about the debt burden 
their children may have to bear after graduation to pay off student 
loans.
  America's families need help. This is why I introduced S. 888, the 
College Tuition Assistance Act of 2001, which is designed to provide 
tax relief to middle and lower income families who are struggling to 
pay these costs, both while a student is in school and after graduation 
when student loans come due.
  Senator Schumer's amendment is an important step toward providing 
families with this type of help compared to what is now in the Finance 
Committee's bill. It increases the size of the tax deduction families 
may take to offset the burden of tuition payments. Senator Schumer's 
amendment also provides a larger tax credit for graduates paying 
interest on their student loans. Although the amendment failed, it 
recognized a critical issue.
  Educational costs are difficult to bear, even for families who make a 
decent living. My bill would provide more relief to middle income 
families and would also extend a hand to lower income families, whose 
needs are far greater than the aid they receive to put their children 
through college. My bill also would provide relief sooner. So, I was 
pleased to support Senator Schumer's amendment and I intend to continue 
to fight for these provisions which would make a real difference for 
America's families.
  Mr. NELSON of Florida. Mr. President, we have been down this road 
before. As a Congressman in 1981, I supported the Reagan tax cuts that 
were promoted as a cure-all for the economic ailments of that era. 
Instead, they led to year after year of increasing deficits, exploding 
national debt, and a series of tax increases enacted to stem the tide 
of red ink.
  With fiscal discipline and a growing economy, we reversed that tide 
just 3 years ago. Since 1998, we have enjoyed surpluses instead of 
deficits. And we have been paying down the debt, reducing the massive 
interest costs that have burdened America's taxpayers.
  But now the Government is about to dig into our pockets, pull out our 
credit cards again, and go stumbling down that road toward economic 
calamity. And--with smoke and mirrors--some are trying to hide the 
costs we'll incur along the way. By manipulating the starting and 
phase-in dates for the various tax cuts--and setting unlikely 
expiration dates on some of them--this bill is jury-rigged to fit 
within the $1.35 trillion allotted for tax cuts over 11 years in the 
Senate's budget resolution.
  But, the fact is, it won't fit once we consider other tax breaks 
already in the pipeline and spending priorities such as defense, 
education and prescription drug benefits. And this bill does not 
guarantee to pay down the national debt.
  Every Senator in this Chamber believes we will enact additional tax 
relief, and provide for our Nation's most

[[Page 9153]]

pressing needs over the next decade. The additional untold story of 
this legislation is that--even if that were possible--the cost of this 
tax plan would triple in the next decade. Unless you believe we are 
simply going to take back the tax cuts we are promising today, you are 
talking about a price tag exceeding $4 trillion in the decade from 2012 
to 2022--when the baby boomers will all be retired.
  Is that how we are going to provide for prescription drugs under 
Medicare and shore up Social Security? By raiding their trust funds?
  Is that how we are going to protect our environment, improve our 
Nation's schools and strengthen our military? By giving them fewer 
resources, instead of more, in the years to come?
  And is that how we are going to keep our economy growing and 
prospering? By returning to deficit spending, ever-increasing national 
debt, and costly interest payments on that debt?
  That is the road we are headed down. I have been down it before, and 
I'm convinced it's the wrong road. I am choosing instead to take the 
conservative road of fiscal responsibility.
  I strongly support responsible tax cuts of nearly $1 trillion that 
would give Americans the relief they deserve. I voted for such cuts as 
some of us tried to amend both this bill and the earlier budget 
resolution. Specifically, I support tax cuts that meet four criteria--
tax cuts that (1) do not raid Social Security; (2) do not raid 
Medicare; and (3) provide relief from the marriage tax penalty now, not 
later; and (4) pay down the national debt.
  Instead we are left with a tax package that is fiscally 
irresponsible.
  With all due respect to Senators Grassley and Baucus, we are about to 
vote on a tax bill that largely promises future relief based on future 
surpluses that may not materialize. It poses a serious threat to our 
economy because it will use up what surplus there is so we cannot pay 
down the national debt. And it seriously threatens our Medicare and 
Social Security trust funds--not only in 2012 but beginning next year.
  I promised the people of Florida I would do everything in my power to 
enact a substantial tax cut, which is balanced, in order to protect 
those trust funds and to continue paying down the national debt. I 
promised I would fight for a prescription drug benefit, and that I 
would work for better schools, a clean environment and a strong 
defense. I intend to keep those promises, and I must vote against this 
bill.
  Ms. MIKULSKI. Mr. President, I rise today in opposition to the tax 
bill currently being debated on the floor today. Everybody agrees that 
we need tax relief. But we must do it in a way that is affordable, 
responsible, and ensures that we are on sound fiscal footing. 
Unfortunately, the Republican tax cut does none of these things. I will 
vote against this tax cut for three reasons: It is irresponsible, 
premature, and it does not meet the compelling needs of our Nation.
  The Republican tax cut is irresponsible because it mortgages our 
future for lavish tax cuts. It is premature, there is no way to 
guarantee that the Republican tax cut will be here today and that the 
American people can count on it tomorrow.
  Unfortunately, the size of this tax cut will put an extra strain on 
this country's cashflow just when we will need it the most, when baby 
boomers will retire.
  Finally, this tax bill makes it impossible to meet the compelling 
needs of our Nation. It does not have an economic stimulus in 2001; the 
size of the tax cut will make it difficult to make balloon payments 
coming due on Social Security and Medicare; and it will be extremely 
unlikely that the money will be there to create a meaningful and 
reliable Medicare prescription drug benefit.
  I support the Democratic alternative because it ensures that we are 
meeting the day to day needs of our constituents and the long range 
needs of our country. What does the democratic alternative provide? 
First, Democrats want to put $300 in your checkbook right away, today, 
this year. Or $600 per family. This would provide an immediate economic 
stimulus and help all Americans who are struggling to pay for 
skyrocketing gasoline and energy prices.
  Democrats would also provide tax cuts for all income taxpayers by 
reducing the 15 percent tax bracket to 10 percent on the first $6,000 
income. Additionally, we include significant marriage penalty and 
estate tax relief, we raise IRA and 401(k) contribution limits, double 
the child tax credit, make college tuition tax deductible and provide 
resources to schools and communities modernize and build new 
facilities. I am also pleased that our bill includes an extension of 
the adoption tax credit and makes permanent the Research and 
Development tax credit. The democratic plan is balanced, fiscally 
prudent, and leaves resources so we can continue to pay down our debt, 
and make the balloon payments coming due on Social Security and 
Medicare.
  Unfortunately, the Republican tax plan papers over the fiscal 
realities of our country. We need to get back to basics, to save lives, 
save communities, and save America. What do I mean by this? Well, while 
we are in the midst of debating bloated tax cuts, we have Marines who 
are on food stamps. I don't see how we can meet our national security 
commitment, do a $1.35 trillion tax cut, and have Marines on food 
stamps. The Marines say ``semper fi,'' ``always faithful.'' They are 
faithful to the United States and we have to be always faithful to the 
Marine Corps and to the military. That's why we must ensure that we 
have the resources to invest in core infrastructure programs, like the 
military, that will pay dividends in the future.
  Democrats want to put money in people's pocketbooks, but we want to 
do it is a way that it is here today and in people's checkbooks 
tomorrow. We believe we're on the side of people who are middle class 
and those who are working their heart out to be able to get there.
  I hope that my colleagues will join me in opposing the Republican tax 
cut. We should do what's responsible, honest, and allows us to meet the 
compelling human need in our nation today. The democratic alternative 
will put us on the right track to doing just that.
  Mr. JOHNSON. Mr. President, I had intended to offer an amendment to 
H.R. 1836, the Reconciliation Tax Act, that would have called for a 
$1.7 billion increase in veterans health care funding. Senators 
Bingaman, Wellstone, Durbin, and Dorgan supported my amendment. While I 
will refrain from offering my amendment today, I will nonetheless 
continue to fight for improved health care for our Nation's heroes.
  In a few short days, Members of Congress will return home to 
participate in Memorial Day services around the country. There is no 
shortage of rhetoric to go around Congress in support of veterans 
benefits and veterans health care.
  However, when the time comes for real decisions to be made on the 
prioritization of veterans issues in the budget, too many Members of 
this body are missing in action. A case in point occurred during debate 
of the budget resolution. Despite bipartisan support for increased 
funding for veterans health care in both the House and the Senate, the 
budget conference report include funding levels below that proposed by 
the administration.
  Last week, I spoke with veterans from South Dakota who expressed 
their concern that the current level of funding in the budget 
conference report could mean long waits for appointments and reductions 
or cuts in vital services. These situations are not unique to my State 
and affect every VA hospital and clinic in the country.
  When the current level of funding in the budget conference, the VA 
could be forced to delay and even deny needed care and slash vital 
programs. Long term care and other provisions authorized under the 
Millennium Health Care Act must be fully funded in order to be carried 
out. The VA is faced with salary increases and inflation which alone 
consume over $1 billion of health care dollars.
  The Paralyzed Veterans of America, PVA, noted that the budget 
conference

[[Page 9154]]

report ``pays a grave disservice to the sacrifice of the men and women 
who have served this Nation. By providing fewer resources than was 
provided in the House-passed version, or the Senate-passed version, the 
conference report breaks faith with veterans. By providing fewer 
dollars than even the Administration's inadequate request for health 
care and benefits delivery programs, the conference report calls into 
question the commitment of this Congress to sick and disabled 
veterans.''
  The Veterans of Foreign Wars, VFW, described the budget conference 
report as ``sadly inadequate'' and unable to cover ``uncontrollable 
expenses such as health-care cost inflation, implementation of the 
congressionally mandated Millennium Health Care Act and other pressing 
initiatives.'' The Disabled American Veterans, DAV, and AMVETS noted 
that an additional $1.7 billion would provide necessary resources to 
meet the needs of the men and women who have served our nation and rely 
upon the VA for the health care they need.
  With an additional $1.7 billion, we will have the resources for a VA 
veterans health care budget that can adequately offset years of 
underfunding, the higher costs of medical care caused by consumer 
inflation, medical care inflation, wage increases, and legislation 
passed by Congress. Only with this additional funding will the VA be 
able to address the treatment of Hepatitis C, emergency medical 
services, increased cost due to medical inflation, and long-term care 
initiatives.
  The Independent Budget, coauthored by AMVETS, the DAV, PVA, and the 
VFW, highlights the need to increase funding in a number of important 
health care initiatives including: an additional $523 million needed 
for mental health care; and additional $848 million necessary for long-
term care; and additional $25 million needed to restore the Spinal Cord 
Injury program; and an additional $75 million to help homeless 
veterans.
  The budget conference report is clearly inadequate to meet the needs 
of sick and disabled veterans. It is unacceptable that while the House 
provided an increase, and the Senate truly met the needs of the VA, we 
are left with a figure that is below the amount found in either 
resolution, below the amount recommended by the Senate Committee on 
Veterans' Affairs, below the amount initially requested by VA Secretary 
Principi, and far below the amount recommended by the Independent 
Budget.
  The amount in the conference report fails to meet mandatory salary 
increases due to inflation, fails to meet medical care inflation, and 
returns us to the days of inadequate budgets to meet the needs of 
veterans. Our country's heroes deserve better, and I encourage my 
colleagues to honor their service by supporting increased funding for 
veterans health care.
  I ask unanimous consent that letters of support for increased 
veterans health care be printed in the Record.
  There being no objection, the letters were ordered to be printed in 
the Record, as follows:

                                          Veterans of Foreign Wars


                                         of the United States,

                                     Washington, DC, May 17, 2001.
     Hon. Tim Johnson,
     U.S. Senate,
     Washington, DC.
       Dear Senator Johnson: It is my understanding that you will 
     be offering an amendment to secure an additional $1.7 billion 
     in funding for Department of Veterans Affairs' Medical 
     Programs. On behalf of the 2.7 million members of the 
     Veterans of Foreign Wars and our Ladies Auxiliary, I would 
     like to take this opportunity to express our support for your 
     amendment.
       In partnership with other major Veterans Service 
     Organizations, we produced the annual Independent Budget for 
     VA where have identified the need for a minimum increase of 
     $2.6 billion in VA's medical care account over FY 2001. The 
     budget resolution for FY 2002 adopted by Congress has seen 
     fit to prescribe a sadly inadequate $1 billion increase. If 
     allowed to stand the VA medical care account would not even 
     be able to cover uncontrollable expenses such as health-care 
     cost inflation, implementation of the congressionally 
     mandated Millennium Health Care Act and other pressing 
     initiatives.
       Your amendment would allow the VA to carry out its mission 
     of providing timely access to quality healthy care for 
     America's sick and disabled veterans.
       We of the VFW, thank you for efforts on behalf of our 
     nation's veterans.
           Sincerely,
                                                Robert E. Wallace,
     Executivee Director.
                                  ____



                                   Disabled American Veterans,

                                     Washington, DC, May 17, 2001.
     Hon. Tim Johnson,
     U.S. Senate, Hart Senate Office Building,
     Washington, DC.
       Dear Senator Johnson: On behalf of the more than one 
     million members of the Disabled American Veterans (DAV), I am 
     writing to you to express our support for your amendment that 
     would increase Department of Veterans Affairs (VA) health 
     care funding to the level recommended by the Independent 
     Budget (IB) for fiscal year (FY) 2002.
       The Congressional Budget Resolution, H. Con. Res. 83, 
     provides a discretionary spending increase of $1 billion. 
     This recommended amount would not even cover the costs of 
     mandated salary increases and the effects of inflation. The 
     IB has identified an increase for VA health care of $2.6 
     billion over the amount provided in FY 2001. This recommended 
     increase would provide the resources necessary for the VA to 
     meet the needs of the men and women who have served our 
     nation, and rely upon the VA for the health care they need.
       Thank you for your efforts on behalf of our nation's sick 
     and disabled veterans. Again, we strongly support your 
     amendment to increase the amount available for VA health care 
     up to the level recommended in the IB.
           Sincerely,
                                              Armando C. Albarran,
     National Commander.
                                  ____



                                            American Veterans,

                                         Lanham, MD, May 18, 2001.
     Hon. Tim Johnson,
     U.S. Senate,
     Washington, DC.
       Dear Senator Johnson: AMVETS fully supports your proposed 
     amendment to increase funding for veterans hospital care and 
     medical services.
       Your proposed amendment would increase the budget for 
     veterans health care by $1.7 billion above the Fiscal Year 
     2002 Budget proposed by the administration. It meets the 
     level of funding suggested by The Independent Budget as 
     necessary for the VA to live up to our country's commitment 
     to veterans and their families.
       Without an increase in VA health care, resources will be 
     insufficient to meet the needs of the men and women who have 
     served our Nation, and reply upon the VA for the health care 
     they need.
       Thank you for your continuing efforts to support our 
     nation's veterans. We believe the price is not too great for 
     the value received.
           Sincerely,
                                                David E. Woodbury,
     Executive Director.
                                  ____



                                Paralyzed Veterans of America,

                                     Washington, DC, May 18, 2001.
     Hon. Tim Johnson,
     U.S. Senate,
     Washington, DC.
       Dear Senator Johnson: On behalf of the Paralyzed Veterans 
     of America (PVA) I am writing to offer our support of your 
     amendment to H.R. 1836 that would add $1.7 billion for 
     veterans' health care. This amount, when added to the $1 
     billion provided in discretionary funding in the recently 
     passed budget resolution, would bring veterans' funding close 
     to the $2.7 billion recommended by the Independent Budget, 
     which is co-authored by PVA.
       The health care requirements of veterans were not met in 
     the budget resolution. After realizing increases above the 
     Administration's request in the House of Representatives, and 
     achieving increases in the Senate that would have matched the 
     Independent Budget's request, veterans' funding was cut back 
     down to the level advocated by the Administration. This 
     amount is simply not enough to meet the health care needs of 
     sick and disabled veterans.
       That is why your amendment is so essential--it would begin 
     the process of meeting the true needs of the health care 
     system dedicated to veterans. Again, PVA thanks you for 
     offering this important amendment.
           Sincerely,
                                               Joseph L. Fox, Sr.,
                                               National President.

  Mr. REED. Mr. President, I am in strong opposition to the tax cut 
bill that the Senate has been considering over the past few days. I am 
sorry to say that this legislation fails the basic tests of responsible 
government. It is fiscally irresponsible to use $1.35 trillion of the 
surpluses projected over the next 10 years to pay for a tax cut, since 
these estimated surpluses may never materialize. Even the Congressional 
Budget Office, CBO, acknowledges that there is considerable uncertainty 
in their forecasts. In fact, within the CBO's estimates, they suggest 
that even a 1 percent per year slower growth in GDP would reduce the 
10-year surplus by $2.4 trillion. With that much

[[Page 9155]]

uncertainty, this tax cut is too large and risks squandering the fiscal 
discipline that has been so hard fought and earned over the past 
several years. With these excessive revenue losses, we will certainly 
sacrifice our ability to adequately provide for critical programs in 
the areas of health care, education, the environment, transportation 
infrastructure, defense and further paying down of the national debt. 
Now, many of the supporters of this legislation also tout the theory 
that government should be run like a business. However, no chief 
executive of a corporation would allow dividends to be locked in for 10 
years, when earnings forecasts are so unclear. In addition, no 
corporation would ever submit a budget that would have critical 
elements missing, such as is the case with defense spending in this 
budget.
  The tax cut also fails the test of responsible budgeting. The bill 
before the Senate is so backloaded that the full costs don't appear in 
the 10-year estimates provided by the Senate Finance Committee. 
Analysis by the CBO and the General Accounting Office, GAO, shows that 
the retirement of the baby boom generation will put enormous pressure 
on the budget starting a little over a decade from now. This is at the 
exact time when the full cost of the tax cut will be felt and will 
almost surely aggravate the deficits that many analysts expect to 
emerge at that point. Simply put, this bill is far more expensive than 
it appears. For example, 60 percent of the costs in the legislation 
don't occur until the second half of this decade. Some of the most 
expensive provisions, such as the full repeal of the estate tax, don't 
appear until the last year, so their real costs are truly masked. Other 
provisions expire in 5 years, such as Alternative Minimum Tax relief 
and tuition tax deduction, so their full cost is hidden. The effect of 
these sunset provisions also ensure that these issues will have to be 
considered again by a future Congress. Some analysts have also 
suggested that if all of the provisions in the bill were effective 
immediately, the full cost over 10 years would likely be over $2 
trillion, while the costs in the next 10 years could exceed $4 
trillion. Lastly, this legislation is a sham as it purports to include 
a complete tax package for the next decade, when realistically, many 
more tax items that are expiring shortly, otherwise known as 
``extenders,'' will have to be added down the road. Again, far too much 
money is in play here while budgetary gimmicks and tricks are dictating 
the process.
  This tax cut is also markedly unfair. Cuts in marginal tax rates 
above the 15 percent bracket and repeal of the estate tax benefit a 
small group of taxpayers who have experienced remarkable growth in 
income and wealth over the past 5 years. However, the legislation 
appears to neglect one important group of people: those taxpayers in 
the 15 percent bracket. Although the proponents of this bill would 
suggest that most taxpayers are in the 28 percent bracket or higher, 
the facts are otherwise. Research by the Democratic staff of the Joint 
Economic Committee and the Budget Committee point out that an 
overwhelming majority of those who pay income tax are in the 15 percent 
bracket, close to 75 percent, and would get no benefit from the upper 
bracket rate cuts in this bill. Now, the bill does provide a tax cut 
for everyone who pays income tax by creating a new 10 percent tax 
bracket immediately, albeit a minuscule one for those in the lowest 
bracket. In addition, the bill makes the child credit refundable, and 
in a manner that reduces marginal tax rates for many working families 
with children. Both of those provisions are worthwhile and should in 
fact be expanded. Nonetheless, Citizens for Tax Justice, CTJ, has 
provided an analysis of the legislation's rate cuts, and many of its 
findings are disturbing, to say the least. Some of these include: the 
top one percent of all taxpayers, with income of $373,000 or more, 
would receive one-third of the entire tax cut; the top one percent 
would receive an average yearly tax cut of over $20,000, while the 
bottom 20 percent would receive an average yearly cut of $64; and the 
middle 20 percent of taxpayers, incomes ranging from $27,000 to 
$44,000, would receive 9 percent of the tax cut, an average of about 
$600 per year.
  One prominent example of the unfairness in this tax bill is the 
repeal of the estate tax. Supporters of this legislation perpetuate the 
myth that the estate tax is a ``death tax.'' The truth is that 98 
percent of Americans face no tax liability under the estate tax when 
they die. In fact, the repeal of the estate tax takes away budget 
resources that could be used to pay down the debt and increase national 
saving, and it uses those resources to benefit a tiny group of very 
wealthy taxpayers. The effect on the Treasury will be astounding: 
although the Finance Committee estimates the estate tax portion of the 
bill to cost $146 billion over 10 years, because this provision is 
backloaded, the real costs will come after full repeal in 2011, costing 
almost $1 trillion over the next 10 years. The impact on states will 
also be overwhelming. A majority of the states use a ``pickup'' system 
for their estate tax, whereby they essentially receive a portion of the 
Federal estate tax receipts. I know that in my State of Rhode Island, 
the estate tax accounted for $34.2 million in state revenue for fiscal 
year 2000. What can $34.2 million pay for? In fact, it can pay for 681 
more police officers, or 729 more firefighters, or 575 more elementary 
school teachers. If the estate tax is repealed, States like Rhode 
Island will no doubt have to make up the shortfall in revenue by 
raising State taxes or cutting their budgets. Total State revenue loss 
when the estate tax is fully repealed could exceed $9 billion. Toward 
what end is this repeal aimed? In 1999, Rhode Island had 134 estates 
that were subject to the estate tax, 15 of which were estates of $5 
million or more. That is out of a total of about 486,000 taxpayers. 
Although the numbers for other States will fluctuate based on their 
size, we are again talking about a very small proportion of our whole 
population. That is why I have supported an alternative that would 
reform, rather than repeal the estate tax system. By raising the tax 
exemption levels to $4 million for individuals and $8 million for 
couples, almost all family-owned farms and businesses will be erased 
from the estate tax rolls. However, the tax would remain on the largest 
estates that have the ability, and the responsibility, to pay for the 
enormous wealth they have been fortunate enough to acquire.
  To put things into perspective, the supporters of this bill and the 
Bush administration are hoping to pass a huge tax cut and increase 
military spending, while relying on rosy estimates of our economy 10 
years down the line. Much of this debate recalls an earlier era during 
which Congress and the Reagan Administration attempted to do the same 
thing. Why are we rushing to pass a tax cut that is even more 
irresponsibly constructed than the 1981 tax cut; a tax cut which caused 
spiraling deficits and mounting debt in the 1980s and early 1990s? This 
bill takes the wrong approach and it is irresponsible. There is an 
approach we can take to provide meaningful and targeted tax relief to 
hard working American families, while ensuring that we have the 
resources to pay down the debt and invest more fully in our nation's 
environment, health care, education and other critical priorities. 
Sadly, the legislation before us rejects that balanced approach and 
embraces a policy which will threaten our prosperity and undermine our 
ability to respond to the needs of working American families.
  Mr. KOHL. Mr. President, I rise to support this tax cut bill, though 
not with great enthusiasm and not without great trepidation. It is 
clear that a balanced tax cut is justified given the massive budget 
surplus we are experiencing. Whether this is that tax cut is a 
different question.
  We have heard much this week about not letting the perfect be the 
enemy of the good. We have gone beyond that point with this bill. The 
debate now is whether we will let the good be the enemy of the 
acceptable.
  The booming economy of the last few years has resulted in exploding 
tax revenues and growing budget surpluses. These surpluses present 
great opportunity and great risk. There is the opportunity to invest in 
unmet national

[[Page 9156]]

needs; education, health care, retirement security, agriculture, child 
care. And there is opportunity to return some tax dollars to the hard 
working families whose productivity has driven our solid economic 
performance. As Federal Reserve Chairman Alan Greenspan has stated, a 
tax cut gets resources to those who know best how to take care of their 
families, the taxpayers themselves.
  But with these opportunities come great risks. We are at risk of 
putting too much faith in multi-year projections of ever-growing 
surpluses. We are at risk of locking in revenue losses and deficits 
with which future Congresses and generations will have to grapple. The 
$1.35 trillion tax cut comes dangerously close to threatening the trust 
fund surpluses that protect Social Security and Medicare. That is why I 
cosponsored an amendment to put in place a ``trigger'' that would delay 
scheduled tax cuts if the trust fund surpluses were violated. That is 
also why I supported several attempt to bring the total tax cut number 
down and reserve some of those funds for spending priorities or debt 
reduction. Unfortunately, none of these amendments was accepted.
  What was accepted, at the insistence of a groups of Democratic and 
Republican moderate Senators, was a sunset that ends all the tax cuts 
instituted in this bill after 10 years. At minimum, that will force 
Congress to reexamine the wisdom of the policies we put in place today 
and adjust them to fit 
with the economic and budget circumstances of tomorrow.
  The other risk we face is passing a tax bill that tilts too much 
toward those who already have so much. I would have preferred a bill 
that included more relief for middle and lower income tax payers, and I 
supported numerous amendments to expand the tax benefits for these 
working families. None of those amendments passed.
  That is not to say that this bill does not contain significant tax 
relief for these families. The provisions that expand and make 
refundable the child tax credit will make a real difference in the 
lives of millions of children struggling now in families living at or 
near the poverty line. These are gains that were not included in the 
House passed bill and that must be retained in the Conference Report to 
make the final bill acceptable. In addition, the Senate bill includes 
significant tax incentives for those who send their children to college 
and those trying to save for retirement. These too must be retained.
  And finally, the bill contains a small provision on which I have 
worked for several years, the Child Care Infrastructure Tax Credit. 
This gives a modest tax incentive to employers who choose to invest in 
child care for their employees. This Nation clearly faces a crisis 
level shortage in quality child care--and quality child care is often 
the difference between work and welfare, between healthy children and 
struggling families. We win as a Nation and as an economy when we get 
employers involved in creating and supporting early childhood teachers 
and facilities.
  These are all good reasons to vote for this bill. But there is 
another reason that overwhelms these all.
  I am a Democrat who supports tax cuts. I am a moderate at a time when 
political power is wobbling from right to left. It is a certainty that 
a tax bill will be signed into law this year. If those like myself say 
``no'' now, and push away from the table, we may be able to make some 
lofty political statements in time for the six o'clock news. But we 
take Democratic principles and the interests of working families with 
us. And I am not ready to do that.
  So I vote in favor of this bill today with the hope and expectation 
that it remains a bill that benefits working families, students, 
retirees, and children tomorrow. And I commend Chairman Grassley and 
the ranking member, Senator Baucus, for the clear effort and good faith 
with which they put together this bill.
  Mr. ROCKEFELLER. Mr. President, I support a meaningful tax cut that 
provides all Americans with financial relief as quickly as possible, 
but I can not in good conscience support the bill before us today. The 
decision the Senate is faced with is not whether we should have a tax 
cut--no one can doubt that Democrats and Republicans alike want a tax 
cut. Rather, the question is how can we create a tax cut that is fair 
to the majority of working people and still have enough resources for 
other critical national priorities?
  During the Senate's consideration of this bill, I supported a $900 
million tax package that provides broad relief to all Americans--across 
the income spectrum--while ensuring sufficient funds for continued debt 
reduction and important programs like a Medicare prescription drug 
benefit. Unfortunately, the tax bill that we are on the brink of 
passing here today is significantly too large and is heavily skewed 
toward the most wealthy. If budget surpluses fail to materialize as 
projected, this bill will threaten our ability to fund urgent national 
priorities such as education and road construction, and could force us 
to dip into the Medicare and Social Security Trust Funds in the coming 
year just as the Baby Boomers begin to retire.
  Mr. President, this bill is simply too large, given the enormous 
uncertainty of long-term budget projections. I believe that both 
President Bush's $1.6 trillion plan and this $1.35 trillion plan 
jeopardize our economic future and the long-term solvency of the 
Medicare and Social Security Trust Funds.
  The facts are stark: Social Security payments will exceed income in 
2015, and Medicare payments exceed income in 2010. We will be forced to 
tap into the Social Security Trust Fund principal in 2025 and the 
Medicare Trust Fund principal in 2017. In 2037, the Social Security 
Trust Fund will be exhausted, and the Medicare Trust fund will be 
exhausted even earlier, in 2025. I believe this tax bill jeopardizes 
the long-term solvency of Social Security and Medicare. These programs 
are fundamental for our seniors, and we have an obligation to ensure 
that both the Social Security and Medicare Trust Funds are protected 
before enacting massive tax cuts.
  This tax bill is even larger than it appears, because it is 
backloaded in order to keep the real cost of the overall package 
hidden. Estate tax repeal does not occur until 2011, so its full cost 
is not included in the Budget Resolution numbers. Marriage penalty 
relief--which to me should be a higher priority than estate tax repeal 
because it helps all married taxpayers across-the-board--does not begin 
to phase in until 2006. Because of these late phase-ins, the true cost 
of this tax plan will not be apparent until the second 10 years. While 
the cost of the tax plan in the first 10 years is an estimated $1.35 
trillion, the cost explodes in the second 10 years to $4 trillion.
  The simple question we must ask is this: If we cannot afford these 
tax cuts now, then how will we afford them in the following decade, 
just as the Baby Boomers enter their retirement years?
  There are other gimmicks in the tax bill designed to make the tax 
cut's impact look smaller than it actually is. For example, the tuition 
deduction sunsets in 2005, in order to keep the cost of the overall 
bill within the $1.35 trillion limit. But we all know from experience 
that the Congress will certainly renew this popular deduction in 2005 
when it expires, so the relatively limited price tag for this provision 
is intentionally misleading.
  This bill also fails to address the need to reform the alternative 
minimum tax (AMT). AMT was designed to make sure the very richest 
people paid their fair share of taxes, but as a result of this bill, 
almost 40 million mostly middle income taxpayers will actually pay 
substantially more in AMT by the end of the decade. This is a problem 
that will have to be dealt with in the next few years, or much of the 
tax relief in this bill will be nullified. Real AMT reform will cost 
several hundred billion dollars--an expense which is not accounted for 
in this tax bill.
  Further, the majority has already asserted that it intends to pass 
additional corporate tax cuts this session. As large as this tax 
package is, the final figure will surely grow.
  Another fundamental problem with this bill is that the lion's share 
of the

[[Page 9157]]

tax relief it contains goes to the wealthiest Americans. Estate tax 
repeal was included in the bill, despite the fact that 98 percent of 
Americans who die are not subject to the estate tax and pass their 
estate on to their heirs tax free. Indeed, only 47,000 taxpayers in the 
entire country even pay the estate tax each year, and half of all 
estate taxes are paid by the wealthiest 0.1 percent of Americans. 
According to Responsible Wealth, the estate tax is repealed under this 
bill in 2011 at a cost of $60 billion--which effectively means we will 
need to tap into the Medicare Trust Fund in order to meet our 
obligations.
  State and local taxes may need to be raised to make up for the loss 
of state estate tax revenues, which are also eliminated by this tax 
bill. Under the federal estate tax, taxpayers are allowed a credit up 
to a certain amount for payment of estate taxes, and many states, like 
West Virginia, tax up to the amount of the credit. If the estate tax is 
repealed, the credit will be eliminated as well, and West Virginia 
would lost over $20 million in revenue a year that is being used to 
fund critical state programs.
  Another way this tax bill benefits the very wealthy is the cut in the 
top rate from 39.6 percent to 36 percent. The Joint Committee on 
Taxation estimates that the cost of this cut will be $114 billion. This 
is one of the more expensive provisions in the bill--but the top rate 
only takes effect at $297,000. So very few taxpayers, including only 
0.3 percent of West Virginians, actually receive any benefit from it.
  The Senate version of the tax plan does make some improvements in 
terms of fairness of the distribution of tax cuts. I strongly supported 
a provision to expand the Earned Income Tax Credit, so that families 
earning between $13,000-$16,000 a year will get the full EITC 
assistance. I also cosponsored Senator Snowe's amendment to give 
partial refundability of the enhanced child credit so that families 
with children can benefit from this tax cut. The bill gives families 
earning over $10,000 a 15 percent child credit, making the child credit 
partially refundable.
  Both of these provisions are improvements, but they do not make up 
for a tax package that is otherwise unfair to our state, and an 
unnecessary bonanza for only the wealthiest. The provisions for low-
income families and children account for just 5 percent of the $1.35 
trillion package.
  In addition, the low income improvements of this bill don't even 
benefit all families with children. Nearly 68,000 children in West 
Virginia won't be helped by the partial refundability provision because 
with incomes of less than $10,000 their families still do not ``earn 
enough.''
  West Virginia taxpayers without children would receive little tax 
relief under the tax bill, according to Citizens for Tax Justice. The 
bill does nothing to relieve the real federal tax burdens faced by 
average West Virginians, who pay not only income taxes, but high 
payroll taxes and federal excise taxes.
  During the Senate consideration of this bill, I offered an amendment 
to put a Medicare prescription drug benefit on equal footing with the 
tax cut for the wealthiest Americans--those in the uppermost income 
bracket. My amendment required that we enact a universal and affordable 
Medicare outpatient prescription drug benefit before the income tax 
cuts for the very wealthiest go into effect. The amendment was defeated 
48-51, on a mostly party-line vote.
  I sincerely believe my amendment would have put positive pressure on 
Congress to enact the Medicare prescription drug benefit we all 
promised our constituents. The vote tells me that many Members 
understand very well that the size of this tax cut threatens our 
ability to pass a Medicare prescription drug benefit.
  In sum, the overall size of this tax package jeopardizes our economic 
future and the future solvency of Society Security and Medicare for 
today's workers and for our children. While the Senate version of the 
tax bill is an improvement over the House and Bush plan, too much of 
the tax cut still goes to the wealthiest, while hardworking West 
Virginia taxpayers--seniors, families with children, married couples, 
and singles--receive little or virtually no benefit. For these reasons, 
I cannot support this legislation.
  Mr. FEINGOLD. Mr. President, I will vote against this tax bill 
because it is not fiscally responsible. This enormous tax cut may end 
up raiding the Medicare and Social Security Trust Fund balances. It 
risks a return to the annual budget deficits Congress worked so hard to 
eliminate. It will cause our Nation to miss what may be a once-in-a-
lifetime opportunity to put our fiscal house in order by paying down 
debt, strengthening Social Security, and modernizing Medicare. And it 
does not fairly distribute its benefits. For these reasons, I must 
oppose it.
  This is the most momentous budgetary vote in two decades. For with 
this vote, Congress appears poised to turn its back on 8 years of 
fiscal responsibility. With this vote, Congress appears willing to 
return to the deficit spending days of the 1980s.
  I do believe that taxpayers deserve tax relief. With the favorable 
surpluses before us, we should cut taxes. I supported Senator Conrad's 
proposal to cut taxes by $745 billion over the next 10 years. With its 
associated interest costs, that package would have devoted roughly $900 
billion to tax relief.
  But the tax cut in this conference report is too large relative to 
the surpluses that economists have projected. It seeks to devote $1.35 
trillion to this one purpose. Interest costs could add another $400 
billion to the cost.
  We should not commit to tax cuts of this size before the projections 
of future surplus dollars have proved real, before we have ensured the 
long-term solvency of the vital Medicare system, before we have brought 
that program up-to-date with needed prescription drug and long-term-
care benefits, and before we have done one single thing to prepare the 
vital Social Security safety net for the impending retirement of the 
baby boom generation.
  With this bill, the Congress appears headed toward repeating the 
fiscal mistake it committed in 1981. Recall that back in 1981, they had 
surplus projections, too. In President Reagan's first budget, 
incorporating his major tax cut, the administration projected a $28 
billion surplus in the fifth year, 1986. In the actual event, the 
Federal Government ran up a $221 billion deficit in 1986.
  The 1980s saw the accumulation of more than $1.5 trillion in deficits 
and the tripling of the Federal debt held by the public. The Congress's 
decision to cut taxes too deeply in 1981 thus robbed the Nation of 
fiscal policy tools, and unduly constrained the Federal Reserve Bank in 
its monetary policy.
  We risk committing that same error again today. As I have noted, the 
bill before us will cost at least $1.35 trillion in its first 10 years. 
And during this bill's second 10 years, the Center on Budget and Policy 
Priorities estimates that it will cost more than $4 trillion.
  And those costs will come just as the Nation faces growing costs for 
Medicare and Social Security with the retirement of the baby boom 
generation. In their 2001 annual report, concluded under the Bush 
administration, the Trustees of the Medicare Hospital Insurance trust 
fund project that its costs will likely exceed projected revenues 
beginning in the year 2016. The Trustees say: ``Over the long range, 
the HI Trust Fund fails by a wide margin to meet our test of financial 
balance. The sooner reforms are made the smaller and less abrupt they 
will have to be in order to achieve solvency through 2075.''
  Similarly, Social Security's Trustees remind us again this year that 
when the baby-boom generation begins to retire around 2010, ``financial 
pressure on the Social Security trust funds will rise rapidly.'' The 
Trustees project that, as with Medicare, Social Security revenues will 
fall short of outlays beginning in 2016. The Trustees conclude: ``We 
should be prepared to take action to address the OASDI financial 
shortfall in a timely way because, as with Medicare, the sooner 
adjustments are made the smaller and less abrupt they will have to 
be.''

[[Page 9158]]

  This bill robs the nation of resources to deal with these important 
challenges.
  As well, the bill before us is tilted heavily toward high-income 
taxpayers. According to Citizens for Tax Justice, when this bill's tax 
cuts are fully phased in, the highest-income one percent of taxpayers 
would receive 35 percent of the benefits of the bill. The majority of 
taxpayers in the bottom three-fifths of the population would get only a 
little more than 15 percent of the bill's benefits.
  When this bill's tax cuts are fully phased in, the one percent of 
taxpayers with the highest incomes would receive an average tax cut of 
more than $44,000, while taxpayers in the middle fifth of the 
population would receive an average tax cut of less than $600.
  This is not a balanced bill. It is not balanced fiscally. And it is 
not fairly balanced in its benefits. I will therefore vote against it, 
and I urge my colleagues to vote against it as well.
  Mr. KERRY. Mr. President, as we near completion of debate over this 
tax bill, I want to commend the Chairman of Finance Committee, Senator 
Grassley, and the Ranking Democrat, Senator Baucus, for their good 
faith efforts to craft a tax bill and move it through the Finance 
Committee, that is no easy task, and I have enormous respect for their 
hard work and the extent to which they each listened to members from 
both sides of the aisle. I am particularly grateful to see that the 
Finance Committee included a proposal advocated by myself, Senator 
Snowe, and Senator Lincoln which would extend the child tax credit to 
perhaps as many as an additional 16 million children. The legislation's 
new child credit refundability provision amounts to nearly $70 billion 
in expanded relief for working families with children. That is truly an 
accomplishment.
  Nevertheless, today we are considering more than a tax bill--and much 
more than a number of individual tax pieces. What we do here has 
consequence. Nothing happens in a policy vacuum, nothing happens that 
doesn't affect everything else we do for this economy, the choices we 
can and can not make for this country. This is more than just a tax 
bill. It is a blueprint for the next several years, and, as such, I am 
sorry to say it is a blueprint that jeopardizes the fiscal discipline 
that has been the foundation of the long-term economic growth our 
country has enjoyed in recent years.
  This tax cut is one of the great lost opportunities of the last 
twenty years in American politics. I want a broad-based tax cut that 
reaches every American and I want it done in a way that's fiscally 
responsible. I'm not alone. We could have had that, instead, we have a 
tax cut that's based on projections that won't hold up and which I fear 
will, as a consequence, bring us back to deficit economics again in 
this country. It didn't have to be this way. No business in America 
pays out dividends to shareholders based on ten year profit 
projections--neither should the government.
  As someone who worked hard to put the budget in the black, from 
Gramm-Rudman Hollings deficit reduction in 1986 when ``balanced 
budget'' was a dirty word for Democrats, to the tough vote in 1993, to 
the balanced budget in 1997, I can't stress enough how this vote takes 
the country in the wrong direction on the question of fiscal 
discipline.
  President Bush has said over and over, it's your money, not the 
government's money. It's also your debt. Under the tax cut that's about 
to be sent to the floor all it takes is one dip in the economy, one 
blip in surplus projections, and we've returned to the days of deficit 
economics, and that means higher interest rates on student loans, on 
car loans, and on mortgages. It means we slow the economy. That's not 
fiscally responsible policy-making, and it's a departure from the 
course of fiscal conservatism that brought us the growth and prosperity 
of the last eight years.
  We could have made a different choice. We could have had a one, a 
two, or a three year tax cut. We could have stimulated growth. If 
surpluses were here after that, we could have cut taxes again, and I've 
never seen a Congress that didn't like to cut taxes. But that's not 
what's happening here. Tax politics is trumping fiscal discipline and 
honest economic policy.
  We know the history here, and we know what a departure this 
represents. In 1993, the Senate cast a difficult vote to commit the 
Congress and the country to getting the deficit under control. This tax 
bill, if passed, could well be the vote that casts away that fiscal 
discipline.
  Last week, we voted on a budget resolution. That budget resolution is 
nonbinding. But it gives us a framework for understanding how all the 
different pieces--the tax bill, discretionary spending, Social 
Security, Medicare, and debt reduction, will fit together. In so doing, 
the budget resolution made certain assumptions, assumptions regarding 
the economy and assumptions regarding spending.
  First, the budget resolution is based on CBO's ten-year economic 
projections which are, overly optimistic and, by definition, hopelessly 
unreliable, as I will explain. Second, it assumes that nondefense 
spending will be held slightly below the rate of inflation for the next 
10 years. We have not held spending to that level in decades. Third, it 
assumes that no additional funds will be needed for Social Security 
reform. I have yet to see a viable Social Security reform plan which 
did not need additional funds to address transitional costs. Fourth, 
although it did assume certain funds for Medicare, funding for a 
prescription drug benefit will have to compete with funding for overall 
Medicare reform. Finally, although it created a defense reserve fund, 
there was no money in the budget allocated for this purpose. It will 
have to compete with all other spending priorities.
  Clearly, each of these assumptions deserves close scrutiny because 
they are the foundation for the tax cut we are considering.
  A little over three years ago, in January of 1998, the Congressional 
Budget Office projected that the federal government would accumulate a 
10-year unified surplus of $660 billion. While the January CBO report 
appeared only a few short months after the Asian financial crisis of 
1997, its authors were careful to note that their ten-year projections 
were based not on cyclical effects, but rather on certain beliefs 
regarding the long-term prospects for the United States economy. The 
surplus estimates were driven by trends in underlying factors--
important issues such as the demographics of the labor force, the rate 
of national savings, and growth of productivity levels in output per 
worker.
  This January, once again, our Congressional Budget Office produced 
new estimates on what to expect over the next ten years. The economists 
projected the economy would grow at a rate of 2.4 percent in 2001, a 
full half a point higher than CBO had anticipated for 2001 in its 
budget outlook written only three years ago. Nevertheless, we find 
ourselves dealing with ten-year surplus projections not of $600 
billion, but $5.6 trillion. From 1998 to 2001, the Congressional Budget 
Office increased its ten-year surplus projections by 5 trillion 
dollars. Allow me to repeat that statement. In three short years, the 
Congressional Budget Office has increased its ten-year surplus 
projections by 5 trillion dollars.
  It begs the question, what has led the Congressional Budget Office to 
increase surplus projections by such a tremendous amount over the last 
three years? Is it the result of deficit reduction measures? Absolutely 
not. Over the past three years, discretionary spending has grown by an 
average rate of well over 4 percent. The Balanced Budget Act of 1997 
slowed the growth of Medicare, but Social Security and Medicaid 
spending continue to increase.
  Today, the same economists that predicted a 10-year surplus of $600 
billion in 1998 have changed their assumptions regarding the economy's 
ability to grow. They assume that productivity growth will continue at 
levels far exceeding levels attained from the mid-1970s through the 
mid-1990s. They assume that productivity growth will be well above its 
average over the last 50 years.

[[Page 9159]]

  Yet, productivity levels already show signs of weakening. 
Productivity has dropped steadily since last summer. In the first 
quarter of this year, productivity recorded its first decline since 
1995.
  A surplus projection centered on an assumption that productivity 
growth will hold at the levels achieved over the last five years is not 
a conservative projection, and it is certainly not the stone on which 
Congress should engrave the largest nominal tax cut it has ever 
contemplated and bet the future of the US economy.
  Indeed, the Congressional Budget Office acknowledges as much in their 
report. Their economists go to great lengths to warn of the pitfalls 
and dangers of budget forecasting. The January report devotes 24 pages 
to this very topic. Under one specific scenario modeled by CBO, their 
economists examine what would happen if the economy reverted to pre-
1996 conditions, specifically, if: (1) productivity growth averages its 
historical rate of 1.5 percent, (2) Medicare and Medicaid spending grow 
a mere 1 percent faster than the baseline, and (3) increases in 
personal tax liabilities from phenomena such as recent capital gains 
realizations gradually fall to historical levels. In this instance, 
they estimate the budget surplus would fall from $5.6 trillion to $1.6 
trillion. A full, four trillion dollars would be eliminated.
  That scenario is far from a ``doomsday'' scenario. It simply assumes 
that productivity growth falls to historic levels, Medicare and 
Medicaid spending increase 1 percent, and capital gains realizations 
fall to historic levels. And it reduces the surplus by four trillion 
dollars.
  Now I say to my colleagues, there is another piece of the surplus 
puzzle that just doesn't fit and that is the spending assumptions. Over 
the past 20 years, the difference in projected spending in the 
Congressional budget resolution for the next fiscal year and the actual 
amount of spending for the next fiscal year has averaged 3.3 percent. 
In other words, spending for fiscal year 2002 will probably be off by 
about 3.3 percent from the level anticipated in the budget resolution. 
Thus, with a $1.9 trillion budget, we're likely to be off by about $60 
billion. And that's just next year.
  Looking at the out-years, spending assumptions can be wildly 
inaccurate. Medicare spending is rising again, it increased by 3 
percent in 2000. According to CBO, ``Historically, Medicare's growth 
rate has varied widely, and such fluctuations are likely to continue.'' 
In 2000, Medicaid grew 2 percent faster than CBO projected. In 
addition, minor upturns in inflation can result in major spending 
increases because many mandatory program benefits, such as Social 
Security, are linked to the consumer price index. And we have yet to 
adequately address all of the problems the Balanced Budget Act of 1997 
created for Medicare.
  On the discretionary side, since the end of President Reagan's last 
term, domestic nondefense outlays have increased at a rate of 6 percent 
a year, those are our investments in education, the environment, 
transportation, children and other priorities. Much of that increase 
was balanced by declining defense expenditures. That's about to change. 
Does anyone really believe that a budget resolution which assumes that 
discretionary spending will rise at the rate of inflation over the next 
ten years is honest budgeting? Judging by the votes during Senate floor 
consideration of the budget resolution, it's not about to begin today.
  Now let's take a look at what happens to the surplus if we make a 
much more realistic assumption about spending. For example, maybe we 
will lower nondefense spending growth from the 6 percent averaged since 
the end of Reagan's term to 5 percent. Let's give ourselves the benefit 
of the doubt and assume that the defense build-up leads to increases in 
defense of only 5 percent per year. Thus, discretionary spending 
increases 5 percent a year over the next 10 years. In effect, with lost 
interest savings, we would wipe out more than $1.1 trillion of the 
projected surplus.
  So first we have a potential situation in which our 10-year surplus, 
due to faulty economic assumptions, has fallen from $5.6 trillion to 
$1.6 trillion. When we then figure in honest and realistic projections 
regarding spending growth, our actual 10-year surplus has now been 
reduced from 5.6 trillion to $500 billion. We have wiped out all of the 
Medicare surplus and we have wiped out about 80 percent of the Social 
Security surplus, and we still have not calculated the cost of the tax 
cut or Social Security reform.
  Now combine that scenario with the tax cut before us. We are about to 
enact a $1.35 trillion tax cut and at the same time, we have done 
nothing to deal with fundamental issues resulting from mandatory 
spending and the retirement of the Baby Boom generation. Moreover, 
there exists the very real possibility that we will return to the days 
of deficit spending and ballooning federal debt.
  And while it may make a nice sound bite to say that if we don't send 
the surplus back to the American people in a tax cut, Congress will 
waste it, no one can make that argument with a straight face unless 
they are willing to set forth a real plan to deal with the fundamental 
issues facing Social Security and Medicare. Our President has yet to 
submit a Social Security or Medicare reform plan and I don't see one on 
the schedule in the Ways and Means Committee or the Finance Committee.
  Social Security's trustees reported in March that Social Security's 
tax income will fall short of Social Security's benefit payments 
beginning in 2016. Medicare's tax income will fall short of Medicare 
spending the same year. Social Security and Medicare's problems are 
related to the aging of the labor force. In the not-to-distant future, 
there will be too few workers in the workforce to maintain Social 
Security and Medicare as pay-as-you-go programs. These are not small 
problems.
  In the case of Social Security, Congress will have to either reduce 
Social Security benefits, raise Social Security taxes, or find a third 
alternative. Individual accounts, partial privatization, or investment 
of Social Security funds in the stock market, even under the best of 
circumstances, regardless of how they are structured, will require use 
of large-scale additional funds to ensure that current and near 
retirees will not be penalized. But under the scenario I have outlined, 
there would be no General Treasury funds available and Social Security 
surpluses over the next ten years would be eliminated.
  The same issues apply to Medicare. The Congressional budget 
resolution sets aside $300 billion in a Medicare Reserve Fund. However, 
that $300 billion is needed just to finance a decent prescription drug 
benefit. In addition, there will be substantial costs associated with 
reforming Medicare. This year's Trustees' Report showed that health 
care costs per capita will rise. But as I have demonstrated, the tax 
cut would place Medicare surpluses in jeopardy.
  Dealing with the Social Security and Medicare's financial problems 
sooner rather than later minimizes the pain for beneficiaries and 
workers by allowing the government to address transitional costs before 
the problem reaches the breaking point.
  Congress should be acting in a fiscally responsible way by addressing 
Social Security and Medicare's long-term problems while we have the 
opportunity, while the Federal government is operating under surpluses 
and not deficits.
  Turning to the actual tax cut before us, regardless of how you feel 
about the bill's specific provisions, one glaring problem flows from 
the fact that most of the bill's provisions will not take effect for 
several years.
  According to the Joint Committee on Taxation, the cost of the bill in 
2011 will exceed the cost of the tax bill in the first three years 
combined. By the time we reach 2011, the cost of the Chairman's 
proposed tax cut will approach nearly $200 billion per year.
  The most obvious example is the bill's estate tax relief provisions. 
Over the next five years, the bill would provide a total of $36 billion 
in estate tax relief. However, the bill does not actually repeal the 
estate tax until the year 2011, and, therefore, the revenue

[[Page 9160]]

hit resulting from repeal of the estate tax will not actually occur 
until 2012, so its impact does not even appear in the revenue tables.
  Thus, the bill repeals the estate tax in the same year that the Baby 
Boom generation will begin retire. Is that fiscal responsibility? The 
stark reality is that the cost of the tax cut will arrive just when we 
are least able to afford it.
  The same problem applies throughout the legislation.
  To make matters worse, because many of the bill's provisions will not 
take effect until the second five years, the costs of the tax bill 
escalates at a time when surplus estimates are the most unreliable, 
towards the end. And by back-loading the bill, we are ensuring that the 
costs of the tax cut will rise just when surpluses are most unreliable 
and our fiscal problems related to the aging of the population are 
truly emerging.
  Finally, I say to my colleague, by passing this tax cut, we are 
effectively ensuring that the Federal debt will stop falling and start 
rising again. Under the Congressional Budget Office's January baseline, 
Federal debt, i.e., debt held by the public as well as debt owed to 
Federal trust funds such as Social Security and Medicare, will fall in 
each of the next five years. However, under the budget resolution 
Congress passed last week, Federal debt would soon be on the rise 
again. Even if you accept their assumptions about spending and the 
economy, after five years, Federal debt will be $600 billion higher 
than the CBO baseline. Over the full ten years of the budget 
resolution, Federal debt would increase by over $1 trillion, from $5.6 
trillion in 2001 to $6.7 trillion in 2011.
  And by using unrealistic economic and spending assumptions, as I have 
shown, they are ensuring that debt held by the public will rise. From 
1969 to 1997, debt held by the public increased every year. Over the 
past three years, we reversed that trend. From 1997 through 2000, the 
Federal government retired $360 billion of debt held by the public. In 
the early 1990s, by enacting a real deficit reduction program, we were 
able to completely change the course of interest rates, inflation, and 
the economy.
  Reducing publicly held debt means the government is buying back 
bonds, thereby freeing capital in private sector financial markets. As 
Federal Reserve Chairman Greenspan noted in Congressional testimony 
earlier this year, ``a declining level of Federal debt is desirable 
because it holds down long-term real interest rates, thereby lowering 
the cost of capital and elevating private investment.'' Paying down 
publicly held debt results in lower interest rates and lower inflation. 
The result is lower home mortgage rates and lower auto loan rates for 
every American.
  Paying down debt has also helped finance a high level of private 
sector investment at a time when personal savings rates are declining. 
By buying back bonds, more capital is available in domestic markets. It 
is that simple.
  But under the tax cut we have before us today, the ability to reduce 
publicly held debt will be strained. Their numbers make unrealistic 
assumptions about the economy and unrealistic assumptions about 
spending. While only time will tell, I fear we are moving down the 
wrong path, one that reverses the progress made over the last eight 
years.
  I acknowledge that the Chairman and Ranking Member have made great 
strides to ensure that their bill will benefit a broad spectrum of 
Americans. I particularly appreciate the fact that they included a $70 
billion provision that Senators Snowe, Lincoln and I requested which 
will ensure that an additional 16 million children benefit from the 
expanded child credit.
  Nevertheless, for all of the reasons I have outlined, I believe the 
evidence is clear, the long-term consequences of the proposed tax 
reduction will set back our economy and our nation. I want tax relief, 
but I don't believe in doing it at the expense of fiscal discipline. 
And that is why I would urge my colleagues to vote against this 
agreement, we can and should do better.
  Mr. SARBANES. Mr. President, I rise today in opposition to the tax 
reconciliation legislation pending before the Senate. Unfortunately, 
this tax bill spends vast sums of money, based on shaky economic 
forecasts, and disguises its true cost by phasing in most of its tax 
relief far into the future. As a result, this legislation poses a real 
risk to our Nation's fiscal health without providing the tax relief 
Americans have been promised for years to come.
  Let me begin by clearly stating that I am not opposed to responsible 
tax relief. I believe we can craft a fiscally responsible tax cut that 
does not endanger our economy and provides meaningful tax relief, 
including targeted measures, a component of across-the-board 
reductions, and an economic stimulus package.
  That being said, I must oppose the massive tax bill before the Senate 
today for several reasons. Foremost among them is my deep concern that, 
if we pass this legislation, we will be repeating the mistake we made 
in 1981 and squandering the fiscal security we have worked so hard to 
achieve. In 1981, Congress complied with the President's request for a 
large tax cut. The Nation felt the negative effects of that tax cut for 
more than a decade, as Federal deficits grew and the national debt 
exploded. It took the country nearly 20 years to recover from that tax 
cut, and move from a period of record budget deficits, to economic 
prosperity and budget surpluses.
  Today, we again have an opportunity to shape the course of our 
country for the better, and part of that course should include 
responsible tax cuts. I have supported proposals to devote a full third 
of our projected non-Social Security surplus, approximately $900 
billion, to tax relief. It is my strong belief that we should devote a 
full third of the surplus to paying down our national debt. Simply put, 
if we don't take measures to reduce the debt in times of surplus, when 
will we? The remaining third of the surplus is needed to address the 
priorities I hear from the Marylanders I meet every day, access to 
healthcare, education, a prescription drug benefit in Medicare, 
protecting Social Security, enforcing our Nation's laws, addressing 
rising energy costs, and on and on.
  A $1.35 trillion tax cut will not allow us to act on these crucial 
areas, particularly when it is based on a highly speculative ten-year 
forecast of our Nation's future revenues. This bill is based on 
economic projections of a $2.6 trillion non-Social Security surplus. 
That surplus is not cash-in-hand being held by the Federal Government, 
it is a prediction that in the future this money will materialize. 
Based on that prediction, the tax bill would spend $1.35 trillion over 
the next ten years, despite a national debt of more than $5.6 trillion, 
or $20,227.19 for every man, woman, and child in our country.
  I believe it is unwise to base such a massive tax cut on projected 
income that may never come to pass. The serious limitations of economic 
projections are clearly illustrated by recent experience: just six 
years ago, in January 1995, the Congressional Budget Office projected 
that we would finish the year 2000 with a $342 billion deficit. 
Instead, we saw a surplus of $236 billion, a swing of $578 billion. In 
fact, most of the projected surplus over the next 10 years is expected 
to occur in the outyears, when projections are the most uncertain: 
Almost 70 percent of the non-Social Security surplus is projected to 
occur in 2007-2011, the last 5 years of the projection period. I 
believe it would be the height of folly to commit these uncertain 
surpluses to large, permanent tax cuts, as this tax bill does.
  While I am concerned about tax reductions amounting to $1.35 
trillion, the cost of the tax bill this decade, I am even more 
disturbed by the exploding cost of these tax measures in years to come. 
The authors of this legislation have employed a variety of tactics to 
disguise the true cost of the bill. Most significantly, the various tax 
cuts provided by this legislation are slowly phased in over ten years 
to keep costs under the $1.35 trillion maximum dictated by the budget 
resolution. Other provisions granting tax relief actually expire in the 
middle of the ten-year period covered by the bill.

[[Page 9161]]

  I am opposed to such shell games that hide the true cost of this 
legislation for two reasons. First, the American public is being 
promised tax relief and likely doesn't understand that the changes 
which may benefit them the most will not arrive for years to come. 
Whatever your own tax cut priority, odds are it will not be realized 
for a long time. Marriage penalty relief does not begin until the year 
2005. The final rate cut in the upper income tax brackets does not 
occur until 2007. The increase in the child credit to $1,000 does not 
take effect until 2011. The full increase in IRA contribution limits 
and the repeal of the estate tax do not take effect until 2011.
  In addition to this extreme backloading of costs, this tax 
legislation actually ``sunsets'' several important provisions in order 
to hold down costs. Most of the alternative minimum tax, or ``AMT'', 
relief provided in the bill is actually eliminated in 2006. As a 
result, the number of taxpayers affected by the AMT would explode this 
decade to nearly 40 million taxpayers by 2011, more than 25 times the 
number of Americans now affected by the AMT. Provisions aimed at 
encouraging small businesses to fund employee pensions expire in 2006. 
And deductions for education expenses end in 2005.
  The American people have been sold this bill as providing all of this 
relief, and have not been told how long they are going to have to wait 
to get it, and that it is not actually permanent relief. Even more 
importantly, such accounting gimmicks disguise the real cost that this 
legislation will impose on our Nation. The true cost of this package 
will rise to anywhere from $3.5 trillion to $4 trillion over ten years 
once it is fully implemented, which coincidentally occurs right at the 
time the baby boomers retire. If we enact this drastic cut, where will 
we find the resources to meet the needs of an aging population? How 
will we invest in national priorities like education, a well-prepared 
military, and a prescription drug benefit in Medicare? I strongly 
believe that we cannot enact such a huge tax cut, based on shaky 
economic forecasts, that will consume such a vast amount of resources 
just as our Nation's need is the greatest.
  Finally, I believe it is worth noting who receives the benefits of 
this tax reconciliation bill. As I have said before, I am not opposed 
to a component of across-the-board tax relief. For example, the new 10 
percent tax bracket created in this bill would benefit all Americans 
who pay taxes, including those with the highest incomes in our country. 
I would also support legislation to ease the marriage penalty and 
significantly increase the estate tax exemption so that our families 
can pass on more to future generations.
  However, a disproportionate percentage of the benefits of this 
legislation is given to the wealthiest in our country. According to 
Citizens for Tax Justice, thirty-five percent of the benefits of this 
tax bill goes to the richest one percent of taxpayers--who have an 
average income of $1,117,000. While they get 35 percent of the benefits 
of this bill, that top one percent of taxpayers pays only 20 percent of 
all Federal taxes.
  In contrast, this legislation fails to provide tax relief for many of 
our Nation's hardest-working taxpayers. The tax bill we are considering 
today provides no tax relief to the many American families who pay no 
income taxes, but who pay substantial payroll taxes. These low-income 
workers have not benefitted from our Nation's booming economy in recent 
years. Between 1992 and 1998, the bottom 95 percent of Americans 
experienced an eight percent rise in their after-tax incomes, while the 
top one percent of taxpayers saw their after-tax income increase by 47 
percent. We should find some way to give those workers who have not 
participated in our recent economic prosperity, but still pay 
substantial payroll taxes, the relief they so desperately need.
  Nonetheless, some will argue that wealthy Americans pay more taxes 
and, therefore, deserve a larger tax cut. That may be true if only the 
dollar amount of the tax cut is considered, but the tax bill we are 
debating gives a larger percentage of its tax cuts to high-income 
Americans. According to the Center on Budget and Policy Priorities, 
this tax bill, when fully phased in, will increase the after-tax income 
of the richest one percent of Americans by an average of five percent. 
In contrast, the bill will increase the after-tax income of the middle 
fifth of American taxpayers by only 2.2 percent, and the poorest 20 
percent of families in our country will see their income increase by 
only 0.8 percent. Therefore, this legislation would increase the after-
tax income of our richest Americans more than twice as fast as those in 
the middle class, and six times faster than families in the bottom 20 
percent of the income scale. Clearly, this bill denies middle-class and 
lower-income Americans tax relief in order to benefit the wealthiest in 
our country.
  I believe that by passing this tax bill we will throw away an 
unprecedented opportunity to develop a sound fiscal policy for our 
Nation. We have an unparalleled opportunity to pay down the Nation's 
debt, to invest in our future, and to shore up vital programs. If we 
act prudently, we can ensure that the Federal government will have the 
resources to meet our obligations after the baby boomers retire and 
beyond. We can do a reasonable tax cut in response to the problems 
confronting working families all across the Nation, and we can do all 
this in a very balanced way. Because this legislation would squander 
our best chance for investing in America's future, lifting the debt 
burden off the next generation, and providing a reasonable tax cut for 
our working families, I strongly oppose this excessive tax bill and I 
urge my colleagues to do the same.
  Mr. LEAHY. Mr. President, I rise today to oppose the tax 
reconciliation bill being considered by the Senate today. I believe 
Vermonters and all Americans deserve tax relief, but we need to have a 
fiscally responsible tax package that benefits everyone. We do not need 
one that is so large, so likely to result once again in budget 
deficits, so full of budgetary gimmicks, and so skewed toward the 
wealthy.
  If we are serious about passing a tax cut bill to provide needed 
relief to all Americans we should be lowering the tax rate for low- and 
medium-income people, making the child tax credit fully refundable, 
eliminating the marriage penalty tax immediately, creating an R&D tax 
credit, increasing IRA and pension contributions, and allowing for 
greater college tuition credits. Unfortunately, we are delaying all of 
these important tax relief components in order to shoehorn a massive 
rate reduction for the wealthiest Americans into this bill. It also 
pays for this massive tax plan at the expense of needed investments in 
Social Security, Medicare, education, the environment, and paying off 
the national debt.
  I am one of five Senators still in the Senate who voted against the 
Reagan tax plan in 1981. We saw what happened there: We had a huge tax 
cut, defense spending boomed, and the national debt quadrupled. The tax 
plan was popular but it was wrong. America should not move backward in 
that direction.
  This tax plan is too large. I voted for a responsible tax cut plan 
targeted to help the low- and medium-income people of this country who 
need tax relief the most. The $900 billion alternative I supported 
offered immediate tax refund checks to help boost the economy and help 
Americans pay for higher gasoline and energy prices, rate reductions 
for all income taxpayers, marriage penalty relief to start immediately, 
a partially refundable child tax credit, tuition tax deductibility to 
make college more affordable for middle class families and a major 
effort to modernize our public schools, a comprehensive package of 
retirement savings incentives to increase IRA and pension contributions 
and encourage small business to set up pension funds for their 
employees, a permanent extension of the $10,000 adoption tax credit, 
health insurance deduction for the self-employed, responsible estate 
tax relief, a permanent R&D tax credit, and elimination of the 
alternative minimum tax, AMT, for people with income up to $80,000. 
Unfortunately, the majority refused to seriously consider this offer to 
provide reasonable tax relief to working men and women and their 
families.

[[Page 9162]]

  This tax plan is not fiscally responsible. We should keep in mind the 
inherent risks of forecasting budget surpluses ten years into the 
future. The President has argued that the surplus will be around $1.6 
trillion and that all of that should go toward tax cuts. And most of 
the tax cuts in this bill come in the second 5 years of the 10-year 
plan. Setting aside the argument of how to spend that much money, is it 
really available? The predictions used to calculate $1.6 trillion were 
based on the U.S. economy expanding at an annual rate of 4 percent from 
2000-2010. I think we know from the current economic slowdown that our 
economy is growing nowhere near 4 percent, if at all, right now. That 
is a big yellow flag that these assumptions are wrong. Focusing on 
budget predictions 10 years in the future is exceptionally risky and 
does not allow businesses and individuals to properly plan long-term.
  This tax plan does not address our enormous Federal debt. Whatever 
surplus our Nation now enjoys should be used to pay down the $5.7 
trillion gross Federal debt burden our country still carries. The 
Federal Government has to pay almost $900 million in interest every 
working day on this national debt. Paying off our debt will help 
sustain our sound economy by keeping interest rates low. I want to 
leave a legacy for our children and grandchildren of a debt-free 
Nation.
  This tax plan is slanted toward the wealthiest among us. The original 
tax plan proposed by the President provides nearly half of that $1.6 
trillion tax cut to the wealthiest in our country. We are sacrificing 
real tax relief to working families in this country for rate reductions 
to the wealthy. We should focus on enacting a responsible plan that 
will benefit the broadest number of people by reducing taxes to low- 
and medium-income people. By focusing only on income tax rate 
reductions, this tax cut plan leaves out millions of taxpayers who do 
not pay Federal income taxes but who do pay payroll taxes. In Vermont, 
there are 23,000 families who do not pay Federal income taxes. But 82 
percent of those families do pay payroll taxes. For the vast majority 
of taxpayers, payroll taxes generate the largest tax burden, and yet 
this plan does not touch payroll taxes.
  This tax plan has not been thoroughly reviewed and is full of 
budgetary gimmicks designed to mask the true effects of the bill. There 
are many unforeseen consequences of this tax bill that we should take 
into account before enacting this massive tax cut. However, with 
Republicans pushing to get this bill done by Memorial Day, there is 
great pressure to ram through a $1.35 trillion tax cut without a full 
review of all the proposals.
  The New York Times has reported that one unanticipated effect of full 
repeal of estate tax may be greater capital gains taxes for most 
estates. After 2011, when the estate tax will be repealed, capital 
gains taxes would be owed on everything inherited above $1.3 million. 
As the Times reporter said:

       Presumably, the drafters of the legislation did not worry 
     if all the pieces did not fit together in a coherent package 
     because they were primarily interested in getting a bill on 
     the table for debate.

  States that tie their State tax returns to Federal returns are going 
to be hurt by the lost Federal revenues. Vermont's tax system is one of 
three in the nation in which taxpayers use their Federal tax bill to 
calculate their State income taxes. It is a simple system, but it is 
affected by every little tax change at the Federal level. In effect, a 
massive Federal tax cut leads to a massive State tax cut. According to 
Vermont State economists, the State stands to lose $506 million over 
the next ten years because of this tax bill. In FY 2002 alone, Vermont 
will lose $35.7 million. The conservative Heritage Foundation has 
estimated that Vermont may lose up to $1.5 billion because of this huge 
tax cut. This is a very large amount of money for a State whose 
population is only 609,000. How will the State make up these lost 
revenues?
  Vermont was hurt 20 years ago when Congress last considered a massive 
tax cut. Those rewrites to the Federal Tax Code put the State in red 
ink for years. As the red ink grew, an emergency tax study group 
assembled by the Governor found that between 1982 and 1987 the State 
stood to lose $300 million because of the Reagan tax cut. Now we will 
be putting Vermont back in a similar situation. As our Governor has 
already warned, without raising State taxes to make up for Federal 
loses, Vermont will once again see major deficits.
  This tax bill also asks States to pay for repealing the Federal 
estate tax by abruptly ending payments from Federal estate tax revenue 
that are now shared with the States. This bill will cut by half the 
Federal credit that States receive for the Federal estate taxes that 
are collected and will deny States between $50 billion and $100 billion 
over 10 years, or as much as two-thirds of the cost of the estate tax 
repeal in the bill.
  Another anomaly of this bill is the way the AMT is calculated. While 
Democrats hoped to exempt people who make under $100,000 from AMT 
permanently, Republicans only want to slightly increase the exemption 
for 4 years from 2002 to 2006. The Republican plan would cause 39.6 
million taxpayers to be subject to the AMT by 2011. Clearly this flies 
in the face of the original intent of the AMT, which was to ensure that 
wealthy taxpayers cannot make use of tax breaks to eliminate much or 
all of their tax liability. The tax bill will force more and more 
middle-class taxpayers to pay a tax that was meant to reach very few, 
well-off taxpayers.
  I do not like the marriage penalty and think it is poor public 
policy. While this bill does contain two provisions designed to provide 
marriage penalty relief, it makes couples wait 5 years for that relief. 
While the rate cuts in upper-income tax brackets take effect next year, 
married couples will have to wait until 2005 to get relief and until 
2010 until full repeal is fully phased in. This is 3 years after the 
upper income bracket rate cuts are fully effective.
  After years of hard choices, we have balanced the budget and started 
building surpluses. Now we must make responsible choices for the 
future. Our top priorities should be paying off the national debt, 
saving Social Security, creating a real Medicare prescription drug 
benefit, protecting domestic spending programs, and passing a fair and 
responsible tax cut.
  This tax bill falls far short of these priorities. It uses gimmicks 
to hide the bill's true costs. It provides no marriage penalty relief 
for five years. It contains no immediate tax refund to stimulate the 
economy. It has a hidden tax increase on the middle-class through the 
AMT. And its costs explode after 10 years, just as the baby boom 
generation begins to retire. For the sake of our economy and the 
working families of America, I will vote against this tax cut bill.
  Mr. LEVIN. Mr. President, the budget resolution, including the tax 
bill which has passed the Senate, will almost surely push us back into 
the deficit ditch. The tax bill was rushed through before the President 
makes his request for additional defense funds, before the tax writing 
committees adopt additional provisions which we all know are 
forthcoming to extend current tax provisions, before the tax writing 
committees act to avoid the calamity which will befall 40 million 
people who will be forced to pay an alternative minimum tax as a result 
of this tax bill. That's twice the number that will be paying 
alternative minimum taxes by 2011 under current law. This fiscally 
irresponsible tax bill was pushed through before the review of the 
projected surplus which is due in August, and also before the 
appropriations bills are reported, which everyone here knows will 
exceed the domestic discretionary spending cap provided for in the 
budget resolution. The final result of all this fiscal irresponsibility 
will almost surely be the raiding of the Medicare surplus and a return 
to the deficit days of the 1980s.
  Our future economic health took a blow today.
  I support a tax cut, a reduction in taxes which is modest enough to 
be fiscally responsible, swift enough to provide an economic stimulus, 
and fair to

[[Page 9163]]

all Americans, including working families who are so shortchanged by 
the Republican proposal. The bill passed today is the opposite. Its 
large size makes it fiscally irresponsible, it actually delays tax 
relief, and it provides most of its benefit to the upper income 
Americans. It is based on long-term surplus projections which history 
shows to be highly speculative making this bill dangerous to our 
economic future. Finally, it is being catapulted through the Senate, 
exploiting a process which severely limits debate and which was never 
intended for tax reduction legislation of this size.
  Although this bill is advertised as a $1.35 trillion tax bill, it's 
true cost is closer to $2 trillion. It fails to account for the cost of 
real Alternative Minimum Tax (AMT) reform. In fact, under this 
legislation, by 2011, nearly 40 million taxpayers will have to pay the 
AMT, including many middle income taxpayers. It ignores the fact that 
tens and perhaps hundreds of billions of dollars worth of additional 
spending, over ten years, will be required to live up to the 
President's goals for defense and education, and to provide for urgent 
domestic needs this Senate knows it is going to support.
  This tax bill takes us back to the bad old days of backloaded tax 
breaks whose real costs explode several years after enactment. Although 
it technically sunsets its provisions in 2011 to meet the requirements 
of the Byrd Rule, the changes in the tax code which it makes, such as 
the repeal of the estate tax, are clearly intended to be permanent. The 
cost of these changes explode immediately beyond the ten-year 
``window''. In fact, the bill's claimed $1.35 trillion price tag could 
triple in the second ten years. This budgetary time bomb is set go off 
at roughly the same time as the bill begins to come due for Medicare 
and Social Security. That is the time the ``baby boomers'' begin to 
retire and we must begin to draw down the Social Security Trust fund.
  This tax bill is based on highly speculative long-term projections. 
Projections are always risky. We have seen many Federal budget 
estimates, and we know well that as quickly as these surpluses 
appeared, they could disappear. This bill is based on projections of 
surpluses for ten years downstream. History has shown that CBO 
projections for even five years into the future have been off over the 
past decade by an average of more than 100 percent.
  The massive tax cut which the Senate has passed threatens to lead us 
back into the deficit ditch. We just climbed out of that ditch. And we 
shouldn't head there again, particularly when the country is saddled 
with a national debt that resulted from the last binge of deficits. The 
current national debt is $5.6 trillion. Based on the Budget Resolution 
which the Senate recently adopted and based on this tax cut, the 
national debt at the end of the next ten years will have increased to 
$6.7 trillion. If the projected surpluses do in fact materialize, we 
should be using them mainly to pay down the national debt instead of 
increasing that debt with a big tax cut.
  In 1981, President Ronald Reagan introduced his Economic Recovery Tax 
Act which included huge tax cuts and predictions that the budget would 
be balanced by 1984. In 1981, I opposed that supply side economic 
approach because I was convinced that it would lead to huge deficits. 
We did indeed pay dearly for the debt which resulted from that 
legislation. In 1992, the annual deficit in the federal budget had 
reached $290 billion. The remarkable progress which since then has 
brought us to our current surpluses came about in large part as a 
result of the deficit reduction package which President Clinton 
presented in 1993, and which the Senate and House each passed by a 
margin of one vote. We should not now be passing an imprudent tax bill 
like the one before us, and head back toward new future deficits.
  Although the tax cut is irresponsibly large, the economic impact will 
be remarkably small, because the bill before us does not contain the 
$85 billion economic stimulus adopted in the Senate-passed budget 
resolution. Only $33 billion is allocated for tax relief this year. The 
bill is extensively back-loaded: it doesn't start marriage penalty 
relief--the doubling of the standard deduction and the expansion of the 
15 percent bracket--until 2006. IRA contribution limits aren't fully 
phased in until 2011. The Child Credit isn't fully phased in until 
2011. The delay in relief actually shifts the responsibility of paying 
for our excess onto the next generation.
  The relief provided in the bill isn't equitable. There is no tax 
relief for the 25 million taxpaying Americans that pay their federal 
taxes through the payroll tax. And it means too little to taxpayers in 
the 15 percent bracket, who will see no reduction in their marginal tax 
rate, while those in the top 1 percent receive nearly $40,000 worth of 
relief. In fact overall, the top 1 percent, earning an average of more 
than a million dollars a year, will receive about 35 percent of the 
benefits under this tax legislation.
  I am also deeply troubled by the process which has brought us to this 
point. We considered this legislation under special rules contained in 
the Budget Act for a process called ``reconciliation''. This process is 
being misused to steamroll this bill through the Senate. By restricting 
a Senator's right to fully debate and amend this bill--no more than 
twenty hours of debate is permitted and the amendment process is 
severely constrained--the majority puts the Senate in a straightjacket. 
A similar oppressive tactic was used earlier when the majority bypassed 
the Budget Committee to bring the Budget Resolution to the Senate floor 
and when they excluded Democrats from the Conference Committee in order 
to write the reconciliation instructions which are being used to shield 
this legislation from full debate and amendment. This process is a rush 
to judgment which does damage to the institution of the Senate and its 
reputation for deliberation. And, it does this damage to promote a 
massive tax bill which will negatively affect the economic well-being 
of Americans for decades to come.
  This Administration argues that the projected surplus should be 
returned to the tax payers because it is their money. Of course it is 
their money. But the economy is all of ours too. Social Security 
belongs to all of us. The Medicare program belongs to all of us. Our 
education program and helping people through college, belongs to all of 
us. And, of course, the national debt belongs to all of us as well. We 
owe it to the American people to reject this imprudent tax cut in order 
to pay down that national debt and to strengthen our commitment to 
those programs that the American people want. We can do that consistent 
with a targeted, modest, prudent tax cut. Unless it is improved in the 
Conference with the House, which is not likely, we should defeat this 
massive, unfair, imprudent tax cut bill when it returns to the Senate.
  Mr. KENNEDY. Mr. President, it is unfortunate that the Republican 
leadership has interrupted the Senate's action on landmark education 
reform legislation in order to expedite action on their massive tax cut 
bill. It demonstrates once more that education is not a real priority 
for our Republican colleagues. Their only priority is tax cuts, tax 
cuts and more tax cuts.
  The Republican position could not be clearer: Education can wait 
while we rush to give away hundreds of billions of dollars in tax 
breaks for the wealthy. In Republican priorities, the needs of the 
wealthiest taxpayers for new tax breaks rank far higher than the needs 
of America's school children.
  Across America, 12 million children are disadvantaged in our 
education system, but we currently provide the full range of title I 
Federal education services to only one in three of these children. The 
rest are left to fend for themselves, with the most overcrowded 
classrooms, the least amount of quality teacher time, the most outdated 
textbooks and learning tools, and the most inadequate facilities.
  Students with disabilities suffer from the same federal neglect. The 
Federal Government has long promised to fund 40 percent of special 
education. Yet it still only funds 17 percent, less than half of what 
was promised. Parents of millions of disabled children are forced

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to struggle in the States every year for the education that their 
children deserve. For years, states have called on the Federal 
Government to live up to its commitment to students with special needs. 
Yet the Republican budget, and the tax cut that follows from it, say 
no.
  Instead, one of every three dollars of the tax breaks in the bill 
before us will go to the wealthiest 1 percent of taxpayers. Once the 
tax breaks are fully implemented, the richest 1 percent will receive an 
average tax cut of $37,000 each year--more than most families take home 
from work in an entire year.
  Mr. President, $37,000 a year could pay the salary of a new teacher 
in most school districts. But if this tax bill passes, there won't be 
funds for new teachers. Our Republican colleagues in Congress have 
decided that wealthy taxpayers need the money more.
  The tax cut is clearly excessive. It is neither fair nor affordable. 
No wonder the Republican leadership is attempting to force a final vote 
in Congress as soon as possible, before public outrage builds.
  Through the use of smoke and mirrors and budget gimmicks, the bill 
technically complies with the mandate of the budget resolution to 
report a tax bill costing $1.35 trillion over eleven years. But the 
real costs are far higher. The real costs of this bill explode in the 
outyears. It does not conform with the clear intent expressed by a 
majority of Senators to substantially reduce the size of the Bush tax 
cut.
  Most disturbing of all is the extreme use of backloading to conceal 
the enormous cost of these tax cuts when they take full effect. The 
rate reduction is not fully implemented until the year 2007. Marriage 
penalty tax relief does not even begin until the year 2005. The amount 
of the child credit does not reach the full $1000 until the year 2011. 
The estate tax is not repealed until the year 2011 as well, so that 
almost none of the cost of the repeal shows up until the year 2012.
  These tactics are the height of fiscal irresponsibility. The 
excessive cost of the tax breaks in the first 10 years is bad enough. 
But that cost will triple in the following 10 years. A $1.35 trillion 
tax cut in the first 10 years will mushroom to more than $4 trillion in 
the next 10 years, precisely when the Nation will confront 
unprecedented additional costs for Medicare and Social Security because 
of the retirement of the baby boom generation. Funds urgently needed to 
strengthen these basic programs are being denied by these reckless tax 
cuts.
  Democrats support a substantial tax cut, one that would cost nearly a 
trillion dollars over the next 10 years, and that would give working 
families a fair share of the tax benefits. But this Republican bill 
does not deserve to be enacted. It is far too costly, and it fails to 
provide significant tax relief to those who need help the most.
  It is clear that the nation cannot afford this tax cut without 
seriously neglecting America's most important priorities, including 
education. To meet our basic education needs, I will propose an 
amendment making reduction in the top marginal income tax rate 
contingent upon funding education at the levels that the Senate has 
already voted to support during our consideration of the Elementary and 
Secondary Education Act. If we do not have adequate resources to 
provide all students with a quality education, then we certainly do not 
have the resources needed to provide new tax breaks for the wealthiest 
Americans.
  Fewer than 1 percent of taxpayers have incomes high enough to be 
affected by the top income bracket. These are the richest men and women 
in America. The $120 billion in tax breaks contained exclusively for 
them in this misguided bill should not take priority over the support 
for education that the Senate has already agreed is necessary. Support 
for basic education deserves higher priority than lavish new tax breaks 
for the wealthiest citizens.
  Mr. BIDEN. Mr. President, Americans deserve a tax cut. They deserve a 
large tax cut. And in this time of budget surpluses, we can afford 
hundreds of billions of dollars of tax relief.
  But Americans deserve other things at least as much. They deserve 
honesty in budgeting. They deserve a government that will face up to 
the fundamental choices that have to be made in writing a ten-year 
budget plan.
  Americans deserve a strong national defense, safe streets, effective 
schools, world-class health care, clean air and water, a safe and 
efficient transportation system.
  I must vote against this tax bill because it does not honestly face 
the serious choices that still confront us in this era of surpluses, 
because it sacrifices virtually all other priorities--and some of our 
fundamental values--to the single-minded pursuit of cutting taxes.
  Despite what some would have us believe, we cannot afford to do 
everything for everybody all at the same time. We cannot cut taxes by 
nearly 2 trillion dollars in the next ten years--a number that actually 
doubles in the following decade--and continue to provide the 
fundamental governmental functions that Americans need and deserve.
  If we are honest about the real costs of this tax cut, Mr. President, 
we would admit that on top of the $1.35 trillion sticker cost, we have 
to add $300 billion in additional interest payments that come from not 
paying down the national debt.
  If we admit that we will have to reform the Alternative Minimum Tax 
that will soon hit millions of Americans, we have to add another $300 
billion to its cost. Because history shows that we will extend the 
Research and Development tax credit and other popular and useful breaks 
that we have always supported in the past, we can add another $100 
billion to the size of the tax cut.
  Those calculations put the full cost of the tax cut and the real, 
foreseeable, inevitable tax issues that will face us in the next decade 
at over $2 trillion.
  Two trillion--again, a number that will at least double in the ten 
years after the coming decade.
  But we are told that there is a surplus that will cover the costs of 
this and all of the other things we will want and need. Money in the 
bank. Not to worry.
  There is an old saying to the effect that something that sounds too 
good to be true, probably is too good to be true. This big tax cut 
certainly sounds good. It certainly would be appealing to go along and 
vote for it.
  But that would not be honest because the numbers that we have in 
front of us right now tell us that we simply can't afford it.
  The surpluses available to us in the next decade, if we agree not to 
spend money from the Social Security and Medicare Trust Funds, is 
supposed to be about $2.5 trillion. That sounds like a lot of money, 
and it would be, if it were real.
  But it is not real for two reasons.
  First, it is based on some assumptions we all know are just not true. 
If we can, let's just leave aside for a moment how well we can project 
the future of this economy--that problem alone has proved every other 
long-term surplus projection we have ever made wrong by hundreds of 
billions of dollars.
  But even if we could know for sure that the economy will continue to 
grow at the high rates of investment and productivity we need to match 
the forecasts behind those projections--which we don't--those 
projections simply ignore some basic facts.
  Only if we ignore those facts can we believe that the tax cuts in 
this bill make sense.
  Here are some of the facts that make those surplus forecasts more 
likely wrong than right. They assume we will have no wars, no 
hurricanes, no floods, no earthquakes--no national security emergencies 
or natural disasters that would subtract billions of dollars from the 
projected surpluses.
  The second reason the projections have to be wrong is that they 
assume we will cut the size of government in our country by 25 percent 
over the next ten years. As a share of the economy, our federal 
government is already the lowest it has been since 1960. There are 
plenty of reasons to believe that we will not be able to cut it by 
another 25 percent.

[[Page 9165]]

  Our surplus projections do not account for increases in our 
population or increases in the cost of living over the next decade--
incredible as it may sound, they do not. If we put those two basic 
budgeting concepts back into our assumptions, that subtracts as much as 
$640 billion from the surpluses.
  Subtract that $640 billion from the $2.5 trillion estimated surplus, 
the tax cut is greater than the surplus remaining. Basic honesty in 
budgeting shows that we cannot afford a tax cut this big.
  And the surplus projections ignore new spending priorities that 
everyone wants to address, on top of just keeping up with current 
levels.
  The Administration has called for both a radical overhaul of our 
national defenses, and a new anti-ballistic missile program. We have no 
clear idea what those programs might cost, but I have added up just the 
six best known weapons modernization programs, and they add up to over 
$380 billion.
  The new defense plan could add perhaps $250 billion, and a full-blown 
missile defense plan that covered every option the President has 
expressed an interest in covering could be another $100 billion. So 
prudence suggests we should show some of those costs in the budgets for 
the next ten years.
  But we don't. That is hundreds of billions of dollars that will have 
to come out of the supposed surpluses, but we have no place for them in 
our discussions of this tax bill or in our budget calculations.
  The President says that he wants to spend more for education, even 
though his budget includes no new spending for it. So far here in the 
Senate, we have passed $150 billion in new education spending, on a 
priority that all Americans share.
  With just the spending that we know about in defense and education, 
virtually all of the non-Social Security, non-Medicare surplus is 
gone--and then some--with nothing left for improvements to our aging 
roads, bridges, sewers, dams, or docks.
  No money for additional air traffic controllers or airports, no money 
to break the gridlock on our highways with a national high-speed 
passenger rail system.
  No money for new policemen on the beat, for after-school programs to 
prevent juvenile crime, no money for drug interdiction or drug 
treatment programs.
  With the huge additional burdens on Social Security and Medicare 
coming in the years just beyond the decade covered by this tax plan, 
there is no money left for the fundamental reforms of those programs. 
If we follow the Administration's approach to Social Security reform, 
we will need an additional trillion dollars. But there will be no money 
left.
  Why are we left with so little for so many of our fundamental needs? 
Why, when we have finally brought our budgets into balance after years 
of deficits, can we not afford to pay for these essential priorities 
that we all agree deserve our support?
  Because this tax cut was not designed as part of a comprehensive 
budget plan. If it becomes law for the next decade, it will be the only 
real priority in our budget. Every other priority, from defense to 
education--and even, I am afraid, balanced budgets--will be only an 
afterthought.
  That is why I will vote against this tax bill. It costs too much; it 
depends too much on wishful thinking; it ignores realities that are 
staring us in the face over the next ten years.
  We tried to amend this bill to fix the problems I have discussed. 
Senator McCain offered an amendment to scale back the size of the tax 
cut to make room in our budget for the projected increases in defense 
spending. That prudent statement of our national priorities was voted 
down.
  Senator Harkin offered an amendment to simply hold off on a piece of 
the tax cut until we could certify that we can meet the long-term 
obligations of Social Security and Medicare. Once we could make that 
certification, every bit of the tax cut would go forward. That basic 
commitment to the promises we have made was voted down.
  I offered an amendment to scale back the size of the tax cut to make 
room for a tuition tax deduction to help pay for college. That 
important priority of middle-class families was voted down.
  Senator Rockefeller offered an amendment to make sure we can afford 
to provide a prescription drug benefit for seniors before we cut taxes. 
It would not prevent a cent of the tax cut from going out--as long as 
we could pay for a prescription drug benefit. That bipartisan priority, 
shared by the President, was voted down.
  Senator Feingold offered an amendment to scale back the size of the 
tax cut so that surviving spouses will not have to give up their 
earthly possessions to pay for nursing home care received by deceased 
Medicaid patients. That small gesture toward fairness was voted down.
  In every case the tax cut came first; every other priority--every 
other value--was left behind.
  We can afford major tax relief for all Americans. And we can afford 
to provide the national security, the world-class education, the health 
care and the other priorities Americans have a right to expect. We can 
even afford a little fairness in the distribution of the many blessings 
we enjoy. We can afford to act on our values.
  But not if we pass this tax bill.
  We are indeed a blessed nation, at an historic peak in our prosperity 
and in our influence in the world. We have the resources to prudently 
manage the challenges and opportunities before us. But we are not 
immune to the basic laws of budgeting--we have to make choices.
  This tax cut, by its sheer size--a size selected without 
consideration of any other priority--refuses to face honestly those 
fundamental choices. It refuses to recognize any other values.
  I cannot support it.
  Mr. McCAIN. Mr. President, I commend Senators Grassley and Baucus for 
their dedication and hard work in completing this Reconciliation bill.
  During the debate on the tax reconciliation bill, I have had serious 
reservations about some of the priorities contained in this bill.
  First, after years of neglect, our military forces need to be 
significantly strengthened and it won't be cheap. But in the wake of 
large tax cuts, non-defense spending initiatives, and uncertain surplus 
projections, we cannot be sure how much money will remain to fund such 
defense priorities as National Missile Defense, force modernization, 
spare parts, flight hours, overdue facility maintenance, training 
programs, and the care of our service members. As of yet, we have not 
received from the Administration a request for defense spending 
increases. I hope their request, when it comes, is adequate to meet the 
needs of our national security, which, as I observed, are many and 
serious. If that request is not adequate to our needs, I will fight as 
hard as I can to increase it.
  With the adoption of the Reconciliation bill both the Administration 
and Congress are going to have to make some very hard choices to find 
the resources to fund our national defense priorities. There's no way 
around it. We cannot take money from the Social Security and Medicare 
Trust Funds, so that means we will have to cut other spending programs 
or adjust the tax cuts to support our military forces. Those are very 
hard choices, indeed, and we don't like to make hard choices in 
Congress very often.
  But, Mr. President, we are going to have to make them because our 
first duty, is and always will be the nation's security, and the 
defense of American interests and values in the world. And those 
members who believe we have been derelict in our duty lately, will have 
to take our case to the public, inform them of the hard choices before 
us and urge them to urge us to do the right and necessary thing, even 
if it requires us to take on a few sacred cows around here.
  Mr. President, while I hoped for even more tax relief to middle 
income Americans, I do want to commend Senate Grassley for moving in 
that direction by insisting that the top rate should be cut to only 36 
percent. I wish we could have made even greater progress by increasing 
the 15 percent bracket to include more middle class

[[Page 9166]]

taxpayers. But the Senate has decided otherwise, and, recognizing what 
progress has been made by Senator Grassley, I will not register my 
disappointment by voting against the bill. Neither do I wish to vote 
against the President's first, important success in the Senate. But I 
do want to make clear my firm opposition to any increases in benefits 
to the top tax rate payers at the expense of the majority of Americans 
who are in much greater need of tax relief. Should further reductions 
in the top tax rates be made in conference, I will vote against the 
conference report without hesitation.
  Mr. NELSON of Nebraska. Mr. President, I would like to express my 
support for the tax cut bill. Simply stated, the time has come for a 
sensible tax cut. The American people deserve it; the budget can 
support it. Now, it's time for Congress to authorize it.
  I sincerely believe this legislation will serve as an efficient 
delivery vehicle for responsible tax relief that will benefit all 
Americans. While I support this tax cut plan for several reasons, the 
most concise justification for my position is that the $1.35 trillion 
in tax cuts over 11 years provided in the bill will cut taxes without 
cutting hope.
  Since the beginning of this debate, I have repeatedly and 
consistently voiced my support for a substantial tax cut, as long as it 
would not interfere with our ability to fund our domestic budgetary 
priorities. I am pleased that this tax cut plan will not sap our 
resources for important obligations like agriculture and defense. It is 
reassuring to know that implementation of this plan will not be at the 
expense of our critical responsibilities. This legislation will provide 
across-the-board tax relief for the people of Nebraska, as well as all 
Americans, without interfering with Social Security and Medicare or 
hampering our efforts to pay down the national debt. Clearly, the 
cornerstone of this bill is responsible tax relief.
  Perhaps even more significant in this bill's eleven-year, $1.35 
billion tax cut package is the inclusion of a $100 billion up-front 
stimulus package. This two-year economic stimulus package will have an 
immediate impact on our economy, which has been showing all the 
symptoms of a slow-down. Such tangible, instant relief is precisely 
what is needed to counteract the threat of an economic recession.
  While the reduction of personal income tax rates and the economic 
stimulus package are the highlights of this bill, I would like to 
emphasize the fact that there are several other components of this 
legislation contributing to its overall efficacy. This bill includes 
raising the exemption for estate tax relief followed by a gradual 
repeal of the estate tax, a doubling of the childcare tax credit by 
2010, the dissolution of the so-called marriage penalty tax, and 
pension reform that will allow larger contributions to IRAs and 401(k) 
plans. I know Nebraskans have supported these initiatives for quite 
some time, so it brings me great satisfaction to know that they will 
soon be implemented.
  I commend Senators Grassley and Baucus for their efforts to achieve 
substantial bipartisan support for this tax cut bill. Their work has 
resulted in legislation that skillfully and responsibly addresses many 
of the major points of contention among the members of the Senate. It 
is in that same spirit of bipartisanship that I hope the Conference 
Report will be crafted. If the Conference Committee will follow the 
Senate Finance Committee's lead and work to build bipartisan support 
for the Conference Report, I am confident that the American people will 
finally receive the tax relief they deserve.
  Ms. LANDRIEU. Mr. President, I rise today to support the Restoring 
Earnings to Lift Individuals and Empower Families Act of 2001. This tax 
package provides some needed tax relief to the people of Louisiana. In 
addition, it represents a bipartisan compromise by the committee 
members. I would like to thank the chairman of the committee, the 
distinguished Senator from Iowa, and the ranking member, from Montana, 
for their hard work in developing a tax relief package that tries to 
address the concerns and priorities of the people of our Nation.
  While there is not a consensus on how to provide tax relief, there is 
consensus that the American people deserve a tax cut in the face of 
large projected surpluses. This package provides marginal income tax 
rate reductions, marriage penalty and estate tax relief, expands 
provisions for the child tax credit, encourages savings, and rewards 
adoption. The benefits of these provisions are not balanced in the way 
that I would like to see, but, of course, that is the nature of 
compromise. However, some of the tax cut initiatives included provide 
real relief to people who really need it, working families, struggling 
to make ends meet.
  Louisianians work hard to provide for their families. Our State has 
an average income of $30,000 a year. In addition, 90 percent of all 
Louisiana households earn less than $75,000. I believe that the 
proposal before us now, the Senate RELIEF package, distributes benefits 
more fairly to the average taxpayer and middle-income families than the 
tax plan initially proposed by President Bush, and far better than the 
bills supported by the House Leadership.
  This bill has many of the elements that will make a real difference 
to many Americans and Louisianians. Among these compromise elements are 
marriage penalty relief, and reform and eventual repeal of the estate 
tax, which I have voted for in the past and continue to support. In 
addition, this package provides necessary broad-based income rate 
reductions including the creation of a new 10 percent rate, and a 
doubling of the child tax credit to $1,000, to strengthen families.
  When fully phased-in, the average Louisianian can expect to receive a 
tax cut anywhere from $300 to $500 a year. But more importantly, the 
effect of the new refundable child credit could offset much of the 
payroll and excise taxes that affect many Louisiana families. For 
example, a married couple with two children earning $20,000 could 
receive a tax benefit of as much as $2,000. That is a real saving that 
could make a substantial difference for many families.
  In representing the people of Louisiana, my commitment has been to 
fiscal discipline, tax code fairness, debt reduction, and tax relief. 
Louisianians and Americans of all income levels deserve the significant 
tax relief included in the $1.35 trillion tax cut package now being 
considered by Congress. So, while I support tax cuts, I also support an 
amendment that provides an insurance policy against returning to 
deficit spending, a trigger mechanism. Federal Reserve Chairman Alan 
Greenspan repeatedly has stated in recent months his support for a 
trigger mechanism.
  Through this trigger mechanism, the goal is to enact tax relief in a 
fiscally responsible way that protects against the depletion of the 
Social Security and Medicare surpluses, and allows for true debt 
reduction. The trigger creates a safety mechanism to address the 
possibility of either fiscally irresponsible tax cuts or ``budget 
busting'' Federal spending increases that would lead the nation back to 
a period of budget deficits and mounting public debt. Under such a 
trigger, tax relief would continue to be phased-in while specified debt 
reduction targets are met. If Congress falls short of those targets, 
the trigger would delay the implementation of new spending and tax 
reduction proposals until those debt reduction targets are back on 
schedule. The trigger mechanism will not cancel out or hamper the $1.35 
trillion tax cut package. It will instead strengthen and increase the 
certainty of the tax relief by ensuring fiscal discipline.
  I have also offered an amendment on behalf of myself and Senator 
Craig. The adoption tax credit amendment will truly encourage 
parenthood through adoption, and in the long run, reduce the costs to 
taxpayers. It provides a permanent expansion of the credit to $10,000 
for both special needs and non-special needs adoptions for families 
with incomes up to $190,000. Removing children from long term foster 
care is a great benefit to society because it reduces the possibility 
that these children will develop costly social problems; such as drug 
dependence

[[Page 9167]]

or criminal involvement. This delinquency comes at a high cost to the 
taxpayer. Our amendment enjoys wide bipartisan support, and should be 
included in the final package passed by the Senate.
  While I support many of the measures in this tax relief package, I 
should add that there are provisions that I find very troubling. This 
tax cut is back loaded, with many of the costs exploding after the 10-
year budget window. The repeal of the estate tax, only one provision of 
this tax bill, has been estimated to cost at least $145 billion in the 
eleventh year alone. In the long run, over the next 15 to 20 years, the 
revenue cost of the total tax package could be as high as $5 trillion. 
This is an enormous drain on Federal revenues, greatly reducing our 
ability to pay down our debt and provide strategic investments 
necessary for our economic growth.
  Another concern is the lack of immediate marriage penalty relief, a 
provision that would benefit many families in Louisiana. This is 
unfortunate, because married couples treated unfairly by the tax code 
deserve a speedy remedy. In addition, Education Savings Accounts 
established in the tax bill are costly and, in my opinion, are an 
inefficient use of these funds given the great need of new investments 
necessary to support essential education reform efforts underway in 
Louisiana and across the Nation. We need to target more of our federal 
revenue to poorer, moderate-income, and disadvantaged school districts 
to the level the playing field of opportunity and to truly ensure that 
no child is left behind.
  Despite these concerns, the package does provide tax relief that is 
warranted due to the large projected surplus. That is why I rise to 
support this compromise tax relief package.
  Mrs. FEINSTEIN. Mr. President, I rise to support the reconciliation 
bill currently pending before the Senate.
  Although this bill is far from perfect, I do not think there is a 
member of the Senate who would not have drafted a different bill giving 
different weight to different provisions if given the opporutnity. It 
represents a compromise on a very difficult set of issues and does, in 
some areas, make progress.
  While it does not provide the immediate economic stimulus I would 
like, for example, it does afford a wage earner providing for his or 
her family who makes less than $45,000 a tax cut of $300 this year, and 
$600 next year. Additionally, although not phased-in as fast as I would 
like, the changes this bill makes to the marriage penalty and the child 
tax credit provisions will allow a working couple to avoid paying the 
marriage penalty simply for getting married, and provide them with 
child tax credits when they have children.
  The President requested a $1.6 trillion tax cut over ten years. This 
reconciliation bill will cost $1.35 trillion, still a sizable amount, 
over 11 years, including $100 billion for economic stimulus.
  This bill contains several provisions which I believe are important 
to assure the continued long-term economic health of the American 
economy and which will benefit many hard-working American families: It 
contains the creation of a new, retroative, 10-percent tax bracket 
which has the effect of benefitting every single American who pays 
income taxes. Most of the benefit of the 10 percent bracket goes to 
people who earn less than $75,000 a year. It contains an across-the-
board tax cut, including reductions in the upper brackets. 
Significantly, this legislation does not go as far as the President's 
proposal. The 39.6 percent bracket, for example, will fall only to 36 
percent, not the 33 percent the President wanted. This is a fair 
compormise. It provides significant marriage penalty relief although 
that does not go into effect until 2005. Marriage penalty makes sense 
for social reasons: It reinforces the important institutions of family 
and marriage. It eliminates what many of us see as a vast inconsistency 
in our tax law. The marriage penalty simply makes no sense: Two people 
should not find that they pay more in taxes if they are married than if 
they stay single. Although not phased-in as quickly as many of us would 
like, this bill will eliminate this problem for many couples who now 
find they face a marriage penalty. I hope that the Conference Committee 
would find a way to implement this reform earlier than 2005.


  It provides significant estate tax reform and repeal. I have long 
held that people should not be forced to pay a tax simply because of 
the death of a parent or spouse. In all too many instances under the 
current estate tax families are forced to sell a primary residence or 
go deeply into debt to hold on to a family farm or business simply 
because of the estate tax triggered by the death of a loved one. This 
legislation will first raise the unified credit to $4 million and lower 
estate tax rates and, then, in 2011, repeal the estate tax. Estate 
assets will not escape taxation under this approach. Rather they will 
be taxed at a stepped-up capital gains rate of 20 percent if and when a 
family chooses to sell them. This will allow families to keep the 
family home, business, or farm and, I believe, represents real progress 
on this issue.
  This is especially important for California because of high land and 
property costs. Under the present estate tax, the heir of a $3 million 
estate which includes a home or business or farm could pay $700,000, or 
45 percent of the taxable estate value of $1.7 million in estate taxes, 
due immediately. In future years, because of astronomic increases in 
land and property values, this will affect many more Californians than 
in the past. A child who does not have the cash to pay the tax may be 
forced to sell the family home, business, or farm. I cannot support a 
tax where rates are so high that they force an heir to sell their 
inheritance simply to pay the tax on it, especially in the case of 
farms or businesses where taxes have already been paid on the income 
which was used to purchase the asset.
  This reconciliation bill expands the tax credit for families with 
children from $500 to $1,000 per child; increases the amount of the 
credit that is partly refundable so lower income families can benefit; 
and it expands and simplifies the earned-income tax credit so it is 
available to many more low-income working families than it is today. 
For example, under the current rules a family with one child would have 
to earn at least $14,000 to have a fully refundable credit of $600. 
This bill will extend the credit to families with incomes of $10,000.
  It provides incentives for parents to set aside money for their 
children's future education by expanding the education savings accounts 
contribution limit from $500 to $2,000; extends the employer-provided 
tuition assistance credit to encourage employers to help employees 
continue their education; and helps college students pay off their 
student loans by eliminating the 60-month limit on deductibility of 
student loan interest.
  It includes pension provisions to provide an incentive for people to 
save for their retirement, including increasing the contribution limits 
for IRAs from $2,000 to $5,000 by 2011; increasing 401(k) contribution 
limits from $10,500 to $15,000 in 2010; and includes provisions to help 
provide retirement fairness for women, including allowing ``catch up'' 
contributions to retirement plans for individuals over age 50.
  It includes a down payment towards fixing the Alternative Minimum 
Tax, AMT, problem, an issue that is projected to mushroom by 2010. More 
needs to be done to make sure that middle class families do not find 
that because of the AMT they do not receive the benefits promised under 
this tax cut package. But I am pleased that in taking this first step 
the Senate has recognized that this is a big problem, especially for 
states like California, and I look forward to continuing to work with 
my colleagues in the years ahead to fix this problem before it develops 
into a genuine crisis.
  I have had two concerns about this approach taken in this 
legislation, however. First, that the costs of this tax bill after 2011 
may be quite high--as much as $3 to $4 trillion by some estimates.
  That is why it was critical, for me to be able to support this 
legislation, that the ``sunset'' provisions remained in place and that 
the provisions included in this bill expire in 2011.

[[Page 9168]]

  Although I fully expect that Congress will extend many, if not all, 
of these provisions, this provides us a critical opportunity to make a 
mid-course correction if, 10 years from now, a different approach on 
these issues is called for.
  Second, I want to make sure that the tax cuts we are considering here 
today will not endanger the projected surpluses or undo the hard work 
and hard choices of the past decade which have allowed us to eliminate 
deficits and pay down the debt.
  That is why I supported the amendment offered by Senators Bayh and 
Snowe to create a ``trigger mechanism'' which will allow us to slow-
down the phase in of some of these tax provisions should we not meet 
our debt reduction goals. Although this bipartisan amendment narrowly 
failed, I think that it sends an important message about our commitment 
to fiscal responsibility.
  On the whole I think that the bill pending before the Senate today 
represents a fair compromise on a most contentious issue.
  Today we are voting on a $1.35 trillion package, some $150 billion 
more than the Senate approved in the budget amendment last month with 
65 votes, but still a fair package with many positive elements. So let 
there be no mistake: This is a large bill, and represents a major 
change in the tax system. As this reconciliation bill goes to 
conference, it is my sincere hope that the conferees understand that 
for myself, and, I believe, many of my colleagues, the package that we 
are voting on here today represents what we consider to be fair and 
balanced, and that we would have considerable difficulty supporting any 
changes which may threaten to upset this balance.
  I urge my colleagues to join me in support of this reconciliation 
bill.
  Mr. FITZGERALD. Mr. President, I rise to speak about the Holocaust 
Victims Tax Fairness amendment, No. 670, to H.R. 1836, which I offered 
last Thursday, and which was approved by the Senate yesterday by voice 
vote.
  I would like to thank Senators Schumer, Jeffords, Clinton, McCain, 
Torricelli, Domenici, Allen, Durbin, Gordon Smith, Specter, Bill 
Nelson, Bingaman, Corzine, DeWine, Leahy, Collins, and Feinstein for 
cosponsoring my amendment.
  This year we mark the 56th anniversary of the end of the Holocaust. 
There are as many as 10,000 Holocaust survivors in my home state of 
Illinois, and over 100,000 in the entire United States, with an average 
age over 80. It is imperative that Congress act as soon as possible to 
prevent the federal government from attempting to tax any restitution 
obtained by Holocaust survivors and their families because of their 
persecution by the Nazis.
  Holocaust survivors and their families have lived through unspeakable 
horrors. Three weeks ago, I attended a Holocaust Memorial Service at a 
synagogue in Skokie, Illinois. After the formal proceedings were over, 
I spoke with a number of survivors of concentration camps, and heard 
what they were able to tell me about their dreadful experiences. One 
survivor of Auschwitz told me things she had never told her children. 
Why? Because I was a United States Senator, and she felt she had to 
tell me so that the Holocaust would never be forgotten, even though 
remembering these horrors caused her indescribable pain.
  The accounts of these survivors remind all of us that America has an 
obligation to continue to pursue justice and compensation for Holocaust 
victims and their families.
  My amendment, the Holocaust Victims Tax Fairness Act of 2001, would 
prevent the Federal Government from imposing the Federal income tax on 
Holocaust restitution or compensation payments that victims or their 
heirs may receive.
  The IRS has indicated in various private letter rulings that certain 
restitution money is exempt from the Federal income tax, but these 
rulings apply only to the specific individuals who received them, or to 
specific settlement funds, not to all recipients of compensation and 
restitution.
  The U.S. Treasury Department has made clear that Federal legislation 
is needed to ensure that all compensation and restitution payments are 
protected from unfair taxation. In fact, the Bush Administration 
Treasury Department supports my legislation, as did the Clinton 
Administration last year. The Holocaust Victims Tax Fairness Act of 
2001 will provide certainty for elderly Holocaust survivors, thereby 
sparing them from having to navigate complex legal and bureaucratic 
processes.
  More than 50 years after the end of World War II, many banks and 
companies in Europe are beginning to return stolen assets to survivors 
of the Holocaust and their heirs. In August of 1998, two of the largest 
banks in Switzerland agreed to distribute $1.25 billion as restitution 
for assets wrongfully withheld during the Nazi reign. And in February 
of 1999, the German government agreed to establish a fund to compensate 
victims of the Holocaust.
  This amendment ensures that the beneficiaries of these settlements 
and other Holocaust restitution or compensation arrangements can 
exclude the proceeds from taxable income on their Federal income tax 
forms. The measure also ensures that survivors and their families do 
not lose their eligibility for federal or federally assisted need-based 
programs when they receive Holocaust-related restitution or 
compensation payments.
  Those of us too young to have lived in those times can never know the 
pain of the survivors. But we must learn from them. We who were born 
after the war must commit ourselves to try our best to shoulder the 
responsibility the survivors have carried for so long. While the 
restitution settlements pale in comparison to what they have lost, this 
legislation ensures that survivors and their families can keep all that 
is returned to them without being unnecessarily burdened by taxes or 
excluded from need-based programs.
  The Congress must send a clear message that to allow the federal 
government to tax away any reparations obtained by Holocaust survivors 
or their families because of their persecution by the Nazis or their 
sympathizers is simply unacceptable. Given that the average age of 
Holocaust survivors now exceeds 80 years of age, we believe it is 
imperative that the Congress act now to prevent the Federal Government 
from attempting to tax this money.
  Similar legislation was agreed to by the Senate as an amendment to 
the Taxpayer Refund Act of 1999. The provision was retained in 
conference, but the final bill was vetoed, preventing this important 
measure regarding Holocaust restitution from becoming law.
  My amendment improves significantly upon bills on this issue that 
were introduced in the 106th Congress. For example, this amendment is 
more carefully crafted to encompass all possible types of restitution 
and compensation that Holocaust survivors or their heirs may receive in 
the coming years.
  Furthermore, unlike previous versions, my legislation ensures that 
survivors and their families do not lose their eligibility for Federal 
or federally assisted need-based programs when they receive Holocaust-
related restitution or compensation payments; this provision expands 
upon a 1994 law that protected only victims, not their heirs, from 
losing benefits from need-based programs because of restitution 
payments. My legislation corrects this unfortunate omission in the 1994 
law.
  Finally, unlike previous versions, my amendment provides that the 
initial tax basis of property returned to Holocaust victims or their 
heirs will be the fair market value of the property on the date of 
recovery. This provision ensures that Holocaust survivors who receive 
in-kind, rather than cash, restitution do not have to pay tax on 
capital gains if they immediately sell the property. Survivors should 
not be unfairly penalized because they receive in-kind restitution; and 
the Federal Government should not make one dime on Holocaust 
restitution, whether the restitution is in cash or in kind.
  This legislation has strong bipartisan support in Congress. Twenty 
Senators have already cosponsored S. 749, a bill I introduced last 
month that is identical to this amendment.
  Many organizations that work to assist Holocaust survivors have 
endorsed

[[Page 9169]]

the Holocaust Victims Tax Fairness Act of 2001, including the 
Conference on Jewish Material Claims, the Anti-Defamation League, B'nai 
B'rith International, the American Jewish Committee, and the American 
Gathering of Jewish Holocaust Survivors--the largest organization of 
American Holocaust survivors.
  After over 50 years of injustice, Holocaust survivors and their 
families are reclaiming what is rightfully theirs. Even as we support 
these efforts to reclaim stolen property, we must do our part in 
protecting the proceeds. I thank my colleagues in joining me in 
supporting this amendment.
  Mr. CAMPBELL. Mr. President, today I express my support for H.R. 
1836, the Tax Reconciliation Act of 2001. This bill is the largest 
income tax relief bill in 20 years and I believe the American taxpayers 
deserve and desire this legislation.
  The Tax Reconciliation Act goes a long way to relieve taxpayers of an 
unfair tax burden. This bill provides: broad-based tax relief by 
reducing tax rates; family tax relief by addressing the Marriage 
Penalty Tax and by immediately increasing the Child Credit to $600; 
$150 billion to Estate Tax Relief and by repealing the Estate Tax by 
2011; $30 billion in education benefits and $40 billion in retirement 
and pension benefits, and by extending the availability of the child 
credit under the Alternative Minimum Tax (AMT) and by increasing the 
AMT exemption amount.
  I am particularly interested in the estate tax relief because again 
this year I introduced the Estate and Gift Tax Rate Reduction Act of 
2001, S. 31. Estate and gift taxes remain an unfair burden on American 
families, particularly those who pursue the American dream of owning 
their own business. Why should family-owned businesses and farms be hit 
with the highest tax rate when they are handed down to descendants--
often immediately following the death of a loved one? These taxes, and 
the financial burdens and difficulties they create come at the worst 
possible time. Making a terrible situation worse is the fact that the 
rate of this estate tax is crushing, reaching as high as 55 percent for 
the highest bracket. That is higher than even the highest income tax 
rate bracket of 39 percent.
  Furthermore, the tax is due as soon as the business is turned over to 
the heir, allowing little time for financial planning or the setting 
aside of money to pay unscheduled tax bills. Estate and gift taxes 
right now are one of the leading reasons why the number of family-owned 
farms and businesses are declining. Quite simply, the burden of this 
tax is just too much.
  This tax sends the troubling message that families should either sell 
the business while they are still alive in order to spare their 
descendants this huge tax after their passing, or allow the value of 
the business to decline, so that it won't make it into their higher tax 
brackets. Whichever the case may be, it hardly seems to encourage 
private investment and initiative, which have always been such a strong 
part of our American heritage.
  I am pleased that the bill before us takes the important step of 
addressing this unfair burden. I will continue to work with my 
colleagues for the complete elimination of the death tax.
  I have heard people say that the cost of this bill is too great--that 
we can't afford it at this time. But I think since we now have a 
balanced budget and a significant surplus, then the American people 
deserve this tax relief and they deserve it now. The American people 
have earned this tax relief.
  I know that $1.35 trillion is a lot of money, but we have over a $3 
trillion surplus and one reason we have a $3 trillion surplus is the 
taxpayers got their taxes raised too much. If the American people 
overpaid, then the American people should get their money back--that is 
just fair.
  The Tax Reconciliation Act of 2001 is the largest middle-class tax 
relief in twenty years and I think it is high time the hard-working 
taxpayer get this relief. I support this legislation and I urge my 
colleagues to do the same.
  Mr. MURKOWSKI. Mr. President, we have engaged in a very hard-fought 
battle on the Senate floor since last Thursday. Some would say that 
this has been a partisan battle, and in many ways it has been a good 
partisan battle. If you look at the series of amendments that we have 
considered these past few days, you will see a fundamental 
philosophical division between the majority of both parties in the 
Senate.
  The Republicans have stood firmly for the proposition that the 
American people have been overtaxed and deserve a partial refund of the 
huge $5.6 trillion surplus that is expected to accumulate over the next 
10 years. We are not saying all of the surplus should be returned to 
the American taxpayer, but a modest portion--25 percent deservedly 
belongs to hard working American families. The remainder will be used 
to preserve and protect Social Security; enhance Medicare and pay down 
the national debt.
  On the other hand, the Democrats have come up with dozens of 
amendments that reduce the size and scope of tax cut in order to 
promote more federal spending. In fact, I think one amendment offered 
by the senior Senator from Michigan, Mr. Levin, pretty much sums up the 
philosophy of the Democratic Party. That amendment provided that if 
Government discretionary spending went beyond the amounts set forth in 
the budget resolution, then the Secretary of the Treasury would be 
required to raise the top marginal rates paid by individuals.
  In other words, let the Congress spend as much of the taxpayers' 
money as it pleases, with no discipline, no limits and then pay for 
that spending with administrative tax increases. Thus if Congress 
spends $200 billion more than budgeted, the Treasury Secretary simply 
can push a button and the top marginal rate could be 50 percent or 60 
percent of whatever it takes to pay for wasteful spending.
  Fortunately, that unconstitutional amendment was defeated, though 41 
of the 50 Democrats supported the concept of this unconstitutional 
delegation of taxing authority and the lifting of all discipline or 
spending.
  That said, the final bill before us is a bipartisan measure that will 
bring much needed tax relief to nearly every taxpayer in the country. 
And for more than 10 million individuals and families with no income 
tax liability, they will receive a rebate of payroll taxes; 19 million 
of the 64 million individuals and families with a top income tax rate 
of 15 percent will now have a top rate of 10 percent. And that tax cut 
is immediate and retroactive to January 1, of this year.
  More than 30 million families will benefit from the increased child 
credit, 10 million of whom will receive a refundable child credit. Over 
more than 40 million couples will benefit from the marriage penalty 
relief contained in the bill and small businesses, the engine of growth 
in this country, will now be able to preserve their family assets 
without the threat that the government will force the business' breakup 
because of the punitive death tax.
  For Alaska Natives, the bill contains a provision that will allow 
Alaska Native Corporations to establish settlement trusts. This is only 
fair. These tribal corporations, unlike lower-48 tribes, are required 
to pay income taxes. Settlement trusts will allow them to invest some 
of their earnings for the future social benefit of their members.
  And for the many employees who work in the building and construction 
trades, the bill includes a provision that will allow them to receive 
pensions that better reflect the pension agreements their unions 
negotiated as part of multi-employer agreements.
  This is a fair and balanced tax cut. I would have preferred we would 
have cut taxes even more, as the President proposed. But the step we 
take tonight marks the first major tax cut for all Americans in 20 
years. I commend the chairman of the Finance Committee, Senator 
Grassley, and the ranking member, Senator Baucus, for their diligence 
and hard work in achieving this important relief for the American 
taxpayer.

[[Page 9170]]


  Mr. ENZI. Mr. President, I rise in support of S. 896, the Restoring 
Earnings to Lift Individuals and Empower Families, or RELIEF Act of 
2001. It is time we ease the tax burden on all American taxpayers and 
return part of the surplus to the people who created it.
  The legislation before us will benefit American taxpayers and improve 
our Nation's economy. The provisions of the RELIEF Act of 2001 include 
across-the-board rate reductions for all Americans, repeal of the death 
tax, reduction of the marriage penalty, doubling of the child credit, 
and increased incentives for retirement savings and education. This 
legislation incorporates some good principles of tax policy, such as 
encouraging investment, strengthening families, and rewarding savings. 
It takes an important step in the right direction toward a tax policy 
more worthy of a great nation.
  The RELIEF Act of 2001 will encourage economic growth and 
productivity by strengthening America's small businesses. Small 
businesses are the backbone of the American economy. They represent 
over 99 percent of all employers in America and employ half of 
America's private workforce.
  Small business creates 80 percent of all new jobs in America and 
accounts for bout 38 percent of the gross domestic product and half of 
the gross business product. Because of their ability to adapt quickly 
to changing market conditions, small businesses are nearly the sole 
source of job growth during times of economic recession. In short, if 
we want to provide a stimulus to the present economy, we should do all 
we can as soon as we can to help America's small businesses.
  The legislation before us will greatly help small businesses. First, 
it kills the death tax. It should come as no surprise to anyone that 
the death tax is one of the most destructive taxes to small businesses. 
In one foul swoop, this tax can demolish the work of several 
generations of entrepreneurs.
  The death tax rewards savings and investment with crippling tax rates 
that all too often force families to sell off their businesses just to 
pay their bill to the IRS. The death tax is a punitive tax on families 
by penalizing them for trying to pass on their life's labor to their 
children. I am pleased that this legislation axes the death tax and 
sends it to its grave where it belongs.
  Secondly, the RELIEF Act of 2001 will help stimulate the economy by 
empowering small businesses in their effort to provide more jobs, 
invest in their physical facilities, and develop new products that will 
benefit American consumers and our Nation as a whole. it is important 
for everyone to understand that most small business owners file their 
taxes as individuals. Most do not file as traditional C-corporations, 
but rather organize as sole proprietorships, partnerships, S-
corporations or some other structure that allows them to file their 
taxes using the tax rates for individuals. Each and every one of these 
``flow through'' businesses that has positive income will benefit from 
the tax relief before us.
  I would like to give my colleagues and the American people an idea of 
the number of small-business owners who would benefit under the rate 
reductions in the legislation before us.
  There are nearly 17\1/2\ million individuals who had income from sole 
proprietorships in 1999, the last year for which we have complete data. 
Each one of these 17\1/2\ million people will receive tax relief under 
this legislation. These might be retailers, dentists, general 
contractors, accountants, or people employed in any other number of 
occupations that provide the goods and services that we use every day.
  I should mention that these numbers only include taxpayers who had 
income from non-farm sole proprietorships and does not include business 
owners who may organize using other business entities, such as 
partnerships or S-Corporations. If we added in the people who file the 
schedule F for farm income and those who file schedule E for 
partnership income, the total would probably be in the neighborhood of 
24 million. Since we don't have that data broken down by States, we 
will consider those small business owners who file as sole 
proprietorships. Keep in mind that the 17\1/2\ million is really the 
floor rather than the ceiling of small business owners who will benefit 
from the rate reductions in this bill.
  To give people an idea of how this tax bill will benefit their 
constituents, I would like to share some of the numbers from individual 
States. In my home State of Wyoming, there were 38,000 people with 
small business income in 1999. By passing this tax relief, each and 
every one of these business owners would have more money to put into 
their businesses and benefit the economy as a whole.
  Here is how this often works in the real world. Many of these 
businesses have a profit on paper which effectively puts these business 
owners into the highest tax bracket for any given year. If they didn't 
have to pay 40 percent of their income to the Federal Government, they 
would use this invest this money into their business by buying more 
inventory, building, remodeling, or re-tooling their physical 
facilities.
  Many of these businesses would use this money for testing, research 
and development of new products and technology which would in time 
greatly benefit the economy as a whole. In my home State of Wyoming, 
each of our 38,000 business owners are making a great contribution to 
our local communities and it is time we let them keep a little more of 
their own money so they can grow their businesses rather than grow the 
pork in the Federal budget.
  If you look at the other States, you will find that they also have 
significant number of small business owners who will benefit under the 
tax relief before us.
  Montana has 76,000 business owners who would benefit from this tax 
relief. Like Wyoming, many of these are Main Street businesses which 
form the backbone of the economy in our small towns and help perpetuate 
the western way of life.
  Colorado has 329,000 business owners who would benefit from this tax 
relief. Nebraska has 117,000 small business owners who would see their 
incomes rise from this tax relief. When you include the number of small 
business owners who operate farms, I expect this number would be 
considerable higher.
  Similarly, 486,000 small business owners in Georgia would find more 
money in their pockets if we pass the RELIEF Act of 2001.
  I have heard the criticism from some on the other side of the aisle 
that this tax cut is too tilted toward the rich. Some have said that 
the President's proposal would give millionaires the money to buy a new 
Lexus while it would only allow middle income people money to buy a new 
muffler. I really don't know what world they are living in, but I find 
it interesting that most of the people who are making these claims 
don't have any experience owning or operating a small business.
  I have heard a number of my colleagues on the other side of the aisle 
express great concern about the number of mega-mergers between 
multinational corporations over the past several years. They have 
argued that these businesses continue to swallow up their smaller 
competitors in many of our communities and all too often have the 
effect of eliminating any real local competition. As a former small 
business owner, I am very sympathetic to these concerns.
  My experience has taught me that the small, locally owned family 
businesses are much more likely to be active in their community. These 
are the businesses that constantly donate their goods and services to 
local charities, schools, and civic organizations in an effort to make 
their towns better places to live. Small business owners live in the 
same communities where they sell their products or offer their services 
and this is generally not true of the large, multinational 
corporations. Since most small businesses pay taxes under the 
individual rates, this legislation takes an important step in leveling 
the playing field with their large competitors.
  In short, if members of the U.S. Senate want to take one action this 
year that can greatly aid in the survival of

[[Page 9171]]

America's more than 17\1/2\ million small businesses, they should vote 
for this tax relief legislation. Members will not have a better 
opportunity this year to register their support for America's Main 
Street business owners than the RELIEF Act of 2001.
  It is important to understand that we need to lower all the marginal 
rates to benefit our small businesses. According to treasury data, 
nearly two-thirds of the taxpayers who would benefit from lowering the 
top income tax rate are small business owners and entrepreneurs. 
Contrary to the stereotypes too often painted by the far left, most of 
the taxpayers in the top income tax bracket are not the idle rich.
  Now I have a little experience in owning and operating a small 
business. I owned operated a Main Street shoe store in Gillette, WY, 
for 26 years with my wife and our three children. Let me tell you, when 
I got a tax cut, I did not go out and buy a Lexus. I would take that 
money and make improvements to my store so that my business would be 
more successful in the future and I would be better able to provide the 
services and products that would benefit my family and my community.
  I wonder how these 17\1/2\ million small-business owners would feel 
if we told them ``you can't have a tax cut, because we don't trust you 
to spend your own money. You might just waste that tax cut on a luxury 
car. You better let us keep that money in Washington so we can continue 
to increase the size and scope of the Federal Government and have a 
little more control over every aspect of your lives.'' I don't know who 
my colleagues are talking with, but I trust the more than 38,000 small-
business owners in my State to use their own money as they see fit.
  America's taxpayers are long overdue for a return of their surplus. 
Americans are shouldering the highest peacetime tax burden in our 
Nation's history. Both the level of taxation and our underlying tax 
policy are unjust and in desperate need of reform. For too long, we 
have punished marriage and savings, discouraged innovation and job 
growth, and punished the same small business owners that deserve much 
of the credit for our economic success over the past decade.
  It is time we listen to the more than 17\1/2\ million small business 
owners spread throughout our States, and our communities. It is they 
who will benefit from the RELIEF Act of 2001, and they in turn will 
help us by providing many of the goods and services that we will use 
every day.
  The RELIEF Act of 2001, will benefit every American taxpayer by 
allowing them to keep some of their own money. It will stimulate the 
American economy by rewarding entrepreneurship and job creation. It 
respects marriage and the family. It encourages savings and investment. 
It gives Americans greater freedom over their incomes and their 
futures. I applaud Chairman Grassley and Senator Baucus for their hard 
work in writing this legislation and bringing it before the Senate 
today. We should enact this legislation with all deliberate speed. I 
urge my colleagues to join me in supporting the RELIEF Act of 2001.
  Ms. SNOWE. Mr. President, I rise in support of the bipartisan tax cut 
package which passed the Finance Committee on Tuesday.
  I first want to thank and commend Chairman Grassley and Ranking 
Member Baucus for working so closely together to build a principled 
consensus, one that not only brings this pressing issue to the floor in 
a timely fashion, but will also ultimately benefit the people of this 
nation. They have worked tirelessly for a fair and balanced tax cut 
bill, and I believe they have achieved that goal.
  Inevitability, none of us will agree with everything in this bill. 
Some will wish we had done more, some less. But that is the sign of 
true compromise.
  It is not about any one of us getting everything we would like. It's 
about making a judgment as to whether the preponderance of the measures 
in a given bill works for the good of the country. That is how the 
process should function--however difficult that process may be, and 
however much it may require us as individuals to compromise on facets 
of the bill we would prefer to be different.
  We cannot allow the gears of the deliberative process to become 
jammed with the monkey-wrench of absolutism. This is not the time to 
retreat into the false haven of ideological absolutes. Especially in 
these perilous economic times, we cannot let personal or partisan 
differences get in the way of passing a fair and meaningful tax cut. Of 
course we have an obligation to speak our minds and to make changes 
where and when we can. But we also have an obligation to heed the 
warning signs our economy is sending.
  I think everyone has probably had the opportunity to read at least a 
number of the myriad articles on the state of the economy. One Business 
Week article spoke of a terrible first quarter, stating that ``the 
earnings of the 900 companies on Business Week's Corporate Scoreboard 
plummeted 25 percent from a year earlier . . . The first quarter profit 
plunge was the Scoreboard's sharpest quarterly drop since the 1990-91 
recession.''
  Productivity fell at a 0.1 percent annual rate in the first quarter--
the first quarterly drop in 6 years. And layoffs are at their highest 
levels since they were first tracked in 1993, with major corporations 
announcing more than 572,000 job cuts this year. Little wonder, then, 
that the unemployment rate has risen to 4.5 percent, with April's job 
loss the largest since February 1991.
  Even more ominous is Business Week's recent observation that if wide 
layoffs of high wage earners continue, the likelihood of recession 
becomes even greater.
  And the Washington Post noted recently that Federal Reserve cuts in 
interest rates have been the most aggressive since the second quarter 
of 1982--the worst recession since the Great Depression--and that 
observation came before the most recent half-percent rate cut. We 
cannot ignore these economic storm clouds that may portend negative 
consequences for American workers as well as our economic future.
  And while it is true that a tax cut may not actually prevent a 
recession, if one is in the offing, I well remember the words of 
Federal Reserve Chairman Alan Greenspan, who came before the Finance 
Committee in January.
  Chairman Greenspan stated that tax cuts, while perhaps not having an 
immediate effect, could act as ``insurance'' should our recent downturn 
prove to be more than an inventory correction . . . that it could 
soften the landing and shorten the duration of any recession should it 
occur. Again, there are ominous clouds on the horizon, and let's keep 
this in mind as well--``blue chip'' economists have indicated just this 
week that they are factoring the tax cut in their projections.
  In fact, if there is one concern I have with this package, it's that, 
given our growing economic uncertainty and the grim repercussions it 
could have, we need to do even more this year to get money into the 
hands of taxpayers and to get the economy back on track.
  I know there is an ongoing discussion about whether the best way to 
do this is to adjust the withholding tables as this bill envisions, or 
to issue checks directly to taxpayers. In the end, I think that 
whatever method best gets this into taxpayers hands--be it accelerated 
withholding, sending checks, or a combination of the two--is an 
imperative and I would urge the conferees to develop such a plan as 
they craft the conference report.
  The fact of the matter is, the case for cuts has never been more 
compelling--it's an issue of our economic health and well-being, and 
it's an issue of fairness for the American taxpayer--who shouldered the 
burden of the debt and created the surplus in the first place.
  As a percent of GDP, Federal taxes are at their highest level, 20.6 
percent, since 1944--and all previous record levels occurred during 
time of war or during the devastating recession of the early-1980s, 
when interest rates exceeded 20 percent and the highest marginal tax 
rate was 70 percent.
  The fact of the matter is, it would be irresponsible not to return a 
reasonable portion of the surplus--which is really just an overpayment 
in the form

[[Page 9172]]

of taxes--to the American taypayer. And there should be no mistake--if 
we fail to pass a meaningful relief package, we will fail both working 
families and the economy upon which their work depends.
  And let us not forget that this package is nearly 25 percent smaller 
than was proposed by President Bush in his budget. Let us not forget 
that it will utilize less than one-half of the projected surplus over 
the coming 10 years, 45.7 percent, excluding both Social Security and 
Medicare surpluses.
  In fact, even with a $1.25 trillion tax cut over the coming ten 
years, we will still have about $1.5 trillion available for other 
priorities, including the funding of a new prescription drug benefit 
and additional debt reduction. Mr. President, this package is neither 
unreasonable nor irresponsible.
  As to the issue that's been raised of ``backloading'' the tax cuts in 
this bill, as the chart behind me demonstrates, the structure of the 
tax package is phased-in to reflect the flow of surpluses projected to 
accrue over the coming ten years.
  Specifically, during the first 5 years, when the non-Social Security 
and non-Medicare surpluses are smaller, the tax cut is also smaller. In 
later years, as the surpluses grow, the tax cut grows as well. The 
alternative is to phase-in the tax cuts more rapidly and dip into the 
Social Security and Medicare surpluses--not an option at all in my 
book.
  Just as importantly, many of us fought hard to ensure that the 
benefits of this tax cut package will be weighted toward those who need 
relief the most--middle and lower-income taxpayers.
  We have before us a thoughtful proposal that addresses concerns I, 
myself, had with the distributional effects of the original package. 
And it does so in a variety of meaningful ways--retroactively creating 
a new ``10 percent'' bracket . . . providing much-needed AMT relief for 
middle-income families . . . and ensuring marriage penalty relief for 
all couples while bolstering the Earned Income Tax Credit program by 
providing $22.5 billion over the duration of the package.
  And we didn't stop there. The bipartisan education package that the 
Finance Committee reported in March is included in this bill, along 
with a new deduction of up to $5,000 for higher education tuition paid, 
and a new credit of up to $500 for interest paid on student loans--
provisions that I have sought along with Senators Torricelli and 
Schumer.
  With the cost of college quadrupling over the past 20 years--a rate 
nearly twice as fast as inflation--and with students borrowing as much 
during the 1990s as during the 1960s, 1970s, and 1980s combined, these 
provisions will provide critical assistance to individuals and families 
grappling with higher education costs.
  It also includes the bipartisan IRA and pension package--introduced 
separately by Senators Grassley and Baucus that will not only 
strengthen and improve access to pensions and IRAs, but also enhance 
fairness for women who frequently leave the workforce during prime 
earnings years, and suffer from reduced retirement savings accordingly.
  And finally, no package could truly be said to produce fairness 
without including a refundable child tax credit. That is why I worked 
with Senators Lincoln, Jeffords, Kerry, and Breaux--as well as both the 
chairman and ranking member--to include a provision that builds on the 
President's proposal to double the $500 per child tax credit by making 
it refundable to those earning $10,000 or more, retroactive to the 
beginning of this year.
  This is introducing a wholly new concept with respect to that child 
tax credit, and one that is most assuredly warranted. For the first 
time we will provide and expand benefits to minimum wage earners.
  How will this help? In its original form, the tax relief plan would 
not have reached all full-time workers--the tax reduction would have 
disappeared for wage-earners with net incomes of less than about 
$22,000. Indeed, without refundability, there are almost 16 million 
children whose families would not benefit from the doubling of the 
Child Tax Credit. To give an idea of how many children we're really 
talking about, that is about twice the population of New York City or 
about 13 times the entire population of my home state of Maine.
  Thanks to the changes we have made, the bill now provides a 
substantial tax credit to a total of 37 million families and 55 million 
children nationwide who might otherwise have gained no benefit from the 
proposal to simply double the per-child credit.
  Many of these are families earning minimum wage, struggling to make 
ends meet in addition to paying their share of State and local taxes, 
payroll taxes, gasoline taxes, phone taxes, sales taxes, and property 
taxes. All told, the average full-time worker earning the minimum wage 
pays more than $1,530 in payroll taxes, and more than $300 in Federal 
excise taxes.
  This is no small burden to working families already living on the 
fiscal edge. In fact, despite America's strong economy, one in six 
children live in poverty, and the number of low-income children living 
with a working parent continues to climb. My provision that is included 
in this bill to make the child tax credit refundable will give these 
families a hand up as they strive for self-sufficiency, and give these 
kids the hope of a childhood without poverty.
  The partially refundable credit will provide a benefit of up to 15 
cents for every dollar earned above a $10,000 per year threshold. In 
real terms, this year, a working family with one child and an income of 
$13,000 would be eligible for a refundable credit of $450; and a family 
with an income of $14,000 would qualify for the full $600 credit.
  As tax reductions and the child tax credit are phased in over 10 
years, the maximum allowable refundable credit will rise from $500 to 
$600 this year, increasing to $1,000 by 2011. Families with more than 
one child would also receive a refundable credit based on their income.
  Will this tax relief solve all the financial problems faced by 
eligible families? No. But it will help to purchase essentials, like 
groceries, heating fuel, or electricity. And it sends an important 
message of encouragement that we want those who work hard and strive to 
improve their lives to succeed. Refundability shows that tax relief is 
for all full-time working families.
  With these kinds of adjustments, we take a critical first step in 
ensuring that the balance of this package in its totality will help 
lower and middle income taxpayers.
  In fact, in looking at the various analyses of the changes we made to 
the package, the Joint Tax Committee estimates that those earning less 
than $50,000 will see their share of Federal taxes drop from 14.3 
percent under current law to 13.8 percent in 2006.
  Indeed, the largest reductions in the effective tax rates will apply 
to those in the $20,000 to $40,000 range. Conversely, in 2006--the 
fifth year of implementation--the share of federal taxes paid by those 
with incomes of $100,000 or more will increase from 58.4 percent to 59 
percent.
  Moreover, as a result of the refundability of the child tax credit, 
according to Joint Tax, those in the $10,000 to $20,000 income range 
will see their share of federal taxes reduced from 1.5 percent to 1.3 
percent--a reduction of $3 billion. And by 2006, this level is down to 
1.1 percent.
  If you look at upper income brackets, and I know there are those who 
still have concerns with the top one percent, according to Citizens for 
Tax Justice, this gives 19 percent of tax cuts to the top one percent 
who pay 37 percent of taxes, as opposed to 31 percent in the 
President's original package.
  And in terms of the overall package, it is worth noting that creation 
of the new 10 percent bracket alone accounts for $438.6 billion, while 
reductions in all other brackets amount to $397.3 billion--that's 52 
percent of the cuts going to the lowest bracket, with 48 percent going 
to all others.
  At the same time, the share of federal taxes paid by those with 
incomes of $50,000 to $100,000 will fall from 27.3

[[Page 9173]]

percent to 27.1 percent--and from 14.3 percent to 13.8 percent for 
those earning under $50,000. So yet again we've seen a shift in the 
weighting of the bill away from benefits for the higher income 
brackets.
  As for the compromise we developed that results in a reduction of the 
uppermost bracket from 39.6 to 36 percent, it is worth noting that many 
individuals in that bracket are small business owners whose business-
related income is taxed as personal income.
  According to the Treasury Department, in 2006, 63 percent of the tax 
returns that would benefit from reducing marginal rates in the top two 
brackets would be reporting some income or loss from a business. And in 
my home state of Maine, for example, about 97 percent of all businesses 
are small business.
  The reality is, small businesses have played a central role in our 
nation's economic expansion. From 1992 to 1996, for example, small 
firms created 75 percent of new jobs--up 10.5 percent--while large-
company employment grew by 3.7 percent. So why--when we're talking 
about such a tremendous impact on individuals and the economy . . . 
when the top corporate tax rate is 35 percent--why should we continue 
making small business men and women pay so much more?
  I think the American public often thinks about tax cuts the way they 
would think of winning the lottery it would be great if it really 
happened, but it in reality it really only happens for ``the other 
guy'' . . . that tax cuts will only apply to someone else . . . and if 
they do happen, they'll be so small as to have no appreciable effect on 
everyday life.
  Well, the American people should know that this tax cut applies to 
everyone, and especially those who could use the break the most. And 
that's true not just on paper, but in reality--in the real world.
  For example, a married couple with two children and $15,000 in income 
will pay no income tax. They will receive $4,008 from the earned income 
tax credit--an increase of $402--and a benefit from the expanded per-
child tax credit of $600. That is over $1,000 extra in their pocket--
that's going to mean a lot to that family making $15,000 a year.
  The point is, this is no phantom tax cut--this is real, this is 
balanced, and this is fair. And what this all comes down to is, if you 
are really serious about cutting taxes, you should support this package 
that begins the process of providing some relief given, once again, the 
status of our economy and the tax burden on the American people.
  We know we are never going to get unanimity on an issue of this 
magnitude. But we can have progress and we can come to some kind of 
consensus. This package represents a bipartisan effort that, in the 
aggregate, is good for our future and good for the American taxpayer 
today. And it deserves our support.
  The PRESIDING OFFICER. The bill having been read the third time, the 
question is, Shall the bill pass?
  Mr. CRAIG. I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The clerk will call the roll.
  The legislative clerk called the roll.
  The result was announced--yeas 62, nays 38, as follows:

                      [Rollcall Vote No. 165 Leg.]

                                YEAS--62

     Allard
     Allen
     Baucus
     Bennett
     Bond
     Breaux
     Brownback
     Bunning
     Burns
     Campbell
     Carnahan
     Chafee
     Cleland
     Cochran
     Collins
     Craig
     Crapo
     DeWine
     Domenici
     Ensign
     Enzi
     Feinstein
     Fitzgerald
     Frist
     Gramm
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inhofe
     Jeffords
     Johnson
     Kohl
     Kyl
     Landrieu
     Lincoln
     Lott
     Lugar
     McCain
     McConnell
     Miller
     Murkowski
     Nelson (NE)
     Nickles
     Roberts
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Voinovich
     Warner

                                NAYS--38

     Akaka
     Bayh
     Biden
     Bingaman
     Boxer
     Byrd
     Cantwell
     Carper
     Clinton
     Conrad
     Corzine
     Daschle
     Dayton
     Dodd
     Dorgan
     Durbin
     Edwards
     Feingold
     Graham
     Harkin
     Hollings
     Inouye
     Kennedy
     Kerry
     Leahy
     Levin
     Lieberman
     Mikulski
     Murray
     Nelson (FL)
     Reed
     Reid
     Rockefeller
     Sarbanes
     Schumer
     Stabenow
     Wellstone
     Wyden
  The bill (H.R. 1836), as amended, was passed.
  Mr. LOTT. Mr. President, I move to reconsider that vote and I move to 
lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. LOTT. Mr. President, parliamentary inquiry: Do we have an 
agreement to be in morning business?
  The PRESIDING OFFICER. Yes. If the leader will permit. under the 
previous order, the Senate insists on its amendments and requests a 
conference with the House of Representatives.
  Under the previous order, the Chair now appoints Mr. Grassley, Mr. 
Hatch, Mr. Murkowski, Mr. Nickles, Mr. Gramm of Texas, Mr. Baucus, Mr. 
Rockefeller, Mr. Daschle, and Mr. Breaux conferees on the part of the 
Senate.
  Mr. LOTT. Mr. President, even though the distinguished managers of 
this legislation have just left the Chamber, I want to say once again, 
as I have earlier, I think we should congratulate our two managers, the 
chairman of the Finance Committee, Senator Grassley, and the ranking 
Democrat on the Finance Committee, Max Baucus. They have done yeoman's 
work. There are a lot of us who say that the chairman and ranking 
member of committees should always reach out and try to work together 
and find a way to have a bipartisan agreement. In this case, these two 
gentlemen have done it.
  Perhaps there is not a total happiness with their agreement on either 
side. But this is the way it should work. I think they have come up 
with a good package and they should be commended. We didn't set a 
record with a number of votes on a package of this nature, but we did 
do 54 votes on amendments. We went through a lot of hours, having votes 
basically every 15 minutes. We stayed right with it. They are 
exhausted, but they are also exhilarated, as they should be, because 
this is a real good day's work.
  I know this legislation is going to be good for America, good for job 
security, and economic growth for working families of America and for 
their children. It does have the core components the President asked 
for but also other areas, such as education, pension savings, and the 
alternative minimum tax.
  So they have done good work, and I am glad we have passed this tax 
relief package. They now have to go to conference and that, too, will 
be a challenge. I am sure they are up to it, and they are going to work 
to make sure the interested parties in the House and the Senate, on 
both sides of the aisle, are included.
  So this has been a real lift to get it completed. I know it has been 
difficult on both sides of the aisle. I know Senator Reid has been here 
through the long hours--12 hours, I believe, yesterday alone. Senator 
Daschle and I talked many times to try to find a way to bring it to a 
conclusion. We have been able to achieve that.
  The vote speaks for itself; 62 Senators voted aye for tax relief for 
America. I am very happy that this hurdle has been jumped and now we go 
to the final stage.
  With that, I yield the floor.
  The PRESIDING OFFICER. The Democratic leader is recognized.
  Mr. DASCHLE. Mr. President, I will use my leader time to make a few 
comments about the tax bill. Let me first begin by congratulating the 
distinguished chairman and the ranking member. While I differ with the 
outcome, I certainly do not differ with the manner in which they worked 
together. I appreciate the bipartisan spirit in which they worked, and 
I hope we can see more of that in the future.
  I do hope we can see a different result in the future as we face 
these critical questions. I believe with all my heart that we will 
regret the day this passes and is sent to the President for his 
signature. I think we will regret it, in

[[Page 9174]]

part, because it is based on projections that are very faulty. We will 
not realize a $5.7 trillion surplus. I think we can predict that 
safely. We also recognize that, with the uncertainty of the budget and 
all of the economic conditions that we will face, to commit to a tax 
cut of more than $4 trillion in its entirety over a 10-year period of 
time is not in keeping with the fiscal responsibility that we have all 
said we are so proud of--the fiscal responsibility that actually 
brought about surpluses over the course of the last 3 years.
  So our first concern has been, and continues to be, that it is based 
on faulty projections. Our second concern is that it will crowd out all 
other priorities that we hold, in some cases, in both parties. We say 
we are for reducing the public debt. I believe that as a result of the 
passage of this legislation there will be no further reduction of 
public debt. We all have indicated a willingness to support 
prescription drug benefits. I predict that as a result of this we will 
be told we can't afford prescription drug benefits.
  We all indicated that we advocate strongly protecting Medicare and 
Social Security. This bill will force us to tap into the Medicare fund, 
the Social Security fund, and deny the protection and the kind of 
viability in those trust funds that we have counted on these last 
several years. This bill will not allow us to provide the kind of 
resources for investment in education that we have all said is 
important to both parties and this country. So across the board, this 
legislation crowds out and, in some cases, eliminates our opportunity 
to address America's priorities in a balanced and meaningful way.
  The third concern I have is one of fairness. We can do better than 
this. We ought to do better than this. When we provide a third of a $4 
trillion tax cut to the top 1 percent, a third to the next 19 percent, 
and a third to the bottom 80 percent, that doesn't say much about the 
balance and our sensitivity and empathy for working families all across 
this country.
  There is only one group of taxpayers who will not receive any 
marginal rate reduction in this bill, and that is the 72 million 
taxpayers who will still pay the 15-percent rate. That is wrong. We 
ought to do better than that. We ought to be sending a clear message 
that we understand they deserve a tax rate cut like everybody else. But 
that is not what this bill says. So I am concerned about the fairness. 
I am concerned about the imbalance that this legislation represents.
  Mr. President, for all of those reasons, I regret the fact that we 
passed this legislation today with the vote that we did. I suspect we 
will be back addressing budgetary and other implications for many years 
to come. I hope in the future we will remember our promise, our 
commitment to fiscal responsibility, our commitment to the other issues 
that we have all said are important not only to us, but to the country. 
I hope, in a bipartisan way, our judgment in the future will reflect 
those commitments more accurately than the one we have just made today.
  I yield the floor.

                          ____________________