[Congressional Record (Bound Edition), Volume 148 (2002), Part 12]
[House]
[Pages 16067-16072]
[From the U.S. Government Publishing Office, www.gpo.gov]




     EDUCATION SAVINGS AND SCHOOL EXCELLENCE PERMANENCE ACT OF 2002

  Mr. HULSHOF. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 5203) to provide that the education savings incentives of 
the Economic Growth and Tax Relief Reconciliation Act of 2001 shall be 
permanent, and for other purposes, as amended.
  The Clerk read as follows:

                               H.R. 5203

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Education Savings and School 
     Excellence Permanence Act of 2002''.

     SEC. 2. EDUCATION SAVINGS INCENTIVES MADE PERMANENT.

       Section 901 of the Economic Growth and Tax Relief 
     Reconciliation Act of 2001 is amended by adding at the end 
     the following new subsection:
       ``(c) Exception.--Subsections (a) and (b) shall not apply 
     to the provisions of, and amendments made by, title IV.''.

     SEC. 3. TAX-FREE EXPENDITURES FROM EDUCATION SAVINGS ACCOUNTS 
                   FOR QUALIFIED ELEMENTARY AND SECONDARY 
                   EDUCATION EXPENSES AT HOME SCHOOLS.

       (a) In General.--Clause (i) of section 530(b)(4)(A) of the 
     Internal Revenue Code of 1986 (defining qualified elementary 
     and secondary education expenses) is amended by striking ``or 
     religious'' and inserting ``religious, or home''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.

     SEC. 4. CLARIFICATION RELATING TO EXCEPTION FROM ADDITIONAL 
                   TAX ON CERTAIN DISTRIBUTIONS FROM QUALIFIED 
                   TUITION PROGRAMS, ETC. ON ACCOUNT OF ATTENDANCE 
                   AT MILITARY ACADEMY.

       (a) In General.--Subparagraph (B) of section 530(d)(4) of 
     the Internal Revenue Code of 1986 (relating to exceptions 
     from additional tax for distributions not used for 
     educational purposes) is amended by striking ``or'' at the 
     end of clause (iii), by redesignating clause (iv) as clause 
     (v), and by inserting after clause (iii) the following new 
     clause:
       ``(iv) made on account of the attendance of the account 
     holder at the United States Military Academy, the United 
     States Naval Academy, the United States Air Force Academy, 
     the United States Coast Guard Academy, or the United States 
     Merchant Marine Academy, to the extent that the amount of the 
     payment or distribution does not exceed the costs of advanced 
     education (as defined in section 2005(a)(3) of title 10, 
     United States Code, as in effect on the date of the enactment 
     of this clause) attributable to such attendance, or''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2002.

     SEC. 5. PROTECTION OF SOCIAL SECURITY AND MEDICARE.

       The amounts transferred to any trust fund under the Social 
     Security Act shall be determined as if this Act had not been 
     enacted.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Missouri (Mr. Hulshof) and the gentleman from Washington (Mr. 
McDermott) each will control 20 minutes.
  The Chair recognizes the gentleman from Missouri (Mr. Hulshof).
  Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, it is back-to-school time. Indeed, as I look at the 
clock above the Speaker's chair, in about 2 hours when we call for 
votes, this Chamber will fill with our colleagues; and there will be 
some of the same giddiness as kids going back to school. And the 
inevitable question we ask one another is what did you do on your 
summer break?
  Certainly I think as we prepare for some very solemn events later 
this week as well as next week and certainly recognizing the impact of 
a year ago, I think a lot of attention has caused us to really forget 
some of the important education initiatives that have passed and become 
law. Specifically, this Congress began last year with a renewed 
commitment to education. ``Leave no child behind'' has become a 
familiar mantra. In fact that landmark legislation of leaving no child 
behind is now the law of the land and really starts with the mindset 
that a child, any child, can learn.
  As President Bush stated, indeed as Governor of the State of Texas, 
``The Federal Government must be humble enough to stay out of the day-
to-day operation of local schools, wise enough to give State and local 
school districts more authority and freedom, and strong enough to 
require results. We must make our schools worthy of all of our 
children. Whatever their background, their cause is our cause. It must 
not be lost.''
  Thereupon we came together in a very bipartisan way and passed that 
landmark legislation. But Congress did not stop there. Last summer in 
the Economic Growth and Tax Relief Reconciliation Act, there were some 
significant tax incentives to improve the affordability of education, 
not just higher education but kindergarten through elementary school, 
through secondary, essentially schoolchildren of all ages that would be 
able to take advantage of through their parents or other mentors or 
family members, opportunities of savings vehicles and incentives 
through the Tax Code.
  Yet, Mr. Speaker, as you know and as this body knows, a year ago when 
we enacted the Economic Growth and Tax Relief Reconciliation Act, 
because of some very technical, arcane procedural rules in the other 
body, there was a sunset provision placed upon those tax incentives 
relating to education. What this bill today, H.R. 5203, attempts to do 
is to make permanent those positive savings vehicles, those tax 
incentives that would help all parents across the country really focus 
on their children's education.
  Certainly, as we debated this a year ago, the idea is a simple one. 
No child should be discriminated against because of the choice of where 
he or she goes to school. Public schools, private schools, religious 
schools, home schools, any child should have the advantage of these tax 
incentives through parents or other mentors as far as educational 
expenses.
  We cannot in Congress, of course, set tuition rates. We cannot set 
student fees. In my hometown of Columbia, Missouri, as college students 
are coming back, they are lamenting the fact that they are facing an 8 
percent tuition hike this year. There is nothing that not only this 
legislative body but other State legislatures can do as far as the 
rising cost of tuition. However, we have acted as far as making college 
education and other educational expenses more affordable, education 
more accessible. It is time to make those provisions in the Tax Code 
permanent, those tax relief measures. This body has acted making the 
entire Economic Tax Reconciliation Act of 2001 permanent. We have also 
acted as a body to

[[Page 16068]]

make those pension opportunities permanent, the marriage penalty repeal 
permanent as well as the death tax repeal. We believe it is time for 
Congress to make a renewed commitment to make permanent the education 
tax incentives. Accordingly, I ask that H.R. 5203 be adopted.
  Mr. Speaker, I reserve the balance of my time.
  Mr. McDERMOTT. Mr. Speaker, I yield myself such time as I may 
consume.
  It is nice to be back here on the first day of school to witness the 
27th act of the Republican budget follies of 2001-2002. The gentleman 
from Missouri talks very openly about the No Child Must Be Left Behind 
bill, and we all clapped and patted ourselves on the back. It 
authorized an increase in the budget of 15 percent for children and 
education. But then there was the budget, the real honest-to-God 
budget. That was 2.8 percent. Promising 15 percent and then giving them 
2.8, right? And meanwhile come down here and shovel more money out the 
back door in tax breaks.
  You call it arcane reasoning. Well, we did not want to break the 
budget. That is why you did not make it permanent in the first place. 
If you had passed this thing in perpetuity, you would have broken the 
budget, and it never would have passed the Senate. That is why you put 
that sunset clause in.
  But the fascinating thing is that the Bush budget that says it cares 
about education in the public schools cuts 50 programs, including 
civics and art and history education. It cuts school counselors and 
technology for teachers. That is in the public schools. We do not want 
to fund the public schools. We just want to figure out how to give 
everybody a voucher, forever. We are going to boost the amount from 
$500 a year to $2,000; and we are going to add that everybody now is 
permanent. Higher education, high school, middle school, elementary 
school, home school, everybody can take their money and go outside the 
public school system. Yet 90 percent of the kids in this country go to 
the public schools. So why is our focus not on putting money in the 
public schools?
  Even more interesting and the reason I started with this talk about 
the budget, 2 years ago, a little less than 2 years ago, we came out 
here and we said we have $5.6 trillion in surplus. And we could do 
anything. We can give enormous tax breaks. We can do all these things. 
But even the Republicans now have to admit that their own Congressional 
Budget Office says that this year we are going to be $157 billion in 
debt, in deficit. That is counting all the Social Security money. All 
that money, all that talk about lockboxes and we are going to protect 
Social Security. I can remember listening to hundreds of speeches from 
the other side that would be saying today, ``You're raiding the Social 
Security money.'' But suddenly we do not hear any of that. We have the 
Congressional Budget Office say we are only going to be $157 billion in 
debt. They do not point out that the biggest chunk of that is money 
coming from Social Security.
  Maybe next year it is going to get better. That would be right, 
right? Well, it is only going to be $145 billion in deficit. Yet you 
want to come out here and pass a bill that puts another $5 billion out 
in perpetuity. You do not know what is happening in the stock market. 
Everybody tells me it is getting better. The economy is coming back. It 
is not coming back in the Northwest. We have got the highest 
unemployment we have had in 15 years. So when people are saying, Oh, 
well, let's give all these permanent tax breaks because it's coming 
back, where is the proof of that? Who believes the Secretary of the 
Treasury? We do not have a serious financial leader in this executive 
branch. Nobody that the world believes. They go out and make speeches 
and the market drops. So explain to me how you can continue to give 
money away permanently.
  The funny thing about this, of course, is it does not take effect for 
8 years, right? Put it in today, people will forget about it; but it 
will bite out there someplace down the road. It is a very clever 
strategy. Put in the idea with the sunset, come back a year later and 
say, well, we are only extending what we did last year. That is 
deceptive. We are in financial difficulties in this country. We should 
not be passing this kind of legislation at this point when we have not 
done the education budget. We have not even done any of that yet for 
the public schools, and you want to give people money to go to the 
private schools.
  Mr. CONYERS. Mr. Speaker, will the gentleman yield?
  Mr. McDERMOTT. I yield to the gentleman from Michigan.
  Mr. CONYERS. I thank the gentleman for yielding. I am impressed that 
this measure is coming up at this point in time. Is there some reason 
that we keep going over this? Has this subject been before the House of 
Representatives before?
  Mr. McDERMOTT. My impression is that we have done this at least twice 
before. And the Senate always rejects it, because the emphasis should 
be on public schools.
  Mr. CONYERS. I want to thank the gentleman for his comments. I want 
you to know that I think there will be more people here thinking about 
the wisdom of H.R. 5203 when it comes up for a vote today.
  Mr. McDERMOTT. I hope they will all vote against it.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HULSHOF. Mr. Speaker, I am pleased to yield 5 minutes to the 
gentleman from Texas (Mr. Sam Johnson), another valued member of the 
Committee on Ways and Means.

                              {time}  1645

  Mr. SAM JOHNSON of Texas. Mr. Speaker, I did not know we were going 
to come in here and try to get into a political debate. As I recall 
from the Committee on Education and the Workforce, we did not do any 
cutting; we consolidated.
  I do not think we have taken one red cent out of the Social Security 
trust fund, and we do not intend to. I think that it is important for 
the people to know that they can count on the future, that they can put 
their money into a savings account and count on it to be there for 
their kids to go to school, if that is what they desire to use it for.
  Mr. Speaker, it is an honor for me to be here today to solve a 
problem brought to my attention by a constituent. Great ideas do not 
always start from inside the Beltway or from pundits or strategists. 
They come from good Americans back home, like my friends Paul and 
Jeanette Miesse of Plano. Their son, Kyle, attends Jasper High School 
where he is in the tenth grade and participates in ROTC. Kyle is 
considering applying to the Naval Academy. I want to help them make 
that a reality.
  Kyle's dad researched the 529 Education Savings Account. As you know, 
529 savings plans, run by the States, allow parents and others to put 
money aside for college to grow tax free, and, as long as the money is 
spent on education, the money is spent tax free. These tax incentives 
are an important way to encourage savings for higher education.
  Current law provides penalty-free refunds from 529 plans for certain 
situations, such as when the student receives a scholarship. The 
problem with this is the definition of the word ``scholarship.'' It 
excludes appointments to the United States service academies, such as 
West Point, Annapolis, or my favorite, the Air Force Academy. Under the 
Tax Code, these appointments are considered commissions in the military 
and so are different from scholarships.
  Hard-working students and athletes across America are rewarded with 
scholarships to colleges and universities. Congress recognized the hard 
work of these young people when we permitted their parents to receive 
penalty-free rebates of their contributions to 529 plans. In addition 
to academic and athletic scholarships, the IRS and Treasury have told 
us if a student earns an ROTC scholarship, their plan can make penalty-
free rebates. It is only the United States military academy students 
who are not eligible for this benefit.

[[Page 16069]]

  Serving this country is a noble profession. Congress ought to 
encourage, not discourage, young people to join our armed forces, 
especially today, and the clarification we are making today will ensure 
that all students who attend our United States military academies get 
the same treatment under 529 plans as their peers.
  Given that each Congressman is eligible to make appointments to the 
United States service academies, I think all of us in Congress have a 
direct interest in making sure we solve the problem. On average I 
nominate about 40 students from the Third District of Texas to the 
service academies.
  I think when hard-working, patriotic young Americans are rewarded 
with an appointment to a service academy, we should not turn around and 
impose a 10 percent penalty on their parents who saved for their 
children's education. We should provide the same penalty-free 
withdrawals for the plebe, the middy and the cadet as we provide to 
those who play sports, earn an academic scholarship or pay for school 
through ROTC.
  Again, I want to thank my constituents, Paul, Jeanette and Kyle 
Miesse of Plano, who brought this issue to my attention.
  To my knowledge, at no time during the consideration of this 
legislation did we consider the issue of appointments to the service 
academies. I believe the omission was simply an oversight, and I 
encourage the passage of this bill that will permanently extend the 
education tax breaks included in the tax law we enacted last year.
  I do not see how anybody can vote against helping parents send their 
kids to school and help make it permanent. I want to thank the chairman 
for including in this bill that clarification. It is people like this 
in our own districts that make a difference.
  Mr. McDERMOTT. Mr. Speaker, I yield 3 minutes to the gentlewoman from 
California (Ms. Woolsey).
  Ms. WOOLSEY. Mr. Speaker, H.R. 2503 has one fatal flaw, and it must 
keep every Member of this Congress and in this body, every Member that 
supports public education, from voting for it.
  H.R. 5203 takes much-needed Federal funds away from public schools 
and gives that money to wealthy families to pay for private schools. 
While private schools and religious schools and military schools are an 
important part of the education mix in this country, they must not be 
funded with Federal dollars.
  Yet this is exactly what H.R. 5203 does. It makes the tax breaks for 
families who use education savings accounts to pay for private schools 
a permanent benefit. Families who can afford to put part of their 
income into education savings accounts more often than not are the same 
families who can afford to pay for private schools. We must not, we 
cannot, and we should not be using precious Federal dollars to 
subsidize children who come from wealthy families so that they can go 
to private schools and take that money away from our public school 
system.
  A strong public education system is the only way we can prepare all 
of our children for the high wage, high skilled jobs that will ensure 
America's place in the world market. A strong public school system is 
also how we prevent dependency on welfare here at home.
  Public education is the backbone of our country. It is why we are a 
great Nation. We cannot afford to give money to private schools when we 
do not have the will and we do not have the budget to fully fund our 
Nation's public education system.
  We cannot invest in private education when we do not meet our Federal 
obligation to IDEA, the Individuals With Disabilities Education Act. 
But when we do have a budget that truly leaves no child behind, I will 
support a measure like this. Until then, vote against H.R. 5203 because 
it weakens public education and it must be defeated.
  Mr. HULSHOF. Mr. Speaker, I yield myself 90 seconds.
  Mr. Speaker, I want to commend the other side for waiting until at 
least the second speaker to bring up the mantra ``tax breaks for the 
wealthy.'' What I would like to do is refute that comment specifically 
from the last speaker.
  As this body knows, we have yet to reach the appropriation for public 
education. The Labor, Health, Education appropriations bill is yet to 
come. That is the funding mechanism for public schools.
  I would take issue with my friend from Washington State who declared 
that somehow there are cuts in public education. Since 1995, this body 
has increased funding for public education by nearly 30 percent, and I 
dare say I question how additional funds in public education is 
perceived to be a cut.
  Specifically, to the point raised by the last speaker, 70 percent of 
the tax savings just from education savings accounts go to families 
with children in public schools making less than $75,000 a year. Let me 
repeat that statement: 70 percent of the benefits of education savings 
accounts go to public school children whose parents make a combined 
income of less than $75,000. There are 14 million families whose 
children benefit from just the education savings account vehicle. 
Almost 11 million of those are children who attend public schools.
  So I think that clearly the issue of funding of public education is 
something this body will consider later in the appropriations process, 
and I certainly take issue with the comments of the last speaker.
  Mr. Speaker, I reserve the balance of my time.
  Mr. McDERMOTT. Mr. Speaker, I yield 3 minutes to the gentleman from 
California (Mr. Becerra).
  Mr. BECERRA. Mr. Speaker, I thank the gentleman for yielding me time.
  Mr. Speaker, in response to my friend and colleague's mention of this 
debate, I think we all have to make clear something about this debate 
right here and now: It is not those of us on this side of the aisle who 
brought this legislation forward, and it is not that we wish to 
constantly raise the point that these are tax measures that have tax 
cuts, that help principally wealthy individuals. That is the fact of 
this measure, that it will cost some $3 billion per year.
  But it is as if Congress learned nothing from the Enron, the Global 
Crossing, the Arthur Andersen, the WorldCom financial scandals that let 
so many fat cats become even fatter, that now we have a bill that would 
again benefit the wealthiest Americans at the expense of the majority 
of middle-class Americans.
  Really, at the end of this, if you take a look at this bill, this is 
an attempt to sneak vouchers through the back door for private schools 
again, at the expense of the 90 percent of our kids who are attending 
public schools.
  But the worst part, as you heard the gentlewoman from California 
mention beforehand, was that this is fiscally irresponsible. We are 
already running a deficit this year, when we were told by the Bush 
administration last year we would have a $165 billion surplus for this 
year. Yet we are in deficit. Now we want to take $3 billion per year 
once this is permanently extended and spend it to help mostly wealthy 
families who will take advantage of these tax breaks.
  That does not seem right, especially when you think that the 
President's own budget called for a cut of all funding for dropout 
prevention programs in our schools throughout the Nation, especially 
when you consider the fact that the President is unwilling and this 
House is unwilling to let us have before this body a debate on school 
construction monies so that our school districts throughout the Nation 
which are overcrowded could have the money to build the schools for all 
our kids, not just those that are wealthy.
  Why not do school construction measures like that which is 
cosponsored by the gentlewoman from Connecticut (Mrs. Johnson) and the 
gentleman from New York (Mr. Rangel) and a number of us that would say 
spend less than $1 billion per year to help school districts, leverage 
that into $25 billion over the next 10 years to help build schools, 
rather than give away $3 billion per year to mostly wealthy Americans.
  That is what this debate is about. It is about being fiscally 
responsible. All

[[Page 16070]]

of us want to stand for our kids to have a fund to go to school. I have 
two of my three already in school, public school, and I want to make 
sure that they have the resources, along with every child that is in 
the classroom with them, to do the right thing and learn the right way. 
But this will help no one. In fact, it does not help anyone for the 
next 10 years.
  For those reasons, we should vote against this and do something 
meaningful for our children and our schools throughout the Nation. I 
urge my colleagues to vote against this measure.
  Mr. HULSHOF. Mr. Speaker, I reserve the balance of my time.
  Mr. McDERMOTT. Mr. Speaker, I yield 3 minutes to the gentleman from 
Texas (Mr. Doggett).
  Mr. DOGGETT. Mr. Speaker, certainly we need more incentives to 
recruit and retain the best public school teachers possible. The many 
who currently are underpaid and overworked need additional incentives. 
We need incentives to help our children prepare to achieve their full 
potential. Children confronted with schools that are in disrepair or 
have inadequate technology and other equipment are deprived of an 
educational environment where they can strive and thrive.
  As a product myself of the Austin public schools and the father of 
two children who are successful graduates of the Austin public schools, 
one now a teacher herself in public schools and the other a physician, 
I welcome a debate on incentives to improve our schools.
  Unfortunately, this is not that debate. This debate has little to do 
with public education and everything to do with political theater. We 
have soaring deficits as a result of the fiscal mismanagement of this 
country.

                              {time}  1700

  And the solution that is offered today is to dig the hole just a 
little deeper by providing even more tax breaks to favor those at the 
top and adding that to the huge deficits that we already have.
  While the President some time ago adopted the slogan of the 
Children's Defense Fund: ``Leave no child behind,'' unfortunately, his 
budget this year leaves quite a few children behind. He committed to a 
15 percent increase in federal education funding to address these very 
real needs in our public educational system, and instead he has 
proposed less than 3 percent.
  We do not need to wait for the appropriations bill to know that the 
President's budget leaves too many children behind across this country, 
and instead of addressing that today, what is proposed in this bill is 
that we make permanent a provision referred to as the ``Coverdell 
Savings Account.'' But, in fact, this is not a savings provision, it is 
a looting provision. It provides tax breaks equivalent to vouchers for 
private schools. That is what this all about, just another way to 
voucherize and separate and divide our public education so that we help 
a handful of children and we leave all the rest to suffer without the 
incentives and the support that we need to genuinely leave no child 
behind.
  Mr. Speaker, undermining public education undermines America. And in 
a democracy where the government is only as good as the people, a 
poorly educated populace threatens our way of life. Only an educated, 
informed citizenry can hold their leaders accountable, can hold their 
Members of Congress accountable, when they offer expensive, election-
year giveaways like this bill to a select few at the expense of 
millions of children across this country.
  Mr. HULSHOF. Mr. Speaker, I yield myself 1\1/2\ minutes to respond to 
the gentleman from Texas.
  Under existing law that the President signed last June, here is who 
can contribute into a Coverdell education account. By the way, this is 
mirrored on the premise of the Roth IRA; that is, that one contributes 
monies into a savings account and then the interest that builds up, the 
power of compound interest, as Einstein talked about, as that interest 
builds up, it is tax-free if used in a Roth IRA, for instance, for 
retirement expenses and in the Coverdell account for education 
expenses.
  Here is who can contribute to an education account: anyone. Parents, 
teachers, mentors, small business owners, corporations, charities, 
foundations, labor unions, concerned citizens, church groups, anybody 
can designate funds to go into an education account for any child.
  Now, I would say to the gentleman, in fact, this is new resources, 
incentives that would not be committed to education but for the fact 
that we put them in the Tax Code and provide this tax incentive. This 
year alone, this year alone, 3.5 billion more private dollars are being 
allocated specifically to educating our kids just this year.
  The other point I would make is simply, everyone keeps talking about 
the budget picture. Again, keep in mind that there is absolutely no 
budget impact, or a minimal budget impact, making this permanent until 
the year 2010 and 2011.
  Mr. Speaker, I reserve the balance of my time.
  Mr. McDERMOTT. Mr. Speaker, I yield 3 minutes to the gentleman from 
Michigan (Mr. Levin).
  Mr. LEVIN. Mr. Speaker, I would have thought maybe this break for 
August would have given the Republican majority here some pause, but 
no, I guess they are going to plunge further into this reckless fiscal 
irresponsibility. They never answer our statement about what they are 
doing to the budget deficit. New facts do not seem to matter. They just 
go on as if it does not matter what happened in August, or was it 
September, when the CBO said, oh, the deficit is going to reach $157 
billion, and if Social Security taxes were not counted, we would be 
$315 billion into red ink. So what is our colleagues' response to all 
of this sea of red ink? Pour more red ink. Make the sea even more 
bloody worse, I guess.
  But that does not make any sense. They are making something permanent 
in the eleventh year, they are doing that now, with this fiscal 
situation facing America.
  Mr. Speaker, we know it is not going to pass the Senate. It will not 
happen. So why are our colleagues attempting this? It is a political 
ploy that I guess our colleagues think Americans will not see through. 
But it is clear to me that the American public knows red ink when they 
see it, and when they see the Republicans dipping into Social Security 
taxes, they know they are doing it, and they know that this is another 
indication of their playing reckless with the Social Security system of 
America. So it is terrible policy to do this in view of the red ink, 
and I think it is really bad politics.
  So I urge my colleagues to vote ``no'' on this. Whatever the merits 
are of the bill, we do not need to add to the red ink today in the 
future when we are already drowning in this sea of red ink. It is 
hurting this economy. Vote no.
  Mr. HULSHOF. Mr. Speaker, I yield myself such time as I may consume 
to directly respond to the question posed by the gentleman from 
Michigan (Mr. Levin).
  The amount that H.R. 5203 would add to the budget deficit this year: 
zero. The amount that H.R. 5203 would add to the budget deficit of next 
year: zero. The amount that H.R. 5203 would add to the budget deficit 
in the next 6, 7 years: zero. In fact, I would say to the gentleman, as 
he cites the Congressional Budget Office, that when the budget impact 
of H.R. 5203 hits in the year 2011 to the tune of $2.3 billion, CBO 
projects that we will be back in the black to the tune of $3.2 billion. 
Also, in the year 2012, when there is a budget impact from our bill 
today of another $3.2 billion, CBO projects another $522 billion of 
surplus.
  The other point I would like to make, especially to the gentleman 
from Michigan, is this: we are trying to make permanent one of the 
provisions that he sponsored. H.R. 1438 provides taxpayer assistance, 
employer-provided assistance to permanently extend exclusion for the 
cost of undergraduate courses and graduate level courses. That is a 
bill that was coauthored by the gentleman from Michigan. It happens 
that of the $5.5 billion in those outyears, that $2.2 billion of those 
$5 billion are making permanent the bill that the gentleman has indeed 
introduced here.

[[Page 16071]]

  Mr. SAM JOHNSON of Texas. Mr. Speaker, will the gentleman yield?
  Mr. HULSHOF. I yield to the gentleman from Texas.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I would also like to point out 
that the gentleman keeps talking about deficits. I recall when I first 
got into this Congress they were huge, and it was a Democrat controlled 
Congress at that time.
  Right now, I believe we are at war. We are spending money on 
defending this United States, the freedoms that we represent and the 
freedom all over the world. We are working to put in place a homeland 
defense. I will tell my colleagues right now, if it costs money to 
protect America and protect our freedoms, I do not think any of us 
should stop it.
  Mr. HULSHOF. Mr. Speaker, I reserve the balance of my time.
  Mr. McDERMOTT. Mr. Speaker, I yield 1 minute to the gentleman from 
Michigan (Mr. Levin).
  Mr. LEVIN. Mr. Speaker, the gentleman from Missouri has very much 
shaped the issue. I favored those provisions, but within a circle of 
fiscal responsibility, and the gentleman is being fiscally 
irresponsible. The figures the gentleman read are figures that show how 
much the surplus is outside of Social Security taxes. Read that to the 
public for year 3, 4, 5, 6, 7, 8, 9 and 10. When we exclude Social 
Security, we are in deficit every year with a projected surplus of $4.2 
billion only in year 11, and those figures are always off. My 
colleagues are playing loosely with Social Security monies.
  So whatever the merits of a bill might be, do not just throw Social 
Security to the winds like my colleagues are doing it. Why are they 
doing it now in terms of 2011? My colleagues think it is good politics. 
It is lousy policy and poor politics.
  Mr. McDERMOTT. Mr. Speaker, I yield myself the balance of the time.
  What is fascinating about this whole thing, as I started out by 
saying, it is more of the budget follies. Now my colleagues come out 
here and they say, oh, but they are now telling us at CBO that it is 
really going to be good in the future. That is what my colleagues said 
last year. Last year they said, $5.6 trillion in the bank. We can count 
on it. And they spent it all. And they are now in the hole. I do not 
know, it is as though they have an addiction. They cannot stop 
spending. Yet if they are going to spend, why do they not spend to fix 
up the schools of this country? If they care about public education, 
why not use that money for fixing up public schools? No. We are going 
to give it to people so that they can leave the public school system. 
We are going to use the public money so that people can leave it and go 
find a better school and somehow their kids are going to do better.
  Now, the real myth here is that this helps ordinary people. Ordinary 
people living paycheck to paycheck do not have money to put aside in an 
educational fund. So we are right away talking about people at the top. 
If we look at who is losing their jobs today, it is pretty scary, 
whether it is in WorldCom or Enron or any one of the dot-coms or at the 
Boeing Company or any of these other places. These people do not have 
the kind of money to put into an educational account. This is a tax 
break for people at the top who have 5 or 6 grand laying around and 
say, well, I can put 2 grand into this educational thing and Charlie 
can use it when he goes to college or when he goes to the private 
school next year.
  My Republican colleagues also defined this so loosely that yes, some 
of the money does go to people on the bottom. You can buy driver's 
education with it, you can buy Internet access for your kid, you can 
buy anything you want; as long as you call it an educational expense, 
it can come out of this money. The reason there are surprises in here, 
like my friend from Texas says, we never had any hearings. That is why 
we do not know what is in the bill.
  Mr. HULSHOF. Mr. Speaker, I yield myself the remaining time to close, 
as we have no further speakers.
  I would say to the gentleman and others, my friends, and I consider 
them my friends, many of whom are on the committee, I certainly hope 
that this interest in fiscal discipline remains as we really grapple 
with these appropriations bills, the challenge that remains ahead of us 
over the next weeks.
  Mr. Speaker, the idea is that we want to encourage families to put 
aside money for their children's education expenses. It was good policy 
a year ago. It is not good politics, it is just good policy to help 
those children achieve the American dream. Everybody has talked about 
their children. My daughter, who is almost 3, one on the way in 
December, and as we think of providing the best education possible for 
all of our children, is it not prudent to put aside that money at the 
earliest possible time, certainly as we see the cost of tuition 
continue to go up?
  If Congress fails to act, Mr. Speaker, here are the provisions that 
we will lose come January 1 of 2011. Instead of the annual contribution 
limit to an education account being $2,000 a year, it would revert to 
$500. Instead of expanding these education account benefits to all kids 
who go to any type of school, we would be simply focused on those of 
college education and forgetting about those educational expenses for 
special needs kids or educational expenses for those in kindergarten 
through elementary school and secondary education.

                              {time}  1715

  My friend, the gentleman from Texas (Mr. Sam Johnson), talked about 
section 529 plans. The reason we need to make these tax incentives 
permanent is as we invest into a prepaid tuition plan or section 529 
plan, the thrust of that is that those withdrawals that we make in 
those years that those kids, I say to the gentleman from California 
(Mr. Becerra), that are not college age yet, when they reach college 
age, if we fail to act, those distributions out of those section 529 
plans are going to be taxable and not tax-free. That is certainly a 
good policy reason why we need to act today to make these incentives 
long-term.
  Prepaid tuition plans. Again, as the gentleman from Michigan talked 
about, he has been a champion of tax-free employer-provided education 
assistance, not just for graduate education but for undergraduate 
education, again, trying to provide and enlist as many opportunities 
for individuals in this country of all ages to better themselves 
through more education.
  And certainly the student-interest loan deduction, again, if we fail 
to act, we will once again put limits on the amount of interest that 
can be deducted on those burdensome student loans if we fail to act.
  Again, Mr. Speaker, it has been an interesting debate. I would just 
simply say that if it was good policy as we debated this and voted on 
it as the House and the President signed it into law 1 year ago, it 
remains good policy today. We need to provide permanent relief to 
families who want to help their children achieve the American dream.
  Mr. Kind. Mr. Speaker, I rise today in support of making education 
more affordable and accessible to our nation's students. HR 5203, 
however, does not actually benefit the majority of students and 
families.
  Education savings accounts were established in 1997 as a tool for 
families to save money over a period of years for their children's 
higher education. Congress recognized the growing cost of college and 
the increasing difficulty families face trying to pay for college, and 
created these accounts to encourage early savings. Last year's tax cut 
legislation increased the contribution limit for education savings 
accounts from $500 to $2,000 and expanded the definition of qualified 
education expenses that can be paid from a education savings accounts 
to include elementary and secondary school expenses for public, 
private, or religious schools.
  While I support making education more affordable, HR 5203 will allow 
parents to use these statutorily created education savings accounts--
tax free--for almost ANY aspect they consider relevant to their child's 
education, at any school from kindergarten through college.
  If parents feel they need a new sport utility vehicle to drive their 
kids to school; That is OK.
  If they need a new microwave oven to prepare breakfast for their kids 
before school; That is OK.
  If I want to use these funds, tax free, to pay my older son Johnny to 
tutor my younger son Matthew on the ABCs; That is OK.

[[Page 16072]]

  Mr. Speaker, these examples seem silly for good reason; this bill 
does nothing to help families or to teach children. We need to focus 
our national attention on helping needy families, fixing ailing public 
schools, and leveraging community investment to help parents, teachers 
and administrators meet the important educational challenges they face 
in serving the vast majority of our children. In addition, we need to 
fully fund the No Child Left Behind Act (NCLB) passed last year.
  Our Public schools currently serve approximately 90 percent of 
students in grades K-12 and face record-breaking enrollments. The NCLB 
gave parents the choice to transfer their kids from a failing public 
school to non-failing public school. Recent reports show, however, that 
very few students are actually able to benefit from this because our 
schools cannot accommodate any additional children. We should act 
smarter to devote scarce federal dollars to ensure that all our 
children receive the education they deserve.
  Finally, the bill is fiscally irresponsible. Last year's tax cut bill 
halted our progress in reducing the national debt. Virtually all the 
projected surpluses that were used to justify last year's bill have now 
disappeared. Furthermore, enactment of the bill being considered today 
would further increase the budget deficit that already is occurring as 
a result of last year's bill.
  I hope my colleagues will join me in opposing the underlying bill. 
This is not the time to be considering a tax cut that our country 
cannot afford when there is no assurance that the money will truly 
benefit all families equally.
  Mr. NUSSLE. Mr. Speaker, education is the foundation Iowans need to 
compete in an ever-changing complicated world. As Iowans have returned 
to classrooms for the new school year, we should act to make our 
commitment to education access clear.
  Last year, the Congress approved and the President signed into law 
the Economic Growth and Tax Relief Reconciliation Act of 2001. This 
important new law contained significant tax relief to improve the 
affordability of education from kindergarten through college. 
Unfortunately, due to arcane rules in the Senate, these education 
provisions will expire after December 31, 2010. Failing to act would 
mean that Americans would lose $5.5 billion in tax relief on New Year's 
Day, 2011.
  Knowing the importance of providing affordable education for Iowa's 
students of all ages, I introduced the Education Affordability Act, 
H.R. 5189, in July of this year. My legislation would repeal the sunset 
provisions and make permanent provisions eliminating the 60-month limit 
on the deductibility of student loan interest payments, increasing 
income limits for student loan interest deduction, and providing tax-
free employer-provided education assistance. I am pleased that the 
legislation we are considering today incorporates the provisions of my 
bill. In addition to the provisions of my legislation, H.R. 5203 would 
also make permanent the increase in the annual contribution limit to an 
Education Savings Account (ESA); expansion of ESA benefits to qualified 
expenses at public, private and religious schools; tax-free withdrawals 
from 529 plans for qualified higher education expenses; and pre-paid 
tuition programs at private institutions of higher education.
  By putting more money into the hands of taxpayers so they can make 
their own decisions about education, I believe this legislation helps 
Iowans provide their families with the best possible futures.
  Mr. STARK. Mr. Speaker, I rise today in opposition to H.R. 5203, the 
so-called Education Affordability Act.
  This education bill is a cynical, backdoor attempt to create a 
voucher program. it drains our public schools of needed resources so 
Republicans can give tax breaks to the 10% of families who send their 
children to private schools. What about the other 90% of American 
families whose kids attend public schools? This bill does nothing to 
address their concerns.
  We ought to be down here today making sure our public schools have 
the resources they need. We ought to be finding ways to fully fund last 
year's ``Leave No Child Left Behind'' law.
  Our public schools have critical needs that Republicans want to 
ignore. We ought to be making funding available for local schools to 
hire more quality teachers and reduce class sizes. We ought to be 
providing money to modernize our schools and renovate outdated and 
unsafe facilities. More than $300 billion is needed for school 
construction alone. That $300 billion cannot be met without significant 
help from the Federal Government. But, it will be hard to keep students 
from attending classes in trailers or dilapidated school buildings if 
Republicans pass this bill.
  If concern for public schools isn't reason enough to vote down this 
legislation, then consider its effect on our budget. Today's bill takes 
the fiscally irresponsible step of making part of last year's trillion-
dollar tax cut permanent. This will only balloon our rapidly expanding 
budget deficit.
  We ought to be more sensible. We ought to stand up for real 
priorities and the qualify of public schools. I urge my colleagues to 
take a stand for public education and vote no on H.R. 5203.
  Mr. ETHERIDGE. Mr. Speaker, I rise today in opposition to H.R. 5203, 
the latest in a long series of Republican bills to provide vouchers for 
private schools at the expense of our public schools. Specifically, 
this bill would make permanent the so-called Coverdell ESA tax breaks 
in last year's disastrous tax bill.
  As the former Superintendent of my state's public schools, I have 
been proud to lead many successful efforts here in the U.S. House to 
defeat private school vouchers. I am particularly proud that in my 
freshman term in this office, I took to the floor to defeat then-
Republican Speaker Newt Gingrich on his private school voucher bill. I 
can assure my colleagues that I will be here to lead the charge against 
private school vouchers as long as the people of North Carolina 
continue to send me to Congress to serve them.
  Vouchers are a bad idea because they drain needed public resources 
away from our public schools, where more than 90 percent of the 
children in this country are educated, in favor of private schools that 
have no accountability to the American taxpayers. Rather than siphoning 
funds from the public schools, we need to invest more in initiatives 
like school construction, teacher training, class size reduction, 
tutoring and in other proven methods to raise academic achievement. 
Rather than make permanent the enormous tax bill that has blown the 
surplus and ruined the economy, we should pass legislation to get 
Americans working again.
  Let me state that there are some provisions of this bill that I do 
support. For example, I strongly support tax relief for employer-
provided education and training benefits. I also strongly support 
expanded tax deductibility of college student loan interest. Both these 
meritorious provisions do not change the fact that this is a 
fundamentally flawed bill.
  This bill is bad education policy. This bill is bad tax policy. This 
bill is bad budget policy. I urge my colleagues to join me in voting it 
down.
  Mr. CARDIN. Mr. Speaker, regrettably, I cannot support this bill 
because of the budget implications it would create. The Bush 
Administration has failed to produce a budget proposal that is fiscally 
responsible, it has failed to protect the Social Security surplus, and 
this bill will dip even further into that surplus. We cannot raid the 
Social Security surplus to reward private schools while we are in the 
middle of a budget crunch and a public school funding crunch.
  There are two measures in H.R. 5203 that I do support. We should 
extend Section 529 savings accounts so that hard-working parents can 
attempt to keep pace with rapidly rising higher education costs and 
give their children the opportunity to go to college by creating 
education savings accounts. We should also allow parents of military 
academy students with scholarships to withdraw Section 529 funds 
without penalty. We must give students who are attending our military 
academies the same treatment as students with other scholarships. I 
hope that we can enact a good budget bill that includes these important 
provisions.
  Mr. HULSHOF. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Culberson). The question is on the 
motion offered by the gentleman from Missouri (Mr. Hulshof) that the 
House suspend the rules and pass the bill, H.R. 5203, as amended.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of 
those present have voted in the affirmative.
  Mr. McDERMOTT. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

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