[Congressional Record (Bound Edition), Volume 149 (2003), Part 1]
[Senate]
[Pages 317-319]
[From the U.S. Government Publishing Office, www.gpo.gov]




                                TAX CUTS

  Mr. DAYTON. Mr. President, I wonder if perhaps you and some of my 
colleagues remember, as I do, the movie ``Animal House,'' one of the 
classic American comedies. In the movie, the rogue fraternity Delta 
House had one solution to many of their problems, and that was a road 
trip. If there was an academic suspension--a road trip; fraternity 
problems--a road trip; expulsions--a road trip.
  Here in Washington we have some who hold a similar one-line refrain 
to just about every problem; and that is--tax cuts. We have budget 
surpluses--tax cuts; budget deficits--tax cuts; economic recessions--
tax cuts.
  Well, like road trips, tax cuts are a lot more fun and popular than 
dealing with unpleasant realities. Tax cuts are practically guaranteed 
to make the politicians who support them popular with their 
constituents, and so I must confess to liking them myself. But, like 
road trips, tax cuts not only avoid unpleasant realities, they often 
make them worse. They might postpone the day of reckoning, but the 
conditions will be even worse as a result, not only because of the 
delay in facing up to those realities, but also because of the tax cut 
itself.
  This tax cut proposal that the President made 2 days ago is the road 
trip equivalent of visiting Fort Lauderdale. It is excessive, it is 
reckless, it is dangerous, and it is seductively appealing. 
Masquerading it as economic stimulus would be consumer fraud. I note 
with interest that the White House has seemed to have dropped that 
claim. Little of it would take effect actually this year, and none of 
the proposals put real dollars in the pockets of consumers.
  This is a reelection stimulus package aimed at 2004 rather than an 
economic stimulus package aimed at 2003. It is putting money in the 
pockets of the wealthiest Americans who, if this administration had its 
way, would, it seems, pay almost no Federal taxes of any kind, whether 
they are alive or after they are dead. It is important we remember that 
the richest Americans already got huge tax reductions in 2001. Those 
with incomes of more than $1 million a year will get an average of 
$650,000 in tax cuts over the 10-year life

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of that bill. The rich do not need another tax cut, yet they would be 
the ones getting most of the money in the President's proposal.
  The struggling millionaire getting by on an annual income of $1 
million or more would be getting another $50 to $100,000 a year in 
additional tax reduction, depending on their amount of dividend income. 
Middle-income-tax payers, upper middle income-tax payers, people who 
work for a living, would get the benefit of the increase in the child 
tax credit, which I support. That is a good idea. I hope this body will 
pass it. But they will get little from the rest of the President's 
proposals. And for most of them who put their investments into 401(k)s 
or IRAs or other retirement accounts for whom dividend income is 
already tax exempt, there would be no additional gain in our doing so 
at the cost of some $67 billion over the next 10 years to the Federal 
Treasury.
  In fact, the total tax package of $670 billion in cost over the next 
10 years would give little boost to economic recovery, little tax 
relief to most Americans, and once again, more huge tax cuts to the 
richest 1 percent of Americans.
  Those of us who point this out are accused of class warfare. I must 
say, this is not my proposal. These are the facts. And those who are 
proposing it are the ones who are guilty of setting one class of 
Americans against others.
  In addition, this is a $670 tax package that we cannot afford. We are 
already running, once again, $200-billion-a-year deficits. That is $200 
billion a year in deficit after we use up all of the Social Security 
trust fund surplus. President Clinton, in 1997 and 1998, balanced the 
Federal budget for the first time in 28 years. Then he did it again in 
1999 and 2000, in the actual operating account of the Federal 
Government, leaving the Social Security surpluses untouched. As you 
recall, those of you who, like me, ran in the year 2000, most of us, I 
think probably all of us promised to put that money in a lockbox.
  The President, when he was campaigning, promised to put the Social 
Security surpluses in a lockbox which meant that the rest of the 
Federal operating budget would have to be balanced, and it was. It was 
projected by OMB in January of 2001 to remain balanced, actually in a 
surplus, for the next 10 years. Well, of course, that has not happened.
  We have gone from debating, when I first arrived here 2 years ago, 
how to best utilize a $5.6 trillion expected surplus over the decade, 
how we could pay down the national debt and save $200 billion a year in 
interest payments so that when the baby boom generation retires in 
significant numbers, starting in about a decade, when that trust fund 
has to start cashing in its IOUs, that this country would be in the 
strongest possible financial condition to meet those growing needs. But 
in 2 years, those surpluses have disappeared, and we are now looking at 
projected deficits every year for the foreseeable future, which is 
heading us, with additional debt and no cushion, toward a financial 
Armageddon in a decade that will rival nothing we have seen in this 
country since the Great Depression.
  The least we should do--not what we should do but the least we should 
do--is not make it worse. This tax proposal would do so.
  So in one tax proposal, we have greater tax unfairness, greater 
income inequality, greater financial instability, a greater future 
catastrophe. For this proposal and those who support it, it is like an 
alcoholic. I am a recovering alcoholic, so I know whereof I speak. It 
is like an alcoholic who knows that they should stop, that it is bad, 
that there are going to be future disastrous consequences, but is 
unwilling or unable to do so.
  I must say that those of us who are ``Friends of Bill W.'' see other 
signs of that kind of behavior in some of the statements being made 
these days, justifications for these deficits--that a trifecta caused 
our budget downfall; people don't cause deficits, trifectas cause 
deficits--and denial where top administration officials are starting to 
say: Well, deficits don't matter.
  Well, they mattered when the President was campaigning in the year 
2000 and pledged to keep the Social Security surpluses in a lockbox. 
They mattered the last 2 years when the President criticized any 
attempt to spend additional money on schoolchildren or prescription 
drugs for the elderly. It seems that deficits don't matter only when 
the White House wants to ignore them.
  It is bad enough that people in the administration who should know 
better say that deficits don't matter. It is their job to pretend that 
the emperor has clothes even when he does not. But other economists and 
economic policymakers around the country who are saying the same things 
and making up rationalizations and contradicting their former positions 
really are guilty of professional cowardice, and they do their country 
a great disservice by the masquerade they are enabling. They have no 
honest escape from or avoidance of the truth and the facts as they know 
them to be.
  I must say that responsibility starts with and falls most heavily on 
the Chairman of the Federal Reserve, who has danced around the head of 
a needle every time this administration has proposed policies which 
contradicted the admonitions he consistently gave to the Congress 
during the last administration. I think it will be shameful for 
anybody, any professional economist, or economic policymaker to come to 
Capitol Hill in the next few weeks and hedge or confuse or rationalize 
whether this is an economic stimulus proposal, which is not what its 
benefits are relative to its fiscal cost to this country, and whether 
it promotes greater tax inequality or equity. And anyone who is 
unwilling to speak that truth should have the integrity to step out of 
any public position or should just stay away from here entirely.
  To the millionaires and the multimillionaires of America, the 
captains of industry who are running up support for this proposal, I 
know whereof I speak. I say, you are letting your greed ruin America. I 
can understand most Americans' aversion to taxes, especially the poor, 
the middle class, even the upper middle class who are living on their 
earned incomes, who are raising children, wanting to improve their own 
financial conditions and that of their families. I can understand their 
resentment for every tax dollar. But if you can't live on a million 
dollars in this country and pay your fair share of taxes on it, you 
should deal with that yourself. You are the luckiest people in America. 
You are the luckiest people in the world. You are the luckiest people 
in the history of the world.
  If you are paying more taxes, it is because you are earning more 
money, a lot more money in many cases in the last few years. For people 
who want to make more money and pay less taxes on it, that, to me, is 
greed. To advocate for it, knowing the financial condition of this 
country, knowing the harm it would cause your children and your 
grandchildren when they have to pay the bills in the years ahead, is 
not only selfish, it is downright unpatriotic.
  This antitax ideology is destructive to America. This obsession with 
paying no taxes whatever it takes, moving a home or residence, moving a 
business, setting up offshore shells and tax evasions and other kinds 
of tax avoidance, people who are doing so should be ashamed. If this 
country falls into a financial abyss in the years ahead, we will have 
no one to blame but you. Nothing that anyone has hoarded will begin to 
replace the economic strength of this country if it is lost.
  There are other reasons this tax cut is terrible. That is that it 
ignores the serious unmet needs of our people. The priorities of this 
Congress and this administration regretfully have been tax cuts for the 
rich ahead of quality education for our schoolchildren, prescription 
drug coverage for senior citizens, disaster aid to destitute farmers 
and flood and fire victims, and a lot of serious unmet social needs.
  One of those areas of greatest critical need and a broken promise of 
the Federal Government for a decade is the area of special education. 
It was a quarter century ago when Congress made a promise that it would 
pay for 40 percent of the cost of special education. In fact, Congress 
even passed a law in 1982 that stated that it would do

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so. It legally bound itself to providing 40 percent of the cost of 
special education.
  Today, nationwide it is 16 percent; in other words, less than half of 
the promise that was made.
  For my State of Minnesota, that difference amounts to over $200 
million a year in tax money, in funding for education that has to be 
made up by tax money in Minnesota, with more regressive property taxes, 
State income taxes--money that Minnesota does not have and many other 
States don't have.
  Now, I heard my friend from New Hampshire recite a great number of 
statistics that purported to demonstrate how much the Federal 
Government has increased its funding for education. The problem with 
the numbers of percentage of increase is the actual base in many of 
these programs--the measure was quite low. In fact, the Federal share 
for funding of all of K-12 education has been 7 percent. The State and 
local governments have been obligated to pick up the rest. For most of 
the time it has been desirable because it has maintained local control 
of our schools. But you can increase a low number by a high percent and 
still have a low number.
  I heard lots of blaming of the previous administration, that they 
should have spent more for education. I would say, having come 2 years 
ago, probably it should have done so. Probably the last 25 years of 
administrations should have spent more for education--certainly in 
special education they should have honored that promise when it was 
made and kept it. The priority of the last administration, almost by 
necessity, was to bring this country out of deficits, to put this 
country back in sound fiscal condition, to put the Social Security 
surplus money in a lockbox so it would, therefore, meet present and 
future retirements.
  I believe I heard the Senator from New Hampshire say that in all of 
those 8 years, this country was operating in a surplus. That is not the 
case.
  The PRESIDING OFFICER. The Senator has used up his time.
  Mr. DAYTON. Mr. President, I ask unanimous consent to have 2 more 
minutes to finish my remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DAYTON. Certainly we should have spent more. President Bush, to 
the extent he has spent more money--and he has--for special education, 
boosting the Federal share from 12 to 16 percent, I give him credit for 
doing so.
  But I am not concerned about who is right. I am concerned about doing 
what is right. I am concerned about what is right for the 
schoolchildren of this Nation. I speak as a former schoolteacher who 
taught in a public school in New York City with 32 children in the 
classroom. It was the toughest job I ever had. I heard them say that 
the number of students in a classroom doesn't make any difference. 
Anybody who has tried to teach kids knows it makes a difference. I have 
been to 150 more schools in Minnesota, and anybody who doesn't know 
they are substandard and dangerously decrepit--they can cite all the 
statistics they want, but they are not looking at reality. Anybody who 
thinks the schools are over funded and that teachers who are averaging 
$40,000 nationwide are overpaid should spend a day, a week, or a year 
in a school and see what that job is about, see the kids from all 
different backgrounds and countries with different languages and 
capabilities--no wonder test scores are affected.
  Anybody who thinks we are over funding public education is off in 
another world. In Minnesota and in other States where funds are not and 
will not be available through property taxes and State taxes, the 
question is, Who will help us out? The Federal Government has these tax 
cuts for the wealthiest people, and we are saying to these kids: No, I 
am sorry, you go your own way, you suffer, we are not going to put 
computers on your desks to enable you to succeed. We are going to test 
you and find out how you are doing and use the bully pulpit. It is no 
wonder good teachers are leaving. Who would want to stay when that is 
going on. This next year is about priorities for this country, 
priorities on how we will spend the money and the resources we have. 
That debate should continue.
  I yield the floor.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Ohio is recognized for 15 minutes.
  Mr. DURBIN. Mr. President, I ask unanimous consent to follow the 
Senator from Ohio for 15 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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