[Congressional Record (Bound Edition), Volume 155 (2009), Part 5]
[House]
[Pages 5781-5787]
[From the U.S. Government Publishing Office, www.gpo.gov]




                     TREATING ALL CITIZENS EQUALLY

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 2009, the gentleman from Texas (Mr. Carter) is recognized 
for 60 minutes.
  Mr. CARTER. Madam Speaker, I thank you for recognizing me this 
evening.
  I was real pleased to see our 30-Something Group over there has 
expanded their folks, a lot of new faces, and new faces are good for 
Congress. It is good to see them, and even though my in my opinion they 
are a little misdirected, they certainly are entitled to their opinion. 
I am not here to debate them tonight. Maybe some other night I might be 
here for that purpose.
  Tonight I am here because I have been raising and talking about an 
issue here in the last couple of weeks, probably now going on a month, 
about a change in the tax law that I proposed in the form of a bill 
that I introduced here to instigate the ``Rangel Rule,'' which would 
allow ordinary citizens to be treated as nicely as Charlie Rangel, the 
chairman of the Ways and Means Committee, who by his own admission on 
the floor of this House failed to pay taxes for a period of quite a 
long time, something like 10 years or better. But he did catch up on 
those taxes when he finally realized kind of, whoops, I messed up for 
about 10 years, and maybe I ought to pay these taxes. It may have been 
a longer period of time than that. I don't know. It is not really 
relevant to the issue. The issue is that he was not assessed any 
penalties or interest by the IRS.
  I really have a hard time figuring that out, because I have talked to 
a lot of people back home in Texas who have like not filed their taxes 
on April 15th, but have gotten an extension, and they ended up filing 
like on August 15th or October 15th, which is not a real long delay, 
nothing to compare with like 10 years or 20 years or whatever the 
period was. But they all got assessed penalties and interest by the 
IRS, and we really don't like to think that just because somebody 
happens to be the chairman of the Ways and Means Committee that they 
should be treated any differently than, say, those folks back there 
that I talked to in Texas or the folks that have contacted me from all 
over the country on this issue.
  So I have been raising that issue, and in all fairness tonight I want 
to be fair to Chairman Rangel, because he is a man that, of course, 
this House highly respects. There are other issues that have to do with 
Mr. Rangel. We may go into some of those tonight. But in all fairness 
to the chairman, maybe I should have expanded this rule a little bit, 
because there are others who have issues that need to be dealt with, at 
least talked about.
  You know, the current Secretary of the Treasury, Tim Geithner, I 
guess he had some issues that he had with taxes too. His were very 
confusing to me, because the other day, I couldn't find the board 
tonight, but we had a picture of a letter that a company sent, a fairly 
sizable check around $30,000-plus that was sent to Mr. Geithner, 
telling him here was his money he was supposed to pay his taxes with, 
and he was signing, by the obligation of this form, he was obligating 
himself to pay his Social Security and Medicare taxes.

                              {time}  1915

  And that he, by the signing of this document said, ``I sure will. I 
promise you. I give you my word, that I will pay these taxes.'' And 
then, whoops, he just kind of let it slip his mind for about 4 years. 
And, in fact, it had completely slipped his mind until he became the 
subject of discussion in the United States Senate about whether or not 
he had a clear conscience to serve as the Treasury Secretary of the 
United States. At that point in time, he realized that, ``Uh-oh, I 
believe I forgot something. I believe I forgot to pay my taxes for 2001 
and 2002 and 2003 and 2004 and maybe some more.'' And so he rushed in 
and he paid those taxes.
  Now, he didn't pay them all because he was slick enough or smart 
enough or maybe good lawyer, if he's lawyer, enough to know that the 
statute of limitations had run on 2 years of these taxes he was 
supposed to pay. And so I think he relied upon that statute to prevent 
him from having to pay that amount of money. But he, like Chairman 
Rangel, he did some hustling and some catching up, and he caught up and 
he paid his taxes.
  Now, you know, it's real upsetting to the IRS when people don't pay 
their income taxes. They get real upset about it. But my experience of 
being a lawyer and a judge for, well, going on 30-something years is 
that they get particularly irritated when you don't pay the Social 
Security and Medicare taxes you're required to pay, because they kind 
of feel like that's a whole lot bigger crime than slipping up and 
miscalculating on your income tax.
  And they get downright serious about that. I've seen them padlock 
people's businesses over failing to pay those taxes. I have a good 
friend that used to run a place called Big G's in Round Rock, and he 
got padlocked all the time back in the '70s when I represented him. And 
he always got slapped with heavy penalties and heavy interest.
  But Mr. Geithner, Secretary Geithner, he finally paid some of those 
taxes, and he paid some taxes, some interest. But once again, just like 
Chairman Rangel, he wasn't assessed any penalties for intentionally not 
paying his taxes. And I say ``intentionally'' only by the state of the 
evidence that has been presented and the fact that he signed a document 
addressed to the IRS in which he pledged to them that he knew that the 
check they had sent him was for taxes and he knew he was obligated to 
pay those things.

[[Page 5782]]

  So, with that sworn statement, I think it's pretty fair to say he 
intentionally didn't pay his taxes. Now, you know, he may have had just 
a temporary lapse of memory, but let's hope not, because we really 
don't want to think that the man that's in charge of the monetary 
system of the United States has that kind of temporary lapses of 
memory. I mean, we, as American citizens, certainly don't look for that 
quality in a Treasurer. And so I think we ought to be concerned about 
that.
  So I guess what I'm starting off to say here is that I don't want Mr. 
Rangel to think that I'm just mistreating him by himself, because I 
really don't intend to do that. I really think it's time for us to look 
at all these issues that are ethical issues that seem to have come up 
in the majority since the Democrats have been in charge of this 
Congress.
  And, you know, it's kind of funny. I think it's really amazing. There 
are polls that show that the American people really think that the 
Democrats have only been in charge of this Congress since President 
Obama got in office. But, I mean, that's a mistake. This is actually 
the third year that the Democrats have been in charge of this Congress. 
So those things that everybody talked about last year that they thought 
the Congress did very poorly, and many seem to point the fingers at the 
Republicans, at that time the Republicans were not in charge of this 
Congress. This was the Democrats' Congress. They are in charge of it. 
They decide what comes to the floor and what doesn't come to the floor. 
They set the policies of this Congress at this time, and they have for 
the last almost 3 years.
  So back when the Republicans were in charge, they talked about a 
culture of corruption. I'm not talking about a culture of corruption 
yet, but I am talking about certainly some lapses in ethical behavior 
on behalf of our colleagues.
  And as our President, who, by the way, made a very nice speech last 
night, and many of us were very taken back by his speech--and we all 
recognize his very good talent at speaking to the American public. 
President Obama is a very skilled speaker. And I sat right there in 
that chair right there, and I listened to the whole thing, and I was 
impressed.
  But he's had a little problem with some of his people that he's 
gotten to go to work for him. Besides the ones that we just talked 
about--and Secretary Geithner got away with what he had to do. I guess 
if we're going to have the ``Rangel Rule,'' we might have the 
``Geithner Getaway,'' because he certainly got away with not paying his 
taxes for a period of time.
  But, you know, Secretary of State, who was a candidate for the 
President of the United States, Hillary Clinton, she also had some 
issues that people got concerned about and probably should be. Her 
husband's foundation, President Clinton's foundation, received over 
$500,000 in donations from foreign governments and foreign nationals, 
and we've asked President Clinton's wife, Secretary Hillary Clinton, to 
be our representative to those foreign nations. There are strict 
guidelines about accepting donations like this, but it seems that those 
restrictions didn't seem to apply to her.
  Of course, she's been confirmed and she does represent us with all 
foreign countries and all the foreign representation in the world. She 
is our agent. She speaks for us. The question we have is, is it ethical 
to take donations from foreigners and then serve this Nation as our 
representative with foreign nations? Is that the right kind of 
behavior? Is that the ethics that this House ought to be standing up 
for and the Senate ought to be standing up for? Could there be a 
conflict of interest here that we really should have discussed? Because 
she's negotiating with nations, many of whom have contributed to a 
foundation which furthers issues that are important to Bill and Hillary 
Clinton.
  So, you know, she's there, and I'm sure that she's going to do a good 
job. I certainly hope so. But I think we at least ought to ask these 
ethical questions about Secretary Clinton.
  Governor Richardson from New Mexico was another one that the 
President of the United States thought would be an outstanding Cabinet 
member. He was man enough to actually pull his name down because there 
were being issues raised in New Mexico about payments of pay-for-play 
schemes with companies that were involved with the State of New Mexico. 
And rather than bring this ethical lapse to the forefront, he thought 
it was better if he just stayed in New Mexico and dealt with his issues 
there, rather than having to bring them up here to Washington. That's 
good. It's a good thing. It looks like, after two or three tries, we're 
finally going to hopefully get a Commerce Secretary here.
  So the whole point of being here tonight is to point out that you're 
not hearing a lot about it but there are an awful lot of ethical lapses 
of judgment that are going on in the Congress these days. And they seem 
to be all coming from the ruling majority.
  I see that I have a friend here that has joined me. He's always a 
good friend, and he always comes to my aid when I'm standing alone, and 
that's my good friend and classmate, Dr. Burgess from Texas.
  Dr. Burgess, I'd like you to join me and give us your ideas on some 
of the subjects we're talking about and any other subjects you want to 
talk about. I'll yield you such time as you may choose to consume.
  Mr. BURGESS. I thank the gentleman for yielding. And as always, it's 
a pleasure to join him on the floor of the House. He has such good 
ideas.
  And, certainly, the concepts talked about tonight are something that 
have perplexed me, perhaps not the individuals involved, but the 
concepts involved have perplexed me for years, because our Tax Code is 
complicated. It turns out it's so complicated the chairman of the Ways 
and Means Committee, the committee that's charged with writing our tax 
laws in this country, they've written laws that are so complicated they 
can't understand them and they cannot follow their own law.
  Now, the judge very kindly has introduced legislation that if we're 
going to grant dispensation to the chairman of the Committee on Ways 
and Means, perhaps we ought to grant that same dispensation to others 
who are at a less high station in life and perhaps find themselves just 
as unfortunate when trying to deal with our very complicated Tax Code.
  The fact is, Madam Speaker, the Tax Code does not need to be so 
complicated. There are great ideas out there for simplifying the Tax 
Code. The good news is that 80 percent of the people in this country 
think that Congress ought to do something. They don't identify whether 
they think the Republicans ought to do something or the Democrats ought 
to do something, but Congress ought to do something about the 
complicated Tax Code that people have to follow.
  We've got the chairman of the Ways and Means charged with writing the 
tax law, cannot follow the tax law because it is too complicated. We've 
got perhaps the smartest financial mind in the world, the man that was 
chosen as the President's Secretary of the Treasury, who has been 
charged with dealing with this very harsh financial environment in 
which we find ourselves, who, in spite of that high station in life and 
in spite of that keen, incisive intellect that is going to allow him to 
chart that course through these very turbulent economic waters, can't 
fill out his income tax, even when aided by TurboTax.
  But I'm all about solutions, and I'm here to offer the solution that 
is going to uncomplicate the lives of these two very powerful and 
important public figures, public figures that we know we need to get us 
through these turbulent economic times.
  Madam Speaker, I spent my life in health care. And we were deprived 
of one of the bright lights in health care, a former Senator, Tom 
Daschle, who had to withdraw his name from consideration because of 
difficulties with reporting taxes. And, quite honestly, it is difficult 
to know you have a car and driver that someone gives you, is that 
something you have to report as income?

[[Page 5783]]

  We could simplify this process and eliminate these problems that 
would allow us many more great public servants to be able to come to 
the fore and help us with these vexing problems, economic turbulence 
and the difficulty with our health care system.
  Now, I was a doctor back in Texas for over 25 years. You know, the 
old saying goes, ``There's nothing as certain as death and taxes.'' But 
I will tell you that sometimes the taxes seem a lot more complicated 
than death. The Tax Code was created in this very body some 96 years 
ago, back in 1913. And it has grown from--you know, we talk about the 
length of bills today. In fact, we had one on the floor that stretched 
up halfway to the ceiling. But the initial Tax Code was 400 pages. Now 
the Tax Code stands at well over 67,000 pages, and the complexities are 
well-known. But they don't need to be there.
  Part of the problem is, over the 96 years since the Tax Code was 
introduced, men and women on both sides of the aisle who were well-
meaning have attempted just a little bit of social engineering into the 
Tax Code, and the result is this very complicated, complicated 67,000-
page structure that we have in front of us today.
  And it's creating problems for those of us who want to be in 
compliance with the law. We're desperate to be in compliance with the 
law. And every single American simply trying to comply with the law and 
fill out their taxes by April 15th is supposed to be familiar with all 
of those 67,000 pages of the tax rules.

                              {time}  1930

  Again, you consider a man as brilliant as the Secretary of the 
Treasury, Timothy Geithner. He couldn't understand and had difficulty 
filing his taxes. Well, you've got to wonder does your own tax attorney 
understand everything that's in those 67,000 pages, because when it 
comes to the Tax Code, ignorance of the law is no excuse. So we must 
fix the Tax Code.
  Americans don't always see eye to eye on every issue. In fact, you 
saw evidence of that here last night, but again, 80 percent of the 
American people, according to American Solutions, think that the system 
of the way we go about filing and collecting our taxes needs major 
change. Everyone knows the problems. Every year, Americans waste 
billions of hours and billions of dollars complying with the complex 
Tax Code. In 2005, the average taxpayer paid almost $2,000 in household 
compliance costs. That means, you know, you've got to work several days 
a week just to pay the cost of paying someone to fill out your taxes 
because you don't want to make a mistake because things could go very 
badly for you. You might lose an opportunity to serve your government 
at the very highest level if you don't do this correctly.
  I brought a little poster to share with the Congress. Again, I'm 
doing this in the spirit of generosity in offering a possible solution. 
I realize there are other solutions out there, and by no means do I 
intend to disparage other solutions that people are willing to talk 
about, but this is just one idea that's out there.
  It was developed by my predecessor, Congressman Armey, when he was in 
the House of Representatives here for many, many years. He wrote a book 
called the Flat Tax, and I remember buying the book in 1995. I believed 
in the book. I thought, certainly, by 1996 or 1997 that Majority Leader 
Armey would have had that enacted into law. We sit here now over a 
decade later. It's time. It's time for just this type of change. Let's 
go through it. It's so simple, Madam Speaker.
  It's just a little bit of personal information: Name and Social 
Security number; a spouse, if you have one, and the Social Security 
number; you write down your income, your personal exemptions; you add a 
couple of lines; you calculate the tax; you multiply it by the taxable 
income calculation--17 percent in this legislation that I introduced 
last week that, interestingly enough, is called H.R. 1040. It makes it 
easy to remember.
  So, if you're following along at home and are wondering what is this 
panacea for our tax problems, H.R. 1040: calculate your taxes; 
calculate the refund; send it in. What did it take? All of 30 minutes--
30 seconds. I beg your pardon. We have trouble with zeros here in this 
Congress. It takes all of 30 seconds, and you're done.
  You don't have to keep that shoe box full of receipts. You don't need 
to go online and download a program that you don't understand. You 
don't need to have the concern that you filed a tax return that is in 
error and that you're going to be held accountable for that. No more 
expensive tax attorney bills. The hours of stressful research into 
preparing your taxes, think of what Americans could do with those hours 
if they were no longer bound to their desks in their houses, really, 
literally between now and April 15. There's no telling how many nice 
spring weekends are going to be spent sifting through that shoe box 
full of receipts. No more of Congress' picking one special interest 
group over another to reward in the Tax Code, and no more potential 
leaders of the free world who'll be having to pull their names out of 
contention because they can't comply with a very complicated Tax Code.
  So, again, I come here tonight in the spirit of goodwill, in the 
spirit of offering solutions. We should be about solutions.
  One of the things on the bill that I introduced, H.R. 1040, is a flat 
tax, but I'll have to say that Congress doesn't always know best, and I 
trust the American people to know best in their situations. If a family 
has constructed its finances around the IRS code, it would be wrong for 
Congress to simply come in and change all the rules of the game all at 
once. So this tax would be optional. People would have a period of time 
when they could opt into a flat tax. If they'd constructed their 
family's finances around the complicated Tax Code and they wanted to 
continue to file under the Tax Code, they could do so, but boy, if 
they're ready to kick that shoe box of receipts over into next week and 
take that weekend off that they were going to spend doing their taxes, 
that would be their choice. We should give Americans the power to 
choose, the power to make that choice as to whether or not they would 
like to opt into a fair or flatter tax.
  A flat tax would be much less costly. Taxpayers could save $100 
billion a year just on the cost of compliance. The result in increased 
personal savings would be a stimulus package that could have an 
immediate effect on the American economy.
  Well, Madam Speaker, we live in a very political time, and this 
concept that I'm offering tonight is done in the spirit of offering 
solutions, in the spirit of cooperation to Members on both sides. I 
encourage people to look at H.R. 1040. Give me your ideas. Certainly, 
the bill has been introduced. Cosponsors are on the bill even as we 
speak, so there is an opportunity for other Members of Congress to 
cosponsor this legislation.
  Again, you think of the difficulties the judge has already pointed 
out. He has had to introduce a bill called the Rangel Rule so the poor, 
little guy in his district who gets caught in the tax trap can at least 
have the same consideration in the tax courts that we gave to the 
chairman of the Ways and Means Committee.
  We've got the Geithner getaway. We've had the Daschle dodge. All of 
these issues could have been avoided if we would have simplified the 
Tax Code. It is within our power to do it. The American people are 
looking to us for solutions. They're not looking for partisan rhetoric. 
They're not looking for one side to gain an advantage over the other. 
They want us to work together on big issues like this. Eighty percent 
of the American people feel that the simplification of the Tax Code is 
something that is well-nigh due for the American landscape--filling out 
your taxes on a postcard, making it simple, giving that time back to 
your families. Yes, people need money nowadays, and the economy is 
rough, but boy, if you can give people back time, that is extremely, 
extremely significant. So we're going to give back money and time with 
a simplified tax form.
  Madam Speaker, I am so grateful to my friend from Texas for yielding 
me

[[Page 5784]]

time to talk on this very timely and important subject. We're just a 
few weeks away from the tax filing deadline, and many of us are going 
to lie awake at night and are going to wonder: By golly, am I going to 
have to file for the Rangel Rule because I made a mistake on my taxes, 
and now someone may be coming after me?
  Fortunately, they've got Judge Carter looking after them, and the 
gentleman from Texas has introduced his very forthright legislation, so 
we're trying to protect you on both sides. Maybe this is a preventative 
medicine flax tax where you won't even have the problem, but the judge 
has the remedy if you've gotten into difficulty with the Rangel Rule 
and with the Geithner getaway.
  I appreciate the judge's holding this hour tonight.
  Mr. CARTER. Reclaiming my time for questions to my colleague.
  First off, I'm very aware that my colleague has been a strong 
proponent of the flat tax as we've been here in Congress, and I 
appreciate his coming up again and giving us his special message about 
what he sees as a solution to this problem. If I could ask you a 
question, Dr. Burgess:
  On the issue of Senator Daschle, who took about $180,000 worth of car 
rides or something, would this form solve that problem? Would that 
still be income to Mr. Daschle under the flat tax?
  Mr. BURGESS. You know, Judge, you've asked a very good question. My 
understanding is it would not. We would simplify his life by his not 
having to keep up and keep tally. Everything that was offered as part 
of his compensation package would be considered under the 17 percent 
flat tax.
  Mr. CARTER. That's the answer. I was wondering about that because it 
sure would have helped Senator Daschle in his quest to serve at the 
cabinet level of this administration if he hadn't had to claim those 
things, but of course, I guess we know under the present Tax Code--and 
most everybody knows--that if somebody spends money on your behalf, you 
gain benefit from spending money on your behalf.
  I mean most all of us around here have to catch a cab every now and 
then. Shoot, it doesn't take any time at all before you run up a $15 or 
$20 cab fare. So I guess, in having a car drive you all over town for 
several years, you ought to kind of in the back of your mind figure 
that somebody's paying for this, and it's certainly not you, and 
they're doing it on your behalf, and you're getting the use of it, so 
maybe you ought to at least think about the fact that it ought to be 
income to you in some form or fashion.
  It certainly was a benefit. I think that maybe Senator Daschle ought 
to be jumping up and down to be promoting the flat tax over with our 
colleagues on the other side of the aisle so he can, maybe, stay out of 
this kind of trouble the next time he comes along and somebody wants to 
make him one of the Secretaries of our administration.
  I guess Mr. Richardson could have some benefit from the flat tax, and 
Mr. Geithner might even have some benefit from the flat tax. In fact, 
you've come up with a solution, and I want to thank you for coming up 
with solutions. Now, I have some friends who would argue that the fair 
tax also would be a solution, but we won't go into that today.
  Mr. BURGESS. If the gentleman would yield, that is a fair 
observation. Again, by coming here tonight and talking about something 
that has been important to me for well over a decade, by no means do I 
mean to say that this is the only concept that's out there. There are 
other people who have good concepts. We ought to have the debate as a 
body and take good ideas from all within the body and come up with the 
answers to the tough questions. This is what the American people sent 
us here to do. If we can find a better way, if we can deliver time and 
money to the American people, then we should do so.
  Mr. CARTER. Reclaiming my time, Dr. Burgess, in a sense of fairness 
to our colleagues, I've come up with the Rangel Rule.
  Do you think that I should seek to amend the legislation to expand 
the definition or the title of this rule where it's not just all on 
poor Chairman Rangel's back? Maybe we could call it the Rangel/
Geithner/Daschle/Who is Next Rule on paying taxes.
  Mr. BURGESS. Well, if the gentleman would yield, he has posed a 
question that is technically very complex, and as just a simple country 
doctor, I'm probably not qualified to render an opinion on the title of 
his legislation.
  Mr. CARTER. Truly, it's not a good night to go into the complexities 
because I think everybody knows it's pretty simple, that if you have to 
pay penalties and interest when you fail or if you just make a mistake 
on your income tax--and my colleagues who sit around this House would 
be in that same boat, I assume, because they're not the chairman of the 
Ways and Means Committee--then maybe the chairman of the Ways and Means 
Committee ought to pay those penalties and interest, too. If he 
doesn't, then maybe none of us should.
  That's the whole idea behind the Rangel Rule. It's a simple rule. 
Just write at the bottom of your tax form ``wish to exercise the Rangel 
Rule,'' and all penalties and interest would be excused. What a joy 
that would be for so many taxpayers in the United States. It would be a 
bipartisan effort because it wouldn't just be for Republicans or 
Democrats or even Independents. It would be for everybody.
  Mr. BURGESS. If the gentleman would yield, I love the spirit of 
forgiveness that he has embodied within this legislation.
  Again, my purpose in being here tonight was to offer a possible 
solution. I think Members of Congress should be about solutions. The 
American people want to see us be about solutions. This is one that is 
widely embraced and polls very well, but I would yield the floor back 
to the judge, and would certainly, again, thank him for his 
forthrightness and for his leadership in holding this special hour 
tonight.
  Mr. CARTER. Well, I appreciate your coming back up here and telling 
us about the flat tax. I think the flat tax is a concept that all 
Americans, no matter what party they're a part of, should at least have 
the patience to take a look at. The flat tax is for the simplification 
of the public's life because, really and truly, we spend overtime 
around this place complicating Americans' lives. I believe they would 
be blessed to no end if we would just spend a little time de-
complicating their lives.
  This last week, in fact, I got off the phone tonight. A fellow asked 
me about that stimulus package. He said he watched John Boehner drop 
that thing on the floor here and scare everybody in the room. He wanted 
to know was that really the stimulus package or was that just something 
he dropped to get people's attention. I said, ``No, that was it,'' and 
that was very complicated.
  I think, honestly, everybody would say that, in the 12 hours that 
that stimulus package was available to Republicans and to many 
Democrats, nobody, even the best speed reader wasn't able to read that 
almost 1,100 pages and decipher what it meant. Unfortunately, I happen 
to be a fellow who has had to deal with deciphering what the law means 
for a long time.

                              {time}  1945

  And some of the Federal laws are written in such a way that, you know 
what? It takes an act of Congress to figure them out, as we say back 
down in Texas, because they are very complicated, and we complicate 
people's lives. So the flat tax may be an idea whose time has come that 
we won't complicate people's lives.
  The purpose of talking about all of these issues that concern the 
ethical behavior of this House is because it has been the subject of 
the 30-Something Group which preceded me here for at least 4 years that 
I know of. I have sat in the chair where the Speaker is sitting right 
now and heard the 30-Something Group accuse people in this House of 
corruption. I haven't accused anyone of corruption because I think, 
actually, that's beyond the pale of what Members of Congress should do.
  I just said that there is ethical lapses that have to be discussed, 
and if they

[[Page 5785]]

turn out to be more than that, that's for someone other than me to 
discuss. That's for someone like the Ethics Committee or the Justice 
Department to deal with, but not for me to deal with.
  I'm certainly not accusing anyone of corruption here tonight. But I 
am very concerned that we put sunlight on the types of behaviors where 
Members of Congress have failed to do the responsibilities that we tell 
the American citizens is their responsibility as a citizen--that is, 
pay their taxes and pay them on time. And yet they don't suffer the 
penalties that the average taxpayer suffers for failing to do that. 
That's the purpose of me being here today.
  I'm really pleased to see my friend from California (Mr. Dreier) 
here. I hope he will talk to you and share some of his wisdom on the 
issues of ethics.
  I know you served in this House for many, many years, and you've 
dealt with these issues over and over. And I'd like to yield you what 
time you'd like to use here.
  Mr. DREIER. Mr. Speaker, I thank my very good friend and colleague.
  I've heard two Texans up here talking about not only the issue of 
ethics but also tax reform. And I'd like to take a few minutes to talk 
about a proposal that I put forward that I believe will go a long way 
towards dealing with a lack of compliance, which is an issue that we 
are regularly addressing, and something that there has been very little 
talk about, and that is the issue of economic growth.
  We've talked about saving our economy. We've talked about working 
towards recovery. But it seems to me, Mr. Speaker, one of the important 
things that we need to focus on is economic growth itself. And, 
frankly, if we had a tax code that is like the one that my friend, Mr. 
Burgess, was just talking about a little earlier, I think that many of 
the problems that we have with people who have not complied with the 
Tax Code would, in fact, be diminished.
  As my friend said, he's not accusing anyone of ethical violations as 
he's standing here, but we do know this: with a tax code that is as 
voluminous as it is, it encourages a lot of the behavior that we have. 
And I think what we need to do is simplify it.
  On the opening day of this Congress, I was privileged to introduce, 
as I did in the last Congress, what I call the Fair and Simple Tax 
Plan, F-A-S-T, which is FAST. And I think there is so much common sense 
to this. And I know that, having two very distinguished gentlemen from 
Texas, common sense is in great abundance in Texas. And I will admit it 
is, on occasion, lacking in my State of California. But remember, we've 
got common sense in California, but we have, on occasion, not enough 
common sense. But it seems to be very abundant in Texas, and even in 
North Carolina. I see my colleague from North Carolina here, and I 
think it's abundant there.
  But I do believe, Mr. Speaker, that as we look at a commonsense 
approach to deal with the issue of economic growth--which, again, 
should be a very important driving factor for us here because we're not 
simply talking about stemming the downturn, we're not talking about, 
you know, our attempt to recover. We need to have policies that create 
bold, robust economic growth, and we can do that.
  So let me take a moment, if I might, Mr. Speaker, and talk about the 
Fair and Simple Tax Plan.
  What it consists of is taking the six rates that we have today and it 
cuts that in half down to three rates. The first rate, which is the 
income on the first $40,000, would be a flat 10-percent rate. Then, for 
income between $40,000 and $150,000, the rate would be 15 percent. And 
the flat rate for income above $150,000 would be a 30-percent rate.
  Now, I know a lot of people say, ``Why don't we just do a clean, 
simple flat tax and have that be it?'' Well, there are a number of 
things and challenges around here, a number of areas that are really 
sacrosanct.
  People always talk about the need to deduct the interest on their 
home mortgage, right? When we talk about a flat tax, the red flag seems 
to go up and they say, ``What about the deductability of interest on 
home mortgages?'' Well, under the Fair and Simple Tax Plan--which, 
again, was introduced on the opening day--we maintained the opportunity 
for people on a single-page form to deduct the interest on their home 
mortgages.
  And what else is very important and sacrosanct to people, and that is 
to be able to make charitable contributions. So we maintained the 
deductability of charitable contributions.
  And one of the things that President Obama spoke here in this Chamber 
about last night was the issue of health care and the challenge that 
exists there. We all know that we need to take action. So the Fair and 
Simple Tax Plan includes a $15,000 exclusion so that people can 
purchase either direct health care or they can purchase insurance. And, 
again, it incentivizes them to do that.
  Then it deals with issues that have been heavily debated here. One of 
the things that people are concerned about regularly are jobs leaving 
the United States and going overseas. Our constituents talk about that 
with regularity.
  A lot of people make what I believe is a misplaced claim that somehow 
embarking on trade agreements, which simply open up new markets, that 
causes the flow of jobs out of the United States into other countries. 
Well, the fact is it's not trade agreements, Mr. Speaker, that do that. 
What it is is it's the fact that the United States of America has a 
tax, a tax on businesses, the job creators in this country, that is 
second only to Japan. And under the Fair and Simple Tax Plan, we slash 
that tax from 35 percent to 25 percent. Again, as you talk to those job 
creators out there, that would go a long way towards encouraging 
economic growth.
  And then the capital gains rate. Well, people say, ``What capital 
gains do we have today with this market downturn?'' We need to look 
long-term. We need to look at what we want. And we want greater 
economic growth and to reduce that top rate on capital gains from 20 
percent to 15 percent rather than increasing it, as I believe action 
that would go a long way towards encouraging economic growth and it 
would help us deal with the flow of revenues that we will need for much 
of the spending that is taking place.
  And we all acknowledge, well, the stimulus package went way, way, way 
overboard with $800 billion and a thousand pages. We were passing that 
thing around as we were debating it the other day, those of us who 
could catch it and could throw it with 1,100 pages.
  The fact is we all recognize that infrastructure spending is 
essential, very, very important for the goods' movement and other 
things here. But we could do that for significantly less than the $800 
billion that is in this so-called stimulus bill.
  So we need revenue to be generated, and I believe that slashing the 
top rate on capital gains, taking that rate on job creators, on 
businesses, from 35 to 25 percent, would go a long way towards creating 
economic growth, which, therefore, would create the flow of revenues 
that we need to meet a lot of these essential items that are out there.
  Mr. Speaker, the other thing that it does is that it completely 
eliminates the inheritance tax, the death tax, throws it out the 
window. We all know that for people who have to go to a funeral home 
and then deal with the Internal Revenue Service within a matter of days 
is a challenge. I have had to go through this. It's very painful. That 
tax is very, very punitive. It's forced people to have to sell 
businesses and others just to meet that tax obligation that is there.
  Right now that tax rate has been 45 percent, and it had been 55 
percent. And I believe that if we could completely eliminate that, that 
would, again, create a tremendous opportunity for growth to take place. 
A lot of small businesses would be saved.
  And all of this is done within the context of a single-page form, 
throwing the complex code that we have out, and the taxpayers would 
have the option of

[[Page 5786]]

going to this Fair and Simple Tax Plan.
  I think that that's the kind of creative proposal that we need to 
take on to deal with the challenge of economic growth, which I think 
should be priority number one as we seek to deal with the economic 
downturn that we have.
  I also want to say that on the overall issue of ethics, I'm very 
proud--there are a lot of people who have said on this issue that when 
we Republicans were in charge, we did next to nothing on it. Well, as 
my friend knows very well, when Republicans were last in charge, we put 
into place very, very strong--a very strong ethics reform package.
  We dealt with a lot of these issues, and it hasn't gotten the kind of 
attention that I believe we need to get. Why? Because people have 
constantly engaged in attacking Republicans. And, obviously, there has 
been corruption on both sides of the aisle. A very, very bipartisan 
thing, tragically, has been that corruption has existed on both sides 
of the aisle.
  But I do want to make sure that the record is clear that we, when we 
were in the majority, spent an awful lot of time addressing that issue, 
and we put into place with some bipartisan support, I think, very good 
ethics reform.
  But especially at this time--and my friend is absolutely right. We 
need to make sure that a good example is set for the American people 
because we are going through a tough time. The President made it so 
clear. His opening remarks last night were so on target, about the fact 
that people have sleepless nights, the fact that people are anguishing 
over this. This notion of a high school student opening that envelope 
and having to put that acceptance letter back into the envelope, as the 
President said so well here last night, is the kind of story we hear 
with great regularity.
  And I, the other day here on the floor, shared an even greater 
tragedy. A very good friend of mine told me that his 14-year-old son's 
best friend's father had just committed suicide because of the serious 
economic downturn that we have faced. And I've talked to a number of 
people, and the suicide rate has continued to climb as it relates to 
the economic challenges that we have.
  That's why I continue to believe that even though we've passed this 
so-called economic stimulus package--which, from my perspective, I hope 
and pray, we all hope and pray, that it brings us out of the downturn 
that we're going through right now. But, frankly, if one looks at 
history, it is proved to have failed.
  Now, in special orders, a number of us have been regularly quoting 
Secretary Morgenthau. Henry Morgenthau was the Treasury Secretary under 
Franklin Delano Roosevelt. And in 1939, Secretary Morgenthau was 
testifying before the House Ways and Means Committee. And in his 
testimony before the House Ways and Means Committee, he said the 
following--now, remember, this is Franklin Delano Roosevelt's Treasury 
Secretary. I've read the card so many times, I've got it now committed 
to memory.
  He said, ``We have tried spending money.'' Again, this is testimony 
before the Ways and Means Committee. ``We have tried spending money. We 
have spent more money than we have ever spent before. Now, after 8 
years of this,'' the Roosevelt administration, ``we have an 
unemployment rate that is just as high today as it was when we started, 
and we have an enormous debt to boot.'' That's what the Secretary of 
the Treasury of Franklin Delano Roosevelt said in testimony in 1939 
before the House Ways and Means Committee.
  I got to thinking about this the other day, and I believe that we 
should look to another Democratic President as our model for economic 
growth, that being John F. Kennedy. So, over the weekend, I started 
reading up about Douglas Dillon, who was the Treasury Secretary under 
John F. Kennedy. He put into place bold, robust, dynamic economic 
growth policies through tax cuts that took the top rate from 90 to 70 
percent and had a capital gains reduction. And it unleashed tremendous 
growth, a surge in the flow of revenues in the Federal Treasury.
  Similarly, I was very honored to be elected to this Congress, as my 
friend said correctly, a long, long time ago. 1980 is when I was 
privileged to be elected, the same day that Ronald Reagan was elected 
to be President. And Ronald Reagan inherited a tremendous--a very, very 
difficult economic time. The unemployment rate was very, very high. 
Interest rates were approaching 20 percent. We had inflation very high. 
It was a very, very, very challenging time economically for our 
country.
  And what was it that was put into place, I should say not just a few 
weeks after he became President, as has been the case here, but after 6 
months of going through a very deliberative process? We put into place 
in May of 1981 what was known as the Gramm-Latta budget package that 
reduced the rate of spending by the Federal Government by 17 percent. 
And in August of 1981, we put into place the Conable-Hance tax package, 
which reduced marginal rates and doubled the flow of revenues to the 
Federal Treasury through the decade of the 1980s.

                              {time}  2000

  Yes, there was a great deal of spending--a lot of spending on 
defense, a lot of other spending that took place from this Congress--
but we still saw that surge in the flow of revenues to the Federal 
Treasury.
  So we have the ideological bags of the past. Secretary Morgenthau 
referred to the fact that they spent more money than they ever spent 
before, and yet they had an unemployment rate that was as high as when 
they started. And we had John F. Kennedy and Ronald Reagan, who has 
these bold, dynamic, robust marginal rate reduction packages that 
created a surge and flow of revenues to the Treasury by reducing 
marginal tax rates. That's what we should be doing today. And I think 
that using things like our fair and simple tax plan as a model for that 
would help us deal with the challenges that we have.
  I thank my friend for the hard work that he has put in on a wide 
range of projects. I'm pleased to sit with him in the leadership of 
this great institution. We meet regularly and sit next to each other in 
those meetings, and he always has a very, very insightful and 
thoughtful proposal on a regular basis. And I believe that it really 
stems from what I began talking about, and that is that Texas common 
sense. So I thank my friend for yielding.
  Mr. CARTER. And I thank you for your comments, my friend from 
California. Mr. Dreier, as we have well seen, is very knowledgeable in 
the concepts of this House and how it operates, and the history of this 
House and what the history tells us.
  I want to thank both my colleagues for coming out here today. And, 
quite frankly, we have been asked by and challenged by the 
administration to put forth ideas. I would hope that the White House is 
monitoring what was said by both of my colleagues here tonight as some 
ideas that ought to be looked at and considered. We really do want to 
work with the administration and share ideas. And we would really like 
to have a world where nothing is off base, because obviously the two 
parties disagree on a lot of policy, but a free flow of information and 
ideas is what the American people expect us to do. And I think we heard 
two gentlemen tonight who put forth different, but similar, ideas as to 
how to simplify our lives and how to turn things around.
  To me, bipartisan is not, ``here's our bill, if you vote for it, 
we're bipartisan.'' Bipartisan is, we sit down and we discuss the 
issues, sometimes one at a time. And when we conclude, we hear both 
sides, and then people are willing to give and take to make it work.
  You know, if the President of the United States told us when he was 
elected that he was vehemently opposed to earmarks, that he was going 
to do everything he could to get rid of earmarks, and if he finds 
spending in a bill that everyone would acknowledge is an earmark and he 
chooses to veto that bill because it goes against what he told the 
American people his principles were and the Republicans help

[[Page 5787]]

support that veto because they agree with the principles that he put 
forward, that is certainly bipartisanship--and that opportunity may 
actually arise over the Omnibus bill that we passed today with the 
9,000 some odd earmarks that are contained therein. So that's 
bipartisanship. Listening to what Mr. Dreier and Mr. Burgess have to 
say and not dismissing it out of hand, that's bipartisanship.
  And so, that's kind of an aside from what I'm here to talk about 
tonight. But I'm really grateful for my colleagues to come in here and 
put these ideas out on the table because I think they're good ideas. 
And I don't necessarily agree completely with every one of them, but 
I'm certainly willing to listen. And I think our President has told us 
he is willing to listen. And I take him at his word. I think he is, and 
I hope he will. And I feel good about it; I think he will.
  Now, I've talked about ethical issues tonight, I'm going to talk 
about them some more because there's a lot more that we can talk about. 
And they are issues that are important. And I'm trying to be friendly 
about it, but make no mistake, I have spent 26 years of my life making 
sure that the laws of my State are abided by. And people who violate 
those laws, after all of their rights are protected under the 
Constitution, if they are convicted of doing something wrong, I 
honestly believe they should be punished. And I've been involved in 
that also.
  So, although I try to be friendly about this discussion--and I will 
continue to try to be friendly because the American people are tired of 
mean spiritedness--I want everyone to understand that, from my personal 
belief, everyone is entitled to their day in court, everyone is 
entitled to be presumed innocent. I'm not making accusations that you 
should consider convictions. But should there be a conviction, I 
believe that this body is not above the law, and we should keep it that 
way. And I will pledge myself to do so. And I think every Member of 
this body would feel the same way. And that's why these little ethical 
slips give the impression that somebody might be above the law.
  We are a nation of laws, we are not a nation of men. And being a 
nation of laws, we expect everyone, no matter what their status, to 
abide by those laws. This body is a body of rules, and we expect 
Members of this body to abide by those rules; and the failure to abide 
has consequences.
  So even though I'm trying to be as friendly as I can on these issues, 
I want everybody to understand that those are principles that this 
country stands on and that this body stands on, and I intend to make 
sure that those principles stand firm. I think my colleagues across the 
board, both sides of the aisle, in their heart of hearts will agree 
with me. And I think it was a right policy when a Member, even though a 
close, personal friend of mine, was accused of something, that under 
our rules he had to step down until his issues were resolved. And I 
think it's unfortunate that the Democrats, under their rules, don't 
take the same position; that if a serious accusation of misbehavior or 
breaking the law is raised against a Member in the form of an 
indictment, that that person has to step down from positions of 
leadership. Both sides should have the same rules. Unfortunately, we 
don't have it that way.
  Still, I defend every person's right to be presumed innocent until 
proven guilty beyond a reasonable doubt. And I will stand for any 
Member of this House, no matter what his party affiliation, to preserve 
that right on his behalf because I have preserved that right on behalf 
of thousands of people who were convicted by a jury of their peers of 
heinous crimes, and yet that was a right guaranteed by our 
Constitution. It's a right guaranteed to our Members. So make no 
mistake, I make no accusations of guilt because that's not appropriate 
under our system, but I do raise questions of ethical lapses, and I 
will continue to do so.
  I thank the Speaker for allowing me to speak here tonight. I'm going 
to yield back my time now. And I want to thank my colleagues who joined 
me here tonight. And we will be doing some more of this, and I hope 
other colleagues will join us and give us their ideas.

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