Floor Statement to Open Debate on the Tax RELIEF Act
Mr. President, we will start consideration right now, and there will be up to 20 hours ofdebate and action on the bill that is before us under the reconciliation provisions of the Budget Acton what will be the largest tax cut that has been given to the American people in the past 20 years.In this process, we are going to take a considerable and substantial sting out of the federal tax bite.This is the third-largest tax reduction in the last 50 years, to put it in some other perspective as well.Before I get to the issues that are before us, I will say a little bit about the process of puttingthis legislation together.
I know we are all going to be thinking about what kind of tax bill we have, how much taxesare going to be reduced, the fairness of it all, and the equity of it all. But I would like to have mycolleagues spend a little bit of time thinking in terms of how we got here.
First of all, almost 12 months ago, the President of the United States gave a speech sayingthat one of the foundations of his campaign was going to be a very substantial tax reduction becausetaxes have reached the highest point they have ever been in the peacetime history of the UnitedStates.
He campaigned on that and did not back off one iota when pundits made fun of it, wheneconomists maybe took exception to it. It was very well thought out and intellectually honest.
He pursued full steam ahead through the highs and lows of the campaign -- through timeswhen you might be depressed with the campaign going against you, through times when you wereon a high in the campaign, and right through that campaign -- through the election, through theperiod of time when there was some sort of question as to who might be the next President becauseof what was going on in Florida and the counting of ballots, and from the time he was announcedthe winner to the time he gave his inaugural address on the day of swearing in.
So we are here today because we have a President who wants to make a difference, adifference for the taxpayers in this country, a difference for the economic advancement of our people,the creation of jobs, and the encouragement of investment.
Without this presidential leadership, we would have tax bills before the Congress this yearbut they would not be as substantial as what we now have before us. For the President of the UnitedStates, it is not substantial enough because, as we know, he proposed almost 20, 25 percent morethan we are dealing with. Here again, the President must accept the will of the people expressedthrough the Congress. There was a compromise, a necessary bipartisan compromise on a levelsomewhat less than what the President proposed, but the $1.35 trillion we are dealing with in thisbill.
The bill we have before us is a product of the process: The presidential election, theextremely important leadership of a President who is committed to principle and performing in officewhat he said he would do during the campaign -- and that is a rarity in politics, but this President isdoing it -- and the legislative process in the Congress.
Compromise is always necessary in any Congress, whether it is overwhelmingly controlledby one party or the other party or whether it is evenly divided, as it is now in the Senate – absolutelyevenly divided, 50 Democrats/50 Republicans -- or in an almost evenly divided House ofRepresentatives with the Republicans being the clear majority.
Process is pretty important. I want people to think of this process as we debate verycontroversial amendments over the next two days. The Senate Finance Committee is kind of amicrocosm of the entire Senate, and perhaps people will think of the hard work Senator Baucus andI, and my colleagues on the Republican side and almost half of the Democrats, have put into craftingthis legislation. It didn't happen in one 10-hour meeting on Tuesday, when we considered all theamendments that were in dispute, about the product Senator Baucus and I put together. It didn'thappen in 10 hours. It happened over a long period, starting about mid-January. I will refer to someof the substantial things that happened to get us where we are today from where we were lastJanuary.
That is not to detract from what I said about the President of the United States contributinggreatly to where we are today as well, maybe not in the specifics of the bill but the overall questions-- are taxes too high, and should they be reduced -- the President winning on the process that theyshould be reduced, and now going through the process of actually giving the American working menand women the tax relief they deserve. People will get tired of my saying it, but this is a bipartisantax bill. My friend Senator Max Baucus, ranking Democrat on the Finance Committee, worked withme to put together a package of tax cuts that would receive solid support on both sides of the aisle.We knew this would not be easy, getting the people's business done, unless it was a bipartisanproduct.
That, again, is a reality of a 50/50 Senate. This bill came together after the Senator fromMontana and I heard from our respective caucus members about their priorities.
You don't put together the biggest tax cut in two decades without considering all points ofview. As we start this debate now, it is not just Senator Baucus and Senator Grassley who are at thetable -- where maybe that was the situation from time to time over the last several months -- everySenator, all 100, is at the table as we now consider the product of the Finance Committee and itsbipartisan cooperation. That is the nature of the Senate.
We talked to our members about their priorities, and then we put this product together. Twodays ago, our efforts yielded the results we hoped for when we started out four months ago. This billwas approved by the Senate Finance Committee by a 14-6 margin, a clear demonstration of solidbipartisan support.
I hope the work that has gone into this product over the last four months is respected. Eventhough Members might not agree with it, could they do better? Each time people are down herecasting a vote -- and they are going to vote yes or no -- I ask my colleagues, particularly on theRepublican side, to think in terms not that they like everything that is in here but couldthey have done better. If they can't do better, I hope they will show respect for the bipartisanapproach we used.
More importantly, I hope they will respect the transparency that has been the hallmark of theFinance Committee's work throughout the first four months and the communication that has goneinto this by individual Members communicating with others to say, "What do you think about taxlegislation," to get specific points of view from specific Members and, most importantly, the peopleon this committee as well as others outside the committee.
It was not easy to arrive at a final agreement. Among the Finance Committee's 20 members,there were many opinions on what is important. In the end, no one got everything he or she wanted,including this chairman. Most of us got something we can support. We got a bill that will reducetaxes, will bring about tax relief for American working men and women in a meaningful way, in away that taxpayers are going to notice and notice soon -- by this summer -- and they then will seeit in fatter wallets.
I am very pleased Senator Baucus and I and other members of the Senate Finance Committeehave been able to put together this truly bipartisan package. It is a testament to the FinanceCommittee that within one week after the budget resolution was passed, we now are on the Senatefloor to vote on comprehensive tax relief for everyone who pays income taxes in America. I hopethe Senate will express -- not to me, not to Senator Baucus, but to other members of the committee --the spirit of cooperation that was evident throughout that process Tuesday. I want Members to knowthat I am proud of the Finance Committee in this process as well as the substance of this legislation.Now I will turn to what is in the bill. The heart of the bill is across-the-board tax cuts inindividual income tax rates. Again, a little bit about the process: Senator Baucus and I have met atleast weekly for a long period of time since January. I met with individual members of thecommittee in their office -- not in my office, in their offices -- throughout the month of January andFebruary, both Republicans and Democrats. I have had my staff meet with other staff on an ongoingbasis, but very intensively, during and since the Easter break.
I have also had an opportunity to visit with members outside of my caucus and also Democratmembers outside of the committee as well. And you always wonder when you go down this process-- it takes over three or four months -- whether it is time well spent. I wondered, as I would go tothe next meeting, whether it was really worth my time.
Let me say, in looking back to all the time I have put in on this, and I think of mybackground as a farmer; you put the seed in the ground, as we are doing in Iowa, to grow the biggestcorn crop that any state produces -- because we are No. 1 -- and for the first period of time beforeit emerges above the ground, three-fourths of that growth that first month is below the ground. Youdon't see it unless you dig in there with your fingers and inspect it.
And so Senator Baucus and I sowed that seed in January and that seed sprouted. I know nowit sprouted; I didn't know then that it would sprout. It sprouted for those days between the middleof January and last Friday at 1:30, when we finally had an agreement.
So I conclude that whatever time I spent on this -- and I am going to conclude for SenatorBaucus, and maybe I should not do that -- and whatever time he spent on that process was time wellspent. Even though we are going to have honest disagreements, I hope we can be cordial and politein this process of debate. I will have to remind myself of that from time to time as well.
Now to the product. The heart of this bill, as I said, is across-the-board tax cuts of individualincome tax rates. This bill creates a new 10-percent rate that will apply retroactively to the beginningof this year. This new low rate will apply to income that is currently taxed at a 15-percent rate. Sopeople who are hit first by the 15-percent rate now can already count going back to January 1 thisyear, that on their first dollars made they are not going to pay 15 percent; they are going to pay 10percent. It will give immediate tax cuts to millions of American taxpayers and provide an immediatestimulus to the economy.
For married persons, the upper end of the 15-percent rate bracket will be expanded to includeincome currently taxed at the 28-percent rate. So for those people being taxed at 28 percent, theyare going to see more of their income taxed at the 15-percent rate. The current 28-percent rate willdrop to 25 percent. The current 31-percent rate will fall to 28 percent. The existing 36-percent and39.6-percent rates will be lowered to 33 and 36, respectively. This legislation also includesimmediate death tax relief and its eventual repeal.
This bill expands the child credit and earned-income credit, enhances pension protection andincentives to save, and creates over $30 billion in educational incentives -- full deductibility ofinterest on student loans, deductibility on college tuition, and on educational savings accounts. Itprovides marriage penalty relief and relief from the individual alternative minimum tax.
Everyone in America will share in this tax cut. It is across-the-board relief for those who payincome taxes. That means that this tax cut will flow to every wallet on every Main Street inAmerica. Over 100 million individuals and families will have their tax relief; 14 million elderlyindividuals will receive tax reduction, resulting in 12 million paying less tax on Social Securitybenefits; over 40 million couples will benefit from the marriage penalty relief; 3 million couples willno longer itemize deductions as a result of the standard deduction increase; 9 million individuals andfamilies will benefit from the increased individual retirement account contribution limits from$2,000 to $5,000; 30 million families will benefit from the increased child credit.
This is a tax bill for everyone, regardless of income level, of family, your age, yourmarital status. I will give you a few examples of what we expect next year.
A married couple with two children and $15,000 in income will pay no income tax becausewe expanded the earned-income credit and per-child credit. This family will receive an additional$1,000 from the Government. A married couple with two children and a $90,000 income willreceive an additional tax reduction of $1,050. A couple, age 65, married and filing jointly, with a$30,000 income, will have a $600 reduction. A single mom with one child and a $25,000 incomewill receive a tax cut of $400.
Keep in mind, these examples are for the year 2002, which is just the beginning of these taxsavings. The tax rate cuts, child credits, and other benefits will greatly increase as they are phasedin over the next several years.
I know most of us in this Senate also have personal stories about what this tax relief forworking men and women will do for those same people back home. I will tell you about some ofthe people in Iowa and what this tax cut will mean for them.
Maurice Colby of Vinton, Iowa, retired after processing waste water for the Navy for 28years. He works part time for his neighbor, a family farmer, during planting season. I will bet heworks there during harvesting season as well. He does that to earn extra money.
As retirees, Mr. Colby and his wife worry about expenses. Their total tax bite is tough,especially when heating fuel and high gasoline prices are considered. The Colbys usually take adriving vacation most summers, but not this year. Mr. Colby said this: "It's time for relief. It hasbeen a long time."
Ronald Harless, 76, and his wife Jean, 72, of West Des Moines, are retirees on a fixedincome. Mr. Harless worked as a printer making telephone books. Mrs. Harless was an officeworker. Mr. Harless says he lived frugally and saved his money for retirement. Despite a series ofheart surgeries, he has never used the Veterans' Administration's health services, even though he isa Navy veteran who landed at Normandy during World War II.
Mr. Harless says he paid taxes all of his life, has never been a drain on the taxpayers andwants to keep it that way. Mr. Harless of West Des Moines, Iowa, wants to support himself and stayout of the taxpayer-funded nursing homes as long as he can. However, he says he and his wife are,in their words, "barely getting along" on their retirement income and, hence, would welcome the taxprovisions of this bill to give them some needed relief.
Joseph McBride, Jr., of Fort Dodge, Iowa, works in sales and marketing for a food servicecompany. His wife is a registered nurse. They have four children, ages 14, 12, 10, and 8. Mr.McBride says he would welcome a tax cut because he would like to have more money in his pocketto secure his children's future. He is very interested in saving money for his children's college tuitionand will see that increase from $500 up to $2,000. The tax cut will be very beneficial.He also wants to put a little extra money in the local economy. Fort Dodge's economy is notas good as he would like, and he wants to do his part to help it get better.
Another concern is energy costs. Mr. McBride in Fort Dodge says he remembers therecession and gas shortages during the Presidency of Mr. Carter. Mr. McBride said he paid moremoney in taxes last year than he ever has. Mr. McBride is right; he did pay more taxes last year thanhe ever has. That is because the Federal Government's collection of individual income taxes is nowat its highest level in history.
As I have said many times, today's tax surplus in our Federal Treasury is caused by excesscollections of individual taxes.
During the height of World War II, the tax collection from individuals was 9.4 percent ofgross domestic product. Today income tax collection from individuals is an astounding 10.2 percentof GDP, nearly a full percentage point above World War II. More importantly, not just a little bitabove World War II, but we have seen a 50-percent increase in individual tax collections in the last6 years, from about just a little over 7 percent of gross national product to 10.2 percent now.
I might have a chart during the debate, but I can show where the revenues into the Treasuryfrom the estate tax have been about level for the last decade. Corporate taxes have been level forthe last decade. Taxes from fees and services have been about level. But we see a great spike in theindividual income taxes coming into the Federal Treasury in the last six or seven years.
It is beyond belief in a time of unprecedented peace and prosperity that individual taxcollections exceed the level required to defend the entire world, which is what the United States did56 years ago. That is why we must move decisively to give working men and women this tax relief.We must not keep the money in Washington where there is a tendency for it to burn a hole in thepockets of Members of Congress to a point where they have to spend it.
This will help in several ways. It will not build up Government spending to a level that isunsustainable so that if we ever go into a recession, income goes down but spending doesnot go down, and then we again have a deficit.
Also, since the Federal Government does not create wealth -- it only provides an environmentfor working men and women of America to create wealth -- we move the money from Washingtonback to the individual taxpayers of America, and there it is going to turn over many more times,because of the freedom of the marketplace, than it will if it is left in the Federal Treasury. There isa political decision of what ought to be done with it. There is a lot of efficiency with a politicaldecision, but it does not have the potential for economic growth that it will have if my constituentsin Iowa spend it and/or invest it.
Too often Members of Congress think this is not the people's money; this is the Government'smoney. It is the taxpayers' money, and Washington has simply collected too much of it, particularlytoo much from the income tax. There has been a 50-percent increase of gross national product overthe last six years. So we are going to return this money. It is even wrong for me to say that becausethere is some implication that it is my money. We are going to let the American people keep moreof the money they earn by passing this tax bill.
Over the next few days, we are going to hear a lot of talk about population demographics andabout how this tax relief for American men and women is going to compromise our nationalpriorities. Let me set the record straight at the very beginning. This tax relief for American workingmen and women in no way endangers our national priorities. The President has said that. I havesaid it. It is a fact. A majority of the Congress said that when they adopted our budget last week.
We are here because a majority of the Congress, and a bipartisan majority of the Congress, said weought to put more money in the pockets of working men and women than into the Federal Treasury.The budget resolution did that. It did it through a blueprint for how the Government willfund its priorities. That blueprint provides record levels of funding for education, prescriptiondrugs, and defense. I want to make very clear that we pay down every dollar that is possible to paydown on the national debt over the 10 years of this budget resolution.
That blueprint also says we have more than enough surplus to enact the tax relief for workingmen and women that is before us in this bill today. In fact, the bill before us refunds only 24 centsof each dollar of projected surplus.
How many people who are listening now or who will read this in the paper are going to say:How come you can't do better than that? The only answer I can give them is, it is part of the processof compromise by which we work in a bipartisan way to do the people's business.
Twenty-four cents out of each dollar is hardly what I would call a risky tax measure. We aregoing to hear this from a lot of our colleagues: Risky, risky. We are going to hear people say thatthe projections in the budget for the next 10 years are so uncertain that we should not be giving a taxcut. This caution by my colleagues is perfectly legitimate. We ought to always be cautious onalmost every public policy decision we make. But check with those same Members to see that whenthey want to spend more money, do they worry about whether the budget projections are accuratefor the next 10 years? No. It is only when we want to let the American people keep their hard-earnedmoney that this issue arises.
For those who want to use the word "risky," those who want to say the projections couldchange and want us to be cautious, the only thing I ask -- it is perfectly legitimate for them to saythat, but as they are talking about a new spending program that is going to spend out over the next10 years, I encourage that same caution before people vote on that issue.
This is a responsible tax cut. We are at the highest level of individual taxation in history.It is a time to end that. Let's also get another thing straight. This bill in no way touches the SocialSecurity or Medicare trust fund. This is a bipartisan tax bill that represents the best thinking fromboth sides of the aisle. It is a victory for the process of the Senate. The problem we now face is thatsome people around here preach bipartisanship but then turn around and attack the bipartisancompromise reflected in this bill. They will work to obstruct this bill's enactment, and they willdemean the great efforts and political risks that Republicans and Democrats alike take to reach thisbipartisan agreement. I imagine we are going to see plenty of this sort of thing on the Senate floorover the next few days. I don't think it will work because today we are about doing the President'sbusiness. This bill only contains tax relief for individuals. It is not larded with favors for specialinterests. You cannot draft bipartisan legislation such as that very easily. I think there is some purityof cause and purity, consequently, of content.
This bill before the Senate is a historic opportunity to prove we can join together, on abipartisan basis, as common Senators, with a common purpose, to relieve a heavy burden from thepeople who sent us here. The Finance Committee has shown this can be done. Our committee hasdone what the Constitution and the rules of the Senate require. We have led the way. I am veryproud of our Members and their efforts.
I urge all Senators to be vigilant in our deliberations, circumspect in rhetoric. The reliefordered by this bill is too needed by too many to be demagogued by the few. America is watching.America is waiting. What America is going to see over the next 3 or 4 days in this Senate is aproduct of a process that started about the second or third week of January when the Senator fromMontana, then for a short period of time chairman of this committee, as the Democrats controlledthis body for 17 days back then, said: I would like to meet with you and talk with you about thefunctioning of the committee. That was an hour and a half discussion. But some important fewwords were said by Senator Baucus on that day, which were that we could have a bipartisan tax billif we worked at it. I thank Senator Baucus for that suggestion. I thank Senator Baucus for spendingso many hours with me since then to make it happen. Most importantly, I thank him for hishandshake at 1:30 last Friday when we had an agreement. I thank the Senator.
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