Bill Bradley

Mr. BRADLEY

Mr. BRADLEY. Mr. President, I would like to preface my remarks by commending Senator Domenici for his efforts to help tame the Federal Government's runaway deficits. As you know, Mr. President, under 12 years of Republican administrations, the Federal debt quintupled. In 1980, when Republicans took over both the White House and the Senate, the Federal debt stood at about $800 billion. After 12 years of Republican leadership, the debt stood at roughly $4 trillion. If it were not for the almost $200 billion in interest that we pay each and every year on the debt that was amassed under successive Republican administrations, we would already have a balanced budget. In 1993, in order to begin to tackle the problems posed by this mountain of debt, Congress passed the largest deficit reduction passage in history. We did this without a single Republican joining in the effort. Time and time again, I have stated that we cannot gain control over the Government's fiscal crisis with gimmicks. No amendment to the Constitution will ever balance the budget. No rosy projections about economic [[Page S7466]] growth and supply-side impacts will balance the budget. Only strong and consistent leadership will balance the budget. If we want to restore the Federal Government to fiscal sanity, we cannot abrogate our leadership responsibilities or refuse to join the debate for fear of the political consequences of tough decisions. Instead, we must act decisively to continue to move toward a balanced budget. We could adopt a ``scorched earth'' approach to balancing the budget, slashing and burning everything which gets in our way. But what good have we done for our children if we reduce their debt burden but deny them a decent education and adequate health care? How much have we improved our workers' ability to compete in the world economy if we deny them the funding necessary to improve their skills? Presenting numbers which add up to a balanced budget is one thing; deciding how to reach those numbers is an altogether different task. It is in deciding how to reach those numbers--deciding what our priorities really are--that we reveal who we are as individuals and what we stand for as a nation. So, Mr. President, while I am pleased that the proposed budget resolution moves us toward a balanced budget, I am concerned about the means used to achieve this end. Mr. President, the Republicans' choices distort the principle of shared sacrifice. They have balanced the budget on the backs of children, students, families, and seniors. They have chosen to cut programs for those most in need in our society, while asking little or nothing of large corporations and the wealthy. Mr. President, no matter how the Republicans phrase their assault on Medicare, it's just that--an assault. Their cuts will force millions of seniors to suffer drastically reduced benefits, a much lower quality of care, and significantly higher medical bills. We desperately need Medicare reform, but we cannot simply let seniors free-fall until these reforms take place. The Republicans' Medicare cuts mean that, on average, seniors will have to find an additional $3,447 to pay for their health care over the next 7 years. For the majority of seniors, this will be no easy task. In 1992, the median income of seniors in this country was only about $17,000 a year, and about a quarter of elderly households had incomes under $10,000. These seniors already spend more than $1 of every $5 on medical care. For the millions of seniors across the country who live on fixed incomes, finding an additional $3,447 will mean sacrificing something else which is important to them. It has been stated that each month millions of American seniors are forced to choose between food and necessary medication. I can't help wondering how many more will be faced with this horrible choice once the proposed cuts are put into place. In addition to higher costs, seniors are likely to have fewer choices. In many cases, financial limitations will leave them with no choice but to join a managed care plan. Doctors, hospitals, and others providers are all likely to face even lower reimbursement rates. As a result, many health care providers may no longer be able to afford to accept Medicare patients. Those that can will be forced to shift even more costs onto their privately insured patients, creating a hidden tax on employers and individuals. Mr. President, that's just Medicare. This budget proposal also cuts Medicaid by $175 billion. Again, I think it is important that we all understand exactly who these cuts will affect. Medicaid now insures about one of every four American children. It helps to pay for roughly one of every three births in this country. It also provides aid to over three-fifths of the people who need long-term care services, either in nursing homes or at home. Most elderly recipients of Medicaid are people who spent their whole lives as members of the middle class. But when faced with nursing home costs averaging almost $40,000 a year, it doesn't take long for their entire life's savings to disappear. Once they reach this point, these people have nowhere else to turn. Thankfully, Medicaid has been there to provide a safety net for them. This resolution caps Federal Medicaid spending at an average annual growth rate of 5 percent. We all know that Medicaid spending is expected to grow faster than that in the future. By setting a 5-percent cap, the Federal Government is essentially saying to the States: ``It's all your problem now. We can't figure out how to deal with the growing number of uninsured and the rising costs of health care, so you do it. We wash our hands of any responsibility to help you deal with these critical needs.'' But, if we are honest with ourselves, we must admit that States can't cope with these problems alone. So, Mr. President, let me tell you what is expected to happen once these proposed Medicaid cuts go into effect. By the year 2002, the number of uninsured children in America is predicted to rise by more than 6 million. By that same year, there will be an additional 3 million persons who need, but will not receive assistance with, the costs of long-term care. These individuals will not be able to obtain nursing home care, despite the fact that they will need more care than their family and friends will be able to provide. For those individuals who will be able to enter and remain in nursing homes the picture will not be much brighter. Medicaid now pays significantly less than the private sector for long-term care. When Medicaid cuts these payments even further--as it will have to do in response to the budget cuts-- nursing homes will have to do even more with less. This means that staff will be stretched even thinner, and each resident will receive even less personal attention. The proposed cuts will mean that the quality of life of nursing home residents will deteriorate even further. There is no doubt that Medicare and Medicaid have taken the brunt of the proposed cuts. But they are not the only examples of shortsighted cuts contained in this budget proposal. Consider the cuts to the earned income tax credit and education funding. The EITC provides tax relief to lower income working families. By proposing to cut the EITC, this budget deals a strong blow to the working families. While I strongly believe that sacrifice is needed to balance the budget, I have to ask: Is it fair to ask working families to make a sacrifice of this magnitude at the same time the Republican budget proposals contemplate tax cuts for corporations and the wealthiest Americans? At the same time, this budget significantly cuts funding for student loans. We all recognize that we must balance the budget so that our citizens will be able to compete successfully in the next century. While I agree with the need to prepare for increased global competition, it is difficult to understand how we will become more competitive without the skills and knowledge that an education provides. At the same time that this budget makes drastic cuts in critical programs, it completely ignores the billions of dollars we spend each year on special-interest tax loopholes. The tax code provides special exceptions that will total over $480 billion in 1996, more than double the entire Federal deficit and nearly one-quarter of total Federal spending. Because many of these tax code provisions single out narrow subclasses for benefit, the rest of us must pay more in taxes. Balancing the budget will not be easy. It will require significant sacrifices. However, how can we argue that we are fairly balancing the budget when we raise taxes on working families and make dramatic cuts in Medicare, Medicaid, and education, yet continue to spend billions each year in tax pork? Mr. President, to help correct many of the problems contained in the Republican budget proposal, I have offered a substitute balanced budget proposal. In fact, under my proposal, the Federal Government would have a significant budget surplus by the year 2002. The main difference between the proposals the Republicans and I have offered is in the priorities that they set. I believe that our Nation's future success will depend on the choices we make today. To ensure this success, I believe that our priorities must be placed on our children. The most important step we can take to build a better life for our children will be to balance the budget, which my proposal would do. However, in our efforts to put the budget in balance over the long run, we cannot ignore the needs of our [[Page S7467]] children today. Therefore, my proposal would fully fund the education and child nutrition programs cut under the Republican proposal. At the same time we are attempting to create a better future for our children, we cannot ignore the legitimate needs of older citizens today. To ensure that the elderly and the least well off in our society are not forced to bear the bulk of the sacrifices that balancing the budget will require, my proposal restores $100 billion in Medicare funding and replaces $75 billion in Medicaid cuts. I would also repeal the Republican tax increase on those families that are trying to work their way out of poverty. Although we need to balance the Federal budget, it would be short-sighted to do so on the backs of America's working and middle-class families. In the face of declining real wages and Republican proposals to cut important aid programs, more and more American families are facing increasingly tough times. These are working families who need every penny of the wages they earn just to make ends meet. We simply should not tax these families into poverty by cutting the EITC. My budget would pay for these changes by reducing defense spending by just $5 billion below the current baseline, cutting $15 billion in wasteful, pork-barrel spending, eliminating $46 billion in unnecessary agriculture subsidies, and raising the tobacco tax by $1 per pack to restore much of the funds lost in the Republican Medicare cuts. I would also close $197 billion in special-interest tax loopholes. My budget explicitly provides that individual tax rates will not be raised and that the deductions for mortgage interest, charitable contributions, and State and local taxes will not be affected. Instead, these savings will be realized by simply slowing the rate of growth in special-interest loopholes enjoyed by corporations and the very wealthy. Left unchanged, between now and the year 2002, the Federal Government will spend roughly $4 trillion on tax subsidies; my proposal would affect less than 5 percent of this amount. Rather than reducing the deficit by singling out children, working families, and the elderly for especially harsh treatment, I would offset a portion of these potential cuts by setting specific targets for eliminating tax loopholes. I believe that this approach would allow us to balance the needs of the many with the desires of the few. Mr. President, I expect that some will attempt to mischaracterize my efforts to close special interest tax loopholes as a tax increase. If there was a special tax credit for Members of Congress, and we closed that loophole, no one would claim that we were raising taxes. However, when we attempt to close tax loopholes for the oil and gas industry, the agricultural industry, or other industries, we hear the champions of these special interests claim that we are trying to raise taxes. Tax loopholes give some individuals and corporations a special exception from the rules that oblige everyone to share in the responsibility of our national defense and protecting the young, the aged, and the infirm. The only way to let everyone keep more of what they have earned is to minimize these tax expenditures so that we can reduce the burden of the national debt and bring down tax rates fairly, for everyone. Finally, if, by balancing the budget, we realize additional savings, my budget provides that these savings may be used to provide a middle- class tax cut. This tax cut would not be available until after we have achieved the savings necessary to put us on a path toward a balanced budget. It is my strongest hope that we will have these savings in order to provide much needed tax relief to working families in New Jersey and across the country. Frankly, Mr. President, I do not expect my budget proposal to pass. By asking the Defense Department, the tobacco industry, agribusiness, and other special interests to share in the burdens of balancing the budget, my proposal takes a small bite out of a number of sacred cows. As a result, I anticipate that my budget proposal will raise a good deal of organized opposition. Unfortunately, unlike defense, tobacco, and the wealthy, most Americans cannot afford high-paid lobbyists to protect their interests. So, in all likelihood, my budget proposal will be defeated, average Americans will be left bearing the burden of balancing the budget, and special interests will continue to enjoy all of their same benefits at the expense of the rest of us. Mr. President, fundamentally, my budget proposal is about setting priorities. There's no serious disagreement between Democrats and Republicans on the need to balance the budget. In fact, my proposal would reduce the deficit by even more than the Republican proposal. However, the real question that my proposal raises is how we should balance the budget. Either we can balance the budget by raising taxes on working families and cutting needed assistance for children and the elderly--as the Republican proposal would do--or we can spread the burden for balancing the budget more fairly--as my proposal would do. I am very pleased that our Republican colleagues have chosen to join the fight to eliminate budget deficits. Again, I commend Senator Domenici for introducing a budget resolution which seeks to achieve that goal. At the same time, however, I have serious concerns about many of the specific proposals contained in this budget. I am deeply concerned for our Nation's children, families, and seniors. And, I am concerned that many of the cuts in the Republican budget proposal are necessary because of a refusal to simply slow the rate of growth in special interest loopholes. Mr. President, America needs a balanced budget. But it deserves a much better balanced budget than that proposed by our Republican colleagues. The budget I have proposed will balance the budget without losing sight of the obligations we have as a nation to our children, families, and seniors.

Mr. BRADLEY

Mr. BRADLEY. Mr. President, I rise in support of the Bumpers-Bradley amendment to strike language that would allow us to count the sale of public assets--parks, powerplants, buildings, even oil in national storage facilities--as deficit reduction. This bill language will open the floodgates for proposals to unload valuable Federal assets in return for the fast buck. Many of these proposals, in fact, will lead to reduced revenues in the future, and higher deficits. Only by a reliance on today's political myopia--a simpleminded scoring of sales revenue within the limited budget window--will many of these proposals withstand the straight face test. Only by railroading these proposals through the Senate, under the very restrictive and controlled conditions of budget reconciliation, would many of these proposals ever have a chance of becoming law. I have not seen the Budget Committee's latest scoring of these asset sales receipts. But I note for colleagues' benefit that the analysis that I have shows an interesting point. In the short term, the committee's proposals produce deficit reduction. In the longer term, however, and certainly by the year 2002, these savings disappear. In fact, selling these assets appears to reduce future revenues sufficiently that the actual effect by the year 2002 is that the deficit increases. Asset sales are short-term and short-sighted. It would be helpful to review why we produce these budget resolutions in the first place. The reason is not to balance the budget. If it was, I'm sure we could create some appropriate fiction which showed budgetary balance by definition. But that's not what we were supposed to be doing here. We're supposed to be systematic. We're supposed to be honest. We're supposed to be consistent. We're supposed to address the substantive, structural issues which keep the Federal Government spending--year in, year out-- more money than it takes in. So what do we have here, buried deep in this bill? We have a trick, a gimmick. We cut spending, by redefining what a cut is. Now, for the first time since we gave this budget process teeth--with the passage of Gramm-Rudman--we can sell off national property--national assets--and include the proceeds as deficit reduction. Mr. President, because of these cynically clever changes, we can now propose--for example--to sell nearly a billion dollars' worth of oil from the strategic petroleum, and chalk that up to deficit reduction. Notwithstanding the fact that both Democratic and Republican administrations have endorsed expanding the SPR, notwithstanding the fact that hardly a week goes by without some oil State Senator coming to the floor to talk about rising oil imports and the threats to national security, notwithstanding the fact that at any time we could liquidate this oil inventory for cash, how can we seriously allege that this particular sale has anything to do with positive public policy, with putting our fiscal house in order, with creating a better future for our children? Why stop at a billion dollars of SPR oil? Sell it all. And credit the $10 billion raised to balancing the budget or protecting our children's future. This asset sale language will lead to all sorts of questionable proposals. It may make sense to sell the assets of the Tennessee Valley Authority, or Bonneville Power, or the hydrodams in [[Page S7305]] the West, or some small park in Louisiana or Texas or Virginia. But these arguments need to have a broader basis than the most simpleminded budget concerns. In fact, I doubt that any business accountant or economist would agree with the underlying budgetary premise--that liquidating public assets adds to public wealth. If I sell my stock portfolio and put the returns in my checking account, do I become wealthier? Have I protected my children? It may make sense to make sell my stocks, but the transaction itself produces no wealth--except for my broker. Consider the Arctic National Wildlife Refuge. We can lease the refuge to oil developers and sell any oil that might be underground to them. We will get some money. The companies will get the rights to oil. If they find oil, probably it will be shipped to the Pacific rim and burned completely. Have we done a lot for our kids? You must be joking. At best, we can claim for our children a neutral financial transaction. But what about the larger issues? If we go ahead with the development of ANWR, we damage probably irrevocably a unique, world- class ecosystem. We consume utterly a non-renewable resource. We get some cash. If we forgo the drilling of ANWR, we preserve intact this ecosystem. We preserve intact any oil underground and the possibility of future development. We do not get the cash. I, frankly, reject any claim that our children will thank us for using up this oil and running oil rigs and oil pipelines across the Arctic Plain. Mr. President, what the American public expects, and what our children expect, is for us to get our fiscal house in order. Our children are not asking us to sell off their collective inheritance. Our children are not asking us to look narrowly at some budget window and forget that many of these assets produce public value--and I do not just mean financial value--beyond the window. When one Member from the other side of the aisle, Senator Craig, considered this issue as a House Member, he said ``asset sales are in fact blue smoke and mirrors at best. If they are to happen, they should be set off budget.'' Exactly right.

Mr. BRADLEY. Mr. President, the issue of whether there will be a tax increase in the budget resolution, of course, is yesterday's story. There already is a tax increase in the Republican budget proposal. It is the elimination of the earned-income tax credit. It is a tax increase of $20 billion on families that earn under $28,000 a year. So make no mistake, the issue is not whether or not there will be a tax increase. The issue is who is going to pay the tax. And I believe that this measure is appropriate. It says that corporations and wealthy individuals who use tax loopholes should lose them or have them limited. The Senator from South Dakota and I might disagree on which tax loopholes should be eliminated, but there is no question that we should tell the Finance Committee to work to achieve that amount of deficit reduction through the elimination of the tax loopholes. If this amendment does not succeed, when we get to the end and we are offering amendments that will not be able to be debated, I will be offering another alternative budget that will cut discretionary spending more, Medicaid and Medicare less, tax expenditures less, have a tobacco tax, cut defense more, and cut agriculture more. That will be an alternative budget to the one that is being offered now by the distinguished Senator from North Dakota. So that, indeed, we will have two Democratic amendments that would produce a balanced budget--not one but two. And I hope that this amendment is seriously addressed by the Senate and passed, because it is clearly better than the current budget proposal.

Mr. BRADLEY

Mr. BRADLEY. Certainly, on your time.

Mr. BRADLEY. The effect of this will be to increase either the offset for Social Security taxes or, for 48 percent of the people receiving the earned income tax credit, income tax increases. That increases net revenues. I yield 2 minutes to the distinguished Senator from Massachusetts.

Mr. BRADLEY

Mr. BRADLEY. Will the Senator yield just for a question?

Mr. BRADLEY. If the Senator still has time that will be unused, I have people on my side who do want to use time, and while Senators are in conference, does the Senator mind if they speak?

Mr. BRADLEY. Mr. President, I ask unanimous consent that further reading be dispensed with.

Mr. BRADLEY. Mr. President, I yield 8 minutes to the distinguished Senator from Ohio.

Mr. BRADLEY. I yield 2 minutes to the Senator.

Mr. BRADLEY. Does the Senator agree that these working families pay Social Security taxes?

Mr. BRADLEY. Mr. President, we will withhold further comment on this side until the other side has a chance to state their case as to why they want a tax increase on working Americans. That is the basic question. Mr. DOMENICI addressed the Chair.

Mr. BRADLEY. I am sorry. We will hear later from the Senator from Louisiana, who can address the purpose of the originator, Senator Long of Louisiana. The point the Senator misses, and I think the other side admits this consistently----

Mr. BRADLEY. I say to the distinguished Senator from Nebraska I expect that we would need several hours on this amendment. I know there are many people who want to speak, and I will just have to see how many people come to the floor. Under the rules, we are allowed 2 hours equally divided, an hour on each side. We could start with that and see if there are others who want more time.

Mr. BRADLEY. Mr. President, I send an amendment to the desk and ask for its immediate consideration.

Mr. BRADLEY. Mr. President, the amendment that I have sent to the desk makes one simple point: Although we need to balance the Federal budget, we should not do it on the backs of America's working and middle-class families. The budget resolution before the Senate attempts to claim that it will balance the budget without raising taxes. However, buried deep in this budget proposal is a $20 billion tax increase--a $20 billion tax increase--on America's working families. The amendment that I have introduced on behalf of myself, Senator Breaux, Senator Murray, and others, would correct the numerous problems posed by the current earned income tax proposal in the budget resolution. The amendment would repeal the worst aspect of the $20 billion tax increase on working families. Specifically, the amendment would repeal the $12.8 billion tax increase on working families with children and the $4.1 billion tax increase on working Americans without children. At the same time, however, the amendment would ensure that we continue to improve the program's administration to fight against any potential fraud or abuse and to ensure that the benefits of this program go to those for whom it was intended. Mr. President, since its creation in 1975, the earned income tax credit has been one of the most important sources of support for working and lower-middle-class families. In 1996, the earned income tax credit will provide a tax cut for over 21 million workers and their families. In my own State of New Jersey, the earned income tax credit provided 372,000 taxpayers with families with an average of over $1,000 in tax relief in 1993, a $1,000 tax cut for over 300,000 New Jersey families. The EITC helps families move off the welfare roles and into the work force. The incentive only goes to working families. No one on welfare gets this. These are working families. If you do not work, you do not qualify for the tax cut. It is as simple as that. Social Security taxes and various means-tested programs create disincentives for welfare recipients to work. Without the EITC's offsetting tax reduction, the working poor lose benefits and pay higher taxes for each extra dollar that they earn. The historic 1993 deficit reduction package expanded the earned income tax credit. Just as a point of reference, in my State about 40,000 people ended up paying higher income taxes because of that deficit reduction package and nearly 400,000 ended up paying less taxes because of the earned income tax credit. So, as a result of that deficit reduction package, nearly 10 times more people in my State got a tax cut than got an income tax increase. When fully phased in, the credit will be available for families with two or more children, earning up to approximately $28,500. Two children and family, up to $28,500, that is roughly half the median income for a family of four. So what we are saying here is roughly a fourth of all families with two kids will qualify for the earned income tax credit. These are working families. Because the minimum wage has not kept pace with inflation, without these changes in the EITC many working families have fallen deeper into poverty as a result of higher taxes and lost benefits. The EITC works in a very important way for working families. For every added dollar a lower income working family earns, payroll taxes take 15.3 cents and certain other benefits drop. For example, food stamps drop 24 cents for every additional dollar. The EITC was intended to offset some of these disincentives by providing a tax reduction of 40 cents for every dollar earned by a working family with two children. In other words, that means the EITC can make a big difference in people's lives. Most eligible families earning between $5,500 and $15,500 will qualify for at least $1,000 in credits. That is another $1,000 in someone's pocket that can go to pay for food, for utility bills, for tuition to parochial school, for health insurance, or for mortgage payments. Not only does the EITC help families work their way out of poverty, the EITC is good for business. It puts more purchasing power in low- income consumers' pockets and lets them keep more of what they earn. It also increases the effective wage rate paid by employers, providing the neediest Americans with an even greater incentive to go to work. By helping these families we also ease the burden on public services provided by State and local government. Even President Ronald Reagan recognized the value of the earned income tax credit. At the signing of the 1986 Tax Reform Act he stated that the bill's expanded EITC provisions were a very important thing. Ronald Reagan called the EITC provisions ``the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress.'' In addition to President Reagan, the EITC has received widespread bipartisan support, including that of Presidents Ford, Carter, Bush, and Clinton. However, the current budget proposals would repeal many of the gains realized under this bipartisan group of leaders during almost two decades. So, what is the impact of this tax increase on working families? In the face of declining real wages and Republican proposals to cut important aid programs, more and more American families are going to face increasingly tough times. These are working families who need every penny of the wages they earn just to make ends meet. We simply should not tax these families into poverty by cutting the earned income tax credit. The goal of the 1993 expansion of the EITC was to ensure that individuals who work full time do not have to raise their children in poverty. Achieving this goal is just as important today as it was 2 years ago. By the year 2000, roughly 17.8 million taxpayers, 80 percent of the total recipients, would feel a tax increase as a result of the proposals that are embodied in this budget. On average, taxes would be raised for affected working families by over $600 each. In New Jersey, working families will face a $452 million tax increase. Over the next 7 years that amounts to about $1,500 for the 297,000 recipients of the [[Page S7139]] earned income tax credit who are working families. The tax increase on working families with children amounts to $329 million. On an average, that would raise taxes by $1,733 over 7 years on 190,000 New Jersey families with children. So this is a significant tax increase in the middle of a budget proposal that purports to have no tax increase. Who are the people who receive the earned income tax credit? Let me just give you a snapshot of a couple of people. Michael Thompson from Newark, NJ, is 32 years old, married, with two daughters. He earns $7.75 per hour working in a warehouse for the Community Food Bank in New Jersey. His wife worked over 5 years for a large health insurance company but was laid off in 1994 and has been unable to find new work. Last year the Thompsons received an earned income credit that they used to pay the rent and to make up back payments on their utility bills. How about Deborah Hammerstrung from Barnegat, NJ, a clerical supervisor for the Visiting Home Care Service in Ocean County. When Mrs. Hammerstrung and her ex-husband separated 2 years ago, she could not afford to move into an apartment on her own. Instead, she was forced to move back with her mother. By providing her with a small credit against the taxes she has paid, the EITC is helping Ms. Hammerstrung pay the utility hookups for her own apartment. And last year, Ms. Linda Bailey, of Elizabeth, NJ, received a small earned income tax credit. Ms. Bailey worked as a registration clerk at St. Elizabeth's Hospital and is the mother of two children aged 6 and 14. She used the $1,000 credit she received to help pay her gas and electric bills. These are only a few examples. I could give you countless other examples in my own State of New Jersey where the earned income tax credit has allowed struggling families to send a child to parochial school, to begin to make a payment on college tuition, to fully pay the utility bills, and on and on. These are struggling working Americans. The earned income tax credit has put a little money in their pockets so they can get by. This is not the time to increase taxes on these working Americans. Like most other working Americans, the recipients I have described live from paycheck to paycheck. As a credit against taxes they paid, the EITC provides these families with a little breathing room. They are not using the EITC to pay for fancy meals out or hire high- paid lobbyists. No, they are not using it for that. Instead they use the EITC to help buy clothes for their kids, to pay utility bills, and to put meals on the table. The higher taxes this budget will impose on them will make it increasingly more difficult for New Jersey families to meet these basic needs and work their way out of poverty. Of course, working families in New Jersey are not the only ones who will suffer as a result of the Republicans' proposed tax hike. Almost 30 percent of all taxpayers in Mississippi will lose under this budget. There taxes will go up. Twenty percent of the families in Texas will face a larger tax burden as a result of these proposals. And in Oklahoma, almost 215,000 working families will find it harder to make ends meet after the proposed tax increase by the changes in the earned income tax credit. Recently, I have heard statements that these cuts in the EITC are not really a tax increase because recipients do not have an income tax liability. Critics of the EITC would have us believe that just because someone receives a tax refund that person could not be paying more tax. Mr. President, if the Federal Government owes you a $1,000 tax refund and we change the Tax Code so you end up getting only a $500 refund, then we have raised your taxes, notwithstanding the fact that you still get something back. In addition, there are claims that this budget is not increasing taxes because some of the EITC recipients do not owe any income tax. That claim ignores all the other taxes that working families have to pay. When working families receive their paychecks, the stub does not just show how much they pay in income tax withholding. It also shows what was subtracted for Social Security taxes, for Medicare taxes, for State taxes, and others. The EITC is intended to help offset these taxes, as well as Federal income tax. Let me demonstrate this point by an example. Imagine a young married couple with two children. If this family earned $16,500 per year, they will be just above the poverty level. Although they would not owe any individual income tax, they would incur $2,525 in Social Security taxes. That is what they would have to pay. Under current law, they would qualify for an EITC that offsets practically all of that Social Security tax, $2,532, just enough to offset the Social Security tax liability. But under the proposal that is in this budget the EITC would fall, and their taxes would go up by over $300, a tax increase. Mr. President, it is important to recognize that the proposal in this budget is a straight tax increase on working families. None of the proposals do anything, beyond what the administration has already suggested, to reduce errors in the program. The amendment that I offer would implement the compliance provisions, such things as matching Social Security numbers, et cetera--there are many different elements of the compliance provision--and thereby build on our past efforts to eliminate tax fraud and ensure that the EITC goes on only to those most in need. Further, the Republican attack on the EITC stems from reports of fraud in the program. In a small January 1994 study the IRS found 13 percent of all EITC refunds could be in error. It is important to note that many of these errors result in ordinary mistakes that taxpayers make on all kinds of tax returns. We have already taken a number of significant steps to eliminate fraud and to focus the benefits of the 1993 tax cut on those most in need. We have also made some additional changes in the last year or so to narrow eligibility for the EITC. In the Uruguay round legislation, for example, we prohibited the EITC from going to undocumented aliens. We deny the tax break. Also, we allow the IRS to use simpler procedures with certain types of questionable returns. We deny it to individuals who have $2,350 in investment income. So the eligibility has been narrowed. Then there are people who argue about the planned growth of the EITC. They are claiming that the EITC is expanding. To bolster these claims, some critics have carted out graphs and charts--and we will probably see some here today--that show the growth of the EITC since the early 1990's. Of course, these graphs present only a snapshot of the EITC and ignore the fact that the increases in the EITC are a result of a conscious effort by Congress and Presidents Reagan, Bush, and Clinton to expand the program and to provide a modicum of tax relief to America's working families. Mr. President, if I could, as this chart demonstrates, once these changes are fully phased in, once you make eligibility, up to $28,500 for a family of four, the EITC will grow only at the pace of inflation and population growth, a straight line. So people on the other side who say this program is out of control because we tried to help lower middle-class families--and when you help lower middle-class families, you provide a bigger tax cut to more people; it is going to increase--they want to raise taxes on these very same people. But once the eligibility is fully phased in, it is a national revenue loss. In fact, beginning in 1996, if you simply took the EITC relative to the rest of the economy, it is on the way down. So, Mr. President, at the same time that we have listened to the other side's attempts to explain why we need to raise taxes on working families in order to balance the Federal budget, we have not heard a single word about the truly uncontrolled growth in so many other areas of the budget. Take, for example, one of the provisions in the Tax Code called section 29. Section 29 refers to a little known provision in the code that gives a handful of oil and gas producers billions of dollars' worth of subsidies at the cost of other taxpayers. Between 1989 and 1994, section 29 tax subsidies grew by over 1,000 percent. This uncontrolled growth--uncontrolled 1,000-percent growth in 6 years-- dwarfs the planned, [[Page S7140]] controlled, and short-term growth of the EITC. So why does the Republican budget raise taxes on millions of American families without touching a single penny in special interest loopholes like section 29, that went up 1,000 percent in 6 years? The answer I think is fairly simple. The supporters of section 29 and a lot of the other special interest corporate loopholes--loopholes that are used by the wealthy--like these subsidies and they spend millions of dollars each year to hire lobbyists to insert their special provisions in the Tax Code. Mr. President, working families are too busy with their kids, trying to make ends meet, holding down two or three jobs, to have either the money or the time to come down to Washington and lobby for their provision in the Tax Code. As a result, taxes are raised on working families while special-interest loopholes proliferate. In 1996, spending through the Tax Code will total $380 billion. It is the second fastest increase of the deficit, beyond entitlements, $480 billion, more than double the size of the projected deficit. Between now and 2002, tax expenditures will total more than $4 trillion. I support, like many Members of the Senate, some of these provisions: Home mortgage interest deductions, property tax deductions, charitable deductions. These are valuable tools. However, for every one of these provisions, there are numerous other loopholes, such as section 29, that simply benefit one industry or a few taxpayers over the large mass of taxpayers. Mr. President, reducing the budget deficit will require shared sacrifice. However, raising taxes on millions of working Americans while consciously ignoring the billions of dollars that we give away each year through special interest tax loopholes is not my definition of shared sacrifice. So this amendment is really just about setting priorities, determining how we should share the burden of balancing the budget. There is no serious disagreement between Democrats and Republicans on the need to balance the budget. In fact, this amendment would reduce the deficit by the exact same amount as the original budget proposal. The real question that this amendment raises is how we should balance the budget. 3 Either we can balance the budget by raising taxes on working families, as contemplated in the Republican budget proposal, or we can forgo a small proportion of proposed tax cuts for corporations and the wealthy, as this proposal would do. I believe the choice is clear: Tax cuts for lower-middle-class working Americans and no tax giveaways to corporate and wealthy Americans. That is what this amendment is all about.

Mr. BRADLEY. I yield 7 minutes to the distinguished Senator from Washington.

Mr. BRADLEY. Mr. President, does the other side wish to make their case? We are anxious to hear their defense of this tax increase. Would the other side at any point like to argue the tax increase? Mr. NICKLES addressed the Chair.

Mr. BRADLEY. Will the Senator yield?

Mr. BRADLEY. Does the Senator deny that the provision in the Republican proposal will increase the tax on working families?

Mr. BRADLEY. Yes. So it is a tax increase on working families.

Mr. BRADLEY. Will the Senator yield for another question?

Mr. BRADLEY. Will the Senator yield?

Mr. BRADLEY. Would the Senator yield?

Mr. BRADLEY. The Senator is wrong. In 1993 we cut that provision by 40 percent. If the Senator is arguing that we should cut every other corporate provision by 40 percent, his argument would be consistent. I do not think he is arguing that.