Kent Conrad

Mr. CONRAD

Mr. CONRAD. Mr. President, the great thing about our country is we can have honest differences of opinion, and we do. The Senator from Oklahoma says he is against redistributing income through the Tax Code. That is exactly what this bill does. Only this redistributes it up. We have a circumstance in which the wealthiest 1 percent are getting a greater share of the tax reduction provided in this bill than they pay in Federal taxes. Now the Senator wants to talk just about income taxes. People don't only pay income taxes; they pay income taxes, payroll taxes, and other taxes. The wealthiest 1 percent don't pay 33 percent of Federal taxes--they don't. They pay 23 percent to 26 percent in Federal taxes, but they get 33 percent of the benefit in this plan. That is not fair. It is not fair. The Senator talks about the estate tax. The fact is, the estate tax is paid by the wealthiest 2 percent of the estates in America. We agree there is a problem with the current estate tax because it bites at much too low a level--$675,000 for an individual, $1.3 million for a couple--before you start paying any tax. That is too low given what has happened to the value of financial assets, real estate and other assets. I have supported increasing the estate tax to $5 million for an individual, $10 million for a couple, but eliminating the estate tax is fiscally irresponsible given the cost the Federal Government is going to face when the baby boomers retire. It costs $750 billion the second 10 years. From where is the money going to come? The Senator from Oklahoma is going to shift that burden on to everybody else. The tax policy is fundamentally a question of, what is the fairest way of distributing the burden in society? What is the fairest way? The Senator from Oklahoma apparently has a difference with this Senator, at least on what is fair. I don't think it is fair to take the people's money and give 33 percent of the benefit of this tax cut to the wealthiest 1 percent. I don't think that is fair. I don't think it demeans the Senate one bit to have that debate. I think it is exactly the debate the people of this country, who sent us here, expect us to have. What is the fiscally responsible thing to do? What is the fair thing to do? That is exactly what we ought to be debating. We also have a difference on what the historical record is. The Senator goes back to the 1980s and talks about a doubling of tax receipts. But I think that is misleading because it doesn't take account of inflation. The way to best compare what happened to revenue and expenditure in different historical periods is by looking at revenue as a percentage of gross domestic product and outlays as a percentage of gross domestic product. When you do that, it is very clear what happened in the 1980s. The spending went up with the big defense buildup the President proposed and Congress enacted. The spending went up as a percentage of GDP. The revenue went down sharply as a percentage of GDP. That opened up this massive chasm, which was deficit. The yearly difference between what we took in and what we spent multiplied the debt. The debt quadrupled, putting this country in a deep hole. And the same folks who designed that package are coming back with the one we see today. The question is, what is the fiscally responsible thing to do? I don't believe it is responsible to pass this package. I don't think it is a fair thing to do, either. I rise to offer an amendment to deal with one of the issues that I think is most unfair in terms of the bill that is before us. Every Senator has talked about the need to fix the marriage penalty. Indeed, we should fix it because some couples pay more taxes simply because they are married. That is not right. That is not fair. I think we all agree with those propositions. But this bill doesn't do anything about it for 4 years. There is no marriage penalty relief in this bill for this year. There is no marriage penalty relief in this bill for next year. There is no marriage penalty relief in this bill for the year thereafter. There is no marriage penalty relief for 4 years. I don't think we can leave this legislation without addressing the marriage penalty now. The amendment I am offering would simply say, let's put in place those elements of this legislation that address the marriage penalty now. Let's do it this year. Let's put it in place immediately. I believe marriage penalty relief should begin as soon as possible--not 4 years from now, not 5 years from now, but now. Under my amendment, the two key components of this legislation dealing with the marriage penalty would be put into place immediately: One, the standard deduction for married couples would double the deduction for single individuals; two, the top income limit in the 15- percent bracket for married couples would be double the limit for single individuals. This does not solve the marriage penalty, but they are the provisions that are in this bill. These are the provisions in this bill that do not take effect for 4 years. I am simply saying let's move them up and have them take effect immediately. By providing marriage penalty relief more quickly, we are helping middle-class Americans, strengthening families, and removing tax disadvantages to marriage. I think we can all agree on that. We also help simplify tax filing for the many families who will no longer have to itemize their deductions. We are improving the fairness of the package. The bottom line is, without this fix, a couple who got married last year will have to wait until their eighth wedding anniversary to get full marriage penalty relief. I don't believe that is right or fair. We can do better. This amendment is an attempt to do that. My amendment is paid for by delaying the rate reductions for the top two brackets, so that the rates will drop to 35 percent and 38 percent in 2009, and to 33 and 36 percent in 2010. In essence, we are saying, put marriage penalty relief as a top priority. Amendment No. 654

Mr. CONRAD. Mr. President, I send an amendment to the desk.

Mr. CONRAD. Mr. President, I ask unanimous consent that further reading of the amendment be dispensed with.

Mr. CONRAD. Mr. President, I say to the managers I have no desire to take an hour on this amendment, considering the other amendments Senators desire to offer. I am prepared to go to a vote very quickly on this amendment. Perhaps others want to speak. I understand that. I ask unanimous consent that Senator Johnson be shown as an original cosponsor of the amendment.

Mr. CONRAD. Mr. President, perhaps others would like to speak. I am happy to work with the manager in whatever way he thinks is most appropriate in order to move things along. If the manager on our side wants to delay consideration and have other amendments considered or have others speak on other subjects, that is fine with me.

Mr. CONRAD. I thank the Senator very much. I have made my initial remarks. I see the Senator from South Dakota, Mr. Johnson, now in the Chamber. He is an original cosponsor of the amendment. I think he would like time to speak on the amendment as well.

Mr. CONRAD. I would like to hear an explanation of how it harms the economy of the country to address the marriage penalty this year rather than wait 4 years. How is that? How does that hurt the country? How does it hurt the country to address the marriage penalty now instead of waiting 4 years? Just the opposite is true. It strengthens the country to address the marriage penalty now and not wait 4 years. The fact is, on this side I offered a budget plan that had half as big a tax cut, but it dealt with the marriage penalty. In fact, it had more money to address marriage penalty than is in this bill. So it is not a question of since you supported a smaller tax cut that you were then preventing addressing the marriage penalty. There are other choices to be made. How much you provide at the top end of the income spectrum is a key issue. Here is the problem with this bill. The top 1 percent get twice as much of the benefits as the bottom 60 percent. That is the problem with this bill. If you didn't design the tax proposal in this way, you would have no problem doing what I am doing with this amendment, which is to provide marriage penalty relief starting now, not waiting, as the legislation before us does, for 4 years to do anything. The problem they have is summed up very well in this chart. The top 1 percent get 33.5 percent of the benefit of this bill. The bottom 60 percent get 15 percent of the benefit. So the top 1 percent, people on average who earn in this country $1.1 million a year--and that is great; I am all for them. I am pleased they are successful. It is a great thing about America. But when we are talking about taking the people's money and giving it back to people, I am not for taking the people's money and giving a third of it to people who are on average earning $1.1 million. That doesn't strike me as fair. That doesn't strike me as equitable. That doesn't strike me as balanced. That doesn't strike me as the way to strengthen the economy. In this amendment I say let's address the marriage penalty beginning now. We do not have to wait 4 years to begin to address the marriage penalty. The marriage penalty is not right. It is hurting those who are in a circumstance in which the Tax Code penalizes them for being married. That is not right. Nobody supports that. I do not suggest anybody does. The Senator from Iowa said some of us on the other side last year did not support a proposal on marriage penalty. You bet we did not support that because it did not solve the marriage penalty. It dealt with three of the provisions in the code that create marriage penalty, that impose a marriage penalty. There are over 60 provisions in the code that impose marriage penalty. On our side, we proposed giving taxpayers a choice. They could file as individuals, they could file as a couple, whichever benefited them the most. That is the only way to solve all of the 60 places in the Tax Code that impose a marriage penalty. That was not accepted. It was not passed. In this bill, we have a different approach. It is a useful approach. It helps. But it is delayed. It is deferred. It is drawn out. What we are saying is: Look, let's address the marriage penalty now. Let's not wait 4 years before we start. And let's not wait until 2008 to fully phase it in. Let's start dealing with the marriage penalty now. I think that is fair and it does no harm to the country. It strengthens the country to do so. I thank the Chair and yield the floor.

Mr. CONRAD. Mr. President, when my colleague, who I respect and admire and like and work with frequently, makes these points, I just profoundly disagree. I do not think this is a balanced package. I showed the chart as to why I do not think this is balanced. He is talking about upsetting the balance. This is not my idea of balance. The top 1 percent get 33 percent of the benefits, and the bottom 60 percent get 15 percent of the benefits. Half as much for the bottom 60 percent as the top 1 percent? And this is called a carefully crafted balance? Looking at it a different way, the bottom 20 percent get 1 percent of the benefits, the top 20 percent get 70 percent of the benefits. And this is a carefully crafted balance? There is no balance. The top 1 percent get 33 percent of the benefits, twice as much as the bottom 60 percent. When we look at rate reduction, it is very interesting. These are the rates that are in the current code: For the 15-percent rate, they do not get any rate reduction, none, zip. Interestingly enough, that is where the vast majority of the American taxpayers are. That is where 70 percent of the American taxpayers are. They get no rate reduction. For the 28 percent, they get 3 points, about a 10 percent on rate reduction; the same is true at 31 percent; the same is true at 36 percent. The very top, the very wealthiest who pay a rate of 39.6 percent, get the biggest rate reduction of all, but the bottom rate, where 70 percent of the American taxpayers are, gets nothing. They call this balanced? I do not see any balance. They call this fair, carefully calibrated? Carefully calibrated if you are at the top. But if you are one of the 70 percent of the American people who are down here in the 15-percent bracket, you get no rate relief. It does not seem carefully calibrated to me. It does not seem fair to me. It does not seem balanced to me. When there are five rates in the current Tax Code and only one rate gets no rate relief, and it just happens to be the rate where 70 percent of the American taxpayers are, that does not strike me as balanced. And the biggest rate reduction going to the very top bracket does not seem balanced to me. I do not think it is going to seem balanced to the American people when they have a chance to review it. I do not think it is going to seem balanced to them when they have a chance to find out the details. I do not think the 70 percent of the American people who find out they get no rate relief are going to think they have been treated very fairly. This thing is weighted to the very top, the very wealthiest among us. That is what this is. It is not balanced. It is not fair. I yield the floor.

Mr. CONRAD. Mr. President, I ask for the yeas and nays.

Mr. CONRAD. Mr. President, I am happy to yield back that time. Mr. President, I ask unanimous consent that Senator Kennedy be added as an original cosponsor of the amendment.

Mr. CONRAD. I thank the Presiding Officer, and I thank my colleague from Texas, who is a respected colleague. Let me just say we agree that the marriage penalty relief ought to be moved up. We strongly agree on that proposition. Mine does it faster than the offering of the Senator from Texas. Mine deals with both elements of marriage penalty relief that are in the bill, both the standard deduction--doubling it for couples over what is provided a single individual--and also providing a fix on the 15-percent bracket. The Senator from Texas starts hers earlier than the underlying bill but does not complete the phase-in until the year 2008 on the standard deduction. And she does not speed up the fix on the 15-percent bracket at all over what is in the current bill. My amendment would provide that relief next year as well. In addition, we have a different way of paying for it. I ask those in the very top rates--the 3 percent who are in the top two rates--to defer so that we can give this relief immediately. That seems to me to be a fair way to proceed. It seems to me to be the priority of the American people. We have 50 million people who are affected by the marriage penalty. Under the current bill, nothing is done, nothing for 4 years. Then it is phased in, and it is not completed until 2008. My amendment says, if we say it is a priority, let's make it a priority. Let's put in place marriage penalty relief next year. Let's do the job. I hope very much my colleagues will give close consideration. We do not change where the rates ultimately wind up. We do delay the reduction for the top rates, the two top rates that affect only 3 percent of America's taxpayers, so that we can give 50 million people relief from the marriage penalty now, something I think every Senator in this Chamber has spoken for at one time or another. Mr. President, how much time do I have remaining?

Mr. CONRAD. I will try to take the same amount of time the Senator from Texas just took to conclude. If the Presiding Officer could inform me when I have used the same amount of time that the Senator from Texas just used so it is fair, I will yield back the remainder of my time.

Mr. CONRAD. Does the Senator yield back her time?

Mr. CONRAD. I yield 5 minutes to the Senator from New Jersey. The Senator from New Jersey has been very active on these education issues. I think he has been critically interested in providing incentives for parents paying for college. I yield 5 minutes to him.

Mr. CONRAD. Mr. President, in response to the Senator from New Mexico, I don't think the choices he has presented are the full choices before the American people and before the Congress. The Senator from New Mexico refers to the choice of either giving the tax cut back to the American people or the money being spent here. I don't think those are the choices. Those are two of the choices. There is a third choice. The third choice is to pay down more of the people's debt. When we refer to the people's money, that is exactly right. This is the people's money. I think everybody here is acutely aware of that. We have, fundamentally, three choices. One is tax cuts, and certainly that ought to be part of what we do. The second choice is spending. I think most people on both sides of the aisle say we need to increase spending on education and national defense. The third choice is how much do we use to pay down our debt. The President says we should only pay down $3 trillion of the $3.4 trillion publicly held debt we currently have. There is another debt that the President is not dealing with and that we are not dealing with. That is the gross debt of the United States. That is the combination of the publicly held debt and the debt owed to the trust funds of the United States. The gross debt of the United States is not going down; it is going up. As we sit here today facing a debt of $5.6 trillion, at the end of the 10-year-period the gross debt of the United States will be $6.7 trillion. We are not paying off the national debt around here, not by a long shot. The national debt is increasing. Interestingly, it is increasing by about the amount of the tax cut we are providing. I yield 4 minutes to the very distinguished Senator from New York, Mr. Schumer, who has a great commitment to the education issues that are in part addressed by the Senator from Texas.

Mr. CONRAD. Mr. President, I ask for 4 minutes.

Mr. CONRAD. If I may conclude, the only way to eliminate all of the 60 places the Tax Code imposes the marriage penalty is to give couples a choice. That is what I supported.

Mr. CONRAD. The Senator from North Dakota voted against that proposal because it didn't fix the marriage penalty. We had an alternative proposal that gave couples the choice. The only way to eliminate the marriage penalty----

Mr. CONRAD. Will the Senator yield?

Mr. CONRAD. I think it is important to point out the differences between my amendment and the amendment of the Senator from Texas. As you know, in terms of marriage penalty relief, there are two provisions. One is to double the standard deduction for a married couple from what is provided single taxpayers. The second is to deal with the fix on the 15-percent bracket so that we also are providing relief that way. The Senator from Texas would start the standard deduction relief in 2002, which is more quickly than what is provided for in the underlying legislation, but she would then string it out to 2008. Her amendment does nothing to speed up the fix on the 15-percent bracket. There is no improvement there. My amendment takes both provisions that are designed to deal with the marriage penalty and puts them into place next year and pays for it by deferring the reductions for the very top brackets, the top 3 percent of earners in the country. They get their full relief, but it is delayed so that we can give relief to 25 million couples--50 million people--who are affected by the marriage penalty.

Mr. CONRAD. Under the bill that is before us, not until 2008. Under my proposal, there would not be any phase-in. We would do it all the first year.

Mr. CONRAD. Yes. Actually, overnight they changed it. It was not going to take affect for 5 years. In other words, this chart says, marriage penalty relief for middle-income taxpayers was going to be delayed until 2006; it did not do anything for 5 years. Now it has been changed and moved up 1 year. So it does not do anything for 4 years in terms of marriage penalty relief. What we are saying is, let's do it next year. Let's make it a priority.

Mr. CONRAD. The pay-for in my amendment is to delay the rate cuts for the top two rates, the 39.6-percent rate and the 36-percent rate. As the Senator knows, there are about 3 percent of the American people who are in those very top rates. We still give them the full rate reduction included in this legislation; we just delay it so that we can affect a significant number of people who are in the marriage penalty situation. As you know, there are 50 million couples who have filed a joint return for the most recent year for which the full details are available, and 25 million of them experienced the marriage penalty. That is 25 million couples. That is 50 million people. The legislation I am offering says: Let's allow those people to have relief from the marriage penalty and do so immediately, and have the full benefits of this legislation that addresses the marriage penalty effective in the next year.

Mr. CONRAD. Mr. President, I yield 10 minutes to the Senator from North Dakota.

Mr. CONRAD. Mr. President, first of all I thank the Senator from Texas for supporting the fundamental idea of moving up marriage penalty relief. I would just differentiate our proposals in this way. The proposal I am offering would give the full marriage penalty relief starting immediately. The Senator from Texas would provide the relief starting immediately but phase it in over an extended period of time; we would not get the full phase-in until 2008. That would just be on one of the provisions dealing with marriage penalty. As I understand it, she does not deal with the other provisions at all. In addition, there is a difference in the pay-for. The pay-for on our side is to ask those at the highest income levels, the highest tax brackets, to simply have their tax cut deferred for a number of years. We get to the same level over the period of the 10 years in tax rates, tax brackets. We ask the fewer than 1 percent of the people who are in the very top tax bracket and the approximately 2 percent of the people who are in the next tax bracket to defer additional reductions so we can provide marriage penalty relief starting immediately. The Senator from Texas has a totally different pay-for. She goes after student loan money; she goes after the education IRA money; she goes after the alternative minimum tax money. I do not think that is the way we want to pay for this. I don't think we want to pay for moving up marriage penalty relief by going after the student loan interest money. I don't think we want to pay for marriage penalty relief by going after the education IRA money that allows people to save for the education of their children. I don't think we want to go after the alternative minimum tax money that we already know is totally inadequate in this bill, and under this bill we are going to go from 1.5 million people being affected by the alternative minimum tax to nearly 40 million people, nearly 1 in every 4 taxpayers who think they are going to get a tax cut and are in for a big surprise: They are going to get a tax increase under this bill. I hope Members will look very carefully at the fundamental differences between what I am offering to speed up marriage penalty relief--do it immediately, do it now--versus what the Senator from Texas is proposing, which is to start now but to dribble it out until the year 2008. Is the Senator from Michigan seeking time? I yield 5 minutes to the Senator from Michigan. Then I announce my intention to yield 10 minutes or whatever he will consume to the Senator from North Dakota.