Kent Conrad

Mr. CONRAD

Mr. CONRAD. If I can address one of the concerns of the Senator, when we vote--this is a very awkward question, I say to my colleague. Let me be very direct about what it is. We are missing two of our votes. We have a third Member who is ill. So what we have said is we would defer votes on these major matters until at least some of our Members are back. The body is very closely divided. We are completely ready to have votes on other matters throughout this day. The problem is, with the major votes on these consequential issues where we are missing two of our Presidential candidates until tomorrow--they will be here Thursday and Friday--and we are missing Senator Byrd who, as you know, is ill, that is the reason we have asked to defer votes on these major amendments until tomorrow. It is a difficult situation. It has been throughout. I do thank the Republican caucus for the extraordinary courtesy they extended to the Budget Committee by allowing Senator Byrd to vote--to allow proxy voting in our committee. Our committee does not allow proxy voting, and for a very good reason. We are the only committee that can report a fast-track vehicle to the Senate floor directly. But I do thank the Republican side for doing that. It was very gracious. I think it was in the best tradition of the Senate. Here on the Senate floor, of course, there is no ability to allow that accommodation to a colleague who is ill. That is the circumstance. I regret it. I just say to my colleague, we are happy to have as many votes as you want to have. The reason we have deferred these major votes until tomorrow is for the reason I have given.

Mr. CONRAD. No, this is this Tax Policy Center, I say to my colleague, and they estimate the number of estates in any year, and then they do a further analysis of how many would actually pay an estate tax, and what they have concluded is two-tenths of 1 percent.

Mr. CONRAD. Mr. President, I would just say to my colleague, last year we did much better.

Mr. CONRAD. You remember last year we did more votes earlier. Just in line with what the Senator is thinking because that is the best way. I think all of us would agree that is the best way to do our business, to do the votes earlier. You will recall on the vote-arama on that Friday we actually finished at 2 o'clock in the afternoon because we did have more votes earlier. I am entirely, 100 percent in agreement with the Senator. I would far prefer to do it that way. I think it is easier to follow the debate and to have the votes then coincident with the debate. (Mr. DURBIN assumed the Chair.)

Mr. CONRAD. Mr. President, if I might, just on the underlying amendment offered by the Senator, this amendment as we understand it-- we have just seen it--would virtually eliminate the estate tax. Let me say why. Let me first say there is no death tax in the country. Of course, if you poll people and you ask them: Do you want to eliminate the death tax? they will say sure. I had a baggage handler stop a colleague of mine, and he said: My No. 1 priority is to eliminate that death tax. My colleague, who is the current occupant of the chair, told him there is no death tax here. You are not going to pay any tax when you die unless you have $2 million. The guy was very surprised about that because he heard all this talk about a death tax. There is no death tax in America. There is a tax on estates. At today's level you would have to have $2 million to be taxed. That affects only one-half of 1 percent of estates. When the exemption increases, as it does under current law, and reaches $3.5 million per individual, $7 million a couple in 2009, which is next year, only two-tenths of estates will be taxed. If you are out there and you are hearing about this death tax, don't worry. It does not apply, next year, to 99.8 percent of people who pass away. It only applies to two-tenths of 1 percent of estates. We already have a tax structure that has overwhelmingly benefited the wealthiest among us. The amendment by the Senator would cost an additional $478 billion over 10 years, and none of it is paid for. That means it goes on the debt. That means we have to borrow that amount of money, and where are we going to borrow it? We are now borrowing over half the money at our bond auctions from abroad--most of it from the Chinese and the Japanese. So we would have, if the amendment of the Senator is agreed to as is, the unusual situation of borrowing this money primarily from China and Japan to give a tax advantage to two- tenths of 1 percent of the people, but the borrowing would be in the name of all of the American people. So 99.8 percent of the American people would be borrowing this money, primarily from China and Japan, to give it to the Warren Buffets, the Paris Hiltons, and others of enormous wealth in this country. I do not think that is a good policy. In the underlying budget, we have improved the estate tax situation, reformed it in what is, I think, a reasonable way. This is the bizarre circumstance that is in current law. The exemption now, in 2008, is $4 million--$2 million a person. OK? So if you are a husband or wife and you pass away at the same time, you have $4 million of exemption that applies today. You don't pay anything if you have estates of less than $4 million. In 2009 that will go up to $7 million. Then in 2010, under current law, there is no estate tax, it is repealed. Then, in 2011--it is utterly bizarre--it goes down to $2 million per couple, $1 million a person. In the underlying budget we are saying, no, that makes no sense at all to go back down to $2 million a couple, $1 million a person. It should be at $7 million a couple, as it is in 2009. If, in fact, we adopt those levels, virtually no one will pay the estate tax. That is a fact. Here is what has happened under current law: The number of estates that are taxed is falling very dramatically. In 2000, there were 50,000 taxable estates. In 2006, that has been reduced to 13,000. In 2009, we are now expecting there will only be 7,000 estates that will pay anything. As I indicated, that is two-tenths of 1 percent; 99.8 percent of estates are completely exempt. That is a fact. Now I am going to lay down an amendment.

Mr. CONRAD. I would be happy to yield.

Mr. CONRAD. I know the Senator is pulling my chain. Even as slow witted as I am, I can recognize when a Senator is pulling my chain, and here on my birthday, my friend and my colleague is doing that. What we have tried to do is come up with an alternative. I will send this amendment to the desk to provide an alternative approach to that which the Senator from Arizona is offering, to go over and above what is in the Baucus amendment. I say to my colleague, it provides another $45 billion, so that in addition to extending the estate tax exemptions of 2009, $7 million a couple, $3.5 million an individual, instead of dropping down to $2 million a couple or $1 million, we stay at the $7 million; index it for inflation. But in this amendment I am sending to the desk, I say to my colleague, it also provides another $45 billion in a reserve fund, which means it would have to be offset either by a spending reduction or other revenue to further close the gap between what Senator Baucus provided in his amendment the other day, and the amendment Senator Kyl has laid down here. That would be $45 billion in additional room in order to further reform the estate tax. I want to make clear that would be in a reserve fund, so it would have to be offset, it would have to be paid for.

Mr. CONRAD. I do not know. This is not my amendment. This is an amendment Senator Baucus and others have crafted. So I apologize to the Senator, I do not know how much more of an exemption that would permit. But others who have crafted this amendment hopefully will have an answer that can be provided when they are available.

Mr. CONRAD. Maybe I can conclude this part and go back to the Senator from Illinois who is also inquiring and answer his question.

Mr. CONRAD. Mr. President, I send this amendment to the desk. I have styled it Conrad No. 2. In fact, it is not my amendment. It is the amendment of the chairman of the Senate Finance Committee, who is at this very moment chairing a hearing on this subject, so he could not be here. That is why I am sending it to the desk.

Mr. CONRAD. I ask that Senator Baucus be permitted, when he is able, to further discuss his amendment. I know we have got time reserved for that purpose.

Mr. CONRAD. Yes, that is true, under the exemption rates for next year. Under the exemption rates for next year, it will be two-tenths of 1 percent. I believe this year it is five-tenths of 1 percent; there are 99.5 percent this year that are exempt. Next year it will be 99.8 percent exempt, as the rate goes up.

Mr. CONRAD. That is the correct math.

Mr. CONRAD. My understanding is--and the Senator might correct me-- that under the Kyl proposal the cost would be approaching $200 billion over--$458 billion over 10 years.

Mr. CONRAD. I think that is clearly correct.

Mr. CONRAD. Yes, I think that is undeniably the case. The problem this country confronts now is we have massive deficits and, under this President, a dramatic increase in the debt. So all of these provisions are based on borrowed money. So why would we go borrow this amount of money, which is increasingly from foreign countries, in order to give a benefit to two-tenths of 1 percent of the American people, when 99.8 percent of the estates in this country are already exempted from the taxation? That is lost on me.

Mr. CONRAD. No, this is all put on the tab. This is all borrowed money.

Mr. CONRAD. Because Senator Bunning was put on notice earlier he could come at roughly this time. I would be happy to withhold on Senator DeMint's amendment.

Mr. CONRAD. Will the Senator yield for a question?

Mr. CONRAD. I would like to try to harmonize the numbers because I don't want to leave people with the misimpression that we have some difference on the numbers because I don't think we do. The Senator is talking about 131,000 estates possibly being affected. But that would be at the million-dollar-a-person exemption level; is that not the case?

Mr. CONRAD. Mr. President, why don't we do this out of courtesy to Senator Bunning, who is already here: If we could go to Senator DeMint--how much time would Senator DeMint require?

Mr. CONRAD. But that is assuming we have a million-dollar-per-person exemption. Under what is in the budget, we would have $3.5 million per person--$7 million a couple--which, according to our figures, would give only 7,000 estates out of 3.5 million any tax. I think the difference between your 11,000 and my 7,000 was, you are talking about estates that have a filing responsibility. I am talking about estates that would actually have a tax liability. As the Senator well knows, there are some additional people who have a filing obligation even though they don't have a liability. The numbers the Senator and I are using are actually quite close. We are using somewhat different assumptions. He is talking about if we went down, which current law does, to a million dollar exemption in 2011, 131,000 estates would be affected. What we are seeking to do is to make certain that does not occur, that the exemption amount be $3.5 million a person, $7 million a couple, which would exempt 99.8 percent of estates.

Mr. CONRAD. That is absolutely fair. I didn't want to leave some impression that you and I had some great difference on the numbers. I think our numbers are actually very close.

Mr. CONRAD. Mr. President, I say to the Senator, may I be recognized for a moment? I have a housekeeping item we need to address. Mr. President, I ask unanimous consent that amendment No. 4196, which I sent to the desk, be restyled as being offered on behalf of Senator Salazar. I sent it to the desk in the name of Senator Baucus.

Mr. CONRAD. That should be in the name of Senator Salazar. He is the mover of that amendment.