Harold Ford

Mr. FORD

Mr. FORD. Mr. Chairman, will the gentleman yield?

Mr. FORD. Mr. Chairman, I have great respect for the gentleman from Pennsylvania (Mr. Weldon). I probably will vote the way he is going to vote on this, but does my colleague recall, I think it was 1999, the sense of congress resolution supporting the troops in Kosovo, if I am not mistaken, my good friend voted no on that. So as my colleague thinks about my colleagues on this side expressing reservation, I hope we are not labeled anything other than patriots that he and I am.

Mr. FORD. Mr. Chairman, if the gentleman will further yield, did the gentleman vote against that resolution?

Mr. FORD. I hope that as this vote proceeds, Mr. Chairman, I will say to my friends on the other side of the aisle that some of us who are struggling with this, please refrain in your press statements and releases from referring to anybody on this side of the aisle as being unpatriotic. I think there are legitimate questions about how this was brought to the floor, about the specificity associated with it, about the term of our stay there. I have been on the ground, as I know many of my colleagues on the other side have there in the region, so I would hope that we can all refrain from referring to anyone in this body, anyone in this Chamber, Democrat or Republican, as being unpatriotic.

Mr. FORD

Mr. FORD. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, it is always good to see a gentleman from Tennessee in the Speaker's Chair. I thank the gentleman from Ohio (Chairman Oxley) for his leadership on this and many other issues. I also thank the gentleman from Massachusetts (Mr. Frank) for his leadership, not only on this set of issues, but the way in which he and the gentleman from Ohio (Chairman Oxley) worked together and the way he leads our side on all of the critical issues that come before the committee. Mr. Speaker, let me thank the gentlewoman from Pennsylvania (Ms. Hart) and my friend, the gentleman from New Jersey (Mr. Ferguson). I rise in support, obviously, of this Check 21 conference report. Both the gentlewoman from Pennsylvania (Ms. Hart) and the gentleman from New Jersey (Mr. Ferguson) were key and original sponsors of the legislation, and it was a pleasure to work with both of them. I also want to thank the gentleman from Alabama (Chairman Bachus), again, the gentleman from Ohio (Chairman Oxley), the gentleman from Massachusetts (Mr. Frank) and the gentleman from Vermont (Mr. Sanders) for their stewardship of this bill through the committee and the conference with the Senate. I had my chance to serve on my first conference committee. I did not say anything. If that is the standard for getting things done like you want, I will be happy to follow that from here on out. As I say, this is a good bill for all of my colleagues in the Congress. I might add, from a consumer perspective, it is probably one of the more important pieces of legislation to come out of this committee and in this session. The intent of Check 21, as the gentleman from Ohio (Mr. Oxley) indicated, is very simple: It is to modernize the Nation's check payment system and enable it to keep pace with new technologies. Check 21 will bring the benefits of new technologies to more consumers, while strengthening our finance system. In recent years, the financial system of this country has undergone tremendous change. Technology has brought the world closer together and accelerated speed of business. Millions of dollars can flow across the continent and across oceans with the click of a mouse. Consumers and businesses are making increasing use of credit cards, debit cards, direct deposits, electronic funds transfers and other electronic forms of payment. At the same time, checks remain a vital and extremely popular form of payment. Millions of Americans rely on checks to pay house rent, monthly bills, groceries and many other kinds of purchases and expenses. This year, upwards of 60 billion checks will be written in the United States. According to the Federal Reserve Board, the volume of checks peaked in the 1990s and checks will remain an indispensable part of our financial system and our economy for decades to come. Check 21 will bring the check payment system into the 21st Century, and, in doing so, help preserve the institution of the check by creating more efficiencies. By making check processing more efficient and more cost-effective on the back end, we can make sure more consumers, particularly seniors in this country, have the option of writing checks on the front end. Here is how Check 21 works. It unleashes innovation by removing legal obstacles to check truncation. Check truncation is when information on a paper check is captured off the check and delivered electronically, instead of the paper check being presented physically. Through check truncation, paper checks are rendered into zeros and ones, digital signals which can move through the payments system at digital speeds. In crafting this bill, my colleagues and I shared the goals articulated by the Fed when it drafted the Check Truncation Act. We wanted to find a way to facilitate check truncation and foster innovation without mandating the receipt of checks in electronic form. It is important that banks, businesses and consumers continue to have the option of accepting checks in paper form. Check 21 accomplishes this by establishing a new negotiable instrument, a substitute check with the same legal status as original checks. These substitute checks would contain a two-faced image of the original check. They would include the magnetic code at the bottom, so that any bank can process them, using existing equipment, and conform to standards for size, paper stock and the like. These substitute checks can be used by banks and consumers in the same way as original checks. So why is check truncation a good thing? The gentleman from Ohio (Mr. Oxley) has spoken to it already. But according to Roger Ferguson, the Vice Chairman of the Federal Reserve, check truncation ``reduces the number of times a check must be physically processed and shipped. As a result, check truncation is generally more efficient, more cost- effective, less prone to processing errors and fraud.'' It sounds like a good thing for consumers. I might add that with the help of many of our colleagues on the committee, particularly the gentleman from North Carolina (Mr. Watt), as well as the gentleman from Alabama (Mr. Davis), we were able to address some of the concerns raised by consumers related to consumer protections and trying to ensure that all of the protections provided in the Uniform Commercial Code would indeed be afforded to consumers under this bill. I have a long statement which my staff put together, an exhaustive statement. The gentleman from Ohio (Mr. Oxley) has pretty much walked through all of these issues. Mr. Speaker, I rise in support of the conference report on the Check 21 Act, which I was proud to introduce with the gentlelady from Pennsylvania, Ms. Hart, and the gentleman from New Jersey, Mr. Ferguson. I want to thank Chairman Bachus, Chairman Oxley, and Ranking Members Frank and Sanders for their stewardship of this bill through the Financial Services Committee and the conference with the Senate. This is a good bill that has gotten stronger from a consumer perspective, and I would urge my colleagues' support. The intent of Check 21 is simple--to modernize the Nation's check payment system and enable it to keep pace with 21st century technology. Check 21 will bring the benefits of new technologies to more consumers while strengthening the financial system, which is the very lifeblood of our economy. In recent years, our financial system has undergone tremendous changes. Technology has brought the world closer together and accelerated the speed of business. Millions of dollars can flow across the continent and across oceans with the click of a mouse. Consumers and businesses are making increasing use of credit cards, debit cards, direct deposits, electronic funds transfers, and other electronic forms of payment. At the same time, checks remain a vital and extremely popular form of payment. Millions of Americans rely on checks to pay house notes, monthly bills, groceries--and countless other kinds of purchases and expenses. This year, upwards of 60 billion checks will be written in the United States. According to the Fed, the volume of checks peaked in the 1990s--but checks will remain an indispensable part of our financial system and our economy for decades to come. Check 21 will bring the check payment system into the 21st century, and in so doing, help preserve the institution of the check. By making check processing more efficient and more cost-effective on the back end, we can make sure more consumers have the option of writing checks on the front end. The technology to make the check system more efficient exists, and is already in use. But the legal framework behind the check payment system has not kept up with technological advances. Under today's system, millions of paper checks are physically transported every night, by ground and by air. Checks move from the bank to which they are deposited, to any number of intermediary banks, check processors, and/ or the Federal Reserve, then are sent to the paying bank, and finally, in some cases, back to the person who wrote the check. The problem is that under current law, unless a bank enters an agreement with another bank to process payments electronically, the banks must physically exchange the original paper checks. This outdated legal framework can only be described as clumsy and inefficient. It's unnecessarily slow, and it prevents millions of consumers from realizing the benefits of new technologies. Another weakness of the current system--one with potentially severe consequences for the economy--was exposed on September 11, 2001. When the Nation's aviation system was grounded in those harrowing hours and days after the terrorist attacks, millions of checks could not reach their destination. The Nation's payment system ground to a temporary halt. Fortunately, due to the swift response of the Federal Reserve, banks all across the Nation, and the companies that transport checks, the 9/ 11 attacks did not cause major disruptions in the financial system. But 9/11 demonstrated that our check payment system is vulnerable to physical catastrophes--not only terrorist attacks but also natural disasters. Check 21 unleashes innovation by removing legal obstacles to check truncation. The name ``check truncation'' is industry jargon, so let me try to explain what it is--and why it's a good thing. Check truncation is when the information on a paper check is captured off the check and delivered electronically--instead of the paper check being presented physically. Through check truncation, paper checks are rendered into zeroes and ones--digital signals which can move through the payments system at digital speeds. In crafting this bill, my colleagues and I shared the goals articulated by the Fed when it drafted the Check Truncation Act, which this bill is largely based on. We wanted to find a way to facilitate check truncation and foster innovation ``without mandating the receipt of checks in electronic form. . . .'' It is important that banks, businesses, and consumers continue to have the option of accepting checks in paper form. Check 21 accomplishes this by establishing a new negotiable instrument, a ``substitute check,'' with the same legal status as original checks. These substitute checks would contain a two-faced image of the original check. They would include the magnetic code at the bottom so that any bank could process them using existing equipment. And they would conform to standards for size, paper stock, and the like. These substitute checks can be used by banks and consumers in the same way as original checks. So why is check truncation a good thing? According to Roger Ferguson, Vice Chairman of the Federal Reserve, check truncation ``reduces the number of times the check must be physically processed and shipped. As a result, check truncation is generally more efficient, more cost effective and less prone to processing errors and fraud.'' Check 21 is a strongly pro-consumer bill. Consumers will benefit in a number of ways. First, Check 21 will promote efficiency in the banking system by lessening the need for the physical transportation of checks, which is costly and resource-intensive. As banks compete for their business, consumers will benefit from lower costs and expedited services. Second, banks will be enabled to compete with each other to offer new products and services, such as online access and review of check images, which gives consumers instant access to their checks, day or night. If a consumer makes an inquiry about a check, his or her bank's customer services representatives will be able to access and review the check instantly. This can sharply reduce the time for customer inquiries. Millions of consumers already enjoy these services, including members of the Congressional Federal Credit Union here on Capitol Hill, as well as credit unions in communities across the country. Credit unions have had check truncation for two decades and by all accounts it has been a great success. Consumers may also benefit from more deposit options. Because electronic processing could eliminate the need for daily physical pick- up of checks, consumers could enjoy extended deposit cutoff hours and deposit services at ATMs in remote or underserved urban and rural areas. Third, this streamlined system will reduce the disruptions caused by bad checks. By speeding up the check clearing system, individuals will be notified faster if their check--or checks written to them--have not cleared. This will reduce the likelihood that a single bounced check will result in a ``chain reaction'' of bounced checks. Fourth, Check 21 establishes a new and important consumer protection--an expedited recredit for contested substitute checks. A consumer who raises a dispute because a check that has been rendered into a substitute has been improperly charged to his account will receive a recredit within 10 business days, for amounts up to $2,500. This ``right of recredit'' is an important part of this bill. Although the House and Senate bills were structurally similar, the conference report reconciles some important differences. And in each case, the conference adopted the pro-consumer position. The conference report adopts the Senate language on the timing of the recredit procedure. Consumers will have 40 days to submit claims for recredit, as opposed to 30 days in the original House bill. Consumers facing extenuating circumstances will have that period extended ``for a reasonable amount of time,'' rather than 30 days in the House bill. The conference report retains the language of an amendment that Mr. Davis of Alabama introduced in Committee, which stipulated that the consumer need not currently be in possession of the substitute check to enjoy the right of expedited recredit. The conference report adopts the House language requiring banks to describe the process of check substitution for all new and existing customers. In the Senate bill, this consumer notice would expire after three years. The conference report makes it permanent. The conference report includes language requiring the Federal Reserve Board to publish data regarding the costs and revenue of transporting checks. I would like to commend the Fed and the transportation company AirNet for helping to negotiate this compromise language. Finally, the House bill would have gone into effect 18 months after enactment--the conference report adopts the Senate position of a 12- month effective date. In conclusion, Check 21 will make our payments system stronger and more efficient. In so doing, it will protect our economic security and promote economic growth. I am proud to have introduced Check 21 with Ms. Hart and Mr. Ferguson. I respectfully urge my colleagues' support for this bipartisan, common-sense, pro-consumer bill. Mr. Speaker, I yield such time as he may consume to my friend, the gentleman from Texas (Mr. Hinojosa).

Mr. FORD. Mr. Speaker, I yield such time as he may consume to our ranking member, the gentleman from Massachusetts (Mr. Frank).

Mr. FORD. Mr. Speaker, I yield myself 1 minute. Not having any other speakers, I do not know if the gentleman from Massachusetts (Mr. Frank) is still on the floor, but I want to thank him again for his leadership on this legislation and the ease which I think all of the committee finds in working with him; and reiterate again, to the gentleman from Alabama (Chairman Bachus), to thank him; and to Jeanne Roslanowick and Jaime Lizarraga and Ken Swab and Erika Jeffers, with whom I attended law school; and Lawranne Stewart; and, of course, Kevin MacMillan and Hugh Halpern; and the rest of the team on the other side, Carter and Dina and Bob; thank you as well. It was a pleasure to work with all of you, I know, on behalf of Scott Keefer and Luke Iglehart; also on my staff, who worked closely with them. This is a good bill. I hope my colleagues see fit to support it. All of the benefits have been touted. I thank the gentlewoman from Pennsylvania (Ms. Hart) again for her hard work, and I thank the gentleman from New Jersey (Mr. Ferguson) again for his initiating this legislation. With that being said and there are no other speakers on our side, I yield back the balance of my time.

Mr. FORD

Mr. FORD. Mr. Speaker, I thank the gentleman from Missouri (Mr. Blunt) for yielding me this time. And I thank the leadership on my side, the gentleman from California (Mr. Stark) and the gentleman from Washington (Mr. McDermott) and, of course, the gentleman from New York (Mr. Rangel). I rise today in support of H.R. 7. It has been a pleasure to work with the gentleman from Missouri (Mr. Blunt) and the leadership on his side. I thank him for the new friendship, or the strengthened friendship, we now have, and I appreciate the bill we have been able to put together. The intent of the Charitable Giving Act, which has already been stated, is pretty simple. We want to help churches and charities and places of faith and nonprofit groups across the country who are committed to making a difference, and I dare say, making our communities better. With this slow economy, with some 3 million jobs lost and the end of a bull market now, it seems more important than ever to find new ways to encourage giving, charitable giving. As generous as our Nation is, we all know we face challenges, for many of my colleagues on my side of the aisle have highlighted how some of the decisions we have made here in this Congress have impacted our ability to grow. But as the Speaker knows, millions of Americans give a portion of their paychecks or their savings to help those less fortunate than them. In my community of Memphis and communities across America, nonprofit groups, volunteer organizations work every day to fill those vital needs. Often these efforts can do more to help than what we do here in Government. And at a time of mounting budget deficits in Washington and in almost all 50 State capitals, charities are carrying a heavier burden. States are cutting back money to hospitals, health clinics, schools, drug and alcohol rehab programs, preschool and afterschool programs. Because of the deep wells of compassion that exist in our communities, we cannot let any people fall through the cracks. But money is tight for millions of families. They want to give, but they also want to have money to pay the bills. This bill is one way we can empower people to give more to charity for it empowers those whose compassion runs deep, especially those who do not have deep pockets. As the Members know, many in Congress and in this country raised constitutional concerns about many aspects of the President's faith- based agenda. We share the President's goal of rallying the armies of compassion, but we were concerned about the faith-based component. Our bill will encourage giving and help charities without regard to religious affiliation. What this bill does is remove obstacles to charitable giving in a tax code. First, the bill allows some 86 million Americans who do not itemize the opportunity to deduct a portion of their charitable contribution, between $250 and $500, $250 for individuals and $500 for married couples. It raises the cap on corporate charitable contributions from 10 percent to 20 percent over 10 years. It also provides for tax-free contributions from IRAs for charitable purposes, which will help a wide range of charities, especially education institutions. It provides $150 million a year for a Compassion Capital Fund to assist small community and faith-based organizations with technical assistance and to expand their capacity to serve. In closing, Mr. Speaker, I want to commend the gentleman from New York (Mr. Rangel) and the gentleman from Maryland (Mr. Cardin) for the substitute to H.R. 7, which I intend to support. The substitute includes the entire original bill, and it makes it better by increasing the authorization levels for the Social Services Block Grant by $1.1 billion. The Senate companion of this bill includes funding for SSBG as well. I also commend the gentleman from Texas (Mr. Doggett) for working to make this bill revenue neutral. The revenue effect of H.R. 7 is tiny compared to the positive benefits, as the gentleman from Missouri (Mr. Blunt) has already stated, that will come out of it, and certainly compared to other bills that we have considered in this Chamber in recent years. In closing, I urge all of my colleagues, particularly my Democratic colleagues, to support this bill on final passage. I look forward to working with many here and others in the Chamber to reconcile whatever differences there may be and realize that when we support this bill, despite its minor cost, as the gentleman from Missouri (Mr. Blunt) and others have stated, it will help so many of our Nation's charities, places of faith, and educational institutions.

Mr. FORD

Mr. FORD. Mr. Chairman, before the gentleman yields back, Jim Worth, I forgot to mention him, the legislative counsel. I thank him as well.

Mr. FORD. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I thank the gentleman from Ohio (Mr. Oxley) and the gentleman from Alabama (Mr. Bachus) for his leadership, as well as the gentlewoman from Pennsylvania (Ms. Hart) and the gentleman from New Jersey (Mr. Ferguson), and all my friends on the committee and all my friends on the Democrat side. The rule kind of got heated and spirited over another issue that probably deserves some heat and spirit, but I think this issue here is one that should enjoy relative ease as we move forward. I thank the gentleman from Ohio (Mr. Oxley) (for working with the gentleman from New York (Mr. Weiner) and the gentleman from Massachusetts (Mr. Frank) in addressing what also is an important issue in how people's checks are cashed and how they may be penalized for someone else wronging them. That being said, the gentlewoman from Pennsylvania (Ms. Hart) has walked through in pretty good detail what this bill seeks to do. In a lot of ways, Check 21 is pretty simple in what it does. It just modernizes the Nation's check payment system and tries to keep up with all the new technologies in the 21st century. The gentleman from Alabama (Mr. Bachus) mentioned how many millions of dollars can flow across the continents and across the oceans with the click of a mouse and the challenge we faced 2 years ago after the tragedies of 9/11 and how this bill really tries to respond. I know some people suggested, my good friend, the gentleman from Texas (Mr. Sessions), suggested earlier somehow or another this would really help to decrease oil costs. I hope we are not overstating the impact of the bill, and this will help in our fight against terrorism. Perhaps it will. But one thing can be said, it is pro-consumer. It is pro-business in a lot of ways, not only pro-business for the banks but pro-business for those institutions who electronically transfer monies and those who depend heavily on checks. My good friend, the gentleman from Vermont (Mr. Sanders), who deserves some thanks also on our side of the aisle for working with the gentleman from Alabama (Mr. Bachus), in particular raised some legitimate concerns throughout the debate about checks and whether or not these substitute checks that have now been introduced as a legal equivalent will somehow or another diminish the rights of those who rely on checks heavily, particularly seniors. Perhaps the opposite is true. Not only does this legislation not affect arrangements between banks and customers moving forward, but it will probably also allow for a cheaper, more efficient way for checks to be used. I say that because banks will actually save money on the process and will actually be able to provide a greater array of services to all of its customers, particularly those customers who may rely more on checks. The year upwards of 60 billion checks will be written in the United States; and although, more and more people are relying on forms of electronic pavements, the Fed makes clear that checks will remain an indispensable part of our financial system. Mr. Speaker, I could go on and on about the bill, but I take 30 more seconds before yielding to the gentlewoman from New York (Mrs. Maloney) for some comments on the bill. We talked about check truncation, and just to be real simple about what this is, we wanted to find a way to sort of foster innovation without mandating the receipt of checks in electronic form. It is important for banks and businesses, consumers to continue to have that option of accepting checks in paper form. Essentially, what truncation is is when information on the paper check is captured off the check and delivered electronically, instead of the paper check being presented physically. Through check truncation, paper checks are rendered into zeros and one digital signals which can move through the payment system at digital speeds. Check 21 accomplishes this by establishing this new negotiable instrument, a substitute check which has the same legal status as original checks. The substitute checks would contain the two-face image of the original check. They would include the magnetic code at the bottom so that any bank could process them using existing equipment. They would conform to standards for size, paper stock and the like. The substitute checks can then be used by banks and consumers in the same way as original checks. I make one last comment about my friend from North Carolina (Mr. Watt). He and the gentleman from Alabama (Mr. Davis) both contributed heavily to this bill ending up as good as it has, largely because of concerns they raised about the language. But for the gentleman from North Carolina (Mr. Watt) bringing to our attention how there might have been some ambiguity regarding coverage of the Uniform Commercial Code as it relates to certain disputes between banks, we might not have tightened the language. And but for the work of the gentleman from Alabama (Mr. Davis), who will speak in a few minutes, the language regarding the recredit provision, which actually is a new protection for consumers, might not have been included. Mr. Chairman, I yield 2 minutes to the gentlewoman from New York (Mrs. Maloney). (Mrs. MALONEY asked and was given permission to revise and extend her remarks.)

Mr. FORD. Mr. Chairman, I yield 4 minutes to the gentleman from Alabama (Mr. Davis), a new colleague but one who has already distinguished himself in the Congress.

Mr. FORD. Mr. Chairman, will the gentleman yield?

Mr. FORD. Mr. Chairman, I yield myself the remaining time. I will consume the shortest period of time as I possibly can, Mr. Chairman. The gentleman from New Jersey (Mr. Ferguson), who walked off the floor, deserves a lot of credit for this, and forgive me for not mentioning him more, and obviously the gentlewoman from Pennsylvania (Ms. Hart), it is her bill this go around; but the gentleman from New Jersey (Mr. Ferguson) brought my attention to the bill, and I thank him for that. I think all the merits of the bill have been talked about pretty extensively and maybe the more we talk we may lose what unanimous support we have. So I am not going to talk much longer other than to thank a few people. I want to thank Roger Ferguson at the Federal Reserve, the vice chair. I want to thank Ed Hill and Grant Cole at Bank of America. I want to thank Janelle Duncan with the Consumers Union, as well as the Consumer Federation of America and the United States Public Interest Research Group, for all of their hard work. As the gentleman from Alabama (Mr. Davis) said, this is one bill that I think in a lot of ways can be accurately described as pro-business and pro-consumer. I want to thank Brant Imperatore with O'Conner and Hannan, and of course, the committee staff on both sides, Erika Jeffers, who is a law school classmate, and Ken Swab and Jaime Lizarraga; as well as the gentleman from Ohio's (Mr. Oxley) staff, Kevin MacMillan, Deena Ellis, Jim Clinger, Carter McDowell. There were a number of groups outside of here, the Independent Community Bankers, America's Community Bankers, Credit Union National Association and many others, who contributed to making this final product as good as it is. I ask my colleagues to support the bill. Mr. Chairman, I yield back the balance of my time.

Mr. FORD

Mr. FORD. Mr. Speaker, let me preface by saying I rise in support of the rule and rise in strong support of the bill and thank the gentlewoman from Pennsylvania (Ms. Hart), the gentleman from Ohio (Mr. Oxley) and the gentleman from Alabama (Mr. Bachus) for all of their hard work. In light of the conversation that is occurring, there has been a lot of back and forth. I rise just to say two things: One, this really represents the difference in priorities between the two parties. While one cannot dispute that the bill that passed here a few nights ago in the form of a jobs bill or a tax cut bill, whatever Members choose to call it, the President has suggested that his tax bill will produce a million jobs, so I have taken to calling it a jobs creation bill. The reality is the bill cuts taxes for some people but not enough people. The $3.5 billion that was taken out of the bill, tax cuts that were removed from the bill to make room for other tax cuts, my side characterizes it as tax cuts for wealthy Americans. The other side characterizes it differently. The reality is $3.5 billion was taken out of the tax cut that would have gone primarily to families who earn under $25,000 a year. It is suggested that up to 12 million children will lose out. The gentleman from Alabama (Mr. Bachus) is my friend, but I take issue with one characterization. This is not a welfare program. These people earning under $25,000, they work. Some may work not only in the military but here on this Capitol Hill where we work day in and day out. I believe people who work day in and day out deserve a break. Not only do these people need it to help feed their families and pay their higher energy bills, they will also spend it in ways that will help rejuvenate this economy. A point was made about the middle class, and I will submit for the Record yesterday's Washington Post piece that shows numerous studies indicate that the middle-class tax share is set to rise after the passage of the 2001, 2002, and 2003 tax bills. We may not like this, but these are the facts. It reports that people earning between $28,000 and $337,000 a year will end up paying a higher share of taxes than any other group of Americans after the passage of the 2001, 2002 and 2003 tax bills. Mr. Speaker, I hope that my friends who label this as an effort to increase welfare will take a look at the facts of the tax bills that this Republican House and Republican Senate have passed. [From the Washington Post, June 4, 2003] Middle Class Tax Share Set To Rise Studies Say Burden Of Rich to Decline (By Dana Milbank and Jonathan Weisman) Three successive tax cuts pushed by President Bush will leave middle-income taxpayers paying a greater share of all federal taxes by the end of the decade, according to new analyses of the Bush administration's tax policies. As critics of the tax cuts in 2001, 2002 and 2003 have noted, the very wealthiest Americans--those earning $337,000 or more per year--will be the greatest beneficiaries of the changes in the nation's tax laws. And, as administration officials have argued, low-income taxpayers will also enjoy a disproportionately lighter tax burden. The result is that a broad swath of lower-middle, middle- and upper-middle-income people, as well as some rich Americans, will carry a greater share of the federal tax burden after the laws passed in the past three years are fully implemented. While taxes are scheduled to decline for all income groups, those earning more than $28,000 but less than $337,000 will end up paying a greater share of the taxes than they did before the changes. The findings, by two groups that have been critical of the Bush administration's tax policies, add a new wrinkle to the increasingly contentious debate over the fairness of Bush's tax policies and which income groups would benefit most. Liberal groups have argued that the Bush administration is penalizing the poor while rewarding the rich. In part to answer those critics, Republicans have targeted the poor with expanded tax refund checks for families with children, a new 10 percent tax bracket and a larger earned-income credit for married couples who are poor. The result may be a surprise to both sides: By the end of the decade, the middle class will be picking up a greater share of the government's tab. ``It's hard to get a lot of progressivity at the very top,'' said R. Glenn Hubbard, the architect of Bush's most recent tax cut proposal and a former chairman of the White House Council of Economic Advisers. By slashing taxes on dividends, capital gains and inheritances, the cuts ensure that tax burdens will no longer rise consistently with income, as they would with a perfectly ``progressive'' system. ``But,'' Hubbard added, ``we've very much retained progressivity overall because so much money was dumped into the bottom rates.'' The two studies focused on separate issues. Citizens for Tax Justice examined the percentage changes in total federal taxes that would be paid by different income groups through 2010. The Tax Policy Center, jointly run by the Brookings Institution and the Urban Institute, looked at the share of federal taxes that would remain for the various groups once those changes are fully phased in. But the studies reached similar conclusions. Citizens for Tax Justice found that for the lowest fifth of taxpayers--those earning below $16,000--federal taxes would fall 10 percent between now and 2010, while federal taxes for those in the second quintile--earning between $16,000 to $28,000--would fall 12 percent. At the other end of the scale, the decline for the top 1 percent of taxpayers--those making $337,000 and up--would be 15 percent. In contrast, for taxpayers earning between $45,000 and $337,000, the decline would be 7 percent, less than half the cut reaped by the very wealthy. Citizens for Tax Justice assumed that those provisions in the tax laws scheduled to expire before 2011 would expire as scheduled, although administration officials have said they are determined to make those changes permanent. The Tax Policy Center assumed that all proposed tax cuts would become permanent. It found that the share of federal taxes paid by the top 1 percent of taxpayers would drop to 22.8 percent of the total in 2011, from 24.3 percent today, while the share paid by the lowest 40 percent would fall to 2 percent, from 2.2 percent. All others would have a slightly larger proportion of the federal tax burden in 2011 than they do today. For families earning between $22,955 and $80,903, their share of federal taxes would rise from 25.5 percent to 26.1 percent. Both groups included all federal income, payroll, corporate and estate taxes; Citizens for Tax Justice also included excise taxes. Treasury Department officials said the studies are skewed because they include Social Security and Medicare payroll taxes, which the tax cuts did not seek to reduce. Pamela F. Olson, the assistant Treasury secretary for tax policy, said that if Social Security taxes are included, then Social Security benefits should also be measured. ``Then you would have a very progressive system,'' she said. Instead, Olson pointed to the Treasury's analysis of the impact of successive tax cuts on individual income taxes only. In that analysis, all taxpayers with less than $100,000 in income are shown to be paying a smaller percentage of their income in taxes than they did before Bush took office. Households earning $100,000 or more are now paying 73.3 percent of federal income taxes, up from 70 percent. Figuring out whether tax policy benefits the wealthy or the poor is a hotly disputed subject. Liberals favor a progressive tax system in which households pay higher tax rates and a higher share of their total income as they climb up the income ladder. By that measure, the Bush tax cuts have made the tax code less progressive. By 2011, the poorest taxpayers' after-tax income will have risen only 0.3 percent, according to the Tax Policy Center, while household income for the richest 1 percent of taxpayers will have jumped 8.6 percent. Conservatives say the better measure is which group winds up paying a greater proportion of the tax burden after the tax cut. The rich may get the largest dollar benefit from the tax cuts, but the top 20 percent of household will still be paying 71.5 percent of all federal taxes in 2011. Conservatives and liberals alike agree that Bush's tax policies have shifted more of the tax burden to the middle class. Kevin Hassett, a conservative economist with the American Enterprise Institute, said it ``makes complete sense'' that this would happen as a result of Bush's policies. Changes such as the elimination of the estate tax and the reduction of the stock-dividend tax disproportionately benefit the wealthiest 1 percent, who have the largest amount of assets and capital. Those at the other end of the income spectrum benefit disproportionately from targeted tax cuts such as the child tax credit. With the biggest gains going to the wealthiest and to low- income taxpayers, those in the middle inevitably get a higher tax burden because they don't qualify for the targeted tax breaks that go to the poor or the investment-related tax breaks that go to the wealthy. ``The middle class is predominantly labor income,'' Hassett said.

Mr. FORD. I can sit and listen to a lot of this, and I have a lot of friends on the other side of the aisle. But let us be fair. These people making less than $25,000 a year get up and go to work just like you and I do every single day. They pay a payroll tax which is the highest tax paid by 82 percent of Americans. So the other side of the aisle can label us not being for tax cuts if you choose, but do not call this a welfare plan. This is a plan designed to help people who go to work day in and day out but who earn under $25,000 a year.

Mr. FORD

Mr. FORD. Mr. Speaker, what is the problem then if my colleagues believe in removing all these taxes, which I think there is a lot of merit to, I am a big tax cutter like the gentleman is? I support those ideas. How is that consistent with the taking 3 million, or I should say up to 12 million, children or removing them from the target of a tax cut which my colleagues did, they voted for it?

Mr. FORD. Mr. Speaker, will the gentleman yield?

Mr. FORD. Mr. Speaker, that is a little unfair. I do not think anyone objected to flags being flown and so forth. You make a good point on some of the other things, but that is a little unfair on the flag.

Mr. FORD. That is unfair.

Mr. FORD. Mr. Speaker, will the gentleman yield for a quick question?

Mr. FORD. . . .

Mr. FORD. . . .

Mr. FORD. . . .

Mr. FORD. Mr. Speaker, I want you to know I mean no disrespect to you personally or to the institution, but the notion that somehow welfare has any role in this debate is asinine. My colleagues know and we know, as do those watching know, certainly our colleagues in the Senate know, that everyone we are discussing today with regard to this child tax credit are working people. The welfare reform package that passed this Congress passed before I got here, so it is easy for me to say I would have voted for it, since I was not here. But I can assure my colleagues that my votes since that time are consistent with that. Now, I appreciate the gentleman from Texas (Mr. DeLay) coming down here, but what he did, I think, was to lay out pretty clearly for those on our side and the other side just the difference in priorities. Our priorities differ in great ways from the Republicans. Many of us like tax cuts; my Republican colleagues like tax cuts. We think tax cuts should benefit more people, the Republicans think they should benefit a lesser group of people. No disrespect to you. Do not mean to ridicule my colleagues personally, but there are complete differences in priorities and realities. The reality is what we are discussing today. People earning $25,000 a year or less make up a good portion of America. Frankly, those of us on this floor, that is a fraction of what we earn year in and year out. And how dare we, as we pass a tax cut bill, how dare we say that we have done enough for people that make $11,000, $12,000, $13,000, $14,000 and $15,000 a year. How dare we say that to their children, when the facts betray everything that you believe and I believe. Frankly, if these children whom we are denying this tax credit to could vote, they would vote all of us out of office. As many times as we have lied to them about building new schools and putting more teachers in the classrooms, they would fire the President, might have even fired the former President. So let us be honest. We deny 12 million children a tax credit. No funny math, no Enron accounting, no Arthur Andersen accounting can refute that. We should do better and we can.

Mr. FORD

Mr. FORD. Fair enough.