Phil Gramm

Mr. GRAMM

Mr. GRAMM. I am hopeful that at some point we are going to work out a compromise and move this bill forward. It seems to me the position we are in is we want to set this vote up for tomorrow. The Senator has the right to object to doing that, pending getting the opportunity guaranteed that he can offer his amendment. If he is here--and he has this problem with this funeral apparently--no one can prevent him from doing it. I am hopeful if we work out a compromise that we might talk him out of offering the amendment. So I think we should accept the amended unanimous consent request of the majority leader. I do not see that we are giving him anything that he would not have if we were not here. It seems to me, pending trying to work out a compromise, that we would be better off not having it offered tonight. He could offer it as a second-degree amendment tonight--it is perfectly within the rules-- by objecting to setting up the vote for tomorrow. So I think the logical thing to do is to take the majority leader's proposal.

Mr. GRAMM

Mr. GRAMM. Mr. President, let me first say that I believe the Senator from Florida is to some degree correct about his concern. I think his remedy is wrong, and I am not going to support it. But I believe there is a problem. I wish to try to set out what I think the problem is and why I don't think this is the remedy. The problem is that, beginning in January of this year, huge numbers of insurance policies expired. We tried last year without success to pass a bill. That effort went into mid-December. I am familiar with it because I was involved in it. Insurance companies sold policies beginning in January, and we are in June. Policies have been sold. Rates have gone up, as they had to go up because risks have gone up. But if we come in now with a bill that has a very low retention, where the taxpayer is going to become the net payer before there is a substantial or mega loss--I remind my colleagues that when we first started debating this no one proposed that we go into business with the insurance companies. No one has proposed--I don't think anybody proposed. Maybe I had better be careful because for every bad idea there is a constituency. But I don't think anybody has proposed that we set up a Government insurance program. The proposal has been that, once there is a cataclysmic loss, the Federal Government be the backup for insurance companies. The word that has been used throughout the debate is the Federal Government would be the ``backup.'' In October, when we were putting together a bill that had a retention rate of $10 billion, which meant that private insurers had to lose $10 billion before we stepped in and started to pay 90 percent of the costs, $10 billion is a cataclysmic loss. What happened as the bill evolved in December, and when we were only weeks away from the bill going into effect, that $10 billion retention got changed to individual company retentions. So the level at which the taxpayer starts paying has gone down and down. Now we find ourselves in a position where various interests that would have been delighted in October to have gotten the $10 billion retention now oppose it, wanting individual company retentions. The Senator from Florida is simply pointing out that to come in now where the Federal Government is going to pay out money before there is a mega loss is going to create a situation where people have charged premiums and sold policies based on one set of circumstances. We are about to change those circumstances. In doing so, you are going to have a net wealth effect. There is no question about it. I think the solution is to change the bill before us and require a higher level of loss--a higher level of ``retention,'' as it is called in the industry--so we simply move back to insure the kind of loss that no one was able to insure against in any case. But I wanted to make it clear that there is some validity to the Senator's argument and concern about equity. Having said that, I am very loathe to getting the Federal Government in the business of setting insurance rates. We have never done it before. It is something that has been done by the States. Those State regulations are still in place. I know our distinguished colleague from Florida has been a State insurance commissioner, and he understands how difficult it is to set these rates. As difficult as it is for Florida and Texas, it would be more difficult for the Federal Government because we have never done it. I simply, again, make the point that I made earlier; that is, I think there are two problems with this bill as it exists now. One is we are leaving victims of terrorism unprotected against predatory lawsuits. On a straight party-line vote a minute ago, we decided to do that. The second problem is that we have a retention level in this bill now that is so low that it doesn't take into account the fact we have had 7 months where insurance has been sold with no Federal backup. Also, the most critical point is that, if we want a reinsurance market to emerge, if we want to encourage syndication, you don't do that with individual company retention. I am afraid we are creating a hothouse plant here which will never get out of subsidization. We will never get out of this business if we leave the bill the way it is now. I am not saying that the $10 billion retention solves every problem in the bill. It doesn't. But at least it forces companies to syndicate, and it forces companies to be willing to purchase reinsurance. That creates the profits to bring it into existence. I intend to vote against the amendment of the Senator from Florida, but I wanted to make it clear that he has raised an issue that the current bill does not deal with. If this amendment is not successful, I hope we will find a way for dealing with it. I yield the floor.

Mr. GRAMM. So the day we introduced the bill with a $10 billion industry retention, based on the logic that we wanted to encourage reinsurance, that we wanted to encourage syndication, there was broad support in the insurance industry and in American business for that compromise. We got to December, 3 weeks away from--at least as we are told, and as I believe actually did happen--tremendous numbers of insurance policies expiring on January 1. So recognizing we were writing a bill where the industry would have only 3 weeks to try to respond to it, the bill that was put together had not an industry retention but an individual company retention that would produce a situation where, with as little as $50 million of cost, the Federal taxpayer could be pulled into the process, a far cry from the $10 billion retention we had had in the original compromise. The logic of it, as of December 10, was that we were 3 weeks away from the beginning of the year and there was not time for this syndication to occur, there was not time for reinsurance to occur. Now it is 7 months later. Insurance companies have sold terrorism insurance, not at the price we might have chosen, not to the people we might have chosen they sell it to, but the point is at inflated rates, because things changed, the market changed, and we expected rates would go up. It was, in fact, required that they go up economically. Now insurance companies have sold all these policies based, at that point, on no Government backstop. To come back in now with an individual company retention that could put the taxpayer at risk, when the costs are as small as $50 million or $100 million, makes absolutely no sense. What has happened, as we might expect it to happen, is that if I were running an insurance company and I had a choice between having Government backup begin at $100 million versus $10 billion, I would not be running an insurance company long if I did not decide that $100 million was better than $10 billion. So now we are having this debate driven by insurance companies that want the low retentions. In December, when we were writing a bill to go into effect in 3 weeks, there was not any other choice, but once that marker got out there and people saw it as a possibility, then they decided this deal they were willing to sign on in October, which protected the taxpayer by having insurance companies pay the first $10 billion, that that was no longer acceptable. Seven months later, premiums collected, risks taken to come in with an individual company retention level at the level that is being discussed now in this bill, would grant a huge windfall. I think it is not justified and not good public policy, and that is an issue that has to be dealt with. We have to decide, are we representing the taxpayer or are we representing some other interest? It seems to me to put the taxpayer at risk, to back up policies that have already been sold, with no Government backup, where premiums have already been collected on the basis that there would be no Government backup, to now come up with a backup that is in the tens of millions rather than $10 billion, is to basically have the taxpayer enter into a situation where the initial risk is borne largely by the taxpayer and not by the insurance company. Let me say to my colleagues that if this were World War II instead of a new kind of war, we could have had a Government insurance program. We had one in World War II. We had two kinds. We had one for international shipping and we had one for domestic assets. Both companies made money. Both companies, when we signed the peace treaty on the Missouri, faded out. The problem now is this war will not end with a peace treaty on the Missouri. It will end with the scream of some terrorist. But there will not be a signed agreement that it is over, nor will we know that is the last terrorist in the world. We have to decide if this is a transition bill that is trying to build these risks into the structure of insurance rates, or are we getting the Government permanently in the insurance business in America. That is a fundamental question. When we decided in October, we answered the question. When this bill was written in December, we were forced into this low deduction by having only 3 weeks. Seven months later, that makes no sense. This is the issue that needs to be dealt with. I hope it can be compromised on a bipartisan basis. As I said earlier, from the beginning I have believed we needed a terrorism insurance bill. Finally, I turn to the liability question, and I will be brief. We have before the Senate the most modest proposal related to punitive damages that has been discussed thus far in this bill. We had a bipartisan agreement that banned punitive damages outright, a complete ban. The House adopted a bill that had extensive protections from predatory lawsuits in a terrorist attack. In my mind, to unleash predatory lawsuits after a terrorist attack is like piracy on a hospital ship. It is outrageous and unacceptable. Now, the Senator from Kentucky has given a very watered down compromise and, I think, a reasonable one, and to me acceptable--though I like the House provisions better; I like the proposal of the President better. What his compromise says is that you cannot sue victims of terrorism for punitive damages. You can sue the terrorists, but you cannot sue the victims, the people who were in the attack, the people whose buildings and lives were destroyed, unless they have been convicted of a felony related to the attack. In other words, they had some measure of criminal culpability. I don't know how anyone can be against this proposal. If you are against this proposal, you are basically willing to unleash predatory lawsuits on anyone--in this case, including victims of terrorism. Let me conclude and yield the floor by urging my colleagues to vote for the McConnell amendment. The President has said in a letter, through four spokesmen, including the Secretary of the Treasury, that he will not sign a bill that does not protect people from predatory lawsuits that arise from a terrorist act. I hope my colleagues will vote for the McConnell amendment. Second, I hope we can work out a compromise on this retention issue. We should be able to work out a compromise. I commend to my colleagues that we do it. If we do it, we can immediately transform this bill into a bipartisan bill. We can get an overwhelming vote for it. We could end the debate on it. If not today, certainly early next week. There is work that has yet to be done. I hope we can do it together. There is no reason we cannot. I yield the floor.

Mr. GRAMM. I think I should be through within, say, 10 minutes.

Mr. GRAMM. Yes, I would be happy to yield.

Mr. GRAMM

Mr. GRAMM. I would say to the gentlelady from Maine that this is an important issue that was brought to our attention only after the basic legislation was drafted. For that reason, I have every intention of making sure that, in conference, we give full consideration to the problems faced by the group life industry.

Mr. GRAMM. I thank the Senator from Nebraska for raising this important question. I believe that this bill does not speak individually to the issues now confronting the group life insurance industry. I would note that the bill does contain a provision that requires the Secretary of the Treasury, after consultation with the Nation of Association of Insurance Commissioners and representatives of the insurance industry and other experts, to study the potential effects of acts of terrorism on the availability of life insurance and other lines of insurance coverage.

Mr. GRAMM

Mr. GRAMM. Mr. President, let me repeat those facts very briefly because facts are persistent things. In 1999, 104,000 American families filed a death tax return, with 45,000 of them ended up paying a death tax. Only 889 qualified for the exemption that would be expanded by this amendment. In the last 5 years, of the people who would have qualified for this and all the other exemptions, only 33 of them have been farmers and ranchers. So as I said earlier, this amendment provides a political figleaf for Senators who are going to vote against a permanent repeal of the death tax and who are using this to cover themselves. It is going to provide political protection for more Senators than it is going to provide tax relief for farmers and ranchers in America. Some 40 Senators will get the figleaf of protection. Some 33 farmers and ranchers in 5 years have gotten relief from all of these provisions. I think this is a clear choice. The Senator complains that the tax cut is temporary. Why? Because we did not have 60 votes; because the Democrats opposed the President's tax cut in overwhelming numbers. They had the ability to filibuster. The only way we could get the tax cut adopted was to use a procedure that required that the tax cut expire after 10 years. Now the Senator from North Dakota is attacking us for a provision that exists because the Democrats would have filibustered the tax cut. When we voted, I assumed we meant to repeal the death tax. People said they did. Now we have come down to doing it. There is only one real repeal. That is the amendment I am going to offer with Senator Kyl. We are going to raise a budget point of order against this amendment. It will require 60 votes to overcome it. The same point of order will be raised against our amendment. I urge those who voted for the tax cut to vote to sustain this point of order so we can have a real repeal, something for which they voted. Second, I urge people who did not vote for the tax cut to look at the absurdity of having a situation where 11 years from now this death tax is going to come out of the grave and prey on family businesses and force people to sell off the life work of their family to give the Government a 55-percent tax on everything they have accumulated in their lives. The National Federation of Independent Business is faxing me a letter right now opposing this amendment, saying it does not solve the problem. I will have that letter printed in the Record. I have the letter before me. I ask unanimous consent it be printed in the Record.

Mr. GRAMM. Mr. President, on the two previous amendments, we have afforded the authors of the amendments the ability to close the debate. We would like to preserve that right for ourselves in this debate on our amendment. So what I would like to do is to ask those on the other side who want to come and speak to do it, so we can take our remaining time to use at the end to close out the debate. There is no rule that says it has to be done that way, but when we closed out the debate on the Dorgan amendment, he had the last 11 minutes. When we concluded the debate on the amendment of the senior Senator from North Dakota, he closed out that debate. So if we could do it that way, we would like to do it. It seems reasonable to us. If anybody objects, obviously we can talk about an alternative.

Mr. GRAMM. Mr. President, under the unanimous consent agreement, I raise a 311 budget point of order against the Conrad amendment.

Mr. GRAMM. Mr. President, as provided for in the unanimous consent agreement, I make a point of order under section 311 of the Budget Act against the pending Dorgan amendment.

Mr. GRAMM. How much time do we have, Mr. President?

Mr. GRAMM. Mr. President, I send an amendment to the desk on behalf of myself, Senator Kyl, Senator Brownback, Senator Nickles, and Senator Hutchison.

Mr. GRAMM. I am going to yield 3 minutes 20 seconds to my colleague from Arizona, and then I would like Senator Dorgan to use his time and then I will conclude.

Mr. GRAMM. Let me take 5 minutes of it. Then I will yield to the Senator from Colorado.

Mr. GRAMM. How much time do we have remaining?

Mr. GRAMM. Madam President, facts are persistent things. The good thing about fiction is you can always have it the way you want it. If you make it up, it can always be good, if you are for it. It can always be bad, if you are against it. But facts are persistent things. In 1997, recognizing that we had confiscatory taxes on small businesses and family farms upon death but not being willing to repeal the death tax, which our Democrat colleagues are not willing to do--the only vote we are going to have today that would repeal the death tax or would change the death tax, the only one that would go to the President to be signed today is the one I will offer--wanting to get credit for helping without helping, we adopted a provision called 2057. That is the closely held family business exemption. Our colleague says: We will expand it so it will cover every small business, every family farm. It has been in effect for 5 years. How many farmers and ranchers do you think have qualified for this protection in 5 years? In 5 years that this provision of law has been in effect, only 33 farm and ranch families have qualified. This bill that is being offered as an alternative to the real repeal of the death tax is not about 33 families. It is about protecting 40 Senators by giving them a fig leaf when they vote against repeal of the death tax. The plain truth is in 5 years of being in effect, this provision has afforded relief to 33 farmers and ranchers. And why? It is 17 pages of single-spaced requirements. It gives the government a lien against your property for 10 years. It sets up requirements like ownership of assets for at least 8 years, when if you are growing chickens, they don't live 8 years. The bottom line is, this is absolutely unworkable and meaningless except for fewer taxpayers than we are going to have Senators vote against repeal of the death tax. I go back and make my point: Our colleagues know this is an issue that Americans care about. They desperately want to spend the money we are collecting by making people sell their farms, sell their businesses upon the death of the founder in order to give the government 55 cents out of every dollar they have accumulated in their lifetime. But rather than repeal the tax so that this absolute tragedy and theft could stop, this outrage could end, they are offering basically a proposal that has proven to be unworkable. When it gets down to the bottom line, the question before us is a very simple one: Do you think it is worth making people sell their business, sell their farm, sell off the product of their life's work to give government 55 cents out of every dollar they have accumulated, even though every dollar they have accumulated they have paid taxes on, so that Government can spend that money? Or do you think it would be better to let people keep the money and eliminate the situation where death is a taxable event? That is the question before us. There is only one real repeal. I have been around the track before. I have seen it. I know what is going to happen here. We are going to have a bunch of people who are going to vote to sustain this point of order so that even though we have a majority who want to repeal the death tax, we won't be able to do it today. But they are going to vote for these proposals where only 33 farmers and ranchers in 5 years have qualified, and they are not outside the 10-year window. They may not end up qualifying. They are going to go back home and say: Look, I wasn't against repealing the death tax. I just was against their repeal of the death tax. There is only one real repeal, and that is the one that passed the House. I yield 5 minutes to the Senator from Colorado.

Mr. GRAMM. Madam President, I yield 5 minutes to the Senator from Missouri.

Mr. GRAMM. Mr. President, I have sent to the desk the real repeal of the death tax. This amendment is identical to the language that was adopted in the House of Representatives last week. Current law phases in the elimination of the death tax and then, due to the limitations of the Budget Act, the death tax rises up out of the grave in 2011 and starts destroying family businesses, family farms, and family dreams in 2011. What our amendment does is makes the repeal of the death tax permanent. I want to touch on a couple of issues, and then I want to yield to some of my colleagues who want to speak. I remind my colleagues that when we passed the tax bill, we had 58 votes. It would have taken 60 votes to have made the tax cut permanent by waiving the provisions of the Budget Act. We only had 58 votes. We have this anomaly that the death tax rises out of the grave because we only had 58 people who supported the tax cut. I believe everybody who voted for that tax cut was committed to the principle that we were repealing the death tax. Today we have an opportunity--the first real opportunity--to achieve that goal. I remind my colleagues that in the year that the repeal would go into effect, which would be 2011, we are projected by the latest Congressional Budget Office estimate to have a $450 billion surplus. Our Democrat colleagues say they would like to make it permanent, but we cannot afford it. I remind my colleagues, when it would go into effect, under current estimates, we would have a $450 billion surplus. What they are really saying is they want to spend the money rather than letting people keep their farm, keep their business, keep their dream. We have heard throughout this debate Member after Member get up and say that this repeal will take money away from the Treasury and that they are very worried about the debt and the deficit. Not once, twice, three, four, or five times, but six times in the last 9 months we have increased spending many times more than would be required to pay for the repeal of the death tax. In nonrequested, nonemergency funding in the emergency appropriations bill, items the President did not ask for, we spent four times as much as it would take to fund the repeal of the death tax next year. In total, in the last 9 months, the same people who are saying we cannot afford to make this repeal permanent have voted for 15 times more spending next year than the cost of repealing the death tax. These are the same colleagues who have 100 different taxes that ought to be increased, 41 different tax cuts that ought to be taken back, but they do not have one single idea about how we could control spending. In reality, this is a very simple debate. When you cut through to the bottom line, it is a debate about priorities. Those who are opposed to making the tax cut permanent are basically saying: We are willing to force people to sell their business and sell their farm, tax a family at the moment of death and take away the life work of their parents so that Government can spend more money. That is what this is about. Are you willing to take away somebody's farm, somebody's business, somebody's dream so Government can go on spending as usual? I am not. This is a clear-cut issue, and it is a question of right and wrong. It is not right for people to work a lifetime, pay taxes on every dollar they earn, scrimp, save, sacrifice, plow that money into a business, plow it into a farm, work 12 or 14 hours a day, and then when they die their children have to sell their life's work to pay a tax on income that has already been taxed. It is fundamentally wrong. This is a moral issue, not just a tax issue or an economic issue. I urge my colleagues to vote to make the death tax repeal permanent. If the people who voted for the tax cut and if the people who voted for the sense-of-the-Senate resolution earlier this year are saying we ought to make the death tax repeal permanent voted for this amendment, we would succeed. I urge my colleagues to take away this tax on farms, ranches, businesses, and dreams by making the repeal of the death tax permanent. I yield 5 minutes to the Senator from Texas, Mrs. Hutchison.

Mr. GRAMM. And Senator Dorgan?

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

Mr. GRAMM. Why don't I take 10 minutes, and I will give my colleagues 10 minutes. Let me just begin by sort of straightening a little history out. The death tax started in America through a Stamp Act on wills when we had an undeclared war with France. It was repealed right after the tensions with France ended but was reimposed during the Civil War. Abraham Lincoln did not impose a death tax because he wanted to take away people's inheritance in America. He imposed it, along with a lot of other taxes before we had an income tax, to try to save the Union. It too was repealed when the war was over. We reimposed the death tax during the Spanish-American War, and repealed it when the war was over. Finally, it was imposed during World War I. We had a battle between the President and the Congress over the League Of Nations. It ended up not being repealed, and it still plagues us today. That is the history of the death tax. Let me also say to my colleagues that this is an old issue and it is an old issue between the two great political parties. In 1981, when Ronald Reagan came to Washington, part of his tax cut was to raise the exemption--the amount of wealth in your business or your farm or your estate you could protect from taxes--from $175,000 to $600,000. The same arguments made by the same Democrats were made at that time. They said it was wrong to raise the exemption to $600,000. Had they prevailed 20 years ago, the exemption would be $175,000 today. Ten years ago, Congressman Gephardt and Congressman Waxman proposed lowering the exemption--that is, the amount of your farm or your business or your estate that you could pass to your children without it being taxed--from $600,000 to $200,000. Our colleagues basically admit this is a cancer on the economy--but they only want to take part of it out, not all of it out. The problem is, 10 years ago members of their party were trying to lower the deductible and raise the tax. We want to take the whole cancer out because we believe it will come back if we do not. Finally, in 1997--which is not that long ago--32 Democrat Members of the Senate voted against raising the exemption to $1 million. We have had a lot of talk today about rich folks and who is rich and who is not rich. Sometimes it is awfully hard to tell. But I do want to use this figure. Iowa is a farm State. They have 80,000 farms. It is estimated that 30,000 of those farms today are valuable enough that if the owner of the farm died, their children would have to pay a death tax. That is almost 40 percent of the farms in Iowa. Look, there are some people who are bothered by the fact that some people become successful in America and make money. I am not one of them. If someone became very rich, started a business in College Station, had 200 employees, had $10 million worth of machines and plant and equipment and trucks, and they died--our Democrat colleagues say they are rich. But is America richer if we take $5.5 million from them, make them sell the business, sell the trucks, sell the equipment, make their children do all that to give the Government $5.5 million in taxes? Are we not better off leaving that $5.5 million at work in College Station than we are destroying that business and bringing it to Washington? Sure, the family is rich. But is America richer or poorer by destroying it? Can we build up one family by tearing down another? I do not think so. I mentioned earlier in the debate--I want to mention it again--I have been bequeathed only one thing in my life. My Great Uncle Bill, my grandmother's brother, died and left me in his will a cardboard suitcase. I am proud to say I still have it today. It had yellow sports clippings from the 1950s in it. If they had been baseball cards, I would be a rich man today. If all my relatives I know of left me everything they own, I do not believe I would qualify to pay the estate tax. So why do I feel so strongly about repealing the death tax? For the simplest of all reasons--it is wrong. It is wrong. It is not right, no matter whether somebody is Bill Gates or Dicky Flatt, who owns a print shop in Mexia, TX, and who never gets that blue ink off the end of his fingers. It is wrong, when they die, to make their children sell off their life's work to give Government 55 cents out of every dollar they have accumulated in their lives. They work, they save, they scrimp-- Dicky Flatt gets up early in the morning, he works on Saturday. Everything he owns he plows back into that business. He sent his children to Texas A&M. They have come back into the business. Dicky's daddy worked there, his momma worked there, he works there, his wife works there, his son works there, his son's daughter worked there, and they plow everything they can back into their business. I do not know what it is worth. But I know whom it belongs to. I know who built it. How is it right, after they have done all that work, made all those sacrifices, scrimped and saved, lived far below the level they could live if they chose to spend their money--why is it right to take it away from them just because they earned it? That is what this issue is about. It is not about being rich versus being poor. It is about right versus wrong. It is wrong when people who pay taxes on every dollar they earn, who have plowed it back into their businesses or farms or estates, to destroy all that when they die. Death should not be a taxable event. It is hard enough to face dying, without having to know that your children are going to lose what you have built. Every day, people are spending billions of dollars to try to get around this tax. Talented people are retiring when they are 55 years old because they know the Government is going to take the fruits of their labor away from their children. People are selling off farms to try to plan their estates. They are shutting down businesses to divide up the assets ahead of time so they do not have to pay the taxes, and America is poorer for it. We have heard a bunch of speeches from my colleagues. They believe what they believe. I believe what I believe. Who is to say who is right? But I will say this. Over and over, we have heard people get up on the floor and say we can't afford this. I would just like to remind my colleagues that last Thursday--I hope I am not stretching their memory--last Thursday we spent $14 billion the President did not ask for, for nonemergency matters. That is four times as much, over the next 2 years, as repealing the death tax permanently would cost. So the same people who say we cannot afford to make the repeal of the death tax permanent, they could afford to spend four times that much last Thursday on unrequested programs, but they cannot afford it today. When we passed the farm bill, they could afford to spend seven times as much as it would cost next year to repeal the death tax, but they can't afford it today. On the energy bill, they could spend more than enough to pay for it, but they can't afford it today. When we added all those riders to the trade bill, they could spend more than it would cost next year to repeal the death tax, but they can't afford it today. When they wrote this budget, they asked for $106 billion of new discretionary nondefense spending. We have heard all of this talk about the war and fighting the war. When they wrote this budget, they spent $106 billion more than the President asked for. Yet today they cannot afford to make the death tax repeal permanent. It is a matter of priorities. It is a matter of what you think is of a higher order. What my Democrat colleagues, with very few exceptions, have said indirectly, without saying it just flat out, is the following: They are willing to force people to sell off their businesses and farms to give the Government the money because they want to spend it. They think that is more important than leaving those businesses and farms intact. I believe they are wrong. I believe the American people believe they are wrong. I think this is something that we need to do. I commend it to my colleagues. I yield the remainder of our time to my colleague from Arizona. I thank him for his leadership on this issue.

Mr. GRAMM. Madam President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. GRAMM. Madam President, let me remind my colleagues where we are and what we are doing. Last year, we adopted a repeal of the death tax. Under that repeal, we phased up the exemption. We will soon start phasing down the rates, and in 2010 we will actually repeal the death tax. But because of a quirk in the rules of the Senate and the budget process, this death tax snaps back into full force in 2011. Members of the Senate voted to repeal the death tax. They proclaimed they were repealing the death tax. We are here today to really finish that work by simply taking the provisions of law that are in place and in 2010--a year when according to the Congressional Budget Office March estimate we will have a surplus of over $300 billion--we would eliminate the death tax forever rather than having the death tax come back from the grave to prey on working families. That is the provision we are here to debate. We have had offered an amendment which is really not about protecting family farmers. It is not about protecting small businesses. It is about protecting politicians. It is an amendment that makes a nominal change in existing law that still allows the death tax to continue but it claims to give an unlimited exemption to small businesses and to small farmers under a section of law called section 2057. This is a provision that was proposed last year by the opponents of the death tax repeal as an alternative when we voted on repealing the death tax. It is in law today but at a lower level of protection. The point I want to make is, section 2057--which this amendment claims would be expanded to shelter more value in small business and family farms--and all the other special exemptions put together have been used by only 33 taxpayers in the time they have been in effect. In other words, these provisions that supposedly shelter and give small business and family farms special protection are so convoluted, so burdensome, so inefficient that only 33 taxpayers in the years since these provisions have been in effect have found it possible to use this section 2057 to gain the promised relief. So the reality is, if this amendment were adopted, it would provide assistance to 33 known taxpayers but it would provide a figleaf to 40 Senators by allowing them to vote against the repeal of the death tax once and for all. My colleague and cosponsor on this bill is a distinguished attorney, and I want to give him an opportunity to talk about this provision in some detail, but let me basically sum up the arguments we have heard thus far and that we are certainly going to hear today. The first argument we are going to hear is that repealing the death tax is going to cost money, is going to drive up the deficit, and is going to increase debt. I remind my colleagues that under the latest estimates we have, the death tax collects less than 1 percent of the revenues that we collect in the Federal Government. Yesterday, I made reference to two studies, one by our own Joint Economic Committee titled ``The Economics of the Estate Tax,'' and the other by the Institute for Policy Innovation titled ``The Case For Burying the Estate Tax.'' Both of these studies make a very strong case that by forcing small business and family farmers who are trying to protect their families from the death tax to pay these big insurance policies, to hire all these lawyers, to hire all these accountants, and by forcing people to sell off businesses and farms prematurely to try to plan for this tax, we have lowered the efficiency of the economy. The study by our Joint Economic Committee concludes that the level of capital in America is $50 billion lower than it would be without the death tax. The study by the Institute for Policy Innovation concludes that by disrupting economic activity and lowering efficiency, this tax actually collects no net new revenue. Our colleagues say, and we are going to hear it throughout the day in the debate, that, well, we would make it permanent but we cannot afford it; we cannot afford to make it permanent. I remind my colleagues that the amendment I will offer, which is the permanent repeal amendment that passed the House, does not go into effect until 2010. As I noted earlier, in 2010 we are projected to have a surplus of some $300 billion. What those who oppose permanent repeal of the death tax are really saying is they want to spend that money. There is an interesting paradox here. Despite all the talk we had yesterday and will likely hear again today that we simply cannot afford to make the repeal of the death tax permanent and we have to force families to sell off the family business and sell off the family farm and give government 55 cents out of every dollar people have accumulated in their working lifetime in aftertax dollars, that we have to do that because we need the money, I find it interesting that in five different instances over the last 9 months where this Senate has voted to spend more money than we would lose in revenues next year if we made the repeal of the death tax permanent. We spent $14 billion on nonemergency items in the emergency supplemental appropriation that the President did not ask for and that over the next 2 years is some four times as much as repealing the death tax would save families if they got to keep the money. The farm bill next year costs seven times as much as letting people keep the family farm or keep their small business. The energy bill was more expensive than the cost of letting people keep their family farms. The trade bill added new entitlements that cost more over the next 3 years than letting people keep what they have accumulated over a lifetime. Railroad retirement costs 15 times as much next year. The stimulus package that was adopted, the parts that were not asked for by the President, cost more than making the repeal of the death tax permanent next year. Finally, the budget reported on a straight party line vote out of the Budget Committee adds new spending--not requested by the President, not defense related, not related to our security needs in fighting terrorism--of $105.8 billion. In short, on five different occasions in the last 9 months we have voted on the floor of the Senate or in the Budget Committee to add new spending that, when it is added up, is some 15 times more expensive than repealing the death tax permanently, and yet our colleagues who voted for each and every one of these increases in spending now say, well, we could afford to spend all of this money but we cannot afford to stop forcing families to sell off their farms and their businesses and the accumulated value of the life work of their parents. That represents misplaced priorities. We have colleagues who could name 100 taxes that ought to be increased, who could name 40 tax reductions that should be taken back, but they cannot name a single Government program that we could live without or we could reduce. At its root, this issue boils down to one simple choice. We will hear many arguments today, but it comes down to a simple choice. The people who do not want to make the repeal of the death tax permanent believe it is worth forcing people, at the death of their parents, to sell off their life's work to give over half of it to the Government, even though it is all aftertax income. They have already paid taxes on it once. The opponents of making the death tax repeal permanent believe it is worth forcing businesses to liquidate farms, to shut down, equipment to be sold, jobs to be destroyed, because they believe that having that money in Washington so they can spend it is worth it. Those who want to make the death tax repeal permanent do not believe that. Those who want to make the repeal of the death tax permanent believe we would be better off as a nation--we would be richer, freer, happier, and the world would be fairer--if, when families work and save and sacrifice and pay taxes on every dollar they earn in their lifetime and they build up a business, farm, or estate, that their death should not be a taxable event. We will hear a discussion today that says, OK, we are willing to do this for some. We know it is bad for some people, but we want to pick and choose as to who has to pay this death tax. The position of those who want to repeal the death tax permanently is a position that we believe the tax is immoral. We believe it is wrong. We think, whether somebody's estate is worth $700,000, or whether they built a business that has 200 employees and that has tools and capital and land and trucks and equipment worth $10 million, we believe, if they built a business worth $10 million, that destroying that business to bring $5.5 million of that to Washington so we can spend it does not represent a good choice in public policy. After all, it is their money. They built it. They accumulated it. They sweated and saved and sacrificed for it. That ultimately is the issue. We believe it is wrong to tax death. We believe it is wrong when people build up assets and build a business for government to then destroy it. I showed data yesterday indicating more than 70 percent of small businesses that are founded by a family member do not survive into the second generation; 87 percent do not survive into the third generation. According to the NFIB, the No. 1 reason is the death tax. It is time to fix this provision of the Tax Code. We are going to have an opportunity to do that. There will only be one real amendment. There are two amendments that give political cover. There is one amendment I will offer that is exactly the same language the House passed, and if we adopt it, it will go to the President and he will sign it into law. That is the issue. There is one real repeal, as my colleague from Arizona says. I yield the floor.

Mr. GRAMM

Mr. GRAMM. Reserving the right to object, Mr. President.