Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, I appreciate the Senator from Minnesota always speaking strongly for the need to do more for education, but this is not the place for this particular issue. In addition, this motion, if it went into effect, would delay the over $30 billion of tax incentives for education that we already have in this bipartisan bill. This amendment also is not germane. Consequently, I raise a point of order on the germaneness of this provision on a reconciliation measure and that the amendment will come under section 305(b)(2) of the Budget Act.

Mr. GRASSLEY. This amendment was offered at 11 p.m., Thursday, so you have not had a chance to take into consideration what he proposes to provide for the State treasuries at the expense of the Federal Treasury. What Senator Graham has not shared is that his zeal to protect the State treasuries is at the expense of the American taxpayer and, most importantly, the estate tax reform provisions in this bill. If you would read from his amendment: Beginning on page 64 strike through page 66. What that really says is: Strike all estate tax reductions. Strike all State death tax changes and slash the unified credit. We may have heard from Governors, obviously, on this. Do we believe that the Governors really believe our bipartisan death tax reform package should be slashed for the mere convenience of State treasuries? Do we really believe that the American taxpayer with estates between $2 million and $4 million should accept the burden of funding the States' coffers merely because the States have already drafted a budget and they do not want to get around to drafting another budget for a couple years? I ask that you kill this amendment.

Mr. GRASSLEY. Mr. President, this is a key amendment that would destroy the bipartisan tax bill that we have before us. He proposes to stimulate the economy by expanding the range of the income eligible for the new 10-percent rate. But Senator Graham has not emphasized the tremendous price that would be paid, and that would be eliminating the rest of the tax bill. The only thing that would survive is the 10- percent rate. Worst of all, the Senator's proposal would actually increase taxes on middle-income Americans because a family of four with $60,000 in taxable income would pay $100 more in taxes under the Graham amendment than they would pay under our bipartisan tax bill when fully phased in. If this amendment is successful, Senator Graham then would, of course, destroy our bipartisan effort to provide $1.3 trillion tax relief.

Mr. GRASSLEY. Mr. President, I raise a point of order on germaneness; that the underlying amendment is not germane to the provisions of the reconciliation measure. The point of order is against the amendment under section 305(b)(2) of the Budget Act.

Mr. GRASSLEY. I raise two points about this amendment before I raise a point of order. A trigger would substantially reduce the economic benefits of tax cuts, making it more likely that the debt reduction target would not be met. Second, there is no reason that we need a trigger to raise taxes. The reality is, Congress is not shy about raising taxes. We have actually reduced taxes in 1981, and we raised taxes in 1982, 1984, 1987, 1989, 1990, and 1993 before we reduced taxes once again in 1997. What is rare is for Congress, then, to actually give tax relief such as we are now. The Senator from Virginia, Mr. Allen, has an amendment to the amendment, and I defer to him at this time.

Mr. GRASSLEY. Mr. President, 2 weeks ago, we passed the budget resolution. It seems as if we are involved in redebating the enacted budget resolution. The budget resolution provides record levels of funding for prescription drug coverage. The budget resolution also says we have more than enough tax surplus to enact the tax cut before us. We handle one issue at a time in the Senate. The Finance Committee will address the prescription drug issue at a later time. I have said that I hope to do that in committee the last 2 weeks of July. The Senate does make one piece of legislation contingent upon another. The pending amendment is not germane to the provisions of the reconciliation measure. I therefore raise a point of order against the amendment under section 305(b)(2) of the Budget Act.

Mr. GRASSLEY. I object.

Mr. GRASSLEY. I object.

Mr. GRASSLEY. I object.

Mr. GRASSLEY. Mr. President, I ask that we pass over the Collins amendment and not vote on it now and go on to the next amendment.

Mr. GRASSLEY. Mr. President, may we have order, please.

Mr. GRASSLEY. Mr. President, we are going to yield back all time on this amendment and accept the amendment.

Mr. GRASSLEY. Mr. President, this amendment guts our tax relief bill by $87 billion. It increases taxes, then, on families and working people by $87 billion by denying the tax cuts in the bipartisan bill. This amendment not only delays the reduction in marginal rates; it provides only a 1-point reduction in marginal rates. This 1-point reduction equals the tax relief that our bipartisan tax plan provides in the first year alone. Our plan's additional tax cuts would be eliminated entirely by this amendment. The proposal of Senators Daschle and Carnahan would actually make our tax system less progressive by giving greater savings to upper income taxpayers as they pass through the 14-percent bracket. When you are really serious about reducing the tax burden for people in the 15-percent income bracket, you target your available resources to people at that income level. That is exactly what we have done. For those earning between $12,000 and $45,000, we have provided tax relief ranging from 9 percent on one end to 33 percent on the other. This is a conclusion made by the nonpartisan Joint Committee on Taxation. To all of my colleagues on both sides of the aisle who supported the budget resolution, a vote for this amendment destroys our efforts to provide a $1.35 trillion tax cut. I urge you to vote against the amendment.

Mr. GRASSLEY. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. GRASSLEY. I yield time to the Senator from Oklahoma.

Mr. GRASSLEY. I intend to use my 10 minutes this way, so if anybody else is planning to speak, they will know time is used up: 3 minutes to the Senator from Virginia, and 7 minutes to the Senator from Oklahoma.

Mr. GRASSLEY. I thank the Senator from Montana for his compliment. I have said many times on the floor of the Senate, we are here with a bipartisan bill only because of his willingness to work with us and our desire to have a bipartisan bill as opposed to a partisan debate. I think that is the way the Senate Finance Committee normally works. I am glad to have it work in this particular instance. As we come to the end of our 20 hours of deliberation and begin voting on amendments, I want to make some final comments. This is a bipartisan effort. This bill was drafted in concert with Senator Baucus and with the benefit of the comments of all the members of the Finance Committee with whom I consulted personally. We took as a starting point President Bush's efforts to provide income tax relief to all Americans. This legislation includes the four main elements of President Bush's goals of providing tax relief to working men and women. First, this legislation reduces marginal rates at all levels and creates the new 10 percent level proposed by the President. While we don't go as far as the President in reducing the top rates--and I would add we didn't go as far as I would like--we also began to address the hidden marginal rate increases such as PEPS and PEASE that complicate the code. As I said earlier today, America is a society of opportunity. Over 60 percent of all families will at one time or another be in the top fifth of income in this country. A man will make more at 55, after 30 years of hard work, then he did at 25. A family should not face a crushing marginal rate tax burden when they finally get a good paycheck for a few years as a reward for many, many years of hard work. Second, we provide income tax relief for married families--for families where both spouses work and where only one spouse works. In addition, thanks to the strong advocacy of Senator Jeffords, we expand the earned income credit for married families with children. Further, there was wide bipartisan agreement to simplify the earned income credit which will mean that hundreds of thousands of more children will receive the EIC benefits. Third, the President's desire to expand the child credit to $1,000 is met in this bill. And in response to the concerns of Senators Snowe, Lincoln, Breaux, Jeffords, and Kerry the child credit was expanded to help millions of children whose working parents do not pay income tax. Fourth, the burden of the death tax is reduced and finally eliminated--as called for by President Bush. The committee was successful in this effort due to the work of many Senators but I would particularly note the efforts of Senators Kyl and Lincoln. Thus, this bill contains the four main elements of President Bush's efforts to provide tax relief for working families--marginal rate reduction, relief for married families, the expansion of the child credit and the reduction and ultimate elimination of the death tax. I remind my colleagues again that the hallmark of this bill is that relief for low income families comes first. The marginal rate drop to 10 percent is immediate, the child credit expansion to low income families is immediate, the expansion of EIC is immediate. In addition, the numbers show that the Finance Committee took President Bush's proposal--which was already quite progressive as compared to current law--that is, at the end of the day upper income families would be paying a greater share of taxes than lower income-- and the Finance Committee made the President's proposal even more progressive. The greater progressivity and ensuring that low income families are first in receiving the benefits of the tax cut is certainly due in no small part to the work of Senator Baucus. So I am somewhat chagrined, reading in the press the constant carping of Senator Baucus' efforts to draft a bipartisan bill. It seems that while many are happy to talk about bipartisanship that can't stand to see bipartisanship practiced. I can assure my colleagues on the other side of the aisle that if Senator Baucus had not been present at the creation of this bill--it would have been a very different piece of legislation. It is because of his efforts that there are many elements in the RELIEF Act that members on the other side of the aisle can enthusiastically support. In addition to President Bush's proposals to provide tax relief to working families, the Finance Committee also included legislation that had already been considered by the Finance Committee earlier this year or last year. I believe that not all good ideas come from just one end of Pennsylvania Avenue. Thus, we included the Grassley/Baucus pension reform legislation which probably would not have made it in the bill without the longtime support of Senators Hatch, Jeffords, and Graham. In addition, the bill contains over $30 billion targeted for education. elements of this include language to expand the prepaid tuition programs to help families pay for college--long advocated by Senators Collins, McConnell, and Sessions. In addition, we provide college tuition deduction thanks to Senators Torricelli, Snowe, and Jeffords, private activity bonds for school construction in response to Senator Graham's concerns, as well as an expansion of the education savings accounts--in honor of Senator Coverdell--thanks to the work of Senator Torricelli and the majority leaders. As I have said all along, no once got everything they wanted in this bill, including the chairman. But I do believe that everyone got something that they believe is important included in the RELIEF Act. I have provided this outline of the legislation to remind Senators of the balanced approach that took place in crafting this legislation; to highlight the fact that it reflects the views and priorities of a wide range of members of the committee on both sides of the aisle; and, to explain why the RELIEF Act took the form it did. But setting aside the priorities and concerns of Senators, none of us should forget the great winners of the RELIEF Act--the American taxpayer. We are providing the American taxpayer the greatest amount of tax relief in a generation. And they deserve it. It is wrong that in a time of surplus we are still imposing a record tax burden on workers. With passage of the RELIEF Act struggling families will have more money to make ends meet; parents and students will be able to more easily afford the costs of a college education; a successful business woman will be able to expand and hire more people; a father finally getting a good paycheck after years of work will be able to better provide for his aging mother; and, a farmer can pass on the family farm without his children having to sell half the land to pay estate taxes. The examples are endless of the great benefits that we realize when we give tax relief to working families. I urge my colleagues to support the RELIEF Act for working families. I yield the floor.

Mr. GRASSLEY. I yield myself 7 minutes of the 19 remaining minutes.

Mr. GRASSLEY. I yield 10 minutes to the Senator from Texas.

Mr. GRASSLEY. Please take 2 minutes.

Mr. GRASSLEY. Two minutes then. I have Senator Gramm who needs some time. I grant the Senator 2 more minutes.

Mr. GRASSLEY. Madam President, I yield 7 minutes to the Senator from Pennsylvania.

Mr. GRASSLEY. I have several Members on my side of the aisle who want part of the 1 hour. I would like to know who they are and have them get over here and take up their share; otherwise, I will use it.

Mr. GRASSLEY. Madam President, it has been suggested by some of those who are opposed to our legislation that the tax cuts are backloaded, and there is some legitimacy to that argument, although don't forget that the tax rate reduction that benefits most Americans--in fact, every income-tax payer in America--the new 10-percent bracket, going back to January 1, 2001, benefits everybody. From that standpoint, this legislation is very frontloaded. But we are dealing with a congressional budget resolution that was adopted earlier this month. The budget surplus, excluding Social Security, will be $2.3 trillion over the next 11 years. The proposed tax reductions over the next 11 years will be $1.3 trillion of that $2.3 trillion. When one looks at the budget surplus and the tax cuts on a year-by- year basis, one will see that tax cuts are designed to stay within the available surplus each and every year. Twenty-nine percent of the budget surplus occurs over the next 5 years, and 29 percent of the tax cut is phased in over the next 5 years. Sixteen percent of the budget surplus occurs in the last year, while only 14 percent of the tax cuts occur the last year. In other words, the tax cuts are phased in to reflect the surpluses available to pay for them. To the extent one argues that our bill is backloaded, our tax relief is frontloaded for the lower income taxpayers, particularly that 10- percent new bracket about which I have been talking. The tax cuts for the higher income taxpayers who pay the bulk of the Federal tax burden come later. The reason for this is we want to help lower income taxpayers first, and the tax surplus itself is phased in. So additional tax relief needs to wait until the year 2006. As a result, lower and middle-income taxpayers benefit by getting their money back first and for the time value of having that money in their pocket longer than higher rate taxpayers. It amazes me; if we had $1.6 trillion the President wanted for tax cuts, we would not have to backload some of these benefits. Wouldn't you know that the people who are complaining about backloading are the same ones who voted against the $1.6 trillion tax cut authority that is in the budget resolution. They deny us the tools then to enact full tax cuts today and then complain because we have to wait a few years to make the tax cuts. These are the same people who, during the budget reconciliation debate, cried that 10-year projections are unreliable. Now they rely on 20-year projections to claim that our tax cut will have negative effects in the second 10 years. It is a fictitious argument because the bill ends in 2011. Under Senate rules, the bill will not be in effect in the second 10 years. We are about national priorities, but that issue was settled last week during the budget resolution debate. The budget resolution itself decides what our national priorities are. This bipartisan tax bill before us then is one part of the priorities the entire Senate set 2 weeks ago when we voted for the budget resolution by a vote of 52-48. The Senate Finance Committee in this bipartisan tax bill is responding to the majority of the Senate in bringing this bill before us as one part of everything that was decided in that budget resolution. We have had people tell us that we cannot rely on projected surpluses to pay for our tax cuts. However, the biggest threat to fiscal discipline is higher spending, not lower taxes. In 1997, Congress and the President agreed to cap discretionary spending in an effort to balance the Federal budget. Unfortunately, as Federal revenues rose to record levels and our deficits turned into surpluses, these spending caps were broken. Since 1997, discretionary spending has exceeded the budget caps by $272 billion. Over the next 10 years, discretionary spending will exceed the levels established in 1997 by $1.3 trillion and, as one can see, that is so close to what this tax bill is that it is enough to pay for our entire tax reduction. No one seems to worry about how unreliable the surplus projections are when we add trillions of dollars in higher spending to the Federal budget. It seems as if there is plenty of money in these 10-year projections if we want to appropriate money, spend more money, but, lo and behold, we bring a tax bill before the Senate to let people keep the money they have earned rather than sending it to Washington, and somehow these 10-year budget projections we rely upon to make policy decisions are undependable. I have come to the conclusion, or I would not be a part of this bipartisan tax bill, and I would not have voted for the budget agreement, that there is plenty of money from the tax surplus to give tax relief to working men and women and to do it in a way that is fiscally disciplined but, more importantly, imposes fiscal discipline on a lot of the big spenders around this Congress who think they know more how to handle the taxpayers' money than the taxpayers do, who believe if we spend more money, we are going to create more wealth. Common sense dictates that the Government does not create wealth. Common sense dictates that individual Americans using the resources of their labor and their brain create wealth. On the other hand, if that money were in the pockets of Members of Congress, it would burn a hole. So we return it to the taxpayers of America, and it allows them, through individual decisionmaking, to decide what they want to do with that money. The process is going to turn over many more times in the economy, particularly if it is invested, than if we spend it in Washington in a political decision as to how the goods and services in our country ought to be distributed. It is better not to make a political decision but let the marketplace empower the individuals to make a choice. We are going to create more wealth, and the money is going to turn over more times in the economy that way and do more good. We have also heard the accusation that we are raiding the trust funds. Some people continue to suggest that the tax cut will do this to the Social Security trust fund and the Medicare trust fund. Let me explain it this way. The budget resolution for which I voted is the basis for this bipartisan tax bill and also, to some extent, what the President said in his budget to the Congress: We can fund our priorities, we can give tax relief to working men and women, we can preserve the Social Security trust fund and the Medicare trust fund, and we can pay down every dollar due on the national debt throughout the 10-year projection of our budget resolution. There are people who disagree with that, but obviously the vast majority of this body understands that to be a fact. Under current law, when Social Security and Medicare collect more than they spend--in other words, more income than outgo yearly in the Medicare trust fund and the Social Security trust fund--that money is invested in U.S. Government bonds. These bonds are held by the trust fund until needed to pay benefits. That will be roughly 2017 for Social Security, probably roughly 2010 for Medicare. In the case of Social Security, that will keep benefits at 100 percent, at least through the year 2037. So when people talk about raiding the trust fund--I don't know whether this is their intent--they do mislead Americans. They want people to believe we are reducing the balance in the trust fund to pay for tax reduction. They know that is not true. The balance in the trust fund can only be reduced to pay for Social Security and Medicare benefits. The tax cuts cannot reduce the balance in the trust fund. Once again, the chart emphasizes what I first said. It shows we will continue to have tax surpluses, indicated by the blue bar, each of the next 10 years. The tax cuts are the red bar and are a small part of each of those tax surpluses each year. We can see the charge of backload. Albeit we are giving relief to every taxpayer this year, in 2001, the tax reductions of this bill kick in over the next few years to reflect the growing tax surplus we have coming into the Federal Treasury. I hope people see that as a responsible way to make sure we are able to fund our priorities, maintain the Social Security/Medicare trust funds, pay down every dollar due on the national debt over the next 10 years, and still give tax relief to working men and women. I yield the floor.

Mr. GRASSLEY. Starting now, the 2 hours is evenly divided.