Chuck Grassley

Mr. GRASSLEY

Mr. GRASSLEY. Madam President, I suggest the absence of a quorum.

Mr. GRASSLEY. I will yield the rest of my time to the Senator from Kentucky.

Mr. GRASSLEY. Let me ask my friend on the other side of the aisle, would it be all right if he could have what time I had not used on the Dorgan amendment?

Mr. GRASSLEY. I probably should spend most of my time speaking against the amendment of the Senator from North Dakota, but I have already spoken today on why I think the estate tax provisions in this bill ought to be maintained. Amendment No. 674 I want to use my time to speak at this point on the first or, I guess now, the second amendment that is going to be up for a vote at 6 o'clock, the Carnahan-Daschle amendment. I want my colleagues to understand exactly what this amendment does because I think it is one of the toughest amendments and one that may have one of the closest votes today. This amendment by Senator Carnahan guts the tax relief for individual taxpayers by $87 billion. In effect, it increases taxes on families and working people by $87 billion by denying them the tax cuts contained in our bipartisan tax bill. Here is how the amendment works. First, this amendment not only delays the reduction of the marginal tax rates; it provides for only a 1-point reduction in the marginal tax rates over a period of years compared to the 3-point reduction in the bipartisan plan Senator Baucus and I have put together. This 1-point reduction equals the rate relief that our bipartisan tax plan provides in the first year alone. Our plan's additional tax cuts would be eliminated entirely under the Carnahan-Daschle amendment. I have a chart here that demonstrates this better. Their amendment allows only a 1-percent rate cut, which our bill implements next year. But Senator Carnahan's amendment delays the rate cuts over 5 years. As you can see from the bottom part of this chart, 1 point each year, but with a different rate each year so that it takes 5 years. The Carnahan-Daschle amendment would entirely eliminate the bipartisan bill's tax cuts for the years 2005 and 2007. Our plan reduces the 28-percent rate to 25 percent over 6 years. Our amendment reduces the rate by 1 percentage point to 27 percent next year. Two years from now, the Carnahan-Daschle amendment would reduce the 28-percent rate to 27 percent but would entirely stop there--no more tax cuts after that point for the 28-percent taxpayers. Who is a 28-percent taxpayer? It would include any family with taxable income over $45,200. Those families get the shaft under the Carnahan-Daschle amendment. Our plan also would reduce the 31-percent rate to a 28-percent rate over 6 years, and would do it immediately 1 point next year. Three years from now, the Carnahan-Daschle amendment would reduce the 31 percent to 30 percent, but stop right there--no more tax cuts then for the 31-percent taxpayer. You can see from this chart, it is the same story over and over again. The Carnahan-Daschle amendment takes just the first year of tax cuts from our bipartisan bill and spreads them out over 5 years. And, of course, that is their idea of tax relief for American working men and women. How do they justify this? How do they justify taking away $87 billion of tax relief from individual taxpayers? They rationalize it by reducing the 15-percent rate to 14 percent; that is all. They claim a 1-percent reduction of one bracket justifies denying a 2-point further reduction in all other brackets. Senators Carnahan and Daschle claim this 14-percent rate puts more benefit to middle-income taxpayers. I doubt that. I will show you with a little bit of math how there is reason to doubt that. I would like to go back to the 28-percent taxpayer family; that is, any family with taxable income over $45,200. Senator Baucus has noted that 75 percent of the benefits under the new 10-percent rate bracket in our bill go to taxpayers making less than $75,000. So I will use that as a starting point. Let's say we have a family with taxable income of $75,000. Under the Carnahan-Daschle amendment, the reduction of the 15-percent rate would save them $452. Two years from now, the 28-percent rate would go to 27 percent, which would give another $298 back. Our bill would give them the $298 not 2 years from now but right now. So when their plan is fully implemented, this family will have a total tax cut of $750 under the Carnahan-Daschle amendment. When our bipartisan plan is fully implemented, this family will have tax savings of $894, which is $144 more than under the Carnahan-Daschle plan. That is because we reduce the 28-percent rate to 25 percent. Our plan provides over 19 percent more in tax cuts for this family than does the Carnahan-Daschle amendment. Senators Carnahan and Daschle justify their proposal because they claim taxpayers in this 15-percent income bracket are shorted since our plan does not reduce the 15-percent rate. They claim that families earning between $12,000 and $45,000 will get no rate cut and no tax relief. That is completely untrue. The nonpartisan Joint Committee on Taxation says that our bipartisan bill provides between 9 percent and 33 percent of relief for families making between $12,000 and $45,000. Taxpayers on the lower end of this range receive the biggest percentage reduction, 33 percent; those on the upper end receive the least, 9 percent. Senators Carnahan and Daschle do not consider that our bipartisan plan targets other benefits to taxpayers in this income range. They only look at the rate itself. So these benefits, including the child care credit, the education incentives, the pensions, and the IRA provisions, and various other tax relief measures in this bill, are yet further reductions for people at the 15-percent bracket, between $12,000 and $45,000. The child credit is one example. The entire 15-percent bracket qualifies for it while it is phased out in higher brackets. For many current 15-percent bracket families, the child credit will erase more than 100 percent of their tax liability. The $3,000 expansion of the earned-income credit income thresholds will make more 15-percent bracket families qualify. Higher tax brackets will not qualify. When fully phased in, a four-person, two-earner family earning $30,000 will see their tax bill change from a $346 liability to a $1,911 net refund under this bill, and that is a 652-percent swing. You may wonder why we targeted these benefits instead of reducing the 15-percent rate. Well, Senator Daschle made this point better than I could when he spoke on the Senate floor last Thursday. This is the reason he identified in correctly pointing out that when you reduce the tax rate, the benefits of the rate reduction go to taxpayers in that rate bracket and to all other taxpayers in the higher rate brackets. This is because taxpayers pass through the lower rate bracket on their way to the higher rate brackets. If you did a rate cut, it would cause our plan to favor upper income levels, for which I am sure Senator Daschle would severely criticize us. Our plan does not do that. As this chart demonstrates, our bill makes the current tax system even more progressive than it is currently. In every one of these brackets, under present law, people are paying a higher share than they would under the new tax law, except for the highest income level of $200,000 and above. At that level, people at $200,000 and above are going to be paying a higher proportion of taxes than they do today. But for every other income level, as a result of our legislation, people in those income levels are going to be paying a lower share of taxes. The Daschle-Carnahan proposal 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 tax bracket, you target available resources to people at that income level. That is exactly what our bipartisan bill does. It targets benefits to families making between $12,000 and $45,000 and provides relief ranging, then, from 9 percent at the $45,000 income to 33 percent at the lower income. That is better relief than Senator Carnahan's 1-percent rate reduction because taking a 15-percent rate to 14 percent is less than a 7-percent reduction of the rate itself. I don't want you to take my word for it. I don't take Senator Daschle's or Senator Carnahan's word for it, either. These are conclusions drawn by the Joint Committee on Taxation. Let's look at the choice before us. Our bipartisan bill provides 9 to 33 percent of relief for 15-percent taxpayers. Our bill provides 19 percent more tax relief to middle-income taxpayers. Their amendment increases individual income taxes by $87 billion based upon the false assumption that we have not cut the tax burden of the 15-percent taxpayers. This all seems to be a simple decision. If you want to provide meaningful relief for all taxpayers, then you should vote to defeat the Carnahan-Daschle amendment. If you want to increase individual income taxes by $87 billion based upon flawed analysis, then by all means vote for the amendment of the opposition. Their amendment only reduces taxes 1 percentage point. It provides a mere thimbleful of tax relief. This amendment creates a smokescreen to try to fool middle-income Americans into believing they are getting substantial tax relief when, in fact, it will increase their tax burden by billions. I will also point out to my colleagues from the other side that the Carnahan-Daschle amendment is not the same amendment offered by Senator Daschle during the Finance Committee markup. That amendment would have cut all of the rates by 1 percent in 2002. The Carnahan-Daschle amendment spreads the 1-percent cuts over 5 years, a very significant difference. I hope the Carnahan-Daschle amendment to withdraw $87 billion in tax cuts is not the crown jewel of the Democrats' tax proposal. I believe the bipartisan bill put forth by our committee should be the high watermark for both political parties. I say to all of my colleagues on both sides of the aisle who supported the budget resolution, a vote for the Carnahan-Daschle amendment destroys our efforts to provide a $1.35 trillion tax cut. As you know, the RELIEF Act before us contains only individual income tax cuts. It is not larded in favor of a lot of special interest legislation that sometimes is in tax bills. You cannot draft bipartisan legislation if you do that. A vote to decrease the tax cuts in the RELIEF Act is a vote to increase income taxes of individuals across America by $87 billion. Obviously, I urge Members to vote to reject the Carnahan-Daschle amendment. I yield the floor.

Mr. GRASSLEY. For Senator Kyl, Mr. President, we will yield back his remaining time.

Mr. GRASSLEY. Mr. President, I yield myself 1 minute. I appreciate the Senator's amendment. He seeks to help encourage charitable giving for scholarships, a very worthy cause. Obviously, it is an idea that deserves to be debated and to be looked at carefully. Unfortunately, it falls outside the scope of the RELIEF act. I hope the Senator and I can work to have the Finance Committee consider a charitable bill down the road. Before I close, I thank the Senator for his good work on the Senate Finance Committee. He is a new member of the committee. The committee has greatly benefited from his energy and ideas. The people of Arizona are fortunate to have his service on the Finance Committee. I yield the floor.

Mr. GRASSLEY. I yield myself such time as I consume. Looking at the amendment being introduced, the purpose of it is to make changes in the bill to reflect changes in the rate of taxation, and particularly heavy emphasis upon change in the estate tax provisions, so that savings can be realized to be used for Federal debt reduction and improvement to the Nation's transportation infrastructure. I know what the Senator's intent is: to save money so it can be used for the Nation's nontransportation infrastructure. But there is nothing in his amendment that directs the money in that direction. So when it is finally said and done as far as public policy is concerned, this amendment is just to change very dramatically the higher rate reduction that we have in the bill and to more or less decimate the estate tax provisions of our bill. I have to confess I do not know what it is to be born rich and live rich. There seems to be a compulsion on the part of people in this body, for those who are born rich, live rich, and die rich, to want them to contribute more to the Federal Treasury than other people who do not fit into that category. There is an effort to nick those rich people for more money when they die. I confess not to understand what it is to be born rich and live rich. So I do not come from the perspective that there is all this money out there that people are just willing to contribute to the Federal Treasury when they die. I do not understand the people who get a big joy out of taxing those people. But if they get a big joy out of it, OK. If they want to establish a category of people who are forever filthy rich and go after them, that might be all right. But most of the people I think about when I talk about doing away with the death tax are people who have lived very moderately throughout their lives and come to a point, probably because they are involved in farms and small businesses and you are just forced to reinvest so much, put all of your earnings back into the business so you can grow and just be competitive. That is particularly true in farming. If you started farming years ago with 80 acres and you are only farming 80 acres today, you aren't going to be successful unless you have a job in town. So you have to keep investing in machinery, be more productive, buy more land, et cetera. That is the sort of person I think of, one who has lived moderately and maybe dies fairly well off. The point is, when they live that way, they want to leave that business, those resources, to their kids. They do not want to be hit with a death tax after they have paid taxes all their lives. I gave the example once before. And I am raising the issue of fairness of a death tax versus those who do not pay it. You have two people who can make exactly the same amount of money throughout their lifetimes. Both of them obviously are going to pay income tax when they make it. But this person over here is going to live very moderately and miserly and maybe leave an estate of $5 million. Then when he dies, his estate, because he lived in so miserly a manner, is going to pay a big reward to the Federal Treasury. You have the other person over here living it up throughout his life, womanizing, drinking it up--you know, all the things that are dealt with in the material world--who does not leave a penny. This person gets taxed once when he makes it and spends it tomorrow. This person gets taxed when he makes it, saves it, and invests it in a business and wants to leave it to his kids, and then he is taxed again when he dies. What is fair about that? Those are the people I am worried about. I am not worried about the filthy rich who are born rich, live rich, and die rich. So I have been a long-time advocate that no American family should be forced to pay up to 60 percent of their savings, their business, or their family farm in taxes when they die. No taxpayer should be visited by the undertaker and the tax collector at the same time. We have now before us an opportunity to do something about that, to help those families that are being crushed under the expensive responsibilities of estate tax planning and estate taxes. Let me suggest probably the money that is wasted in this country on estate tax planning is the biggest waste of the productive resources in this country that you can have. They are even worse than the estate tax, I believe. People who have worked hard, who are faced with the estate tax, who want to leave some money to their kids, just spend wasteful amounts of money on estate planning in order to legally avoid paying estate tax. Wouldn't it be better if those estate planners, those insurance salesmen, those lawyers, were doing something productive, contributing something to the economy as opposed to this nonproductive effort of estate planning? When we do away with the estate tax, these folks will be able to do something productive. There are those in the Senate who want you to believe we are spending $145 billion for the benefit of just 45,000 people; that it is just 45,000 people paying estate tax. I want to tell the Senator from Connecticut I do not believe that is true. There may have been 45,000 estate tax returns that had checks attached. But that is no way to measure the impact on the American taxpayer. In preparation for the RELIEF Act I had the opportunity to review 1999 Internal Revenue statistics regarding estate tax returns. Those statistics, frankly, were outrageous. In the Federal Government's attempt to enforce its version of social responsibility by this huge tax rate of 55 to 60 percent on the estate tax, taken from the family's net wealth on the death of a loved one, it has cast a net. There is a net cast by that one involuntary action of death into thousands of homes in its attempt to capture a few so-called rich families. In 1999, there were only 577 people who died in the United States with gross estates greater than $20 million in value. But 104,000 families were affected by the estate tax requirements. Let's get this straight: 577 people died with estates over $20 million, but 104,000 families were affected by these estate tax requirements. In search of this supposed social justice, to take 55 percent of a family's lifetime efforts to contribute to the Treasury's general fund, we have upset lives in over 100,000 families. Is that truly a ratio with which we are willing to live? Is that fair? I cannot imagine supporting this amendment. Thousands of American taxpayers who deserve immediate estate tax reform are being cast aside by this amendment. On the backs of the American taxpayers, the Senator from Connecticut has proposed funding nontransportation infrastructure. That is an interesting thought--nontransportation infrastructure. In order to achieve that goal, he is willing to wait until the year 2010 to increase the unified credit to just $2 million. That is 30 years from the last time it was increased, 1981. That $2 million, 30 years later, would not even be worth what the unified credit was in 1981. That means for the first time, American taxpayers who are good Americans, who saved and invested in savings accounts and stocks and bonds, will be treated equally with all other taxpayers. It means that for the first time American farm families and the owners of small businesses will not have to jump through hoops, hold their breath, and pray that they planned their estate just right, subject to audit, in order to get the full use of their unified credit. In addition, Senator Dodd gives no estate tax rate relief. The bipartisan RELIEF Act before us does. We immediately drop the top rate to 50 percent. In the year 2007, we reduce the top rate to 45 percent. After all is said and done, people are going to be hit with the death tax at a higher rate of taxation than when they were living, which the top rate today is 39.8 percent. So for the first time in history, an American family can exempt $8 million from the death tax--that is in the bill before us--by the year 2007. In this bipartisan RELIEF Act, we have chosen to treat all American taxpayers equally, and give a unified credit that everyone can use, unlike the proposed amendment by the Senator from Connecticut. In addition to stealing the American taxpayers' increase in the unified credit, offered in this amendment is a paltry increase in the complex qualified family-owned business deduction. That would be increased by a mere $75,000. And that would not happen until the year 2006. I think all this flies in the face of the American taxpayer. This is an overwhelmingly complex additional deduction of $75 which, quite frankly, turns out to be meaningless--in fact, so meaningless that I am ashamed I had a hand in writing this about 2 or 3 years ago when it was written. I would have to suggest to the Senator from Connecticut that if he would read again, as I have been forced to read, the Internal Revenue Code on these provisions, he would find that when you get through these complex provisions, if typed in its entirety, it is over 20 pages long, and it is full of requirements, restrictions, cross- references that boggle the minds of accountants and the legal profession and the American taxpayers. I think we need to be honest with the American public and give them a true death tax break that everyone can use. This amendment will detract from that tremendously. I think our bill does a pretty good job of it, not as good of a job as I would like but within the context of a bipartisan compromise and within the context of the budget restrictions we are operating under, this is the best we can do. I yield the floor.

Mr. GRASSLEY. Mr. President, I yield back the remainder of my time.

Mr. GRASSLEY. Mr. President, I yield myself such time as I may consume. I won't speak long because I know the Senator from Connecticut is waiting to offer his amendment. I rise mainly not to comment on the amendment of the Senator from Vermont but to take some time to speak about his contributions to the legislation that is before us. We heard earlier this morning a statistic that Senator Baucus gave about 75 percent of the benefits of this legislation go to families making under $75,000 a year. The Senator from Vermont, through several provisions on which he has worked with me on this bill, deserves a great deal of credit for this legislation being well balanced. I listened to what the Senator from Vermont said about the amendment he now lays before the Senate. I appreciate his speaking on that subject. He should be very proud of his work on the Senate Finance Committee, as he has every right to be proud of the work that has come from his own Senate committee that deals with the issue of education and many other items. It is fair to say that no Senator has had a greater influence on the relief act that is before us than Senator Jeffords. His fingerprints are on the expansion of the earned-income credit for married families, the child credit being extended for working families who do not pay income tax, and the inclusion of the pension bill, and many of the education provisions in the bill. A married family with two children making $15,000 will receive an additional benefit of over $1,000 next year under the bill before us. That is thanks in no small part to the efforts of Senator Jeffords. I realize the bill before us, as is obvious from the introduction of the amendment, does not do all the Senator from Vermont hopes for in the way of dependent care. I think it is a strong step toward his goals. The changes I have mentioned already to the relief act are estimated to cost tens of billions of dollars. The Senator's amendment falls in the area of an additional $25 to $30 billion, a figure over 10 years. That would be in addition. It is unfortunate that we can't, for a lot of good amendments that are being offered, including the amendment by the Senator from Vermont, do all the things given the tight constraints with which we are faced. But the Senator is always blazing a trail for the work of the Congress, and most of his attention rightfully is given to the needs of families with children and preparing people to do well in school. I don't know what we can do on this particular amendment. But I have heard what the Senator from Vermont said. I pledge myself to work with him. I yield the floor.

Mr. GRASSLEY. We yield back our time.

Mr. GRASSLEY. Mr. President, I yield myself such as I might consume. I appreciate the concern of the Senator from West Virginia about Social Security. The budget resolution provides for protection for Social Security and Medicare. The relief act, in my opinion, does not jeopardize these programs. Rather, I suggest the relief act strengthens these critical programs because we have a strong, growing economy that is going to result from making sure that we keep resources with the taxpayers for them to invest and spend; thus, doing much more good than if the Government keeps those resources. A growing economy is the best guarantee for Social Security and Medicare's long-term solvency. I will talk briefly about the fact that we have had concern expressed in the media about some of these very same things that the Senator from West Virginia has visited about--the long-term needs of all programs, including Social Security and Medicare. I think the editorial writers, as I have read them, just over the weekend, and as late as this morning, are in a frenzy about this tax cut that they need not be in. But they can't seem to make up their minds. One day we are criticized because the $1,000 child credit is not indexed for inflation. Then the next day we are attacked because the tax cut is too expensive in the outyears. Maybe what is really happening is the media is just against reduction of taxes. This is kind of like Goldilocks, I would say, when they first say it is too hot and then it is too cold. But I fear that, unlike Goldilocks, there is no tax cut that is just right for the elite of our media because they want no tax cuts whatsoever. They honestly believe the Federal Government creates wealth, that it is better for a political determination of more money of how the resources are divided rather than letting the marketplace do it. Somehow, I think they feel ignored as we debate this tax bill. It is like the media crying about Social Security and Medicare. When all else fails, I think it is their goal to raise so many questions that senior citizens so ponder the situation of the budget, whether or not there is security there, long-term security for Social Security and Medicare, it ends up scaring them needlessly. In the process of our debate, obviously, when you look ahead 10 years--and I said this last week during the debate, so I am not saying it just because the Senator from West Virginia brought it up-- in 1regard to the long-term projections of the fiscal condition of the Federal Government, meaning how much money is going to come in and how much we are going to spend on existing programs over the next 10 years, it is legitimate to be cautious. On the other hand, we are making judgments based on 10-year forecasts. We recently heard about the Reagan tax cuts in 1981, 20 years ago. At that particular time, we were only looking ahead 5 years. I do not think it has entered into this debate, but I know as a fact in 1963, when President Kennedy had tax cuts, they only looked ahead 1 year. Looking ahead 1 year in 1963, looking ahead 5 years in 1981, or looking ahead 10 years in the year 2001, as imprecise as it is to look ahead, although I have to say the people who work on this are getting better at it than they were during the 1980s--but looking ahead 10 years has to be considered more fiscally responsible in our spending and taxing policies than looking ahead just 5 years 20 years ago or looking ahead just 1 year in 1963. People might wonder why I am talking about 1963, 1981, and 2001. These are the three biggest tax relief measures passed by Congress in the last 50 years. All I am saying is, nobody knows what the future holds, but we are making a tax relief decision for working men and women based upon these 10-year projections. We ought to give some credit to the people who work so hard to make those projections so that we in Congress can be more--I do not know whether the word ``certain'' is correct--so we can at least attempt to be more precise as we make policy for the long term. That is all we are doing. I ask people to consider that in the historical approach as we try to do a better job of making public policy decisions. I yield the floor.

Mr. GRASSLEY. Mr. President, I yield myself 1 minute. I appreciate the commitment of the Senator from Utah to extending the research and experimentation credit. There is no question the issue of research and experimentation has no greater supporter than the Senator from Utah and all the people involved with it ought to appreciate his interest in it. I know the R&D credit has strong bipartisan support and that it was included in the President's request. I ask the Senator give us the time to work with him on the amendment today and see what we can do to make sure it becomes something we can work with and deal with in conference. I yield the floor.

Mr. GRASSLEY. Mr. President, I rise to make a unanimous consent request. Mr. President, I ask unanimous consent that a vote relative to the motion to waive with respect to the Gregg amendment occur at 6:08 today, with 5 minutes under the control of Senator Gregg and 3 minutes under the control of Senator Baucus for final debate prior to the vote, and that there be no second-degree amendment in order prior to the vote, and further, following that vote, the Senate proceed to a vote in relationship to the Carnahan amendment as under the order.

Mr. GRASSLEY. Mr. President, I rise in opposition to the amendment of the Senator from Minnesota. I know he is one of the most sincere individuals in the Senate when it comes to the issue of education. We have had a chance to hear him speak on these issues many times in the last few weeks as we have been considering the Elementary and Secondary Education Act amendments. As sincere as the Senator from Minnesota is in pursuing his goals for education, doing it on this bill is beyond the scope of the Finance Committee's jurisdiction in the way that he would set up a reserve fund to do that. A commitment of this bill back to committee to set up a reserve fund would not be within the jurisdiction of our committee. It would direct us to set up a reserve account that would lead us to what he refers to as full funding of education programs. It would also strike any reduction in the tax burden for those at the 39.6-percent tax rate. There is no revenue estimate for this amendment. That is another issue with which we have to deal within the realities of the budget resolution. Our bill contains many excellent educational provisions that are within the scope and the jurisdiction of our Senate Finance Committee. These are tax provisions. They are tax provisions that consequently would improve the day-to-day lives of ordinary Americans. The Senate has passed these education amendments--twice last year and, I think, the year before. Also, these are provisions which, even though they are in this bill, they are on the calendar as a separate bill that was voted out of our committee by a vote of 20-0. So we know these have almost unanimous support in the Senate, as the Senate Finance Committee is a microcosm of the entire Senate. This motion to commit ought to be seen by our colleagues as a motion to delay the passage of this tax bill and the tax relief for working men and women that will result from this legislation. In addition, while the motion to commit may be in order, what it directs the committee to do is to fund education spending programs. Therefore, it is my belief--and we may raise this point later on--it would not be germane to the bill. I appreciate Senator Wellstone's sincerity. However, I urge my colleagues to reject it. On a larger note, I am going to take this opportunity to ask the Senator from Minnesota to consider a point of view that I expressed last week in regard to the wealthy of America. I do not deny what he says about the people who pay the 39.6-percent tax rates, that they are very high income people and, maybe more so than other people, can afford to pay that rate. I think too often the Senator from Minnesota as well as a lot of other Senators--maybe even some on our side of the aisle--take the view that when we apply the 39.6-percent tax rate, we are applying it to a group of people who have always been rich and will forever be rich. But that is not the true picture of America. I want to address that thought and ask the Senator to consider that point of view as I ask him to focus upon what he is doing on the tax portions of his amendment. We hear so much in this debate about taxing those getting a good paycheck--obviously, a very good paycheck in terms of the amendment of the Senator and those people who are going to be taxed at 39.6 percent. But speeches such as this would make you think the people being taxed must have been getting a good paycheck their entire life--born rich, stay rich, and die rich. But that is not true of most of the people who are in the highest tax brackets. I think people who make these claims provide a distorted picture of America. They present a picture of America where a family who is struggling will always struggle and consequently be at the low income tax rate level or maybe not pay any income tax at all. That is on the one hand. On the other hand, we have an America where people can buy sirloin instead of chuck round, that they have always been able to do this and will always be able to do it. In other words, the poor are always poor and the rich are always rich. But as we all know, real life provides a more complicated picture. The reality is that the vast majority of our poorest Americans, with a bad spell here and there, spend their lives moving up the economic ladder until retirement. Yes, there is an extremely small group of people, estimated at approximately 1 percent, for whom the enormous hardship of poverty is a lifelong constant; that is, they are poor and will remain poor throughout most of their life. For these unfortunates, obviously, our society hopefully is a loving society and provides a safety net, a safety net that is expanded by the provisions of this bill, in addition to a lot of appropriated accounts in which we try to help this group of people. But beyond that 1 percent, or fewer, who are going to be poor throughout their entire life, for most Americans who study, work hard, and play by the rules, their tomorrow is a brighter tomorrow. I do not come to this conclusion by myself. Every one of us can have the benefit of a detailed study by the University of Michigan that about a third of those at the bottom fifth income bracket--the bottom 20 percent economically of our society--will move up to a higher income bracket even next year; in other words, into the second or third quintile. Over the past 16 years of study by the University of Michigan, approximately 80 percent of those who were the poorest of Americans had moved into the middle class. And incredibly--but it tells you something about the greatness of America and our economic system and our social dynamics--about 30 percent of those at the bottom were among the richest top fifth during the 16-year study period. This notion that the people's wages are not constant, that a man probably will not be paid the same amount when he is 25 as compared to when he is 55, is not news to me nor millions of other Americans who understand that there is opportunity to move ahead and up in our society. But from the way others talk, this must be incredible news to those in the Washington elite who have never had a callus on their hands-- that somehow the poor are always poor and the rich did not work to get there, but they have. What a shock to them it must be to learn that over 60 percent--again, 60 percent--of all families found themselves in the top 20 percent for 1 or more years over a 16-year period in an analysis provided by the Federal Reserve. This is who is now labeled the wealthy by those fighting tooth and nail against this tax cut--over 60 percent of all American families. And I would like to tell you the real story for many of these families who have finally received the reward of a good paying job after a lifetime of hard work. It is at that time that these families are often the most financially pressed. In other words, people who have married, gotten a job, had families, over a period of 30 years have moved up and maybe became high-income people, but these are also people who might be hit by a 39.6-percent tax bracket who are also financially pressed because in modern-day America these are the families struggling to pay for their kids' college, helping their kids with the cost of daycare, trying to put away something for savings for their retirement. Also, this generation, the first generation in American history that, besides taking care of their own kids, worrying about their own retirement, may be taking care of their mom and dad who are in a nursing home or need some financial assistance, these people are labeled the rich, the wealthy, and in some instances facing marginal tax rates of up to 50 percent of Federal and State income taxes. My colleagues should know, too, that for most Americans a good paycheck is fleeting because, as I said, the rich in America are not always rich. Most of them were not born rich. They worked hard to get there. And they do not stay there either because fully one-half of the top 1 percent at the beginning of the decade dropped out of the top 1 percent at the end of the decade, and not only were they not in the top 1 percent, they were not even in the top quintile, the top fifth income bracket, by the end of the decade. That said, we still all know that the American dream is alive. Sixty percent of all American families will reach the top fifth income bracket during their lifetime. Eighty percent of those on the bottom rungs will reach the middle class or higher. These high tax rates are really hitting the hard-working middle class who finally get into the top brackets for a few years as a reward for 30 years of hard work and may be even leading a miserly life to some extent thinking about the future. I want you to know those are some of the people who are hurt so much by the high tax brackets--middle-class people who finally make it to the promised land for a few years. I would be sympathetic to people in this body who want to preserve that high tax rate if they wanted to apply it to the people who, for a lifetime, you might refer to as filthy rich. But for people who are from time to time in that high tax bracket, we ought to recognize the fact that it is punitive for people who have worked hard throughout their lifetime. If you want to tax the other group of people who were born rich, stay rich, and die rich, then figure out some way of taxing them at a high bracket over a 5-year average or something so you do not hook these people who reach the high bracket for a few years of their life and steal the American dream from them. I am proud this bipartisan tax bill helps reduce the tax bites of these hard-working, middle-income Americans. I encourage my colleagues to remember that when they offer amendment after amendment, it limits marginal tax cuts. It is these millions of hard-working American families who have borne the brunt of hard work, been productive, raising their family, and providing for their own future. Let's not take it away from them. I yield the floor.

Mr. GRASSLEY. Mr. President, I yield myself such time as I may consume.

Mr. GRASSLEY. I want to make clear I am in opposition, too, but right now I don't have anyone to speak.

Mr. GRASSLEY

Mr. GRASSLEY. Mr. President, how much time does the Senator from Illinois want?

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

Mr. GRASSLEY. I move to reconsider the vote.

Mr. GRASSLEY. Which is the first amendment we vote on, Mr. President?

Mr. GRASSLEY. I yield 20 minutes to the Senator from New Mexico off the bill.

Mr. GRASSLEY. Mr. President, there may be honest differences of opinion between the Senator from North Dakota and I, but when he makes the claim that this tax bill is not fair, I refer to the chart behind me. When our legislation is passed, this bill will make the income tax system more progressive. We have heard the other side say that the upper income gets more out of the tax cuts. First, the people paying the taxes will get more tax reductions. But after this bill is enacted, the wealthy will be paying more of the taxes than they are paying now. As we can see specifically, where the Senator from North Dakota said that the top group would be getting 33 percent of the benefit, take into consideration that they are paying 35.9 percent of the total taxes today. I have a second chart. This chart shows that the tax relief share is greatest in families earning less than $50,000. It is all because of our bill. More than half of the $750 billion that we have in rate cuts in this bill go to the new 10-percent rate. We can see here that we have very carefully tried to craft a bill that is progressive and retains the progressiveness of the present tax system. About the President's proposal, we are not dealing with the President's proposal on the floor today, as the President would like to have it. With the reality of the makeup of the Congress, it never will be. But let's just say that we were debating today the President's proposal that he announced in the campaign and behind which he still stands as his policy. If it were carried out, the top income people in America would be paying a higher percentage of the total income tax take of the Federal Treasury than they do today. So I don't want to hear anybody talk about the progressiveness of our tax system being diluted at all because of either this bill or the President's bill. I yield the floor.

Mr. GRASSLEY. I suggest the absence of a quorum.

Mr. GRASSLEY. Yes.

Mr. GRASSLEY. The charts behind me contradict what the President----