Gil Gutknecht

Mr. GUTKNECHT

Mr. GUTKNECHT. Sad story. And the problem is, we are graduating kids or kids are dropping out of high school; and whether we like to admit it or not, they will face a much more competitive marketplace out there for their skills. And if we have high school graduates who really cannot read at the fifth grade level or sixth grade level, we have placed them at a permanent disadvantage not only relative to other American students, but I think more importantly, as we move into a world economy, it places them at an enormous competitive disadvantage to students from Korea or Japan or Germany, Great Britain, and other industrialized countries around the world.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, I thank the gentleman from Connecticut [Mr. Shays] for yielding me the time. I also thank him for appointing me to the Committee on Ways and Means. I am actually on the Committee on the Budget and delighted to be so. Let me talk just for a minute about some things because I know that, among the general public and amongst some of our colleagues, there is a certain amount of cynicism in terms of whether this budget agreement is real, whether we will actually balance the budget, whether we really will have the discipline to follow through to make the tough choices as we go forward. I think those are legitimate questions. But I think Benjamin Franklin may have said it best when he said, ``I know no lamp by which to see the future than that of the past.'' I would like to remind Members of what we said just 2 years ago when we passed our budget resolution, the blueprint, our 7-year plan to balance the budget. We said in fiscal year 1997 we would spend no more than $1,624 billion in fiscal year 1997. That is the year we are in. Two years ago we said we would spend $1,624 billion. This year we actually are going to spend in fiscal year 1997 $1,621 billion. At a time revenues have increased by over $100 billion, we are spending less than we said we were going to spend just 2 years ago.

Mr. GUTKNECHT. Mr. Speaker, I thank the gentleman for yielding me this time. We talk about the balanced budget and this agreement and what it means in terms of dollars and cents and percentages and so forth, but in many respects this agreement is about generational fairness. I represent an awful lot of farmers, and some of the greatest wisdom I have ever heard has come from some of my farm families. Back in farm country they know one of the great parts of the American dream is to pay off the mortgage and leave our kids the farm. But what we have been doing here in this government for the past 40 years is, in effect, we have been selling off the farm and leaving our kids the mortgage. We all know deep down in our bones that there is something morally wrong with that. An old farmer told me a couple of years ago, and perhaps the best way I have ever heard it put, he said the problem is not that we are not sending enough money into Washington. He said the problem is that Congress spends it faster than we can send it in, and that has really been true. And every time we have raised taxes the deficit has actually gone up. Balancing the budget, saving Medicare and allowing families to keep more of what they earn is not just some accounting exercise. Balancing the budget is about preserving the American dream for our kids. Saving Medicare is about keeping our commitment to our parents. And tax relief for families is about making it easier for those families to pay for their kids' education and save for their future. This is a glorious day for America. It is an historic day, and I am glad to be a part of this Congress and this Committee on the Budget.

Mr. GUTKNECHT

Mr. GUTKNECHT. Madam Speaker, what a difference 4 years has made. If we look back just 4 years ago, this Congress, under the leadership of the other team, was debating the largest tax increase in American history. They were attempting to dismantle the greatest health care system the world has ever known. Welfare reform was being ignored, and the Medicare trust fund was moving toward bankruptcy and was being ignored as well. The Congressional Budget Office was predicting $200 billion deficits for as far as the eye could see. What a difference 4 years has made. Now, we have actually reformed the welfare system, and as a net result, there are 1.3 million American families who were on the welfare rolls who are now on payrolls. I have often said that the real benefit of the welfare reform system that we passed in this Congress 2 years ago was not that it will save money, but it will save people, it will save families, and it will save children from one more generation of dependency and despair. What a difference 4 years has made. We now have agricultural reform so that farmers are starting to farm for the market rather than for the Government. What a difference 4 years has made as it relates to taxes and spending. As I say, 4 years ago the Congressional Budget Office was telling us that we would have $200 billion deficits for as far as the eye could see, and today, I am happy to report, as a result of some tough negotiations and work with this President, we are on the verge of passing the first balanced budget since I was in high school. That is great news for the American people; it is great news for our future. We are reducing the rate of growth in Federal spending by half. Some of us would say that Federal spending will still be going up too much under this balanced budget agreement, but the good news is, we are balancing the budget, we are keeping our promises, and we are doing what the American people have asked the Congress to do for so long. What a difference 4 years has made. As I said earlier, 4 years ago they were debating the largest tax increase in American history. Now we are going to debate a significant amount of tax relief for working families, and they will begin to notice that next year. Everyone who has an income of less than $110,000 and has children is going to get tax relief, the per child tax credit. It will only be $400 next year, but then it goes to $500. That is real money for real families that will make a real difference in their lives, and it is about allowing them to keep more of what they earn so that they can spend and save it as they see fit. There is real tax relief for small business people and farmers as well. As a matter of fact, perhaps the biggest benefactors of the program that was agreed to last night by the White House and congressional leaders will be small business people and farmers. And I represent an awful lot of farmers back in my district in southeastern Minnesota. For example, they will see real capital gains tax relief, over a 30-percent cut over the next 5 years. Small business people and farmers understand what capital gains are all about, because so many of them live poor and die rich. Speaking of death, as a matter of fact, this is one other area where I am very happy with the agreement that was reached between the White House and the Congress. The exemption on death taxes will be increased immediately for small business people and farmers, from $600,000 to $1,300,000 per person, so that a couple, that husband and wife who are working the family farm, it is going to mean that they can pass that farm along to their kids, and that is great news for the American people as well. One of the other things that I have worked on for many years that is good news in this tax package that has been agreed to is that we will finally have 100 percent deductibility for health care expenses for small business people and farmers. That is great news. In fact, that may be one of the most important health care reforms this Congress has passed in a long time. But as we look at all of the things that are in this tax package, I think it is good news for the American people, and I think we will have set the stage for long-term economic growth. As we look at some of the other elements that are in this package, if parents have kids that are going to college, and I speak now as a baby boomer, and I have one in college, and one just finished high school and will be going to vocational school next year, and I have one in high school. When we look at educational expenses particularly baby boomer families are having right now, there is over 31 billion dollars' worth of tax relief for those families. That is great news. We are going to make it easier for those families to send those kids on to higher education. So as we look at this package, there are lots of things in there that I think all sides can take credit for. We are going to expand the availability of health care for kids. The Kid Care Program, $24 billion will be committed to that program over the next 5 years. We want to say to all children that they ought to have the right to get the health care that they deserve. So this is good news for the American people. It is good news for American families, and it demonstrates what a difference 4 years has made.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, what a difference 4 years can make. Four years ago, with the other team in charge, they were about to vote on the largest tax increase in American history, while the other problems of welfare and Medicare reform were being ignored. The Congressional Budget Office was projecting $200 billion deficits as far as the eye could see. As we speak, negotiators are putting the finishing touches on a plan that will guarantee the first balanced budget in a generation and the first tax relief for working families in more than 16 years. We have reformed welfare, and 1.3 million families are on payrolls rather than on the welfare rolls. Medicare is being saved. Mr. Speaker, what a difference 4 years have made.

Mr. GUTKNECHT

Mr. GUTKNECHT. In fact, while the gentleman is bringing a chart down, I think he has made an excellent point and sometimes we forget because we get so bogged down in $1,624 billion and 2.3 percent and $100 billion and $200 million and all of these numbers. We sometimes talk about these kinds of things as if it were some kind of an accounting exercise when really this in the end is about real people and how it is going to affect their lives.

Mr. GUTKNECHT. It underscores the real danger of playing this class warfare game. Abraham Lincoln warned many, many years ago that you cannot help the poor by hurting the rich. In other words, we are all in the same boat. You cannot sink half of them. When they tried to do it, when they tried the luxury boat tax, it had a net negative revenue consequence. That was bad. But what was worse, over 10,000 honest, hard-working Americans lost their jobs. That is the danger of playing this class warfare game. I think we have to talk in the terms that President Kennedy talked about over 30 years ago. He said a rising tide lifts all boats. When he cut marginal tax rates across-the-board, guess who benefited the most? People with the highest incomes. But in the end who really benefitted in terms of more jobs, more economic activity, and a faster growing economy? It was people who needed the jobs worse. President Kennedy understood the principle of a rising tide lifting all boats. Unfortunately, there are Members of this body today who seem to think that if you cannot pick winners and losers you should not do anything to try to improve the state of everybody. I think that is wrong. I think there are people here who unfortunately have gotten into this game that there always have been to be losers and we must always defend the losers. That is simply not true. We have to talk about expanding the pie for everybody. If we do, the American people understand this. If the gentleman could put up this last chart, I know the gentleman wants to talk a little bit about the space race. There is an awful lot of cynicism, Mr. Speaker, and I absolutely understand it. A lot of times I tell people on my money it does not say, ``in Republicans we trust,'' it does not say, in ``Democrats we trust,'' it does not say ``in Congress we trust.'' It says ``in God we trust.'' I do not ask people to trust me, but I do ask them to trust themselves. What we have put on here, and I hope people can see this chart, if they want to know how much this tax package will benefit them, we have a couple of web sites where people can actually call it up on their computer. There is a GOP tax calculator, and hopefully they can see that on their television. People can actually calculate the tax relief for themselves: What does this package mean to me? Do not worry about what it might mean to some wealthy investor who may sell a large investment. Obviously they may get a tax break. But what people really want to know is, what will it do for me? What will it do for my family? If people look at this in those terms, they will decide it is a fair tax package, it is good for them, it is good for their family, and it helps them to save and invest for their future as well as take care of their kids. I am very proud of this tax package. Let me say one other thing. I have just written a letter to the gentleman from Texas Mr. Bill Archer. The President and some of his friends are saying this gives too much tax benefits to the rich, and there are families at the lower-income levels who are working but yet would not receive tax relief under this package. What we have done is send a letter to the gentleman from Texas Mr. Bill Archer, and this is from a recommendation from a gentleman who called in on C-SPAN. He said, ``I understand what the Republicans are saying, only people who pay taxes are going to get tax relief. But I kind of understand what the President and some of the Democrats are saying, too, and that is there are teachers just starting out, fire fighters just starting out. Under the Republican plan they would not get much tax relief.'' He offered what I think is a simple and sensible compromise solution. He said, ``Why do we not just say, let each family decide which package gives them the best bang for the buck?'' In other words, if right now they get a better deal under the earned income tax credit, they could take that. On the other side, if they thought they got a better bargain under the per child tax credit that the Republican conference committee has worked out, they should take that. They could either have the system under the earned income tax credit or the per child family tax credit. Give them the best of both worlds. They could choose one or the other. I think that is a reasonable compromise. I would hope that the conferees would at least look at something like that to try and break this impasse, so that for the first time in 16 years we can actually provide working families with real tax relief. I know the gentleman wants to talk a little bit about, and I want to give the gentleman a compliment, because he represents Cape Canaveral and the space industry down there, and the gentleman does it very admirably. Here recently we have heard a lot of interesting news about the space program, both with the Mir Space Station that is up there circling now, and we all hope and pray that that turns out for the better, but more interestingly, what has been happening on the planet Mars. I know the gentleman has some great pictures that have come back from NASA, and I yield to the gentleman to discuss some of those projects that are currently going on at Cape Canaveral and with NASA in general. I yield to the gentleman from Florida.

Mr. GUTKNECHT. I want to get back to an important point because I think this sometimes is lost. This typical American family, and this is not all that different from the family I grew up in during the 1950's. In fact, when I was growing up in the 1950's, the average family, the largest single payment that they made was for their house payment. Today the typical family, according to the National Taxpayers Union, pays more in taxes, we are talking about total taxes, they pay more in taxes than they do for food, clothing, and shelter combined. That is why the typical American family is being squeezed so much and why this tax relief package we are talking about is so important.

Mr. GUTKNECHT. That is money that they get to keep, and sometimes people misunderstand. They confuse credits with deductions. We are talking about $1,500 more that this family will have in their checkbooks to spend as they see fit rather than having that money being sent to Washington to be spent by Members of Congress and bureaucrats as they see fit.

Mr. GUTKNECHT. I will hold this picture up of this family, but I think if he flips to the next chart, let us talk a little bit about that. He is absolutely right that the President promised when he ran for office the first time a middle-class tax cut. He did not promise a lower income tax cut, he did not promise to cut taxes for people who pay no income taxes. He promised a middle-class tax cut. In many respects, what we are doing is we are helping the President keep that promise. According to the Joint Committee on Taxation, which is a bipartisan committee and is the official scorekeeper of all tax bills, 76 percent of the tax relief in the package that passed this House, and we have not yet got the calculations on the bill that is being finalized in the conference committee, but my suspicion is it will be very close to the same number, at least three-quarters of the benefit of this tax package will go to families who earn less than $75,000 a year. And there are lots and lots of families in that category, and I yield to the gentleman.

Mr. GUTKNECHT. That is what the President promised, and that is what we have delivered. Perhaps we can flip to the next chart because this is another chart that was put together by the Joint Economic Committee on Taxation, again the people who actually are the official scorekeepers, and what you see in yellow is current law or pre- the tax cut package that has been agreed to by the House and Senate. And what you see are the five different, if you broke the economic groups into equal parts of one- fifth, the lowest one-fifth of taxpayers currently pay in the yellow there on the left, they currently pay 1 percent of all the taxes paid in the United States. The top or the lowest 20 percent of income earners in the United States currently pay 1 percent. Under this tax plan they would still pay 1 percent. If you drop all the way over to the highest 20 percent, they currently pay 63 percent of all of the taxes paid in the United States. Under this tax plan they will still pay 63 percent. In fact, if you really are honest about the way the distribution of this tax cut goes, it really does little to change the differences between the wealthy and the poor. The important point is, and one of the things that our friends on the left, they do two things with our tax bill that I think in some respects are incredibly disingenuous. One is they use what is called family economic income or otherwise imputed income. And by doing that you can literally take a family that is earning $47,000 a year, which currently is the median family income, that lives in their own home, that perhaps has accrued values of pensions, perhaps has an IRA that they could cash in, have some undeclared capital gains; in other words, they have got some stock perhaps that they inherited from Aunt Matilda. And if you put all those together using a very convoluted and tortured arithmetic developed by the Treasury Department, you can literally take that typical family, that median family with $47,000 of income, and you can say they have an imputed income of $80,000 a year. And that is what sometimes our friends on the left are referring to when they talk about tax cuts for the rich. The other thing they do, which I do not think is completely fair or honest, is they talk about capital gains and they say capital gains are tax cuts for the rich. Well, in some respects there is some truth, and as a matter of fact if Bill Gates were to sell all of his Microsoft stock under this tax plan with the tax relief that we have included in that for capital gains sales, he would get a very large tax cut. That is a fact, OK? The likelihood is he is not going to do that. As a matter of fact, many wealthy people never sell their stock. They leave it to a trust; in fact, in my guess what probably will happen to Mr. Gates' stock in Microsoft is one day he will leave it to some foundation to build electronic libraries throughout the galaxy. That is what historically has happened with many very wealthy people. They create foundations, they create trusts, and so in some respects they really do not take advantage of these tax breaks anyway. But even if they did, that is their business, it is not the government's business, and he would still be paying billions of dollars worth of taxes. But let us talk about normal people. Let us talk about farmers. Let us talk about small business people. Let us talk about families who save and invest for their future which, of course, is what ultimately I think we want people to do more of. One of the problems we have had with this Tax Code over the last 40 years is that it has discouraged personal responsibility by saying, you know if you save, if you invest, if you take care of your family, you will be punished. If you do not do those things, you will be rewarded. And what we are saying is we have got to reverse some of those perverse incentives. But let us talk about tax cuts for the rich, because the truth of the matter is most people who pay a capital gains tax are rich for 1 day, the day they sell their farm, the day they sell their business or the day they sell some other asset or investment which in many cases they have been paying taxes on for many, many years. So I happen to believe that we ought to encourage people to invest and save and that the real purpose of capital gains tax relief is not to help the wealthy. It is to help more people of modest means become wealthy and to help those people take better care of themselves and better care of their families, particularly in their retiring years. So I strongly support capital gains tax reductions, and frankly I do not have any problem defending or discussing those back in my home district, particularly among small business people and farmers, because they understand that they live poor and they die rich because they have invested, saved and been prudent.

Mr. GUTKNECHT. Mr. Speaker, I want to get back to a point the gentleman from Florida made, and this is one of the things that has been incredibly discouraging and frustrating in that we have the President and the Secretary of the Treasury, Mr. Rubin, and I want to talk specifically about the Treasury Department and their imputed income scheme and, even more importantly, to talk briefly about their notion of exploding, reducing capital gains, exploding the deficit. The real tragedy of that tale is they know that that is not true. As a matter of fact, the Treasury now has updated numbers that shows by reducing capital gains at the levels that we are talking about in this tax bill, you actually increase revenue to the Federal Government over the next 10 years by an additional $25 billion. Yesterday there was an article written by one of the former Federal Governors who said reducing capital gains will actually increase revenues to the Federal Government by hundreds of billions of dollars more because it will encourage people to sell assets that they have been sitting on for a long time and convert those and allow other people to buy them. And as this happens, as we get more and more transactions, as we get more and more people investing in savings, as we encourage investments in savings, you increase the size of the pie. You do not have to raise taxes to increase revenue. If you lower capital gains, even the Treasury Department now acknowledges, you actually increase revenue. You do not explode the deficit, you explode revenues, because the economic activity is growing and the biggest benefactors, and I think you said this, again are not the wealthy. And I will just also quote, there was a gentleman in my office yesterday, and some people know him, he is the president of Godfathers Pizza, a remarkable human being, and I asked him that question about capital gains, and I asked him what kind of tax package would benefit low- and middle-income people the most. And you know what he said? Whatever tax package lowers total taxes the most. He said, do you know why? He said, because wealthy people already have all the toys they want. They already have the boats. They have the Gulfstream IV's, they have lots of toys. So if they have more of their money to spend, particularly as they sell investments, guess what they are going to do? They are going to reinvest it. They are going to invest it in new businesses and new opportunities and new job opportunities for people who need them the most. So the real benefit of this package I think goes to people of modest means and to middle-income families, and that is the way it should be. Just because there may be some wealthy people who will benefit, that is no reason to play this class warfare. I want to remind people and our Members who may be watching, it has not been that long ago that this Congress started to play this class warfare game. What happened? They passed something called the luxury boat tax. They were going to get those wealthy people who bought those cigarette boats and those wealthy people who bought yachts. They were somehow going to get them to pay more taxes. Do Members remember what happened?

Mr. GUTKNECHT. Which dog is which?

Mr. GUTKNECHT. Mr. Speaker, I yield 5 minutes to the gentleman from North Carolina [Mr. Etheridge]. Regarding Tax Relief for Working Farmers.

Mr. GUTKNECHT. Mr. Speaker, I would like to talk a little bit about what has been happening over the last 40 years, what is happening in the Congress today, and sort of pursue some of the ideas that our colleague, the gentleman Wisconsin [Mr. Neumann], was talking about. I am pleased to have joining me the gentleman from Florida [Mr. Weldon], who came in with me and the gentleman from Wisconsin [Mr. Neumann] in the class of 1994, to talk a little bit about what is happening with this budget, what is happening with taxes. I want to mention something that our colleague, the gentleman from Wisconsin [Mr. Neumann], neglected to mention. I think it is a very important point. He said that we are ahead of goal, we are under budget, we are closer to a balanced budget today than we have been since I was in high school. I would like to talk a little bit about some of the things that are happening. We have eliminated something like 289 Federal programs. We have cut over $50 billion in discretionary spending. We have the first real welfare reform plan passed literally since 1965. There is a lot of good news that goes along with this. As a matter of fact, 3 weeks ago when the President did his Saturday radio address, he said that there are 1,023,000 fewer families on welfare today than were on welfare when he signed the Republican welfare reform bill just a little over a year and a half ago. That is good news. It is saving money. But the goal of the welfare reform plan was not to save money. The goal of the welfare reform plan was to save people, and to save families and to save children from one more generation of poverty, dependency, and despair. We are making real progress in the areas of welfare reform, in the areas of Medicare reform, entitlement reform, downsizing the Federal bureaucracy, holding the Federal Government more accountable, squeezing more out of the taxpayers' dollars. We are limiting the growth in spending. In fact, in 1995, when we passed our first 7-year budget plan in which we said we will balance the budget by 2002 and we will provide tax relief to working families in the United States, when we passed that original blueprint for balancing the budget, when we said in 1995 that in fiscal year 1997 we would spend $1,624 billion, that is how much we would spend in this fiscal year that we are in right now. The truth of the matter is we are actually going to spend only $1,622 billion. This Congress is actually going to spend less money this year than we said we were going to spend just 2 years ago. That is good news. But I think the news is even better if we stop and analyze it, because in the intervening time because we have had stronger consumer confidence, we have stronger confidence in the business community, we have lower interest rates than even the Treasury estimated just 2 years ago, as a result of all of that, more people are buying homes, more people are buying cars, the economy is stronger, and the revenues coming into the Federal Government have actually increased by more than $100 billion. At the same time revenue has increased by over $100 billion, real spending by this Congress is less than we said it would be just 2 years ago. I think that is great news for the American people, and it is particularly good news I think for our kids, because we are on the path now toward a balanced budget. There was a published report just a few weeks ago that said if the economy remains even relatively as strong as it is today, even close to where we are today, we could actually balance the budget as early as next year. I think that is great news. Joining me is the gentleman from Florida [Mr. Weldon]. I welcome any comments he may have.

Mr. GUTKNECHT

Mr. GUTKNECHT. Madam Speaker, David Gergen writing in this week's U.S. News & World Report says, and I quote, and David Gergen is a former Clinton administration adviser, he says it is time for the left to stop twisting the truth about tax relief. Why is that important and why do we agree? And let me explain, because seniors in my district are starting to become confused because our liberal friends are talking about this imputed income scheme where we can take people with one income level and impute their income up to a different level. Let me give my colleagues an example of a couple in my district. Their real income is $8,700 a year, but their home is paid for; of course they could rent that home out. They also have accrued value and some pension plans and other things, but they are living on $8,700 a year. Using the imputed income scheme of the Democrats we can take their income up to about $40,000 a year. So the question they have is if the Democrat tax plan passes, will they pay taxes on $40,000 a year or will they pay on $8,700 a year? Madam Speaker, there is a big difference. Seniors are confused. We owe them the truth. I hope that we can pass our plan.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, let us talk about class warfare. According to the Census Bureau, the median family income in the United States today for a family of four is $47,000 a year. Let me be clear, that is $47,000 American dollars, not Euro-dollars, not imputed dollars, not even bus tokens. We are talking about real money here. Let us imagine such a family. Let us give them names, Al and Betty Jones, with a son in eighth grade and a daughter going to college this fall. Under our tax relief plan, the Joneses would get to keep an extra $1,900 of their money. Using the imputed income scheme that the Democrats want to use, the Jones' income magically rises from $47,000 to nearly $80,000. Congratulations, Al and Betty, you are now rich. You no longer qualify for family tax relief under the Democrats' own plan. Worse yet, if we carry this bizarre arithmetic to its imputed conclusion, these rich Joneses would now owe almost $8,000 in new taxes. So instead of getting $1,900 in tax relief under our plan, Al and Betty get a hefty tax hike. I guess that is just the Washington liberal way of keeping up with the Joneses.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, I move that the House do now adjourn.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, I rise today to talk about tax relief, tax relief which, in my opinion, and I think in the opinion and view of the vast majority of American families, is long overdue. We were talking earlier with some of my colleagues about college commencement addresses. Some of us are asked to give a commencement address during the late spring and early summer of the year, and most of us do not remember who the commencement speaker was at our own commencement, particularly our college commencement. I am one of the few who probably does remember, because the director of the United States Census was there to give our commencement address when I was in college. It was interesting to look back about what it was like growing up then, and the difference then. I was a baby boomer. I was born in 1951. The Speaker that spoke at our commencement address, the director of the United States Census, told us on that day that there were more kids born in 1951 than in any other year. I represent the peak of the baby boomers. I remember, we were talking about what it was like to grow up in the 1950s. One of the important things when we talk about taxes is to remind ourselves of how much has changed since I was growing up and since the baby boomers were growing up, because when I was a child I was fortunate enough, my father worked in a factory, I am a blue collar guy, and my folks were able to raise three boys on one paycheck. Part of the reason they could do that, Mr. Speaker, was because the largest single payment they made was their house payment. Today, unfortunately, the average family pays more in taxes than they do for food, clothing, and shelter combined. Let me say that again, because I do not know if most people really, I think they know that down in their bones, but I do not know if they have really internalized what that all means. But the average family in America today spends more for taxes than they do for food, clothing, and shelter combined. So this Congress has been working very hard to balance the budget, to save Medicare, and to provide tax relief to working families. We are having a rather interesting debate here the last several weeks over who would really benefit from these tax cuts. Frankly, I think we need to spend some time talking about how relatively intelligent people can reach entirely different conclusions about who benefits most from this tax relief. I would like to talk a little bit today about our tax plan, our method of coming to these conclusions, how we actually do the arithmetic to come to some of these conclusions, and compare it to exactly how our friends on the left are doing the calculations. We are talking about real income for real families and real tax relief. What some of our friends on the left are using is imputed income, potential taxes, and potential tax relief. I think if we could all use the same set of numbers, whether we are going to use one set or the other, if we use just the same set; if we want to use their set of numbers let us go ahead and do the calculations that way, and then let us do the calculations our way, and let the public decide for themselves who is right, who is telling the truth, and whose tax relief will benefit them the most. Let us go through what the tax relief package that the House has passed and sent to conference is. First of all, the centerpiece of our tax relief package is a $500 per child tax credit. A lot of people get confused between the tax credit and a tax deduction. A credit is money that you get to keep. If you pay taxes you get a credit. That is money that will be yours at the end of the process. So this is a credit. It starts out at $400 next year, and it would go to $500 ever year thereafter. Generally now the President agrees with this formula. There is also nearly $35 billion in post-secondary education incentives. Again, as a baby boomer, and I have one who just graduated from high school, I have one in college and one who is just starting into high school, and I can understand more than anybody the high cost of higher education. I think a lot of families that have children my age understand how difficult and how expensive it is to send kids on to post-secondary education. I think that is a great benefit to working families. There is broad-based capital gains tax relief. Again, what we want to do is make it easier for families to save and invest for themselves. This is where sometimes our friends on the left get a little upset, because they say, well, this is tax cuts for the rich. The truth of the matter is there would be some wealthy people who would benefit from it. I will get down in a later chart to show you just how much benefit the Congressional Budget Office and the Joint Committee on Taxation say there really is for that group of people. Cutting capital gains is not about helping the wealthy. It is about helping middle-class families become wealthy because the only way that you can save and invest for your future is if you in fact put some of that money away. What we want to do is make it easier for people to do that. Unfortunately, what Washington has done for the last number of years is they have operated under a sort of an unwritten rule that no good deed goes unpunished. If you work you get punished. If you save you get punished. If you invest you get punished. What we are trying to do is reverse some of those perverse incentives. We also want to make it easier for people to use IRA's and to withdraw from those IRA's for educational expenses. There is also a significant reduction in the death tax. This is a tax that is particularly onerous to people who own a farm, who own a small business. They would like to leave that farm or that small business to their families. So those are the cornerstones of the tax relief package that passed the House and is currently in conference committee. I would like to talk a little bit about what this tax relief package means and how the various points actually are scored and who benefits. According to the Committee on Ways and Means, and I think these numbers have been scored both by the Congressional Budget Office as well as the Joint Committee on Taxation, which are the official scorekeepers on matters like this, this package is aimed directly at Americans in the middle-income brackets. In fact, we say, and I think we can prove that over 75 percent of the benefit in this tax plan goes to families earning less than $75,000. I want to talk about real earnings because that is also one of the problems we have in this debate because we are talking about real earnings, real taxes, real tax relief for real families. We will get into that in just a few minutes. The way this thing has been scored and, if you break it out, those families under $20,000 a year will benefit to the tune of about $5.5 billion in this tax relief package. Those between $20,000 and $75,000 will get about $83.5 billion worth of tax relief in this package. Families earning between $75,000 and $100,000 will get about $19 billion worth of the benefits, and those earning between $100,000 and $200,000 would benefit to the tune of $6.7 billion, and those earning over $200,000 would only get $1.4 billion worth of savings under this plan. As I said earlier, over 75 percent of the tax relief in this package goes to families earning less than $75,000. I am not saying that. That is what the Joint Committee on Taxation has said. So why do we hear so often from our friends on the left that this tax package is designed to benefit those that they call rich? Part of the reason I think is they use something that is called imputed income or family economic income. Let me try to explain how that works. This all started a number of years ago; I think the Treasury Department even under the Bush administration was trying to figure out a way to calculate family income in a different way. Why they do this, I have no idea. I want to read a quote from someone most of you who are watching and most of my colleagues that are here, watching back in their offices will recognize. I will do this first. I will read the quote, and then I will tell you who it is from. ``Finally, a few words about Federal taxes and what some of the great minds at the U.S. Treasury are thinking about. The Treasury likes to calculate the American people's ability to pay taxes based not on how much money we have but on how much we might have or could have had. For example, a family that owns a house and lives in it, the Treasury figures if the family didn't own the house and rented it from somebody else, the rent would be $500 a month. So they would add that amount, $6,000 a year, to the family's so-called imputed income. Imputed income is income you might have had but do not. They don't tax you on that amount. The IRS doesn't play this silly game. Instead, the Treasury calculates how much they could take away from us if they decided to. If that were the system, consider the possibilities. How about being taxed on Ed McMahon's $10 million magazine lottery? You didn't win it, you say, but you could have. The Treasury Department must have something better to do. If not, there is a good place for Clinton to do some spending cuts.'' Now, that is what David Brinkley said on ``This Week With David Brinkley'' on February 28, 1993. And as our friend Ronald Reagan would say, former President Ronald Reagan, there they go again. We are starting to use imputed income or family economic income to calculate how many people are wealthy. That is why the difference between what the Census says and what the Treasury Department says are so is so different. The Census Department says there are about 11 million American families that are above $100,000 in income. The Treasury Department says that number is 22 million. Americans sitting at home wonder how in the world could two Federal agencies come to such incredibly different answers. The reason is, and the answer is, family economic income or imputed income that David Brinkley talked about. Now, some of the people have said, again you have probably heard it on the House floor, again, tax cuts for the rich. But as the chairman of the Joint Economic Committee, the Joint Committee on Taxation has said, currently if you divide the population of the United States, all of the taxpayers into five groups of 20 percent each, the lowest 20 percent right now of the economic group in the United States pay 1 percent of all the taxes paid in America. After this tax relief is calculated, they will still pay only 1 percent of all the taxes paid. The second quintile currently pay 4 percent of all the taxes paid in the United States and after this tax relief goes into effect, they will still pay 4 percent. The third quintile, it is 11 percent. It remains 11 percent. The fourth quintile, 21 and 21, and finally that top 20 percent of income earners, the top 20 percent of taxpayers in the United States currently pay 63 percent of all the taxes paid in America. The interesting thing is, according to these calculations done by the Joint Committee on Taxation, if this tax cut plan that passed the House were to go into effect signed by the President, there would be no change. The top 20 percent would still pay 63 percent of all the taxes paid in America. I think it is important, and I will come back to this chart in a minute, I want to talk about this whole notion of imputed income. If you take that calculation, if you take a family, in fact we did a quick calculation of a family in my district. If you put that all together, and you can take a typical family and let us call them the Joneses who live in my district that earn approximately $32,500 per year. The Jones' mom works, dad works. They have a youngster that is in high school and they have one who is just entering college. They make $32,500 a year. That is what they really make. But if you use this imputed income, you literally can take that family from $32,500 a year and you can easily get that over $50,000 a year. That is not money that they have. That is money that they might have if they sold all their interest in their IRA's, if they converted their pension funds to cash, if they rented their house, if they had a sale lease back on their house and could get the rent on their house somehow back to them; it is a convoluted way to go. The interesting thing is, if you take that to its logical conclusion, you literally could raise that family into a much higher tax bracket. So if our friends on the left want to use imputed income to calculate people's income and push more people into the wealthy brackets, we are doing some calculations to find out what would they pay in terms of taxes under their tax plan with imputed income. The answer is, over half of the families in America, if you used their calculations and their imputed income statistics, over half the families in the United States of America would actually see a tax increase under the Democrat tax plan. That is interesting, is it not? That is a side of the story that has not been told. The other side of the story is, and we have tried to mention this, but if you use imputed income to do those calculations, the only people in the United States of America who may be guaranteed under their plan to get a tax cut are people who pay no taxes. Mr. Speaker, I submit that that is not my definition of fairness. I doubt if it is the definition of fairness that most Americans have. Mr. Speaker, I know that there is a lot in this business, there is a lot of using statistics and so forth to justify a particular point of view. I do not expect the American people necessarily to believe me. In fact I think the American people are cynical and they should be cynical because politicians down through the years have not always told the truth, the whole truth and nothing but the truth. But I would encourage people to calculate the tax cut for themselves. Any of you who would like to get a copy of this worksheet, there is one on a Worldwide Web page so that people can actually, through their computer, do their calculations themselves. If you do not have access to a Worldwide Web page, if you do not have access to the computer and the Web, we will actually mail one out to you. If people call us or write we will send them a worksheet so they can calculate it for themselves. They can decide for themselves how much the tax relief is worth to their family. It is a fairly simple calculation. First of all, how many children do you have in your family that are under the age of 17? You fill in the blank. In 1998, you multiply that times $400. In every year thereafter you multiply it times $500. That is how much you will get to keep of your tax money. Line 2, amount of capital gains. If you have a capital gains, if you have a gain, if you have sold a stock or a bond, if you have income, if your family income is more than $41,200, you multiply that times 8 percent because that is going to be your savings under the plan that passed the House. If your family income is less than $41,200 per year, you multiply that times 5 percent. That is the capital gains tax relief and that is how much you will get to keep with this plan. Finally, how many children do you have in their first 2 years of either college or vocational school? Those children are worth $1,500 in tax credits to you. We have done some calculations for different families in our district and the differences range anywhere from obviously, one child that is under 17, it is worth $400 next year, but for the average family in my district, this calculation works out to over $1,000 a year that that family will get to keep and spend on their family to invest and save for their future. That is what this tax relief is about. That is why I think it is important for America. In the end, one of the goals is to make certain that we have a strong economy on into the next century. We have been very fortunate; 2 years ago this Congress when we passed our budget resolution, we said that in fiscal year 1997, I am going back 2 years, in 1995, this Congress said that we would spend no more than $1,624 billion dollars in the fiscal year 1997. The good news is, we are actually going to spend this year $1,622 billion. So for the first time in my memory, the Congress is actually going to end up spending less than it said it was going to spend just 2 years ago. The news gets even better because in that same time frame, because the economy has been stronger, there is more consumer confidence, there is more confidence in the business community, the economy has been much stronger than anyone would have predicted just 2 years ago; as a result of that, we have produced an additional over $100 billion in revenue to the Federal Treasury. We have spent less. We have taken in more and as a result, we projected just 2 years ago the Federal Government would have a deficit this year of over $174 billion. The truth is, according to our estimates, it would be about $70 billion. There was a published report earlier this week that shows that the deficit could be as low as $50 billion or even less. That is good news. We want to make certain that that keeps going in that direction and by offering some tax relief, by allowing families to keep more, to spend more, to save more of their money, we in fact can keep this strong economy, we think, long into the future. One of the other benefits of a strong economy is that we are moving families off welfare rolls and onto payrolls. I think one of the greatest accomplishments of the 104th Congress was the welfare reform that we passed that requires work, that requires personal responsibility and gives the States an awful lot more latitude in how they can work to encourage people getting off the welfare rolls and onto payrolls. The good news is since that welfare reform plan passed, and the President talked about this a couple of weeks ago in his Saturday radio broadcast, the good news is there are 1,023,000 fewer families who are trapped in the welfare cycle, that have moved off welfare and onto payrolls; 1,023,000 fewer families are on welfare today than just 1 year ago. That is a huge benefit to all of us. And I have said before that the real goal of welfare reform was not about saving money, even though we will save money to the Federal Government, to the State governments and everyone else, but the real goal was not about saving money. The real goal was about saving people. It was about saving families. And most importantly it was about saving children from one more generation of dependency and despair. And that is really what the welfare system was about. But if we are to keep the strong economy growing, we are going to have to encourage more investment, we are going to have to encourage more saving, and we are going to have to allow families to keep and save and spend and invest more of their own money. I just want to talk briefly, too, about the progress we are making, because sometimes it is easy to forget in the heat of the battle. If we look at all of the red bars here, that is how much we said that the budget would be out of balance in each of the next 7 years. When we passed our original 7-year budget plan in 1995, we said that the deficit, for example, this year, would be $174 billion. Right now it looks like it will be less than $70 billion; it could be less than $50 billion. Now, when we update this, we will probably change these numbers slightly. But the good news is if we look at the blue bars in each of the years, we are clearly now running well ahead of schedule and, frankly, I think if we can keep the economy going at anywhere near the economic growth rate that we have today, we will balance the budget not by the year 2002, but, in fact, we will balance the budget probably by the year 2000 or maybe even earlier. And when we get to that point, what we have to really talk about, in fact we need to begin that debate today, and I congratulate my colleague, the gentleman from Wisconsin Mr. Mark Neumann, who has offered the National Debt Repayment Act, because I think that should be our next goal. It is not just about balancing the budget. It has to be about paying off that $5.3 trillion worth of debt we have accrued and will fall on the shoulders of our children and our grandchildren. Frankly, if we are willing to exercise the fiscal discipline that this Congress has been willing to discipline itself to over the last several years, not only could we balance the budget ahead of schedule, but I think we can begin the process of actually paying off the national debt. I think that that is a goal that is worth fighting for, I think it is a goal that the American people can understand, and I think they will recognize we can ultimately set a goal and stay on that course of actually paying off that debt so that we do not have to pay over $200 billion a year in just interest on that debt. And I tell an awful lot of people back in my district when I give speeches that if we actually do all the calculations, we find that all of the personal income taxes, all of the personal income taxes, collected west of the Mississippi River, now goes to pay the interest on the national debt. That is a very scary statistic. The tragedy is, before we got to Congress in 1994, the elections of 1994, that line was moving further west every single year. Now we are at least beginning to push that line backward. And I think we should have a goal of actually paying off that debt. Because I think there is nothing better that we could leave our kids than a debt-free future. So I encourage my colleagues from both sides of the aisle to join us in that great effort. I would hope they would cosponsor the legislation of the gentleman from Wisconsin, the National Debt Repayment Act, because what it does is, very simply, it says as we begin to reach a surplus in the Treasury, which we think we can no later than 2002. But, frankly, we think if things continue to go anywhere near where we are right now, it could actually be before that, but when we have reached that goal and disciplined ourselves to restrict the growth in spending at 1 percent less than the growth in revenues, and that does not require draconian cuts, we will still see spending at the Federal level growing faster than the inflation rate, but it will not be growing as fast as it has in the past. So if we slow the rate of growth in spending and get control of entitlements, we cannot only balance the budget, but we can pay off the national debt and, at the same time, take a third of those surpluses and apply them to additional tax relief so that American families can keep and spend more of their own money. Mr. Speaker, I know a lot of my Republican colleagues are headed for airplanes and it is a getaway day, and we are all eager to get home, but I want to close by saying that I am very proud of the work that is being done in this Congress. I know that sometimes the American people see some of the debates and some of the arguments here on the House floor and they sometimes miss the big picture. But the big picture is that before 1994 the United States and this Congress was headed in the wrong direction. We were spending more than we took in. In fact, from 1975 to 1995, for every dollar that Washington took in, it spent $1.22. Today, now, we are still not quite to a balanced budget, we are still spending more than we take in, but we are down to $1.04. If we stay on the path we have set over the last several years, we will get to that balanced budget ahead of schedule, we will do it under goal, and we are going to allow families to keep more of what they spend and earn. Because for 40 years Washington had it wrong. For 40 years Washington believed that Washington knew best; that somehow they could spend money smarter than American families; that a Federal department of housing was better than a family department of housing; that a Federal department of human services was better than a family department of human services. Now, there are still legitimate needs of the Federal Government, and there are still people who are dependent on the Federal Government, and we are not talking about pulling the rug out from under people. But we are talking about people getting a little gentle nudge so that we reinforce some of those time-tested principles, things like faith, family, work, thrift, and personal responsibility. Those are the things I think Americans want us to underscore, but for too long under the liberal agenda what we did was we undermined those values. The good news is I think the tide is turning. The tide is clearly turning. We are on our way to a balanced budget, we are saving Medicare, and for the first time in 16 years we are going to allow families to keep and save and invest and spend more of their own money. That is the direction I think the American people want us to go, that is the direction we are going, and with the help of the American people, we are going to win that fight.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, I would like to quote from a famous news anchor: ``Finally, a few words about Federal taxes and what some of the great minds in the U.S. Treasury are thinking about. ``The Treasury likes to calculate American people's income on the ability to pay taxes, based not on how much money we have but on how much we might have, or could have had. For example, a family that owns a house and lives in it, the Treasury figures that if the family did not own the house and rented it from somebody else, the rent would be $500 a month, so it would add that amount--$6,000 a year--to the family's so-called imputed income. Imputed income is income you might have had but don't. They don't tax you on that amount. The IRS does not play this silly game. Instead, the Treasury calculates how much they could take away from us if they decided to. ``If that were the system, consider the possibility. How about being taxed on Ed McMahon's $10 million magazine lottery? You didn't win it, you say. But you could have. ``The Treasury must have something better to do. If not, there is a good place for Clinton to cut some spending.'' David Brinkley, ABC news, February 28, 1993.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, I want to talk a little bit tonight about tax relief, and particularly tax relief for middle class working families. All of us were home for about 10 days in our districts and most of us had a chance to meet with folks in community events. I was at Spam Jam in Austin, Minnesota, where we celebrate the world's greatest lunch meat. I was at 6 parades in my district. I got a chance to talk to a lot of people. What they told me was pretty simple. I think they are generally pleased with what we are doing in terms of balancing the budget, but frankly they do want some tax relief, they want it to be fair, they want it to be part of a balanced budget plan, they would like us to save Medicare. I am happy to report tonight, Mr. Speaker, that we are doing exactly that. I want to talk a little bit about the differences in the debate that the American people are being subjected to about whether or not this tax relief plan that we are offering to the American people is fair. And I would suggest that there is a big difference in the debate, and the debate is between real and potential, real and potential. In fact, if you listen carefully to the debate, we are going to talk about real tax relief, they are going to talk about potential tax relief. They are going to talk about potential income, we are going to talk about real income. And I do not fault completely our current Secretary of the Treasury, Mr. Rubin. He was not the first to come up with a concept of imputed income. Now what is imputed income? And earlier we had one of our colleagues from Texas talk about a family that made $40,000. Now someone, if we had been able to, and sometimes it is rude to interrupt people and ask them to yield, but is that real income or is that imputed income? Because imputed income, as the gentleman from New Jersey [Mr. Saxton] said earlier, includes potential rent that you could get from the house that you currently live in. As a matter of fact, David Brinkley a couple of years ago opined about this issue. Imputed income is income that you might have had but did not. It is potential income. For example, the example has been used several times about the young fire-fighter or the young policeman who earns $25,000 or $35,000 a year. Well, if he lives in his own home and could have rented his home out, actually then his real income might have been $40,000 or $45,000. If he has a vested interest in a pension plan, that would be part of his imputed income. So if we are going to calculate people's income using imputed income, let us calculate the taxes. But the real fact of the matter is that if you look at this chart that earlier was presented, nothing really changes with the tax bill in terms of who is going to pay the taxes. What this chart shows is that under the current tax formula the top 20 percent of taxpayers pay 63 percent of all the taxes paid in the United States. Under the new tax formula that we are proposing from the House, the top 20 percent will still pay 63 percent. Now we are going to have this debate, and they are going to use imputed income, we are going to use real income. They are going to use potential taxes, we are going to use real taxes. We should not even have this argument, and we are not going to ask the American people just to trust us and do not trust them. Trust yourself. And what I am going to invite people to do is to calculate the tax cut for themselves, and this is available now, I think, on the World Wide Web. We are going to make these worksheets available so people can calculate their own tax relief. This is a very simple little work sheet: Number of children in your family under the age of 17; under our tax relief, the first year, 1998, you multiply times 400, and the second year and years after, you multiply it times 500. If you have two children it is worth $800 next year and $1,000 the year after. If you have a capital gain, if you earn more than $41,200, you multiply times 8 percent. If you have income, household income, of less than $41,200, you multiply times 5 percent. That is what you are going to save. And finally, if you have youngsters who are in their first 2 years of college, you multiply times a $1,500 credit. Do the calculations yourself, but I can tell you this: If you are an average family in my district earning $32,500 a year with 2\1/2\ children, in fact let us just say 2 children, it is worth over $1,000 to that family. Now that is real money that they can spend themselves or they can save for their own future. So do not take our word for it, do the calculations yourself, and these are real tax cuts for real people, not potential tax cuts for potential income. Finally let me just say there are additional benefits in this tax relief package, and you have choices as to whether you want to take the credit on higher education costs or you can take a $10,000 deduction depending on your situation. Penalty-free withdrawals from your IRA's for college expenses, exclusion of capital gains on a home up to $500,000; this is real tax relief for real families, not potential tax relief based on potential income.

Mr. GUTKNECHT

Mr. GUTKNECHT. Mr. Speaker, I think our time has about expired. I think you have summarized very well where we were, where we are and where we are going. The negative naysayers said you cannot balance the budget, you cannot provide tax relief, you cannot reform welfare, you cannot save Medicare, not all at the same time. Well, it is happening. This chart illustrates very clearly where we were. For the last 20 years, we spent, this Congress spent $1.22 for every dollar they took in. We are now spending less than $1.04 for every dollar we take in. We are making real progress. We are on the right track. The American people understand that. And we are going to balance the budget and let people keep more of what they earn.

Mr. GUTKNECHT. And frankly that is what many of our colleagues were talking about for a number of years before we came here. They were talking about moving away from the welfare state and to an opportunity society, and we are making real progress in that direction. In fact, in meeting with particularly small business employers in my district, the biggest problem that I hear at virtually every stop is we cannot find people. We have; in fact I have had a number of businesses say we turn away business, we simply do not have enough good people to get the product out the door or to get the job done so we are turning away business, and is that not a wonderful problem to have? And that people with modest amounts of skill now are able to get out there to become self-sufficient. And I have often said this, and I really believe this, that a job is more than the way you earn your living. A job helps to define your very life. It is about a sense of self worth. And what we are giving to over a million families today is something they did not have a year ago, and that is a job, a future, real hope and real opportunity. And if I could I want to share one more story, I know that you go to schools often, as well as I do. I often go to schools, I read to kids, I listen to kids, and we can learn a lot sometimes from kids. And I was at a school a few months ago in my district, and one of the teachers, after the kids went home, we were meeting with the teachers. We were talking about welfare and what it has done to families and what it was doing in their particular school, and actually she was quite congratulatory. She said, ``I think you guys are doing the right thing about welfare reform,'' and she said, ``I'd like to tell you a story. There was one of my students who came in. He has just started acting better.'' His behavior was better, he was carrying himself better, everything about him was better. His deportment was better, his studies were better, his grades were better. So finally the teacher said, ``You know, Johnnie, is there something different at your house?'' And Johnnie said, ``Yeah, my dad got a job.'' I mean it has an effect on families, and so by getting the economy moving stronger, by increasing consumer confidence, by getting Americans to believe once again that Congress can balance the budget, that we can live within our means and we can allow Americans to keep and spend more of what they earn, we have done a lot more than just balance the budget. It is about helping families to really have more hope in their futures.

Mr. GUTKNECHT. Mr. Speaker, if the gentleman will continue to yield, in the last 20 years Government spending at the Federal level has increased to nearly double that of the national inflation rate. That had been the pattern. The gentleman almost quoted a good old farm fellow in my district who said it so clearly. He said, the problem is not that we do not send enough money in to Washington. The problem is that Congress spends it faster than we can send it in. So raising taxes to try to balance the budget has never worked. What really has to happen is we have to limit the growth in spending, allow spending to increase but at a much slower rate, and we cannot only balance the budget then but we can actually allow American families to keep more of what they earn.

Mr. GUTKNECHT. Show that chart. I think people are astonished when people see the numbers, the average Federal revenue growth over the last 17 years.