Jon Kyl

Mr. KYL

Mr. KYL. Mr. President, I rise to introduce the Kyl-Faircloth State Fair Housing Laws Recognition Act of 1995. I thank Senator Faircloth for his cosponsorship of this bill, and his leadership in States rights issues. I am pleased to introduce this amendment which will prohibit the Department of Housing and Urban Development [HUD] from enforcing a complaint of discrimination on the basis of a housing provider's occupancy standard, and thereby transferring from HUD to the States and localities the authority to set occupancy standards. Mr. President, an occupancy standard specifies the number of people who may live in a residential rental unit. In July of this year, HUD general counsel Nelson Diaz issued a memorandum which, in effect, supplants the traditional two-per-bedroom occupancy standard, and may force housing owners to accept six, seven, eight, or even nine people in a two-bedroom apartment. HUD should not be establishing national occupancy standards. HUD was created in 1965 with the best of intentions: To build and fund housing for the poor. But the agency's regulations have gone far beyond the scope of that intent. Housing is first and foremost a local issue. The Federal Government should play a limited role in it. State officials are closer to the situation and can tailor standards to meet the needs of their communities. HUD has accepted a two-per-bedroom standard as reasonable in enforcing fair housing discrimination laws under the Fair Housing Act. Most public housing units subscribe to that standard. That is, until Henry Cisneros became Secretary of HUD. Secretary Cisneros and his then Deputy, Roberta Achtenberg, disagreed with the traditional occupancy standard, arguing that it discriminates against larger families. The new HUD standard is without factual foundation. Mr. Diaz has used the Building Officials and Code Administrators [BOCA] Property Maintenance Code as a foundation for his occupancy standard. The BOCA code, however, is a health and safely code specifically drafted by engineers and architects to provide guidance to municipalities on the maximum number of individuals who may safety occupy any building. It was never intended to alter the minimum number of family members HUD could require owners to accept under fair housing law. The code was adopted without any consultation, public hearings, or analysis of its impact on the Nation's rental housing industries. That is wrong. Secretary Cisneros, through HUD's general counsel, has circumvented the Federal Government's rulemaking process by imposing this standard through an advisory without public hearings. Mr. President, the Manufactured Housing Institute, Arizona Association of Homes and Housing for the Aging, and the Arizona Multihousing Association endorse the bill. Arizona Gov. Fife Symington, speaker of the Arizona House of Representatives Mark Killian, and president of the Arizona Senate John Greene have sent me a letter in support of this bill. I ask unanimous consent that their letter be printed in the Record. States and localities should establish occupancy standards, not a Federal bureaucracy. Several States have an occupancy standard including my own home State, Arizona. And it has worked well. It is time we begin returning a certain amount of authority back to the States. Public housing laws are a good place to start. That is why I introduce this bill which blocks HUD's attempt to set a national occupancy standard, and transfers that authority to the States and cities. I urge my colleagues to cosponsor this bill. I ask unanimous consent that the full text of the bill be printed in the Record.

Mr. KYL

Mr. KYL. Madam President, I rise as an original cosponsor of S. 1372, introduced by Senator John McCain and Majority Leader Dole. It is time to lift the senior citizens earnings limitation off the backs of America's and Arizona's senior citizens. This legislation would gradually raise the limitation to $30,000 between 1996 and 2003, and would thereafter index for inflation. During the 1992 Presidential campaign, President Clinton said that America must ``lift the Social Security earnings test limitation so that older Americans are able to help rebuild our economy and create a better future for us all.'' I could not agree more. Yet, despite the continued urging of many Members of Congress and millions of Americans, the President appears reluctant to make good on this campaign promise. So, it has fallen to Senator McCain once again to pursue this issue, as he has for so long. The Social Security earnings limitation [SSEL] was created during the Depression in order to move older workers our of the labor force and to create job opportunities for younger workers. Obviously, this situation no longer exists. Currently, under the SSEL, senior citizens aged 62 to 64 lose $1 in benefits for every $2 they earn over the $8,040 limit. Seniors aged 65 to 69 lose $1 in benefits for every $3 they earn over $11,160 annually. When combined with Federal and State taxes, a senior citizen earning just over $10,000 per year faces an effective marginal tax rate of 56 percent. Moreover, when combined with the President's tax on Social Security benefits passed in 1993, a senior's marginal tax rate can reach 88 percent--twice the rate millionaires pay. If enacted, this legislation would gradually repeal the earnings test and would allow seniors to continue to work to meet their needs without penalty. Some lawmakers apparently forget that Social Security is not an insurance policy intended to offset some unforeseen future occurrence; rather, it is a pension with a fixed sum paid regularly to the retirees who made regular contributions throughout their working lives. Social Security is a planned savings program to supplement income during an individual's retirement years. I believe no American should be discouraged from working. Such a policy violates the principles of self-reliance and personal responsibility on which America was founded. Regrettably, America's senior citizens are severely penalized for attempting to be financially independent. When senior citizens work to pay for the high cost of health care, pharmaceuticals, and housing, they are penalized like no other group in our society. Senior citizens possess a wealth of experience and expertise acquired through decades of productivity in the workplace. Companies hiring seniors have noted their strong work ethic, punctuality, and flexibility. Their participation in the work force can add billions of dollars to our Natiion's economy. To remain competitive in the global marketplace, America needs for its senior citizens to be involved in the [[Page S 16584]] economy: working, producing, and paying taxes to the Federal Government. A law which discourages this is not just bad law, it is wrong--and it hurts not only seniors but all Americans.

Mr. KYL

Mr. KYL. Mr. President, on behalf of the leader, leader time is reserved. There will be a period for morning business until 12 noon today. At noon, it is the leader's intention to turn to the House message to accompany the budget reconciliation bill to appoint conferees on the part of the Senate. Several motions may be made with respect to appointing conferees, and therefore rollcall votes can be expected on those motions. Mr. President, I suggest the absence of a quorum.

Mr. KYL

Mr. KYL. Mr. President, I rise in support of this legislation to make technical corrections in certain laws relating to Native Americans, particularly section 3 of the bill which would repeal the Trading With Indians Act. Mr. President, the Chairman of the Indian Affairs Committees, Senator McCain, and I began working for the repeal of the Trading With Indians Act during the last Congress. Senator McCain championed the issue in this body. I sponsored the companion bill while I was still serving in the House of Representatives. I want to thank the chairman for his continuing personal involvement, and for acting so promptly on the issue this year. The Trading With Indians Act was originally enacted in 1834, and it had a legitimate purpose at that time--to protect Native Americans from being unduly influenced by Federal employees. But, a law that started out with good intentions more than a century ago has become unnecessary and counterproductive today. It establishes a virtually absolute prohibition against commercial trading with Indians by employees of the Indian Health Service and Bureau of Indian Affairs. The prohibition extends to transactions in which a Federal employee has an interest, either in his or her own name, or in the name of another person, including a spouse, where the employee benefits or appears to benefit from such interest. The penalties for violations can be severe: a fine of not more than $5,000, or imprisonment for not more than 6 months, or both. The Act further provides that any employee who is found to be in violation should be terminated from Federal employment. This all means that employees could be subject to criminal penalties or fired from their jobs, not for any real or perceived wrongdoing on their part, but merely because they are married to individuals who may do business on an Indian reservation. The nexus of marriage is enough to invoke penalties. It means, for example, that an Indian Health Service employee, whose spouse operates a law firm on the Navajo Nation, could be fined, imprisoned, or fired. It means that a family member can't apply for a small business loan without jeopardizing the employee's job. Mr. President, in some cases, the Trading With Indians Act even threatens to break up Indian families. I ask unanimous consent that the text of a column, which Jack Anderson and Michael Binstein wrote on the subject in December of 1993, appear in the Record at the conclusion of my remarks. The protection that the Trading With Indians Act provided in 1834 can now be provided under the Standards of Ethical Conduct for Government Employees. The intent here is to provide adequate safeguards against conflicts of interest, while not unreasonably denying individuals and their families the ability to live and work--and create jobs--in their communities. Both Health and Human Services Secretary Donna Shalala and Interior Department Assistant Secretary Ada Deer have expressed support for the legislation to repeal the 1834 Act. Secretary Shalala, in a letter dated November 17, 1993, noted that repeal ``could improve the ability of IHS to recruit and retain medical professional employees in remote locations. It is more difficult for IHS to recruit and retain medical professionals to work in remote reservation facilities if their spouses are prohibited from engaging in business activities with the local Indian residents, particularly since employment opportunities for spouses are often very limited in these locations.'' Let me cite one very specific case in which the law has come into play. It involved Ms. Karen Arviso, who served as the Navajo area IHS health promotion and disease prevention coordinator. Ms. Arviso was one of those people who played a particularly critical role during the outbreak of the hantavirus in the Navajo area several years ago. She put in long hours traveling to communities across the reservation in an effort to educate people about the mysterious disease. Instead of thanks for her dedication and hard work, Ms. Arviso received a notice that she was to be fired because her husband applied for a small business loan from the Bureau of Indian Affairs. The Trading With Indians Act would require it. What sense does that make? Mr. President, repeal of the Trading With Indians Act is long overdue. I hope we will pass this legislation today unanimously, and that the House will act on it promptly. I ask unanimous consent that the Anderson/Binstein column be printed in the Record.

Mr. KYL

Mr. KYL. Mr. President, there are a number of good things in this amendment, which was offered by my colleague from Arizona, John McCain. If [[Page S 16064]] the amendment were crafted differently and was more limited in scope, I would support it. For example, I have consistently supported efforts to eliminate funding for the Market Promotion Program [MPP], a program that provides subsidies to companies that advertise American agricultural products abroad. Such promotional activities are a reasonable and fundamental cost of doing business for any industry. If the return on every dollar spent on export promotion is as good as MPP proponents suggest in terms of jobs and exports, then it would seem to be in the industry's own best interest to bear that cost itself. I understand that the industry's resources are finite. One more dollar could always be spent on promotional activities, particularly if each dollar produces significant gains in sales. But at some point, the agricultural industry, like any other industry, decides that it cannot expend any more; that the marginal gains do not justify the additional cost. Once the industry defines that point of diminishing returns, it is not appropriate to ask taxpayers to subsidize additional promotional efforts that the industry itself is unwilling to finance. The amendment also eliminates funding for 266 highway demonstration projects. I strongly support that. Earmarking scarce dollars for politically well-connected projects is one of the most unfair, least efficient, ways of allocating scarce transportation dollars. The earmarkings in the House version of last year's National Highway System bill totaled more than $2 billion--funds that would otherwise have been allocated according to the more equitable distribution formula established by ISTEA. I am talking about the House version because I served in the House of Representatives when that bill arose, and I was 1 of only 12 who voted against it at the time. The regular formula for distributing highway dollars is based on such objective factors as population, miles of roads, and vehicle miles traveled. Earmarking, however, is based largely on politics. For example, last year's House bill, just 10 States got 55 percent of the total funds available. Not coincidentally, those States were represented by 36 of the 64 Public Works Committee members. California, home State of the chairman of the House Public Works and Transportation Committee which produced the bill, took 15 percent of the total, about $290 million, for 51 projects. Arizona, by contrast, got just three projects, for a total of $15 million. Had the earmarkings been eliminated and the funding been distributed according to the ISTEA formula instead, Arizona would have gotten between $800,000 and $7.6 million more than it did under the bill. The three Arizona projects would most certainly be funded under this alternative approach--they all have merit, and are all of high priority--but the State would have had more to devote to other worthy projects as well. Twenty-seven other States would also have done better under the formula than they did under earmarking. The Senate refrained from such earmarking last year, and I am pleased that both the House and Senate have refrained this year. I support the provisions of the McCain amendment that would terminate 266 unstarted highway demonstration projects that were authorized or appropriated in prior years. The amendment also eliminates funding for the U.S. Travel and Tourism Administration [USTTA]. Like the Market Promotion Program that offers subsidies to the agricultural industry, the USTTA offers subsidies to the travel industry for promotional activities that I believe the industry ought to bear on its own. There are other programs, however, that, in my opinion, should not be a part of this package. They are not pork. They are not corporate subsidies. I am talking primarily about the B-2 bomber. This is a program that is in the national interest. This is not an Arizona project, so I am not here to defend it because my State has a major economic interest in its production. I do not differ with my colleague from Arizona very often, but on this issue, I must. Mr. President, the Nation's long-range bomber force consists primarily of two aircraft: the B-52 and the B-1. The 95 B-52's are all over 30 years old, and their ability to penetrate modern air defenses is doubtful. The 96 B-1's were procured as an interim bomber until B- 2's were available. For 40 years, the United States relied on forward presence, or the deployment of large forces in bases around the world engaged in almost constant maneuvers or exercises. With the decline in defense spending and the withdrawal of U.S. forces for overseas bases, the United States will rely increasingly on smaller military forces, operating principally from North America. In the past 6 years alone, the U.S. Air Force has reduced its major overseas bases from 38 to 15--a reduction of 61 percent. Rather than forward presence, current strategy calls for American power to be projected abroad in response to aggression in regional conflicts. The combination of a bomber with stealthy low observable, long-range, and precision strike capabilities provides the Nation with a competency never before achieved. With its range and large payload, B-2's can penetrate enemy air defenses and disrupt enemy advances in the critical early hours of conflict, before other forces arrive. Later in the conflict, B-2's can strike deep to interdict enemy follow-on forces or high-value strategic targets without fight escort. I have two letters that I ask unanimous consent be printed in the Record--one from seven former Secretaries of Defense, and the other from the former air commander of the Desert Shield/Desert Storm Air Forces--that further expand on the vital importance of the B-2 bomber to the future Armed Forces of the United States. For these reasons, I believe that the B-2 remains an integral component of our future national security, and I must, therefore, oppose the amendment.

Mr. KYL

Mr. KYL. Mr. President, on rollcall vote 518, I voted ``no.'' My intention was to vote ``aye.'' I ask unanimous consent that I be permitted to change my vote, which in no way would change the outcome of the vote. (The foregoing tally has been changed to reflect the above order.)

Mr. KYL

Mr. KYL. Thank you, Mr. President. If there is a single vote on which the American people will judge the success or the failure of this Congress, if there is a single vote this session that will change the course of American history, it will be the vote on the Balanced Budget Reconciliation Act, which is before us today. This single vote will determine whether we finally face up to the grim reality of a national debt that is $4.9 trillion and growing daily, a debt that now amounts to $18,500 for every man, woman and child in this country, or whether we continue the spending spree that we have been on for the last 20 years at the expense of our children and grandchildren. This single vote is more important than the votes on the balanced budget amendment and the line-item veto. Those are the tools that will help us balance the budget and keep it there. This bill actually balances the budget. This single vote will determine whether we keep the promises we made to the American people last fall that we would balance the budget and provide badly needed tax relief or whether it is business as usual: Promises out the door as soon as it is time to make the final decisions, the difficult decisions. I believe that this Congress, the new majority and the American people who sent us here last year believe that it is different. We have spoken, we have worked, we have voted for the fiscal restraint for years but never had the votes in the Congress to prevail. This time is different. We finally have the chance and the numbers to prove what we say is what we mean: That Government is too big, that it costs too much, that it intrudes too far into the lives of our people and that, finally, we are willing to do something about it. Mr. President, this is the most crucial vote that we will cast, and I am assuming that the majority of this body will support this Balanced Budget Reconciliation Act and put this country on the right course for the next century. I believe this Congress--the new majority that the American people sent here last year--is different. We have spoken, we have worked, we have voted for fiscal restraint for years, but have never had the votes in Congress to prevail. This time is different. We finally have the chance, and the numbers, to prove that we mean what we say--that government is too big, it costs too much, and it intrudes too far into the lives of our people--and that we are willing to do something about it. Former Education Secretary Bill Bennett probably said it best in testimony before the Budget Committee earlier this year. He said: We have created a nanny state that takes too much from us in order to do too much for us. This has created inefficiency, sapped individual responsibility, and intruded on personal liberty. Mr. President, it is time to change course. Fourteen years ago, President Reagan embarked on a similar mission to curb Federal spending, cut taxes, and reduce regulation. He succeeded in cutting taxes--and that launched the longest peacetime economic expansion in our Nation's history. And, I will talk about that a little more later. Yes, deficits soared. But that was not because of the tax cuts. It was because the majority in Congress at the time did not have the courage or the will to limit Federal spending. In the budget we have before us, spending growth is limited to about 3 percent a year. Had Congress been able to exercise the same restraint beginning in fiscal year 1982--the first year President Reagan had full control of the budget--the budget would not only have balanced in fiscal year 1989, there would actually have been a $73.5 billion surplus. Instead, Congress let spending grow by about twice that rate. Spending skyrocketed from $745.8 billion in fiscal year 1982 to $1.1 trillion by fiscal year 1989. So even as revenues grew dramatically--from $617.8 billion in fiscal year 1982 to $990.7 billion in fiscal year 1989--the deficit soared because spending grew faster. A 60.4-percent increase in revenues was not enough for the spendthrift majority in Congress. To my colleagues who say this is no time for a tax cut, let me tell you that the middle-class tax cut in our budget does not come at the expense of a balanced budget, but as a result of one. It is the dividend that the American people receive from the downsizing of government: the $200 million reduction in the congressional budget; the phasing out of the Commerce Department; welfare reform; and the consolidation and elimination of other programs to name a few. In fact, the Congressional Budget Office has certified that our budget meets its deficit reduction target; will help the economy; and, as a result, will produce a $170 billion economic dividend. We can and should return this dividend to the people. The $170 billion, combined with $21 billion from the repeal of corporate welfare, and billions of dollars in other savings--none of which comes from Medicare--allows us to pay for the tax cut and balance the budget. That is certified by the CBO, the agency President Clinton praised as the most accurate forecaster of budget numbers. My colleagues, taxes are a problem, but it is not because they are too low; they are too high. Go out and talk to people in your States. Listen to them. The typical family now pays over 40 percent of its income in Federal, State, and local taxes. That is more than it spends on food, clothing, and shelter combined. Americans are working more than 3 hours of every 8-hour workday just to pay taxes to various levels of government. Back in 1948, the typical family paid only about 3 percent of its income to the Federal Government in taxes. The budget balanced that year. In fact, the entire Federal budget amounted to only $29.8 billion--about what we will pay this year for 43 days' worth of interest on the national debt. Mr. President, the American people are not undertaxed. They are overtaxed. They need relief. When politicians say we cannot afford a tax cut now, it is because they do not want to give up the money that is available for them--for the politicians--to spend. Well, what about hard-working families? What about what they can afford? These are people struggling every day to get the kids to school, go to work, and pay their bills. To the family with two kids earning $20,000 a year, a $500 per child tax credit means a lot. The Heritage Foundation recently estimated that 344,152 taxpayers in Arizona--more than 28 million taxpayers nationwide--are eligible for the $500 per child tax credit. Heritage estimated that 47,552 taxpayers in Arizona--3.5 million nationwide--would see their entire income tax liability eliminated as a result of the $500 per child tax credit. Those taxpayers are not wealthy, yet they are the ones who benefit most significantly from the Senate tax cuts. In fact, 83 percent of the tax reductions in this bill will go to those with annual incomes under $100,000, and 70 percent will go to those with incomes under $75,000. The bill includes a capital gains tax cut. A recent study by the Cato Institute found that the capital gains cut will benefit poor and working-class Americans most. The study found that the tax reduction would unlock hundreds of billions of dollars in unrealized capital gains, thus promoting investment in new technologies and entrepreneurial ventures. It would ``expand economic opportunities for working-class Americans by encouraging capital formation, new business creation, and investment in capital-starved areas, particularly inner cities, and lead to the creation of more than half a million new jobs and increase wages by the year 2000.'' People across America are frustrated. They are struggling day in and day out to make ends meet, while they watch the Federal Government squander their hard-earned tax dollars on everything from farm subsidies to pork-barrel highway projects, helium reserves, and welfare for lobbyists. President Clinton even wants us to pay ``volunteers'' to do their work--pay ``volunteers'' in the AmeriCorps program more than the average American earns in a year. People in homes across the country are struggling with an oppressive tax burden while Congress and the President argue about who is rich, and about how much ``we'' can afford to give up in tax revenue. My colleagues, it is the American people--not government--that needs help, and this bill takes a small, but meaningful, step in that direction. This bill is not radical or draconian. In fact, the tax cuts will total $245 billion over 7 years--just 2 percent of the total amount that the Federal Government will collect over that period. It is modest, and if the American people knew we were having such a battle over just 2 percent, they would be stunned. Throughout the debate over the next few days, we will hear a lot about tax cuts for the rich. Whenever politicians start to object to tax bills because they do not tax the ``rich'' enough, or they provide too much relief for the ``rich,'' middle America better hold onto its wallet. As I pointed out before, more than 70 percent of the benefit of this cut goes to those with annual incomes of less than $75,000, so we are not talking about the super rich at all. Remember in 1990 when Congress was supposedly going to soak the rich with a luxury tax on expensive cars, boats, jewelry, and furs? Well, it was not the rich who ultimately got soaked. The sale of yachts fell by 73 percent, and boatyards died. Sales of Cadillacs declined 17 percent. The rich simply avoided the tax by not buying the yacht or the Cadillac, and it was the guy on the line who ultimately paid the luxury tax--paid with his job. Congress had to repeal it. In 1993, President Clinton called on the American people to pay higher taxes--he called it making a ``contribution'' to the Government. But it was the average woman on her way to work who found that she had to pay a higher price for gasoline to get there. It was the senior citizen making as little as $34,000 per year who found out he was among the ``rich'' President Clinton had in mind; he ended up paying higher taxes on his Social Security. Now President Clinton says he made a mistake in 1993--that he raised taxes too much. I agree that he made a mistake, but if I recall correctly, he sent up a budget asking for $359 billion in new taxes-- $100 billion more than he eventually got. It turned out that there was no support in Congress for a tax increase of that magnitude, even among members of his own party. He ultimately had to settle for a tax increase of ``only'' $258 billion--still the largest in history. Yes, President Clinton did raise taxes too much, and we have the chance in this bill to undo some of the damage. Not only have people been taxed too much, but they have lost jobs as well. A constituent of mine, Tom Ford from Tucson, AZ, contacted me recently about what the Clinton tax increase has done to him. Mr. Ford makes a living as a special effects specialist for the motion picture industry. He lost one job on a film called ``China Spur,'' which was to have starred Willie Nelson, Ernest Borgnine, and Heather Locklear. The film was canceled when the Clinton tax increase took effect because the investor found he did not have enough money to take a risk on the film. Tom Ford worked on another movie, ``Waiting to Exhale,'' with Whitney Houston. Again, taxes hurt the little guy. The project went forward, but corners were cut. Salary and hours were reduced. Whitney Houston got her full asking price, and paid all her taxes, as did Gregory Hines and Angela Bassett who also starred in the film. But the guys behind the scene--people like Mr. Ford--were forced to work for less. It was they who bore the brunt of the tighter budget that resulted from higher taxes. What does that mean? Wealthier taxpayers like Whitney Houston do not get hurt. She has a great deal of talent, and will continue to command a good wage no matter what taxes are levied. But others are not so fortunate. When Mr. Ford does not work, or works fewer hours or for less money, he cannot buy the extra equipment he needs for filmmaking. And this, in turn, means someone who produces the equipment is also put out of a job. He cannot buy the new pick-up truck he needs for his business. The Ford dealer in Tucson loses a sale, and the factory worker in Detroit sees her job threatened because sales fall off. Mr. Ford pointed out the irony in a letter to me. He said, ``the only good thing is that with a lower income brought on by higher taxes, I am now paying less in taxes to the government.'' But that is not what is supposed to happen according to the big taxers. If you listen to the other side in this debate, you will hear that higher tax rates are supposed to bring in more revenue for the Government. But that is not what Tom Ford's experience demonstrates. High tax rates cost jobs and ultimately reduce revenues that might otherwise accrue to the federal Treasury. That is the experience of the 1980's. Tax revenues increased from $517 billion in fiscal year 1980 to $1.03 trillion by fiscal year 1990. They nearly doubled. And that is despite the fact that the top income tax rate fell from 70 percent to 28 percent. The share of total Federal income taxes paid by the top 10 percent of taxpayers, ranked by adjusted gross income, rose from just under 50 percent in 1980 to more than 57 percent by 1988. During a period in which their marginal rate fell by 60 percent, the wealthy paid almost 19 percent more in dollar terms in Federal taxes. That is because the tax base expanded as people worked more, invested more, and took money out of tax shelters and put it into taxable investments instead. Just as the local department store does not lose money when it holds a weekend sale--volume more than makes up for a reduction in price--the government does not lose revenue when it reduces tax rates. Just the opposite occurs. With businesses expanding, more people working, and more investments being made, tax revenues will increase. The opposite occurs when tax rates are increased. People change their behavior to avoid the higher tax. After the tax increases of 1990 and 1993, income tax collections actually declined from 8.6 percent of gross domestic product [GDP] to 8.2 percent of GDP in 1994. Even if you disregard the dynamic effect of the tax cuts proposed in the budget before us today, tax revenues are projected to increase substantially. They will increase from $1.35 trillion in fiscal year 1995 to $1.85 trillion in fiscal year 2002. That is $500 billion--half a trillion--more money than we are collecting today. Mr. President, how much is enough? Can the Government not get by with an extra 35 percent worth of revenue--an extra half-a-trillion dollars--to spend? How much more is needed? Now there is a lot of talk about the spending cuts in this package; that they are too deep or that one group or another is being singled out. The fact is, most programs are not being cut at all. Medicare spending, for example, will rise from $178 billion this year to $274 billion 7 years from now. In other words, we will be spending 50 percent more in 7 years than we spend today. The average Medicare benefit will go from about $4,800 per person today to $6,700 in the year 2002. That is not a cut. Let us be honest. It is not a cut. Student loan volume will grow from $24 billion in 1995 to $36 billion in 2002--another 50-percent increase. Be honest: a 50-percent increase is not a cut. It is the logic that defines a spending increase as a cut that has gotten us into this predicament. It is like giving someone a 50-percent raise and having that person quit because he thinks his employer cut his salary. Let us be honest. An increase is not a cut. Let us make no mistake about what these deficits mean. When mom, dad, grandma, and grandpa want more from the government than they are willing to pay for in taxes today--that is a budget deficit--we are all handing the bill, dollar for dollar--plus interest--to our sons and daughters, and their children yet to come. Most people agree that the Federal Government should maintain a social safety net to provide individuals with the hand up that they need to escape hard financial times. No one here is proposing that we eliminate that helping hand. But, we have got to find a way to provide a safety net without leaving future generations with a legacy of debt and despair. My grandson was born just 5 months ago and already owns a share of the national debt that is $18,500 and rising. He can expect to pay $187,000 in taxes during his lifetime just to pay the increase on the national debt. What will be left of his income to care for his children? How will the Government care for the needy of tomorrow when every dollar of individual income tax revenue is devoted to interest on the national debt? Mr. President, a balanced Federal budget offers hope. Yes, it will require that Congress prioritize spending so that the most important programs are not jeopardized. And wasteful programs will have to be eliminated. Some of the luxuries will have to be postponed to another day. A balanced budget will require heavy lifting, but it offers hope and opportunity. The Congressional Budget Office predicts that a balanced budget would facilitate a reduction in long-term real interest rates of between 1 and 2 percent. That means that more Americans will have the chance to live the American dream--to own their own home. A 2-percent reduction on a typical 30-year $80,000 mortgage would save homeowners $107 a month. That is $1,284 a year, or over $38,000 over the life of the mortgage. A 2-percent reduction in interest rates on a typical $15,000 car loan would save buyers $676. The savings would accrue on student loans, and credit cards, and loans to businesses that want to expand and create new jobs. Reducing interest rates is probably one of the most important things we can do to help people across this country. This bill includes incentives to help people buy insurance coverage for long-term health care, and to save in medical savings accounts. It includes a tax credit for adoption expenses, and estate tax reform so that families are not forced to sell their small businesses just to pay estate taxes to the Government. This budget represents a break from business as usual. We are finally making the tough choices the American people sent us here to make. We are keeping our promises--for a change. Will some people be unhappy with the bill? Of course. It is always easier to hand out money other people earned than it is to say ``no.'' Will some say they have been singled out? Of course. But if you look at the myriad of interests that say they have been singled out, you see that no one has been singled out at all. This is a historic debate, the most important vote many of us will ever cast. Let us not miss this opportunity or another one might not arise until it is too late for our country. Vote for the Balanced Budget Reconciliation Act.

Mr. KYL

Mr. KYL. Mr. President, the former Chairman of the President's Council of Economic Advisors, Martin Feldstein, just wrote an article for the Wall Street Journal about the 1993 tax increase. For many of us, it confirms what we have been saying all along: that tax rate increases and tax cuts change people's behavior. Just because the Government increases taxes doesn't mean that people will pay more to the Treasury. They will respond to the higher rates by earning less, producing less, and investing less. That is precisely what Mr. Feldstein found. He wrote: Because taxpayers responded to the sharply higher marginal tax rates (imposed by President Clinton in 1993) by reducing their taxable incomes, the Treasury lost two-thirds of the extra revenue that would have been collected if taxpayers had not changed their behavior. Moreover, while the Treasury gained less than $6 billion in additional personal income tax revenue, the distortions to taxpayers' behavior depressed their real incomes by nearly $25 billion. Mr. President, tax rate increases are counterproductive. If the goal is to increase revenues to the Treasury, the better alternative is to cut tax rates. Lower tax rates stimulate the economy, resulting in more taxable income and transactions, and more revenue to the Treasury. The tax cuts of the early 1980's are a case in point. Revenues increased from $599.3 billion in fiscal year 1981 to $990.7 billion in fiscal year 1989--up about 65 percent. The tax bill before the Senate today begins to undo some of the damage done by the 1993 tax increase that President Clinton now disavows. As Martin Feldstein points out, however, it does not go far enough. Congress should also revisit the issue next year to consider rolling back the personal tax rate increases that were part of the Clinton tax bill. I ask that the entire text of Mr. Feldstein's article be printed in the Record. The article follows: [From The Wall Street Journal] What the '93 Tax Increases Really Did (By Martin Feldstein) President Clinton was right when he recently told business groups in Virginia and Texas that he had raised taxes too much in 1993, perhaps more so than he realizes. We now have the first hard evidence on the effect of the Clinton tax rate increases. The new data, published by the Internal Revenue Service, show that the sharp jump in tax rates raised only one-third as much revenue as the Clinton administration had predicted. Because taxpayers responded to the sharply higher marginal tax rates by reducing their taxable incomes, the Treasury lost two-thirds of the extra revenue that would have been collected if taxpayers had not changed their behavior. Moreover, while the Treasury gained less than $6 billion in additional personal income tax revenue, the distortions to taxpayers' behavior depressed their real incomes by nearly $25 billion. how it happens To understand how taxpayer behavior could produce such a large revenue shortfall, recall that the Clinton plan raised the marginal personal income tax rate to 36% from 31% on incomes between $140,000 ($115,000 for single taxpayers) and $250,000, and to 39.6% on all incomes over $250,000. Relatively small reductions in taxable income in response to these sharply higher rates can eliminate most or all of the additional tax revenue that would result with no behavioral response. If a couple with $200,000 of taxable income reduces its income by just 5% in response to the higher tax rate, the Treasury loses more from the $10,000 decline in income ($3,100 less revenue at 31%) than it gains from the higher tax rate on the remaining $50,000 of income above the $140,000 floor ($2,500 more revenue at 5%); the net effect is that the Treasury collects $600 less than it would have if there had been no tax rate increase. Similarly, a couple with $400,000 of taxable income would pay $18,400 in extra taxes if its taxable income remained unchanged. But if that couple responds to the nearly 30% marginal tax rate increase by cutting its taxable income by as little as 8%, the Treasury's revenue gain would fall 67% to less than $6,000. How can taxpayers reduce their taxable incomes in this way? Self-employed taxpayers, two-earner couples, and senior executives can reduce their taxable earnings by a combination of working fewer hours, taking more vacations, and shifting compensation from taxable cash to untaxed fringe benefits. Investors can shift from taxable bonds and high yield stocks to tax exempt bonds and to stocks with lower dividends. Individuals can increase tax deductible mortgage borrowing and raise charitable contributions. (I ignore reduced realizations of capital gains because the 1993 tax rate changes did not raise the top capital gains rate above its previous 28% level.) To evaluate the magnitude of the taxpayers' actual responses, Daniel Feenberg at the National Bureau of Economic Research (NBER) and I studied the published IRS estimates of the 1992 and 1993 taxable incomes of high income taxpayers (i.e., taxpayers with adjusted gross incomes over $200,000, corresponding to about $140,000 of taxable income). We compared the growth of such incomes with the corresponding rise in taxable incomes for taxpayers with adjusted gross incomes between $50,000 and $200,000. Since the latter group did not experience a 1993 tax rate change, the increase of their taxable incomes provides a basis for predicting how taxable incomes would have increased in the high income group if its members had not changed their behavior in response to the higher post-1992 tax rates. We calculated this with the help of the NBER's TAXSIM model, a computer analysis of more than 100,000 random, anonymous tax returns provided by the

Mr. KYL

Mr. KYL. The President talked about his companion, Rosy, Rosy Scenario. I recall when the President first spoke to the Congress, he talked very firmly about the need for us to work together, using a common set of assumptions. And he pointed out that, of course, that common set of assumptions came from using the numbers, the credible numbers, the objective, bipartisan numbers of the Congressional Budget Office, to analyze how much Government would actually cost and how much the revenue would actually be for the various kinds of taxation that we have in the country, and that instead of the President using the OMB, which is what he accused past administrations of using, and the Congress using the CBO, or the Congressional Budget Office, we ought to both agree that the CBO had it right. They had it figured out; they used the right assumptions; and we ought to use the CBO numbers. Now, I would ask the Senator from Pennsylvania, which numbers did the President use? And did that have an effect on the assumptions inherent in his so-called budget?

Mr. KYL

Mr. KYL. Mr. President, I ask unanimous consent that Senator Pell be listed as a cosponsor of the bill just passed.

Mr. KYL. Mr. President, I move to reconsider the vote.

Mr. KYL. Thank you, Madam President. Madam President, I am pleased and honored to close this debate on this important and historic legislation which will finally cause the United States Embassy to be relocated in Jerusalem, the capital of Israel, by the year 1999. We all know that diplomacy is filled with subtleties but that some things are fundamental. One of those fundamental things is the relationship between the United States and Israel. Key to that relationship is an underlying principle. The principle is that Jerusalem is the essence of the historical connection of the Jewish people for Palestine. That is why Jerusalem is the capital of Israel. This legislation, which is a bipartisan presentation of congressional intent that finally actions replace words, that deeds replace words, and expressing that historical connection, as I said, is supported in a bipartisan way by the overwhelming majority of both sides of the aisle. There are approximately 50 Republicans which have cosponsored this legislation, and it is strongly supported as well by the many Democrats who have spoken on it. I think the key here is for the American people to finally express, as I said, in deeds rather than words, their support for Israel through the acknowledgment that Jerusalem is the capital by the relocation of the United States Embassy in the capital city of Jerusalem. As Senator Lieberman from Connecticut so ably pointed out, and Senator Dole did as well, this is not about the peace process, which we all support. Rather, it is an expression on the part of the United States that no longer will there be any doubt about our position relative to Jerusalem. It is an honest position, as Senator Lieberman said. That is why, Madam President, it is so important for this body, in an overwhelming way, to express its support for the United States-Israel relationship by supporting this legislation to relocate the Embassy of the United States to the capital of Israel, Jerusalem.

Mr. KYL. I yield 3 minutes to the Senator from Connecticut. [[Page S 15533]]

Mr. KYL. How much time remains?

Mr. KYL. At this time I would yield time to the Senator from Connecticut.

Mr. KYL. Madam President, I ask unanimous consent that Senator Graham from Florida be added as a cosponsor to the legislation.

Mr. KYL. Is it fair to say that the intention of the waiver is to address constitutional concerns that have been raised about S. 1322?

Mr. KYL. What is the significance of the phrase ``national security interests'' as opposed to ``national interest''?

Mr. KYL. The waiver provision in S. 1322 will be examined by many people. I would like to join with the distinguished majority leader in clarifying on the Record the meaning and purpose of the waiver language.

Mr. KYL. Although in drafting the legislation Senators did not limit the number of times the President could invoke the waiver authority, is it correct to say that the intent of the drafters is not to grant the President the right to invoke the waiver in perpetuity?

Mr. KYL

Mr. KYL. May I also ask unanimous consent that a letter received this morning addressed to Senator Dole, Senator Moynihan, myself, and Senator Inouye from AIPAC be printed in the Record.

Mr. KYL. I also ask unanimous consent that the time consumed as a part of this debate be subtracted from the time originally provided for Senator Byrd from West Virginia.

Mr. KYL. Madam President, I ask unanimous consent that Senator Kohl be added as a cosponsor to the legislation.

Mr. KYL

Mr. KYL. Mr. President, I think it would then be important to indicate to Members that the vote would occur at 11:45, and not at 11:40.

Mr. KYL. Sure.