Jim McDermott

Mr. McDERMOTT

Mr. McDERMOTT. I yield to the gentlewoman from Florida.

Mr. McDERMOTT. Mr. Chairman, reclaiming my time, I think that goes to the whole question of fairness and it really says this whole thing is skewed to the people at the top. Mr. Chairman, we were talking before about the issue of, let us take a family making $23,000, living in Georgia, a police officer. What is he going to get out of this tax bill?

Mr. McDERMOTT. Mr. Chairman, how much money would the gentleman say one would have to have to stay tuned for the estate taxes?

Mr. McDERMOTT. Mr. Chairman, once again reclaiming my time, what is the level that the gentleman would say that people should stay and watch this program and it is going to do some good for them? What kind of income level would it really mean?

Mr. McDERMOTT. Mr. Chairman, I would ask the gentleman, is that fair?

Mr. McDERMOTT. Mr. Chairman, reclaiming my time, is the gentleman saying that we are writing this provision on estate taxes for 1.8 percent of the people?

Mr. McDERMOTT. The gentleman means up to 50 percent.

Mr. McDERMOTT. I yield to the gentleman from Louisiana.

Mr. McDERMOTT. Mr. Chairman, I would like to begin by saying that the last speaker talked about the child credit. I think everyone should know that 50 percent of the children in Ohio, the State he represents, will not get the child credit. That is more than 1.4 million children in that State will not get this so-called fair tax credit. Mr. Chairman, I want to talk about the fact that Democrats always want to reduce taxes but they want to do it fairly, and that is, really, I think, we ought to have a little discussion out here about this question because fairness is a central issue in taxation in this country, in a democracy. We started on taxation without representation. That was what the whole thing was about. That is how we came into existence. But in this debate we have to have honesty. I listen to the special orders that go on in this place, and a couple of nights ago one of the Members got up and said it is important for the American people to understand when they hear things like, ``If you're earning $20,000, you're not going to get a tax cut,'' there is a very good reason that a family of four earning $20,000 is not going to get a tax cut. Listen to this: They do not pay Federal taxes. Now since I was 16 years old I have been working. I started at the National Tea Store in Illinois, and every week we got a check and always got a tax stub with it, and I have always looked at my tax stub. And everybody watching and thinking about this should take out their tax stub and look at it. On my tax stub it says I pay Federal tax. That is withholding tax on the income. Then there is something called FICA. In my FICA tax, 7 percent of what I pay is Federal taxes. It goes to pay for Medicare and Social Security. Anybody who is paying FICA is paying taxes. They are paying Federal taxes. The other side here wants to say, ``If you don't have to pay income tax on a 1040, you're not paying taxes.'' But if someone is a $20,000 worker in this country and they are paying 7 percent of their $20,000 on FICA taxes, they are paying Federal taxes, and they ought to be able to get the tax breaks in this bill. There are a number of issues that I think we ought to talk about, and, Mr. Chairman, the gentleman from Louisiana [Mr. Jefferson] knows about capital gains. Let us talk about the fairness of capital gains in this bill that the Republicans have put out here.

Mr. McDERMOTT

Mr. McDERMOTT. It is not very family friendly.

Mr. McDERMOTT. For every dollar that they get, it will now be 50 cents?

Mr. McDERMOTT. One of the things that really is distressing about that: If you think about when that is, 10 years from now will be 2007. You add another 5 years, and you are at 2012. That is when the baby boomers are going to be getting to Medicare and Medicaid, and if the deficit explodes right as they reach retirement, all these 30 and 40 and 45-year-old people right now who are saying, well, by God when I get to 2010, I will at least have Medicare and Social Security. If the tax provisions in this bill explode in our budget in 2012, or thereabouts, there is going to be another Congress in here looking to cut away on those programs at the very time when those people are depending on it. And that is why people around here are saying, well, we are doing this for our children, we are doing this for our children. You mean we are laying a bomb for our children in the year 2012 that we are going to light in here and wait for it to explode out there in 15 years, just when our kids will be at the point of trying to educate their kids and they will be looking at us and saying what are we going to do about mom and dad?

Mr. McDERMOTT. Mr. Speaker, I appreciate the gentleman giving us the opportunity to discuss this tax bill. I think what the gentleman from Texas has suggested is misleading, because the Joint Tax Committee has a proposal where they show how the taxes are distributed. But they never put in the full impact of the taxes unless they are fully phased in. What is really deceptive about this tax bill and why it is really bad is that in the outyears, that means beyond the year 2007, this explodes. What they did was they made very few changes and sort of said, ``But we'll phase it in 5, 6, 7, 8, 9, 10 years from now.'' Most of the people who voted for this do not expect to be here when the deficit is re-created, as it was after the 1981 tax bill. The fact is that if we look at the charts that the gentleman has there, it is very clear that the bottom 40 percent gets nothing. I offered an amendment in the committee on an issue that is a very familiar one and, that is, the marriage tax penalty. Let us say you are a couple. You make $30,000 between you. You make $15,000 apiece. If you file together, you pay 10 percent more tax. This was in the Contract With America. Two hundred some odd Members of this House signed the Contract on America and said we want to get rid of the marriage tax penalty because we want to encourage people to get married. We are very worried that all these children are being born out of wedlock. So we want people to get married. But the Tax Code is much more advantageous to you if you do not get married. If a couple makes $20,000, now, let us say the man makes $14,000 and his wife who goes out and works, does some baby-sitting or whatever, makes $6,000, they have got $20,000 of income. They pay a penalty of 48 percent more taxes if they get married. They are much better to stay apart. I would recommend on a tax basis, if I were a tax consultant, to a young couple, ``Don't get married, for heaven's sake. You're going to pay 48 percent more.'' They put it in the Contract on America and said, ``We're going to go out there and do what's good for families.'' But looking at this tax bill, 58 percent goes for people making more than $247,000. That is not the family making $20,000 trying to get by. This tax bill is simply those figures up there, that use Treasury figures or their figures, if they gave the total figure of what the impact was, it would be clearly skewed to people at the top of the income bracket. My view is that amendments like the marriage penalty ought to be what we give people. That would get people at the bottom end of the scale. Because people making $20,000, $30,000, are down in those groups at the bottom of the gentleman's graph. Another one I offered in the committee, or was going to offer but nobody wanted to deal with it, is the whole FICA tax. People say, ``Well, they don't pay any income tax; look, we've given them this earned income tax credit and all this so they don't pay any income tax.'' But everybody pays FICA. That comes out of everybody's tax. My view is that we ought to give a break to people on their FICA tax. Again, that would put all the benefit down at the level of under $75,000, but this tax bill they brought to the floor, they are bringing to the floor next week, is simply neither family friendly nor small business friendly because another amendment that I offered in the committee was: ``Why can't you deduct the total cost of your health care if you purchase it?'' Now a big company, if they buy insurance for you, if Boeing or General Motors, they deduct it 100 percent. But if you are a small business person out there, maybe you hire one or two people, you are running a little catering business or something, and you buy health insurance, you cannot deduct the 100 percent. Why? Because big people can and little people cannot? I guess, because they turned that amendment down on a party line vote, they said, and it was the number 1 issue of the National Federation of Independent Businesses. The small business people said we want 100-percent tax deductibility. But it was turned down in the Committee on Ways and Means for this bill that benefits the rich, and I think that it is very important that you have these kind of discussions out in public so that the public can understand and begin to learn what is really here. When you talk about the estate tax, the so-called death tax, everybody says, well, gee, I am going to die; I would like to pass a few things on to my kids. Well, if you have got $600,000 worth of stuff to pass on to your kids, it goes for free, simply for free. There is only 1.6 percent of the families in this country that pay the death tax, 1.6 percent. Now you think that is the people at the bottom who are making 20 grand or 30 grand? We do not know who they are, but they are folks who have millions and millions and millions and millions of dollars, and those people are in here asking for a tax benefit at the same time that we put a marriage tax penalty on a couple making 20, 25, $30,000. Mr. Speaker, there is something wrong with a tax structure that does that, and I think that this bill makes it infinitely worse. So I commend my colleagues for coming out here and raising these issues.

Mr. McDERMOTT

Mr. McDERMOTT. Mr. Speaker, today we have an opportunity to do something which I cannot see any reason why anybody would not do. And that is to make sure that the tax breaks that are put into this bill do not explode in the outyears. The estimates that we have seen on the proposals that have actually been put on the table by Senator Roth and others have deficits of $750 billion in the second 10 years. And if anyone votes against this resolution, they can only do it on one of two bases. One is that they do not care that we are replaying 1981. In 1981 we made decisions in this House, none of us were here, most of us were not, at least, and it took us 15 years to dig ourselves out of it. Now here we are going back in the pit again and doing the same thing again and setting ourselves up unless we instruct our conferees to refuse to put that kind of language in the budget resolution. They must limit the explosion in the outyears. The only other reason that someone would vote against this resolution or this motion by the gentleman from South Carolina [Mr. Spratt] is if they simply do not expect to be here. I understand there are a lot of Members around here who believe in term limits. Maybe they figure in 6 years they will all be gone, but the very Members who are here today saying we must balance the budget always put it in terms of our children. We have to do it for our children. We do not want to sink our children in debt. Yet if we do not limit the tax breaks by the motion that the gentleman from South Carolina [Mr. Spratt] is making, we set in motion something that will happen 10 or 12 or 15 years out there. If you are a baby boomer in this country and you are going to get to 65 in 15 years, just as the baby boom generation gets to taking Medicare and Social Security, this major problem will be back on the doorstep. Who will be here to fix it? Well, it will be our children. They will have then run for the U.S. Congress, and they will be facing the same problem. They will say to themselves, why did the Congress of 1997 set in motion this mess? We can almost excuse the Congress of 1981, because they did not know. They were not really paying attention or they did not know what was going to happen. But we have now seen what happens when we give big tax breaks and cut the budget, and so we have no excuse for setting in motion something that will be an enormous problem for our children. I urge all my colleagues to vote for the motion to instruct the conferees offered by the gentleman from South Carolina [Mr. Spratt].

Mr. McDERMOTT

Mr. McDERMOTT. Mr. Chairman, I yield 4 minutes to the gentleman from Massachusetts [Mr. Frank].

Mr. McDERMOTT. Mr. Chairman, would you tell us how much time we have left?

Mr. McDERMOTT. Mr. Chairman, I yield myself 3 minutes. Mr. Chairman, I think those of us who are going to vote for this budget resolution, and I am not, are going to have to accept two assumptions. One is that we are going to have 10 years of the economy going up. Now, I have not heard that they have repealed the law of gravity in economics. The fact that this budget is based on 10 years of unending going up at $45 billion a year is simply unbelievable. Second, we have to believe that the Committee on Ways and Means is going to restrain itself in tax giveaways and cutting entitlements. Now, in this budget agreement there is about $16 billion cut from a program called DISH. That is a disproportionate share. It goes to hospitals that take care of people who cannot pay for it. Many of those hospitals are children's hospitals. I say to my colleagues to ask themselves about their children's hospital. They get 40 to 70 percent of their money from this DISH money, and when we cut that out of this budget, how can we say to ourselves, well, are we not wonderful? We are giving health care to another 5 million kids when we are taking the guts out of the budget of our local children's hospital. Let us talk about the fact that there is no protection against the Committee on Ways and Means on the issue of the earned income tax credit, on low-income housing tax credits. I called Seattle today because I wanted to know what the facts are today. If one is low income in this country in Seattle, and it is a good city, there is a 3-year waiting list to get in. If one is a senior citizen in the citizen program that has 1,300 houses, there are 1,000 names on the list. That means everybody who is in senior citizen housing has to die if one is going to get into the program if one registered today. How long will that take? And we say this is the budget that we can begin giving great tax breaks to people when we have enormous problems. The minority leader was right. We can do better. None of us, there is not anybody on this floor who does not want to balance the budget. It is an argument about how it is balanced. This is an unfair balancing, and it takes our belief in the tooth fairy to believe it. Members have to believe that we are not going to do again in 1997 what we did in 1991. It took us 16 years to get back. If we put in exploding tax cuts, and I really think this budget will balance for about 20 minutes in 2002, it will be like one of those touch-and-go landings with a 747, where they hit the runway and go right back up in the air. When this comes we are going to have real problems. I urge Members to vote against this.

Mr. McDERMOTT. Mr. Chairman, I yield 2 minutes to the gentleman from Rhode Island [Mr. Weygand]. (Mr. WEYGAND asked and was given permission to revise and extend his remarks.)

Mr. McDERMOTT. Mr. Chairman, I yield such time as he may consume to the gentleman from California [Mr. Miller]. (Mr. MILLER of California asked and was given permission to revise and extend his remarks.)

Mr. McDERMOTT. Mr. Chairman, I yield 2 minutes to the gentleman from Rhode Island [Mr. Kennedy].

Mr. McDERMOTT. Mr. Chairman, I yield 3 minutes to the gentleman from Massachusetts [Mr. Markey].

Mr. McDERMOTT. Mr. Chairman, I yield 2 minutes and 45 seconds to the gentlewoman from California [Ms. Pelosi].

Mr. McDERMOTT. Mr. Chairman, I yield myself 30 seconds. Mr. Chairman, the gentleman from Ohio, like the chairman, have both said that they are restructuring Medicare. The chairman said in the committee, ``The ultimate answer is moving toward a voucher program.'' Senior citizens, beware of what they have in mind for you. Mr. Chairman, I yield 2 minutes and 30 seconds to the gentleman from Pennsylvania [Mr. Kanjorski]. (Mr. KANJORSKI asked and was given permission to revise and extend his remarks.)

Mr. McDERMOTT. Mr. Chairman, I yield myself the balance of my time. Mr. Chairman, I went to Wheaton College, where Billy Graham went to school, so I am glad that having a Billy Graham bumper strip on my car is going to get me tax relief. It sounds like that is what is being promised out here, that all those folks who go to the Billy Graham revivals will get a tax cut. What about the rest of the folks? As I look at the two proposals we have on the table, and the reason we keep talking about tax cuts is because all we know that is what the Republicans put on the table last year and what Senator Roth, the Member of the other body, put on this year, and three-quarters of the money that comes in tax breaks in both those proposals went to people making more than $100,000. I am glad that all those people going to Billy Graham's revivals are making $100,000 or more, because if they are not, they are not going to get anything out of this tax break. The estate taxes. Now, we are all going to die. That is pretty sure. Taxes and death we know. And when you die, if you are in the 1.6 percent at the very top of the economy, you are going to take advantage of that little old tax break. Nobody else is. That estate tax business is simply for the people at the very top of the economy. Now, we could have crafted a very careful use of the estate tax, if it is family farms you want to keep together or small businesses. But nobody will talk specifics. What this budget agreement does is say, buy a pig in a poke, send this tax break over to the Committee on Ways and Means and trust Chairman Archer and the members to do a very skilled, very careful, very fiscally conservative proposal. Now, if you believe that, go back and look and see what happened in 1981 and 1986. They got in a bidding war. It was us. It was not Republicans, it was Democrats. I was not here, but I know who did it. There is no clean side here. It is not good or bad on either side of the aisle. But the fact was, the committee ran away. And it will happen again, you watch.

Mr. McDERMOTT. Mr. Chairman, I yield 3 minutes to the gentleman from New York [Mr. Nadler]. (Mr. NADLER asked and was given permission to revise and extend his remarks.)