Don Nickles

Mr. NICKLES

Mr. NICKLES. Mr. President, I yield myself 5 minutes to speak in opposition to the Carnahan amendment.

Mr. NICKLES. I object.

Mr. NICKLES. Mr. President, we heard the minority leader say there are 72 million people who do not get anything out of the bill; they do not get a rate reduction because we do not reduce the 15-percent bracket. There are different ways of cutting taxes. The way we have done it is to put in a significant percentage of income. People were saying 15 percent. We said we are going to tax that at 10 percent. The net result is we cut everybody's individual taxes. If they make up to $12,000 as an individual, they get a tax cut of $300. If it is a couple, they get a tax cut of $600. That boils down to an across-the-board cut, if you want to look at that, for people who are in the 10-percent bracket; if they are married, it is a 10-percent tax cut. You can do that one of two ways. You could say let's reduce the 15- percent bracket to 13.5 percent. I have suggested that. It might make that simpler policy. That way we can say we reduced every bracket a similar amount. But the other brackets we reduced by 1 point. I suggested 1.5 points. In other words, reduce the 15-percent bracket 10 percent so we can say we reduced every bracket by the same amount. I will be happy to reduce upper brackets by 10 percent. We do not do that, certainly not retroactively. For people to assume we are not helping the lower or middle income is not factually correct. The rate reduction we have in the bill reported out of the Finance Committee exceeds 1 percent. It exceeds what we have done in every other bracket. It exceeds it for a couple reasons. One, it is retroactive to January 1 of this year. All other rates have to wait until January 1 of next year and get a 1-point reduction. On the least income rate, we give them a 33-percent reduction on their first taxable income of $12,000. That is a $600 savings, and that is over a 1-percent reduction for everybody who is in the 15-percent bracket going all the way up to $44,000, $45,000 for a joint couple. My point is there are different ways of doing it. For people to demagog and say they do not get a rate reduction, well, they get a bigger tax cut by the way we have done it. If you want to change the way we have done it and say for the 15- percent bracket we reduce it to 14 or 13.5, we could easily do that. It ignores that we give a $500 tax credit per child, which benefits that income category substantially, and ignores the fact the income tax credit is refundable over my recommendation. There is a lot of tax policy direction. I believe about $450 billion of the entire rate reduction, which is only $850-some billion, is directed on this 10-percent bracket, on the lowest income. For people to make this allegation that 72 million people are ignored is hogwash. That is not correct. We could redo it by rate reduction, we could redo it in any number of different ways, but this group gets the biggest percentage of reduction of anybody in this tax bill. Upper income people, anybody else at a 28-percent rate, 31-percent rate, 33-percent rate, 36-percent rate, 39-percent rate, get a 1 point reduction for 4 years. We are giving a great percent or point reduction for low income retroactive to January 1 of this year. I urge my colleagues to vote no on the Carnahan amendment.

Mr. NICKLES. I would ask that both sides would have 5 minutes prior to the vote.

Mr. NICKLES. I will reclaim my time. I am not waiting for my colleague to make a speech. I think it is absurd for someone to say: We are just going to reduce the rate to 53 percent; we are going to reduce the tax 2 percent for the upper end estates and, oh, sure, at end of that time we are going to repeal it. I don't think so. I don't think that is credible. For someone to suggest we are still really for repeal but we are going to keep the rate at 53 percent, I do not think is credible. It is not going to happen. Back to this idea of how many estates, you might say in 1 year there were 28 taxable estates above $5 million, but I tell you there are thousands of estates that are subjected to this tax that are trying to avoid this tax, trying to minimize this tax; thousands in my State, millions in your State--millions? Surely a million. There are thousands in Northern Virginia. You don't have to go very far. You are talking about taxable estates around this area, if you look at high priced neighborhoods where the Government comes in: Oh, the Government is entitled to take half of that house or half of that property or half of that business because somebody passes away? What right does Government have to get 53 percent of somebody's estate? It is just absurd. It should be unconscionable. I go back to our friend, who is not the most conservative Senator with whom we had the pleasure of serving, the Senator from Illinois, Carol Moseley-Braun. We agreed we should not tax estates more than we have on personal income tax. I believe President Clinton said the same thing. That rate is 39.6. The amendment of my colleague from New York says, let's keep it at 53. And 53 is too high. I urge my colleagues, if you think the amendment is laudable for the deduction of student loan interest, I may well agree with you but not at this offset, not to gut the estate tax, not when the estate tax is one of the pillars of this bill, both for this President and this Congress and the past Congress. So let's not gut the bill. Let's find another way. Again, we are going to find out if people want to legislate or people want to try to defeat the bill. I urge my colleagues, work with some of us who want to see a bill enacted and signed into law. We will work to find a way to have greater student loan deductibility. We can do that. We can do it with 60 votes. And you will not have half the Senate going berserk. But I tell you this amendment, to gut the estate tax reduction, will not finally be successful. We are going to figure out a way to have a significant reduction in estate taxes. That is part of what a lot of us have been working on for decades. It is what we passed last year. We are going to get it done this year. I urge my colleagues, let's find another offset. If we have to, let's defeat the Schumer amendment and then we can come back and do something more on student loan deductions without gutting the estate tax deduction we have in the present bill. I yield the floor.

Mr. NICKLES. I will yield in a moment.

Mr. NICKLES. Last year we passed a bipartisan bill, with 59 votes in the Senate, to repeal the death tax. This amendment says let's not do that; stop at 53 percent; the Government is entitled to take over half. I think this is a terrible pay-for. It is a terrible offset. It is class warfare rhetoric at its worst. It is not the way to do it or to pay for it. My colleague from New York would work with us, like our colleague from New Jersey. Let's work together, and maybe we can figure out a way to do this to expand the interest deduction for all Americans. I am happy to work with our colleagues to do that. I think you will find bipartisan support for doing it. But not at the expense of gutting the reduction we have in one of the most unfair taxes on the books, the so-called death tax. It is absolutely unconscionable we will tell people who are farming that their farm or ranch happens to be worth $3 or $4 or $5 million and the Federal Government is entitled to take half. I think it is wrong. I urge my colleagues, because somebody asked for the yeas and nays on the Schumer amendment, vote it down. Then we can come back. I will be happy to support an amendment that will increase the interest deduction and have a different pay-for than what is in here. The way this amendment is paid for is grossly unfair to millions of small businesses all across the country that are trying to build and pass on their business to their kids. This amendment is unfair, and it should be defeated. Let's find a different pay-for or offset it in a different way, in a different manner, not in the manner proposed by my colleague from New York. I will be happy to yield.

Mr. NICKLES. Mr. President, I thank my colleagues and urge strong opposition to this amendment. It guts the effort to reduce the so- called estate tax, the tax on death. Some people say let's see if we cannot do more for providing for interest deductibility on student loans. I am happy to do it. But this is not the way to pay for it. Maybe we can do it without an offset. Maybe we can find another offset. I am happy to try to find a different offset--or maybe no offset altogether. Why do we do this? We are at $1.35 trillion. I guess the cost is $11 billion or $12 billion. Maybe we can add to the cost of the bill--that is one way--or find an offset. I can think of things in the bill that are not quite as meritorious as an estate tax deduction. I believe it is unconscionable we will take over half of somebody's estate because they die. In many cases, in an estate there is a business or operation and someone wants to continue operations, and we will say: We don't care; we want half of it. Somebody died but give the Federal Government half. The bill we have is rather timid in what it does. I remember the former Senator from Illinois, Carole Moseley-Braun, agreed we should not have a death tax exceeding the maximum tax rate on personal income tax, which is 39.6. We didn't even do that in this bill. We didn't even do that. President Clinton said maybe we shouldn't have death taxes exceeding the personal income tax rate. For all the talk about the grand estate tax reduction and all the benefits, all we do is, the tax presently starts at 60 percent and we get it to 45 percent, and then for a grand 9-month period we get it repealed. But my colleague's amendment says let's stop and keep the tax at 53 percent. As soon as you have a taxable estate, it is taxed at 53 percent. There will be no tax once you reach that $2 million exemption; the Federal Government gets half. Let's just assume you have a restaurant in New York City and that restaurant is worth $5 million and somebody passes it on, maybe to a third generation, and the grandson wants to continue operating the restaurant worth $5 million. Uncle Sam says, no, we want half. I think that is wrong. I urge my colleagues to vote against this amendment when and if we get to a vote on it. I urge Members to vote no because the pay-for is wrong. We can perhaps work together to find another vehicle or another way to pay for it. It is not that expensive an amendment. The effect of the amendment is to gut the estate tax reform we have in this bill. It guts it. This is a whole lot of the bipartisanship we have, where we have Democrats and Republicans who have come together to say let's reduce the estate tax.

Mr. NICKLES. Is the Senator on my time or your time?

Mr. NICKLES. Then I will answer. My colleague could not be more wrong. The Senator does not understand the essence of estate if you think there are only 28 Oklahomans who have estates over $5 million. There are millions of estates, millions of estates in this country right now, that are effectively wasting a lot of time, energy, and resources to avoid paying this unfair, punitive tax. There are probably millions in your home State, millions in your State alone. Let me give an example. I used to own and operate a small business. It wasn't in this valuation, but it comes out on occasion when someone suffers a death and finds Uncle Sam wants a third or half. You don't want to have that happen again. You go to great lengths to make sure it doesn't happen again. So if you think this only applies to a few, you are sadly mistaken--absolutely mistaken. There is more energy and effort used in spending to avoid this tax than probably any other tax in America because it is unfair. I was third generation in the company I managed, Nickles Machine Corporation. I managed it for several years and am proud of it. I had nephews managing until recently. It is difficult to pass on a business to succeeding generations if Government comes in and takes half every time one person in a generation passes away. It is next to impossible. To think we have calculated that there are only so many taxable estates misses the whole point. There are millions of businesses, farms, ranches, and so on, where people are working aggressively to build, maybe get in that category, maybe they are not. But they do not want to be caught. They do not want to be stuck. They do not want their children to have to sell to pay taxes to the Federal Government.

Mr. NICKLES. I yield the floor.

Mr. NICKLES. Will the Senator yield?

Mr. NICKLES. I am trying to get a copy of the amendment. Has the amendment been sent to the desk?

Mr. NICKLES. Mr. President, to correct my colleague, the amendment he has proposed today doesn't fix it for every category. It does what we did last year, in that we expanded the 15-percent bracket. We doubled the deduction. My point is, there is a real inconsistency between the arguments made on the floor today and the amendment they propose on the floor today and the position they took last year. Last year we had a chance to eliminate the marriage penalty and my colleagues voted no. Now they are proposing basically the same amendment we passed and sent to the President. They are trying to put it on this bill. They had a chance to pass it last year and have it become law. That is my point. I wish they would have had this position last year. One other final comment: I wish we could do more on the marriage penalty in this bill today. And we could have, if we had $1.6 trillion to work with. The same colleagues who say we want to do more on the marriage penalty were the same ones saying we want less of a tax cut. Now they are saying, we want to get rid of the marriage penalty. But last year, unfortunately, they voted in opposition to repeal the marriage penalty. I ask unanimous consent to print the material to which I referred.

Mr. NICKLES. I am happy to yield.

Mr. NICKLES. I am happy to yield.

Mr. NICKLES

Mr. NICKLES. I appreciate my colleague's suggestion. I will work to make sure everyone has available from the Finance Committee a short description of the bill so at least they will understand the major details of it. With that, Mr. President, I suggest the absence of a quorum.

Mr. NICKLES. Mr. President, I appreciate my friend and colleague's suggestion. I will just mention a couple of things. One, the bill that passed the Finance Committee last night passed by a vote of 14-6, a bipartisan bill by every definition. The bill that passed last night in the Finance Committee is the same one introduced by Chairman Grassley and ranking member Baucus last Friday. It hasn't really changed. The information from the Joint Tax Committee is available. The analysis of the bill is available. The bill itself has now been reported, but it hasn't changed. We did not change one provision. Not one amendment was adopted, so people don't have to worry about all the things that are different. It is a pretty simple bill. The rate reductions are pretty simple. They are there. They are not quite as good as I think they should be. I will be happy to explain the entire bill; I can do that. But the rate reductions are very timid, in my opinion. It takes 7 years to get the rate reductions enacted--6 years, I guess--2007 before they are finally enacted, with only a 1 point reduction for all the rates beginning in 2002. But we do have an immediate 10-percent rate. So, anyway, those things are there. It is pretty easily understood. I hope we go to the bill tomorrow and have as much time as necessary on Thursday, on Friday, and a final vote on Monday with Senators able to offer amendments and to consider them. The only thing that is complicated is that when you see the bill it will be thicker because the IRA pension provision that passed with over 400 votes in the House was included and that is very extensive, with multiple provisions, several little pieces involved, some of it somewhat complicated, but it does have overwhelming support in both the House and the Senate. So that will cause the bill to be thicker. You take that provision out, or leave that provision alone, and the rest of the bill is not all that complicated. I urge our colleagues to talk to other members of the Finance Committee. We will get information out today. I hope we begin consideration on it tomorrow and finish it no later than Monday so we can have a chance to have a conference with our colleagues in the House and actually pass it prior to adjourning for the Memorial Day break. That means we have a lot of work to do both on the education bill and on the tax bill in the next week and a half. I think these next 9 days will be very productive for the American taxpayer and for the American public. I appreciate my colleague's question.

Mr. NICKLES. Mr. President, today the Senate will be in a period of morning business until 10 a.m. At 10 this morning, the Senate will resume consideration of S. 1, the education bill. Senators should expect rollcalls throughout the day with respect to amendments to the education bill. Also, as a reminder, the tax reconciliation bill was reported out of the Finance Committee last night. It is expected that the Senate will begin consideration of that measure on Thursday. The majority leader hopes that significant progress can be made on the bill on Thursday with the expectation of completing the reconciliation bill on Monday. In addition, the majority leader is expecting that the Senate will complete action on the education bill next week prior to the Memorial Day recess. I thank my colleagues for their attention. I just mention that both of these bills, the reconciliation bill and the education bill, are two of the more important issues we will be taking up this entire session. It is our intention to complete both of them by the end of next week. That will take a lot of cooperation and attentiveness by all Members. I encourage Members if they have their amendments to bring them forward. Let us not spend a lot of time on them, complete the amendments on the education bill and on the reconciliation bill so we can give some good news to taxpayers and to everyone who is interested in improving education. Mr. President, I thank my colleagues for their attention.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from New Hampshire (Mr. Gregg) is necessarily absent.

Mr. NICKLES

Mr. NICKLES. I announce that the Senator from Idaho (Mr. Crapo) and the Senator from Nevada (Mr. Ensign) are necessarily absent.

Mr. NICKLES. I announce that the Senator from Idaho (Mr. Crapo) and the Senator from Nevada (Mr. Ensign) are necessarily absent.

Mr. NICKLES

Mr. NICKLES. Mr. President, I compliment my friend and colleague, the chairman of the committee, Senator Domenici, for his work. We have been on the Budget Committee for many years. I have been on it for 20 years and have had the pleasure of working with him. Most of the time, unfortunately, the budgets are pretty partisan. I wish they weren't. I know Senator Domenici wishes they weren't. Many times they are difficult to put together. This has been one of the toughest. It is not an easy task in any way, shape, or form. Certainly, with a 50/50, evenly divided Senate, it is a very difficult task. I compliment my friend and colleague who has had battles with Democrats, Republicans, with liberals on both sides of the aisle and conservatives on both sides. He has wrestled with a very difficult task. He has come up with a product that I think is a giant step in the right direction. It is not perfect. The Senator from Tennessee, whom I compliment, is a member of this committee. He said he would like to have a larger tax cut. This is a small tax cut in relation to the surplus. We have an estimated surplus of over $5 trillion. The total tax cut, at maximum, is $1.35 trillion, with one-fourth going to taxpayers. The majority is used to pay down the national debt. We have colleagues on both sides who said let's do it. The Senator from New Mexico said we are paying down the national debt from publicly held debt, as of this year, $3.2 trillion, and in 10 years it will be less than $1 trillion. We are paying it down to the maximum extent that we possibly can. Nowhere in the history of our country have we ever paid down the national debt the way we are projecting to do it this year, next year, and throughout the next 10 years. So I compliment my friend from New Mexico. We still have a significant surplus. He says let's give a portion of that to taxpayers. I have heard people objecting and saying we are not taking care of our Nation's domestic needs. Either we need more money for education, or veterans, or defense, and so on; we need more money to spend. The spenders have been winning for the last 3 years. The people who have wanted for the last 3 years to give some of the surplus to the taxpayers or let the taxpayers keep some of the surplus have lost. We passed tax cuts in 1999 and 2000. President Clinton vetoed them. We did not have the votes to override, so the taxpayers did not get a break. They just kept sending in more money. As a matter of fact, taxpayers today, on a per capita basis, send in $1,000 more than the Federal Government is spending. The Federal Government today is spending $7,000 for every man, woman, and child in the United States. That is a surplus of about $1,000. Let's give a portion of that back to the taxpayers. Let's let them keep some of their own money. They are sending in too much. Granted, there is no limit to the ideas we have in Congress on spending people's money, and people obviously think Congress can spend it better than the American people. Let the taxpayers keep a portion of it and take the bulk of the surplus and pay down the national debt. That is exactly what we are doing in this proposal. Spending continues to grow. Maybe it has not grown as much as it has in the past. Thank goodness. Spending got out of hand in the last couple of years. I will put in a chart showing domestic spending last year grew 14.1 percent. Defense spending grew at 3.5 percent. Some people say spending grew at 8 percent last year. Nondefense spending grew at 14 percent last year. That is not sustainable. The education function last year grew in budget authority 29.9 percent. That is not sustainable. Yet on top of those enormous increases we had last year and large increases in the previous year, this budget says let's grow spending more, actually 5 percent more. I heard people say: We are not doing enough in education despite the enormous increases we had in education. Education funding is projected under this budget to grow at 11 percent, and all of us suspect, with the large support we have in education led by our President and others, that education within these functions will probably grow by even more than that amount. My point is, we are spending a lot of money, over $7,000 for every man, woman, and child, and it should be enough. Surely, we can give some tax relief to taxpayers. I heard some of my colleagues say the tax bill benefits the rich. I am in the process of working with others on the Finance Committee to put together a bill. It does not just benefit the rich; it benefits taxpayers. It is weighted towards taxpayers who are in the lower income categories. We are talking about large percentage cuts for individuals who pay the lowest rates, not the highest rates. The largest beneficiaries, certainly in the first few years, are the people at the lower end of the brackets who are now paying 15 percent. They will pay 10 percent, or 12 percent under the House bill, or people who are paying 28 percent will pay 15 percent. We are going to expand the 15- percent bracket. My point is, please do not prejudge the tax bill as benefitting the rich. A lot of that is class warfare demagoguery that is not going to be sustained by the facts. Let's allow taxpayers to keep a portion of the surplus and take the bulk of the surplus to pay down the debt and limit the growth of spending to 4 or 5 percent as proposed under this budget. It is affordable and sustainable. I thank my colleagues for supporting this budget resolution. We had 65 votes in favor of the budget a week or two ago. There is no reason those individuals who supported this budget a week or so ago would not support it today. The differences in the tax cut are minimal from what we passed a couple weeks ago. I urge my colleagues to support the budget resolution. Mr. President, I ask unanimous consent that the chart to which I referred earlier be printed in the Record.

Mr. NICKLES

Mr. NICKLES. For the information of all of our colleagues, the Senate will begin full floor consideration of the education reform bill at 9:30 a.m. tomorrow. Amendments will be offered during tomorrow's session and therefore votes will occur. If the conference report to accompany the budget resolution is received from the House, the Senate will suspend consideration of the education bill to begin consideration of the conference report. Under the rule, there will be up to 10 hours of debate with a vote on adoption of the budget following the use or yielding back of that time. It is hoped that the Senate can complete action on the conference report prior to adjourning this week.

Mr. NICKLES

Mr. NICKLES. Mr. President, if there is no further business to come before the Senate, I ask unanimous consent the Senate stand in adjournment under the previous order.