Don Nickles

Mr. NICKLES

Mr. NICKLES. I want to make a significant statement, and I will yield at a later time. That is a pretty significant growth, from $1 billion to $5 billion. Look at this chart to see what happened since 1990, because now we are talking about a program that is going to be 30 billion dollars plus. Again, I am just talking about outlays, what the Federal Government is writing a check for. I am not talking about a tax credit that somebody has to reduce their taxes. I am talking about what the Government is writing the check for--outlays where the Government is writing a check. These figures are exploding. In 1990, outlays were $5 billion. In 1992, they doubled and went to $10 billion. By 1995, the outlays went to $20 billion, and they continue to escalate. In 1997, outlays for the EITC will be $23.8 billion. Again, I will have these inserted into the Record. The growth rate for the last several years in EITC outlays, beginning in 1990, was 14 percent, 55 percent, 22 percent, 21 percent, 42 percent in 1994, and 18 percent in 1995. Those are increases in outlays where we are writing checks, not reducing someone's tax liability. Uncle Sam is writing a cash payment benefit. Again--this is 10 times the rate of growth of inflation over most of these years. The cost of this program now exceeds the cost for Aid for Families with Dependent Children. We are going to talk about welfare reform very soon. Senator Bradley, myself, and others are going to be working on a welfare markup tomorrow. We will focus on AFDC because it has been the largest cash assistance program for welfare dependents. The EITC exceeds AFDC. It did not a couple years ago. This chart maybe is a little more confusing, and thus needs explanation. You see the red, which is the outlays. The green here is the credit portion. So the total cost of this program, estimated by the year 2002, is going to be $36.2 billion. That is an unbelievable explosion of a program that only cost a couple of billion dollars back in the late 1970's and even in the early 1980's. The total cost of the program in 1986 was $2 billion. The total cost of the program in 1990 was $6.9 billion. The total cost of the program in 1994 was $21.8 billion. It tripled between 1990 and 1994--tripled; it went from less than $7 billion to $21.8 billion. By 1996, it goes up to $28.4 billion. Again, the growth rate in the total cost of this program, outlays and credits, is astounding. In 1991, it went up 60 percent; in 1992, 17 percent; in 1993, 20 percent; in 1994, 40 percent; in 1995, 16 percent; and in 1996, 12 percent. Now, the cost of the EITC is growing for a lot of different reasons. One, Congress has increased the amount of money people are eligible for. But I will give you some figures. The maximum credit in 1990 for two or more children was $953. From 1976 through 1978, the maximum credit anybody could receive out of this program was $400. In 1979, all the way through 1984, it was $500. Then, in 1985 and 1986, it was $550. Then it has increased substantially every year. In 1990, a person could receive $953. So it basically doubled from 1979 to 1990--the maximum amount of credit that anybody could receive for two or more children. Again, keep in mind that 99 percent of the people who file returns for this receive a lump sum payment. So $1,000 is not a bad deal. More and more people found out about it and thought, hey, this is a pretty good deal. They can file an income tax return even though most of these people have income such that they are not going to pay any Federal income tax. Maybe they will pay some Social Security tax, but they will file a return and get $953. Then more and more people became eligible. Congress increased eligibility and people became [[Page S7146]] aware that it could be very easily cheated. The maximum amount went up dramatically. In 1995, it was $1,511. It went up another 50 percent over that period of time. From $953 in 1990; and in 1993, $1,511. In 1994, Congress made some changes in a tax bill that not any Republican voted for. I do not remember anybody saying we are going to increase the maximum amount on the income tax credit from $1,511 to $2,528 in 1 year. The maximum tax credit went from $1,511 to $2,528. In 1995, the maximum tax credit is $3,110. In a few years, we went from less than $1,000 to $3,110. It has tripled. No wonder the cost of this program is climbing up out of control. We went from a maximum credit for a family with two or more children of less than $1,000 to $3,000 in 5 years. You can see why there was an explosion in cost. Unfortunately, there was also an explosion in fraud. For my colleagues to defend a program that has had this kind of fraud and error rate I think is unbelievable. I am just looking at a GAO study that was given to the Senate in March 1995. It says, ``The most recent taxpayer compliance measurement program shows that about 42 percent of EIC recipients receive too large a credit and 32 percent were not able to show they were entitled to any credit.'' Think of that, 32 percent of those surveyed could not show that they are entitled to receive any credit. One-third of the beneficiaries were not able to show that they were entitled to any credit? And we are expanding it on this kind of scale? People can receive $3,100 and one- third could not even defend that they were entitled to receive it and 42 percent showed an error? Maybe some of those errors were small, maybe some of them were large, maybe some of them were intentional, maybe some of them were not, but about 34 percent of EIC paid out was awarded erroneously. Mr. President, 34 percent was awarded erroneously? Wow, think of that. We are talking about a program that is bigger than AFDC, a program that is growing at this kind of rate, and it has that kind of fraud and error rate. What are these radical Republican proposals that I keep hearing about that we are taxing working poor? That is false. I just totally deny that accusation. That irritates me. What we are trying to do is stem the tide of a program that is totally out of control. Republicans think we should control it. As my colleagues know, we are not passing tax law on the floor of the Senate. We are not rewriting the program. We are saying we have a program that is out of control and we ought to contain its growth. Under the Republican package, let me mention, the total cost of this program grows from $25 billion in 1995 to $28 billion in 1996. It continues to grow about $1 billion a year to $32 billion by the year 2002. In other words, under the proposal we are suggesting to the Finance Committee, EITC would continue to grow, but it would grow about $1 billion per year, a little over 3 or 4 percent per year, whereas under current law it continues to grow much faster than that. Let me give a couple of specific examples. As I mentioned, right now under the earned-income tax credit, a person with two or more children is able to receive $3,110. Under the plan that some of us are proposing, next year that person could receive $3,119 and that figure would continue to increase every year so by the year 2000 a person with two or more children could receive $3,560. So, again the maximum credit allowed would increase every single year. Granted, it will not increase as fast as provided under current law. A person could receive, again, lump sum payments under current law from $3,110 in 1995 to over $4,000 by the year 2000. We allow the increase to go from about $3,110 in 1995 to $3,560 by the year 2000. So we have smaller increases. The current law says let us take it up to $4,000. Again, keep in mind most people are receiving this as a lump sum payment. I think that is a great incentive for fraud. If you cheat on your tax return, not only do you reduce your taxes, which is what happens in most cases, but Uncle Sam is going to write you a check. Right now the check is $3,110. We found a lot of fraud when people were getting just $953. What are they going to do when they can get $4,000? So we think we need to curb this abuse. We need to eliminate the fraud. We need to slow, not expand, this program. We did not even freeze the program. Maybe we should have. A program this fraudulent probably should have been frozen. We did not do that. Actually, if you had frozen the program for 7 years I think you save $50 billion. We did not do that. We just slowed the rate of growth. For my colleagues to insinuate that is a tax increase on the working poor, I beg to differ. I think that is totally false. If we are ever, ever going to balance the budget, we have to curtail the growth of programs that are growing a lot more rapidly than inflation. I have already given the figures of the rapid cost of this program. We are trying to constrain it in our proposal. If we allow Uncle Sam to continue writing checks that grow from $953 in 1990 to $3,110 in 1995 to $4,000 in 2000, this program will not be contained. These numbers will continue to climb off the charts and we will have deficit spending. Not only will we continue to have deficit spending but we are going to find that too many people are eligible for this program--I have read in one case where 30 to 40-some-odd percent of the District of Columbia is now eligible for this program. You are going to continue to have rampant, rampant abuse, I am afraid, because the dollars are so large. And that would be a serious mistake. So I will send a second degree amendment to the desk and ask for its immediate consideration. I will postpone that. I yield the floor. Exhibit 1

Mr. NICKLES. And 13 percent were judged to have intentional errors. That is a fraudulent program. I will tell my colleagues, Senator Domenici wants to save an hour of time so that we can consider more amendments. I do not blame him. He has a lot of amendments pending. I will tell my colleagues, I had hoped to offer a Sense-of-the-Senate amendment in the second-degree to tell the Finance Committee, ``Reform this program and in the process we think you can save some money.'' This happens to be a program that needs to have some waste, fraud, and abuse taken out of it. That was the essence of the Sense-of-the- Senate amendment I had intended to offer, saying to the Finance Committee, ``Preserve this program in a way that you eliminate the waste and the abuse and the fraud that we see now and as reported by the GAO.'' That is what we should be doing. I think the Finance Committee can do it. GAO says one-third of this program is fraudulent. We did not even cut it that much. We maybe should have frozen the program until we eliminated the fraud. We did not do that. We allowed the program to grow. I urge my colleagues to vote against the amendment of the Senator from New Jersey. I will be happy to yield for a question.

Mr. NICKLES. The Senator is correct.

Mr. NICKLES. Will the Senator hold a second?

Mr. NICKLES. It will be my intention to yield the balance of my time as soon as we have our amendment ready. I continue to hear the proponents of this amendment say that our efforts to reduce the growth rate of EITC is a tax increase on working poor. I want to say that is flatly wrong. Eighty percent of the money in this program is going to people in lump sum, cash payments. My friend from Nevada gave some excellent examples of people who qualified for the credit. I heard him say that one person received $1,000, and another received $1,200. Under the assumptions in this budget resolution, they could receive more than they received last year. Let me repeat that. Under our proposal, they could receive more than they received last year. No one's payment, if they received an earned income tax credit and their income was the same, would be less. We did not roll back the program. We did not lower the credit or income eligibility amounts. Again, here are the growth rates of this program, and it has exploded. For its first 10 years, the EITC cost less than $2 or $3 billion. Now the program has outlays of over $20 billion in the last few years. Even under our proposal, it continues to increase about $1 billion per year. Granted, that is about a 3-percent growth instead of a growth rate that was at 20 and 40 and 55 and 60 percent. So it grows a lot more slowly. I am putting all these tables into the Record. People right now, in 1995, can receive a $3,110 lump sum; 99 percent of the people who qualify for this receive the benefit in a lump sum. Now, my colleagues call this a tax increase, even though next year we would give them slightly more $3,110. We say next year the maximum amount under our proposal would be more than that but it would be only slightly more than that. My colleagues on the other side say, well, wait a minute, next year we want to increase that to $3,500, and in a few years we want to take it to $4,000. We are saying that, no, we are going to be more conservative; we are going to increase it to $3,560. So instead of giving somebody $4,000, we are going to say we will give you $3,560. Every year we are going to give you more than last year under our proposal, but our colleagues are calling this a tax increase. I disagree. The handouts will be a little less. The cash payments will be a little less under our proposal. They will be more than last year, but they will not continue to grow at this unaffordable rate. We cannot afford this. Our Government cannot afford it. And again I was surprised to find that the cost of this program now exceeds the Aid to Families with Dependent Children, the largest cash welfare benefit program in our Nation's history. The earned-income tax credit is a great name, but it does not fit this program. This is a negative income tax program. I have heard my colleagues say this affects anybody who makes under $26,000--I will put tables in the Record on this subject. In 1995, the figure is $26,673. That is the maximum amount of income you can make and still receive some EITC. But that figure increases. Under current law, by the year 2000, you can receive EITC if you make up to $32,596. Under the so- called radical assumptions in this budget, you can receive EITC if you make up to $31,656. So the EITC still goes to the same people, but we just have just slowed the growth of the maximum credit amount. What we have done, in my opinion, is respond to the studies of GAO. I heard my colleague say it was an old study. The IRS in 1994, in a 2- week study on electronic returns, said that 29 percent of those audited received too much earned income credit. That is a total of $358 million. They said 13 percent were judged to have intentional errors, outright fraud. That was $183 million. That was just a short, little 2-week study. In 1988, another tax compliance measure showed that 42 percent of EITC recipients received too large a credit and 32 percent were not able to show they were entitled to any credit. That was when the program was much smaller, and that was when the incentives to cheat were much less. Now we have tripled the amount of money that individuals can receive. Now people have found out that you can get a big check if you make $12,000--and it does not make any difference if you made $12,000 working 40 hours a week or if you made $12,000 working 100 hours a year. Maybe for some reason you are working part time, whatever. You can qualify for this benefit and be able to receive $3,110 dollars. And when people find that out, there is a lot of incentive to cheat a little bit. In the past people cheated to reduce their tax liability, and now we find that people have other incentives; if you cheat a little bit now, we are going to give you a check, and the check is not just a few hundred dollars as this program used to be. It is not just $953 as it was in 1990. Now it is $3,110 and growing to $4,068. We think that is too rapid a growth. We think this program is too fraudulent. We think we should curtail the growth of that program. I tell my colleague from New Jersey, I will share with him a copy of the second-degree amendment I have. We are trying to [[Page S7152]] make sure it conforms with his amendment, and I will give that to him in just a moment. I reserve the remainder of my time. I suggest the absence of a quorum. Mr. DOMENICI addressed the Chair.

Mr. NICKLES. I withhold.

Mr. NICKLES. Mr. President, my colleagues are certainly entitled to their own opinions, but they are not entitled to their own facts. The fact is that this program is growing rampantly out of control. It has been, without a doubt, the fastest growing entitlement program in Government. It is also probably the most fraudulent program we have in Government. I want to refute the statement I have heard almost all of my colleagues on the other side say--that this is a tax increase on the working poor. They are totally wrong. The changes we are talking about making in the EITC program are not a tax increase on anyone. What we are doing is reducing the rate of growth of a program that is growing in cost by leaps and bounds. We are not talking about tax credits. We are talking about reducing the amount of checks that we are writing--outlays. This is a cash benefit program. Eighty percent of the money in this program is written in a check at the end of the year. It is not a reduction in somebody's taxes. It is a payment; it is a negative income tax. In almost 99-plus percent of the cases, it is a check paid as a refund to people in a lump sum payment. These lump sum payments have been rising dramatically. My colleagues need to be aware of the exploding costs in this program. The numbers on this chart are what the Federal Government is actually spending. I will have this inserted into the Record so my colleagues can see it. The growth in this program is astronomical. I heard a couple colleagues saying Ronald Reagan and others were supporters of this program. Let us put their support in context. In 1980, this program's outlays were $1.4 billion. In 1986, they were $1.5 billion. So in 5 or 6 years, the outlays almost had no increase. So it was very, very small, program. In 1986, we had some increases, and by 1990, this program's outlays were $5.3 billion.

Mr. NICKLES. Mr. President, I rise in opposition to the amendment offered by my friends on the other side of the aisle because we need to restrain the growth of the earned-income tax credit. I want to make several comments, and I am going to insert several charts and figures into the Record. I ask unanimous consent that at the conclusion of my statement, these charts be printed in the Record.

Mr. NICKLES. Just in response to the Senator, I will make a few comments in just a couple of moments.

Mr. NICKLES. That is correct.

Mr. NICKLES. Mr. President, I have a couple comments I want to clarify for my friend from New Jersey, I was hoping we could get some time reduction. I understand that he was not able to get that. My guess is that a point of order will be made when time expires on this side. A couple points on this amendment. Right now we are spending a total, for the so-called earned income tax credit of $25.3 billion per year. Under the budget proposal we have before us, if you add up the next 7 years, that total will be $204 billion. A freeze would be $176 billion. So we are spending about $30 billion more than a freeze. So the total amount of money that we spend on this cash payment program still goes up. Most of the beneficiaries receive a lump sum. I am tired of hearing people talk about tax cuts and tax increases. The EITC is primarily a cash payment, a lump-sum cash payment to a lot of individuals, and the cost of the program is going up every year. It goes up even under our proposal. I wanted to make that perfectly clear. I also want to inform people that if they received an earned income tax credit last year of $3,110, next year they will receive, even if the Finance Committee passed this as we proposed, a little more. It will not continue to escalate as rapidly as it has. It cannot continue to escalate as rapidly as it has. I might mention, if we do nothing, if we follow the guidelines of some people, the status-quo type budgets as they propose, this entitlement program will continue to explode, and it certainly has exploded. We will be spending $226 billion over the next several years. How can people call a program where 80 percent of the money is handed out in cash payments, where 99 percent of the benefits are received in an annual lump-sum payment, a tax cut. I might mention, I am going to put in the Record a chart for the earned income tax credit for two or more children. I also have one for persons with one child. The figures I was using before were two or more children. When a lot of people find out they are eligible for this, they are going to start filing. A lot of people are going to start working to have their income come in right on that level. You say, how can you do that? I tell you, in the private sector, I used to hire some people who were retired from other companies, and they wanted to work just enough so they could make a little money before they started losing Social Security. So people can adjust their incomes; they can be paid just about that much. That happens. Or they can work part time until they make this amount of money, and you do not have to work 2,000 hours to receive the maximum credit. There is no hour limitation. As a matter of fact, the average number of hours people worked in this program is 1,300. That is about 24 hours a week. That is not 40 hours a week. You could actually be a lobbyist or something and work 100 hours in a year, and if you happen to make about the right amount of income, you could receive a $3,100 check from Uncle Sam. We are talking about reducing the growth of these checks. We are not even reducing the amount, but we are saying they will not be growing as fast. I think that is important. Some people call that a tax increase. It means we are going to write smaller checks, these checks will not be growing as fast. It is not affecting anyone's tax cuts, tax rebates, or anything like that. Most of these people are receiving cash payments, so we are trying to curtail a program that has been growing seriously out of control.

Mr. NICKLES. Not quite yet. The growth in this program has been unsustainable. The people advocating this amendment want that growth to continue. We cannot afford it. If you are going to balance the budget, you are going to curtail the growth of entitlement programs. This is an entitlement program. This is one of the fastest growing entitlement program. I mentioned before the cost of the program totally exceeds the cost to Aid to Families with Dependent Children. Aid to Families with Dependent Children in 1995 cost $18 billion. This program in 1995 cost us $25.3 billion. It is past AFDC big time. AFDC provides cash payments; this program provides cash payments. This program provides cash payments for a family with two children of $3,110. With one child, it provides for a maximum credit of $2,094. So you get an extra $1,000 if you have two or more children. Some people who are talking about changing the welfare program say they want to take some of the incentives away from having more children. This program is a big incentive for people to say, ``We want our income to be at this [[Page S7154]] particular level so we can get a nice big check from Uncle Sam.'' I have also found that in some cases, 20, 30, maybe even 40 percent of the people living in a particular area could be eligible for this cash payment program. Then you start finding con artists who will sign people up who do not pay taxes and have not filed returns in the past. They will go on a recruiting trip and encourage people to have their income fall into this category, file an electronic return and maybe split it with them because they weren't going to do a return in the first place. There has been a lot of fraud in this program. I am quoting these figures from a recent GAO report. The most recent study shows 42 percent of EITC recipients receive too large a credit, and 32 percent were not able to show they were entitled to any credit--wow, 32 percent, the study showed, were not entitled to any credit. And then in 1994, the IRS did a 2-week study on electronic returns and showed 29 percent received too much EITC and 13 percent----

Mr. NICKLES. I yield the Senator 2 additional minutes.

Mr. NICKLES

Mr. NICKLES. I reserve the balance of my time.

Mr. NICKLES. Mr. President, I want to try and clarify some of the statements that have been made. In the first place, I will repeat what I told Senator Bradley. This budget resolution does not direct the Finance Committee not to raise taxes. We do not have a tax increase in this budget. I know many of my colleagues on the other side want to have a tax increase. We do not have a tax increase. This says reduce the outlays. My colleague from Connecticut said we are saving $21 billion. We reduced the rate of growth in this program. That is our direction or suggestion to the Finance Committee to reduce the growth by $21 billion over 7 years. If we froze the program, we would have $50 billion in savings. Frankly, I think we probably should freeze it because it is so rampant with abuse. It is so fraudulent. There are so many people taking advantage of this program. The more people find out about it the more they like it, especially if they find out that their neighbor or somebody else is taking advantage of it, and received a nice cash lump sum of $2,000 or $3,000. Unfortunately, the amount of dollars are so significant more people will be filing fraudulent returns. That is what the IRS has told Congress. The IRS has made some interesting statements. They said 13 percent of returns they judge to have intentional errors. In other words, fraud. They said 29 percent, in a 1994 study, 29 percent received too much earned-income credit. Regarding illegal aliens, the IRS suspects that more than 160,000 receive earned-income credits in 1994. I am afraid we spent a lot of money for GAO to do some homework for Congress, and then we do not pay any attention to their work. Maybe we should not in some cases. In this case, they have clearly shown this is a fraudulent program that needs to be reformed. Some of our colleagues are saying, no, no, keep the status quo, keep going as usual. So what if 30-some percent have abused the program. So what if it went from a few billion dollars a year to a $30 billion program. Allow it to continue. Mr. President, I do not think we can afford to. We can achieve every bit of the savings, and allow the program to go by eliminating the fraud in this program. If we do not, we ought to be ashamed of ourselves. GAO says look at a wealth test. We enacted an EITC wealth test earlier this year, but its thresholds are too high. A person can have a lot of assets and receive a lot of income from those assets and they can still qualify for the earned-income credit. For hours of work, there is no minimum. People can work 100 hours and qualify for $3,000 benefit in this program. People do not have to work 2,000 hours. The average recipient last year worked, I think, 1,300 hours. Some people could work 100 hours and still receive it. This program is set up for abuse. The GAO has done a pretty significant study. This is recent study, in March 1995. I encourage my colleagues to look at it. It is available. We paid for it. We should look at that information. I know my colleagues on the other side supported this massive increase in 1993, and they are very proud of it. They have gone back and quoted Ronald Reagan who stated it was a good thing. However, the total cost of this program in 1980 was $2 billion; in 1986 it was still $2 billion. This program did not grow very fast, initially. By 1988 it grew to $5.9 billion. Then its cost really exploded. I heard a couple of my colleagues say it is primarily for families, but in 1993 their tax bill opened the program up to people who do not have children. Originally, as conceived by Senator Russell Long and others, the EITC was for families. Senator Long has written an op-ed piece saying he supported the earned-income program, but he said Congress went too far in 1993 when they expanded this program to apply to people without children. Originally, people had to have one or two kids to qualify for the program. Now you do not. Again, we make a lot more people eligible and we increase the amount of money they are eligible for. In 1990, the maximum amount anybody could receive out of this program was $953. In 1995, the maximum that someone can receive with two kids is $3,110. In the year 2000, that maximum amount under current law will be $4,068. We have millions of people that are eligible. So we are saying, no, we do not think we can afford that. So we allow the maximum to increase every year but at much smaller levels. So we say by the year 2000 the maximum amount that someone could receive with two or more children would be $3,560, over $450 more than what they are receiving today, but not going all the way to $4,068. Granted, the EITC is not growing as fast under our proposal. It should not because the program is so rampant with fraud and abuse. It is growing too fast. We need to curtail it. We need to have some containment on entitlement programs or we will never, ever, get to a balanced budget. Then, Mr. President, I want to mention one other thing. That is the way our colleagues on the other side of the aisle want to pay for this. They will take it from the so-called reserve fund that we are setting aside, if we balance the budget, to give back to the American taxpayer. This is about the third or the fourth amendment, and I am sure we will receive more, where our colleagues on the other side of the aisle are saying how they want to spend the so-called economic dividend. They want to spend it before we get there. That is, in a nutshell, the reason why the Democrats have never had balanced budgets. They want to spend it before we get it. They want to spend more than we take in. They are more popular spending money than taking it away. When we call this program an earned-income tax credit, it makes people [[Page S7157]] think we are reducing taxes. We are not. This program is a negative income tax. We ought it call it what it is. It is a negative income tax. George McGovern campaigned on a negative income tax in 1972, and now we have it in law. Perhaps it has maybe a better title, but for 80 percent of the people, it is a lump sum negative income tax. It is a cash payment. It is a cash payment that is growing a lot faster than AFDC. We should be discussing this when we get into welfare reform. I am all for trying to create incentives to get people to work, but this is a lump sum payment that discourages work. There are a lot of people that might work just enough to maximize this payment, by either reporting income, or not reporting income. We had some people on this case that might report income they did not receive so they could get into this level, and others might not report income that they received, cash or otherwise, so they could stay at this level. I do not even want to get into the confusing stuff about the marginal tax rates this program creates, but we find people in the phase-out side of this program that will end up paying 80 percent or 90 percent of their additional, marginal income in taxes. Think about that. I do not want to get too confusing with facts, but they can have the highest marginal tax rate of anybody in America. And that is not fair, either. That is a real disincentive to earn more income. I do not think we should have that. The direction of the Finance Committee and the direction of this budget is to limit the growth of this program. It is growing too fast. It is out of control. GAO says--not just Don Nickles and Bill Roth who had a hearing on this in the Governmental Affairs Committee--that the cost of this program is exploding. I compliment Senator Roth for his efforts. We need to respond. The Finance Committee and Ways and Means Committee needs to respond. We need to get this program under control.

Mr. NICKLES. I will be brief. I would like to point out to my colleague that I think he is totally incorrect. The revenue numbers in our budget are the CBO baseline revenues. We did not change revenues. We did not direct the Finance Committee to change revenues. They have to reduce outlays. We do not raise revenues, we reduce outlays.

Mr. NICKLES

Mr. NICKLES. I ask unanimous consent for an additional 5 minutes.

Mr. NICKLES. So the facts are, taxes under this President go up dramatically and spending continuing to rise even faster than it would have under normal pretenses. And then if you look at the President's budget for the next several years we continue piling up debt upon debt upon debt. That is not acceptable. I am excited about the fact that now we have balanced budget plans in both the House and the Senate. The House has their assumptions, and the Senate has theirs. There may be some changes. I know some people are thinking about making some changes on the tax side. Fine, as long as we get to zero. And I would like to get there sooner if we can. I would like to get to where we had to borrow as little as possible. But let us get there. Let us do it. In all the other previous budget resolutions that I have seen and I have been involved in, we have talked about trading off how much we are going to reduce the rate of spending with how much we are going to raise taxes. We are not doing that in this package. My friend from Massachusetts said we need more taxes on big corporations or we need more taxes on somebody else. Republicans are not going to raise taxes. The problem is not that we are undertaxed. The problem is we are overspent. So we are going to attack the problem. We are going to reduce the rate of spending. Spending under this proposal will grow at over 3 percent per year. Under business as usual, it would have grown at over 5 percent per year. A lot of special interest groups are going to scream and say it is not fair. The Senator from Massachusetts criticized the Senate and the House for making a reduction in the CPI. I hope we do follow the instructions of this resolution and have analysts give us a correct determination of what they think an accurate reflection of CPI is. If we are going to have cost-of-living adjustments, they should be accurate, and if there are savings to be made in that, fine, they should be accurate. When you have people like Alan Greenspan say the CPI is overinflated and has been for some time, that tells me we should make a change. Finally, I know we are going to have a debate on earned-income tax credit next week, and I will save most of my remarks on that subject. But I heard my colleagues say that our proposal is a tax increase on the working poor. That is totally false. We ought to deal with the facts. The earned-income tax credit is inappropriately named. Over 80 percent of the spending on this program is a direct handout to people with zero tax liability. And it is a program that is fraught with abuse. How in the world can our colleagues defend a program when the General Accounting Office says that they found 42 percent of the people receiving benefits received too much in benefits, and 32 percent of the people were not even eligible to receive benefits--32 percent. We do not have a program that I am aware of that is so open for fraud and abuse and it needs to be reformed. Do we reduce the rate of growth of earned income tax credit? Yes, we do, and we should. We can get more than the savings we proposed if we just eliminate the waste and the abuse in the system. But the system has been enlarged and expanded to such an extent, people can receive such large annual lump sum payments that there is a great incentive for fraud. They can file fraudulent tax returns and they can get cash. It is false to say, ``Hey, this is a tax increase on low-income people,'' when only 20 percent of the people who receive this benefit have any tax credit whatsoever; 80 percent do not have tax liability. They get a lump sum cash payment at the end of the year and that payment this year is over $3,000 if you receive the maximum amount. It will grow up to about $4,000. We allow it to grow under this budget; we just do not allow it to grow so much, quite so fast. Every year under our proposal, the EITC will grow in total amount, but it will not continue to compound at 55 percent per year as it has done in the recent past. We cannot allow a program where we are writing checks to be growing at such unbelievable rates. The program cost a few billion dollars a few years ago and now we are looking at a $25 and $30 billion program. It still grows to $30 billion under Senator Domenici's plan. We reduced the rate of growth in that program. We need to reduce the rate of growth in that program. We need to clean out the waste and abuse in that program. We ought to be ashamed of ourselves if we do not, and we are going to try to do that. For our colleagues on the other side or others to say that is a tax increase on working poor, I beg to differ. I think they are entitled to their own opinion, but they are not entitled to their own facts. I thank the indulgence of the Chair and my colleagues. I ask unanimous consent for an additional 2 minutes.

Mr. NICKLES. Mr. President, for the information of my colleagues, it is my intent to speak for 15 minutes. The Chair will please notify me at the end of 15 minutes. Mr. President, in listening to my friend from Massachusetts, it is interesting to note that he did not say ``here is a better idea.'' It is interesting to note that he did not say the President had a better idea. I believe the Senator from Massachusetts voted against the President's budget. I would say he was right because the President's budget needed to be voted down. The President's budget allows the deficit to continue to climb. The President in his state of the union speech and in his campaign speeches said he was going to bring the deficit down, but, unfortunately, that is rhetoric. That is not fact. The facts are that under the President's budget the deficit goes up every single year and it is shocking to see how rapidly it goes up. As a matter of fact, under the President's budget the deficit increases by $100 billion in the first 5 years. The deficit right now is $177 billion, in 1995. Under the President's budget, in the year 2000, it goes up to $276 billion. That is a $99 billion increase. By balancing the budget for the first time in 29 years, we have a chance to make history. The House of Representatives made history when they passed a budget last night that says, as scored by the Congressional Budget Office, we are going to eliminate the deficit. The President's budget as scored by the Office of Management and Budget has deficits that stay at $200 billion for the next 5 years and then go up to $300 billion. But the President in his State of the Union Address in 1993 said he was not going to use fictional numbers; he was not going to use smoke and mirrors. He stated that he would use the estimates of the Congressional Budget Office. The Congressional Budget Office says that his deficit increases nearly every single year. Next year, under the President's budget, the deficit increases from $177 billion to $211 billion, then to $232 billion in 1997. By 1998, it is $256 billion; in the year 2000, $276 billion. So in a clear trend the deficit is going up $100 billion in 5 years under the President's proposal and really crossing $300 billion by the year 2002. We have a clear alternative. The House voted for a budget plan that brings the deficit down to zero. In the Senate, we now have a plan that brings the deficit down to zero. That is a big difference. That means we will be borrowing significantly less. I know I heard my friend from Massachusetts say, we are slashing spending; we are cutting; we are eliminating spending in many programs. I will put a table in the Record that shows spending under the Republican budget in Medicare. In 1996, we will be spending $9 billion more than we did in 1995 in Medicare. In 1997, we will be spending $20 billion more than we did in 1995. In 1998, we will be spending $35 billion more than we did in 1995. $50 billion in 1999, $66 billion in the year 2000, $84 billion in the year 2001, over $100 billion more in Medicare spending in the year 2002 than we are spending in 1995. Medicare spending is going up. It may not be going up as fast as it would be under present law but present law says it goes broke. The President is AWOL, or absent without leadership, because he does not do anything to save the Medicare system. He allows it to go broke. The law does not allow Medicare to borrow from other trust funds so unless we raise payroll taxes or reduce the growth of spending, it is going to go broke. That is not acceptable. Now we have two plans, the House and Senate. The President does not have a plan. The President's plan was renounced by the Senate today 99 to nothing. Looking at this chart of deficit estimates, the President's deficit goes up every year. This line represents the House budget plan. I compliment them. They were able to pass it in 1 or 2 days. It is going to take us 5 days, but we will eventually pass it. The Senate plan shows up on this chart as almost a straight-line decline to get to a balanced budget. We even do it faster than the House does. Of course, the House has some tax cuts. The House gets there. We get there quicker. Frankly, I hope we stay on a quick, straight, level decline to get to a balanced budget because that means we are going to borrow less in these intervening years. And that is what we should do. We should balance the budget as soon as possible. Now, my colleague from Massachusetts said we are not going to be spending enough. He said we need to spend more money, I heard him say we should be spending more money in education; we should be spending more money on earned income tax credits; we should be spending more money for Medicare; we should be spending more money for Medicaid; I think I heard him say we should be spending more money for every single program with the exception of defense. Looking at this new chart, you see right now we are spending $1.5 trillion, and I would like to put that in perspective because I know my colleagues on the other side seem to think we are not spending enough. To put it in perspective, in 1960, we spent less than $100 billion. In 1970, we spent less than $200 billion. In 1980, we spent less than $600 billion. In 1990, we spent about $1.25 trillion. And now we are at $1.5 trillion. Amazingly enough, even under the so-called slashing, cutting, gutting budget of Senator Domenici total spending will still go up to $1.8 trillion. My math may not be accurate, but $1.8 trillion is a lot more money than $1.5 trillion. As a matter of fact, that is about $350 billion more after 7 years than this year. Actually, spending goes up every single year, in almost every category except defense which is is basically frozen. I have a table which shows that show under the present budget does not even stay frozen at $270 billion. It actually declines for a few years and then comes back up. Domestic discretionary spending has a slight reduction. We reduce it by $30 billion. With regard to Social Security--and I know I heard my colleague from Massachusetts say several times that we are cutting Social Security--we are spending $334 billion in 1995, and we are going to be spending $480 billion in Social Security in the year 2002. Medicare spending will grow from $178 billion in 1995 to $283 billion in 2002. That is over a $100 billion increase in Medicare; Medicaid, this year we are spending $89 billion. It goes up to $125 billion. Other mandatory programs increases from $146 billion to $197 billion. My point is, spending is escalating. It escalates from $1.5 trillion to almost $1.9 trillion. To put that in perspective, when we are talking about spending $1.5 trillion--there are 12 zeros in $1 trillion. That is about $6,000 for every man, woman, and child in the United States. I have a family of six. That is $36,000. Under the Republican budget, spending increases to about $7,500 for every man, woman, and child in the United States. Under President Clinton's proposal, spending would grow to about $8,500 for every man, woman, and child in the United States. So we allow spending to grow but it does not grow quite so fast. A lot of people are talking about Medicare going broke by the year 2002. The trust fund will be bankrupt. I hate to inform my colleagues, but by the year 1997, that is next year, the Medicare trust fund already has a deficit. In 1997, there is a $5 billion deficit and in 1998 there is a $10 billion deficit. That deficit continues to escalate to the year 2002 when it reaches $41 billion. So we are losing money already. That means more money is going out than coming in. Some people, say, ``Well, we will just draw down the reserves of the Medicare trust fund.'' How are we drawing down the trust fund? There is no bank account. If there is a bank account anywhere in Washington, DC, that we can pull those funds out of, I would like to know about it. The facts are, we are going to borrow that money. Actually, the General Treasury will borrow $125 billion between now and the year 2002 to pay to the Medicare trust fund, which will in turn pay benefits. There is not a bank account which holds excess Medicare taxes from previous years. Not in First National, not in Chase, and not in City Bank. We are going to borrow the money to pay Medicare benefits. The fund is already broke. But we have heard so much rhetoric, ``Oh, we can't allow these Medicare spending cuts. This is going to cut Medicare recipients.'' The facts are, if we do not reduce the rate of growth in Medicare spending we are going to have to raise payroll taxes. And I have not heard one of my colleagues yet who said, ``Let's raise payroll taxes to save the Medicare system.'' If they think that is an option they should use, let them offer that as an amendment. But if we do not do that, we must reduce the rate of growth of this program. Those are our only options. As I mentioned before, the law precludes us from borrowing from other trust funds. And we should not do that anyway. That is playing a shell game. The Medicare tax right now is 2.9 percent on all payroll. That is a lot of money. The program has been growing in cost at rates that are not acceptable. These claims are not just from Don Nickles. They come from President Clinton, and Mrs. Clinton, and Secretary Shalala, and the other trustees of the Medicare trust fund. All have said we have to reform the system. And we can reform the system. We can do a better job of providing health care for senior citizens at lower rates of growth, at rates of growth that are right now a couple of times the rate of inflation. Right now, they are three times the rate of inflation. We are trying to say it should be no more than two times the rate of inflation. Is that realistic? Yes, it is. Can it be done? Yes, it can. Actually, it has to be done or the fund is going to go broke. Then what are we going to do? In the year 2002, we are not going to pay the bill. We will tell people, ``I'm sorry you went to the hospital. I know you owe money. But we can't pay you.'' That is not acceptable. I will just mention that there is a lot of rhetoric on Medicare and a lot of demagoguery. I know a lot of people are trying to scare senior citizens, but I think they are smarter than that. This chart shows that under current policy the rate of growth in Medicare is not sustainable. Under the plan that we now have in the budget before us, the growth rate of Medicare is a little over 7 percent per year. That will keep the fund solvent at least temporarily so we will not be bouncing checks. This line represents a freeze on Medicare and Medicaid. I have heard a lot of my colleagues say, ``Let's freeze all spending.'' That is what a freeze is. I doubt that we will long hear that argument. I think it is vitally important, Mr. President, that we be responsible. I think it is vitally important that we say, no, we are not going to allow deficits to continue to increase, we are not going to take a deficit right now that is $177 billion and allow it to go up to $277 or $300 billion. That is not responsible. That is not leadership. I looked at the current services budget and it just happens to track right along with President Clinton's figures. There are no changes. It is just like the President said, ``Well, I've given up.'' And I have heard other claims, ``In 1993 we made a giant step toward real deficit reduction and we did this without Republican help. So too bad for you guys. You're going to have to do this one on your own.'' There is a good reason why Republicans voted against the 1993 budget package. And I want to take issue with some of things that President Clinton and Mr. Panetta have said. They claim to have reduced the deficit by nearly $600 billion. I have heard that figure time and time again. I am going to insert into the Record several tables which make my points. One of these tables shows the source of deficit decline since President Clinton took office. Tax and fee increases account for $262 billion of that decline. I will give the President credit for those. Yes, we know he passed the largest tax increase in history. I might mention, it was a large tax on middle-income Social Security recipients and on low and middle-income people that buy gasoline. As for his claims to cut spending, according to the Congressional Budget Office he has not yet cut any spending. In fact, he increased spending $4 billion in 1993, $9 billion in 1994, and $3 billion in 1995. I might mention, the House has passed a rescissions bill, the Senate will pass a rescissions bill, in all likelihood, next week, and the President already said he would veto it. So we will have had a chance to cut 10 billion dollars' worth of spending and the President said he would veto that. If you believe the assumptions for 1996, 1997, and 1998 he will have some spending reductions totaling $88 billion. The remainder of the deficit reduction since 1993 is attributable to technical, economic, and other changes. In other words, $213 billion of the deficit decline is in no way attributable to this administration. So if you add all those figures together, yes, CBO says there is a $500 and-some-billion deficit reduction from the amount they have estimated in January 1993 compared to January 1995. But the truth is there are no real spending cuts. The truth is we have not had a spending cut yet all the way through 1995. The truth is we have spending increases and big tax increases. This administration likes tax increases a lot and they like to spend more money.

Mr. NICKLES. Mr. President, I urge my colleagues to be serious when we take up this budget. It bothers me to see that it is so partisan. It bothers me to see that there are not more bipartisan efforts to get to a balanced budget. If there is a better idea--and there is bound to be a better idea because this is not a perfect plan--bring that plan forward. When we took a vote on the balanced budget amendment a couple months ago, a lot of people said we should balance the budget whether we pass a constitutional amendment or not. We were serious, and now we are going to try to do it. It is going to take some votes from both sides to pass a reconciliation bill. So I hope we will not get so polarized that we are not able to work together to make sure we quit piling up endless debts on our children and on our children's children. To me that is a vital question: Are we serious? Are we actually going to finally start living within our means? I remember going to a town meeting and somebody raising their hand: ``Senator Nickles, will we ever see a balanced budget in my lifetime?'' The person was in their early twenties. I want that answer to be ``yes.'' I think this Congress has a chance to make it yes, and I hope that we will during the course of next week. I yield the floor. Mrs. MURRAY addressed the Chair.

Mr. NICKLES

Mr. NICKLES. Mr. President, I would like to announce for the information of the Senate that the hearing scheduled before the Subcommittee on Energy Production and Regulation will also include S. 801, a bill to extend the deadline under the Federal Power Act applicable to the construction of two hydroelectric projects in North Carolina, and for other purposes. The hearing will be held on Thursday, May 18, 1995 at 2 p.m. in room SD-366 of the Dirksen Senate Office Building in Washington, DC. committee on agriculture, nutrition and forestry

Mr. NICKLES

Mr. NICKLES. Mr. President, I ask unanimous consent that there now be a period for the transaction of morning business with Senators permitted to speak for up to 5 minutes each.

Mr. NICKLES

Mr. NICKLES. Mr. President, I would like to announce for the public that a hearing has been scheduled before the Subcommittee on Energy Production and Regulation. The hearing will take place Thursday, May 18, 1995, at 2 p.m. in room SD-366 of the Dirksen Senate Office Building in Washington, DC. The purpose of this hearing is to receive testimony on S. 283, a bill to provide for the extension of the deadline under the Federal Power Act applicable to two hydroelectric projects in Pennsylvania, and for other purposes, S. 468, a bill to provide for the extension of the deadline under the Federal Power Act applicable to the construction of a hydroelectric project in Ohio, and for other purposes, S. 543, a bill to provide for the extension of the deadline under the Federal Power Act applicable to the construction of a hydroelectric project in Oregon, and for other purposes, S. 547, a bill to provide for the extension of the deadlines applicable to certain hydroelectric projects under the Federal Power Act, and for other purposes, S. 549, a bill to provide for the extension of the deadline under the Federal Power Act applicable to the construction of three hydroelectric projects in the State of Arkansas, S. 552, a bill to provide for the refurbishment and continued operation of a small hydroelectric facility in central Montana by adjusting the amount of charges to be paid to the United States under the Federal Power Act and for other purposes, S. 595, a bill to provide for the extension of a hydroelectric project located in the State of West Virginia, and S. 611 a bill to provide for the extension of time limitation for a FERC-issued hydroelectric license. Those who wish to submit written statements should write to the Committee on Energy and Natural Resources, U.S. Senate, Washington, DC 20510. For further information, please call Judy Brown or Howard Useem at 202-224-6567. committee on energy and natural resources

Mr. NICKLES. Mr. President, I would like to announce for the public that a hearing has been scheduled before the Subcommittee on Energy Production and Regulation. The hearing will take place Tuesday, June 6, 1995, at 9:30 a.m. in room SD-366 of the Dirksen Senate Office Building in Washington, DC. The purpose of this hearing is to receive testimony on S. 708, a bill to repeal section 210 of the Public Utility Regulatory Policies Act of 1978. Those who wish to submit written statements should write to the Committee on Energy and Natural Resources, U.s. Senate, Washington, DC 20510. For further information, please call Judy Brown or Howard Useem at 202-224-6567. subcommittee on forests and public land management

Mr. NICKLES

Mr. NICKLES. Mr. President, I rise today to congratulate a fellow Oklahoman, Ray Stowers, D.O. on his recent appointment to the Physicians Payment Review Commission [PPRC]. Dr. Stowers is an osteopathic, family practice physician from Medford, OK. Since his first year in practice, Dr. Stowers has remained dedicated to the advancement of rural family medical practice, evidenced by his service as a faculty member of the Oklahoma State University College of Osteopathic Medicine. During this time, Dr. Stowers maintained his office at the rural site for the Enid Memorial Hospital providing exceptional health care for the individuals in that community. One of Dr. Stowers' many successes occurred when he was appointed by the Governor of Oklahoma to serve on the board of the Task Force on Rural Health Care issues which was responsible for advising the Governor on the State's health care manpower needs, and for convening a statewide conference to discuss rural health care delivery issues. Dr. Stowers is also an expert in physician payment issues. Since 1992, he has served on the American Medical Association's Relative Value Update Committee [RUC]. As the first osteopathic physician appointed to serve on this committee, Ray has facilitated greater understanding, collaboration, and teamwork between the osteopathic medical profession and the allopathic physician community, and has lent his considerable expertise on physician practices to the RUC proceedings. Since 1994, he has also served as the osteopathic profession's liaison to the American Academy of Physicians regarding reimbursement, certification, legislation, and managed care options. Since PPRC was established by Congress in 1986, an osteopathic physician has never served on the Commission. Dr. Stowers' appointment makes him the first osteopathic physician to serve on the Commission and the medical profession could not have put forth a finer candidate. Dr. Stowers represents what is best about medicine and physicians in America today. During the time when the trend to become a specialized physician is so strong and promises such great rewards, he has remained dedicated to the path of providing solo, rural family medicine for over 21 years. Dr. Stowers has served his family, his profession, his community, and his State of Oklahoma well. The entire country will now benefit from the same service of compassion and integrity. Dr. Stowers, the State of Oklahoma is proud of your accomplishments. I am honored to join your family, friends, and colleagues in wishing you every success as you embark on your next challenge of serving on the Physician Payment Review Commission.