Don Nickles

Mr. NICKLES

Mr. NICKLES. Mr. President, I yield the Senator from Utah 20 minutes.

Mr. NICKLES. I suggest the absence of a quorum.

Mr. NICKLES. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. NICKLES. Mr. President, I ask unanimous consent that following a point of order against the Conrad amendment No. 264, Senator Conrad be recognized in order to make a motion to waive relative to his amendment and that the amendment and the motion then be temporarily set aside; provided further that Senator Conrad be recognized in order to offer an amendment, the text of which is at the desk, and that the time until 5 o'clock be equally divided in relation to the amendment; further, I ask that at 5 o'clock the Senate proceed to a vote in relation to the motion to waive with respect to amendment No. 264, and regardless of the outcome, the Senate then immediately proceed to a vote in relation to the second Conrad amendment. Also, no second-degree amendments be in order prior to the above amendments.

Mr. NICKLES. Mr. President, I believe the pending amendment, No. 264, offered by the Senator from North Dakota, Mr. Conrad, proposes to create a new point of order prohibiting the consideration of certain spending and tax measures until the President sends information regarding the costs of the war. The language is not germane to the measure now before the Senate; therefore, I raise an objection under section 305(b)(2) of the Congressional Budget Act of 1974.

Mr. NICKLES. Certainly.

Mr. NICKLES. Mr. President, I know the Senator from Texas has been waiting patiently. I will recognize the Senator from Texas for 20 minutes.

Mr. NICKLES. I yield an additional 5 minutes to the Senator.

Mr. NICKLES. If the Senator will yield?

Mr. NICKLES. I think he was wanting to speak on the Senator's amendment.

Mr. NICKLES. Mr. President, I am going to speak in opposition to both amendments. To remind our colleagues, we expect a vote on both of the amendments offered by our friend and colleague from North Dakota, Senator Conrad, at 5 o'clock. Both of these amendment also are very important. Let me just address the first Conrad amendment, the first one we will vote on. In my opinion, it is fatally flawed for a couple of reasons. One, it creates a new 60-vote point of order against the spending and tax legislation until the President sends Congress a report on the cost of the war and reconstruction of Iraq. I think it is a serious mistake for Congress to ever limit itself depending on what another branch of Government does, whether it is the executive or the judicial branch. I think that is a serious mistake. Certainly if you think of balance of powers, does that really make sense? I don't think so. So I urge my colleagues to support a budget point of order against it. I guess that will be a motion to waive the point of order. But I hope my colleagues will think for a moment what we are doing. We are saying we are not going to act until the executive branch does something. There are a lot of different ways of getting the executive branch's attention other than saying we are not going to deal with the budget or issues before Congress. I think it is very constraining and shortsighted. It is shortsighted from the standpoint it makes an exemption or an exception. It says we can't do it to consider legislation that deals with spending--except for defense. I agree with that; homeland security, and I agree with that. Then it says: Except for a growth package. Then it kind of defines out the Democrat leader's growth package. I heard our colleagues on the Democrat side say it has a pause in spending. It doesn't have a pause in spending. I look at the Senate Democrats' stimulus plan. It has $85 billion in new spending in 2003 and $26 billion in new spending in 2004. It has a tax cut in 2003 but a tax increase in 2004, and a tax increase in 2005. In other words, we are going to have a resolution that says you have to have 60 votes to do anything other than our package. You can't do your package, can't do somebody else's package, but it is OK to do the Democrats' package. I find that to be fatally flawed. Then I find it repeated in the second amendment. The second amendment is the largest tax increase we have had offered before the Senate in a long time. This amendment is mind-boggling. First let me state, in the President's initial budget he requested about $1.5 trillion in revenue reductions over the 10-year period of time. Keep in mind, we are talking about over a base of $26 trillion or $27 trillion. We reduced that to $1.3 trillion in the budget resolution we have before us. Senator Conrad's second amendment would reduce that 1.3--I keep hearing 1.4, but actually it is 1.314 trillion in our resolution. He would reduce that to $121 billion. I believe that would allow for $87 billion in the first year. Maybe it is a coincidence, but the Democrats' Economic Recovery Act, introduced by Senator Daschle, has spending of $85.6 billion in the first year. So both amendments basically say, we want to have no tax cuts or we want to have no tax cuts whatsoever except that we want to be able to do our stimulus plan, and even though the amendment may not define it, the stimulus plan as introduced in S. 414, Senator Daschle's plan, on which Joint Tax and CBO score its spending at $85.6 billion in the first year and $26.2 billion the second year--that is additional, incremental spending. The budget resolution we have before us, just to put it in perspective, has about $10 billion in new nondefense spending. So this would be an increase of about 8.5 times the amount of incremental, new spending we have in our bill. That is a big spending increase. That is a humongous spending increase, not to mention its impact on future taxes. The budget resolution we have before us assumes that present law, the 2001 tax bill--which is scheduled to sunset in the year 2010--would be extended. It assumes that it would be extended to the years 2011, 2012, and 2013. That is about a $600 billion package. Senator Conrad's second amendment assumes that is not the case. In other words, that would not be the case. In other words, there would be a tax increase. It means the people who are paying at the 10-percent income tax level would go to the 15-percent level. It means for the people who would be paying at the 25-percent level, their rate will go back up to 28 percent. It means that people who would be paying at the 35-percent level will be paying 39.6 percent. It means that couples who have children, who would have a $1,000 tax credit per child, will go back to $500. It means that couples who saw their marriage penalty greatly reduced will see it greatly reenacted. It means that married couples who have net effective tax rates or taxable income of $56,000 today, who pay a 15-percent rate on all income up to that level, will find a great percentage of that income taxed at 28 percent. It is a humongous tax increase. So I urge our colleagues to vote no. I will again make a couple comments. I heard, in statements of support, that: Well, this would stop those tax cuts for the wealthy. Well, wait a minute. What is wealthy about a couple making $56,000? What is wealthy about a $1,000 tax credit per child? What is wealthy about trying to get rid of the marriage penalty for married couples who make $56,000? What is so wealthy about that? Why should individuals be paying at rates in excess of what General Motors pays? People who are sole proprietors, people who own their own business, why should they pay income tax rates in excess of the largest corporations in America? Why don't we just try to pass--I guess this amendment is just that-- you try to pass a big tax increase and see if that really helps the economy. I don't believe it will. I think it would hurt the economy. I think it would cost thousands and thousands of jobs. I heard our colleague from New Jersey say he had a couple of economists that do not support the elimination of double taxation. I have a whole list of economists who say getting rid of double taxation on dividends would be very positive and have a very stimulative impact on the market. And that would help anybody, not just people who currently own taxable stock or dividends that might be taxable. It would help anybody who happens to have investments in their retirement accounts that are tracking the market, which would include probably every teacher, every public employee, every union member, all of whom have savings plans, retirement plans which are dependent on a vibrant stock market. The President has a plan that would grow that. Our colleagues do not. Then let me make a couple other comments on Social Security. I keep hearing all this comment about: Well, this budget raids Social Security. I have heard the figure, $2.6 trillion or $2.7 trillion. If you use that analogy, the budget that was reported out of the Budget Committee last year, but not considered on the floor of the Senate, would have so-called raided Social Security of $2.1 trillion. I want to add some facts on just Social Security and Medicare. The reason I add the two together--maybe this is my old business hat--but I look at payroll taxes and individuals who are self-employed. I used to be self-employed. They pay 15.3 percent of payroll taxes, up to--the taxable amount this year is what? I think it is $87,000. Now, it just so happens that 12.4 percent of that is Social Security and 2.9 percent of that is Medicare. So if you add the two together, it is a combined total of 15.3 percent of payroll. I actually looked for the last 20 years. I wanted to see how much money is going in from the payroll taxes and how much money is going out in benefits. I did that. As this chart shows, the income coming in is shown on the blue lines, and the benefits going out are shown on the red lines. And I notice from the years 2003 to 2013, the amount of money coming in is less than the money going out. I am not crediting interest on these so-called trust funds. I will touch on that for a second. If an individual is self-employed or they are working for a company where the company matches, they pay 7.45 percent of the 15.3 percent. Their employer matches this amount to create the combined total. That is what is coming in to fund Social Security and Medicare. So the total taxes coming in, in the year 2003, for these functions would be $731 billion. And the amount of money going out in Social Security and Medicare is $746 billion. There is more money going out than coming in. I wanted to look back at the last 20 years or the last 10 years prior to that to see what happened in actual dollars coming in and going out. On this chart, the amount of money coming in is the lighter color, and the amount of money going out is the darker color. In almost every year--not every year, but in almost every year--more money is going out than coming in. In a few years there is a surplus. But then I wanted to know: Wait a minute, if there is a surplus, where did that surplus come from? And I kind of notice there is a general fund surplus or general fund transfer from the general fund into Medicare. In other words, for most of these years, but not every year, you will notice there is more money paid out in Social Security and Medicare. So I guess you could say: Oh, they had some surpluses in Social Security, but we are raiding it. Well, if you are raiding it, you are moving it out to pay Medicare. Frankly, an employee, an individual, an employer, they don't really make that fine distinction between Social Security taxes and Medicare taxes. They pay the payroll tax. And it just so happens, they pay the payroll tax and the Government is paying out more than what is coming in. Even in those few years where there was a surplus--more money came in than went out combined--for those few years, if you look at the amount of money in the general fund, transferred in to Part B--and we subsidize Part B, the doctors' portion of Medicare; we subsidize that to the tune of 3 to 1, 75 percent Federal Government; not payroll taxes, general revenue funds going in to subsidize Part B, the doctors' payments--those amounts exceed any positive amount, as shown over here on the chart. So the point is, more money is coming out than if you add Social Security and Medicare together. Maybe there is some synergy there. If you look at the amount that some of our colleagues--and I agree with Senator Conrad on many aspects of Medicare and Social Security and long-term challenges that we have. We have an unfunded liability in Medicare that is about $15.3 trillion. It is about two or three times that of Social Security. Demographically, we have a big challenge. We need to be addressing it in a bipartisan way. We do not make changes around here in Medicare without bipartisan support. So we need to be working together to help save the system and improve the system. In our budget, we provide for up to $400 billion to strengthen, improve, and save Medicare. That is a lot of money. That is a big expansion of an entitlement, not just for prescription drugs but also to save the system that we know needs to be addressed. We need to do it in a bipartisan way. I hope we will. But I want to make a couple of analyses. I keep hearing about raiding Social Security, and I think: Wait a minute. Do they not know we are paying all this money extra for Medicare? Do they not know Medicare has an enormous unfunded liability? Do they not know we are paying a lot of general fund money to subsidize Medicare? Those things also should be computed and added. If Social Security is being raided, it is being raided to pay Medicare. A lot of this trust fund symbolism is because Congress, over the years--well, we have strengthened the Medicare trust fund and HI fund because we moved home health away from HI into Part B, which is subsidized by the general fund. This made the HI fund look more solvent. In reality, it was financial maneuvering. The real security for Medicare and Social Security is a healthy economy. If we don't have that, we don't have jobs, we don't have payroll taxes coming in, and we won't be able to pay benefits. Both systems are basically on a pay-go system. If they were funded systems, we would be put in jail because we have not funded the liabilities in the systems. I used to be a fiduciary and trustee of a pension plan. There are liabilities to an employer if you don't fund the plans. We don't do that for public employees. We never have in Social Security or in other Federal employee plans. So I just mention that. Finally, I want to touch on this comment about ``raiding the trust fund.'' I want to make sure people understand this. Social Security--if we enact no bill, or our budget stays as it is, we will end up having a $4.1 trillion trust fund. If we don't do a budget, we will have $4.1 trillion in the trust fund, period. So, again, the important aspect of being able to pay Social Security and Medicare, frankly, is a growing economy. The President has a plan to grow the economy. If we adopt either of these two amendments pending before us, what we will say is the only growth package we can enact is the one that is offered by our colleagues on the Democrat side. Looking at their package--look at the composition of it; it is not a tax package, it is basically a spending package. In 2003, it says, we will spend $85.6 billion, and we will have a tax reduction in 2003 of $16.2 billion, but we will have a tax increase in 2004--next year, 6 months from now--of $17.8 billion, and a tax increase in 2005 of $16 billion. We will take away the bonus depreciation provision that was in the 2002 tax bill that had strong bipartisan support, that many people are talking about maybe we should extend or improve or enhance. So we really would encourage investment. This provision would take it away. If you want to do something to dampen the economy, it would be to adopt these amendments. I cannot think of anything more negative on the economy than if we adopted these provisions. They are consistent in saying, yes, we want to cut your tax bill, but we want to have our proposal, which is not a tax bill, it is really a spending bill. In about 45 minutes, I urge my colleagues to vote no on both of the underlying amendments.

Mr. NICKLES. Will the Senator yield?

Mr. NICKLES. I am reading your first amendment, and correct me if I am wrong. S. Con. Res. 23--it is a point of order amendment; 264 is the amendment number. On pages 1 and 2, it says: It shall not be in order in the Senate to consider any bill, joint resolution, motion, amendment, or conference report that would increase the deficit in any fiscal year, other than one economic growth and jobs creation measure providing significant economic stimulus in 2003 and 2004, which does not increase the deficit over the time period of fiscal years 2005 through 2013. . . . But it does allow--correct me if I am wrong--a significant increase in spending in 2003 and 2004, comparable to that as introduced by Senator Daschle.

Mr. NICKLES. Yes.

Mr. NICKLES. Mr. President, how much time remains on our side?

Mr. NICKLES. I yield 10 minutes to the Senator from Colorado.

Mr. NICKLES. How much time remains on both sides?

Mr. NICKLES. I suggest the absence of a quorum and ask that the time be equally divided.

Mr. NICKLES. Mr. President, I have already made a budget point of order on the first amendment. Senator Conrad moved to waive it. I urge my colleagues to vote no on the motion to waive. The amendment creates a new 60-vote point of order against spending and tax legislation until the President does something, until the executive branch does something. I think that is a serious mistake. We are going to handicap what congressional action can be waiting on what the executive branch must do. There are other ways of getting the administration's attention than saying we are not going to legislate. So I think that's a serious mistake. Also, it is very interesting but fatally flawed from its definition. It says we won't do anything except for--well, maybe the Democrat stimulus plan. In other words, we are not going to consider anything but maybe our bill, because it says we have an exemption in 2003 and 2004, and also not increase the deficit in 2005 to 2013. If I look at the Democratic leader's package, it has significant deficit increases in the first year of about $100 billion in 2003; $85.6 billion in spending, $16 billion in tax reduction for a total of a $101 billion increase in deficit in 2003. Then in 2004 it has $26 billion in new spending but a tax increase of $17.5 billion, and a tax increase in 2005 of $16 billion. It assumes the bonus depreciation that we passed in 2002 would be curtailed; In other words, a tax increase on business. Even though we have already given it to you, we are going to take that away from you. That is really going to help the economy? I think this resolution is fatally flawed, and I hope our colleagues would vote no on it. On the second amendment, it is an amendment that basically says we should have at least $1.2 trillion more tax increases than proposed by the President or the budget resolution that is pending before us; a $1.2 trillion tax increase. It is not every day we vote for something that large. It also says no reconciliation bill. It says let's do a $150 billion--actually $121 in tax reduction, $29 billion in spending in the first year or so. Again, it is kind of patterned where maybe this would fit for the Democrats' proposal but not anything like the President's proposal. Let's have our stimulus or growth package or just gut the bill. What is the net increase? It assumes the 2001 tax cuts that are scheduled to sunset in 2010, that will not happen. Those tax increases we are going to hit. So people who are paying 10 percent, look out, your tax rate will go to 15 percent. In our proposal we assumed we would extend those tax cuts, but we did not do it in reconciliation, so Congress would have another 6 years or 7 years to make that decision. Senator Conrad's amendment assumes we are going to have those tax increases hit. We are going to allow all the changes we made in 2001 to sunset; therefore, you are going to see death tax rates go back up to 55 percent; you are going to see rates climb back to higher levels. It means for couples who were receiving $1,000 per child, that is going to be reduced to $500. It means couples who have a combined income of $56,000 and are paying in the 15 percent tax bracket are going to find about $12,000 of that income is going to be taxed at 28 percent instead of 15 percent. It is a big tax increase compared to the resolution we have before us. I urge my colleagues to vote no on both amendments. These are important amendments. I thank my friend and colleague from North Dakota because I told people, if people want to cut the growth package, let's vote and find out where the votes are. This is an amendment to say the growth package should be maybe $150 billion, but even at that we are going to reduce the total amount of tax reduction assumed in our bill to zero on the growth package, other than the $150 billion, and assume there will be very large tax increases actually hitting the American people in the years 2010, 2011, and 2012. I hope we would not enact such a plan. I think it would be a disastrous move for the economy.

Mr. NICKLES. Madam President, I thank my colleague and want to inform our colleagues we will be voting in 2 minutes on two important amendments, and I encourage our colleagues to vote no. I have a list of economists who state the President's package would help the economy and help grow it. It is several pages. I don't know if I want to clutter the Record further. I ask unanimous consent to have printed at least a couple of pages. I do not want to burden the taxpayers.

Mr. NICKLES. I also have a list of economists who say the President's package would greatly increase the stock market: James Glassman from Chase, 10 percent to 15 percent; Charles Schwab, 10 to 15 percent; and on and on. Some of us would love to see the stock market increase. The amendment of the Senator would basically gut the growth package. There would be zero growth package--maybe $150 billion in the first 2 years, but that is not long-term growth. And his first amendment does say a point of order would lie unless there was significant economic stimulus in 2003 and 2004, and also you can't have any increases. It happens to fit the Daschle plan. It doesn't fit any plan I have seen on this side, so it is kind of a carve-out. We will have a budget point of order or super point of order against any bill I have seen, but certainly not the minority leader's plan. I urge our colleagues to vote no on the motion to waive. And then I will move to table the second amendment at the appropriate time. Also, Madam President, I ask unanimous consent that the vote on the second amendment be limited to 10 minutes.

Mr. NICKLES. Madam President, I yield the floor.

Don Nickles

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