Frank Pallone

Mr. PALLONE

Mr. PALLONE. Mr. Speaker, Democrats are united in support of tax breaks for working families. At the end of last month, the President unveiled his alternative to the Republican tax scheme and the President's proposal provides significantly more relief for middle income families. Mr. Speaker, it is clear to me who benefits with the Republican approach to cutting taxes. Their tax breaks focus on big business, special interests and wealthy families, while limiting tax cuts for education and families with children. I just want to say I want to balance the budget and I want to give tax cuts back to the American people, but I want to do it in a manner that is fair to the middle class. The Republican plan falls extremely short of this goal, and I am going to continue to urge my Republican colleagues to abandon their sinking ship and support the Democratic tax alternative. The facts are on our side, and the American people are with us on this issue. They have woken up to what the Republicans are trying to do. The Republican leadership needs to wake up, also, and listen to their constituents on the tax issue.

Mr. PALLONE

Mr. PALLONE. Mr. Speaker, I yield to the gentlewoman from Connecticut [Ms. DeLauro].

Mr. PALLONE. What we are hearing is Republican tax breaks are going to big business, special interests, wealthy families and all at the same time limiting tax cuts for education and families with children. It is just incredible. I yield to the gentleman from Texas [Mr. Lampson].

Mr. PALLONE. Mr. Speaker, I wanted to say quickly to the gentleman, and I think we all realize that we are not in the business of redistributing wealth, the bottom line is the economy is really good. Wealthy people, wealthy corporations are benefiting from it. You mentioned the stock market. We read these statistics every day. All we are really saying is, this was the promise that was made when this balanced budget agreement was signed, is that we only have a limited pot of money. This tax relief should go primarily to working families. That is where the Republicans have broken the deal on this balanced budget agreement. It is just not fair. Mr. Speaker, I yield to the gentlewoman from California [Ms. Woolsey].

Mr. PALLONE. I want to thank the gentlewoman for stressing the education tax cuts and the ways to improve on the access to education, because again we are talking about very limited resources here in the context of this balanced budget plan. It certainly makes so much sense to spend that money on ways to provide access to higher education and relieve the burden, if you will, on families that are trying to put their kids through college rather than spend it on some of the other things that the Republicans have proposed. It just makes sense in terms of investing in our future. I want to thank the gentlewoman. Mr. Speaker, I yield to the gentleman from Illinois [Mr. Davis].

Mr. PALLONE. Mr. Speaker, I want to thank the gentleman. I think we have made the point quite clearly tonight that Democrats are not talking class warfare. What we are saying is with the limited amount of resources in the tax cuts that are available under this balanced budget plan, it certainly makes sense to provide the tax cuts in ways that are going to help the average family, the working family and invest in the future so that there are opportunities, whether it is education or whatever it happens to be. It makes no sense to just shower most of these tax cuts on wealthy individuals or big business, because it will just not help the country in the long run. So I appreciate the gentleman's comments. Mr. Speaker, I yield to my colleague from Michigan.

Mr. PALLONE. Mr. Speaker, I want to thank the gentleman from Michigan for those remarks and really bringing home how this Republican proposal impacts the average American and why the Democratic alternative is so much better. I will end with this. I want to thank all my colleagues for participating in the special order tonight and really urge that my Republican colleagues will come along to the Democratic alternative and support it. It is not too late. We are in the process of doing the budget reconciliation now and certainly hopefully we can come together on a tax package that benefits the average working American.

Mr. PALLONE. Mr. Speaker, as you note this evening, some of my colleagues on the other side of the aisle, some of my Republican colleagues, made reference to Treasury Secretary Rubin's report which was released over last weekend that illustrated very clearly how the Republican proposals primarily benefit wealthy individuals. In addition, Secretary Rubin expressed serious concern regarding the potential for the Republican tax cuts to explode the deficit, and I just wanted to mention this report again because I think it is significant. It says that only 38 percent of the tax cuts would be for middle-class families under the Republican House proposal while 55 percent of the tax cuts would go to the affluent. Now President Clinton's tax cuts are more targeted to the middle class. Eighty-three percent of the tax cuts under his proposal would be targeted to the middle class, and only 10 percent would be targeted to the wealthy. Now we are hearing all these statements from the Republicans about how these Treasury numbers are inaccurate, the Republican plan does give more money to the middle class. Unfortunately, these Republican arguments are without basis and they basically ring hollow. It is the Treasury numbers that examine the full 10 years of this balanced-budget agreement in their calculations. What the Republicans do is they only look at the few years in the agreement that they think favor them and then skew their numbers to make it seem that they are helping the middle class, and in fact they are not. One of my colleagues, the gentlewoman from Texas [Ms. Jackson Lee] mentioned the Congressional Research Service report which was issued on July 2, just last week, and this is a nonpartisan analysis. And what that report stated was that the Treasury office's numbers, the Treasury Office of Tax Analysis, and I quote, ``provides a more comprehensive measure more consistent with how economists would measure the bill's benefits to individuals in different income classes.'' They go on to state the OTA, the Treasury analysis, is a better representation of the permanent distribution. So this Republican argument is baseless because the facts back the Democrats' argument. The Democratic tax plan primarily benefits the middle class, and the Republican scheme primarily benefits the wealthy. I just wanted to use an illustration now, if I could, under the Republican tax scheme to show how a typical family is not really helped, and I use as an example here, as you can see on the chart, of Joe and Betty who do not fare well under this Republican proposal. Basically Joe cannot figure out why the CEO of his company is getting a $24,000 tax break under the GOP plan while he gets almost nothing. Joe's wife, Betty, works part-time and worries that she will get a pay cut and possibly lose her pension under the GOP plan because her boss may turn her into an independent contractor. One of the things that the Republicans do not tell you is not only that the Republican plan does not provide much in the way of tax cuts to the middle class, but they also have these little provisions in the bill that change the definition of workers and their rights and whether or not they get minimum wage. And one of the things they do is to turn a lot of people into independent contractors, so they may lose a lot of the benefits that they now have. Now Joe and Betty again, they have a daughter Susie who is headed for a community college in a few years, and she would likely face $750 in tuition costs under the Republican plan compared to the zero tuition under the Democratic alternative, because we are a lot more generous in what we do to help families pay for higher education. Finally, little Joe Junior in this family of four and his sister would not receive a child tax credit under the Republican plan, even though both parents work and pay taxes. Now meanwhile we have got this CEO here of the company where Joe and Betty work, and just to give you an illustration, Joe found out that they have a memo from their accountant that they project that this CEO was going to get a $24,000 windfall of extra income due to the Republican tax breaks. In addition, the CEO is thinking about how turning low-wage women employees like Betty into independent contractors is going to mean big bucks for the company and could mean a raise for him under the GOP bill. Of course Mr. CEO's gains are the country's losses because the Republican tax scheme will cause the deficit to explode. I have a number of my colleagues here tonight that I would like to yield some time to to talk about what is going on here, but the bottom line is that the GOP plan is giving most of the tax breaks to wealthy individuals. The Democratic plan is aimed towards the working class, towards the middle class. That is what the Treasury report shows, and no amount of rhetoric on the other side of the aisle is going to change the facts as they exist. I would like to yield now to the gentleman from Maine.

Mr. PALLONE. Mr. Speaker, I want to thank the gentleman. I think one of the points the gentleman is making that we need to stress over and over again is, when I was making reference before to this Congressional Research Service report that basically says that the Treasury Department report is the accurate one, and defies what the Republicans were saying tonight, what this Congressional Research Service report primarily is saying is that the Republicans are in effect pulling the wool over our eyes, because they are looking at how this tax cut is distributed under the 5-year plan rather than the 10-year plan. That is what we have to look at really, is the 10-year plan, because that is where these tax cuts are generated primarily to wealthy Americans in the latter part of that 10 years. They are the ones who are really being tricky about this on the Republican side by not looking at the broader picture and at this plan over the 10 years. It is particularly true with capital gains and with IRA's, because those are the things where the benefits really increase at the latter end of that 10-year period. That is where wealthy people get most of the benefits and the average person does not. I think the gentleman is making a very good point. Mr. Speaker, I yield to the gentleman from Arkansas [Mr. Snyder].

Mr. PALLONE. I appreciate the gentleman's comments, Mr. Speaker. When he was talking before about the payroll tax, what the Republicans are trying to do is to just look at the Federal income tax and say, unless you are paying a certain amount in Federal income tax you should not get any tax relief. The gentleman pointed out very vividly how payroll taxes for many people, working people, are even a bigger chunk of what they have to pay to the Federal Government than the income tax. When we think about other taxes, I know in New Jersey, for example, we have one of the highest property tax rates in the country. People are paying a tremendous amount of property tax. Why is it that all these other taxes, whether they be Federal, State, local, whatever they are, cannot be considered? People are paying them to the government. I do not think we should really make a distinction whether or not it is income, payroll, State, local, whatever it is. It is still taxes that you have to pay. People need relief. Plus the thing that really bothers me is that when this balanced budget agreement was struck between the President and Congress it was made quite clear by the President that the tax relief had to go to middle-income people and primarily to working people. Now the Republicans are basically breaking the deal, the way I see it.

Mr. PALLONE

Mr. PALLONE. Mr. Speaker, I yield myself such time as I may consume. I rise today in support of this legislation. Mr. Speaker, the striped bass fishery is one of the most important fisheries for marine recreational anglers. The fishery extends north from Cape Hatteras to Maine. In 1995, over 1 million anglers made almost 7 million trips and nearly spent $160 million in pursuit of this fish. For the last three decades Atlantic striped bass stocks have been declining due to overfishing, pollution, habitat destruction, and other factors. Fishermen and managers alike were concerned that the fishery would soon become an endangered species. Recently, however, the Atlantic striped bass stocks have grown and are slowly returning to their previous abundance. Many Atlantic coast States have recognized the significance of this growth and understand the pressure that commercial fishing interests may have on commercial breeding stocks. In response, States such as New Jersey, Connecticut, Pennsylvania, Georgia, and several others have passed game fish laws or have prohibited Atlantic striped bass commercial angling. The enactment of the Striped Bass Conservation Act or the Striped Bass Act, which was passed in 1984, has authorized an annual study population assessment of striped bass stocks to be done with the NMFS and the U.S. Fish and Wildlife Service. It was enacted to encourage coastal States to comply with interstate management plans developed by the Atlantic States Marine Fisheries Commission to conserve striped bass populations. Unfortunately, Mr. Speaker, the last study that was actually done on striped bass was in 1994. Mr. Speaker, when this bill had a hearing, when we had a field hearing of the Subcommittee on Fisheries Conservation, Wildlife, and Oceans in Manahawkin, NJ, a few months ago, many spoke out about the effects of environmental changes and interspecies competition on striped bass populations. I think support of this legislation would allow us to better understand striped bass stock and design management plans that not only benefit the stock, but also the striped bass fishing community. I also want to commend the sponsor of the bill, my colleague the gentleman from New Jersey [Mr. Saxton], because the bill increases public participation in the preparation of striped bass management plans. Today, the implementation of the Federal-State partnership embodied in the Striped Bass Act has restored the striper to its former glory as one of the most important sport and commercial fisheries on the east coast. It is clear evidence that conservation can work. And knowing the importance of this fishery to American anglers, I would urge Members of this body, my colleagues, to support the legislation and reauthorize the appropriations for the annual striped bass study.

Mr. PALLONE. Mr. Speaker, I yield such time as he may consume to the gentleman from Massachusetts [Mr. Delahunt].

Mr. PALLONE. Mr. Speaker, I have no further requests for time, and I yield back the balance of my time.

Mr. PALLONE

Mr. PALLONE. Mr. Speaker, now that we have returned from the Independence Day district work period, negotiators between the House and the Senate will get down to business hammering out a final version of the balanced budget resolution. Democrats have argued in favor of tax cuts primarily for the middle class while Republicans seem intent on large tax breaks for their wealthy friends. A recent Treasury Department report indicated that in the last year of the Republican budget proposal, affluent Americans would be the primary beneficiaries of the tax cuts. Over half of the tax cuts would benefit those making nearly a quarter of a million dollars and more. President Clinton's and other Democratic proposals seek to give more back to the middle class. Our tax proposals provide more money for education expenses and for working families. Mr. Speaker, the budget negotiators must move to lighten the burden on low- and middle-income families if they are to gain the President's approval and not break the promises that were made to working families as part of this budget deal.

Mr. PALLONE

Mr. PALLONE. Mr. Speaker, my Republican colleagues are obviously concerned that the media and the American people are beginning to understand that their tax plan heavily favors the wealthy and that, if their plan is made into law, it would explode the deficit. Rather than balance the budget, it would unbalance the budget, and that would really be a great tragedy since so many people have worked so hard to achieve this balanced budget agreement. I believe that Congress should balance the budget, and I also believe that we can cut taxes responsibly and in a way that maintains the goals of continued balanced budgets beyond the year 2000. Democrats feel that any tax cuts should be targeted primarily to working Americans. Unfortunately, the Republicans have thus far been successful in cutting a large portion of the taxes for their country club buddies. Republican tax breaks focus on big business, special interests and wealthy families, while limiting tax cuts for education and families with children. They offer million dollar tax exemptions instead of helping working families. Democrats, on the other hand, strongly believe that the Republican values from this debate are out of sync with the average American. Democrats and President Clinton have offered alternatives that make better use of the tax cut moneys and focus them on middle-income families. Mr. Speaker, over the weekend Treasury Secretary Rubin released a report that better illustrates how the Republican proposals primarily benefit wealthy individuals over the 10-year budget window. In addition, Secretary Rubin expressed serious concern regarding the potential for the Republican tax cuts to explode the deficit. According to the Treasury report, which examined the last year of the Republican proposals, only 38 percent of the tax cuts would be for middle class families under the House proposal, while 55 percent of the tax cuts would go to the affluent. The President's tax cuts, on the other hand, are targeted more to the middle class. Eighty-three percent of the tax cuts under President Clinton's proposal would be targeted to the middle class, and only 10 percent would be targeted to the wealthy. Now, there was another study conducted by Citizens for Tax Justice, which illustrated that over half of the tax cuts will benefit those making nearly a quarter of $1 million and above. Someone making nearly $650,000 can expect to receive somewhere near $22,000 in tax benefits, while someone making $44,500 can expect only a few hundred dollars. And those in the bottom 40 percent of the income distribution, but still working families, can actually expect to pay more taxes under the Republican proposal, which certainly is not fair, in my opinion. The differences in the Democratic and Republican approaches in this budget plan are clear, and I will continue to urge Republicans to wake up and listen to the American people. The Republican tax cuts focus on short-term profits and financial gains. Democrats emphasize investment in education to create a highly trained work force for the future. Republicans penalize low-income workers by not cutting their taxes and also treating people who are working their way off the welfare rolls as second-class citizens. Democrats, on the other hand, believe that low-income workers should not be excluded from the tax cuts and are eager to assist welfare recipients in becoming productive citizens. The contrasts are so clear, Mr. Speaker: Republicans have always favored the corporate tax breaks and the million dollar exemptions, while Democrats have been the fighters for the middle class. Again, the argument is no longer about whether we should balance the budget or cut taxes but about how we should do it. I believe the Democrat approach is the right approach. It is certainly not too late. We are now in the process of reconciling the budget. The Republicans really have to move to lighten the burden on low- and middle-income families if they are to expect that the President is going to approve this budget. And they cannot break the promises that were made to working families as part of this budget deal. That was the commitment, that this budget deal was going to balance the budget and that the tax cuts were going to be mostly for working families. And the Republicans have to live up to that commitment. So far they have not, but it is not too late, and I am hopeful that we will work in that direction and that we can come together on a plan that both balances the budget and, at the same time, primarily helps working families. That is the only fair way to do it, Mr. Speaker.

Mr. PALLONE

Mr. PALLONE. I yield to the gentleman from Connecticut.

Mr. PALLONE. Exactly. I appreciate that.

Mr. PALLONE. Mr. Speaker, I wanted to enter into the Record the study from the Citizens for Tax Justice that shows just how many children are excluded from this tax credit and point out that in the State of Georgia, the previous speaker's home State, the Republican tax plan excludes 49 to 52 percent of Georgia kids. The Citizens for Tax Justice study says that the House plan, the Republican plan, would exclude 52 percent of Georgia's children and the Senate tax plan would exclude 49 percent of Georgia's children. They would not receive it, including that police officer. Mr. Speaker, I yield to the gentleman from Maine [Mr. Allen].

Mr. PALLONE. I yield to the gentleman from California.

Mr. PALLONE. I yield to the gentlewoman from Michigan.

Mr. PALLONE. Mr. Speaker, we have a statistic here that just shows you that the billionaire, Bill Gates, would get capital gains and estate tax reductions and even a new IRA provision that would let him take a $4,000 tax break for educational expenses for his kids, but that Georgia policeman making $23,000 is denied a tax credit for his kids. Mr. Speaker, I yield to the gentlewoman from Michigan [Ms. Stabenow].

Mr. PALLONE. Mr. Speaker, I listened to the gentleman from Georgia, and I want to point out exactly the type of person that the Democrats are trying to help, the person who is out there working. We mentioned the Georgia policeman. This is from the Wall Street Journal today. This is a starting police officer in Gwinnett County, GA, coincidentally part of Speaker Gingrich's district. He is paid $23,078 a year. If his family has two kids, it gets $1,668 in earned income tax credit, this is the deduction we were talking about before, which offsets his $675 in Federal taxes, and yields a check for $993. But that family pays $1,760 in payroll taxes, and another $354 in Federal excise taxes. That is even after this deduction that we are talking about. The out-of-pocket Federal taxes for this family would be at least $1,121 a year, and in reality, more like $2,800 a year. What we are saying is that that policeman right now, under this Republican proposal, does not get that $500 deduction, the child tax credit. That person is paying payroll taxes to the Federal Government, excise taxes to the Federal Government. The gentleman is saying that that Georgia policeman, who is out there every day on the line, is a welfare recipient. That is exactly what the gentleman is saying. That is what the Democrats are saying is not right.

Mr. PALLONE. Mr. Speaker, I just wanted to say I am looking at some figures with regard to New York State, the gentleman from New York [Mr. Solomon] who spoke before on the Republican side. It says that tax plans, the child credit, the child credit under the Republican plan would exclude 53 to 56 percent of the children in New York State; 3,183,357 New York kids will be ineligible under the House plan for the child tax credit. This is from Citizens for Tax Justice, a nonpartisan Washington-based research organization that released a study today showing that the proposed child credit in the pending House of Representatives tax plan would exclude 56 percent of New York children. The Senate bill would exclude 53 percent. Obviously the families of New York have been promised a child tax credit for 3 years, but now many of them, the majority of them will actually get nothing.

Mr. PALLONE. Mr. Speaker, will the gentlewoman yield?

Mr. PALLONE

Mr. PALLONE. Mr. Speaker, the word is getting out to most Americans that the Republican bill being considered today provides tax cuts to the rich and not for the working middle class. But today I read in the New York Times that there is another huge tax break for the wealthy that most of us did not know about. Buried in the estate tax section of the big tax cut bill is an obscure provision that would cost the Government $9 million a year in lost revenue and give a bonanza worth thousands of dollars to about a thousand wealthy taxpayers. A tax lawyer in New York, who spoke on the condition that his name may not be used, said his client, who he would not identify, stood to save at least $100,000 in taxes if this provision in question became law. Who knows what other tax breaks for rich individuals or corporations are in the Republican bill we will consider today? I urge my colleagues to vote ``no'' on this windfall for the rich at the expense of working Americans.