Earl Pomeroy

Mr. POMEROY

Mr. POMEROY. Mr. Speaker, I thank the gentleman for yielding me time. Mr. Speaker, I am honored that the ranking member is allowing me to close on behalf of the minority, and I am honored to follow the comments of my friend and colleague, the gentleman from South Carolina (Mr. Spratt), who has laid out in detail why we believe the plans, the spending and tax plans of the majority, have already placed this into a deficit situation before 10 years are up, take the country's largest surplus ever and put us back into a deficit situation. That has direct bearing on the issue before us, because under the majority's proposed bill to be considered today, general fund transfers are required to keep the Medicare Trust Fund whole. What if there are no general fund revenues left? This chart summarizes the detailed information the gentleman from South Carolina (Mr. Spratt) just covered. As it makes clear, there is a significant question whether general fund revenues will be available; and if they are not available, the Medicare Trust Fund takes a hit. The substitute offered by the minority in the upcoming debate ensures that the Medicare Trust Fund will be made whole, will be held harmless, by requiring an advance certification before that tax cut takes effect in any given year that there are ample revenues to go into the Medicare Trust Fund to compensate for the revenues lost with the tax reduction. It is absolutely critical, I think we can all agree, with Medicare already slated for solvency trouble, not to make that problem worse. The plan by the majority jeopardizes the Medicare Trust Fund. The Democrat substitute preserves the trust fund by requiring the advance certification, so vitally important to make sure we maintain solvency. The Democrat substitute, and I am grateful for the Committee on Rules making it in order, also provides tax relief for 95 percent of the people. As cosponsor of the substitute, in conjunction with the gentleman from Texas (Mr. Green) and the gentleman from Massachusetts (Mr. Capuano), we have advanced what we believe is a much better way to go as we look at this Social Security tax issue. Under our bill, we would safeguard the Medicare Trust Fund, as I have just mentioned, but provide very meaningful tax relief. Under our bill, income for taxation of the Social Security check would be reduced from 85 to 50 percent to households earning up to $100,000 and individuals earning up to $80,000. That means someone on Social Security has their Social Security check and an additional $80,000 for an individual, $100,000 for a couple. One-third of all people on Social Security today live on their Social Security check. Two-thirds have the Social Security check for most of their income. We are talking about the most affluent 5 percent, the only group that would be excluded from the tax cut offered by the minority. Now, some might say, why do you not give it to everybody? After all, the most affluent need the break too. We do not think they need the break as badly as we need to apply these revenues in other areas, and we save by our approach, by capping it at the $100,000 per household, we save $40 billion over a 10-year period of time. Just think what you can do to enhance prescription drugs for seniors with $40 billion. So it is a matter of who needs these resources first, the very most affluent households, as advanced by the majority, or those other households that cannot afford their prescription drug medicine that might benefit from reallocation of those dollars in that area. So basically that is the choice between the two approaches. The majority approach offers tax relief; the minority approach offers tax relief. The majority approach fails to protect the Medicare Trust Fund; the minority approach protects the Medicare Trust Fund. The majority passes on a significant tax break to the most affluent households in this country; the minority substitute advances meaningful tax relief for 95 percent of the Social Security recipients in this country, leaving only those households earning $100,000 or more in outside income to continue to have 85 percent of their Social Security income considered for taxation. All in all, as you look at the issue, I think you will have to conclude that there are two ways to approach tax relief in this area, and the Democrat approach, with its protection for the trust fund, with its granting of tax relief to all but the most affluent 5 percent in this country, with the preservation of the $40 billion saved thereby for application on critical priorities like Medicare prescription drug coverage, the Democrat substitute is the better way to go.

Mr. POMEROY

Mr. POMEROY. Mr. Speaker, I yield 2 minutes to the gentleman from Wisconsin (Mr. Kind).

Mr. POMEROY. The certification requirement in our substitute does ensure that the Medicare Trust Fund stays solvent, because it requires, before the effect of the tax in a given year, it requires certification there are sufficient general fund revenues to move into the Medicare Trust Fund. Without that certification, we believe one could find themselves in a situation where there was no general fund revenue available to move into the Medicare Trust Fund.

Mr. POMEROY. Mr. Speaker, I offer an amendment in the nature of a substitute.

Mr. POMEROY. Mr. Speaker, I yield myself 3 minutes. Mr. Speaker, the Democrat substitute provides tax relief for senior citizens that is fiscally responsible and safeguards the Social Security and Medicare trust funds. The amendment provides the same tax relief as the underlying bill to 95 percent of Social Security recipients but reduces the cost of the bill by $43 billion over 10 years. The amendment replenishes the revenue lost to the Medicare trust fund with revenue dedicated from the general fund surplus. Most importantly, unlike the Republican bill, the Democrat substitute protects Social Security and Medicare by requiring the Treasury Secretary to certify that the Medicare and Social Security trust funds are not being used to underwrite this tax relief. Nearly 80 percent of our senior citizens will not be affected by either the majority or minority substitute. They do not pay this tax. Now, of those that do pay the tax, the Democrat substitute takes care of all but those 5 percent earning as a household over $100,000. Now, in doing so, we ensure, first of all, 95 percent of all Social Security recipients are covered, but we save over the course of the bill $43 billion. At that point in time, it becomes a matter of priorities. Where do you want these resources to be allocated? Is the highest purpose for this $43 billion the tax relief purpose of households over $100,000, senior citizens with outside income of $100,000 or greater? Or could it be applied more appropriately? For example, as the chart indicates, that $43 billion saved in the Democrat substitute could go a long way to funding very meaningful prescription drug coverage for our seniors. Finally, the Democrat substitute protects Social Security and Medicare by requiring that before the tax cut takes effect, the Secretary of Treasury must certify that the budget surplus, excluding the Medicare and Social Security trust funds, is sufficient to cover the projected revenue loss. This is very important. Because the majority proposal, while it talks about transferring general fund revenues to cover the revenue lost in this tax measure, does not address the circumstance of if there are no general fund revenues available. Look at this third and final chart. Under the projections that we have now put together of their spending and tax plans, they completely exhaust the surplus within the 10-year period of time, and in fact are $88 billion into the red, right back into Republican deficits of old, no funds available for the type of transfer envisioned in their bill. Now, the Democrat substitute ensures that the Medicare trust fund will never be raided by this measure and therefore is a preferable way. Mr. Speaker, I reserve the balance of my time.

Mr. POMEROY. Mr. Speaker, I yield myself 30 seconds to make some brief responses. I imagine the gentleman, my friend and colleague, was a very good lawyer from the way he spun his argument back. The fact of the matter is if there is not a risk that there will not be sufficient general fund revenues to flow into these trust funds to make certain the Medicare trust fund is whole, lawyers and accountants would not have any issue advising their clients. The fact of the matter is, as the third chart I showed earlier demonstrates, very conceivably the plans of the majority would erode the surplus and leave this Nation in the position of having money come from Social Security or Medicare. That is what the substitute wants to avoid. Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. Green).

Mr. POMEROY. Mr. Speaker, I yield 2 minutes to the gentlewoman from Texas (Ms. Jackson-Lee). (Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.)

Mr. POMEROY. Mr. Speaker, I yield 3 minutes to the gentleman from Massachusetts (Mr. Capuano), cosponsor of the Democrat substitute.

Mr. POMEROY. Mr. Speaker, will the gentleman yield?

Mr. POMEROY. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Mississippi (Mr. Taylor).

Mr. POMEROY. Mr. Speaker, I yield 2 minutes to the gentleman from Maryland (Mr. Wynn).

Mr. POMEROY. Mr. Speaker, will the gentleman yield?

Mr. POMEROY. On the point of the gentleman, well made but I take issue with it, that in those years when we ran deficits we transferred money from the general fund, I think a more appropriate way to view what was occurring is trust fund dollars were being spent, dollars from the Social Security trust fund, dollars more appropriately allocated to the Medicare Trust Fund. The majority and minority have found a point of consensus that we do not want anymore to spend the Social Security Trust Fund on anything but Social Security. We believe, therefore, that this certification requirement requiring before that revenue is lost in a given year, there be general fund revenue available to replace it in the Medicare Trust Fund, is the only way that will ensure the solvency of the Medicare Trust Fund without using funds from either the Social Security or Medicare Trust Fund to keep it whole.

Mr. POMEROY. I yield 2 minutes to the gentleman from New Jersey (Mr. Andrews). (Mr. ANDREWS asked and was given permission to revise and extend his remarks.)

Mr. POMEROY. Mr. Speaker, I yield 4 minutes to the gentleman from Missouri (Mr. Gephardt), the minority leader of the House. (Mr. GEPHARDT asked and was given permission to revise and extend his remarks.)

Mr. POMEROY. Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. Stenholm). (Mr. STENHOLM asked and was given permission to revise and extend his remarks.)

Mr. POMEROY. Mr. Speaker, I yield 1 minute to the gentleman from Massachusetts (Mr. Capuano), a cosponsor of the democratic substitute.

Mr. POMEROY. Mr. Speaker, I yield 1 minute to the gentleman from Texas (Mr. Green), another cosponsor of the substitute.

Mr. POMEROY. Mr. Speaker, does the gentleman from Florida (Mr. Shaw) have any additional speakers?

Mr. POMEROY. Mr. Speaker, I believe we have the right to close.

Mr. POMEROY. Mr. Speaker, I yield 1 minute to the gentleman from Florida (Mr. Davis).

Mr. POMEROY. Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Mr. POMEROY

Mr. POMEROY. Mr. Speaker, I thank the gentleman for yielding me this time and want to follow along on his comments. As the preceding speaker, the majority whip indicated, this is not really about Russia, it is about Cuba. How I wish we could have an opportunity to discuss the full range of issues about Cuba, because the majority whip has stood singularly to stop this floor from the consideration of overturning the outdated, ineffective sanctions on the sale of food and medicine to Cuba, and he will not even let that proposal come up as proposed by the gentleman from Washington (Mr. Nethercutt) for full consideration of the House. So that part of the Cuba question never comes to the floor. It is only this part, the piling-on part, the continuing of the outdated sanctions part, all inconsistent with this theme, that comes to the floor for consideration. As to the issue before us, it is very, very bad business. Last week we marked up a foreign operations appropriations bill. The fact of the matter is we know that extension of taxpayer aid to other countries is at an all-time low relative to the size of our economy, at least in the context of recent history. So we have to have private economic opportunity flowing across the world and in the global marketplace. It will be a critical part of bringing developing countries along. If any action by this Congress would push Russia into defaulting upon its debt, the ramifications would be felt far beyond Russia. They would be felt in countries like Brazil, struggling to get their economic house in order. They would be felt in countries like South Korea and Malaysia and elsewhere, as the market would contract and pull investment capital out of those developing countries. Mr. Speaker, I cannot really think of a more unfair, unbalanced debate as what this bill introduces today, nor can I think of much that would do more to stop global development in these Third World countries and other developing countries all in the name of misguided Cuban policy.

Mr. POMEROY

Mr. POMEROY. Mr. Speaker, today we are going to consider legislation that will help American families save for retirement. This has never been more important than now, because baby boomers are getting along in their career years and projections are that they will live longer than ever. The Democrats will offer a substitute, which will add to the underlying legislation, a new savings incentive for middle- and modest- income households. It will be a tax credit for savings committed and will function much like an employer match on traditional 401(k) plans. If you contribute at the qualifying income level, $2,000, to an IRA, the Federal Government will provide a tax credit for $1,000 that can be added to that savings strategy. This Democrat substitute, I hope, will enjoy the support of both parties. It goes directly to middle and modest income levels, those that are having most difficulty in saving for retirement.

Mr. POMEROY

Mr. POMEROY. Mr. Speaker, I thank the gentleman from Massachusetts for yielding me this time. Mr. Speaker, I want to begin by commending the gentleman from Massachusetts (Mr. Neal) and in particular the sponsors of this legislation, the gentleman from Ohio (Mr. Portman) and the gentleman from Maryland (Mr. Cardin) for the detailed work they have done. Just listening to the debate and their presentations on the floor leave one well aware of the depth of knowledge they have acquired on this complex subject during the time of their work on the legislation. In balance, especially as to the Portman-Cardin proper, not addressing the IRA adjustment, but Portman-Cardin proper, I believe that they have made decisions that are well founded in terms of trying to continue support for defined benefit plans in the workplace. We have seen a collapse in the workers covered by defined benefit plans, the traditional pension coverages. In fact, from 1975 to 1995, the number, percentage of covered workers has fallen 40 percent in defined pension plans. The number of actual defined benefit plans in the marketplace has gone from 114,000 in 1987 to 45,000 in 1997. It is time we address this subject head on, and that is what the Portman-Cardin legislation does. I have enjoyed working with the gentleman on it. I believe that there is much to be said for the traditional pension plan in terms of protecting workers. It shifts investment risk away from workers who are least able to bear it, and it provides lifelong guaranteed benefits sustaining people in retirement years, no matter how long they live. Let us face it, workers are living longer today, so these features of defined benefit plans are very, very important. This legislation also incorporates a bill that I had introduced as a stand-alone measure called the Retirement Account Portability Act, and it will allow much greater portability across different types of defined contribution plans. Right now, if one works for a nonprofit corporation, one will have a 403(b) plan. If one works for a for-profit, one will have a 401(k) plan. If one works for a State government, one will have a 457 plan. As one moves in the workplace between these categories of employers, one cannot move one's defined contribution money with one. There is no public policy purpose served by the existing law with those prohibitions. It is time we knocked them down. I am very pleased this, along with the reduction investing schedule from 5 years to 3 years for defined contribution, was incorporated in this legislation. So there is much to commend this bill and particularly the effort behind it by the gentleman from Ohio (Mr. Portman) and the gentleman from Maryland (Mr. Cardin). The problem I have today is not with what is in the bill; it is what was left out of the bill as the Committee on Ways and Means marked it up. And that is a special savings incentive for workers needing additional help in saving for retirement. This chart makes it very clear that savings rates are lower among households who earn less money. There is no rocket science there. It is just obvious. Families that have incomes well in excess of $100,000 can save much more than families earning under $35,000. This legislation basically fails to address this savings issue. It addresses pension, but only 27 percent of workers under 415,000 have access to workplace retirement savings. It increases the IRA limits, but only 7 percent of households under $50,000 are accessing the tax- deductible IRA. These people need a more powerful savings incentive, and it is time we address the savings needs of middle- and modest-income households. They have not had an additional savings incentive passed since 1981, and the Democrat substitute, which we will debate next, would provide a powerful new savings incentive for these families.