Jim Saxton

Mr. SAXTON

Mr. SAXTON. Mr. Chairman, I thank the gentleman from Ohio [Mr. Kasich], the chairman of the Committee on the Budget, for yielding this time to me. Let me just say that there are two things that this economic program that the contract embodies are trying to carry out. One is to slow the growth of outlays that the Federal Government does on an annual basis. This chart shows where we have come in terms of outlays over the years from a low of total Government spending in 1930 of 12 percent to the 1990 level of spending of 42 percent, and it is the chairman of the Committee on the Budget and his committee members who are going to be responsible for bringing down this rate of growth under our plan. The second part of our plan is to create more revenue, to get revenues growing so that, as we bring down the rate of growth and spending, the revenue line will catch up with that level of spending that is necessary, and in so doing eliminate the budget deficits and, eventually, the debt. In order to do that, John Kennedy told us in 1963 that, if we do good, smart tax policy, it will create an economic expansion, we will have more people working, earning more money and hence paying more taxes, and that is what today's debate is essentially about. Now we know that there are some folks on the other side of the aisle who do not want lower taxes because it means we have to spend less because we will have a smaller government, and so they try to come up with some red herrings to scare some of the Members who might be hesitant to vote for it. The next chart shows what one of those arguments is about. They say that the capital gains tax reduction that we are proposing to put in place does big favors for the rich people when in fact 38.4 percent of the people who pay capital gains tax have an income of under $50,000, and, as a matter of fact, the next 22 percent have income over $100,000, and so in fact the large majority of the capital gains that are paid are paid by low income and middle income people. The other thing that the opposition would like us to believe is that the $500 per child tax credit somehow favors rich people when in fact 87 percent of the people who will benefit from this program earn less than $75,000 a year. As a matter of fact, the last speaker, the gentleman from South Carolina [Mr. Spratt], has 123,000 children in his district which are middle income people, and has district, if we do not pass this plan, will therefore lose $307 million to the families and his middle class taxpayers. gentlewoman from Hawaii [Mrs. Mink]. (Mrs. MINK of Hawaii asked and was given permission to revise and extend her remarks.)

Mr. SAXTON. I thank the gentleman from Texas for yielding me this time. Mr. Chairman, one of the things that we hear repeatedly from the opposition side of the aisle is that somehow this Republican tax plan is going to hurt those who are already less well off than others, the poorer folks in the United States. We have heard it over and over again and it did not just start today. It has been going on for some time. I call those of you who use that line revisionists, revising the history of the 1980's just as some people in this country would revise the history of World War II, kind of the same thing. Let me give an example. A speaker earlier today talked about what happened to the bottom fifth of the wage earners in our country during the 1980's and they said that they were less well off in 1990 than they were in 1980. That is true. But you do not say why. As a matter of fact, in 1979 when our President was not a Republican, the bottom fifth on average earned a level at about $9,800. During the next several years, ending in 1982, that level of income for the bottom fifth of our wage earners plummeted so that by 1982, it was way down here at about $8,400. Then Republican tax policy changes took place in 1981, 1982, and 1983. Look at what happened to the average wage level of the bottom fifth of our wage earners. It went up dramatically. Not quite to $9,800, but almost. It grew rapidly. Then we go off this chart in 1990, we had a tax increase, and in 1993 we had another tax increase. If this chart were up-to-date, you would see this yellow line shoot back down again because we increased taxes, hurt the economy, and had the most dramatic effect on our low-wage earners. We are not out to hurt them. We are out to help them with this tax plan.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I would like to point out what the gentleman from Florida [Mr. Weldon] mentioned here just a few minutes ago is demonstrated on this chart. He said that most of the people who benefit from capital gains on an annual year-to-year basis earn less than $50,000 a year. And that is absolutely correct. If you take out the one year when they have gotten the benefit of the capital gain and average all of their other years out, as a matter of fact, 38.4 percent of the people on a year-to-year basis actually earn less than $50,000 a year and 22.4 percent, for a total of almost 60 percent of the people, earn less than $100,000 a year who benefit from the capital gains tax cut that we are suggesting. So, when our friends from the other side of the aisle suggest that it is the rich folks that benefit, this chart tells a different tale.

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

Mr. SAXTON

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

Mr. SAXTON. Mr. Speaker, I would just like the gentleman to yield on the point he is making about Government taking a bigger and bigger bite out of people's pockets and a bigger and bigger bite out of national income. This chart demonstrates, beginning in 1930 when the Government took 12 percent of national income, to 1940, when the Government consumed 25 percent of national income, to 1960, when it consumed 32 percent of national, all the way up to 1990 when local and Federal Government consumed 42 percent of national income. What the gentleman is saying correctly and very articulately is that this bill is about trying to turn this around so national income is consumed less by the Government rather than more each decade, as we see is evident on this chart. I thank the gentleman for making that point.

Mr. SAXTON

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

Mr. SAXTON. I just want to be recognized to ask the gentleman a question. And that is, as you pointed out, correctly, our capital gains tax rate is high. Mr. Schumer was just talking about the alternative minimum tax. When corporations or businesses are charged these taxes, how do they recoup the money that they have sent to the Government? Where do they get the money to send down here to Washington, DC for the politicians to spend?

Mr. SAXTON. It is the consumer that ends up paying higher prices so businesses can pay taxes to send to Washington for the politicians to spend.

Mr. SAXTON

Mr. SAXTON. Well, it is tax. I would say to the gentlewoman when I was chairman of the working group that put the growth part of our tax package together during the summer of last year and we identified a number of issues that we thought needed to be changed and had broad agreement, for example, the capital gains tax, which show again, conclusively, that not only did it not raise the money that CBO said it would raise, but it acted as a wet blanket on the expansion of business. And that is what caught up with us beginning in 1988. One of the red herrings that is brought by our friends on the Democrat side is that the rich get all the breaks from the capital gains. As the gentlewoman knows, who prepared taxes for people and businesses for years, and as this chart shows, 38.4 percent of the distribution of capital gains realizations, 38 percent of the money from capital gains comes from people under $50,000. So 38 percent of the tax break comes for people who make less than $50,000. That is the biggest single group of people who will benefit from the capital gains tax cut. Of course, 22.4 percent make between 50 and 100. When you get to $100,000 to $200,000, which I consider a pretty good salary, it is only 13.8 percent of the people who pay capital gains there and 25,4 percent who make over $200,000. So by far and away the benefits here are for people who are in the modest income category. This is another issue here on this chart that has been, I think, mischaracterized by the other side of the aisle, the distribution of the $500 per child tax credit. We had this chart up here a few minutes ago when somebody else was speaking, and it shows clearly that 87.5 percent of the people who will benefit from this, the families earn less than $75,000 a year.

Mr. SAXTON. I will yield to my colleague, the gentlewoman from Washington [Mrs. Smith].

Mr. SAXTON. Mr. Speaker, the gentleman from New York [Mr. Schumer], my good friend, and I work about as well together as a Democrat and a Republican who come from different ends of the political spectrum can work. I would just like to say to the gentleman that I appreciate the things that he just said about the alternative minimum tax and the companies that he referred to. He mentioned that they do not have children and I guess that is true, but I will tell you what. They have a lot of workers. Mobil has a lot of workers and Ford has a lot of workers and Chrysler has a lot of workers. I cannot really read the whole list. I am sure all those big companies have a lot of workers that depend on them. One of the things that my friend from New York did not say is that what the alternative minimum tax repeal does is to make it easier for these companies to do business. Studies show conclusively that 42 cents out of every dollar that we give back to a corporation in taxes goes directly to the workers in salaries, more workers, and higher salaries. So the repeal of the alternative minimum tax is not such a bad way to go to make things better for everybody. As a matter of fact, that is what the Republican tax package is about: To make things better for everybody. It is patterned, believe it or not, after something John Kennedy said years ago when he said, ``A rising tide lifts all boats.'' It is true. This is a growth-oriented tax package and the alternative minimum tax provision is part of that growth package.

Mr. SAXTON

Mr. SAXTON. This is an attempt to get back to what it was at an earlier time before inflation eroded the exemption that we have for members of our family.

Mr. SAXTON. Well, on average today the total amount that government takes out of a family's budget is well over 40 percent.

Mr. SAXTON. I said the families that make $75,000 a year, perhaps the one spouse makes $40,000 and the other spouse makes $35,000 a year, that to most people today would be considered to be a middle-class family.

Mr. SAXTON. Mr. Speaker, the gentlewoman just made a point that most families that are going to benefit from the $500 tax credit are middle class, and that is, in fact, absolutely correct. This chart shows graphically just how that works out. As a matter of fact, according to this chart, which comes from the Tax Foundation, who will get the contract's $500 per child tax credit, it shows clearly that 85.5 percent of the people who will get the tax credit, the family earns less than $75,000 a year as the gentlewoman correctly pointed out, and that those over $75,000, there are only 12.5 percent who will benefit from the tax cut.

Mr. SAXTON. Will the gentlewoman yield to me?

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks, and submit extraneous material in the Record, on the bill, H.R. 716.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, on that I demand the yeas and nays.

Mr. SAXTON. Mr. Speaker, I yield such time as he may consume to the gentleman from Washington [Mr. Metcalf].

Mr. SAXTON. Mr. Speaker, I yield such time as he may consume to the gentleman from Alaska [Mr. Young]. (Mr. YOUNG of Alaska asked and was given permission to revise and extend his remarks.)

Mr. SAXTON. Mr. Chairman, I yield myself such time as I may consume. (Mr. SAXTON asked and was given permission to revise and extend his remarks.)

Mr. SAXTON. Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 716) to amend the Fishermen's Protective Act.

Mr. SAXTON. Mr. Speaker, I rise in strong support of H.R. 716, to reauthorize and improve the Fishermen's Protective Act. Originally enacted in 1967, this law established a system of economic safeguards for U.S. fishermen against illegal or unjustified seizure by a foreign government. One of these safeguards is the Fishermen's Guaranty Fund-- which is a voluntary self-insurance program administered by the State Department. The fund compensates fishermen for vessels and catch confiscated by a foreign nation under claims of jurisdiction not recognized by the United States. The amount of money each vessel owner pays into the program is based on the gross tonnage of the vessel. For example, during the history of the program the fees have ranged from $16 to $30 per vessel ton with participation ranging from 8 to 30 vessels, depending on the year. Disbursements or claims paid out from the fund have averaged less than $1 million each year. The largest claim occurred in 1984 for $5.5 million for a vessel that had been seized and ransacked off the Solomon Islands. In 1986, a Federal court in the Brenda Jolene versus United States case decided that fees collected under the act must equal the amount Congress appropriates. Since historically, the President has not requested an appropriation, the State Department has been unable to collect additional fees. While there is approximately $2.9 million in the fund, there is a large settlement case pending from the seizure of four tuna boats off the coast of Costa Rica in 1992, and any further claims would deplete the assets of the fund. The passage of this legislation is sorely needed due to unfair and illegal actions by the Canadian Government. Last year, the Canadian Government charged U.S. fishermen $1,100 each to access the Inside Passage. The Canadians stopped the charge, but not before many U.S. fishermen were subjected to it to the amount of $285,000. We must amend the Fishermen's Protective Act so these American fishermen can be compensated for the unfair charge. During this crisis last year, the former Merchant Marine and Fisheries Committee was quick to act. Similar legislation was adopted by the committee and passed the House as part of a larger bill on October 7, 1994. Mr. Speaker, I urge all of my colleagues to support this legislation and thank the chairman of the full committee, Don Young, for introducing this bill, and the ranking minority member on the Fisheries, Wildlife and Oceans Subcommittee, Gerry Studds, for his support of this legislation. Mr. Speaker, I reserve the balance of my time.

Mr. SAXTON

Mr. SAXTON. Mr. Speaker, our Contract With America states the following: On the first day of Congress, a Republican House will require Congress to live under the same laws as everyone else; cut committee staffs by one-third; and cut the congressional budget. We kept our promise. It continues that in the first 100 days, we will vote on the following items: A balanced budget amendment--we kept our promise; unfunded mandates legislation--we kept our promise; line-item veto--we kept our promise; a new crime package to stop violent criminals--we kept our promise; National Security restoration to protect our freedoms--we kept our promise; Government regulatory reform--we kept our promise; commonsense legal reform to end frivolous lawsuits--we kept our promise; welfare reform to encourage work, not dependence--we kept our promise; congressional term limits to make Congress a citizen legislature--we kept our promise; family reinforcement, tax cuts for middle-income families, and the Senior Citizens' Equity Act to allow our seniors to work without Government penalty--we will do these this week. This is our Contract With America.