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TAXPAYER RELIEF ACT OF 1997--CONFERENCE REPORT
(Senate - July 31, 1997)
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[Pages S8415-S8461]
TAXPAYER RELIEF ACT OF 1997--CONFERENCE REPORT
The Senate continued with the consideration of the conference report.
Mr. ROTH. Mr. President, I yield such time as he may consume to the
junior Senator from Utah.
The PRESIDING OFFICER. The Senator from Utah is recognized.
Mr. BENNETT. Thank you, Mr. President.
I thank the Senator from Delaware for his courtesy and consideration
in allowing me to take this time. I also congratulate both the Senator
from Delaware and the Senator from New York for their ability in
crafting this particular piece of legislation.
When I ran for the Senate in 1992, I made tax reform one of my
primary goals. I must confess that this bill does not meet all of my
expectations and promises as I ran in the campaign, because one of the
things that I was most devoted to was a determination to make the Tax
Code less complex, easier to understand, and tax returns, perhaps,
filed that are the size of a postcard.
This bill does not accomplish that, and I still hold that out as a
goal for the future. But if this bill does not make the Tax Code less
complex, it at least makes the Tax Code less burdensome --less
burdensome for middle Americans, middle-class Americans who have not
received a significant tax break for a long, long time. There have been
tax breaks at the other ends of the Tax Code, yes, at the bottom end
for people who received the earned income tax credit and, some would
argue, too much at the top end. But there has not been the kind of
middle-class tax relief talked about in the 1992 campaign until this
bill.
So while it is not everything that I would want--and there is still
much unfinished business to be taken care of in terms of tax
simplification--it is a step in the right direction that we should
apply. I intend to vote for it enthusiastically and urge all of my
colleagues to do the same.
When I came here in January 1993, the atmosphere was completely
different than the one we find on the floor today. At that time, there
was a determination to see that spending would grow and that taxing
would grow. I am delighted to have been able to be a part of an effort
that has brought us to a case where spending is going down, at least in
percentage terms, and taxes are going down, in terms of the burden that
they are placing on the American people.
So I congratulate all connected with this effort, including, yes, Mr.
President, the President of the United States. I know it is not common
for people on my side of the aisle to stand up and say nice things
about this President, and I have said my share of unkind things in
areas where I feel he has done things that I think are inappropriate.
But as I have said to the President when I have been to the White House
on occasions, ``When you are right, Mr. President, I will back you.
When I think you are wrong, I will oppose you.'' I owe it to him and to
those in his administration who have worked with him on this agreement
to publicly acknowledge that this time I think he has been right. I
congratulate him and those who work with him for their willingness to
do this. I must say that I still had hoped that Senator Dole would be
elected President. I think if he had been, we would be here discussing
the tax simplification that I believe in as well as some tax reduction.
We had our opportunity to make that case in the campaign. For one
reason or another, it didn't fly, and it will have to wait for another
day. But I congratulate all those who have put partisanship aside and
worked together for the good of the people and made a compromise with
which perhaps none fully agree, but for which the American people,
overall, will ultimately be grateful.
For that reason, Mr. President, I am grateful to the two Senators for
allowing me to take this brief time to make these expressions. I
conclude as I began, with my congratulations to them and to their
colleagues on the Finance Committee, to the leadership of both Houses
in both parties, for their ability on the legislative side to work out
an agreement with the President and his associates in the executive
branch to give us at least this first step in the direction of making
the Tax Code less burdensome and less onerous on the American people.
I yield the floor.
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware is recognized.
Mr. ROTH. Mr. President, I yield myself such time as I may use.
Mr. President, when the 105th Congress began, a promise was made to
the American people. They were concerned about Washington's addiction
to spending, and the high deficits that were a consequence of that
spending. We promised to give them a balanced budget. They were
overburdened by rising taxes. They had been shackled with a record-
setting increase in 1992, and were paying more to government than they
were for their own food, shelter, and clothing. We promised them
relief. Our American families were concerned about the education of
their children--about the rising costs of post-secondary schools, and
their ability to help their children enter our colleges and
universities to learn and to prepare for productive futures. We
promised to make education more accessible.
Young Americans, just out of school--many of them starting families--
were finding it increasingly more difficult to buy a home. As a
proportion of their income, they discovered that a mortgage today is
twice as much as it was for their parents. Valiant small businessmen
and -women were finding it increasingly more difficult to build
successful companies. They had lost their home office deductions, the
deductibility of their health insurance, and then--when their company,
despite these and other challenges, proved successful--they had to fear
losing it to death taxes. Again, we promised relief. We promised peace
of mind to senior Americans who were worried about Medicare and its
future. We promised to provide future generations the opportunity to
become more self-sufficient through enhanced individual retirement
accounts, and less dependent on government for their support in the
years to come. And we promised that we would do something to increase
health care coverage for America's children--for America's future.
These, of course, Mr. President, were bold promises. For years, the
Republican Party had advocated these measures, but in a city built on
promises--the majority of which unfortunately go unfulfilled--it was
reasonable that Americans felt that these, too, would remain empty. But
today, Mr. President--today, we can say that these promises made, are
promises kept.
For the first time since 1969, Americans have a balanced budget--a
balanced budget that will be realized within 5 years. For the first
time in 16 years, Americans have real and meaningful tax relief. For
the first time ever, our families will have tax-free education savings
accounts, and for the first time in a decade, we are bringing back the
student loan interest deduction. And these, Mr. President, are not our
only firsts. We are allowing penalty-free withdrawals from IRA plans to
make first-time home purchases.
We are eliminating the capital gains taxes on $500,000 of gain for a
couple that sells their home. We are strengthening and preserving
Medicare by introducing choice and competition to that program. We are
giving States
[[Page S8416]]
greater flexibility and authority to administer Medicaid, and we are
increasing health care coverage for millions of children.
These are all firsts, Mr. President, but there is another first--one
that is more philosophic in nature. For the first time since President
Johnson's Great Society exploded the size and costs of Federal
programs, Americans have a government that is focused on doing more
with less.
When historians look at what has been accomplished here these past
few months, I believe our work will mark the beginning of a new era--an
era which the Republicans have long promised and which President
Clinton articulated when he said that the days of big government are
behind us.
This budget reconciliation package is a strong first step toward
realizing that promise. It is a bipartisan effort--one that could not
have been accomplished without a spirit of cooperation between
Republicans and Democrats, between the Senate and the House, and
between Congress and the President. I'm proud of what we've
accomplished. Members in both Houses of Congress, and on both sides of
the aisle, have reason to be proud, as does Bill Clinton.
Certainly, there are differences between the parties--those
differences can be valuable in the battle of ideas. But this package
represents a collective effort, an effort that is a far cry from the
acrimony, Government shutdowns and the vetoes that attended past budget
debates. I believe our work here demonstrates a coming together on
fundamental issues. Taxes have been too high.
They are still too high. In fact, as a percentage of our GNP, they
haven't been higher than they are right now since 1960. Government has
grown too big, become too inefficient, too overbearing and costly. Too
much power has been taken from our people--from our States--and it's
been centralized here in Washington.
Yesterday we addressed the changes that will take place in Government
programs--especially in entitlements like Medicare and Medicaid. We
explained how this reconciliation package will deliver greater
flexibility to the States for them to administer Medicaid in a more
cost-effective, a more efficient manner.
Today, we focus on the major tax provisions included in our plan, and
how those provisions will provide relief for Americans of all ages--for
our youth, going away to college, for our young families looking to buy
their first home and raise their children, for older families running
small businesses and preparing for retirement, and for those Americans
who are already retired and looking to find comfort and security on
fixed incomes.
This reconciliation package provides relief for all of these. It
includes a $500-per-child tax credit for families with children under
the age of 17. The credit will be available to the working poor through
an enhanced earned income credit. It will cover middle-class families,
couples earning up to $110,000 a year. At $110,000 it will begin to
phase out. And this tax relief will begin next year with a $400 per
child credit in 1998, and the full $500 credit in 1999 and thereafter.
We also provide relief to hard-working, middle-class Americans by
enhancing the individual retirement account. We raise the income limits
on traditional IRA's and create a new back-loaded IRA. In this back-
loaded IRA, the contributions are not tax deductible, but the build-up
and withdrawals are tax-free if the account is held for 5 years and the
account holder is at least 591/2. The income limits for the new back-
loaded IRA will be $95,000 for singles and $150,000 for married
couples. Our new IRA will allow penalty-free withdrawals for first-time
home purchases. Another very important change to the IRA is that we
allow homemakers--below certain family income--to save a full $2,000
annually in an account, regardless of their spouse's pension plan.
Mr. President, I have worked for years to strengthen individual
retirement accounts for working Americans. These changes will go a long
way toward helping Americans prepare for retirement. They will
encourage self-reliance and provide incentive for saving.
This is, indeed, an idea whose time has come. It will be a blessing
to countless Americans as they prepare for the future. And beyond
helping individual families, these expanded IRS's will promote
investment, capital formation and economic growth.
Another important provision of this reconciliation package--one that
will not only provide tax relief, but will, along with our IRA's,
promote investment and jobs, is our capital gains tax cut.
Here, we drop the top rate to 20 percent on investments that are held
for at least 18 months. The rate will drop to 18 percent for assets
purchased after 2000 and held for at least 5 years. For joint filers
with incomes less than $41,200, the top capital gains rate will be 10
percent of assets held for at least 18 months, and 8 percent for assets
held for at least 5 years. Our package does away with capital gains
taxes on the sale of a home, as long as the home is $500,000 or less
for joint filers and $250,000 or less for single filers.
The benefit of capital gains tax relief will be felt not only by our
families, but by America at large. According to economist Lawrence
Kudlow, in a recent Wall Street Journal editorial,
The budget's lower capital gains tax rate will help
maintain U.S. global economic leadership in the 21st century.
This is especially important in relation to the fast-growing
economies of the Pacific rim, with China looming not far
behind. Most of the Asian tigers have lower tax burdens on
capital formation that the U.S.
America, Mr. President, needs this capital gains tax relief. It is
long overdue.
However, the tax relief contained in this package does not end here.
Families will also benefit by the way that this bill offers relief from
the estate tax--the tax that can rob a family of its farm or business
when a father or mother passes away.
To help these families, we raise the unified credit to $1,000,000 per
estate by 2006; and we provide tax-free treatment for family-owned
farms and small businesses for up to $1.3 million. I can't overstate
how important this estate tax relief will be to our families and small
businesses. In 1995, delegates to a convention on small business
survival, ranked killing the estate tax among the top five priorities
on a list of 60 recommendations to the President. This is because many
small business men and women fear the enterprises they have worked
their lives to create won't be around to pass on to their children. The
estate tax relief provided in this package offers a strong first step
toward allaying that fear and providing families the protection they
deserve.
Beyond offering relief for estate taxes, this package also benefits
America's small businesses by accelerating the phase in of the self-
employed health insurance deduction, raising that deduction all the way
to 100 percent, and by clarifying the deductibility of the home office
business deduction. These, Mr. President, are important provisions.
They will promote economic growth, jobs, and family security. They
naturally complement the overarching objective of this legislation to
provide immediate tax relief and to create conditions that will prepare
America and Americans for a bright and prosperous future.
Just how important this objective is can be seen by the fact that a
full 80 percent of the tax relief we offer in this package is directed
at the $500 credit for children and provisions that will promote
education. These education-related measures will go a long way toward
assisting students and their parents in affording the cost of post-
secondary education.
They include the Hope scholarship tax credit, a $2,500-per-year
student loan interest deduction, and penalty-free withdrawal from
IRA's. We can't overstate just how important these measures will be to
American families, to America's students, and to our future. I had
hoped that we could have gone even further in promoting the educational
aspects of this bill. For example, I wanted to maintain a provision
that would offer tax-free treatment for State-sponsored prepaid tuition
plans, a permanent extension of employer provided education assistance,
and a comprehensive education IRA, but in these areas the White House
was unwilling to compromise.
And this brings up a point I would like to make--a point I touched
upon yesterday. No one received everything they wanted with this
package. That, Mr. President, is the nature of compromise. Another
lesson we learn from
[[Page S8417]]
compromise is that it tends to add complexity to the package under
consideration.
We learned how when you have three parties involved in the process--
the Senate, the House, and the administration--each compromise made in
negotiations rendered the final product that much more complex.
Having said this, let me be clear that I am generally pleased by the
outcome. Certainly, I could be more pleased. But the bipartisan effort
that produced this reconciliation package is something to be
appreciated. We accomplished what we set out to do. We provided tax
relief for middle-income families; we provided tax relief to promote
education; and, we provided tax relief that will stimulate economic
growth, opportunity, and jobs.
Let me show just how that relief will affect typical American
families. When I first brought the Senate Finance Committee tax relief
package to the floor--about 6 weeks ago--I introduced three
hypothetical families from Delaware: a single mother named Judy Smith,
a farming family--the Wilsons--and a young professional couple, John
and Susan Jones. Let me show you how this package--in its final form--
will benefit them:
Let's begin with Judy. She has two young children and works as a
legal secretary in Wilmington, making $35,000 a year. Currently she
pays over $3,000 in Federal income taxes--over $3,000. When President
Clinton signs this bill, Judy's taxes will be cut by $800 next year and
by $1,000 the year after. Why? Because of the child tax credit. Judy
will be able to spend that savings as she wants, or she can put it in
an enhanced individual retirement account for her future.
Jim and Julie Wilson, our farming family with three children and an
income of $55,000, now pay over $5,500 in Federal income taxes. When
President Clinton signs this bill, their taxes will be cut by $1,200 in
1998, and by $1,500 in 1999 and beyond, as they will receive $500 for
each child. Julie Wilson will be able to set up a homemaker IRA to save
for her retirement. Looking far ahead, if the farm prospers, Jim and
Julie will be able to pass it on to their children free of the burden
of the estate tax--all because of the middle-income tax relief
contained in this bill.
Finally, Mr. President, let's look at John and Susan Jones. They live
and work in Dover, DE. College graduates, John is a veterinarian and
Susan is a physical therapist. They make $75,000 and have one young
child. Under current law, the Jones family pays about $11,500 in
Federal income taxes. Because of this legislation, they will receive a
$400 tax credit next year, and $500 each year thereafter.
Susan will be able to take the home office business deduction, as her
practice is located within their home, and she will be able to
accelerate the phase-in of the self-employed health insurance
deduction. John and Susan will also be able to deduct a portion of the
interest on their student loans, and they'll be able to set up new
back-loaded IRA accounts for their retirement.
This is how our work will affect these three families, Mr. President.
It will provide relief--much needed relief. As I have said, today the
taxes paid by our families are higher as a percentage of GNP than
they've been since 1960. This bipartisan tax relief effort will do
something about that. It will provide relief as part of a budget
reconciliation package that will lead our Nation to a balanced budget
in 2002. Having said that, however, I want to add that I consider this
only a beginning. Americans not only need tax relief; they need tax
reform. They need tax reform that really does simplify the Tax Code.
They need reform that focuses on fairness. They need reform that
maintains and promotes strong economic growth--growth that will lead to
continued job creation. And they need reform that promotes American
exports and our competitiveness in the global economy.
This is what we will turn our attention to next. And it is my hope
that the same level of cooperation that sustained us in this debate
will attend us as we move from tax relief to tax reform. I appreciate
my colleagues on both sides of the aisle who have been active,
involved, and given to a spirit of willingness throughout this process.
I am particularly grateful to Senator Moynihan--my friend and a
thoughtful, well-esteemed leader.
And again, Mr. President--as I did yesterday--I thank the
professional, capable staff of the Senate Finance Committee for their
countless hours and lost sleep. This was, indeed, a heroic effort.
I yield the floor.
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER (Mr. Burns). The Senator from New York.
Mr. MOYNIHAN. Mr. President, I have the honor now to respond to my
revered chairman, who brought this extraordinary legislation to the
floor and in a very few hours from now will see it sent to the
President to become law.
By day's end, the U.S. Senate will have voted overwhelmingly to
reduce Federal taxes by a net total of $95 billion over 5 years and
$275 billion over 10 years. Whatever one's view of this legislation as
a matter of tax policy, there can be absolutely no doubt that without
the dominant influence of the chairman of the Committee on Finance, we
would not be here today. Absent Senator Roth, we would not be here
today. This conference agreement is a singular achievement for him, and
we congratulate him.
Among other provisions in the legislation, the Roth IRA will soon be
as well-known as the Pell grant. It is a fitting tribute to Senator
Roth's long, persistent, indomitable commitment to encourage savings by
Americans.
For those interested, this is in section 302, Individual Retirement
Accounts, section 408(a), Roth IRAs. It is there in what I think others
across the park in the Supreme Court call black letter law. There, sir,
it is.
There is another aspect of this legislation which has not been
commented on and, I hope, might be. Without perhaps entirely intending
it, and not quite in the mode of how others have done it, after a half
century of discussion, we are, in fact, establishing a children's
allowance in our social policies.
I have had occasion to write about this over the years. We are the
only industrial democracy in the world that does not have a children's
allowance--just a routine thing, a feature of social policy that goes
back to the beginnings of the century. It had various motivations in
Sweden. There was a time when the Swedes thought they were dying out as
a race and needed to encourage more children. So they gave family
allowances. Sometimes called a family allowance. The French much the
same. In places like Canada, just a good social policy.
During World War II, the late Senator Neuberger was working on the
Alaska-Canada highway--ALCAN highway, as we knew it in those days--and
interested in what the Canadians were doing, came upon the family
allowance, the children's allowance, and introduced legislation when he
became Senator after the war. And John F. Kennedy was much interested
in this and cosponsored the legislation. And I can say from the days of
the early Kennedy administration there was an active interest in this
possibility--the elemental proposition that if you have children, it is
going to cost money, and a family raising children needs a little
support. We are giving it. Instead of a direct grant, we are providing
a direct tax credit. The end result will be the same, and a rather
extraordinary bit of social policy is before us which has never been
debated as such, but as I get on in years I begin to think the more you
debate social policy, the less social policy you get, and so we could
perhaps count our blessings in this regard.
But now my friend from Delaware has heard his ranking member say on
many occasions that if it were up to this Senator, we would have no tax
cuts at this time, given the extraordinary condition of our economy
just now, a condition for which many believe the deficit reduction law
enacted in 1993, OBRA 1993, is largely responsible.
I continue to be concerned about whether cutting taxes might undo the
astonishing progress we have made over the last 4 years, because OBRA
93 took hold when we did it. It was, indeed, the largest tax increase
in history, and it has produced extraordinary increases in wealth in
our Nation because it sent a signal to the economy that this Government
was going to get hold of its financing, pay its bills in sound dollars,
not monetize the debt, as the phrase is among economists, inflate the
currency and get rid of your
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debt in that mode. Those are profoundly important signals to the
markets, and we have seen, I believe, the result.
The deficit for fiscal year 1992 was $290 billion and growing. It was
strangling us. We had no prospect whatever of getting out of it. What
earlier on, President Reagan's Director of OMB, David Stockman, had
said, $100 billion deficits as far as the eye can see, had become $300
billion deficits as far as the eye could see. And we turned it around.
We stopped it.
As a result of this aggressive deficit reduction program put in place
by a Democratic Congress in 1993, the deficit for the current fiscal
year could be less than $30 billion, which is about one-third of 1
percent of gross domestic product, a matter of no consequence in the
large sphere of things. The Federal budget is on the verge of balance
at this very moment and for the first time in three decades, and it
would get there without any changes in law. I would estimate that we
might have a balanced budget in the fourth quarter of the next fiscal
year, a year from now. We would have it without change in law. Now we
are putting the date off until the year 2002. I hope that does not
become a fateful mistake. I am not here to alarm anyone, but I think it
needs to be said for the record if the time comes when we have to make
changes. Given the previous success of our action 4 years ago, we may
come to regret what we have done today, but there is not a majority for
that view. There is a very small minority for that view. The
congressional leadership and the President have agreed that there will
be tax cuts this year, and so, given that reality, I joined with the
other Democratic members of the Finance Committee in working with
Chairman Roth in a bipartisan mode.
He has been generous enough to point out, as did earlier in the day
the majority leader, that the Finance Committee was unanimous in
reporting out the measure that we voted on just an hour ago on
spending, and there was an 18 to 2 vote in our Committee on the bill
before us now.
Yesterday, Senator Domenici, the distinguished chairman of the Budget
Committee, said it was the bipartisan solidarity of the Finance
Committee which gave the real impetus to getting the budget agreement
put in place, and I think that is so and nothing, no further tribute is
possible to Senator Roth for having presided over that event.
It is a phenomenon which I hope, and I know he hopes, we might see in
the future. We found that we could do things on a bipartisan basis that
could amaze you. We could raise taxes on tobacco. We could provide the
largest incremental initiative in health care since Medicare and
Medicaid were enacted in 1965--just like that, just in 2 days. Again,
perhaps because it was not debated for a year, we were able to get it
done in an afternoon. I would like to explore that possibility
sometime. Is there an inverse ratio between the amount of debate and
the legislation that emerges? I think you have seen some of that in the
past many years.
I would take the time of the Senate to point to several measures in
the bill which are surely praiseworthy and equally important. One that
has not been commented on anywhere that I have seen in the press is
that the bill before us removes the present $150 million cap on the
issuance of tax-exempt bonds by universities, colleges and nonhospital
health facilities. It sounds like an esoteric matter. What could this
mean? Well, it goes to something that is as important to American life
as anything I know, and it is as characteristic of American democracy
as anything I know.
We are the only democratic nation in the world that has a private
sector in its higher education--not just a few Jesuit colleges here or
every so often a special arrangement in the north of Sweden or the
south of France, and so forth. No, our system of higher education began
as private denominational matters, and we continue to have just about
an equal balance between the great private institutions and the great
public institutions. You could go out to California, in the San
Francisco Bay area, and you would see it is exemplary of Stanford
University, named for a great railroad magnate who gave his money in
the name of his son who died prematurely, and Berkeley, the University
of California at Berkeley, a great State institution.
Now, we have earlier on enabled the private universities, colleges,
and nonmedical health facilities to borrow money on a tax-exempt basis,
which puts them partially on an equal footing with the State
institutions which obtain money directly from the taxpayers, from tax
revenue, and can issue tax-exempt bonds because they are public
institutions.
We capped that amount, and more and more of our institutions have
reached it. And having done that, they are no longer in a position to
build what you could call the capital-intensive science facilities and
suchlike facilities that you need in the area of research on the edges
of knowledge in this country today. And we are the center of such
research. You could hypothesize, if you like, a future where if we did
not do what we are doing, there would come a time when the finest law
school on the west coast would be at Stanford--law schools are not
expensive; you have to add 50 books a year in the library--but all the
physics would be done at Berkeley. Physics is expensive. All the
chemistry, all the great research in astronomy, the outer edges of the
universe to the very core of the Earth itself, all that would be in
public institutions. And the competitive urges and the range of variety
of the private institutions--the University of Chicago, Rice
University, go right down the list of them--that would be lost. The
University of Pennsylvania, New York University, Columbia and, as I
say, across the Nation, those institutions are precious. There is no
reason why Americans should know that the universities and colleges in
the United Kingdom are all public institutions, but it is important to
know that we are singular in this regard, and this legislation responds
to that need. It may just be that no one is interested enough to care,
to take note, but I can assure you the universities involved are very
attentive and are very pleased.
We also extend for 3 years the provision for exclusion from income of
employer-provided educational assistance, which is section 127 of the
Internal Revenue Code. This is a wonderfully unintrusive piece of
social policy. It is probably the single-most successful tax incentive
for education we have. In a world of continuing education, of
continuing developments in science and technology, we have arrangements
whereby an employer can send an employee to school to learn something
special being taught--at night or weekends, whatever--get a degree,
bring the skills back into the workplace. They will be paid more money,
and they will get more income. We will get more revenue. Everyone wins
all around. We in the Finance Committee made this absolutely easy,
workable, a successful program. We made it permanent.
For reasons I cannot understand, and I don't think the chairman could
possibly understand either, the Finance Committee language, which made
it permanent and applied it to graduate school, was dropped in
conference. We had legislation in the Senate to do just this, Senator
Roth and I, with 50 cosponsors. What is the matter with people who
can't see what elemental good sense this makes? The firm that wants to
send a chemist to do postgraduate work in a new field that is just
opening up so he can come back and do it in the private sector of the
economy is just so elemental. That it was not done is disturbing.
Perhaps we will get back to it. I can't imagine why it was not
accepted, but we had no success.
The conferees included another salutary measure by extending for 1
year the deductibility, at fair market value, of charitable gifts of
appreciated stock to private foundations. Absent this, we would have
seen a needless dropoff in charitable giving. And, again, we are trying
to encourage the private sector, that private sector of education we
try to support, the private sector of employer-provided educational
assistance, into giving to private charities.
Now, to another matter of concern--of large concern--just beginning
to be noted. I observed in the Washington Post this morning a comment
on it, and also in the New York Times.
The Senate-passed bill included a measure written by our chairman and
supported by this Senator and others to provide $2.3 billion in
critically needed funding for Amtrak, the National Railroad Passenger
Corporation,
[[Page S8419]]
the last hope of rail passenger service in America. The distinguished
CEO of the corporation, Mr. Tom Downs, said to me, as he would say to
anyone who called and asked, that if he did not get this $2.3 billion,
the corporation would be bankrupt in February or March.
I say to you, Mr. President, that's what this period will be
remembered for, that we did not do this. We had it in the bill. The
Senate voted 80 to 18 for the provision that the chairman provided. And
it was dropped. It was dropped owing to a dispute over other matters
altogether--job protections and outside contracting by Amtrak. It is
provided in this bill that $2.3 billion is there, but it is not
available to Amtrak until some very controversial legislation is
adopted making job protection and such like matters subject to
collective bargaining.
I will be blunt. This could mean the end of Amtrak, the National
Railroad Passenger Corporation. Bankruptcy for Amtrak is an outcome we
should surely do everything in our power to prevent. It would be a
national calamity. I wish to be emphatic in saying that the possibility
is now real, and I hope the administration will join in the effort to
bring about a resolution.
I was surprised, in the often intense debates of this last week on
this matter, that nowhere did we hear from the Secretary of Labor.
Nowhere did we hear from the Secretary of Transportation. What do we
have Cabinet officers for? I don't mean to be critical of any
individual. It occurs to me that they were not invited in. I'll tell
you, I was once an assistant to Secretary Arthur J. Goldberg when he
was Secretary of Labor during the Kennedy administration. We had rail
strikes and soon thereafter, in the Johnson administration, disputes in
the steel industry. Arthur J. Goldberg would have been right in the
middle of it, seeing that workers were protected and that the public
was protected.
This remains to be done. I hope I have sounded an alarm. If I sound
alarmist, Mr. President, may I put it in the Record that I am and I
intend to be alarmist.
Another matter on which we have made an error, in my view, was the
hurtful provision revoking the tax-exempt status of the Teachers
Insurance and Annuity Association and the College Retirement Equities
Fund, known as the TIAA-CREF, a 2-million-member retirement system that
serves 6,100 American colleges, universities, teaching hospitals,
museums, libraries and other nonprofit educational and research
institutions. TIAA was founded by Andrew Carnegie in 1918. It has been
tax exempt ever since. It is a nonprofit charity, and properly not
taxed.
In 1937 it was incorporated under the laws of the State of New York
to ``forward the cause of education and promote the welfare of the
teaching profession''--``forward the cause of education and promote the
welfare of the teaching profession.'' The law further states that the
purpose of TIAA--this is the New York statute--is ``to aid and
strengthen non-proprietary and non-profit-making colleges, universities
and other institutions engaged primarily in education or research.''
And it has done just that. It has long been recognized as a model of
such programs.
As a somewhat unanticipated result, it brought to American higher
education portability of pensions. You did not have to start out in one
institution and after a certain point stay the rest of your life
because you had to have some retirement benefit. It has a great value
to our educational system for the simple reason that it enables a young
person at, say, a 2-year college or a local college, who shows great
promise, does good work, to end up at Chicago or Stanford or Duke,
because they can move. This is part of the agility of American higher
education. There is no reason to tax this, and the Finance Committee
said don't tax it. We never have. The Senate said don't tax it. But
somehow or other we have decided to do so.
Revoking TIAA-CREF's 79-year-old tax exemption will cost the average
retiree who receives $12,000 a year about $600 in income. You know,
librarians are not highly paid. Perhaps that is not widely known. A
$12,000 pension would be quite normal. A $600 reduction would be 5
percent right away. Future retirees currently accumulating benefits are
likely to face reductions of 10 to 15 percent.
Why make the lives of librarians and assistant professors and
teachers in community colleges harder? Why do we do this? Why wasn't
this something that people said no to? The Finance Committee said no to
it. But we were not successful.
Two closing points. In an era in which the most recent Presidential
campaign was captivated--at least sectors of it--by the idea of a flat
tax, it deserves pointing out that this 820-page piece of legislation
will add hugely to the stupefying complexity and mass of the Internal
Revenue Code and its accompanying regulations.
Mr. President, this is not an exercise here in physical therapy. For
as long as I can, I would like to hold it up to show it to you. I dare
not hold it up any longer. If I should drop it, there would go my right
ankle. Did that thump on the desk make itself heard?
In 1986, in the Tax Reform Act of that year, we moved toward the idea
of simplicity in the Tax Code by a broader base and lower rates. Just
an anecdote, the late beloved Erwin Griswold, sometime dean of the
Harvard Law School, sometime Solicitor General of the United States,
was a friend. He used to write me each April describing how long it
took him to complete his tax returns, which he persisted in preparing
himself. Now, mind you, Dean Griswold was perhaps the Nation's foremost
authority on the subject of tax law. He almost began the subject. He
wrote the first text. He describes himself as being a young attorney,
graduate of Harvard Law in the 1920s, in the Solicitor General's
office, and some matters concerning taxation came to him. He, as he put
it in a wonderful address to the bar association tax section, said, ``I
thought of going to the Solicitor General to tell him I didn't know
anything about tax law, but I decided to go to the library instead.''
And he wrote the text.
In his last letter to me, dated April 12, 1994, 7 months before he
died, he wrote that his 1993 tax return took him almost 100 hours to
complete--100 hours for Erwin Griswold to prepare his not very
complicated financial affairs. He was a teacher and a lawyer,
Government employee, and he knew all these matters--yet it took him 100
hours. It would be 110 were he alive into the next tax season.
Let me say, just as an example, a family with three children, two in
college and one under age 17, could be required to calculate the new
child tax credit, a Hope scholarship tax credit for one college
student, and a separate lifelong learning credit for the older child.
Each of these different provisions will have different eligibility
rules and complicated income phaseouts that will have to be calculated
on different worksheets and reported to the Internal Revenue Service on
a variety of forms.
It is no exaggeration, sir--I don't believe it is an exaggeration--to
say that anybody who could fill out the forms necessary to qualify for
these tax benefits would already be an accountant of advanced
experience and achievement and would have no need for the benefits.
I do want to point out that in the statement of the managers
accompanying this conference report, it says, ``The conferees
anticipate that the Secretary of the Treasury will determine whether a
simplified method of calculating the child credit, consistent with the
formula described above, can be achieved.'' So there is hope. But I
wouldn't hope too much.
President Ronald Reagan, our much-loved President Ronald Reagan,
liked to say the Republicans are the party of the Fourth of July and
Democrats are the party of April 15th. With the passage of this
legislation, I think Democrats can no longer take all the credit for
April 15th.
A second and final point. This will be the first-ever tax bill
subject to the line-item veto, which gives the President, ``limited
authority to cancel specific dollar amounts of discretionary budget
authority, certain new direct spending, and limited tax benefits.''
Limited tax benefits are those that provide, a Federal tax deduction,
credit, exclusion, or preference to 100 or fewer beneficiaries.
In January of this year, I joined Senators Byrd, Levin and former
Senator Hatfield in a legal challenge to the line-item veto on grounds
that it violates the presentment clause in article
[[Page S8420]]
I, section 7, of the Constitution. The U.S. District Court for the
District of Columbia agreed and promptly declared the statute
unconstitutional.
But later, on June 26, the Justice Department took the matter to the
Supreme Court itself, and the Court held that we, as legislators, had
no standing to challenge the law, clearing the way for the President to
exercise his new authority.
Now, just 2 days ago, on July 29, the Joint Committee on Taxation met
to consider the list of limited tax benefits in this bill, a list
prepared by the committee staff, that would be subject to the line-item
veto. It was the first time we had done this under the new law, and I
am pleased to report, upon being presented with the 6-page list
totaling 79 separate provisions in this bill subject to the line-item
veto, some members of the joint committee began to display a visible
lessening of enthusiasm for the concept itself.
I have a list here, Mr. President, and take the liberty of asking
unanimous consent that it be printed in the Record, so the
administration will have an opportunity to look up the items, veto them
and then the injured parties can arrive across the park at the Supreme
Court with standing and the Constitution will be preserved.
There being no objection, the list was ordered to be printed in the
Record, as follows:
TITLE XVII--IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO LINE ITEM
VETO
SEC. 1701. IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO
LINE ITEM VETO.
Section 1021(a)(3) of the Congressional Budget and
Impoundment Control Act of 1974 shall only apply to--
(1) section 101(c) (relating to high risk pools permitted
to cover dependents of high risk individuals);
(2) section 222 (relating to limitation on qualified
501(c)(3) bonds other than hospital bonds);
(3) section 224 (relating to contributions of computer
technology and equipment for elementary or secondary school
purposes);
(4) section 312(a) (relating to treatment of remainder
interests for purposes of provision relating to gain on sale
of principal residence);
(5) section 501(b) (relating to indexing of alternative
valuation of certain farm, etc., real property);
(6) section 504 (relating to extension of treatment of
certain rents under section 2032A to lineal descendants);
(7) section 505 (relating to clarification of judicial
review of eligibility for extension of time for payment of
estate tax);
(8) section 508 (relating to treatment of land subject to
qualified conservation easement);
(9) section 511 (relating to expansion of exception from
generation-skipping transfer tax for transfers to individuals
with deceased parents);
(10) section 601 (relating to the research tax credit);
(11) section 602 (relating to contributions of stock to
private foundations);
(12) section 603 (relating to the work opportunity tax
credit);
(13) section 604 (relating to orphan drug tax credit);
(14) section 701 (relating to incentives for revitalization
of the District of Columbia) to the extent it amends the
Internal Revenue Code of 1986 to create sections 1400 and
1400A (relating to tax-exempt economic development bonds);
(15) section 701 (relating to incentives for revitalization
of the District of Columbia) to the extent it amends the
Internal Revenue Code of 1986 to create section 1400C
(relating to first-time homebuyer credit for District of
Columbia);
(16) section 801 (relating to incentives for employing
long-term family assistance recipients);
(17) section 904(b) (relating to uniform rate of tax on
vaccines) as it relates to any vaccine containing pertussis
bacteria, extracted or partial cell bacteria, or specific
pertussis antigens;
(18) section 904(b) (relating to uniform rate of tax on
vaccines) as it relates to any vaccine against measles;
(19) section 904(b) (relating to uniform rate of tax on
vaccines) as it relates to any vaccine against mumps;
(20) section 904(b) (relating to uniform rate of tax on
vaccines) as it relates to any vaccine against rubella;
(21) section 905 (relating to operators of multiple retail
gasoline outlets treated as wholesale distributors for refund
purposes);
(22) section 906 (relating to exemption of electric and
other clean-fuel motor vehicles from luxury automobile
classification);
(23) section 907(a) (relating to rate of tax on liquefied
natural gas determined on basis of BTU equivalency with
gasoline);
(24) section 907(b) (relating to rate of tax on methanol
from natural gas determined on basis of BTU equivalency with
gasoline);
(25) section 908 (relating to modification of tax treatment
of hard cider);
(26) section 914 (relating to mortgage financing for
residences located in disaster areas);
(27) section 962 (relating to assignment of workmen's
compensation liability eligible for exclusion relating to
personal injury liability assignments);
(28) section 963 (relating to tax-exempt status for certain
State worker's compensation act companies);
(29) section 967 (relating to additional advance refunding
of certain Virgin Island bonds);
(30) section 968 (relating to nonrecognition of gain on
sale of stock to certain farmers' cooperatives);
(31) section 971 (relating to exemption of the incremental
cost of a clean fuel vehicle from the limits on depreciation
for vehicles);
(32) section 974 (relating to clarification of treatment of
certain receivables purchased by cooperative hospital service
organizations);
(33) section 975 (relating to deduction in computing
adjusted gross income for expenses in connection with service
performed by certain officials) with respect to taxable years
beginning before 1991;
(34) section 977 (relating to elective carryback of
existing carryovers of National Railroad Passenger
Corporation);
(35) section 1005(b)(2)(B) (relating to transition rule for
instruments described in a ruling request submitted to the
Internal Revenue Service on or before June 8, 1997);
(36) section 1005(b)(2)(C) (relating to transition rule for
instruments described on or before June 8, 1997, in a public
announcement or in a filing with the Securities and Exchange
Commission) as it relates to a public announcement;
(37) section 1005(b)(2)(C) (relating to transition rule for
instruments described on or before June 8, 1997, in a public
announcement or in a filing with the Securities and Exchange
Commission) as it relates to a filing with the Securities and
Exchange Commission;
(38) section 1011(d)(2)(B) (relating to transition rule for
distributions made pursuant to the terms of a tender offer
outstanding on May 3, 1995);
(39) section 1011(d)(3) (relating to transition rule for
distributions made pursuant to the terms of a tender offer
outstanding on September 13, 1995);
(40) section 1012(d)(3)(B) (relating to transition rule for
distributions pursuant to an acquisition described in section
355(e)(2)(A)(ii) of the Internal Revenue Code of 1986
described in a ruling request submitted to the Internal
Revenue Service on or before April 16, 1997);
(41) section 1012(d)(3)(C) (relating to transition rule for
distributions pursuant to an acquisition described in section
355(e)(2)(A)(ii) of the Internal Revenue Code of 1986
described in a public announcement or filing with the
Securities and Exchange Commission) as it relates to a public
announcement;
(42) section 1012(d)(3)(C) (relating to transition rule for
distributions pursuant to an acquisition described in section
355(e)(2)(A)(ii) of the Internal Revenue Code of 1986
described in a public announcement or filing with the
Securities and Exchange Commission) as it relates to a filing
with the Securities and Exchange Commission;
(43) section 1013(d)(2)(B) (relating to transition rule for
distributions or acquisitions after June 8, 1997, described
in a ruling request submitted to the Internal Revenue Service
submitted on or before June 8, 1997);
(44) section 1013(d)(2)(C) (relating to transition rule for
distributions or acquisitions after June 8, 1997, described
in a public announcement or filing with the Securities and
Exchange Commission on or before June 8, 1997) as it relates
to a public announcement;
(45) section 1013(d)(2)(C) (relating to transition rule for
distributions or acquisitions after June 8, 1997, described
in a public announcement or filing with the Securities and
Exchange Commission on or before June 8, 1997) as it relates
to a filing with the Securities and Exchange Commission;
(46) section 1014(f)(2)(B) (relating to transition rule for
any transaction after June 8, 1997, if such transaction is
described in a ruling request submitted to the Internal
Revenue Service on or before June 8, 1997);
(47) section 1014(f)(2)(C) (relating to transition rule for
any transaction after June 8, 1997, if such transaction is
described in a public announcement or filing with the
Securities and Exchange Commission on or before June 8, 1997)
as it relates to a public announcement;
(48) section 1014(f)(2)(C) (relating to transition rule for
any transaction after June 8, 1997, if such transaction is
described in a public announcement or filing with the
Securities and Exchange Commission on or before June 8, 1997)
as it relates to a filing with the Securities and Exchange
Commission;
(49) section 1042(b) (relating to special rules for
provision terminating certain exceptions from rules relating
to exempt organizations which provide commercial-type
insurance);
(50) section 1081(a) (relating to termination of suspense
accounts for family corporations required to use accrual
method of accounting) as it relates to the repeal of Internal
Revenue Code section 447(i)(3);
(51) section 1089(b)(3) (relating to reformations);
(52) section 1089(b)(5)(B)(i) (relating to persons under a
mental disability;
(53) section 1171 (relating to treatment of computer
software as FSC export property);
(54) section 1175 (relating to exemption for active
financing income);
(55) section 1204 (relating to travel expenses of certain
Federal employees engaged in criminal investigations);
(56) section 1236 (relating to extension of time for filing
a request for administrative adjustment);
(57) section 1243 (relating to special rules for
administrative adjustment request with respect to bad debts
or worthless securities);
(58) section 1251 (relating to clarification of limitation
on maximum number of shareholders);
(59) section 1253 (relating to attribution rules applicable
to stock ownership);
(60) section 1256 (relating to modification of earnings and
profits rules for determining whether REIT has earnings and
profits from non-REIT year);
[[Page S8421]]
(61) section 1257 (relating to treatment of foreclosure
property);
(62) section 1261 (relating to shared appreciation
mortgages);
(63) section 1302 (relating to clarification of waiver of
certain rights of recovery);
(64) section 1303 (relating to transitional rule under
section 2056A);
(65) section 1304 (relating to treatment for estate tax
purposes of short-term obligations held by nonresident
aliens);
(66) section 1311 (relating to clarification of treatment
of survivor annuities under qualified terminable interest
rules);
(67) section 1312 (relating to treatment of qualified
domestic trust rules of forms of ownership which are not
trusts);
(68) section 1313 (relating to opportunity to correct
failures under section 2032A);
(69) section 1414 (relating to fermented material from any
brewery may be received at a distilled spirits plant);
(70) section 1417 (relating to use of additional
ameliorating material in certain wines);
(71) section 1418 (relating to domestically produced beer
may be withdrawn free of tax for use of foreign embassies,
legations, etc.);
(72) section 1421 (relating to transfer to brewery of beer
imported in bulk without payment of tax);
(73) section 1422 (relating to transfer to bonded wine
cellars of wine imported in bulk without payment of tax);
(74) section 1506 (relating to clarification of certain
rules relating to employee stock ownership plans of S
corporations);
(75) section 1507 (relating to modification of 10-percent
tax for nondeductible contributions);
(76) section 1523 (relating to repeal of application of
unrelated business income tax to ESOPs);
(77) section 1530 (relating to gratuitous transfers for the
benefit of employees);
(78) section 1532 (relating to special rules relating to
church plans); and
(79) section 1604(c)(2) (relating to amendment related to
Omnibus Budget Reconciliation Act of 1993).
Mr. MOYNIHAN. I thank the President, and particularly thank him for
affording that the Constitution be preserved.
Finally, as I have said, I would have preferred the Senate-passed
bill, in many respects, but committees of conference work by
compromise, and we have a compromise before us which I will support,
again with great thanks to the chairman, to Lindy Paull and to Frank
Polk, and to Mark Patterson and Nick Giordano. I yield the floor.
Several Senators addressed the Chair.
The PRESIDING OFFICER (Mr. Roberts). Who yields time?
Mr. WELLSTONE. Mr. President, I defer to the chairman. I am hoping to
get a chance to speak.
Mr. MOYNIHAN. Mr. President, I believe the chairman would like to
make a comment in response.
Mr. ROTH. Yes, I will be very brief. First of all, I just want to
publicly recognize and thank Senator Moynihan for the role he has
played. I think his statement today is another example of his towering
intellect. We are very fortunate to have an individual who is renowned
throughout this country for his ability to analyze, to study, and come
up with constructive proposals. Certainly, we have all benefited from
his rare intellect.
I would just like to comment on two or three things that he spoke
about in his opening remarks. First of all, I share the pride and
satisfaction in our higher educational system. I have often thought
there are few countries that have anything like ours. They may have one
or two outstanding schools--Oxford and Cambridge in the British Isles;
in Japan they have the University of Tokyo. But we have so many
outstanding schools. My only criticism of what Senator Moynihan said is
he failed to mention the University of Delaware which, I must confess,
is really a hidden jewel. But I share the pride, and I think it is
important that we do everything that we can to strengthen this, both
the private and public sector, in these days where knowledge and
technology is of even greater importance than any other time.
I would also like to speak very briefly about Amtrak, because it
seems to me we have our last clear chance to do something about it. I
have to tell you that for the last several months, I have fought tooth
and nail to try to bring about a solution. Mr. President, I cannot
imagine the leading industrial nation of the world, the only superpower
not having a modern passenger rail system. It is just unconscionable
for that to happen, particularly in these times when we are running out
of--I don't know about the State of New York, but I can tell you, in my
little State of Delaware, we are running out of land. How many highways
can we build? How many planes can fly over? What are we going to do
about the environment? This is a critical matter, not only to the
Northeast but to the entire country.
I couldn't agree more with Senator Moynihan than when he calls upon
the Secretary of Transportation and the Secretary of Labor to provide
some leadership. This can still be salvaged, it still can be saved, but
it means that the parties that are involved and interested are going to
have to get together and bring about the kind of reform that assures a
sound future for our rail system.
This, again I say, is our last clear chance. We have the funds in
there. They are available. Now it is up to those who have the voice on
reform to get together and compromise and work together, just as we did
in our committee.
I again express my appreciation to the distinguished Senator for his
contributions and cooperation.
Mr. MOYNIHAN. Mr. President, can I just say thanks once again to the
chairman, and add that there is every reason to think that Amtrak is on
the verge of financial stability, with a new rail system, fast rail
system, and just when we are about to succeed, we can thwart the whole
enterprise. I hope we will not do that.
Mr. President, I yield the floor. I find my friend has been waiting
so very patiently. The floor is now his.
Mr. WELLSTONE. I thank both colleagues. Mr. President, I ask
unanimous consent to take 15 minutes off the time that has been given
to Senator Bumpers, and I ask Senator Moynihan whether I might get 10
minutes from his time, if that would be OK.
Mr. MOYNIHAN. Mr. President, the Senator most surely can. I wish he
would.
Mr. WELLSTONE. I thank him.
The PRESIDING OFFICER. The Senator from Minnesota is recognized.
Mr. WELLSTONE. Mr. President, let me, first of all, say to Senator
Roth and Senator Moynihan, since my comments will be in disagreement,
that I have tremendous respect for all the work that they have done.
Both of them represent the very best of public service. But I can't, as
a matter of principle, vote for this budget agreement. I support
balancing the budget through a process which observes basic principles
of economic and social justice and embodies the notion of shared
sacrifice in pursuit of the common good, the common interest, the
people's interest. But despite the cheers of its supporters, this deal
fails miserably those tests.
In the midst of all the cheering over this deal, we face a quiet
crisis. It is not a war, it is not a broad economic calamity, but it is
a crisis, nonetheless. This is, by the averages and the indicators, a
prosperous time for our country. It is a time of sustained economic
growth and low inflation, of a booming stock market and low
unemployment. There is no blare of bugles, no moan of universal
distress, no loud hordes of protesters clamoring in our streets. But
averages are misleading. They tell nothing of the end of the curve, the
height at the top or the depth at the bottom, and that is where our
crisis resides. It is a quiet crisis of money, power, and injustice. It
is the crisis of a nation in danger of abandoning the principles of
equality and justice that are so fundamental to our resilience and to
our future together.
The principle of economic justice in this bill has been eclipsed. I
fear it will accelerate growing inequalities in our country that we all
should be committed to combat. We have moved in recent years back to a
darker time. It is a more stratified America. It is really two
Americas: one America with mounting access to the things that make life
richer in possibility; the other caught in a constant struggle to make
ends meet.
One able to purchase the security of gated communities and private
schools; the other beset by the dangers of a decaying social fabric.
One America swiftly navigating the information superhighway, the
other lacking the rudimentary skills needed to navigate an ever-more
complex society.
One enriched by a rising stock market; the other at the uncertain
mercies of the job market.
One wondering when to take a vacation to Europe or Asia; the other
hoping to save enough to take a family to a ball game.
[[Page S8422]]
This other America, this second America is not inhabited by just the
poor or neglected minority. It is, in fact, the residence of the
American majority. It is the homeland of most of our workers, most of
our families, most of our children, and it is precisely this America
that the budget agreement fails to serve fully and fairly.
I would support a deal that required truly shared sacrifice while
investing in our future, but shared sacrifice is not what this package
is all about. Instead, it is about working familie
Major Actions:
All articles in Senate section
TAXPAYER RELIEF ACT OF 1997--CONFERENCE REPORT
(Senate - July 31, 1997)
Text of this article available as:
[Pages S8415-S8461]
TAXPAYER RELIEF ACT OF 1997--CONFERENCE REPORT
The Senate continued with the consideration of the conference report.
Mr. ROTH. Mr. President, I yield such time as he may consume to the
junior Senator from Utah.
The PRESIDING OFFICER. The Senator from Utah is recognized.
Mr. BENNETT. Thank you, Mr. President.
I thank the Senator from Delaware for his courtesy and consideration
in allowing me to take this time. I also congratulate both the Senator
from Delaware and the Senator from New York for their ability in
crafting this particular piece of legislation.
When I ran for the Senate in 1992, I made tax reform one of my
primary goals. I must confess that this bill does not meet all of my
expectations and promises as I ran in the campaign, because one of the
things that I was most devoted to was a determination to make the Tax
Code less complex, easier to understand, and tax returns, perhaps,
filed that are the size of a postcard.
This bill does not accomplish that, and I still hold that out as a
goal for the future. But if this bill does not make the Tax Code less
complex, it at least makes the Tax Code less burdensome --less
burdensome for middle Americans, middle-class Americans who have not
received a significant tax break for a long, long time. There have been
tax breaks at the other ends of the Tax Code, yes, at the bottom end
for people who received the earned income tax credit and, some would
argue, too much at the top end. But there has not been the kind of
middle-class tax relief talked about in the 1992 campaign until this
bill.
So while it is not everything that I would want--and there is still
much unfinished business to be taken care of in terms of tax
simplification--it is a step in the right direction that we should
apply. I intend to vote for it enthusiastically and urge all of my
colleagues to do the same.
When I came here in January 1993, the atmosphere was completely
different than the one we find on the floor today. At that time, there
was a determination to see that spending would grow and that taxing
would grow. I am delighted to have been able to be a part of an effort
that has brought us to a case where spending is going down, at least in
percentage terms, and taxes are going down, in terms of the burden that
they are placing on the American people.
So I congratulate all connected with this effort, including, yes, Mr.
President, the President of the United States. I know it is not common
for people on my side of the aisle to stand up and say nice things
about this President, and I have said my share of unkind things in
areas where I feel he has done things that I think are inappropriate.
But as I have said to the President when I have been to the White House
on occasions, ``When you are right, Mr. President, I will back you.
When I think you are wrong, I will oppose you.'' I owe it to him and to
those in his administration who have worked with him on this agreement
to publicly acknowledge that this time I think he has been right. I
congratulate him and those who work with him for their willingness to
do this. I must say that I still had hoped that Senator Dole would be
elected President. I think if he had been, we would be here discussing
the tax simplification that I believe in as well as some tax reduction.
We had our opportunity to make that case in the campaign. For one
reason or another, it didn't fly, and it will have to wait for another
day. But I congratulate all those who have put partisanship aside and
worked together for the good of the people and made a compromise with
which perhaps none fully agree, but for which the American people,
overall, will ultimately be grateful.
For that reason, Mr. President, I am grateful to the two Senators for
allowing me to take this brief time to make these expressions. I
conclude as I began, with my congratulations to them and to their
colleagues on the Finance Committee, to the leadership of both Houses
in both parties, for their ability on the legislative side to work out
an agreement with the President and his associates in the executive
branch to give us at least this first step in the direction of making
the Tax Code less burdensome and less onerous on the American people.
I yield the floor.
Mr. ROTH addressed the Chair.
The PRESIDING OFFICER. The Senator from Delaware is recognized.
Mr. ROTH. Mr. President, I yield myself such time as I may use.
Mr. President, when the 105th Congress began, a promise was made to
the American people. They were concerned about Washington's addiction
to spending, and the high deficits that were a consequence of that
spending. We promised to give them a balanced budget. They were
overburdened by rising taxes. They had been shackled with a record-
setting increase in 1992, and were paying more to government than they
were for their own food, shelter, and clothing. We promised them
relief. Our American families were concerned about the education of
their children--about the rising costs of post-secondary schools, and
their ability to help their children enter our colleges and
universities to learn and to prepare for productive futures. We
promised to make education more accessible.
Young Americans, just out of school--many of them starting families--
were finding it increasingly more difficult to buy a home. As a
proportion of their income, they discovered that a mortgage today is
twice as much as it was for their parents. Valiant small businessmen
and -women were finding it increasingly more difficult to build
successful companies. They had lost their home office deductions, the
deductibility of their health insurance, and then--when their company,
despite these and other challenges, proved successful--they had to fear
losing it to death taxes. Again, we promised relief. We promised peace
of mind to senior Americans who were worried about Medicare and its
future. We promised to provide future generations the opportunity to
become more self-sufficient through enhanced individual retirement
accounts, and less dependent on government for their support in the
years to come. And we promised that we would do something to increase
health care coverage for America's children--for America's future.
These, of course, Mr. President, were bold promises. For years, the
Republican Party had advocated these measures, but in a city built on
promises--the majority of which unfortunately go unfulfilled--it was
reasonable that Americans felt that these, too, would remain empty. But
today, Mr. President--today, we can say that these promises made, are
promises kept.
For the first time since 1969, Americans have a balanced budget--a
balanced budget that will be realized within 5 years. For the first
time in 16 years, Americans have real and meaningful tax relief. For
the first time ever, our families will have tax-free education savings
accounts, and for the first time in a decade, we are bringing back the
student loan interest deduction. And these, Mr. President, are not our
only firsts. We are allowing penalty-free withdrawals from IRA plans to
make first-time home purchases.
We are eliminating the capital gains taxes on $500,000 of gain for a
couple that sells their home. We are strengthening and preserving
Medicare by introducing choice and competition to that program. We are
giving States
[[Page S8416]]
greater flexibility and authority to administer Medicaid, and we are
increasing health care coverage for millions of children.
These are all firsts, Mr. President, but there is another first--one
that is more philosophic in nature. For the first time since President
Johnson's Great Society exploded the size and costs of Federal
programs, Americans have a government that is focused on doing more
with less.
When historians look at what has been accomplished here these past
few months, I believe our work will mark the beginning of a new era--an
era which the Republicans have long promised and which President
Clinton articulated when he said that the days of big government are
behind us.
This budget reconciliation package is a strong first step toward
realizing that promise. It is a bipartisan effort--one that could not
have been accomplished without a spirit of cooperation between
Republicans and Democrats, between the Senate and the House, and
between Congress and the President. I'm proud of what we've
accomplished. Members in both Houses of Congress, and on both sides of
the aisle, have reason to be proud, as does Bill Clinton.
Certainly, there are differences between the parties--those
differences can be valuable in the battle of ideas. But this package
represents a collective effort, an effort that is a far cry from the
acrimony, Government shutdowns and the vetoes that attended past budget
debates. I believe our work here demonstrates a coming together on
fundamental issues. Taxes have been too high.
They are still too high. In fact, as a percentage of our GNP, they
haven't been higher than they are right now since 1960. Government has
grown too big, become too inefficient, too overbearing and costly. Too
much power has been taken from our people--from our States--and it's
been centralized here in Washington.
Yesterday we addressed the changes that will take place in Government
programs--especially in entitlements like Medicare and Medicaid. We
explained how this reconciliation package will deliver greater
flexibility to the States for them to administer Medicaid in a more
cost-effective, a more efficient manner.
Today, we focus on the major tax provisions included in our plan, and
how those provisions will provide relief for Americans of all ages--for
our youth, going away to college, for our young families looking to buy
their first home and raise their children, for older families running
small businesses and preparing for retirement, and for those Americans
who are already retired and looking to find comfort and security on
fixed incomes.
This reconciliation package provides relief for all of these. It
includes a $500-per-child tax credit for families with children under
the age of 17. The credit will be available to the working poor through
an enhanced earned income credit. It will cover middle-class families,
couples earning up to $110,000 a year. At $110,000 it will begin to
phase out. And this tax relief will begin next year with a $400 per
child credit in 1998, and the full $500 credit in 1999 and thereafter.
We also provide relief to hard-working, middle-class Americans by
enhancing the individual retirement account. We raise the income limits
on traditional IRA's and create a new back-loaded IRA. In this back-
loaded IRA, the contributions are not tax deductible, but the build-up
and withdrawals are tax-free if the account is held for 5 years and the
account holder is at least 591/2. The income limits for the new back-
loaded IRA will be $95,000 for singles and $150,000 for married
couples. Our new IRA will allow penalty-free withdrawals for first-time
home purchases. Another very important change to the IRA is that we
allow homemakers--below certain family income--to save a full $2,000
annually in an account, regardless of their spouse's pension plan.
Mr. President, I have worked for years to strengthen individual
retirement accounts for working Americans. These changes will go a long
way toward helping Americans prepare for retirement. They will
encourage self-reliance and provide incentive for saving.
This is, indeed, an idea whose time has come. It will be a blessing
to countless Americans as they prepare for the future. And beyond
helping individual families, these expanded IRS's will promote
investment, capital formation and economic growth.
Another important provision of this reconciliation package--one that
will not only provide tax relief, but will, along with our IRA's,
promote investment and jobs, is our capital gains tax cut.
Here, we drop the top rate to 20 percent on investments that are held
for at least 18 months. The rate will drop to 18 percent for assets
purchased after 2000 and held for at least 5 years. For joint filers
with incomes less than $41,200, the top capital gains rate will be 10
percent of assets held for at least 18 months, and 8 percent for assets
held for at least 5 years. Our package does away with capital gains
taxes on the sale of a home, as long as the home is $500,000 or less
for joint filers and $250,000 or less for single filers.
The benefit of capital gains tax relief will be felt not only by our
families, but by America at large. According to economist Lawrence
Kudlow, in a recent Wall Street Journal editorial,
The budget's lower capital gains tax rate will help
maintain U.S. global economic leadership in the 21st century.
This is especially important in relation to the fast-growing
economies of the Pacific rim, with China looming not far
behind. Most of the Asian tigers have lower tax burdens on
capital formation that the U.S.
America, Mr. President, needs this capital gains tax relief. It is
long overdue.
However, the tax relief contained in this package does not end here.
Families will also benefit by the way that this bill offers relief from
the estate tax--the tax that can rob a family of its farm or business
when a father or mother passes away.
To help these families, we raise the unified credit to $1,000,000 per
estate by 2006; and we provide tax-free treatment for family-owned
farms and small businesses for up to $1.3 million. I can't overstate
how important this estate tax relief will be to our families and small
businesses. In 1995, delegates to a convention on small business
survival, ranked killing the estate tax among the top five priorities
on a list of 60 recommendations to the President. This is because many
small business men and women fear the enterprises they have worked
their lives to create won't be around to pass on to their children. The
estate tax relief provided in this package offers a strong first step
toward allaying that fear and providing families the protection they
deserve.
Beyond offering relief for estate taxes, this package also benefits
America's small businesses by accelerating the phase in of the self-
employed health insurance deduction, raising that deduction all the way
to 100 percent, and by clarifying the deductibility of the home office
business deduction. These, Mr. President, are important provisions.
They will promote economic growth, jobs, and family security. They
naturally complement the overarching objective of this legislation to
provide immediate tax relief and to create conditions that will prepare
America and Americans for a bright and prosperous future.
Just how important this objective is can be seen by the fact that a
full 80 percent of the tax relief we offer in this package is directed
at the $500 credit for children and provisions that will promote
education. These education-related measures will go a long way toward
assisting students and their parents in affording the cost of post-
secondary education.
They include the Hope scholarship tax credit, a $2,500-per-year
student loan interest deduction, and penalty-free withdrawal from
IRA's. We can't overstate just how important these measures will be to
American families, to America's students, and to our future. I had
hoped that we could have gone even further in promoting the educational
aspects of this bill. For example, I wanted to maintain a provision
that would offer tax-free treatment for State-sponsored prepaid tuition
plans, a permanent extension of employer provided education assistance,
and a comprehensive education IRA, but in these areas the White House
was unwilling to compromise.
And this brings up a point I would like to make--a point I touched
upon yesterday. No one received everything they wanted with this
package. That, Mr. President, is the nature of compromise. Another
lesson we learn from
[[Page S8417]]
compromise is that it tends to add complexity to the package under
consideration.
We learned how when you have three parties involved in the process--
the Senate, the House, and the administration--each compromise made in
negotiations rendered the final product that much more complex.
Having said this, let me be clear that I am generally pleased by the
outcome. Certainly, I could be more pleased. But the bipartisan effort
that produced this reconciliation package is something to be
appreciated. We accomplished what we set out to do. We provided tax
relief for middle-income families; we provided tax relief to promote
education; and, we provided tax relief that will stimulate economic
growth, opportunity, and jobs.
Let me show just how that relief will affect typical American
families. When I first brought the Senate Finance Committee tax relief
package to the floor--about 6 weeks ago--I introduced three
hypothetical families from Delaware: a single mother named Judy Smith,
a farming family--the Wilsons--and a young professional couple, John
and Susan Jones. Let me show you how this package--in its final form--
will benefit them:
Let's begin with Judy. She has two young children and works as a
legal secretary in Wilmington, making $35,000 a year. Currently she
pays over $3,000 in Federal income taxes--over $3,000. When President
Clinton signs this bill, Judy's taxes will be cut by $800 next year and
by $1,000 the year after. Why? Because of the child tax credit. Judy
will be able to spend that savings as she wants, or she can put it in
an enhanced individual retirement account for her future.
Jim and Julie Wilson, our farming family with three children and an
income of $55,000, now pay over $5,500 in Federal income taxes. When
President Clinton signs this bill, their taxes will be cut by $1,200 in
1998, and by $1,500 in 1999 and beyond, as they will receive $500 for
each child. Julie Wilson will be able to set up a homemaker IRA to save
for her retirement. Looking far ahead, if the farm prospers, Jim and
Julie will be able to pass it on to their children free of the burden
of the estate tax--all because of the middle-income tax relief
contained in this bill.
Finally, Mr. President, let's look at John and Susan Jones. They live
and work in Dover, DE. College graduates, John is a veterinarian and
Susan is a physical therapist. They make $75,000 and have one young
child. Under current law, the Jones family pays about $11,500 in
Federal income taxes. Because of this legislation, they will receive a
$400 tax credit next year, and $500 each year thereafter.
Susan will be able to take the home office business deduction, as her
practice is located within their home, and she will be able to
accelerate the phase-in of the self-employed health insurance
deduction. John and Susan will also be able to deduct a portion of the
interest on their student loans, and they'll be able to set up new
back-loaded IRA accounts for their retirement.
This is how our work will affect these three families, Mr. President.
It will provide relief--much needed relief. As I have said, today the
taxes paid by our families are higher as a percentage of GNP than
they've been since 1960. This bipartisan tax relief effort will do
something about that. It will provide relief as part of a budget
reconciliation package that will lead our Nation to a balanced budget
in 2002. Having said that, however, I want to add that I consider this
only a beginning. Americans not only need tax relief; they need tax
reform. They need tax reform that really does simplify the Tax Code.
They need reform that focuses on fairness. They need reform that
maintains and promotes strong economic growth--growth that will lead to
continued job creation. And they need reform that promotes American
exports and our competitiveness in the global economy.
This is what we will turn our attention to next. And it is my hope
that the same level of cooperation that sustained us in this debate
will attend us as we move from tax relief to tax reform. I appreciate
my colleagues on both sides of the aisle who have been active,
involved, and given to a spirit of willingness throughout this process.
I am particularly grateful to Senator Moynihan--my friend and a
thoughtful, well-esteemed leader.
And again, Mr. President--as I did yesterday--I thank the
professional, capable staff of the Senate Finance Committee for their
countless hours and lost sleep. This was, indeed, a heroic effort.
I yield the floor.
Mr. MOYNIHAN addressed the Chair.
The PRESIDING OFFICER (Mr. Burns). The Senator from New York.
Mr. MOYNIHAN. Mr. President, I have the honor now to respond to my
revered chairman, who brought this extraordinary legislation to the
floor and in a very few hours from now will see it sent to the
President to become law.
By day's end, the U.S. Senate will have voted overwhelmingly to
reduce Federal taxes by a net total of $95 billion over 5 years and
$275 billion over 10 years. Whatever one's view of this legislation as
a matter of tax policy, there can be absolutely no doubt that without
the dominant influence of the chairman of the Committee on Finance, we
would not be here today. Absent Senator Roth, we would not be here
today. This conference agreement is a singular achievement for him, and
we congratulate him.
Among other provisions in the legislation, the Roth IRA will soon be
as well-known as the Pell grant. It is a fitting tribute to Senator
Roth's long, persistent, indomitable commitment to encourage savings by
Americans.
For those interested, this is in section 302, Individual Retirement
Accounts, section 408(a), Roth IRAs. It is there in what I think others
across the park in the Supreme Court call black letter law. There, sir,
it is.
There is another aspect of this legislation which has not been
commented on and, I hope, might be. Without perhaps entirely intending
it, and not quite in the mode of how others have done it, after a half
century of discussion, we are, in fact, establishing a children's
allowance in our social policies.
I have had occasion to write about this over the years. We are the
only industrial democracy in the world that does not have a children's
allowance--just a routine thing, a feature of social policy that goes
back to the beginnings of the century. It had various motivations in
Sweden. There was a time when the Swedes thought they were dying out as
a race and needed to encourage more children. So they gave family
allowances. Sometimes called a family allowance. The French much the
same. In places like Canada, just a good social policy.
During World War II, the late Senator Neuberger was working on the
Alaska-Canada highway--ALCAN highway, as we knew it in those days--and
interested in what the Canadians were doing, came upon the family
allowance, the children's allowance, and introduced legislation when he
became Senator after the war. And John F. Kennedy was much interested
in this and cosponsored the legislation. And I can say from the days of
the early Kennedy administration there was an active interest in this
possibility--the elemental proposition that if you have children, it is
going to cost money, and a family raising children needs a little
support. We are giving it. Instead of a direct grant, we are providing
a direct tax credit. The end result will be the same, and a rather
extraordinary bit of social policy is before us which has never been
debated as such, but as I get on in years I begin to think the more you
debate social policy, the less social policy you get, and so we could
perhaps count our blessings in this regard.
But now my friend from Delaware has heard his ranking member say on
many occasions that if it were up to this Senator, we would have no tax
cuts at this time, given the extraordinary condition of our economy
just now, a condition for which many believe the deficit reduction law
enacted in 1993, OBRA 1993, is largely responsible.
I continue to be concerned about whether cutting taxes might undo the
astonishing progress we have made over the last 4 years, because OBRA
93 took hold when we did it. It was, indeed, the largest tax increase
in history, and it has produced extraordinary increases in wealth in
our Nation because it sent a signal to the economy that this Government
was going to get hold of its financing, pay its bills in sound dollars,
not monetize the debt, as the phrase is among economists, inflate the
currency and get rid of your
[[Page S8418]]
debt in that mode. Those are profoundly important signals to the
markets, and we have seen, I believe, the result.
The deficit for fiscal year 1992 was $290 billion and growing. It was
strangling us. We had no prospect whatever of getting out of it. What
earlier on, President Reagan's Director of OMB, David Stockman, had
said, $100 billion deficits as far as the eye can see, had become $300
billion deficits as far as the eye could see. And we turned it around.
We stopped it.
As a result of this aggressive deficit reduction program put in place
by a Democratic Congress in 1993, the deficit for the current fiscal
year could be less than $30 billion, which is about one-third of 1
percent of gross domestic product, a matter of no consequence in the
large sphere of things. The Federal budget is on the verge of balance
at this very moment and for the first time in three decades, and it
would get there without any changes in law. I would estimate that we
might have a balanced budget in the fourth quarter of the next fiscal
year, a year from now. We would have it without change in law. Now we
are putting the date off until the year 2002. I hope that does not
become a fateful mistake. I am not here to alarm anyone, but I think it
needs to be said for the record if the time comes when we have to make
changes. Given the previous success of our action 4 years ago, we may
come to regret what we have done today, but there is not a majority for
that view. There is a very small minority for that view. The
congressional leadership and the President have agreed that there will
be tax cuts this year, and so, given that reality, I joined with the
other Democratic members of the Finance Committee in working with
Chairman Roth in a bipartisan mode.
He has been generous enough to point out, as did earlier in the day
the majority leader, that the Finance Committee was unanimous in
reporting out the measure that we voted on just an hour ago on
spending, and there was an 18 to 2 vote in our Committee on the bill
before us now.
Yesterday, Senator Domenici, the distinguished chairman of the Budget
Committee, said it was the bipartisan solidarity of the Finance
Committee which gave the real impetus to getting the budget agreement
put in place, and I think that is so and nothing, no further tribute is
possible to Senator Roth for having presided over that event.
It is a phenomenon which I hope, and I know he hopes, we might see in
the future. We found that we could do things on a bipartisan basis that
could amaze you. We could raise taxes on tobacco. We could provide the
largest incremental initiative in health care since Medicare and
Medicaid were enacted in 1965--just like that, just in 2 days. Again,
perhaps because it was not debated for a year, we were able to get it
done in an afternoon. I would like to explore that possibility
sometime. Is there an inverse ratio between the amount of debate and
the legislation that emerges? I think you have seen some of that in the
past many years.
I would take the time of the Senate to point to several measures in
the bill which are surely praiseworthy and equally important. One that
has not been commented on anywhere that I have seen in the press is
that the bill before us removes the present $150 million cap on the
issuance of tax-exempt bonds by universities, colleges and nonhospital
health facilities. It sounds like an esoteric matter. What could this
mean? Well, it goes to something that is as important to American life
as anything I know, and it is as characteristic of American democracy
as anything I know.
We are the only democratic nation in the world that has a private
sector in its higher education--not just a few Jesuit colleges here or
every so often a special arrangement in the north of Sweden or the
south of France, and so forth. No, our system of higher education began
as private denominational matters, and we continue to have just about
an equal balance between the great private institutions and the great
public institutions. You could go out to California, in the San
Francisco Bay area, and you would see it is exemplary of Stanford
University, named for a great railroad magnate who gave his money in
the name of his son who died prematurely, and Berkeley, the University
of California at Berkeley, a great State institution.
Now, we have earlier on enabled the private universities, colleges,
and nonmedical health facilities to borrow money on a tax-exempt basis,
which puts them partially on an equal footing with the State
institutions which obtain money directly from the taxpayers, from tax
revenue, and can issue tax-exempt bonds because they are public
institutions.
We capped that amount, and more and more of our institutions have
reached it. And having done that, they are no longer in a position to
build what you could call the capital-intensive science facilities and
suchlike facilities that you need in the area of research on the edges
of knowledge in this country today. And we are the center of such
research. You could hypothesize, if you like, a future where if we did
not do what we are doing, there would come a time when the finest law
school on the west coast would be at Stanford--law schools are not
expensive; you have to add 50 books a year in the library--but all the
physics would be done at Berkeley. Physics is expensive. All the
chemistry, all the great research in astronomy, the outer edges of the
universe to the very core of the Earth itself, all that would be in
public institutions. And the competitive urges and the range of variety
of the private institutions--the University of Chicago, Rice
University, go right down the list of them--that would be lost. The
University of Pennsylvania, New York University, Columbia and, as I
say, across the Nation, those institutions are precious. There is no
reason why Americans should know that the universities and colleges in
the United Kingdom are all public institutions, but it is important to
know that we are singular in this regard, and this legislation responds
to that need. It may just be that no one is interested enough to care,
to take note, but I can assure you the universities involved are very
attentive and are very pleased.
We also extend for 3 years the provision for exclusion from income of
employer-provided educational assistance, which is section 127 of the
Internal Revenue Code. This is a wonderfully unintrusive piece of
social policy. It is probably the single-most successful tax incentive
for education we have. In a world of continuing education, of
continuing developments in science and technology, we have arrangements
whereby an employer can send an employee to school to learn something
special being taught--at night or weekends, whatever--get a degree,
bring the skills back into the workplace. They will be paid more money,
and they will get more income. We will get more revenue. Everyone wins
all around. We in the Finance Committee made this absolutely easy,
workable, a successful program. We made it permanent.
For reasons I cannot understand, and I don't think the chairman could
possibly understand either, the Finance Committee language, which made
it permanent and applied it to graduate school, was dropped in
conference. We had legislation in the Senate to do just this, Senator
Roth and I, with 50 cosponsors. What is the matter with people who
can't see what elemental good sense this makes? The firm that wants to
send a chemist to do postgraduate work in a new field that is just
opening up so he can come back and do it in the private sector of the
economy is just so elemental. That it was not done is disturbing.
Perhaps we will get back to it. I can't imagine why it was not
accepted, but we had no success.
The conferees included another salutary measure by extending for 1
year the deductibility, at fair market value, of charitable gifts of
appreciated stock to private foundations. Absent this, we would have
seen a needless dropoff in charitable giving. And, again, we are trying
to encourage the private sector, that private sector of education we
try to support, the private sector of employer-provided educational
assistance, into giving to private charities.
Now, to another matter of concern--of large concern--just beginning
to be noted. I observed in the Washington Post this morning a comment
on it, and also in the New York Times.
The Senate-passed bill included a measure written by our chairman and
supported by this Senator and others to provide $2.3 billion in
critically needed funding for Amtrak, the National Railroad Passenger
Corporation,
[[Page S8419]]
the last hope of rail passenger service in America. The distinguished
CEO of the corporation, Mr. Tom Downs, said to me, as he would say to
anyone who called and asked, that if he did not get this $2.3 billion,
the corporation would be bankrupt in February or March.
I say to you, Mr. President, that's what this period will be
remembered for, that we did not do this. We had it in the bill. The
Senate voted 80 to 18 for the provision that the chairman provided. And
it was dropped. It was dropped owing to a dispute over other matters
altogether--job protections and outside contracting by Amtrak. It is
provided in this bill that $2.3 billion is there, but it is not
available to Amtrak until some very controversial legislation is
adopted making job protection and such like matters subject to
collective bargaining.
I will be blunt. This could mean the end of Amtrak, the National
Railroad Passenger Corporation. Bankruptcy for Amtrak is an outcome we
should surely do everything in our power to prevent. It would be a
national calamity. I wish to be emphatic in saying that the possibility
is now real, and I hope the administration will join in the effort to
bring about a resolution.
I was surprised, in the often intense debates of this last week on
this matter, that nowhere did we hear from the Secretary of Labor.
Nowhere did we hear from the Secretary of Transportation. What do we
have Cabinet officers for? I don't mean to be critical of any
individual. It occurs to me that they were not invited in. I'll tell
you, I was once an assistant to Secretary Arthur J. Goldberg when he
was Secretary of Labor during the Kennedy administration. We had rail
strikes and soon thereafter, in the Johnson administration, disputes in
the steel industry. Arthur J. Goldberg would have been right in the
middle of it, seeing that workers were protected and that the public
was protected.
This remains to be done. I hope I have sounded an alarm. If I sound
alarmist, Mr. President, may I put it in the Record that I am and I
intend to be alarmist.
Another matter on which we have made an error, in my view, was the
hurtful provision revoking the tax-exempt status of the Teachers
Insurance and Annuity Association and the College Retirement Equities
Fund, known as the TIAA-CREF, a 2-million-member retirement system that
serves 6,100 American colleges, universities, teaching hospitals,
museums, libraries and other nonprofit educational and research
institutions. TIAA was founded by Andrew Carnegie in 1918. It has been
tax exempt ever since. It is a nonprofit charity, and properly not
taxed.
In 1937 it was incorporated under the laws of the State of New York
to ``forward the cause of education and promote the welfare of the
teaching profession''--``forward the cause of education and promote the
welfare of the teaching profession.'' The law further states that the
purpose of TIAA--this is the New York statute--is ``to aid and
strengthen non-proprietary and non-profit-making colleges, universities
and other institutions engaged primarily in education or research.''
And it has done just that. It has long been recognized as a model of
such programs.
As a somewhat unanticipated result, it brought to American higher
education portability of pensions. You did not have to start out in one
institution and after a certain point stay the rest of your life
because you had to have some retirement benefit. It has a great value
to our educational system for the simple reason that it enables a young
person at, say, a 2-year college or a local college, who shows great
promise, does good work, to end up at Chicago or Stanford or Duke,
because they can move. This is part of the agility of American higher
education. There is no reason to tax this, and the Finance Committee
said don't tax it. We never have. The Senate said don't tax it. But
somehow or other we have decided to do so.
Revoking TIAA-CREF's 79-year-old tax exemption will cost the average
retiree who receives $12,000 a year about $600 in income. You know,
librarians are not highly paid. Perhaps that is not widely known. A
$12,000 pension would be quite normal. A $600 reduction would be 5
percent right away. Future retirees currently accumulating benefits are
likely to face reductions of 10 to 15 percent.
Why make the lives of librarians and assistant professors and
teachers in community colleges harder? Why do we do this? Why wasn't
this something that people said no to? The Finance Committee said no to
it. But we were not successful.
Two closing points. In an era in which the most recent Presidential
campaign was captivated--at least sectors of it--by the idea of a flat
tax, it deserves pointing out that this 820-page piece of legislation
will add hugely to the stupefying complexity and mass of the Internal
Revenue Code and its accompanying regulations.
Mr. President, this is not an exercise here in physical therapy. For
as long as I can, I would like to hold it up to show it to you. I dare
not hold it up any longer. If I should drop it, there would go my right
ankle. Did that thump on the desk make itself heard?
In 1986, in the Tax Reform Act of that year, we moved toward the idea
of simplicity in the Tax Code by a broader base and lower rates. Just
an anecdote, the late beloved Erwin Griswold, sometime dean of the
Harvard Law School, sometime Solicitor General of the United States,
was a friend. He used to write me each April describing how long it
took him to complete his tax returns, which he persisted in preparing
himself. Now, mind you, Dean Griswold was perhaps the Nation's foremost
authority on the subject of tax law. He almost began the subject. He
wrote the first text. He describes himself as being a young attorney,
graduate of Harvard Law in the 1920s, in the Solicitor General's
office, and some matters concerning taxation came to him. He, as he put
it in a wonderful address to the bar association tax section, said, ``I
thought of going to the Solicitor General to tell him I didn't know
anything about tax law, but I decided to go to the library instead.''
And he wrote the text.
In his last letter to me, dated April 12, 1994, 7 months before he
died, he wrote that his 1993 tax return took him almost 100 hours to
complete--100 hours for Erwin Griswold to prepare his not very
complicated financial affairs. He was a teacher and a lawyer,
Government employee, and he knew all these matters--yet it took him 100
hours. It would be 110 were he alive into the next tax season.
Let me say, just as an example, a family with three children, two in
college and one under age 17, could be required to calculate the new
child tax credit, a Hope scholarship tax credit for one college
student, and a separate lifelong learning credit for the older child.
Each of these different provisions will have different eligibility
rules and complicated income phaseouts that will have to be calculated
on different worksheets and reported to the Internal Revenue Service on
a variety of forms.
It is no exaggeration, sir--I don't believe it is an exaggeration--to
say that anybody who could fill out the forms necessary to qualify for
these tax benefits would already be an accountant of advanced
experience and achievement and would have no need for the benefits.
I do want to point out that in the statement of the managers
accompanying this conference report, it says, ``The conferees
anticipate that the Secretary of the Treasury will determine whether a
simplified method of calculating the child credit, consistent with the
formula described above, can be achieved.'' So there is hope. But I
wouldn't hope too much.
President Ronald Reagan, our much-loved President Ronald Reagan,
liked to say the Republicans are the party of the Fourth of July and
Democrats are the party of April 15th. With the passage of this
legislation, I think Democrats can no longer take all the credit for
April 15th.
A second and final point. This will be the first-ever tax bill
subject to the line-item veto, which gives the President, ``limited
authority to cancel specific dollar amounts of discretionary budget
authority, certain new direct spending, and limited tax benefits.''
Limited tax benefits are those that provide, a Federal tax deduction,
credit, exclusion, or preference to 100 or fewer beneficiaries.
In January of this year, I joined Senators Byrd, Levin and former
Senator Hatfield in a legal challenge to the line-item veto on grounds
that it violates the presentment clause in article
[[Page S8420]]
I, section 7, of the Constitution. The U.S. District Court for the
District of Columbia agreed and promptly declared the statute
unconstitutional.
But later, on June 26, the Justice Department took the matter to the
Supreme Court itself, and the Court held that we, as legislators, had
no standing to challenge the law, clearing the way for the President to
exercise his new authority.
Now, just 2 days ago, on July 29, the Joint Committee on Taxation met
to consider the list of limited tax benefits in this bill, a list
prepared by the committee staff, that would be subject to the line-item
veto. It was the first time we had done this under the new law, and I
am pleased to report, upon being presented with the 6-page list
totaling 79 separate provisions in this bill subject to the line-item
veto, some members of the joint committee began to display a visible
lessening of enthusiasm for the concept itself.
I have a list here, Mr. President, and take the liberty of asking
unanimous consent that it be printed in the Record, so the
administration will have an opportunity to look up the items, veto them
and then the injured parties can arrive across the park at the Supreme
Court with standing and the Constitution will be preserved.
There being no objection, the list was ordered to be printed in the
Record, as follows:
TITLE XVII--IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO LINE ITEM
VETO
SEC. 1701. IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO
LINE ITEM VETO.
Section 1021(a)(3) of the Congressional Budget and
Impoundment Control Act of 1974 shall only apply to--
(1) section 101(c) (relating to high risk pools permitted
to cover dependents of high risk individuals);
(2) section 222 (relating to limitation on qualified
501(c)(3) bonds other than hospital bonds);
(3) section 224 (relating to contributions of computer
technology and equipment for elementary or secondary school
purposes);
(4) section 312(a) (relating to treatment of remainder
interests for purposes of provision relating to gain on sale
of principal residence);
(5) section 501(b) (relating to indexing of alternative
valuation of certain farm, etc., real property);
(6) section 504 (relating to extension of treatment of
certain rents under section 2032A to lineal descendants);
(7) section 505 (relating to clarification of judicial
review of eligibility for extension of time for payment of
estate tax);
(8) section 508 (relating to treatment of land subject to
qualified conservation easement);
(9) section 511 (relating to expansion of exception from
generation-skipping transfer tax for transfers to individuals
with deceased parents);
(10) section 601 (relating to the research tax credit);
(11) section 602 (relating to contributions of stock to
private foundations);
(12) section 603 (relating to the work opportunity tax
credit);
(13) section 604 (relating to orphan drug tax credit);
(14) section 701 (relating to incentives for revitalization
of the District of Columbia) to the extent it amends the
Internal Revenue Code of 1986 to create sections 1400 and
1400A (relating to tax-exempt economic development bonds);
(15) section 701 (relating to incentives for revitalization
of the District of Columbia) to the extent it amends the
Internal Revenue Code of 1986 to create section 1400C
(relating to first-time homebuyer credit for District of
Columbia);
(16) section 801 (relating to incentives for employing
long-term family assistance recipients);
(17) section 904(b) (relating to uniform rate of tax on
vaccines) as it relates to any vaccine containing pertussis
bacteria, extracted or partial cell bacteria, or specific
pertussis antigens;
(18) section 904(b) (relating to uniform rate of tax on
vaccines) as it relates to any vaccine against measles;
(19) section 904(b) (relating to uniform rate of tax on
vaccines) as it relates to any vaccine against mumps;
(20) section 904(b) (relating to uniform rate of tax on
vaccines) as it relates to any vaccine against rubella;
(21) section 905 (relating to operators of multiple retail
gasoline outlets treated as wholesale distributors for refund
purposes);
(22) section 906 (relating to exemption of electric and
other clean-fuel motor vehicles from luxury automobile
classification);
(23) section 907(a) (relating to rate of tax on liquefied
natural gas determined on basis of BTU equivalency with
gasoline);
(24) section 907(b) (relating to rate of tax on methanol
from natural gas determined on basis of BTU equivalency with
gasoline);
(25) section 908 (relating to modification of tax treatment
of hard cider);
(26) section 914 (relating to mortgage financing for
residences located in disaster areas);
(27) section 962 (relating to assignment of workmen's
compensation liability eligible for exclusion relating to
personal injury liability assignments);
(28) section 963 (relating to tax-exempt status for certain
State worker's compensation act companies);
(29) section 967 (relating to additional advance refunding
of certain Virgin Island bonds);
(30) section 968 (relating to nonrecognition of gain on
sale of stock to certain farmers' cooperatives);
(31) section 971 (relating to exemption of the incremental
cost of a clean fuel vehicle from the limits on depreciation
for vehicles);
(32) section 974 (relating to clarification of treatment of
certain receivables purchased by cooperative hospital service
organizations);
(33) section 975 (relating to deduction in computing
adjusted gross income for expenses in connection with service
performed by certain officials) with respect to taxable years
beginning before 1991;
(34) section 977 (relating to elective carryback of
existing carryovers of National Railroad Passenger
Corporation);
(35) section 1005(b)(2)(B) (relating to transition rule for
instruments described in a ruling request submitted to the
Internal Revenue Service on or before June 8, 1997);
(36) section 1005(b)(2)(C) (relating to transition rule for
instruments described on or before June 8, 1997, in a public
announcement or in a filing with the Securities and Exchange
Commission) as it relates to a public announcement;
(37) section 1005(b)(2)(C) (relating to transition rule for
instruments described on or before June 8, 1997, in a public
announcement or in a filing with the Securities and Exchange
Commission) as it relates to a filing with the Securities and
Exchange Commission;
(38) section 1011(d)(2)(B) (relating to transition rule for
distributions made pursuant to the terms of a tender offer
outstanding on May 3, 1995);
(39) section 1011(d)(3) (relating to transition rule for
distributions made pursuant to the terms of a tender offer
outstanding on September 13, 1995);
(40) section 1012(d)(3)(B) (relating to transition rule for
distributions pursuant to an acquisition described in section
355(e)(2)(A)(ii) of the Internal Revenue Code of 1986
described in a ruling request submitted to the Internal
Revenue Service on or before April 16, 1997);
(41) section 1012(d)(3)(C) (relating to transition rule for
distributions pursuant to an acquisition described in section
355(e)(2)(A)(ii) of the Internal Revenue Code of 1986
described in a public announcement or filing with the
Securities and Exchange Commission) as it relates to a public
announcement;
(42) section 1012(d)(3)(C) (relating to transition rule for
distributions pursuant to an acquisition described in section
355(e)(2)(A)(ii) of the Internal Revenue Code of 1986
described in a public announcement or filing with the
Securities and Exchange Commission) as it relates to a filing
with the Securities and Exchange Commission;
(43) section 1013(d)(2)(B) (relating to transition rule for
distributions or acquisitions after June 8, 1997, described
in a ruling request submitted to the Internal Revenue Service
submitted on or before June 8, 1997);
(44) section 1013(d)(2)(C) (relating to transition rule for
distributions or acquisitions after June 8, 1997, described
in a public announcement or filing with the Securities and
Exchange Commission on or before June 8, 1997) as it relates
to a public announcement;
(45) section 1013(d)(2)(C) (relating to transition rule for
distributions or acquisitions after June 8, 1997, described
in a public announcement or filing with the Securities and
Exchange Commission on or before June 8, 1997) as it relates
to a filing with the Securities and Exchange Commission;
(46) section 1014(f)(2)(B) (relating to transition rule for
any transaction after June 8, 1997, if such transaction is
described in a ruling request submitted to the Internal
Revenue Service on or before June 8, 1997);
(47) section 1014(f)(2)(C) (relating to transition rule for
any transaction after June 8, 1997, if such transaction is
described in a public announcement or filing with the
Securities and Exchange Commission on or before June 8, 1997)
as it relates to a public announcement;
(48) section 1014(f)(2)(C) (relating to transition rule for
any transaction after June 8, 1997, if such transaction is
described in a public announcement or filing with the
Securities and Exchange Commission on or before June 8, 1997)
as it relates to a filing with the Securities and Exchange
Commission;
(49) section 1042(b) (relating to special rules for
provision terminating certain exceptions from rules relating
to exempt organizations which provide commercial-type
insurance);
(50) section 1081(a) (relating to termination of suspense
accounts for family corporations required to use accrual
method of accounting) as it relates to the repeal of Internal
Revenue Code section 447(i)(3);
(51) section 1089(b)(3) (relating to reformations);
(52) section 1089(b)(5)(B)(i) (relating to persons under a
mental disability;
(53) section 1171 (relating to treatment of computer
software as FSC export property);
(54) section 1175 (relating to exemption for active
financing income);
(55) section 1204 (relating to travel expenses of certain
Federal employees engaged in criminal investigations);
(56) section 1236 (relating to extension of time for filing
a request for administrative adjustment);
(57) section 1243 (relating to special rules for
administrative adjustment request with respect to bad debts
or worthless securities);
(58) section 1251 (relating to clarification of limitation
on maximum number of shareholders);
(59) section 1253 (relating to attribution rules applicable
to stock ownership);
(60) section 1256 (relating to modification of earnings and
profits rules for determining whether REIT has earnings and
profits from non-REIT year);
[[Page S8421]]
(61) section 1257 (relating to treatment of foreclosure
property);
(62) section 1261 (relating to shared appreciation
mortgages);
(63) section 1302 (relating to clarification of waiver of
certain rights of recovery);
(64) section 1303 (relating to transitional rule under
section 2056A);
(65) section 1304 (relating to treatment for estate tax
purposes of short-term obligations held by nonresident
aliens);
(66) section 1311 (relating to clarification of treatment
of survivor annuities under qualified terminable interest
rules);
(67) section 1312 (relating to treatment of qualified
domestic trust rules of forms of ownership which are not
trusts);
(68) section 1313 (relating to opportunity to correct
failures under section 2032A);
(69) section 1414 (relating to fermented material from any
brewery may be received at a distilled spirits plant);
(70) section 1417 (relating to use of additional
ameliorating material in certain wines);
(71) section 1418 (relating to domestically produced beer
may be withdrawn free of tax for use of foreign embassies,
legations, etc.);
(72) section 1421 (relating to transfer to brewery of beer
imported in bulk without payment of tax);
(73) section 1422 (relating to transfer to bonded wine
cellars of wine imported in bulk without payment of tax);
(74) section 1506 (relating to clarification of certain
rules relating to employee stock ownership plans of S
corporations);
(75) section 1507 (relating to modification of 10-percent
tax for nondeductible contributions);
(76) section 1523 (relating to repeal of application of
unrelated business income tax to ESOPs);
(77) section 1530 (relating to gratuitous transfers for the
benefit of employees);
(78) section 1532 (relating to special rules relating to
church plans); and
(79) section 1604(c)(2) (relating to amendment related to
Omnibus Budget Reconciliation Act of 1993).
Mr. MOYNIHAN. I thank the President, and particularly thank him for
affording that the Constitution be preserved.
Finally, as I have said, I would have preferred the Senate-passed
bill, in many respects, but committees of conference work by
compromise, and we have a compromise before us which I will support,
again with great thanks to the chairman, to Lindy Paull and to Frank
Polk, and to Mark Patterson and Nick Giordano. I yield the floor.
Several Senators addressed the Chair.
The PRESIDING OFFICER (Mr. Roberts). Who yields time?
Mr. WELLSTONE. Mr. President, I defer to the chairman. I am hoping to
get a chance to speak.
Mr. MOYNIHAN. Mr. President, I believe the chairman would like to
make a comment in response.
Mr. ROTH. Yes, I will be very brief. First of all, I just want to
publicly recognize and thank Senator Moynihan for the role he has
played. I think his statement today is another example of his towering
intellect. We are very fortunate to have an individual who is renowned
throughout this country for his ability to analyze, to study, and come
up with constructive proposals. Certainly, we have all benefited from
his rare intellect.
I would just like to comment on two or three things that he spoke
about in his opening remarks. First of all, I share the pride and
satisfaction in our higher educational system. I have often thought
there are few countries that have anything like ours. They may have one
or two outstanding schools--Oxford and Cambridge in the British Isles;
in Japan they have the University of Tokyo. But we have so many
outstanding schools. My only criticism of what Senator Moynihan said is
he failed to mention the University of Delaware which, I must confess,
is really a hidden jewel. But I share the pride, and I think it is
important that we do everything that we can to strengthen this, both
the private and public sector, in these days where knowledge and
technology is of even greater importance than any other time.
I would also like to speak very briefly about Amtrak, because it
seems to me we have our last clear chance to do something about it. I
have to tell you that for the last several months, I have fought tooth
and nail to try to bring about a solution. Mr. President, I cannot
imagine the leading industrial nation of the world, the only superpower
not having a modern passenger rail system. It is just unconscionable
for that to happen, particularly in these times when we are running out
of--I don't know about the State of New York, but I can tell you, in my
little State of Delaware, we are running out of land. How many highways
can we build? How many planes can fly over? What are we going to do
about the environment? This is a critical matter, not only to the
Northeast but to the entire country.
I couldn't agree more with Senator Moynihan than when he calls upon
the Secretary of Transportation and the Secretary of Labor to provide
some leadership. This can still be salvaged, it still can be saved, but
it means that the parties that are involved and interested are going to
have to get together and bring about the kind of reform that assures a
sound future for our rail system.
This, again I say, is our last clear chance. We have the funds in
there. They are available. Now it is up to those who have the voice on
reform to get together and compromise and work together, just as we did
in our committee.
I again express my appreciation to the distinguished Senator for his
contributions and cooperation.
Mr. MOYNIHAN. Mr. President, can I just say thanks once again to the
chairman, and add that there is every reason to think that Amtrak is on
the verge of financial stability, with a new rail system, fast rail
system, and just when we are about to succeed, we can thwart the whole
enterprise. I hope we will not do that.
Mr. President, I yield the floor. I find my friend has been waiting
so very patiently. The floor is now his.
Mr. WELLSTONE. I thank both colleagues. Mr. President, I ask
unanimous consent to take 15 minutes off the time that has been given
to Senator Bumpers, and I ask Senator Moynihan whether I might get 10
minutes from his time, if that would be OK.
Mr. MOYNIHAN. Mr. President, the Senator most surely can. I wish he
would.
Mr. WELLSTONE. I thank him.
The PRESIDING OFFICER. The Senator from Minnesota is recognized.
Mr. WELLSTONE. Mr. President, let me, first of all, say to Senator
Roth and Senator Moynihan, since my comments will be in disagreement,
that I have tremendous respect for all the work that they have done.
Both of them represent the very best of public service. But I can't, as
a matter of principle, vote for this budget agreement. I support
balancing the budget through a process which observes basic principles
of economic and social justice and embodies the notion of shared
sacrifice in pursuit of the common good, the common interest, the
people's interest. But despite the cheers of its supporters, this deal
fails miserably those tests.
In the midst of all the cheering over this deal, we face a quiet
crisis. It is not a war, it is not a broad economic calamity, but it is
a crisis, nonetheless. This is, by the averages and the indicators, a
prosperous time for our country. It is a time of sustained economic
growth and low inflation, of a booming stock market and low
unemployment. There is no blare of bugles, no moan of universal
distress, no loud hordes of protesters clamoring in our streets. But
averages are misleading. They tell nothing of the end of the curve, the
height at the top or the depth at the bottom, and that is where our
crisis resides. It is a quiet crisis of money, power, and injustice. It
is the crisis of a nation in danger of abandoning the principles of
equality and justice that are so fundamental to our resilience and to
our future together.
The principle of economic justice in this bill has been eclipsed. I
fear it will accelerate growing inequalities in our country that we all
should be committed to combat. We have moved in recent years back to a
darker time. It is a more stratified America. It is really two
Americas: one America with mounting access to the things that make life
richer in possibility; the other caught in a constant struggle to make
ends meet.
One able to purchase the security of gated communities and private
schools; the other beset by the dangers of a decaying social fabric.
One America swiftly navigating the information superhighway, the
other lacking the rudimentary skills needed to navigate an ever-more
complex society.
One enriched by a rising stock market; the other at the uncertain
mercies of the job market.
One wondering when to take a vacation to Europe or Asia; the other
hoping to save enough to take a family to a ball game.
[[Page S8422]]
This other America, this second America is not inhabited by just the
poor or neglected minority. It is, in fact, the residence of the
American majority. It is the homeland of most of our workers, most of
our families, most of our children, and it is precisely this America
that the budget agreement fails to serve fully and fairly.
I would support a deal that required truly shared sacrifice while
investing in our future, but shared sacrifice is not what this package
is all about. Instead, it is about working families sacrificing and
Wall Street i
