TAXPAYER RELIEF ACT OF 1997--CONFERENCE REPORT; Congressional Record Vol. 143, No. 111
(Senate - July 31, 1997)

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[Pages S8415-S8461]
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             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 59\1/2\. 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 investors and big companies garnering the lion's share of 
the benefits.
  Balancing the short-term budget fairly is a responsible and it is a 
worthwhile goal, made easier by our recent economic boom. But building 
a strong economy, preserving a shared prosperity, ensuring social and 
economic stability for the next generation by investing in their health 
and their skills and their character, our children, this is a far 
loftier and far more difficult goal for which we should have been 
striving in this budget agreement, and this agreement falls short of 
those goals.
  First, the agreement is unfair. At times, it is grossly unfair, I say 
to my colleagues, to the vast majority of working Americans who deserve 
real tax relief but will not get it in this bill, because most of the 
benefits go to the wealthiest 3 to 4 percent of the taxpayers and the 
profitable companies.
  Second, this agreement is shortsighted, starving our Nation's 
investment needs, investments critical to our future economic and 
social prosperity, in order to pay for large, unfair, and unwarranted 
tax cuts.
  Third, and perhaps most ironically, since its ostensible purpose is 
to balance the budget, it is fiscally irresponsible. By locking into 
place hundreds of billions of dollars in tax cuts for the wealthy, as 
far as the eye can see, many of which will grow larger and larger over 
time, it will cause the deficit to explode just as the baby boomers are 
expected to retire and begin to draw on programs like Social Security 
and Medicare.
  While this agreement has been hailed by some Democrats because it 
partially preserves funding for certain health care, education, and 
other programs that Republicans have been trying to slash for almost 3 
years, and it is hailed by Republicans because it contains the huge tax 
cuts for the wealthy for which they have so long fought and sought, a 
closer look is called for in the midst of all this cheerleading.
  As a legislator, I have discovered that too often if the deal appears 
to give all things to all parties, as this one does, something is not 
quite right.
  Americans should take a closer look at the details of this package. 
When they do, they will be very troubled by what they see. Even with 
the marginal improvements which were forced by the President and the 
Democratic colleagues in the Congress, it still is a deeply flawed 
agreement which mortgages the economic futures of our children for the 
short-term political benefit which some will derive by claiming to have 
balanced the budget.
  Unless we revisit this deal soon, it will lock us into a program of 
huge tax cuts, mainly going to the wealthiest of people, funded by 
equally large spending cuts in virtually every single basic function of 
Government--environmental protection, airline safety, crime control, 
science and health and technology research, health care for the frail 
and the elderly and the poor.
  And, Mr. President, it will do so while continuing the Republican 
Congress tradition of stuffing more money into the Pentagon than even 
the Pentagon has requested, more B-2 bombers and ships and fighters 
than we need, mostly to preserve jobs in key congressional districts.
  As one of my colleagues observed, this bill sacrifices tomorrow's 
hopes for today's headlines. That is a mistake for which we will all 
pay for years to come, just as we did for the mistakes of the early 
1980's and its exploding deficits.
  Mr. President, the President of the United States said, among other 
things, he would only sign on to a deal that was fair, fiscally 
responsible, with no exploding deficits in the next 10 years or so. 
These were the basic tests that he said he would apply to any final 
agreement. But this agreement clearly fails the fairness test. The sad 
fact is that low-income families get virtually nothing--nothing--from 
this tax cut bill, working families get very little, and the wealthy 
are the big winners in this tax bill.
  While the ink is barely dry on the deal--and so we do not have any 
official information about its actual distributional impact--we are 
asked to vote on this without getting any official information about 
who exactly is going to benefit and who is going to be asked to 
sacrifice.
  Preliminary analysis suggests a disastrously lopsided approach skewed 
to the very rich, those making over $200,000 a year annually. That is 
not the middle class in America. The nonpartisan group, Citizens for 
Tax Justice, has run the numbers through a fairly sophisticated 
distributional model. And they found that the tax package delivers 
about half of its benefits to the top 5 percent of the taxpayers.
  Half of the benefits go to the top 5 percent of the taxpayers. The 
average tax cut for middle-class working families and individuals, when 
you figure in all the tax hikes and cuts together, is about $200. For 
the richest 1 percent, it is about $16,000. I had hoped for substantial 
tax relief for working families. This bill only offers about one-fourth 
of its overall relief to those making under $100,000 a year. I think 
working families should not have to settle for scraps from the tax cut 
table. They should have been the first in line for relief. But that is 
not the case.
  But just a few examples.
  The alternative minimum tax was passed in 1986. With tax fairness, 
large companies ought to pay, large profitable companies ought to pay 
at least some tax. That has essentially been gutted. The Treasury 
Department estimates that these changes would take 76,000 profitable 
corporations completely off the tax rolls, and to the tune of $18 
billion over the next 10 years.
  Another example. While this budget provides little or no relief for 
working families, it gives wealthy Americans huge capital gains tax 
cuts. The vast majority of these benefits from the cuts in capital 
gains go to big investors, people making $200,000, $300,000, and 
$400,000 annually. Hardly tax fairness.
  Mr. President, not only is this deal unfair, it is shortsighted, it 
ignores our most critical needs as a nation, including repairing and 
rebuilding our crumbling schools. Not one penny is invested in our 
crumbling schools, including dealing with our crumbling inner cities, 
our underdeveloped rural areas.
  Through its spending controls, it provides for huge and still 
unspecified cuts in Federal investments that my colleagues apparently 
do not like to talk about much, an estimated $272 billion in such 
nondefense cuts over the next 10 years while it claims to ``protect'' 
some priority programs.
  I am very skeptical. There is not a penny here for crumbling schools 
to secure educational opportunities for children. How come that was not 
a priority program? There is too little for job training for dislocated 
workers, for workers struggling to move off welfare into good jobs, and 
there is too little by way of reinvesting in our inner cities, the 
environmental protection, in basic key investments critical to our 
Nation's future.
  Mr. President, I voted against the spending bill. And I will vote 
against this tax bill. I do not understand how my colleagues can 
basically view these matters separately. They are part of one package 
and one deal. And I will just give some examples.
  We now have huge, significant cuts in Medicare and Medicaid. And they 
are being used to pay for the tax cuts in this deal, which 
disproportionately go to the top 1, 2, 3 percent of the population that 
need the assistance the least. That is part of the tradeoff.
  Mr. President, Medicare will be cut by $115 billion over the next 5 
years. And the proposal assumes $385 billion in cuts over 10 years. In 
Medicaid, we will be cutting $13 billion over the next 5 years.
  Mr. President, in rural Minnesota, where the hospitals and the 
clinics are not greedy--a small profit margin--60, 70, 80 percent of 
the patient payment mix is Medicare and Medicaid. Please, do not have 
any illusions about this.

[[Page S8423]]

 The cuts to the providers will make it difficult for some of these 
hospitals and clinics to go on. When they no longer exist, that hurts 
our rural communities.
  Mr. President, the cuts in medical assistance disproportionately hurt 
our children's hospitals and disproportionately hurt our inner-city 
hospitals which are safety net hospitals for the poorest Americans--
including children--in America.
  My colleagues say to me, ``Well, but this overall agreement, it's not 
that bad, after all.'' And I say, ``Compared to what?'' To the earlier 
Republican bills, which the huge majority of American people rejected, 
this is an improvement. We did not go forward with a $5 copay, even 
though it passed in the Senate, for elderly people for home health care 
visits.
  We have done better by way of graduate medical education. And, yes, 
Mr. President, we have $24 billion more in children's health care. And 
it includes also some additional parity, nondiscrimination for children 
and families struggling with mental illness. I thank my colleague, 
Senator Domenici. It is a labor of love to work with him on this.

  But, Mr. President, we still do not know at the State level how much 
of this will reach the children. We hope it does. There are 10 million 
children without coverage. I have seen projections anywhere from 1\1/2\ 
million to 5 million will be covered, though it is block granted to the 
States. And we do not have the ironclad guarantees that we need. We 
need to fulfill our goal of providing adequate and complete care for 
all children in America.
  But, Mr. President, irony built upon ironies. My colleagues say it is 
not that bad, we are doing better for children. I give credit where 
credit is due. But last Congress we cut $25 billion in the major food 
nutrition program for children. It ultimately will be a 20-percent cut 
in food stamps, and about 70 percent of the recipients are children. 
Almost all of them are in working families, usually families with 
incomes under $7,000 a year. This directly affects the quality of their 
health care. I did not see any restoration of any funding for the major 
child nutrition program in the United States of America.
  Mr. President, my colleagues say we did better for legal immigrants. 
We restored some of the supplemental security income for those 
immigrants that have been in this country, but, Mr. President, we 
eliminated all of the food nutrition assistance. So if you have an 
elderly Hmong woman in Saint Paul, and she has $450 of SSI and another 
$75 in food stamps, and that is her total monthly income--and that is 
exactly the figure for many people --we did not restore any, we did not 
restore one penny of food nutrition assistance. It is not that bad but, 
Mr. President, this piece of legislation is also not that good.
  Mr. President, I do not understand exactly what the concept of 
justice is here. I do not know what happened to the principle of 
justice and fairness. Not only do we have the tax cuts going 
disproportionately to the top 5 percent of the population, but even 
when we say we are going to help children and families, we decide that 
we will do nothing for the poorest.
  The child tax credit is refundable. And now we say it is refundable 
to families with incomes over $100,000 a year. But if you are a family 
with an income of under $18,000 a year, you are not eligible at all. We 
decided that families with over $100,000 a year needed the assistance. 
But since we have the earned-income tax credits, we decided that 
families with incomes under $18,000 a year would not be eligible for a 
child credit at all. What kind of standard of justice is that?
  I spent a lot of time with those families. I see their struggles. 
Don't tell me that those families, families in America with incomes 
under $18,000 a year, could not also have benefited from the tax credit 
so they could have provided their children with a little bit more. 
Don't tell me they would not have benefited. What concept of justice 
justifies a tax credit for families with incomes over $100,000 a year, 
but zero, no assistance, for families earning under $18,000 a year?
  Mr. President, on higher education, we have seen a great deal of 
discussion. I find it difficult to say this, but I am going to because 
20 years of my life was devoted to higher education. Some of this is a 
bit hyped. Some of it is a bit hyped. Some of it is a bit of hype.
  Mr. President, I am grateful for the tax deductions. I am grateful 
for the tax credits which are nonrefundable, but every single financial 
aid officer you want to talk to, everyone involved in financial aid 
will tell you we should have expanded the Pell grants. The statistic 
that is unconscionable is that a flat 8 percent, since 1979, of those 
families with incomes under $20,000 a year, only a flat 8 percent have 
been able to graduate, men and women from those families, with 
affordability being a key problem. There are other problems but that is 
the major problem. There is really nothing in this piece of legislation 
for them.
  We expanded the Pell grant by $300, but the Pell grant is now meeting 
at best about 16 percent of the student's overall need. We could have 
expanded the Pell grant program up to $5,000 a year. It would have 
reached middle income as well for the same price tag as to what we did 
here with the tax deduction and the tax credits.
  But, Mr. President, the tax credits are nonrefundable. The tax 
credits are not refundable. I will just tell you that if you spend any 
time at the community colleges, you will find that most of the students 
are older and going back to school, and they have incomes of around 
$25,000, $26,000 a year. They are ineligible because they do not have 
the tax liability. And we are making the claim that this is essentially 
2 years more of free education? It does not hold up. It does not hold 
up.
  Mr. President, we say we protected priority programs. We have 
hundreds of billions of dollars in tax cuts, which will increase with 
every year, disproportionately going to the top 5 percent of the 
population, and altogether, Mr. President, we came up with not $5 
billion that we were going to leverage for some investment in 
rebuilding crumbling schools, but we threw in $10 million at the end, 
$10 million for all of America. Mr. President, what kind of priorities 
are these? How could the administration have bargained this away?
  I was down in Delta City, MS, in Tunica, MS. I visited a school. This 
was an all-black school. The ceiling was kind of crumbling in. The 
toilets were decrepit. If you had wanted to wash your hands after going 
to the bathroom, you would not have been able to.
  But, Mr. President, I was in Chicago on Monday visiting with some of 
the housing projects, and I saw the same kind of schools. You look at 
these schools, they are so uninviting. They are crumbling. And we tell 
our children we put no value on them when we send children to such 
schools. The General Accounting Office tells us it costs $110 billion 
if we want to invest in rebuilding these crumbling schools. We have not 
invested anything in rebuilding crumbling schools--not really--just $10 
million for the whole Nation. That is a joke, and it is a cruel joke. 
How can we say that we have protected our major priority programs when 
we don't invest anything in rebuilding crumbling schools in America?

  Mr. President, it is not just Chicago and Mississippi; it is North, 
East, South, and West. I say to my colleagues, if you say you are 
committed to education, we can have a debate about educational 
standards. Maybe they are good, maybe they are not. We can debate about 
how you measure academic performance. We can have all those debates. 
But this is simple: Don't send children to schools where the ceilings 
are falling in and the stench of urine is in the hallways and the 
buildings are decrepit and expect those children to do well. We say 
that this budget agreement protects our major priorities. What about 
these children? Aren't they our major priority?
  Mr. President, I was in Chicago on Monday in the Pilsen neighborhood 
with Congressmen Gutierrez and Bobby Rush at the Robert Taylor Home 
Housing Project. St. Augustine had a wonderful Head Start Program. It 
was a great program. I was inspired by their work. But, Mr. President, 
they could take 30-some children at the site we visited, and they have 
335 children who want to participate--335 children who could be given a 
head start if we fully funded this program.
  Altogether we have added $324 million. We have 4 million children in 
the United States of America, from birth

[[Page S8424]]

to age 5, who were not served by the Head Start Program, and we have 
invested a measly $324 million, which we claim--and it doesn't hold up 
under scrutiny--will lead to an additional 1 million children. Why 
don't we fully fund Head Start? If the program does what it says it 
does, which is to give children a head start, why give the tax benefits 
to the wealthiest of people and, at the same time, not the investment 
in rebuilding crumbling schools and not an investment in Head Start? 
Everywhere I go, all across the United States of America, whether it is 
rural or urban, I see the successes with kids, I see men and women who 
work with these children. They should be famous. They make too little 
money as Head Start teachers or as teacher assistants. We say these are 
the critical years, and we say the very early part of children's lives 
is the most critical time, and we invest $324 million, and that is it.
  Mr. President, many of my colleagues support this bill and they call 
it, on balance, a good piece of work. I simply cannot join them in 
their enthusiasm because I am too painfully aware of the people this 
bill leaves behind. Mr. President, the benefits are skewed toward 
America's very wealthy, and when working families find this out, they 
will not be pleased.
  Mr. President, this piece of legislation, this budget deal, leaves 
too many Americans behind. We can and we should balance the budget 
fairly and responsibly, observing the principle of shared sacrifice and 
economic justice, making the Tax Code fairer, simpler, and flatter in 
the process, and investing in our Nation's future. We could have done 
that because the economy is booming and it is much easier to do it now 
than a few years ago. But with this bill, Mr. President, we have failed 
in that effort at fairness.
  If this balanced budget agreement is to be the great accomplishment 
of 8 years of Democratic Presidency, then history will judge us 
harshly. With a budget that we already have, that is essentially in 
substantial balance because of the policies of the past 4 years, this 
agreement today is really a triumph of the past rather than a bridge to 
the century to come.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. ROTH. Mr. President, I yield 10 minutes to the distinguished 
Senator from New Hampshire.
  The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
  Mr. GREGG. Mr. President, let me begin by congratulating the Senator 
from Delaware for the extraordinary job he has done in putting together 
this tax reduction package, which is directed primarily to assisting 
American families, working families of middle-income means, to make it 
easier on them to meet the day-to-day expenses of raising a family. It 
takes giant strides in assisting especially the American middle-income 
family in dealing with the cost of education, which is absolutely 
critical. The effort that was put into this by the Senator from 
Delaware in leading this initiative and pulling this together and 
getting it passed is nothing short of extraordinary. It will go down as 
one of the finest hours, I think, in this body and certainly in this 
Congress. I congratulate him for it.
  I wanted to speak briefly about a couple of areas in the bill that I 
think are especially positive and for which I thank the Senator from 
Delaware for working so hard on them.
  First is the area of estate tax reform. We have heard a lot about how 
this bill greatly helps especially the small businessperson and farmer 
in being able to retain their business and pass it on to their heirs--
their children, in most instances--so they can continue to run the 
business, so that all the years of sweat equity put in on building a 
family farm or a small business won't be lost or confiscated on the 
death of the primary owner of the estate, but rather will be passed on 
to his or her family, and the tax burden on that small businessman or 
farmer is dramatically reduced.
  But there is another item in this bill that has not been talked about 
at all, which I think is especially important in places like New 
Hampshire, and that is the conservation tax--a tax break for people who 
leave their land or keep their land in conservation, or in the 
silviculture activities, upon the death of the primary owner of the 
estate. This section of the bill, which was initiated by myself and 
Senator Chafee from Rhode Island, is basically directed at addressing a 
problem which we see especially in New England. There is tremendous 
pressure on our forest areas to convert those areas to development. 
Many people in New England--especially in New Hampshire--run very small 
tree farms, or operate a lumber business, or a logging business, or a 
business that in some way uses the forest lands. In addition, there are 
a lot of people who, just for the purposes of being good citizens, keep 
their lands open. They don't develop them. They keep their lands in a 
natural, or fairly close to natural, state, and their lands in many 
instances are used for recreation or are used for hunting and used, 
obviously, to maintain the environment.
  Unfortunately, when these folks pass on, because of the nature of New 
England today and the heavy populations that we have and the expansion 
of population that we have, in most instances these pieces of land 
aren't valued for the purposes of running a tree farm or maintaining 
wood lots. They usually are valued for some higher use, defined by the 
terms of cost, such as a mall or, in many instances, a housing 
development of some nature. The result of that is that the property in 
the estate ends up being valued at an extraordinarily high level. The 
heirs who receive the land have no option but to sell the land, develop 
the land, and as a result, convert the land from forestry use into some 
sort of commercial or construction use, which has two events. First, it 
obviously ends the ability of the forestry industry to use that land 
for the purposes of maintaining forest and silviculture activity. 
Second, it ends up developing land. That changes the character of the 
State in many ways.

  There are a lot of people who would rather not develop the lands. A 
lot of heirs are willing to keep the land as a production for forestry 
activities, or as a conservation area, but they can't afford to do that 
because the taxes are so high. So in this bill, as a result of the 
efforts of the chairman of the committee, myself, and Senator Chafee, 
there is now a new deduction that allows people, who agree to do it, to 
retain their land as a conservation easement when they receive it from 
an estate and, thus, keep it as land that is protected for the purposes 
of keeping it in a fairly natural state--using it for timbering if they 
desire to do so. There will be a deduction relative to the value of 
that land of about 40 percent, which is a major plus. It is a major 
commitment to the community, a major commitment, obviously, to the 
individuals who will be receiving the land, that the Federal Government 
isn't going to force people to sell their land in order to pay their 
taxes by putting a value on the land that is so high that they have no 
option but to sell their land. That is good news.
  Now, this only applies to certain types of land. It applies to land 
which lies within a certain distance of a national forest or an urban 
forest. So it doesn't apply to all of the land in New England or all of 
the land in the country. It does apply to land which is basically in 
the same area as the area which has already been protected for the 
purposes of maintaining its pristine qualities. That only makes sense 
that that type of land should be the land that we are targeting, so 
that we don't end up with large commercial developments surrounding our 
national forests and urban forests.
  As a result of this language being put in the bill and the way it was 
put in, it will actually apply to about 90 percent of New Hampshire 
because so much of it is a national forest. We have the largest 
national forest, I believe, east of the Mississippi. Certainly, we have 
the largest national forest in the Northeast, or the most visited in 
the Northeast, the White Mountain National Forest, which takes up about 
17 percent of the State, I believe. Therefore, it has a very 
significant land mass within the State. So this is good news for those 
of us who believe very strongly that maintaining the character of the 
land, in the State of New Hampshire especially, is critical. This will 
allow those folks who receive land coming out of an estate to keep that 
land as forest land, if they desire to do

[[Page S8425]]

so, and not be forced to sell in order to pay taxes. That is a very big 
plus.
  The second element I want to congratulate Senator Roth for deals with 
retirement provisions in this bill. There is a very positive expansion 
of the ability of people to save for retirement in this bill. Of 
course, there is the famous Roth IRA accounts, which we heard a fair 
amount about, which are a series of expansions of IRA accounts. More 
important, this is a whole series of initiatives which came out of a 
working group I chair, the leadership task force on retirement reform. 
Thirteen of those items are in this bill. They give the small 
businesspeople in this country much more flexibility in putting in 
place retirement accounts and gives individuals much more flexibility 
in the area of being able to participate in saving for their 
retirement, and they are very strong initiatives.
  I will say a few words about what this tax bill will mean to American 
families and to their ability to save for retirement.
  Earlier this year I was named to chair a Republican Retirement 
Security Task Force. We introduced a series of reforms as S. 883.
  Senator Roth's contribution to the task force's work was vital. I 
also appreciate his willingness to work in favor of many of these 
provisions in this tax legislation.
  This Nation faces a dire need to expand retirement saving to meet the 
retirement needs of an aging 21st century population.
  But behind this general national picture are the real-life concerns 
of millions of hard-working American families, who are concerned about 
their prospects for retirement. This bill will significantly increase 
their chances to achieve a dignified and secure retirement.
  I would like to describe some of these provisions and the effect that 
they would have for families.
  Consider a family, John and Mary Smith, where John is a full-time 
paid employee, and Mary is working within the home. Or, perhaps Mary is 
working full time, and John is working within the home. Between them, 
they earn $50,000. And suppose that John, but not Mary, is able to 
participate in a pension plan at work.
  Under the old law, this couple could not make a deductible 
contribution to an IRA. But under this bill, now Mary can make a fully 
tax-deductible $2,000 contribution to an IRA.
  And the same is true whether this family earns $50,000 or $60,000 or 
$70,000--on up to $150,000. Because of this tax legislation, a huge 
number of families will now be able to participate in tax-deferred IRA 
accounts.
  An article in the Washington Post this morning indicated that fully 7 
million new IRA accounts will be opened because of this measure alone. 
Think of what that will do for a couple's retirement security--if they 
are able to put away $2,000, tax-deferred, every year.
  Consider another couple: Michael and Susan Jones. Suppose they have a 
family farm. And because of the fortunes of farming, their income goes 
up and down from year to year. Perhaps one year they earn $50,000--and 
the next year they only earn $30,000.
  Under current law, this couple is going to be very concerned about 
whether they can save in an IRA. They don't know whether their 
contributions will be tax-deductible or not. One year it is, the next 
year it isn't. It's very difficult for them to know, as the year 
progresses, whether they can afford to put the money in.
  Under this legislation, we have created something new for them--the 
back-loaded IRA. Now Michael and Susan can make contributions to an IRA 
without worrying about whether they will get the tax benefits--because 
those tax benefits will come at the end of the road. They don't get the 
tax deduction now, when they contribute to the IRA, but they know that 
at the end of the game, they will have tax-advantaged earnings through 
the IRA. This legislation gives them a new way to gain tax advantages 
from savings.
  And, this legislation also vastly expands traditional IRA accounts--
doubling the income limits for tax deductibility over the next 5 years. 
As a result, millions of Americans will find it easier to save for 
retirement.
  This legislation also contains many of the pension reform provisions 
which we worked so hard to create in S. 883.
  This legislation increase the security of employer-provided 
pensions--by increasing the amount of employer funding to meet those 
pension liabilities.
  Under current law, Mr. President, most employers do not have enough 
funding in these pension plans to meet eventual liabilities. Not 
because the employers won't do it--but rather because the Government 
won't let hem. We had sharply limited the amount of funding that 
employers may put in these pension plans.

  So when Frank Williams goes to work, there is often only enough 
funding in his pension plan to support benefits that he would receive 
if he and everyone else in the company retired today. Frank hopes to 
work longer, to accrue a larger pension benefit someday, as does 
everyone in the company. And the liabilities of the pension plan will 
eventually be much larger, because everyone working there will someday 
be entitled to much higher benefits than are accounted for in current 
measures of liability.
  Under this legislation, we will raise the limits on employer funding 
of pensions--from 150 percent of current liability to 170 percent. 
Employers will be permitted to fund at a level that is closer to their 
projected liability. This means greater retirement security for all 
Americans. It means that there will be more funds in Frank Williams' 
pension plan.
  Now consider the case of another hard-working American, Walter 
Taylor, an aspiring entrepreneur, starting his or her own business. 
Under the old law, if he started a pension plan, and he was therefore 
paying both the employer match and the employee contribution for his 
own pension benefits, he would not get the same tax treatment that 
other employers get. This legislation will create a level playing field 
for the self-employed, and says that they too will receive the same tax 
treatment of their matching contributions that other employers receive.
  This will be a tremendous benefit to small businesses, which is where 
we most need to expand pension coverage.
  This legislation will also make it easier and more convenient for 
families to save through IRA's--by facilitating automatic payroll 
deductions into IRA's.
  This legislation will also make it easier for State and local 
government plans to operate, by exempting them from the cumbersome 
nondiscrimination rules that were not intended for Government plans.
  This legislation will streamline and simplify paperwork and reporting 
requirements. It will eliminate the need for obsolete and unnecessary 
forms, and will also facilitate the use of electronic technology to 
replace old paperwork.
  Finally, the legislation will make a number of technical corrections 
to the law, straightening out inconsistencies between tax and 
regulatory treatment of pension contributions, inconsistencies that 
have frustrated employers and pension administrators alike.
  I am pleased to have been the principal sponsor of these provisions, 
and I commend and thank those who have worked to bring us closer to 
enacting them into law.
  Mr. President, I thank the Senator from Maine for allowing me to 
precede her. I thank the Senator from Delaware for allowing me to speak 
and for his extraordinary effort.
  Mr. ROTH. Mr. President, I want to thank the distinguished Senator 
from New Hampshire for his very gracious remarks.


                         Privilege of the Floor

  Mr. ROTH. Mr. President, I ask unanimous consent that the Joint 
Committee on Taxation staff members named on the list I send to the 
desk be granted floor privileges for the duration of the consideration 
of the conference report on H.R. 2014.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The list is as follows:

               Staff Members--Joint Committee on Taxation

       Angus, Barbara M., Business Tax Counsel.
       Arkin, Steven D., Legislation Counsel.
       Barthold, Thomas A., Senior Economist.
       Hartley, H. Benjamin, Senior Legislation Counsel.
       Kies, Kenneth J., Chief of Staff.
       Killelea, Kent L., Legislation Counsel.
       Mann, Roberta F., Legislation Counsel.
       Matthews, Lauralee A., Senior Legislation Counsel.
       McDaniel, Alysa M., Legislation Counsel.

[[Page S8426]]

       Mikrut, Joseph M., Associate Deputy Chief of Staff.
       Navratil, John F., Economist.
       Nega, Joseph W., Legislation Counsel.
       Owens, Judy K., Legislation Counsel.
       Rock, Cecily W., Senior Legislation Counsel.
       Schmitt, Mary M., Deputy Chief of Staff/Law.
       Schwarz, Melbert E., Accountant.
       Smith, Carolyn E., Associate Deputy Chief of Staff.
       Wold, Barry L., Legislation Counsel.
       Terry, Maxine, Legislation Counsel.

  Mr. ROTH. Mr. President, I am now pleased to yield 15 minutes to the 
distinguished Senator from Maine.
  The PRESIDING OFFICER. The Senator from Maine is recognized.
  Ms. COLLINS. Thank you, Mr. President. I thank the chairman, Senator 
Roth, for the extraordinary work he has done to bring this before us 
today for passage.
  Mr. President, I rise today in strong support of the conference 
report on the Taxpayer Relief Act of 1997, the first major tax cut for 
the middle class that the Congress has passed since 1981.
  This historic tax cut bill, along with the companion Balanced Budget 
Act, represents very good news for the American people. These measures 
put the Federal Government on the road to a balanced budget, and will 
provide much-needed tax relief for middle-class families in Maine and 
across the Nation.
  There are several small business and education provisions that I am 
particularly pleased to see included in the legislation before us 
today. These proposals have been among my highest priorities since 
coming to the Senate.
  In fact, the very first bill I introduced as a Senator was designed 
to provide tax relief for family-owned businesses and farms. I am, 
therefore, delighted that the Taxpayer Relief Act will provide 
substantial estate or death tax relief for family-owned businesses and 
farms, the backbone of our economy in Maine. Effective in January of 
next year, these businesses and farms will be eligible for a $1.3 
million exemption from Federal estate taxes, more than double the 
current $600,000 exemption.
  Mr. President, I cannot tell you how strongly I feel about providing 
this relief. Time and again family business owners in Maine have told 
me of their painful decisions to dismember their companies, to sell 
them to large out-of-State corporations, in order to avoid saddling 
their children with enormous debt to pay the estate tax. The tax is 
wrong. It is simply unfair. We ought to be encouraging family 
businesses to prosper and to continue from generation to generation.
  Given that family businesses will create two-thirds of the new jobs 
in the future, our Tax Code should encourage their creation, expansion, 
and continuation. The current estate tax structure penalizes job 
creation and, according to several studies, has actually cost our 
Nation as many as 220,000 jobs--220,000 jobs lost because of this 
onerous tax. Passing the estate tax relief provisions of this bill will 
allow family business owners to invest in their companies, rather than 
in a platoon of attorneys, accountants, and insurance agents attempting 
to alleviate the estate tax bite.
  Adopting this proposal will mean that these businesses and farms can 
stay in the family, and be passed from generation to generation, from 
parents to their children, instead of being sold in order to pay taxes 
as happens all too frequently under the current estate tax laws. These 
reforms will help keep the family in our family businesses and good 
jobs in our communities.
  In addition, the tax package contains some very important reforms 
that will help make a college education more affordable for middle-
income families, another of my top priorities.
  Mr. President, prior to serving in the Senate, I worked at Husson 
College, a small college in Bangor, ME, whose students primarily come 
from lower and middle-income families. Most Husson students are the 
first members of their family to attend college.
  At Husson, I came to appreciate the critical role that Pell grants 
and student loan programs play in making college available to many 
students, but I also learned that our current programs do far too 
little to help many middle-class families who have to carry the heavy 
burden of college costs for their children largely by themselves.
  This is a very serious problem. I am pleased that this legislation 
contains several provisions that are specifically designed to make it 
easier for middle-income families to save for their children's 
education and to help graduates pay back their student loans.
  For example, families will be allowed to establish tax-deferred 
education IRA's that reward them for planning and saving for their 
children's college education.
  Especially important, this legislation allows students to deduct up 
to $2,500 annually in interest on their student loans. Many college 
graduates are faced with daunting debts that will strain their finances 
for years. We currently do not do enough for those for whom the road to 
college ends not with a pot of gold but with a pile of debt. Many 
college graduates are faced with daunting debts from their student 
loans that will strain their finances for years.

  Many students in my home State of Maine, when confronted with this 
dilemma, either decide not to pursue a college education at all, or 
decide to drop out of college. That is one important reason why Maine 
ranks a dismal 49th out of the 50 States in the number of high school 
graduates going on to college. That is why this student loan interest 
deduction is so critical to bringing college within reach of many 
middle-income families.
  Mr. President, these proposals--the education savings account and the 
tax deduction for student loan interest--were included in legislation I 
introduced earlier this year, the College Access and Affordability Act 
of 1997. I am very pleased to see that they were included in the 
conference report. Making higher education more accessible and 
affordable is essential if we are to have a high-quality work force 
able to compete in a global marketplace in the 21st century.
  Finally, Mr. President, I want to note several other important 
provisions that will help our small businesses--the job creators in 
this country. This legislation will make health insurance more 
affordable for the 82,000 people in Maine who are self-employed. They 
include our lobstermen, our hairdressers, our electricians, our 
plumbers, and many owners of our small mom-and-pop stores that dot the 
communities throughout our State.
  Under this package, self-employed workers will be able to deduct 100 
percent of their health insurance premiums by the year 2007. 
Establishing parity of health insurance costs between the self-employed 
and those working for large businesses is a matter of basic equity, and 
it will also help to reduce the number of uninsured, but working, 
Americans.
  Finally, another important provision for small businesses is the 
restoration of the home office tax deduction, which was nullified by a 
Supreme Court ruling several years ago. Home-based businesses are 
exploding all over Maine. This bill will enable many entrepreneurs in 
Maine and throughout the Nation to once again deduct the very 
legitimate expenses associated with working out of their homes.
  Mr. President, in closing, I want to once again commend the 
distinguished chairman of the Finance Committee, Senator Roth, the 
distinguished majority leader, Senator Lott, and Senator Nickles, 
Senator Moynihan, the ranking minority member, and all of those who 
have played such a vital role in crafting such historic legislation. It 
will provide tax relief to our families, to our small businesses, to 
our family farms, and to our students--to our entrepreneurs.
  It is a terrific bill that deserves broad bipartisan support. This 
legislation has my enthusiastic support, and I appreciate very much 
being able to speak to my colleagues on this issue.
  Thank you. I yield the floor.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. Who yields time?
  Mr. CONRAD. Mr. President, I yield myself such time as I might 
consume off Senator Moynihan's time.
  The PRESIDING OFFICER. The Senator is recognized.
  Mr. CONRAD. I thank the Chair.
  I say to my colleague, Senator Hagel, that I think they are under an 
informal understanding of going back and forth. I would be glad to hold 
off, if the Senator has another responsibility elsewhere. I would be 
happy to stand down and allow him to proceed.

[[Page S8427]]

  Mr. HAGEL. My friend and colleague is very generous. My only other 
responsibility, after just a couple of brief comments, would be to 
preside over your insightful commentary on the floor of the Senate. If 
I might take advantage of the Senator's generosity, I would not need 
more than 5 minutes at the most.
  Mr. ROTH. Mr. President, I yield 5 minutes to the distinguished 
Senator from Nebraska.
  Mr. HAGEL. I thank the chairman, and to my friend and colleague from 
North Dakota, I thank him.
  The PRESIDING OFFICER. The Senator from Nebraska is recognized.
  Mr. HAGEL. Thank you, Mr. President.
  Mr. President, I would like to take a couple of minutes to give some 
perspective about what this body has been doing the last few months, 
culminating in a vote shortly today or tomorrow on the Tax Relief Act, 
and what we have just done this morning in the balanced budget 
amendment.
  Four years ago almost exactly, the Congress of the United States 
passed the largest tax increase in the history of America. I bring that 
point to the front because, Mr. President, the agenda has changed. The 
issues have changed. We are now talking about cutting spending, cutting 
taxes, balancing the budget, and actually stepping up to the short-term 
and long-term challenges in our entitlement programs. I might add as 
well that this is a bipartisan effort. The vote that we just held this 
morning on the balanced budget amendment was 85 to 15 with strong 
bipartisan support--Democrats and Republicans working together.
  As we approach a new century--a hopeful, dynamic, energetic, new 
century full of great promise for our next generation--it is very 
appropriate that we take in this body the responsibility to focus on 
fiscal change and infrastructure change to prepare us as we go into 
this next century. We cannot hope to compete in a global economy when 
we overtax, overspend, and overregulate. I believe that all of us in 
this body have come to that conclusion.
  The House overwhelmingly last night passed the balanced budget 
amendment. They, too, will vote on the tax act, as we will shortly. But 
sometimes in the rush of the activity and the heat of the moment and 
the passion of the politics, we tend to forget what has been 
accomplished here. This has been a remarkable accomplishment. 
Imperfect? Of course. Tax cuts--not deep enough. Spending cuts--not 
deep enough. This body is on record in going further on dealing with 
some of the tough, tough issues that we are going to have to deal with 
in Medicare and entitlements. But what is important is that we have 
made a beginning--a very strong, substantive beginning. It is due to 
the efforts of both sides of the aisle and all in this body who have 
helped to make this happen.
  I listened to my colleagues this morning walk through some of the 
specifics of the tax bill. I think they are worthy of what we have done 
because, as you frame it up and understand it, what we have done is, 
for the first time in 16 years, we are about to bring real tax relief 
to Americans. By our vote this morning we have started to begin to 
harness the energy and the resources that we have in this country with 
showing some fiscal responsibility--balance the budget and, again, in a 
bipartisan way. Those are elements that should not be forgotten or 
dismissed easily when both sides of this debate talk about what we have 
done and what we have not done.
  So I, Mr. President, appreciate the opportunity to bring some general 
perspective to this, because occasionally we don't step back enough and 
understand what really has happened here and how this will strengthen 
this country and the opportunities for our young people as we go into 
the next century.
  Again, imperfect, more to do, strong beginning. And I, for one, Mr. 
President, as a new Senator to this body, am proud to have voted for 
the balanced budget amendment this morning, and I intend to vote for 
the Tax Relief Act when it comes to this floor.
  I appreciate the time which my distinguished colleague from North 
Dakota and the chairman of the Finance Committee have given me.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. CONRAD addressed the Chair.
  The PRESIDING OFFICER (Mr. Hagel). The Senator from North Dakota is 
recognized.
  Mr. CONRAD. I yield myself such time as I might consume off the 
ranking member's time.
  I thank the Chair.
  Mr. President, first of all, I want to acknowledge the efforts of the 
chairman of the Budget Committee, Senator Domenici, and the very great 
contribution of the ranking member of the Budget Committee, Senator 
Lautenberg. In addition, I want to recognize the exceptional efforts 
with respect to the tax bill of the chairman of the Senate Finance 
Committee, Senator Roth, and Senator Moynihan, the ranking member.
  First, let me say with respect to Senator Roth, that he conducted the 
Finance Committee as I hope all committees of Congress would be 
conducted. He was absolutely fair. He conducted that committee with a 
bipartisan spirit. I think it made a great difference in bringing us to 
this point.
  I think for too long in Congress on both sides there have been those 
who conducted themselves in a very partisan way. Senator Roth chose to 
conduct himself in a bipartisan way. That did not mean Senator Roth 
gave up his long-held views on taxes and spending. He certainly did 
not, nor did others of us who may disagree. We had a full and fair 
debate, and all of us took principled positions that were ones we 
deeply hold. But there is no reason we cannot have full and fair debate 
and treat each other with respect. That occurred in the Finance 
Committee, and Senator Roth and Senator Moynihan deserve great credit. 
I want to say that at the outset. I hope that serves as a pattern of 
how we conduct ourselves going forward in the Senate. I think that is 
the model of how people in this country would like to see us conduct 
our business. So I want to say to Senator Roth, thank you for being a 
gentleman and conducting yourself with grace.
  Mr. President, I, too, am proud to have voted for the provisions that 
we passed this morning that will finish the job of balancing the 
unified budget. I am also going to be proud to vote for the tax bill. 
While it is not precisely as I would have written it if I were given a 
free hand, none of us can be given a free hand. We are part of a 
legislative body, 100 on this side, 435 in the House and, of course, we 
have the White House to consider because the President can exercise a 
veto.
  We worked together to fashion a result that is a compromise. I think 
it is a very principled compromise. I think it is a fair result. 
Frankly, I would have done more by way of deficit reduction. I wish we 
had been more ambitious. I wish we would have done more in long-term 
reform of entitlement programs. But that was not to be. That is for 
another day.
  Mr. President, we have made progress. This package in total does not 
reduce the deficit as much as I would have liked. But nonetheless there 
is solid deficit reduction here, about $175 billion of net deficit 
reduction over the 5 years.
  I have been part of a group of centrists, a group of 25 Senators 
evenly divided between Democrats and Republicans. We had a more 
ambitious package of deficit reduction, I would say perhaps twice as 
much. I would like to have seen that package passed. We also supported 
in the Finance Committee on a bipartisan basis more far-reaching 
entitlement reforms, especially with respect to Medicare, but others in 
the House would not vote for those changes. Notwithstanding the fact 
that I would like to have seen a different package, a more ambitious 
package, the fact is this package is worthy of support. It does further 
reduce the deficit. It does bring us to unified balance. I want to make 
certain we all understand the difference between unified balance and 
what I would consider a true balanced budget. But it also provides 
expanded educational opportunity for our children. There is provided in 
the previous legislation we passed this morning a broader coverage for 
children in health care. It provides for tax relief. There are a whole 
series of provisions that I think are going to be useful, including 
child tax credits and educational credits. There is also tax reform in 
a number of other areas, including estate taxes. Estate tax relief will 
be especially important in a State

[[Page S8428]]

like mine where we have many small businessmen and farmers. We have a 
package of increased savings opportunities. Nobody is more responsible 
for those than Senator Roth of Delaware. He has had a passion for 
expanding IRA's and they will provide an incentive, I believe, for 
further savings and investment.
  There are also capital gains changes that will be welcome in many 
circles. I personally would not have favored the extent of capital 
gains changes passed here. I would have favored a more targeted 
approach. But nonetheless, we did reach an agreement, and as I said 
earlier, this agreement is worthy of support.
  I, too, want to put this in perspective. I may have a different 
perspective than the occupant of the Chair as he expressed it a few 
moments ago. I remember 1993 very well. The deficit was $290 billion, 
and every projection that we had said the deficit was going higher. The 
Democrats at that time had just been elected to the White House. 
Democrats had control of the Senate and the House. We had to produce an 
economic plan, a 5-year plan, and we did. We passed that plan without 
any votes from the other side of the aisle, not one.
  In that plan, it is true, we raised taxes. I would not agree that it 
was the largest tax increase ever. I believe the tax increases that 
were passed in the early 1980's were larger in terms of relationship to 
the size of our economy. But nonetheless, we did raise taxes, raised 
income taxes on the wealthiest 1 percent in this country. We also cut 
spending--$250 billion of spending cuts--over 5 years.
  That package worked. Some on the other side said that if we passed 
that package it would crater the economy, that it would increase 
unemployment, that it would increase the deficit, that it would reduce 
economic growth. Well, the record is now in. The record is clear. Our 
friends on the other side of the aisle were simply wrong. That package 
did not increase unemployment. Precisely the opposite occurred. We had 
the creation of 12\1/2\ million new jobs in the last 5 years. Inflation 
is at a 31-year low. Unemployment is at a 24-year low. We have had 
remarkable economic growth. We have had business investment expanding 
at a rate of 10.5 percent a year. We have had the largest reduction in 
poverty in our history. This has been an economic plan that has worked 
remarkably well. So that is my perspective on how we get to where we 
are today.
  I will just show this chart. It shows the 1997 budget agreement is 
only possible because of the savings generated by the 1993 plan. 
Interestingly enough, if you look at the years from 1994 to 2002, the 
1993 plan generated over $2 trillion of deficit reduction--$2 trillion. 
The plan we are talking about today will further reduce the deficit, 
but it will produce less than $200 billion of net deficit reduction 
through 2002. So most of the heavy lifting was done by the 1993 plan.
  I am extremely proud to have been part of that plan because it took 
courage to pass that plan. It was controversial and it was difficult, 
but it worked.
  Mr. President, today we are talking about a tax plan that, as I 
indicated, has many important elements. One of the elements that I 
think is very important in this debate is we are able to extend the 
child credit to people who are paying payroll taxes that do not have 
further income tax obligation.
  Some said it would be welfare to give a child tax credit to those who 
do not have an additional income tax obligation but are paying payroll 
taxes. I am very pleased that we were able to prevail in that debate 
because the reality is we have tens of millions of people in this 
country who are paying more in payroll taxes than they are paying in 
income taxes. In fact, 73 percent of the people in this country pay 
more in payroll taxes than they pay in income taxes. Those payroll 
taxes are not just being used to finance Social Security and Medicare. 
They are also being used to finance the ongoing operations of 
Government, because every year we are taking the Social Security 
surpluses and spending them. We are spending the Social Security 
surpluses to support the ongoing operations of Government.
  I will display this chart because it shows what has happened with 
payroll taxes. They have increased dramatically. They now make up about 
35 percent of the revenue of this Government; and, again, 73 percent of 
the people in this country are paying more in payroll taxes than they 
are paying in income taxes. So I think it is entirely appropriate that 
we extended the child credit to offset payroll taxes for those folks 
who earn less than $30,000 a year.
  I might say, in my State, that is very nearly a majority of the 
taxpayers.
  The other provisions of this tax bill are also critically important. 
I am especially pleased with the education component because we have 
made an enormous investment in American families being able to send 
their kids on to higher education. That is good news for American 
families. The good news does not stop there. We have also expanded the 
incentives for people to save and invest. Again, I want to acknowledge 
the role of Senator Roth in that regard.
  In my State of North Dakota, we have tens of thousands of small 
businessmen and farmers who have looked at the estate tax provisions of 
current law and said, Senator, these have not been adjusted for 
decades. We are still stuck at $600,000, and it is time for an 
adjustment. I am especially pleased that in this legislation small 
businessmen and farmers next year are going to see that basic estate 
tax provision raised to $1.3 million. That is going to make a real 
difference in the ability of small business people in my State and the 
State of the occupant of the Chair to pass on their businesses or their 
farms to family members.
  I think that is what we want to do in this country. We do not want to 
break up a small family business or a small family farm. Someone may be 
listening and thinking, is a small family farm, 1.3 million? Given 
what's happened to land values in parts of our State and other parts of 
the country, as urban pressures have grown, absolutely that can be a 
small family farm. You can have a land value of $1.3 million and have 
people who are cash poor. I have friends who are in farming. If you 
went to their homes, you would find them living very modestly, very 
modestly, indeed--driving old cars, living in homes that have not had 
much done to them in maybe 20 years. Yet they have a land value of $1.5 
million. But they have very little in the way of cash income. Yet the 
current estate tax works to break up those family operations. That is 
not what we want to be doing. These estate tax changes are going to be 
very positive.
  Mr. President, I want to end as I began by saying this has been a 
bipartisan effort, it has been a constructive effort, and it has 
brought us to this result. It is a good result. I also want to say that 
we have more work to be done. When we talk about balancing the unified 
budget, what that means is that we are taking Social Security surpluses 
and counting those in order to achieve balance. It is not my idea of a 
real balanced budget. I will really celebrate the day that we are no 
longer counting Social Security trust fund surpluses in order to say 
that we have balanced the budget.
  Let me just show this last chart, because this shows what has 
happened to the so-called unified deficit. It is the blue line. It 
shows back in 1992 we had a deficit of $290 billion. It has gone down 
every single year since the 5-year plan that we put in place in 1993.
  This year the projection is $67 billion. I think when the new figures 
come out in the next couple of weeks they will show that the deficit 
this year, instead of being $67 billion, as is the current projection, 
will be down even substantially from that, perhaps as low as $45 
billion. Some are even now saying the deficit this year will be as 
little as $30 billion.
  We have had a cumulative deficit of only $11 billion in the first 9 
months of this year. That is a remarkable success, from a deficit of 
$290 billion in 1992 to a deficit this year that may be as little as 
$45 billion. Then, under this plan we bump up next year. We don't know 
what the new projections will show. Then we are on a steady, declining 
path to unified balance in 2002.
  But the red line shows something else. It shows that while the 
deficit is in fact declining each and every year, we will still be left 
with a $109 billion deficit in 2002, when one includes the Social 
Security trust fund surpluses. So I think it is fair to say that this 
plan does balance the unified budget, it

[[Page S8429]]

does provide tax relief, it does do other things that are very helpful 
to the American people. But I think it is also important to remind 
ourselves we still have progress that needs to be made. Because in 2002 
we will still have a real deficit, when we consider those Social 
Security trust fund surpluses that are being thrown in the pot to claim 
balance.
  Even with that said, the fact is this package does represent progress 
at further reducing the deficit. It does represent tax relief. It does 
represent the other things that I referenced earlier, like expansion of 
educational opportunity for our families. It also provides, in the 
earlier legislation passed, a dramatic expansion of health care 
coverage for kids in this country who need it.
  With that, I yield the floor. I again thank my colleagues who have 
worked on a bipartisan basis to achieve this result.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, before yielding time to the distinguished 
Senator from Ohio, I would like to thank my good friend and colleague 
from North Dakota for his knowledge, his background, and contributions 
to this effort. No one has, I think, greater expertise in such matters 
as these than this distinguished Senator. I just wanted it to be 
publicly known that I appreciate his contribution and look forward to 
continuing in a bipartisan spirit.
  I am now pleased to yield 10 minutes to the distinguished Senator 
from Ohio.
  The PRESIDING OFFICER. The Senator from Ohio.
  Mr. DeWINE. Mr. President, I thank the chairman of the committee, 
Senator Roth, for the fantastic job that he has done. I congratulate 
also our majority leader, the chairman of the Budget Committee, Senator 
Domenici, as well as the Chairman of the House Budget Committee, John 
Kasich, and the Chairman of the House Ways and Means Committee, Bill 
Archer--all of the people who have been involved in this really 
historic piece of legislation. I rise today in strong support of this 
conference report, the Taxpayer Relief Act. This historic budget 
agreement is an important step forward for fiscal responsibility, 
fiscal responsibility that will balance the budget for the first time 
in 30 years. And it will provide much-needed tax relief for working 
families.
  When we implement this budget agreement, the result will be the first 
balanced budget since 1969. That is great news for the U.S. economy as 
well as for the working families who will see a decline in the interest 
payments they have to carry. This bill will give working families some 
long-needed, much-needed, much-deserved tax relief--$90 billion of tax 
relief over the next 5 years. Today, the working families of Ohio and 
the rest of America are paying record-high taxes. All across America, 
total taxes eat up 38 percent of the typical family's budget--38 
percent. That is more than the typical family spends on food, clothing 
and shelter combined. On these family necessities they only spend 28 
percent of their income.
  The people who are particularly helped by this are the lower middle 
class, the middle class, the working American. A family of four, two 
children, two adults, with an income of $30,000, will see tax savings 
of 53 percent--53 percent. A family with a $40,000 income, that same 
family, would receive a 30 percent tax savings. That same family, at 
$50,000, would still receive a 21-percent tax savings. That is real 
money. That is very, very significant.
  The education tax incentives will also help the next generation. It 
will help Ohio families, it will help American families. We all know 
education is getting more and more important as we move to a skill-
based economy. We also know it is very expensive. This tax relief bill 
will help Ohio's families save and pay for their children's education. 
It will expand the IRA's available for education and create tax-free 
prepaid tuition plans. It makes interest on student loans deductible 
from Federal taxes. It also encourages employers to invest in the 
education of their workers by giving them a tax deduction for employee 
training and employee education.
  This historic tax bill will help families make ends meet over the 
short term, and will help them educate their children over the long 
term. In my view, this is a modest bill, but it is a very important 
bill. It is a historic bill. It is important because it helps America 
as a nation reverse course. Mr. President, 50 years ago Americans paid 
2 cents out of every dollar they earned to the Federal Government. 
Today they are sending 25 cents to Washington alone, and that is not 
counting all the other State and local taxes. That's going in the wrong 
direction. What we do with this bill is change course and begin to go 
in the right direction. The $500 per child tax credit, in particular, 
will help ease the burden of working families who need to hold down two 
or more jobs to make ends meet.
  The tax relief in the agreement will also do a great deal for small 
business men and women. The capital gains cuts and the lowering of the 
estate tax will help promote economic growth and help preserve family 
owned and operated businesses. All of these policy changes in my view 
are extremely positive. They represent substantial progress over where 
we are today.
  I hope that we soon will address the long-term problem, though, of 
runaway entitlement spending. We begin to make progress with this bill. 
Clearly we have to go further. To balance the budget by the year 2002, 
as the budget agreement would in fact do, is very, very important. In 
fact, it's a prerequisite for any other progress we intend to make in 
economic policy. However, while it is essential, it is only a first 
step. We need to view what we are doing today, really, as just that, a 
first step. Our next necessary step is to prepare the Federal budget 
for the fiscal tidal wave that will occur when the baby boomers start 
to retire and become eligible for Social Security and for Medicare. In 
my view, we have to start reforming the entitlements in a responsible 
and bipartisan way. Congress has been talking about this for years. It 
is essential that we make it happen and we make it happen as soon as 
possible.
  But, for today, this bill and its companion measure are an excellent 
step forward, a first step. I am proud to vote yes on both of these 
historic conference reports.
  Mr. DORGAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, I yield myself as much time as I may 
consume of the time allocated to our side.
  I come to the floor today to say I intend to vote for this conference 
report and am pleased with the work that has been done in the Congress, 
and especially the work that has been done by so many people who 
invested so many hours to try to do the right thing.
  The Senator from Delaware, Senator Roth, who heads the Senate Finance 
Committee, has disproved the old adage about what a committee is, which 
is: A group of the unwilling chosen from the unfit to do the 
unnecessary. This committee, under this chairman's leadership, and the 
men and women from the Republican and Democratic caucus who were 
assigned to that committee, I think have done some very substantial 
work that will engender a substantial vote in the U.S. Senate, a 
bipartisan vote. I am glad to stand on the floor in this circumstance 
and say, finally, we have reached a point where both parties have come 
together to say that we fashioned something that we think will work for 
this country.
  We have a very different view of how we got here. I heard some 
remarks earlier. Some of that is probably typical and traditional 
rhetorical comments from both sides about where we have been and where 
we are going. I can remember 4 years ago on the floor of this Chamber 
when the deficit was going up, up, up and out of control, following a 
decade in which the description by the new economic guru to previous 
administrations was, ``Well, let's double defense, cut taxes and things 
will be just peachy.'' Defense spending doubled, taxes were cut, and we 
nearly choked on deficits in this country.
  We came to an intersection in 1993, 4 years ago, with a new President 
and a Congress, and this President said, ``Let's take a hunk out of 
that deficit and tackle that Federal deficit,'' and we voted for it and 
did it by one vote--one vote.
  I can recall the cries of alarm on the floor of the Senate:

[[Page S8430]]

  ``You're going to throw this country into a recession.''
  ``You're going to ruin this country's economy.''
  No, we didn't do that. We were willing to stand up and vote for harsh 
medicine to say this fiscal policy has been out of control, we need to 
get it back into control and play no more games. We cut some spending, 
we increased some taxes, yes, and we cut this deficit down, down, down 
and down, and guess what happened as a result of it? Unemployment 
plummeted. More people are working, inflation is down, the deficit is 
down, the economy is growing, and it is a better place because of it, 
and only because we are standing on the shoulders of those in 1993 who 
cast that vote, some of whom are not here, because we took a clobbering 
for that medicine in 1993. Only because of that tough decision are we 
now able to do the rest of the work and say to the American people, 
this country is moving ahead, moving in the right direction, and 
economic growth is sufficient so that now we can provide some tax cuts, 
as well as some spending cuts, and not only tackle the rest of the 
budget deficit problem, but also provide some much-needed relief to 
overburdened American families.
  Carl Sandburg said once:

       I see America not in the setting Sun of a black night of 
     despair ahead of us, I see America in the crimson light of a 
     rising Sun, fresh from the burning creative hand of God. I 
     see great days ahead, great days possible to men and women of 
     will and vision.

  My attitude about where we are in this country is we are headed in 
the right direction. As I said, unemployment is down, jobs are up, 
crime is down, the country is growing. Is everything perfect? No, not 
at all. We have a lot of changes ahead of us. Is everything in this 
bill perfect? No. If I had written it, I would have made some changes. 
But have we come together at this juncture, together with a Democratic 
and Republican Party, a Democratic President, a Republican Congress, 
men and women of both parties to do something that is good? Yes, I 
think so.
  In this legislation, today we say to the American people we think 
education is critically important and we are going to not only invest 
in education in the bill we passed yesterday, we are going to provide 
significant new tax cuts to relieve the tax burden on families who are 
sending their kids to college. The effort that is made in this piece of 
legislation to value education is critically important because this 
country's future is in educating its kids.
  Yesterday, we talked about expanding Head Start to a million new 
American children. That is a significant achievement.
  Today, we say that families--45 million children in this country--
will receive ultimately a $500-per-child tax credit, which I think will 
be a significant benefit to American families.
  In addition to the significant achievements in education and the 
significant achievements in investing in jobs and other things, 
inducing savings and the things that, I think, have great merit for the 
future of this country, this legislation provides some specific things 
I want to mention just very briefly.
  One, there has been a lot of controversy about estate tax reform. 
People say if you provide estate tax reform, that affects a small slice 
of people with an enormous amount of income. I come from a part of the 
country that is sparsely populated and losing population. My home 
county has 3,000 people living in an area the size of the State of 
Rhode Island. It used to be 5,000, but people are moving and leaving 
many rural areas. I want to do everything I can to encourage every 
family business and every family farm to be passed from parents to 
children, to keep operating and keep open and stay there in rural 
America, and this estate tax provision is going to be enormously 
helpful in doing that.
  I might say that one other piece of good news in this legislation is 
parochial, but important, to people of South Dakota and North Dakota, 
Minnesota, and other disaster victims around the country. There is in 
this legislation several provisions that I had asked be put in that are 
going to be helpful to disaster victims. There are a number of 
provisions that say, because of disasters you are unable to file your 
tax return, and the IRS extends the time in which you are able to file 
a return--the IRS said, ``We'll do that, but we still must charge 
interest''--this waives the interest for taxpayers who were not able to 
file a tax return because their house and all their records are down 
the river someplace in a massive flood. That is a tiny little issue, 
but important, and I am very pleased that it was put in this piece of 
legislation.
  The folks who were victims of blizzard after blizzard after blizzard 
in the Dakotas, Montana, in our part of the country, who had to sell 
cattle because they had no feed and now are going to restore their 
herd, this piece of legislation says you are not going to have to pay 
capital gains tax on the herd that you sold.
  This piece of legislation has a very important benefit to livestock 
producers who were victims of the disaster in our part of the country. 
It overturns an IRS ruling, a tiny little thing, but it is going to 
affect tens of thousands of farmers. The IRS took a position a while 
back on what are called deferred contract sales that farmers have made 
routinely for years and years at the country elevator, that they were 
going to be taxable under certain circumstances. We have no idea where 
the IRS came up with that interpretation. It is completely wrong. They 
had no basis for doing that.
  This legislation says to the IRS that you can't do that. Senator 
Grassley and I, and nearly 60 of our colleagues in the Senate, joined 
and said to the IRS, ``Look, everybody in America has a right to be 
wrong, it is a democracy, but when the IRS is wrong, America pays. In 
this case, you're wrong, and we're going to change the law so you can't 
misinterpret what we write.''
  Those are the kind of things in this piece of legislation that have 
great merit. Those are some of the smaller things I wanted to mention.
  Finally, in closing, because I know other colleagues have things they 
want to talk about, I think this piece of legislation represents an 
awfully good instinct of the political system to get together and see 
if we can't do things together that represents a consensus that will be 
good for the future of this country.
  We so often fight among the political parties to prevent the other 
side from winning that, instead of getting the best of what each has to 
offer, we get the worst of what both can offer. That makes no sense for 
this country. This piece of legislation is a credit, yes, to this 
President and the White House who worked so hard for it and proposed so 
much of this; it is a credit to Senator Roth, Senator Moynihan and so 
many others on the House and Senate side from both political parties 
who I think have done a commendable job. Would I have written it 
differently? Yes. Am I concerned about the outyears a bit? Yes. We need 
to put up fences to make sure we don't go back into a deficit 
situation.
  We haven't finished dealing with the deficit. As my colleague from 
North Dakota, Senator Conrad, pointed out, this is a unified deficit. 
We still have a Social Security problem we must deal with. I probably 
would have preferred to take even more benefits in this piece of 
legislation and provided it to working families, but I didn't write 
every piece of it, and this is a compromise. I also would have 
preferred to have some limit on the issue of capital gains. I support 
the capital gains tax treatment that exists, but I would have had some 
limit on it.
  Having said all that, I am pleased to come to the floor today to say 
I can vote for a piece of legislation that I think advances this 
country's interest, and it rests on a bed of good news that comes from 
our colleagues who, in 1993, stood up and said, ``Count me in, let me 
vote for the first giant step in tackling this Federal deficit.'' And 
this next step, a bipartisan step which is good for this country, is 
one which I hope will give the American people a good feeling about 
their future.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. Who seeks recognition?
  Mr. JOHNSON addressed the Chair.
  The PRESIDING OFFICER. The Senator from South Dakota.
  Mr. JOHNSON. I yield myself such time as I may consume.
  Mr. President, I rise to express my support for this legislation. I 
want to

[[Page S8431]]

commend Chairman Roth and the ranking member, Senator Moynihan, and 
Senators Lott and Daschle for their leadership. A great deal of good 
has come from the bipartisan cooperation put together to produce this 
legislation. I certainly will vote for it.
  Much has been said by some about the historic nature of this 
legislation. Perhaps that is true. But I have to say, in following the 
comments of my colleague from North Dakota about the historic context 
of how we arrived at this point, that some observation needs to be made 
that the truly historic legislation that was passed was the 1993 Budget 
Act.
  President Clinton inherited a hemorrhaging pool of $290 billion of 
red ink that was projected to grow annually when he came to the White 
House. His first step was to work with Congress to pass a 5-year budget 
plan that passed without a single Republican vote. At that time, I 
served in the other body. I remember the immense political pressure 
that was brought to bear at that time. I remember the 30-second 
television spots that followed, accusing every Democratic Member of 
having cast the deciding vote on something that would be catastrophic.
  What happened? The $290 billion of red ink has now plummeted this 
year to an estimated $67 billion, perhaps as low as $30 billion. We now 
have the smallest Federal budget deficit relative to the size of our 
economy of any Western industrialized nation on Earth. We have a 
vibrant economy, high employment, low unemployment, low inflation, and 
we find ourselves now in the midst of a remarkable era.
  This legislation is important legislation, but it will finish what we 
began in 1993 when we had a $290 billion deficit and brought it down to 
as low as $30 billion. This will get us from $30 billion to the finish 
line by the year 2002, a good thing to do, a positive thing to do. But 
the historic step, the politically courageous step, was taken 4 years 
ago.

  Is this legislation perfect? No. No, it isn't. That is the nature of 
any legislation, particularly, I suppose, of a piece of legislation 
that is a product of compromise between very different approaches. I 
think some of the high-fiving that has gone on around town may be a bit 
unwarranted. I would say, however, that this bill has been made much 
better during the course of the debate. The initial legislation, the 
reconciliation legislation that we dealt with in both the House and the 
Senate, provided very little tax relief, essentially no tax relief, for 
families making less than $30,000 per year. There was certainly no 
child tax credit for these families.
  Now, as I see it, this problem has been corrected, thanks to the 
leadership, particularly of the President of the United States, but 
also of Senator Moynihan and Senator Daschle, and others who worked 
very hard on this. Take a family, for example, with an income of 
$23,000 per year, perhaps a teacher, a firefighter, a policeman, a 
farmer, a store clerk, any number of people across our country who get 
up every morning--they play by the rules, they try to raise their kids 
with decent values, they try to keep jeans and tennis shoes on their 
kids, they are doing the right thing, they are not on welfare, they are 
working hard, oftentimes with two jobs.
  But wages, particularly in my State of South Dakota, are not always 
what we would like them to be. Farm prices are sometimes low. And these 
people, who are working their hearts out, oftentimes are living on very 
modest wages. And that family, with a father, in this case, who is 
earning $23,000 a year, and mom who is staying home with two kids, 
under the original bill and under the original Republican plan, would 
have gotten zero in child tax credit. Under the Clinton plan, they 
would have gotten $767.
  Well, the dust has now settled, and under the conference committee 
bill that we are voting on today, that family will get a $675 tax 
credit, a very useful sum for those families. People can make a car 
payment, a house payment, they can get their kids started with clothes 
for school, they can do some positive things. And I think we need to 
reward work, particularly at a time when we are reforming welfare and 
essentially ending the guarantee of federal support of families. We 
need to focus on what more can we do, then, to make work pay. Certainly 
this improved child tax credit, along with augmenting the funds in this 
legislation relative to health insurance for kids, is a positive step 
forward.
  It is true that this bill still has some unevenness to it. I have 
noticed that a group called Citizens for Tax Justice has an analysis 
out that indicates that the wealthiest 1 percent of American families 
will benefit by about a $16,000 tax cut because of this legislation. 
The average middle-class family will benefit by something less than 
$200. That isn't the kind of division that I would have made if it were 
up to me exclusively.
  But nonetheless, I do see the need to balance the budget by 2002, 
provide some key relief, not only with the child tax credit, but 
certainly, in the case of education assistance, to provide a $1,500 tax 
credit for tuition, tax-deductibility of interest on student loans, and 
to expand Pell grants, not only the numbers who are eligible but also 
the size of the grants. That is investing in kids, and investing in the 
brain power of this country. That is really where we must make a 
commitment if we are going to compete in a global economy, not just now 
but for generations into the future.
  I see positive things relative to agriculture. My colleague, Senator 
Dorgan of North Dakota, has gone into much of that. Capital gains 
relief for small businesses and family farmers will be helpful. There 
is also estate tax relief. Certainly, there are some targeted kinds of 
aid for those who have had to liquidate their herds. There is 
restoration of income averaging. There are a number of provisions that 
will be of great help. That I have to applaud.
  I am concerned about the backloading of some of the tax reductions 
which has the potential consequence of making balancing the budget 
post-2007 more difficult. It would be disastrous for us to have gone 
through all of this and then find ourselves the year after balancing 
the budget, or only shortly thereafter, going back into red ink again 
because of backloaded or phased-in tax cuts that had negative 
consequences in the outyears.
  That is something we are going to have to be very conscious of in the 
future. This is not a matter of turning the Federal budget over to 
automatic pilot and now we are home free. It is going to involve 
difficult, contentious, but hopefully bipartisan, annual debates about 
how to maintain equilibrium between our revenue and our expenditures 
while still using our budget for the correct priorities.
  I think one of the key political issues in America over these last 
several years has been, how do we balance the budget? There is 
bipartisan agreement we need to do that. But how, at the same time, do 
we protect Medicare, do we continue to invest in education and protect 
the environment? How do we do it in a way that reflects the best of our 
values and our priorities in this country? Can that be done?
  Some of us remember only a couple years ago when there was a proposal 
that would have arguably balanced the budget, but it would have 
decimated Medicare, it would have taken investment away from education, 
it would have been destructive to the environment, and certainly to 
rural Americans. Thankfully President Clinton vetoed that legislation. 
He said we can do better, we can do better with our priorities and 
still get to a zero deficit.
  Thankfully, this legislation, for all of its warts and all of its 
shortcomings, does in fact get us that remaining $30 billion to $60 
billion that we need to balance the budget, and it expands the number 
of kids who have access to health insurance. It will be helpful to 
small businesses and farms. This bill will increase the tax-
deductibility of health insurance premiums for the self-employed to 100 
percent, something long overdue. And it will, I think, help continue 
the economic growth that we have seen over these last 5 years where we 
have had 5 consecutive years now of deficit reduction and economic 
growth.
  And so, Mr. President, I think that this is a positive piece of 
legislation. It is the product of bipartisan agreement. Thankfully, the 
President has used his leverage to make sure that we do in fact live up 
to these priorities and to bring some common sense back into this bill. 
The truly historic legislation was that of 1993, but this is important 
legislation. I support it.

[[Page S8432]]

  I voted earlier for the budget portion of reconciliation. I will vote 
for this tax portion of reconciliation. I am proud of what our 
colleagues on both the Republican and Democratic sides have been able 
to do to pull together, to set aside some of the anger and some of the 
hostility that too often has characterized political debate in this 
country, and to spend a little less time being Republicans and 
Democrats and a little more time being Americans.
  I think that is what the American people really want. And they want 
to see an end result that reflects the best of our cooperative efforts. 
This legislation does, I think, take us down that road.
  So, Mr. President, while there are things I would have done 
differently, and while we do need to understand the historic context of 
how we arrived here, this is good legislation, and I yield the floor 
expressing my support for this bill.
  Mr. CHAFEE. Mr. President, under our order, we are now going back and 
forth. Senator Hutchison was next, and she was here just a minute ago. 
And I believe she is coming on the floor now. So I ask Senator 
Hutchison, are you ready to go?
  Mrs. HUTCHISON. I would be happy to yield to my colleague from 
Minnesota who I think was here first, and then if I could follow after 
the next Democrat.
  Mr. CHAFEE. It would then go back over to this side-- Senator Baucus 
has been waiting--and then back to you.
  Mrs. HUTCHISON. That would be fine.
  Mr. CHAFEE. I yield to the Senator from Minnesota.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. GRAMS. Thank you very much. I want to thank my colleague from 
Texas for yielding.
  Mr. President, I came to the floor yesterday to discuss in detail my 
strong support for the Taxpayer Relief Act of 1997. I do not intend to 
repeat the arguments I made then, but I do have just a couple of other 
points I think need to be made.
  When my good friends, Senator Hutchinson of Arkansas and Senator Dan 
Coats of Indiana, and I first proposed the $500-per-child tax credit 
back in 1993, we were not doing it to grab headlines and it was not a 
piece of cheap political theater. We pursued the $500-per-child tax 
credit because we believed that working families are horribly 
overtaxed. And how did we know that? Because the American people told 
us so.
  Americans are by nature a very giving and generous people. For a long 
time, they did not complain--at least too loudly--that their tax burden 
seemed to be rising every year even though they were not seeing any 
improvements in Government services. If anything, their tax dollars 
seemed to be buying less and less. But when taxes reached the point 
where working Americans were spending more of their hard-earned money 
feeding the Government than they were spending to feed, clothe, and 
shelter their families, well then, the taxpayers started feeling as 
though their generosity was being taken advantage of. They began 
demanding that the Government stop spending their dollars so 
recklessly. They began asking for tax relief, so they could start 
meeting the needs of their own families, instead of feeding 
Washington's mixed-up priorities.
  So what do working families want from their Government? Well, let me 
first tell you what they do not want.
  America's working families do not want handouts.
  They do not want more government agencies or programs.
  They do not want their tax dollars feeding bigger Government.
  They do not want the Government to intrude unjustly into their daily 
lives.
  They just want to go to work to make a good living, have a decent 
place to call home, and to have the opportunity to provide for their 
children. And they want to keep a little bit more of their own money at 
the end of the day. That is what this package of tax relief will 
deliver. For my home State of Minnesota, the $500-per-child tax credit 
at the heart of our legislation adds up to at least $300 million that 
will stay in the hands of families every year. More than 700,000 
middle-class children will benefit. That is what families have told me 
they want, and that is what we are on the verge of delivering.
  It should not be an occasion to celebrate when politicians actually 
keep their promises. That is how the process ought to work. But we all 
know that Washington has gotten pretty good at making promises, but too 
often fails miserably when it comes time to keep some of those 
promises. But, today, Congress is delivering on what I consider to be 
an irrevocable promise we made to the taxpayers 2\1/2\ years ago. Send 
us to Washington, we said, and we will cut your taxes. That is not a 
political slogan--that was a promise.
  Now, let us not kid ourselves--our package of tax relief is not going 
to make anybody rich. As tax cuts go, it is pretty paltry. The net tax 
relief amounts to less than 1 percent of all the tax revenue collected 
by the Federal Government over the next 5 years. It begins to roll back 
the President's 1993 tax increase, but we would have to pass a bill 
three times bigger than the one before us today to wipe out the 1993 
increase completely. It is an important start, however, in moving the 
Government in a new direction.
  Relying on a radical philosophy of faster, better, cheaper, NASA 
launched the Pathfinder probe and successfully--and dramatically--
opened a new era of exploration on Mars. The return on that investment 
has gone far beyond anything that can be totaled up on a balance sheet. 
I would like to see the same philosophy of faster, better, cheaper 
applied to the rest of Washington as well, for a payback I believe can 
be equally as impressive. A faster government has fewer layers of 
bureaucracy, so that it can more quickly meet the needs of the people. 
A better government is responsive to its citizens and responsible to 
its taxpayers. A cheaper government needs fewer dollars to carry out 
its work, opening the door to future tax cuts that leave even more 
money in the hands of the taxpayers.
  Faster, better, cheaper is an idea that worked on Mars. It is an idea 
that ought to work just as well here on Earth.
  To paraphrase a favorite quote of mine, Mr. President, politics are 
temporary--but the American family is permanent. Enactment of the $500-
per-child tax credit is a great victory for families, one I believe 
will help bring them together, and hopefully keep them together. I am 
proud that I can go back home this weekend and tell the working 
families of my State--who for years have watched their taxes rise and 
their take-home pay shrink--that Washington finally got the message. We 
are at last going to cut their taxes, not because it is the politically 
easy thing to do, but because it is the right thing to do.
  Again, I want to thank and commend the majority leader and my 
colleagues, the chairmen of the Finance and Budget committees, for 
having the determination to bring the Taxpayer Relief Act to the floor. 
This is a great day in the history of the Senate, and it is also a day 
that I am proud to be a part of.
  Thank you, Mr. President.
  I yield the floor.
  Mr. BAUCUS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I yield myself such time as my side is 
allowed to consume.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. BAUCUS. Mr. President, I think that the American people 
essentially want us to do the right thing. They care less whether it is 
the Democratic policy or the Republican policy. They care less whether 
it is conservative or liberal. Essentially, they say, ``You folks back 
there in Washington, come together, do what's basically right, what's 
within the realm of reasonableness. Just get your job done. If you do 
that, you're doing a pretty good job.''
  Mr. President, I think that is what happened here. We Democrats like 
to claim lots of credit for this legislation. A lot of us talk about 
the 1993 Deficit Reduction Act, which I do think is the cornerstone 
which led to declining deficits and allowed the American economy to 
begin to prosper, interest rates dropped, with inflation rates lower, 
unemployment rates lower, et cetera. Republicans like to claim that, 
oh, no, they are the ones that basically did all this. After all, they 
are the majority party in the Congress right now.

[[Page S8433]]

  But the truth of the matter is that it is the combination of both 
sides working together to reach this agreement. And even more truthful, 
we have a big assist, and that is the national economy. The economy is 
doing very well. We all know that. And that enables President Clinton 
to negotiate with the Republican majority in the Congress, and with all 
Congress for that matter, an agreement which makes most people pretty 
happy. That is, it cuts taxes. When the economy is doing very, very 
well, the U.S. Government is bringing in more revenue than it usually 
does, and it is easier to cut taxes. That is what we have done here. We 
all like to have our taxes cut.

  Second, there are additional spending programs in here. One big one 
is education, which is very needed in America. We must invest more in 
education. All of us know that. If we are going to compete with 
countries around the world and we are going to increase the quality of 
living for all of our people, it is critical that our young people get 
a better start and a better education. We spend quite a bit of money in 
this bill on education, whether it is direct spending or tax credits.
  So the economy has helped us very much. I wonder where we would be 
today, Mr. President, if the economy were not doing well today. Would 
we be balancing the budget as quickly? Would we be working as well 
together? Would there be as much peace and harmony on both ends of 
Pennsylvania Avenue? I see the occupant of the Chair shaking his head 
in the negative, and I agree; we would not be doing as well. The 
economy gave us a big boost. We are here, in some respects, because of 
that.
  I, like most Members of this body, support this conference report. It 
does do basic things which are important. No. 1, it moves us toward a 
balanced budget. We are going to have a balanced budget at least by the 
year 2002. My guess, Mr. President, is that we will probably reach a 
balanced budget before the year 2002. In fact, the projected budget 
deficit for this year is to be as low as $50 billion. So we will 
balance the budget. We will be living within our means. That is no 
small matter.
  We also have tax cuts which help small businesses and help families 
around our country and help the country generally. That is good. This 
bill also keeps hospitals and clinics open in rural America. I mention 
rural America because my State tends to be rural, and we have been 
working for many years to be sure that we have quality health care in 
our part of the country, as well as in the cities.
  This will also help make sure America's children have health 
insurance. Not too long ago, we passed the Kennedy-Kassebaum bill, 
which would disallow preexisting medical conditions as a condition for 
denying insurance to insureds. That helped to buy more health insurance 
for programs. We also allow for something called portability; that is, 
if a person has health insurance, he can carry it to his next job. We 
Americans don't have the world's best health insurance program. Other 
countries insure their people a little bit better than we do. But the 
one area this bill addresses is health insurance for kids, which is 
very important and critical. All of us here are very happy for that.
  The bill has some drawbacks and I will address a couple of them later 
on. By and large, the benefits far outweigh those drawbacks. Let's 
start with the good news.
  As work on this agreement began earlier this year, I set a few basic 
priorities for myself by which to judge the final result of this bill. 
One was that this bill must balance the budget, it must help small 
businesses, and it must promote education--those were all priorities of 
mine--and, finally, it must be fair; that is, the distribution effect 
of this bill must be fair to all Americans. On the whole, I think this 
agreement reaches those criteria.
  First, we will see a balanced budget by the year 2002. It might even 
be earlier. But to be realistic, this bill deserves only a bit of the 
credit. I believe that the 1993 budget bill made the real tough 
choices, and that was the bill that began us on a glide slope toward a 
balanced budget. It was a tough bill. We took some tough medicine back 
in 1993. But that laid the foundation for where we are today. It 
brought us from a deficit of $290 billion in 1992 to a deficit of 
perhaps just $35 billion this year. So we started this effort with most 
of the work already done. This is just a small finishing-up effort on 
that 1993 bill. I must say, a booming economy is helping us as well.
  Second, this bill goes in the right direction on taxes. That is, it 
lowers taxes. Overall, it will cut taxes by $90 billion over 5 years. 
That is not a revolutionary change, but it is significant, and it is 
going to help make a difference to some people. Particularly, the $30 
billion in education tax credits is going to help families send their 
children to college. That is going to help.
  By cutting the estate and gift tax, we will help farm families, small 
business owners, and ranchers all across our country keep their land 
and their businesses and their operations in the family. That is very, 
very important to the people in the State of Montana. We have a lot of 
farmers and ranchers who have virtually no return on their investment, 
virtually no cash flow, but their land values are accelerating because 
some people are moving to Montana--wealthier people--which are pushing 
up land values.
  Relief in Federal estate and gift tax is critical. We phase in 100 
percent health insurance for the self-employed, and that means a lot to 
small business people, self-employed people who can't take nearly the 
same deduction in taxes and health insurance they pay compared to 
people who work for big companies. Generally, in America, the more you 
work for a large corporation, the better your health insurance policy, 
because your employer takes the full deduction for the health insurance 
policy. If you are self-employed, you don't get that; you have to pay 
for it all yourself. We began a couple of years ago to phase in a 
deduction for the self-employed. This legislation will bring that to a 
full 100 percent, albeit over the next 7 years.
  A capital gains tax reduction is very important. That should help 
savings and investment in our country.
  With respect to health care, this agreement also means significant 
accomplishments, essentially by providing $24 billion for health 
insurance and services for working children. This is $8 billion more 
than the original plan, and it is paid for with a cigarette tax that 
will create its own health benefits by reducing smoking.
  We also set up a new limited-service hospital program, modeled on the 
Montana Medical Assistance Facility, or MAF's, which allows hospitals 
to keep their doors open in small towns. The MAF is a proven success in 
many communities like, in my State, Circle, Culbertson, Big Timber, and 
Ekalaka, and this agreement will make those MAF's permanent. This will 
also slow a two-decade-long trend that has closed nearly 10 percent of 
all rural hospitals.
  We also allow rural family practice residency programs that are just 
getting started to expand. That is very important. Montana's two 
residency programs, one in Billings and other in Glasgow, are critical 
to attracting doctors to our State's rural communities. It makes sure 
that rural areas get fairer managed care payments from Medicare 
compared to the big urban areas.
  And not least, we objected to proposals in the last Congress to make 
large cuts in Medicare and abolish Medicaid's guarantee of health 
insurance for poor people.
  But the agreement is not perfect. I would like to note four areas 
where I think it falls short.
  First, it contains many special interest tax provisions. This means a 
much more complicated Tax Code and more tax advantage to wealthy people 
and big companies who can hire large numbers of lawyers and 
accountants. This tax bill makes our Tax Code much more complicated, 
unfortunately. We should return to this issue in the future and work to 
simplify the Tax Code and eliminate loopholes.
  Second, it includes unreasonably tough cuts in Medicare and Medicaid 
reimbursements to health care providers. These reimbursements make up 
an average of 55 percent of Montana hospital revenue. And the smaller 
facilities, with under 30 beds, already are collecting, on average, 
over 4 percent less in revenue than their costs. It is tough to squeeze 
these facilities any further.
  Third, it misses a chance to improve our national transportation 
infrastructure. I, with Senator Warner, and 80

[[Page S8434]]

other Senators, requested extra money for highway and transit 
construction. That money would have meant safer travel and a more 
productive economy. But this agreement does not have that.
  It does move the 4.3-cents-per-gallon motor fuel revenues from the 
Treasury to the highway trust fund. But for accounting reasons--that 
is, the lack of an offset--that is only phantom money. It will not mean 
any real change in the highway and transit budget, and I regret that. I 
alert my colleagues that when we take up the transportation bill after 
the August recess, we are going to realize how much we regret that.
  Finally, this bill ducks some of our long-term fiscal challenges. As 
we look 15 or 20 years ahead, we know Americans will live longer. So 
the bills we pay for health care and pensions for older men and women 
will be much higher than they are today.
  With the healthy economy and a good fiscal situation we have today, 
we could have taken some steps now to ease the problems this situation 
will cause the next generation. This agreement doesn't take those 
steps. It is a missed opportunity. I wish we had taken this 
opportunity.
  But on the whole, this is a reasonably good effort. It does balance 
the budget. It helps small business and families. It makes sure 
America's children have health insurance, more than today. Those are 
very important things for our country, and we ought to get them done. 
So I support the agreement, and I urge my colleagues to do the same.
  I might say at this point, Mr. President, how much I appreciate the 
bipartisan efforts, particularly of the chairman of our committee, 
Chairman Bill Roth, who worked very, very diligently to help make sure 
that both sides of the political aisle worked well together. That 
doesn't always happen in this body. There are some committees where 
that doesn't happen much at all. But Chairman Roth, chairman of the 
Finance Committee, did work very hard to bring both sides together, and 
I think that is one reason we are here today finally with this bill.
  I yield the floor.
  Mrs. HUTCHISON addressed the Chair.
  The PRESIDING OFFICER (Mr. Gorton). Who yields time?
  Mr. CHAFEE. We yield such time as the Senator from Texas requires.
  The PRESIDING OFFICER. The Senator from Texas is recognized.
  Mrs. HUTCHISON. I thank the Chair. Today is a historic day. We will 
vote and pass the first substantial tax cut in 16 years, giving much-
needed, long-overdue tax relief to working American families. We have 
been working for tax cuts for 3 years now, and we are making a 
downpayment on that commitment.
  I view the bill that we are debating today as the second half of an 
entire economic package. We passed the first half this morning. I was a 
somewhat reluctant supporter because, while it does take steps toward a 
balanced budget, we missed the opportunity for historic Medicare reform 
that would have created real consumer choice and preserved the program 
for the next generation. The Senate spoke on this issue. But the 
President's opposition to real Medicare reform prevailed in the final 
version.

  He also walked away from some very important decisions we made last 
year on welfare reform. We have hampered the ability of States to 
implement the welfare-to-work law. The President has already denied 
States, including Texas, the ability to privatize and consolidate 
welfare services. In Texas alone, such consolidation would yield annual 
savings of some $200 million. The President's continued opposition to 
true welfare reform carried the day.
  Mr. President, I did support the bill this morning because it is 
linked to the tax cuts we are now discussing, and it does bring us 
closer to a balanced budget. The tax bill is long overdue relief for 
hard-working American families. Republicans took the majority of 
Congress with a very clear mandate to make Government smaller, control 
spending, and let hard-working Americans keep more of the money they 
earn.
  We are trying to live up to that promise. We passed a budget plan 
that will lead to a balanced budget, and now we are succeeding in 
providing substantial tax relief for all Americans.
  Who will benefit from this plan? It is the mothers and fathers who 
will get help raising their children with a $500 per child tax credit; 
homemakers who want to build retirement systems through an IRA; young 
couples who are trying to buy a first home, pay for college for their 
children, or retirement for themselves; small business owners and 
farmers who have spent their lives building a business or farm and want 
to pass it to their children; investors who have provided the capital 
to start new businesses and create jobs.
  A $500-per-child tax credit will mean over 3.5 million families will 
no longer pay taxes at all. Instead of writing a $500 check to the IRS, 
families will get to keep the money they earn and spend it as they 
decide to spend it. Americans really do not need the U.S. Government to 
tell them how to spend their money. I think they should be able to 
choose for themselves. American families know best whether they need to 
spend money on their children, or save it for retirement, or enjoy a 
vacation. The Government shouldn't take that money and make their 
choices for them. In fact, with this tax cut, roughly 28 million 
families will pay fewer taxes. In my home State of Texas the child tax 
credit alone will benefit almost 2 million American families.
  With the passage of this bill, we will cut the capital gains rate to 
20 percent. This will encourage and reward investment and create new 
businesses and new jobs. A low capital gains rate is important to our 
future and our Nation's ability to save and invest. Our current Tax 
Code punishes people for saving and investing. This is wrong. We are 
trying to change it.
  Lowering the taxation of capital gains will do more than release 
hundreds of billions of dollars of tied-up capital. It will bring 
immediate relief to investors, small businesses, workers, farmers, 
homeowners, and the elderly. We need to encourage investment so that we 
can generate the technology, the market, and the jobs of tomorrow.
  Today, more than 41 percent of American families own stock. Fifty-six 
percent of capital gains are reported by families who earn under 
$50,000. Two-thirds of mutual fund shareholders today in America have 
household incomes under $75,000. Fifty percent of those who claim 
capital gains are senior citizens, many of whom need this money to 
improve their quality of life.
  In the livestock industry in Texas, over 60 percent of those polled 
recently admitted to holding onto assets because they couldn't afford 
to give Uncle Sam 28 percent of a capital gains tax.
  We cut death taxes so that years of hard work and success won't be 
wiped out in one generation. According to a recent survey, 51 percent 
of family-owned businesses would have significant difficulty surviving 
in the event of a principal owner's death, due to the death tax. The 
death tax brings little revenue into the Federal Government--only 1.1 
percent in 1997 of all of the Federal revenue. But it does affect 
hundreds of thousands of small business owners, family farmers, and 
ordinary Americans who work, save, and invest for a lifetime, just to 
turn more than half of their hard-earned dollars over to the Federal 
Government when they die.
  Mr. President, this is walking away from the American dream. What we 
have said for over 200 years to people all over the world is, if you 
come to America and you work hard, you will be able to keep the fruits 
of your labors and give them to your children to give them a little 
better start in life than you probably had.
  So walking away from that American dream is what we are trying to 
prevent today by having some relief in the death taxes that people have 
been paying.
  What does this mean for homemakers? We build on the progress that we 
made last year in giving for the first time the homemakers of our 
country the ability to save for their retirement security. This time we 
are adding to that by allowing the full deductibility of that $2,000 
regardless of what the spouse earns or has in a pension.
  How big are these few changes? Let me just give you an example.
  Under the old law, a single-income, married couple saving $2,250 a 
year--which was their maximum--would have, over 40 years, starting at 
the age of 25, when they are 65 approximately

[[Page S8435]]

$629,000 in their retirement nest egg. But today, because of the bill 
we passed last year, and this bill combined, after 40 years of setting 
aside the $4,000 that they will be able to earn tax free, this couple 
will have $1.119 million in their nest egg, an increase in savings of 
almost $500,000.
  So, Mr. President, when you put this together with the death tax 
relief we are giving, you can really see that we are making a 
difference for ordinary Americans. Economic growth does result from 
lower tax breaks. History shows us that expanded opportunity and 
prosperity flourishes under such conditions.
  These are the foundations for our democracy. As a result of the 
passage of this historic bill, Americans will be keeping more of the 
money they earn in their pockets.
  Sometimes I hear debate on this floor when people are talking about 
these tax dollars as if it is Federal dollars. Federal tax dollars 
belong to the Americans who earn them. We want Americans to keep the 
money they earn rather than having to send it to Washington for someone 
here to make a decision for their families.
  We are going to create new jobs, new investments, lower interest 
rates, lower home mortgage payments, lower car payments, lower student 
loan payments, and higher income for working Americans.
  Mr. President, it is not everything we hoped it would be. But it is a 
significant downpayment for the hard-working American families. That is 
something that I hope we can add to as we look toward the future going 
into the 21st century. Hard-working Americans should be able to realize 
the American dream of working hard, doing better for their family, and 
being able to give their children a start that maybe they didn't have.
  That is what this bill will start the process of doing for American 
families. I hope we can continue to work even harder for them in the 
future.
  Thank you, Mr. President.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. BREAUX addressed the Chair.
  The PRESIDING OFFICER. Does the Senator from Rhode Island yield to 
the Senator?
  Mr. BREAUX. Mr. President, under the previous agreement, I guess on 
the Democratic side, I yield myself 5 minutes.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Mr. BREAUX. Mr. President, my colleagues, it has been interesting to 
hear all of the various Members of the Senate come to this floor and 
talk about the product that is before us. We have had a few people who 
have expressed concerns to the extent that they cannot support the 
agreement that is now before the Senate. I think that is unfortunate.
  I remember, when I first came to the House of Representatives, I read 
a book that was written by Lawrence O'Brien, who had been in the 
service of both President Kennedy and President Johnson as the head of 
congressional relations. The title of that book was ``No Final 
Victories.'' The gist of the story that he was trying to convey was 
simply that in this business of governing, in this business of 
politics, there are never really any final victories. There are a whole 
series of small steps that are taken, small accomplishments and small 
achievements that are reached. But there is really never any final 
victory because the job is really and truly never done.
  When I look at the package of spending cuts and the package of tax 
reductions that we have before the Senate this week, I am really 
reminded of that whole theme and thesis of Lawrence O'Brien in ``No 
Final Victories.'' Because if you ask a question, Is this a perfect 
package? the answer, obviously, is no. If you ask the question, Should 
we have done more? the answer is obviously yes. If you ask the 
question, Are you disappointed and discouraged that things that you 
worked on are not in this package? I would say, absolutely. Discouraged 
and disappointed in some areas, yes. But defeated, no. Because I think 
on balance these agreements that are now before the Senate are major 
achievements. They are major steps in the right direction. The work is 
not yet finished. There is a great deal more that needs to be done. But 
we have, I think, set this country on a course and moving in a 
direction which is the correct one for all of us.
  One of the things that I am so encouraged by is the fact that we were 
able to do it in a bipartisan fashion. The vote in the Senate of 80 to 
18 and the vote in the Senate of 72 to 27, I think, on spending cuts 
and tax reductions is in fact a major accomplishment. These problems 
are too difficult and too serious for one party to be able to do by 
themselves. The only way we are ever going to be able to reach these 
agreements that put us on the path of really reforming the Government 
is to do it together. I think that where we worked best was when we 
worked with both sides trying to meet in the center and trying to 
cooperate in a fashion that could really bring true reform to this 
institution.
  The disappointment that I see in the bill is that we missed, for one, 
an opportunity to really reform Medicare. I think that what we 
essentially did was to follow what I call the SOS premise --same old, 
same old. We essentially looked at Medicare and said, ``Well, we have a 
lot of problems with it and we all know it is going to go bankrupt and 
insolvent at the end of the year 2001. So let's appoint a commission to 
try to recommend to Congress what we already know needs to be done.''
  I stand here with a great degree of pride and am so pleased that our 
colleague from Rhode Island, Senator Chafee, is on the floor with us 
today because some of the things that we all know need to be done we 
already did when we worked together in the Centrist Coalition in the 
last Congress and recommended some real strong, difficult things that 
needed to be done with regard to the Medicare Program--which was 
offered by our group, a bipartisan group equally divided in the last 
Congress, when we took on the tough recommendation of means testing for 
wealthier seniors to help contribute more to ensure that the program is 
going to be there for their children, for their grandchildren, and for 
their great grandchildren.
  We needed to recognize that people live longer. So we took the 
position of recommending a gradual increase, I might add over the next 
30 years, in the eligibility age for Medicare recipients merely 
reflecting the increase in life expectancy of all of our citizens, 
which is a very good thing to do. We also made tough recommendations, I 
think, in trying to bring about more competition in the Medicare 
System. But basically those ideas and those concepts, which got 46 
votes on the U.S. Senate floor in the last Congress, were dumped in the 
conference, dumped not really on the merits but because we needed more 
political cover.

  What is the political cover that we have decided upon? Well, it is 
``same old, same old,'' let us appoint a commission. I would love to 
serve on the commission, quite frankly. I would love to try to make the 
recommendations that are needed for us to be able to take the action 
that is necessary. Unfortunately, while the commission will prepare a 
report by March 1999, Congress does not have to act on any of their 
recommendations. We can just say: Thank you. It's been a wonderful 
opportunity to hear what you have to say, but we don't have to do 
anything about it.
  I think my colleague from Nebraska said: Wait a minute; we already 
had a commission. I served as a cochair of it. We have already made 
these recommendations. Why do we need another commission? Why do we 
need a commission at all? Why doesn't Congress act as a commission?
  You know what. Maybe the answer is that we can designate ourselves a 
commission, and instead of calling ourselves the U.S. Senate, we will 
call ourselves the U.S. Commission and then we can make the same 
recommendations that we have already made and act on it and say, well, 
the commission made the recommendation to get the job done that way.
  But I think we have missed an opportunity, and that is unfortunate. 
If we can't do it this year, it is going to be difficult to do it in an 
election year. I am always amazed that everybody tells us to fix it. 
How many times have we heard seniors and others tell us to fix 
Medicare. They say fix it but don't increase the premium; fix it but 
don't increase the age of eligibility. I have said several times 
before, if not now, when?

[[Page S8436]]

 When are we going to do it? And if not this, what? And if not us, who? 
Someone has to take the actions to do the things that are difficult and 
make the tough decisions needed to fix the problem.
  What is going to happen when we wake up on December 31 in the year 
2007 and we still haven't acted on the recommendations of the 
commission and we need to do something to fix a program on the brink of 
insolvency again? What kind of an answer are we going to come up with 
in an emergency? It is far better to try to do this at a time when the 
economy is good and people are working together in a bipartisan spirit.
  So the fact we have another commission which succeeds the last 
commission which succeeds previous commissions is certainly not an act 
of courage. It will not make a chapter in the next Profiles in Courage 
book that is written about what we have done in the Congress, and that 
is unfortunate. But I say that because we should not let the perfect be 
the enemy of the good in the sense that we will never be for anything 
unless it is perfect. While this is not a perfect package by any 
stretch of the imagination, it is a good package. It is one that merits 
our support. As long as we know that this package, the tax cut and the 
spending cuts and what we have done in Medicare is not the final answer 
but just a beginning, I think I would say this to our colleagues who 
have worked together on this: At least we have paved the road to make 
it easier for future Congresses to reach tough conclusions and make 
tough decisions that are really necessary to save Medicare.
  So I support the tax package and commend Senator Roth and Senator 
Moynihan for doing something that has not been done in a long time, 
maybe since the days of my predecessor, Senator Russell Long, on the 
committee, when both sides were able to say, all right, we are 
different parties but we are all Americans and we need to ultimately 
work together if anything is going to be done.
  I always take the position that in politics it is better to get 
something done and then fight over who got it done, rather than to get 
nothing done and then blame the other side for failure. I am glad that 
the Finance Committee was truly able to work together and get something 
done in a bipartisan way. Now we can go fight about who got it done. 
But at least we got something done for the American people. We did that 
in this Congress. We did that with these bills. We made tough decisions 
both in taxes and in spending. I hope that one day in the not too 
distant future the rest of the Congress will be able to act in an 
equally bipartisan fashion and get the rest of the job done.

  I yield the floor.
  The PRESIDING OFFICER (Mr. Smith of Oregon). Who yields time?
  Mr. CHAFEE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. CHAFEE. I would like to take this opportunity to publicly thank 
and acknowledge the tremendous work of the Senator from Louisiana in 
connection with the Medicare reforms that we undertook. No one was a 
stouter soul in that effort to face up to what had to be done if we are 
going to continue to have Medicare. It was the Senator from Louisiana 
who joined in leading the effort, in having the means testing in the 
part B premium and raising the eligibility age to 67 and having a 
copayment, a payment for the home health care visits, of 7 percent.
  I share the disappointment that the Senator from Louisiana has voiced 
in that these elements we worked on did not survive. But I see others 
here. The distinguished Senator from New York was right in the lead in 
these efforts. All I can say is, disappointed though we were, despite 
the overwhelming vote that took place on the floor of the Senate on 
both the means testing and the raising of the eligibility age, up or 
down votes--one got 70 votes, the means testing, 70 to 30, and the 
other got something like 62 to 38, in that neighborhood, over 60 votes, 
in raising the age to 67--they didn't survive the conference because of 
objections from the other body.
  But this is what I want to say, Mr. President. Disappointing as that 
was, nonetheless it showed that it could be done, and now it is an 
accepted fact in this Senate that all three of those elements are 
necessary, and the votes are there to sustain them and make them part 
of any further legislation.
  So now we have a commission, and as was pointed out, there is no 
reporting date for the commission. There is no fast track consideration 
for the commission. I may be wrong in the reporting date.
  March 1, 1999, I am informed. Well, it is not exactly tomorrow. 
However, there is no fast-track procedure; in other words, that it has 
to be considered, has to be voted on up or down, one way or another. It 
could be like so many other commissions we have had in this body.
  Mr. President, disappointed though we might be in those particular 
facts, those particular undertakings, nonetheless we have made some 
substantial achievements in having them so accepted here.
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. Might I simply join my friend and old colleague on the 
Finance Committee in his remarks commending the Senator from Louisiana. 
Typically, he did not mention his own work, his own role in this--it 
was indispensable--to have a unanimous Finance Committee in these 
matters and to make a point. It had been assumed there would be a storm 
of disapproval for what we did. There was none. There was none. The 
usual interest groups wrote the usual letters and the usual people took 
them too seriously. But a day will come when we have learned from this 
experience because it was an event.
  I thank the Senator.
  Mr. CHAFEE. I thank the Senator.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. CHAFEE. I yield to the Senator from Indiana such time as he 
requires.
  Mr. COATS. I thank the Senator.
  The PRESIDING OFFICER. The Senator from Indiana.
  Mr. COATS. First of all, I wish to associate myself strongly with the 
remarks of the Senator from Louisiana and Rhode Island and the Senator 
from New York relative to entitlement reform. I spoke at length on it 
yesterday, and I will not repeat all those remarks. It was with great 
sadness and disappointment we came what I think is as close as we have 
ever come in this Congress to addressing the fundamental reforms, 
structural reforms that need to take place in our entitlement programs, 
particularly Medicare, if we are going to ensure the long-term 
viability of that program, which I think we are all committed to do, 
and if we are going to prevent a crisis situation in which we will not 
act perhaps in a rational, reasonable manner but address it under the 
threat of massive underpayment or massive deficit in that program.
  It is interesting to me that in the Chamber just a moment ago were 
two Republicans and two Democrats, probably covering the ideological 
spectrum within our respective parties, all speaking in favor of 
entitlement reform. So I am hopeful that we are at least moving in the 
right direction. The Senator from New York said that even though we 
expected a firestorm of political opposition, it wasn't heard. It 
wasn't heard because the American people need to be given more credit 
for understanding the nature of the problem and the solutions to the 
problem than we give them credit for.
  There might have been a time politically when retribution would have 
been rendered across the spectrum for anybody who even breathed the 
idea that we ought to change Medicare. But today even senior citizens 
understand that this very important program cannot maintain its 
viability unless some reasonable changes are made, structural changes 
are made, in the current program in the way it is currently operated. 
Younger people understand, and if you ask them today whether or not 
they think there will be a viable Medicare Program for them when they 
retire, an alarmingly high percentage say, no, I don't; I think the 
payroll taxes that are being extracted from my paycheck are going into 
a fund and I will never see the benefits.
  So I share the disappointment of our Members in terms of coming so 
close and yet not succeeding at this important time. I made the point 
yesterday that during difficult economic times,

[[Page S8437]]

when unemployment is high and deficits are running high, we say we 
can't make these changes now because it will result in too much 
economic dislocation. Here we have the best of times. We have never had 
a more favorable time economically and politically in which to address 
these questions. Our economy is humming along at a rate that none of us 
anticipated, pouring revenues into Washington--which we are giving some 
back with this tax cut--which were reducing the deficit, which is what 
we need to do. We are balancing the budget. We are the recipients of 
very good economic fortunes. And we have in place politically an 
administration that doesn't have to stand for reelection, a Congress 
that has already gone on record in support of entitlement reform. It 
just seems as if all the political stars and economic stars are lined 
up and that this is the moment.

  I hope these good times last. I hope these good political stars 
continue to line up in a way that we can accomplish this. But I think 
those who have experienced some years of history understand that the 
good times do not always last, that we will be facing different 
circumstances in the future, and we may not have the pieces in place to 
accomplish this. We do not need another commission. The Senator from 
Louisiana is absolutely correct. We have had commissions. We have had 
studies. We have more information than we know what to do with. We have 
educated the American people. The seniors understand. The young people 
understand. Everybody seems to understand. Unfortunately, we always 
come down to the point of not now; let's do it after the next election. 
Let's get past this next period of time. That is, indeed, unfortunate.
  Today I want to focus the remainder of my remarks, and they will be 
brief, on the continuing effort to bring tax equity to families. This 
is a process that began in the 1980's. I was pleased to be a part of 
that, leading the effort in the House of Representatives along with my 
colleague Jack Kemp in pushing for family tax relief. We were able to 
double the personal exemption, the first major adjustment in the amount 
of tax relief that families get for raising children since the 
inception of the dependents deduction in 1948. We continue that now 
with this bill. I introduced the child tax credit in the Senate in 1992 
as part of my families first legislation. I was joined by then 
Congressman Rod Grams, now Senator Grams from Minnesota. As he was my 
compatriot in this in the House of Representatives, he has continued 
that leadership in the Senate. I am pleased to have worked with him in 
that effort. This is a culmination of a long effort to readdress the 
imbalance that exists within the Tax Code in terms of family tax 
relief.
  Many people have fought for it, and I commend those who have worked 
so hard to achieve this. A disproportionate share of the tax burden on 
families has been a problem in both good economic times and bad 
economic times. It has increased over the decades even as the cost of 
raising children has increased. The Tax Code has been a symbol in the 
past of public indifference to the challenge to families, and this tax 
measure today is a symbol that our thinking and our actions are finally 
changing. Clearly we are beginning to understand that a dollar spent by 
families is far more helpful to children and compassionate than any 
dollar spent by the Federal Government.
  In 1997, Americans will work until the middle of May just to earn 
enough to pay their tax bill. Most families must have both parents 
working, one to provide for the family, one to pay taxes to the 
Government. In fact, families today spend more in taxes than they do on 
food, clothing, and shelter combined. The evidence is overwhelming. The 
facts are no longer contestable.
  The answer is to return public funds to the people and not to funnel 
them through the Government. The child tax credit is a tangible 
achievement for the people of every State. In my State of Indiana, the 
$500 child tax credit will give over 850,000 Hoosier families 
representing 1.1 million Hoosier children an average of over $80 a 
month extra money for family income. I am as proud, I think, as 
anything else that I have done in this body, to be a part of this 
effort to restore equity to families, to give them the ability to 
retain more of their hard-earned dollars to help raise their children 
and pay for the costs of raising those children. It is the most 
immediate practical form of compassion I can imagine, allowing them to 
spend their own money on their own needs.
  Mr. President, I have walked the Halls of Congress for nearly 20 
years, and I have watched the high-powered lobbyists gain funds for 
special interests and for powerful groups. There have been those who 
have stood up over the years for the interests of families. But, 
thankfully, over time, those numbers have changed. Today they include 
the leadership of Congress in both parties. The largest portion of 
relief in this tax bill, 56.2 percent, goes to families, and that is an 
achievement in which we can all take pride.

  I yield the floor.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. Mr. President I believe the distinguished Senator from 
Louisiana would like to speak at this point. She can have as much time 
as she would like from our time.
  The PRESIDING OFFICER. The Senator from Louisiana.
  Ms. LANDRIEU. Mr. President, I appreciate the opportunity to share 
just a few remarks about this important budget reconciliation and 
adoption. I first thank and congratulate the leaders on both sides of 
the aisle, to the chairman and to our ranking member of the Finance 
Committee and the Budget Committee, for all of their hard work and 
leadership. Nothing of this magnitude is accomplished without good, 
strong, well informed leadership. I think we have it in our leaders 
here.
  This bill is not everything that I hoped for. It is not everything 
that any one individual Member would have wanted. And it is not 
perfect. But it is a good bill. It is a good start to getting our 
fiscal house in order. Getting our fiscal house in order and making 
sure we are spending our money wisely, saving where we can and giving 
tax relief, is something that I personally feel is supported by the 
vast majority of Americans, regardless of party, and so many people in 
Louisiana feel this way. On these difficult problems, such as balancing 
the budget, neither party can get the job done by themselves. It is 
going to take both parties to get the job done in the right way for the 
American people.
  I am very proud, though, of a couple of points in this bill. Again, I 
show the Meyers family from Shreveport. Because of the good work that 
we did here in the Senate, and with the leadership of the President--
and I will say many of the Democrats supported the expansion of this 
$500 child tax credit to hard-working, not welfare but hard-working 
middle-class and moderate-income families--this family, Lois and Scott 
Meyers, of Shreveport, will be able to take part in the $500 tax 
credit. Families with earnings up to $110,000 will be able to benefit, 
which, in Louisiana, covers just about all of our families. The 
household incomes of 95 percent of our families are under $75,000. So 
the work that we did, and the fight to make this child credit available 
to working families like this, I think is something we can all be very 
proud of.
  Mr. President, 46 percent of Louisiana taxpayers earn less than 
$20,000 a year--not get less than $20,000, they work hard and only get 
$20,000 a year. This will really help almost 50 percent of the families 
in my State and that of Senator Breaux, and we are happy for that 
victory.
  I also want to say how pleased I am to see our first step, but I hope 
not our last step, in providing health care to uninsured children. 
Again, these are children who are of working families, whose parents 
have jobs--sometimes not just one, sometimes not two, but three jobs--
and are still without health insurance for their children. We could, as 
a country, make no better investment than providing critical health 
care to zero to 3, zero to 6--helping children to develop in ways that 
will save us all, as taxpayers, millions and millions of dollars down 
the line for other expenses like criminal justice or special education. 
I am looking forward to working with my State leaders to design the 
kind of health care program for them that is cost-effective, quality 
oriented, child centered and family centered. I am looking forward to 
that.

[[Page S8438]]

  I also want to say how thrilled I am about the investment in 
education. Because, really, with President Clinton's lead, we have now 
invested more money in education than since President Johnson was in 
the White House. Why is that important? It's important because our 
country doesn't have a future if our children and our workers are not 
well educated and well trained, to take advantage of the jobs and 
challenges that the next century will hold. So the Hope scholarships, 
the Pell grant expansions, and the student loan deductions, I think, 
are excellent provisions, to say we believe in education. It is the 
foundation of our economic development plan for the Nation and we are 
going to put our money where our mouth is.
  Let me also say to my senior colleague from Louisiana, who worked so 
hard on expanding the IRA, I have heard many of our colleagues say that 
giving people money to spend is what it's about. I do believe people 
can make good choices about the way they spend their money. But I think 
the real need is to encourage people to save their money. Our savings 
rate in this country is much lower than it needs to be. If we can 
encourage people to save for the right things--to purchase a home, for 
catastrophic health care needs, for education to improve their 
productivity and to give hope to their children--that is really what 
this is about.
  I thank the members of the committee for fighting hard for expanding 
IRAs. It is important to people everywhere, and very important to 
people in Louisiana.
  Finally, just a word on the estate tax and small business and 
farmers. We believe, on this side of the aisle, and there are many on 
the other side who thought it was important, if a grandmother, 
grandfather, great-grandfather built a farm on the sweat of their brow, 
invested in their land, invested in their equipment, they should be 
able to pass that farm down to the next generation without having to 
sell off the land or sell off the equipment to pay the taxes to our 
Government. We heard that. We have responded, and we have now given a 
tax incentive to be able to pass those small businesses and farms on, 
to people in our country.
  Mr. President, I thank you for the opportunity to address the body, 
to say this is not a perfect bill but it is a very good step toward 
getting our fiscal house in order, to providing much-needed tax relief 
to hard-working, middle-class families in our country and to making the 
kind of investments that are going to make our country even stronger 
and more productive in the future.
  On behalf of the Meyers family, to the 236,000 children that will be 
able to benefit from health care, and to the almost 400,000 children 
that will be able to benefit from this tax credit, and for others, I 
thank you so much and I yield the floor.
  Mr. GORTON addressed the Chair.
  The PRESIDING OFFICER. The Senator from Washington.
  Mr. GORTON. Mr. President, in the absence of the Senator from 
Delaware I believe I am entitled to yield myself 6 minutes from his 
time.
  Mr. MOYNIHAN. Of course, Mr. President.
  The PRESIDING OFFICER. The Senator from Washington is recognized.
  Mr. GORTON. Mr. President, on all too many occasions in this body, we 
have been a part of debates, pointing fingers over failure, over a 
failure to balance the budget, over a failure to meet the needs of the 
American people. We are in a competition again here today, but it is a 
far more pleasant competition. It is competition for credit for a 
success. It is my view that there is plenty of praise to go around for 
that success, from the Republicans and Democrats to the leadership of 
the Congress and to the President of the United States.
  I believe we have heeded the counsel of the people of the United 
States who were not willing to trust either party last November with 
full control over the Federal Government, and demanded that we work 
together and craft solutions to the challenges facing the American 
people. So we have passed a bill that will lead us to a balanced 
budget. And so we are about to pass a bill that will: Give needed and 
overdue tax relief to the American people; a credit to most hard-
working American families of $500 for each of their children 16 years 
old and under; credit and relief for the expenses of higher education 
to those same hard-working middle-class American citizens; relief from 
the savage impacts of the death tax on small businesses and on farms; 
help for the self-employed, in paying for the rising cost of health 
care insurance; relief from burdensome taxation on the sale of homes or 
the sale of other assets that will lead to more investment and to 
better jobs and opportunities for the future; encouragements to save.
  Mr. President, is this the last answer to each of these challenges, 
to all of our challenges? It is not. I share with the Senator from New 
York, the Senator from Louisiana, the Senator from Rhode Island, 
disappointment that we missed this opportunity, an opportunity granted 
by the courage of Members of both parties in this Senate, to deal with 
the underlying challenges to Medicare and to an aging population. But 
we did find that we could debate those issues and vote on those issues 
constructively and positively in this Senate. I believe we have built a 
base on which that debate will be renewed next year, one hopes with 
real opportunities for success.
  We did not simplify the Tax Code in this bill by any stretch of the 
imagination, but I believe we built a foundation upon which we can 
debate next year over whether or not we ought to dramatically simplify 
and make more fair and easy to understand and easy to comply with, our 
tax system. But the fact that we didn't do everything should not 
detract from the fact that we did something. We have moved dramatically 
forward toward a balanced budget, and dramatically forward toward tax 
relief for the American people.
  This is a partnership program for which much credit is due very 
widely and across both parties. I trust that partnership will be 
recognized by an overwhelming vote of approval tomorrow morning.
  Mr. MOYNIHAN. Mr. President, if the Senator from New Mexico wishes to 
speak, I will yield the floor, of course, but the Senator from Arkansas 
would be the next?
  Mr. DOMENICI. Senator Bumpers, do you want to go next? You are 
entitled to.
  Mr. BUMPERS. No, I am willing to let you go and I'll follow you.
  Mr. DOMENICI. Thank you very much.
  The PRESIDING OFFICER. The Senator from New Mexico is recognized.
  Mr. DOMENICI. Mr. President, we are on the threshold of passing the 
largest tax cut in 16 years. It's a package that benefits Americans of 
all ages and in all tax brackets. Mr. President, 82 percent of the 
benefits in this bill go to families earning less than $110,000, during 
the first 5 years.
  I commend the chairman once again, and the entire Finance Committee 
and certainly the ranking member, Senator Moynihan, for their fine 
bipartisan work. The hard-working parents of 45 million children will 
pay $500 less per child in taxes as a result of this tax credit for 
children--45 million children. At least 5 million parents with kids in 
college and taxpaying students will have $1,500 per student more to 
spend at college, as a result of the tuition credit, and 7.2 million 
recent entrants into the job market will be able to deduct their 
student loan interest. This package will mean that the American 
families will get to keep more of their hard-earned money, instead of 
sending it to Washington. This is a very large number of American 
families. I have just given you the numbers in millions, and they are 
very, very significant in all our towns, all our cities in all areas of 
our respective States, be it yours, Mr. President, or mine.

  Let me quickly outline the major components of this package, because 
I think they are very exciting. Some have said it is a very small tax 
cut and, yes, in terms of our gross domestic product, or even our total 
tax, it is not a very big tax cut. But I believe we prove here that we 
can help many, many Americans, especially those most entitled to help 
in areas where we most want to encourage achievement.
  The $500 child credit to help the working poor and middle class, the 
value of the personal exemption has been eroded over time, and the cost 
of raising a family has become more expensive. We all know in our youth 
that

[[Page S8439]]

the deduction that our parents got to take because they had a child 
they were raising was a very, very significant economic advance to that 
family. We let it erode. The credit in this bill will totally eliminate 
the Federal income tax burden for more than 30,000 families in New 
Mexico and 300,000 New Mexican children's families will be able to take 
credit to reduce their taxes. I am particularly pleased that the 
Finance Committee decided to design the credit so that the working poor 
would also see the benefit of the $500 credit.
  In New Mexico, there are 175,087 claimants of the earned-income tax 
credit. I applaud the final bill's approach. It is a logical sequel to 
the new welfare reform laws we have passed, because it, too, emphasizes 
moving from welfare to work.
  The $500 child credit will save New Mexico families $461 million over 
the next 5 years. For a small State and a poor State, that is a lot of 
money that will stay home in the pockets of people and stay in our 
States. This is money that they can choose to spend, or they can save 
it to meet their needs. A family with two children eligible for two 
$500 credits would have an extra $1,000 a year in the family budget.
  Some think that is not much, but this would pay the mortgage for 1\1/
2\ months, or pay half of a year's worth of car payments, or buy gas 
for the family car for 8 months or groceries for 3 months.
  In New Mexico, while 78 babies are born each day, Congress is passing 
this bill so that these children and their families will have a 
brighter future, more opportunity and keep more of their money.
  This tax cut is overdue. Let me repeat, in 1948, the typical American 
family sent 3 percent of its income to Washington in the form of 
taxes--3 percent. Today, the number is closer to 25 percent with the 
Federal tax. Prior to the passage of this bill, most working mothers 
were working to pay taxes instead of improving the standard of living 
for their families, and that isn't right. Lowering the tax burden will 
let moms' paychecks go toward family expenses instead. It is not as 
much as everyone would like, but certainly better than doing nothing. 
As I see it, the entire package is a giant step in the right direction.
  Most people's vision of America and the American dream includes a 
college education for their children. This bill helps fund that dream. 
It is a big expense and tuition costs have risen far more than 
inflation. Parents have told me that they have nightmares about 
financing college for their children. In New Mexico, tuition ranges 
from $18,700 at St. John's College, to $2,080 at the University of New 
Mexico or New Mexico State. Community and technical college tuition is 
about half that.
  This bill provides a number of separate provisions that help finance 
college, but the most significant of them is a $1,500 tax credit that 
reduces taxes dollar per dollar for the first $1,000 worth of tuition 
paid and 50 percent for the next $1,000 of tuition paid for the first 2 
years of college, community college or technical school. A good idea.
  During the junior and senior years of college, the tax credit is 20 
percent of the first $5,000 in tuition paid. Over time, these tax 
credits get bigger so that by the year 2002, the tuition tax credit is 
$10,000.
  I am pleased that the technical colleges and community colleges 
qualify. They are needed. They are filling an ever-more important role 
in our changing educational needs.
  Student loans are one of the broadest based forms of financial aid 
for graduate students. They are instrumental in financing undergraduate 
study as well.
  The deductibility of student loan interest automatically shifts the 
benefit of the provision toward children of low- and middle-income 
families. The deduction of student loan interest is well designed to 
provide annual tax relief, and can provide a powerful incentive for 
more citizens to pursue and push hard for graduate and advanced 
degrees.
  The deduction is phased in: $1,000 in 1998; $1,500 in 1999; $2,000 in 
2000, and $2,500 in 2001.
  Mr. President, this bill has a number of IRA's that our distinguished 
chairman has been the advocate of. He has adequately explained them and 
I won't go into them in detail.
  This bill also allows penalty-free withdrawals from all IRA's for 
undergraduate, post-secondary vocational and graduate education 
expenses.
  The bill also makes the exclusion of $5,525 worth of education 
assistance paid for by employers permanent. This provision has helped 
millions of workers maintain their state-of-the-art skills. As we move 
into the 21st century life-long learning will be a way of life.
  The great educator Horace Mann said, ``Education is the great 
equalizer.''
  In our technological society the reverse is also true, lack of 
education can leave people behind. For example, while in 1980, a 
student graduating from college could expect to earn about 45 percent 
more than a high school graduate, today the differential has almost 
doubled.
  This bill provides $207 million in tax relief over the next 5 years 
for New Mexicans to better educate themselves and their families.
  Actions have consequences and tax policy has mammoth consequences. 
The United States has one of the highest capital gains tax rates and 
one of the lowest savings rates among the seventh wealthiest countries 
in the world. If we cut the capital gains rate, our economy could 
create 150,000, as much as 280,000, new jobs next year. Besides being 
good for the economy, this capital gains tax will benefit everyone. 
Over a 10-year period, about one-third of all taxpayers sell at least 
one capital gains asset. Over a 10-year period, one-third of our 
population can take advantage of capital gains. It is not for one small 
group; it is for one-third of Americans.
  We need to update our image of who benefits from a capital gains tax 
cut. In 1990, the typical mutual fund owner is someone in the $35,000 
to $75,000 income bracket. The average portfolio is $14,000. Half of 
these investors do not have a college degree. This is a very different 
image from the wealthy widow toting a pampered poodle down Fifth Avenue 
in New York and being the one who can take advantage of capital gains. 
But I don't know anyone in New Mexico who has a numeral after his last 
name. I do know that New Mexicans pay $638 million in capital gains in 
1995. Under this bill, that tax would be considerably reduced.
  When the investor invests in companies, the result is capital 
formation. Dale Jorgenson of Harvard has noted that almost half of the 
economic growth between 1948 and 1980 was due to increased capital 
formation and influx into American businesses. Greater economic growth 
results as more and better paying jobs arrive on the scene.
  I am also pleased that the bill expands IRA's and allows penalty-free 
withdrawals for the first-time home buyer and, obviously, we have other 
provisions that help homeowners because they, too, get a very 
significant capital gains differential when they sell their homes.
  As baby boomers age it is very important that they save more for 
retirement. The IRA provisions encourages everyone to save more. I see 
this as a step toward enacting the U.S.A. tax reform plan that I have 
been working on the last few years. Under that plan families would be 
given an unlimited savings allowance so that the tax rate on any 
amounts saved or invested would be zero until the funds are consumed.
  The other major provision in this bill provides death tax relief. The 
estate tax is often referred to as the most confiscatory tax of all. 
Some call it a tax on success. A recent Tax Foundation study found that 
today's estate tax rates--ranging from 18 to 55 percent--have the same 
disincentive effect on entrepreneurs as doubling the current income tax 
rates.
  The unified credit has not been increased since 1987. This bill 
slowly increases it to $1 million by the year 2007.
  The philosophy behind the estate tax was imported from Europe, for 
example, that the accumulation of too much wealth in too few families 
is bad. Today, however, that estate tax philosophy is fundamentally 
flawed. When applied to closely held business assets, ironically, the 
tax produces just the opposite result--often forcing family owned 
businesses to sell off to larger public corporations. It raises roughly 
1

[[Page S8440]]

percent of annual revenues. At that rate, it is hardly worth the 
devastation it causes to family businesses and farms, and 
entrepreneurship.
  Starting a small business is part of the American dream that allows 
any American with a good idea to follow it to prosperity and 
independence. In my State I have seen a number of welfare mothers start 
successful businesses. The ultimate American dream is to be able to 
leave that successful family business to one's children. Too often 
current estate taxes force heirs to liquidate the business or family 
farm to pay the estate taxes.
  The death tax takes its toll. Only 13 percent of family businesses 
are passed on to a third generation. The National Federation of 
Independent Business testified before the Ways and Means Committee that 
``the Federal estate tax represents perhaps the greatest burden today 
on our Nation's most successful small businesses.'' This bill helps 
lighten that burden.
  The death tax changes are timely changes for ranchers. The average 
age of America's cattlemen is 55 years old. Some 80 percent of the beef 
cattle operations have remained in one family for 25 years or more with 
42 percent in the family for over 50 years. Interestingly, 12 percent 
of the ranches have been in the same family for 100 years. This bill 
will contribute to preserving the great American legacy by helping keep 
ranches in the family by providing $25 million in tax relief to New 
Mexicans over the next 5 years.
  The bill also allows people to sell a house tax free. This is a good 
real estate provision. One provision I am not totally satisfied with is 
the treatment of investment real estate. The conference report sets the 
capital gains rate at 25 percent, I truly believe that equity demands 
that the capital gains rate on investment real estate be the same as 
the capital gains rate. I hope the Congress will revisit this issue in 
the near future.
  I am pleased that the bill makes it easier for small business 
entrepreneurs to claim the home office deduction. I am also glad that 
this bill accelerates the phase-in of the self-employed health 
insurance deduction.
  The biggest winners under this tax bill are middle-income families 
with children, particularly those families earning between $20,000 and 
$50,000 per year. Families earning between $50,000 and $100,000 are 
given tax relief too, provided they have children or kids in college.
  A married couple with household income of $35,000 and two children 
under age 17 would see their tax bill fall by $2,000, a 38-percent 
decline from what they'd owe under current law.
  The education incentive mean that families with children in college 
are helped even more. A married couple with income of $35,000 and two 
children, one in college and one still at home, would see their tax 
bill fall by $2,000, a 76-percent decline from what they'd owe under 
current law.
  What these families save on taxes represents cash in your pocket; it 
represents how much of their own money they get to keep. Think about 
how much of a raise a taxpayer would have to get from their boss in 
order to be able to increase their take-home pay by that much.
  Mr. President, today is a banner day. We finished a bill that 
balanced the budget yesterday, and within that framework, today, we are 
passing a net tax reduction of $96 billion over 5 years. This makes it 
the largest tax reduction bill since President Reagan's tax reduction 
in 1981, and the first tax relief bill since President Reagan signed 
the 1986 tax reform.
  Let me say, for those who are disappointed, I am not the least bit 
disappointed. We can always look at this as half-full or half-empty. I 
believe, when you look at Congress and the Presidency and the different 
philosophies, to be here today with the second of two major bills of 
this proportion, moving toward balance and a significant and very well 
tailored tax cut, I believe it is a real achievement, and for those who 
want more and think we should do more, let me suggest, we have been 
trying for a long time to do just this much and have been unable to do 
it. So I am very pleased and think the American people will be, too, 
when they start to feel its impact in their communities, in what they 
pay for taxes and what they keep.
  I thank the Senate, and I yield the floor.
  Mr. BUMPERS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arkansas is recognized.
  Mr. BUMPERS. Mr. President, several years ago, there was a 
magnificent book that came out by a great historian, Barbara Tuchman, 
called the ``March of Folly: From Troy to Vietnam.'' The book cataloged 
how in moments of history, terrible tragedies, terrible mistakes could 
have been avoided because there was always some lone voice saying, 
``Don't do that.'' Almost invariably, the politics of the moment 
dictated otherwise.
  The book ``From Troy to Vietnam,'' starts out with the Trojan horse. 
Every schoolchild knows the story of how the Greeks went to rescue 
Helen from the Trojans. Finally, after many, many months of not being 
able to break into the Trojan fortress, the Greeks designed this Trojan 
horse, a wooden horse, a fabric horse, as the Aeneid describes it, and 
they place this horse outside the Trojan fortress. The Trojans are 
afraid that the gods have placed the horse there, and it would be a 
terrible tragedy for them if they didn't let the horse into the 
fortress. One person, named Laocoon, said, ``Don't let that horse in. 
What more than madness has possessed your brains?'' he said. ``What 
have the Greeks ever done for us?'' But he was the sole voice of 
dissent. So they opened the gates. They let the horse in, and 50 of the 
Greeks' finest soldiers poured out of the belly of the horse and took 
the fortress.
  In World War II, when the debate was going on with the German high 
command about whether to get involved in the war, whether to antagonize 
the United States or not, the commander of all the German submarines 
was consulted. ``If you can sink so much allied shipping,'' they said, 
``the United States won't be a threat.'' And the German U-boat 
commander said, ``You're silly; you're foolish. We can do a lot of 
damage, but we can't come close to sinking that much allied shipping.'' 
And his voice was drowned out as if he had never spoken.
  When the warlords of Japan sat around plotting the attack on Pearl 
Harbor, the great Japanese admiral, Yamamoto, stood up and said, ``I've 
gone to school there. I know the Americans, I know their industrial 
output, I know their tenacity, and I know their love of country. This 
will not work.'' He went ahead to say, ``I am at the Japanese Emperor's 
beck and call, and I will do anything I am called on to do.'' The rest 
of that is history. Yamamoto's voice was drowned out.

  Today, we have this reconciliation bill before us. And there were few 
lone souls in the U.S. Senate who voted against the great tax cut of 
1981, Mr. President. Only 11 people stood up in the U.S. Senate and 
said, ``I'm not voting for a concept of doubling defense spending and 
cutting taxes and presuming to balance the budget.'' Eleven souls said, 
``No, let's not do this. It is the height of folly.''
  Our voices were drowned out. At that moment, the national debt was $1 
trillion and the interest on that debt in 1981 was $60 billion. Our 
voices were drowned out. And 16 years later, because our voices were 
drowned out, today's national debt is $5.3 trillion, and the interest 
on that debt has gone from $60 billion a year to $359 billion a year. 
That is the interest we are paying on the national debt in this year of 
our Lord, 1997. You know how much of that $359 billion is as a result 
of the craziness of this place in 1981? Approximately three-hundred 
billion dollars.
  The pages who sit in front of me will not live long enough to see 
that figure even reduced very much. You want to do something for the 
children? You say, let us give the middle-class children of this 
country a tax break. How about tomorrow's children and the children in 
the next generation and the next generation? What are you doing for 
them? You are saddling them with an incredible debt. When I think about 
what we could do if we would not pass this bill. With the economic 
growth we have enjoyed for the past six or seven years, and as we 
anticipate it will be for the immediate future, would almost certainly 
balance the budget in 1998, and we could even run a surplus in 1999. 
Balancing the budget is within our grasp, an eyelash away. And this 
bill thwarts it in the name of a middle-class tax cut.

[[Page S8441]]

  About the only distributional analysis that has been done on this 
bill is a study by the Citizens for Tax Justice. And what do they say? 
Just look at this chart.
  Look at this middle-class tax cut, Mr. President. The bottom 20 
percent, people who make less than $12,000 a year do not get a tax cut. 
They get virtually no benefit from the child credit and capital gains 
and the other major tax cuts. So with the increase in cigarette taxes 
and airline ticket taxes, the bill is going to cost them $39 a year. So 
much for the poorest of the poor in this country. They not only don't 
get a cut, they pay more.
  Go to the next 20 percent, the people who make up to $22,000 a year. 
What do they get? Why, they get a whopping $8-a-year cut in their 
taxes--a few cents a week.
  If you combine these two bottom groups, you will see that the bottom 
40 percent on average will see their taxes go up by $31 a year.
  Then go to the next 20 percent. The next 20 percent, the people who 
make $22,000 to $39,000 a year, they are going to wind up with a $171-
a-year tax cut--less than 50 cents a day.
  So where is all the money going?
  Look at this chart for just one moment. The next 15 percent that, 
they get $1,163 a year. What does the next 4 percent get? The people 
who make $109,000 to $246,000 get $1,772 a year in tax cuts. And the 
top 1 percent, the people who make $246,000 or more, get $16,227 a 
year.
  So seventy-six percent of all the benefits of this bill go to the top 
20 percent of the people in this country. That is a middle-class tax 
cut? That is to help the middle-class families of this country?
  This bill has had more public relations, more ballyhoo under the name 
of a middle-class tax cut. No wonder 54 percent of the people of the 
country say they favor this bill. And you know why? Because the 
question is asked, ``Do you favor the balanced budget resolution that 
Congress is considering?'' Well, of course they favor a balanced budget 
resolution. Who doesn't? What a travesty. Mr. President, I have been 
divinely hoping that negotiations between the President and the 
Republicans would reach an impasse, breakdown, with gridlock, because 
if we did nothing the budget would be balanced in 1998, 1 year from 
this moment. If somebody had said in 1993, ``You vote for this omnibus 
budget reconciliation bill and we'll balance the budget in 1998,'' we 
would have insisted they take a saliva test.

  When I think of all the good men and women who used to sit in the 
House and the Senate, and they are gone only because they had the 
courage to vote for that bill in 1993, which raised taxes on the top 
1.3 percent of the richest people in America--1.3 percent--because a 
few courageous people in this body--Jim Sasser, Harris Wofford, two of 
the finest men ever to serve in the U.S. Senate, who are no longer with 
us. And a lot more people in the House are no longer with us--they had 
the courage to face up to something that was very unpopular at the 
time. But even on the outside they can take solace in the fact that 
they honored what they believed was a nonnegotiable demand by the 
people of this country for a balanced budget.
  Do you know what we did as a result of that 1993 vote? I am always 
reluctant to talk about this because I have so many good friends on the 
other side of the aisle, but truth has to be told. Not one single 
Republican in the U.S. Congress, in the Senate or the House, not one 
voted for that bill. And the Democratic party suffered at the polls as 
a result of that vote.
  A lot of people stood on the Senate floor and said the 1993 bill is 
going to bring about a terrible recession. So what really happened? 
Before we passed that bill, the deficit for 1993 was estimated to be 
$290 billion. And as a result of passing the deficit reduction bill, it 
turned out to be only $255 billion. In 1994, it dropped to $203 
billion. In 1995, it was $154 billion. In 1996, it was $107 billion. 
For 1997, it is now calculated at around $45 billion, and many 
economists say it could be less. From almost $300 billion, in 4 short 
years, to $45 billion because a few people in this body had the spine 
to vote for something that was politically unpopular. Those people who 
lost their seats as a result of that vote are undoubtedly watching 
their hard-won victory being sacrificed on the altar of political 
expedience. The balanced budget of 1998 that is just about to elude us.
  You know, the economy, if it stays as good as it is right now through 
all of 1998, despite the foolishness of this bill, we still might 
balance the budget in 1998 if the economy stays good, but only for a 
nanosecond. Under the calculations of the bill, we are going to spend 
almost $300 billion more in deficit spending over the next 5 years, and 
the interest on that will be $15 billion--forever. That $300 billion 
goes right on top of the $5.3 trillion you see here. At the end of 5 
years, instead of $5.3 trillion, that will be $5.6 trillion. At the end 
of 5 years, instead of $359 billion in annual interest, it could well 
be $375 billion.
  You want to do something for children? Don't saddle them with that 
kind of debt.
  The Senator from New Mexico pointed out some very cogent points a 
while ago with which I do not disagree. I favor the educational 
benefits in this bill. I favor the child health care provision which we 
are paying for with a cigarette tax. It isn't all bad. But it isn't all 
critical, not as necessary as a balanced budget.
  We are today going to grab defeat from the jaws of victory. The only 
gratifying thing to me about this whole exercise is it shows the 
hypocrisy of the constitutional amendment to balance the budget. I 
always knew that was political, but it is a very effective political 
tool. It took a lot of courage because it was portrayed that if you did 
not vote for the constitutional amendment, you were portrayed as being 
against a balanced budget. The fact that we are about to pass a bill 
which will supposedly balance the budget by 2002 reveals the hypocrisy 
of those people who said, ``You have to have a constitutional amendment 
to balance the budget.''
  And those of us who voted for the 1993 bill to cut spending by $250 
billion and increase taxes by $250 billion have something to be proud 
of because that act instilled so much confidence in Wall Street and the 
people of this Nation, the economy has been on fire ever since. The 
Nation thought the people here in Washington had finally stiffened 
their spines to do something that was right.

  I cannot believe we are in the process of postponing balancing the 
budget for 5 years--the very people who said, you must put it in the 
Constitution and who said they wanted a balanced budget more than 
anything in the world. Here it is within our grasp. And what is their 
solution? Postpone it for 5 years, spend another $300 billion in 
deficit spending.
  Mr. President, the needs in this Nation are truly great. We are the 
greatest Nation economically on Earth. We certainly are the oldest 
living democracy. We have the oldest Constitution in the world.
  Militarily, we are certainly the strongest on Earth, and well we 
should be the way we spend money on defense. But when I think about the 
needs of this country, if you absolutely have to spend this money, 
there are better things to spend it on. We asked the Department of 
Education what it would cost to provide every child in America with a 
college education--every one who would get a college education if it 
were within their financial means. It is very interesting, this tax cut 
is roughly $135 billion, and it would take $1 billion less--$134 
billion--to provide a college education for every youngster in America 
that would want one.
  So the next time you talk to the most conservative groups in your 
hometown--the chamber of commerce or the Rotary Club--you ask them, do 
you think this country would be stronger if we educated with a college 
education every kid in America, or if we give a $135 billion tax cut to 
the wealthiest people in America? I can promise you that if you were 
debating that on national television, it would be 90-10 in favor of 
educating our children.
  So, Mr. President, I divinely hope that everything I say today turns 
out quite differently from the way I am predicting it. But I don't 
believe that is going to happen. If Barbara Tuchman were alive, she 
would certainly include this vote as one of the top follies in our 
Nation's history. Once again, we have managed because of political 
expediency to finesse the real problem.

[[Page S8442]]

  Mr. President, I yield the floor.
  Mr. ROTH. Mr. President, it's time to move beyond the tax and spend 
ways that for far too long have marked business-as-usual in Washington. 
The Taxpayer Relief Act of 1997, as part of the budget reconciliation 
package, signals a new beginning for Congress--the beginning of a trend 
that puts Americans first.
  To argue that the tax relief contained in this package is too high--
or that the cuts are too big--is to argue that government simply 
doesn't tax American families enough. This is absurd. Today, Americans 
are paying higher taxes, as a percentage of our gross national product, 
than they have since 1960. Today, American families are paying more in 
taxes than they are for food, clothing, and shelter combined. High 
taxes are forcing parents who would rather be at home with their 
children to work longer, or to hold down a second job.
  Many, who would rather be homemakers, are forced by high taxes to 
enter the labor market, as Americans are finding it impossible to 
support their families and the government on one salary.
  Despite all of this, we're hearing now that taxes aren't high enough. 
Well my question, Mr. President, is just how high is high enough? How 
much more would satisfy my colleagues? I'm afraid that Congress could 
tax 100 percent of all the wealth in America, and it still wouldn't be 
enough for those who refuse to change their tax and spend ways.
  You see, I come from another school of thought. I believe that the 
money Americans earn belongs to them. I believe our families know best 
what to do with their checkbooks. I believe that money earned by an 
individual belongs to the individual--that it does not belong to 
government--and that government is arrogant to assume that it can 
decide how much a hard-working man or woman can keep.
  You see, Mr. President, unlike my distinguished colleagues, my 
disagreement with this bill is exactly the opposite. My disagreement 
with this bill is that the tax relief contained within it doesn't go 
far enough. The tax cuts aren't deep enough. That's why I can assure 
those who are listening that we will be on this floor again, some time 
in the near future. We will be here addressing real tax reform--tax 
reform that is structured from the taxpayer's point of view.
  But for now, I'm willing to accept this compromise. It was crafted in 
a spirit of bipartisanship, with willing and cooperative leaders on 
both sides of the aisle. I will vote for this tax relief. But again, I 
assure you--I assure the American people--that this relief is only a 
first step in an effort that will continue--a bipartisan effort that 
will deliver the kind of tax reform Americans deserve.
  Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. BUMPERS. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                         Privilege of the Floor

  Mr. BUMPERS. Mr. President, I ask unanimous consent that the 
privilege of the floor be granted to the following members of my staff 
during the pendency of this measure: Barry Becton, Catherine Dolan, and 
Tom Walls.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The PRESIDING OFFICER. Who seeks time?
  Mr. ROTH. Mr. President, I would like to take a moment to express my 
gratitude to the many staff members who helped us draft this historic 
tax relief legislation. These dedicated men and women worked tirelessly 
over the last several months. They worked early mornings, they worked 
late nights and many times almost all night, as well as weekends, to 
help us succeed. I, for one, am deeply appreciative of the staff's 
effort. I know that my colleagues are as well.
  So, Mr. President, I ask unanimous consent to have the names of the 
staff printed in the Record.
  There being no objection, the list was ordered to be printed in the 
Record, as follows:


                       Mr. Roth's Personal Office

       John Duncan.
       Ashley Miller.


                        SENATE FINANCE COMMITTEE

       Lindy Paull.
       Frank Polk.
       Mark Prater.
       Rosemary Becchi.
       Doug Fisher.
       Brig Gulya.
       Sam Olchyk.
       Tom Roesser.
       Joan Woodward.
       Myrtle Agent.
       Mark Patterson.
       David Podoff.
       Nick Giordano.
       Maury Passman.
       Bill Fant.
       Ramon Camacho.
       Ginny Flynn.
       Christina Pearson.


                       Senate Legislative Counsel

       Jim Fransen.
       Mark Matheson.


                       House Legislative Counsel

       Stan Grimm.

  Mr. ROTH. I'd also like to thank the staff of the Joint Committee on 
Taxation for their hard work and effort on this legislation, including 
Ken Kies, Bernie Schmitt, Mary Schmitt, Barbara Angus, Steve Arkin, Tom 
Barthold, Pat Driessen, Chris Giosa, Ben Hartley, Rob Harvey, Harold 
Hirsch, Melani Houser, Allison Ivory, Ron Jeremias, Kent Killelea, Leon 
Klud, Gary Koenig, Tom Koerner, Roberta Mann, Laurie Matthews, Alysa 
McDaniel, Joe Mikrut, Pam Moomau, John Navratil, Joe Nega, Judy Owens, 
Barbara Robles, Cecily Rock, Mel Schwarz, Carolyn Smith, Bill Sutton, 
Maxine Terry, Mel Thomas, Mike Udell, Barry Wold, and Judy 
Xanthopoulos. In addition, I'd like to recognize particularly the 
assistance of the support staff of the Joint Committee on Taxation. 
Without their efforts, this bill could not have been completed in a 
timely manner.
  Mr. MOYNIHAN. Mr. President, if there are additions from our side, I 
know the Senator wishes them to be added also.
  Mr. ROTH. Absolutely.
  Mr. MOYNIHAN. Mr. President, I ask what time remains on the bill.
  The PRESIDING OFFICER. The Senator from Delaware has 3 hours 4 
minutes. The Senator from New York has 1 hour 29 minutes. The Senator 
from Arkansas has 50 minutes.
  Mr. MOYNIHAN. Mr. President, I don't want to introduce any partisan 
wrangling, but this side of the aisle has done much better in using up 
time than that side. Perhaps we could think of yielding back some time.
  Mr. ROTH. Well, I say to my distinguished cochairman that I----
  Mr. MOYNIHAN. We talk more than you do.
  Mr. ROTH. It takes you longer to make a point.
  Mr. MOYNIHAN. I see. I think I will withdraw from this exchange.
  Mr. ROTH. Mr. President, I suggest the absence of a quorum and ask 
that the time be equally divided between the two sides.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. ROTH. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ROTH. Mr. President, I yield 10 minutes to the distinguished 
Senator from Georgia.
  The PRESIDING OFFICER. The Senator from Georgia is recognized for 10 
minutes.
  Mr. COVERDELL. Mr. President, first, I want to thank the chairman and 
ranking member for the hours and hours of deliberation and work to 
bring us to this point. You are both to be highly commended, along with 
several others of our colleagues. But I think all of us in the Senate 
are indebted to the hours of commitment, not only to this distinguished 
body, but to our country, and we thank you both.
  Mr. President, I rise in support of the Tax Relief Act, and I was 
most pleased to be able to cast a vote earlier today for the Balanced 
Budget Act. I know many have said so, but it is worthy of repeating. We 
have waited 28 years to finally have the Congress produce a balanced 
budget act that will be signed by the President. That is a massive 
accomplishment. Now we are on the

[[Page S8443]]

verge of passing, I think by even a greater margin, a tax relief act, 
which is a significant step. It falls short, in my judgment, of what is 
truly needed for the American worker and family, but I applaud the 
significance of it, the direction of it, and even the amount of it.
  I do think it is worth remembering that, in 1990, about this same 
time of the year, American workers and families were given a $250 
billion tax increase. At that time, it was the largest increase in 
American history. It was followed by a promise, in 1992, of a 
reduction, which never occurred. In fact, what happened was that 
another $250 or $260 billion tax increase was given to the American 
worker and family--meaning that from 1990 to 1993, taxes were raised by 
over a half trillion dollars, leaving the American worker and American 
family with the largest tax levy in our history.
  Put in that context, this tax relief is only a 20 percent refund of 
the tax increases in the early part of this decade. That is why I say 
it falls short of what I think really ought to occur, and I know I am 
joined by many colleagues who feel this is a first step and we must 
come back and find additional relief for the American worker.
  Now, I have said many times on the floor, Mr. President, that I think 
it is better to try to bring this down to what it really means to an 
average family. In my State, that family makes about $40,000 a year. 
When that family pays its current tax burden and when that family pays 
its share of the cost of Government and when that family pays its share 
of higher interest rates, they are left with about 47 percent of their 
paycheck. In other words, this year, they worked from January 1 to July 
3 for the Government, which meant that July 4 this year took on a new 
meaning. It was not only Independence Day; it was the first day they 
got to keep the first dime of their paycheck. Or, in other terms, it 
means, in my judgment, if you could conclude that an American family 
ought to keep, at a minimum, two-thirds of their paycheck--it ought to 
be more--but if you concluded, at a minimum, that American workers 
ought to keep two-thirds of their paycheck, that means they are falling 
$8,000 short--this average family I am talking about--every year. Just 
think of what that kind of resource would do for that average family's 
checking account and the kinds of things they could do.
  You know, we are always hearing, and we are told over and over that 
American families have no savings. Why would we be surprised that they 
have no savings, Mr. President, if the Government has been marching 
through their checking account taking over half of what they have? The 
disposable income that is left can barely deal with the essentials. Why 
are we surprised that consumer debt is at an all-time high or that 
individual bankruptcies are at an all-time high or why, in the face of 
a reasonably good economy, there is still so much anxiety in middle 
America? It is because we have left them with so few resources to do 
the job we have always asked of the American family.
  As somebody said the other day on the floor, the best department of 
health and human services is our own American family. But they have to 
have the resources, instead of the Department of Health and Human 
Services.
  So, Mr. President, the fact that we are refunding about $100 billion 
of the $500 billion in new taxes is a laudable step and a meaningful 
step that will help every generation of Americans--children through the 
child tax credits, students through the savings accounts for education 
and the tax credit, small businesses and owners of stock and people in 
retirement or who are about to go into retirement because of the 
capital gains tax reduction and the estate tax improvements. We are 
going to move a flood of capital to the newest ideas because we are 
going to unlock billions of dollars when we lower the tax burden on 
capital.
  So, Mr. President, I applaud our leadership. I applaud the members of 
the Finance and Budget Committees. I applaud the President for finally 
agreeing to sign meaningful tax relief and a balanced budget act. I 
believe this is good for America.
  I have one disappointment. Mr. President, after agreeing to the tax 
proposal, the President sent a late-night letter to our leadership and 
said that he would veto all the tax relief for America if we include an 
amendment which we passed in the Senate which would have granted a 
savings account for families to use for elementary education and high 
school education. That is where the problem with American education 
exists. This amendment would have allowed average families the ability 
to remove from the savings account, without being taxed, money to buy 
equipment, like computers, to hire tutors for special education needs, 
for special transportation costs, and, yes, for tuition, if they chose 
another school to go to. I think it is a severe loss that that 
amendment had to be removed. I am here to say to the Senate and to the 
House and to the President that the millions of Americans who want 
assistance at the elementary and secondary level are not going to go 
away. We will come back. We will author new legislation to achieve 
these goals focusing on elementary and secondary education. It is going 
to be a requirement if we are going to produce the knowledge in our 
youth that will be able to lead us into the new century.
  So, Mr. President, with that, I conclude my remarks and yield back my 
time to the leader.
  (Disturbance in the visitors' galleries)
  Mr. MOYNIHAN addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. Mr. President, I yield the distinguished Senator from 
West Virginia, the former President pro tempore, such time as he may 
require.
  The PRESIDING OFFICER. The Senator from West Virginia is recognized.
  Mr. BYRD. Mr. President, I hope that the galleries will be cautious. 
They are our guests, and they should understand that the Senate rules 
do not allow demonstrations of approval or disapproval.
  Mr. MOYNIHAN. Might I just restate that fact, sir?
  The PRESIDING OFFICER. The Chair reminds the visitors in the 
galleries to refrain from demonstrations.
  The Senator from West Virginia.
  Mr. BYRD. Mr. President, I rise to oppose this reconciliation bill. 
It hands out tax cuts much like adults dole out candy to pacify rowdy 
children. The American people are not children, and I believe that we 
underestimate both the public's eagerness for these cuts and our 
people's comprehension of our Nation's fiscal situation.
  Mr. President, this is no criticism of those Senators who worked for 
the tax cut. I accord to every Senator the right to express his own 
convictions and his own beliefs. And I respect every Senator's 
convictions and beliefs. I happen to differ with many of my colleagues 
in this instance. I just do not think that it is wise to have this tax 
cut. I differ with this administration in that regard. The American 
people are not children. I have been in politics more than 51 years, 
and the easiest vote for me ever to cast is a vote to cut taxes. That 
doesn't take courage. It doesn't take a brave man to do that. That is 
easy.
  Let us first note that the past actions of the Congress in approving 
the tough deficit reduction measure called OBRA in 1993 is largely 
responsible for all but erasing the bloated and damaging deficits of 
the 1980s. That piece of legislation and the steady economic growth we 
have experienced over the past several years have all but brought us 
into budget balance. The legislation we passed called OBRA in 1993 and 
the steady economic growth that we have experienced and are still 
experiencing are what have brought us into budget balance, almost. 
Passed without a single Republican vote--not one Senator on that side 
of the aisle, not one Republican Member of that body on the other side 
of the Capitol, not one voted for that legislation. Not one. That 
passed, as I say, only by Democratic vote. Without a single Republican 
vote, that politically unpopular measure--OBRA 1993--was the castor oil 
that has mostly cured this Nation's serious bout with red ink disease, 
and set us on a straight course to budget balance. May I add that this 
cure has been achieved without the arsenic-laced medication of a 
balanced budget amendment, which so many in this body had prescribed as 
the only cure for the ailing patient. They were wrong, and we have

[[Page S8444]]

turned the corner on our budget woes while at the same time preserving, 
at least for the moment, the checks and balances so vital to our 
continued life as a viable republic. But this legislation pending on 
the Senate floor today threatens to negate our progress and throw the 
body politic back on the critically ill list.
  The outyear losses from the tax cuts contained in this bill could 
propel us backward in time to the irresponsible 1980's. May I note that 
we are voting on this reconciliation bill without the benefit of the 
administration's economic assessment of the outyear impact of these tax 
cuts. We shouldn't have to do that. We are rushing to approve these tax 
cuts in the misguided belief that the people are clamoring for tax 
relief, regardless of the consequences for the deficit in future years.
  Although I applaud the sincerity of those who differ with me, 
realizing that a tax cut would be part of any deal, who have tried to 
make those cuts more fair in their distribution, I cannot fathom the 
justification for supporting this whole package based on the meager 
benefit that might accrue to the nonwealthy. In my view, those of us 
charged with the responsibility to govern must take a larger view of 
our total fiscal policies and remember the lessons of the past two 
decades.
  I am one of the miserable few who retains the miserable memory of 
having voted for the tax cut that Mr. Reagan espoused when he first 
went into office. I voted for that tax cut, and I have been kicking 
myself in the rear ever since. I was wrong. That and the massive 
buildup in national defense and the massive growth of entitlements. 
These are the things that have brought upon us the ills of today, in 
large measure.

  We are only now emerging from the crippling restrictions of a massive 
deficit, debt which hampered our ability to invest in our Nation's 
physical infrastructure, to repair roads and bridges, maintain the 
treasures of our national parks, and provide basic amenities to our 
people like clean, safe water. There are people in West Virginia who 
are lacking in that treasure of safe, clean drinking water. There are 
people in other rural States all over this Nation who need clean, safe 
water. They don't have it. That same deficit has also prevented 
investment in our people's abilities through education, training, and 
health policies. Before we have even paused to experience the sweet 
liberty of freedom from that crushing burden, we are eagerly engaged in 
digging our way right back into debt through these massive back-loaded 
tax cuts.
  Back loaded. Ah, how sweet it is, to tell the American people, ``We 
have cut your taxes!'' Nobody likes to vote for a tax increase. I don't 
like to do that. And there are times when we really need to cut taxes, 
but this is not the time.
  Since the budget has not been balanced since 1969, I guess nobody in 
this town can bear the thought of being in balance. Without the hot 
breath of the deficit master on our necks each and every working day, 
we might actually be able to return to a time when we could address 
some of our real problems in this country. We might even see a little 
creativity and common sense come out of this city. We might have to 
learn to plan and to be proactive about our Nation's problems instead 
of slapping on the green eyeshades every morning and focusing on the 
comforting familiarity of the deficit devil which has become an all-
purpose collective excuse for doing nothing much at all.
  Before we all break out the champagne bottles and congratulate 
ourselves on helping the poor, beleaguered population by making the 
easiest, no-brainer vote in all of politics--the easiest, no-brainer 
vote in all of politics, a tax cut; how easy; how easy it is--let us 
sober up for 1 minute and contemplate the obvious fact that one fairly 
severe recession in the next several years coupled with the impact of 
these back-loaded tax cuts will throw us right back into the deficit 
canyon. That is all it will take.
  Let us further jog our all-too-short memories and recall that the 
national debt as of July 25 is a whopping $5.28 trillion. Yes. Let's 
reduce the deficit. But let us put that money on that national debt. 
Further, I am told that the latest estimate by the Congressional Budget 
Office and the interest due on that debt for fiscal year 1997 is $358 
billion. That is just the interest due on the debt--$358 billion. That 
is $358 for every minute since the Lord and Savior Jesus Christ was 
born--$358 for every minute since Jesus Christ was born. This is not 
small change, my colleagues. And it seems to me that even using the 
new, new, new, new math, and without benefit of a hand-held calculator, 
anyone can see that we cannot prudently afford this tax cut.
  So I am critical--yes--of the Republican Party for advocating this 
tax cut. I am critical--yes--of this administration and this White 
House, of my own political party, for advocating a tax cut at this 
time. It is pandering to the American people. It is pure political 
demagoguery. That is what it is, pure and simple.
  Additionally, any informed observer of our Nation's demographic 
trends can easily see that a low birth rate in our Nation's large and 
aging baby-boom generation are fusing a fiscal time bomb steadily 
ticking along on its inevitable course which will detonate in the 
second decade of the next century. The second decade of the next 
century. But who cares? Many of those of us who vote for this tax cut 
today will not be here. We will not be around. Some of us will be in 
our rocking chairs, enjoying retirement.

  Do not count me in that crowd. We will not be to blame. Who will be 
around to blame us?
  That time bomb could lead to a mushroom cloud, a mushroom cloud that 
spreads over the country, a cloud of returned budget deficits if we do 
not think of ways to responsibly sap its destructive potential.
  Mr. President, simply put, our Nation does not need and can ill-
afford tax cuts at this time--not the tax cuts that are included in 
this reconciliation bill, not the tax cuts promulgated in recent years 
as a result of the so-called Contract With America.
  I did not sign on to that contract, the Contract With America. We do 
not hear much about that contract these days, not much anymore. I never 
signed on to that contract. Here is my ``Contract with America,'' the 
Constitution of the United States. Hallelujah! No signed contract for 
me. I signed the oath to uphold and defend this Constitution of the 
United States against all enemies, foreign and domestic. That is my 
contract.
  But not any tax cut. Such tax cuts threaten to enlarge the deficit 
right at the time we are close to erasing it. Then we are going to 
bloat it again, going to blow it up again. More importantly, tax cuts 
of the sort being considered today could mushroom the deficit in the 
outyears, precisely at the time when our Nation will be graying.
  See, I once upon a time had black hair, black as a raven's wing. Not 
anymore. I went through a graying process. And today my hair has turned 
not to silver but to the 79th wintry snow--I should say 80 in November. 
But precisely at the time when our Nation will be graying, and slowly 
moving closer to the detonation of that time bomb, the explosion of 
retiring baby boomers that threatens to implode our Nation's fiscal 
house.
  There can be no argument, as there was in the early 1980's, that 
these cuts are needed for economic growth. That was the argument they 
used back in the early 1980's. We had a new President. His name was 
Ronald Reagan. My people said, ``Give him a chance.'' They wrote me 
letters and postcards and said, ``Give him a chance.'' Well, against my 
own better judgment, I voted for his tax cut. In those days, we could 
argue that the cuts were needed for economic growth. That is one of the 
arguments Mr. Reagan so well used.
  We are currently in our sixth consecutive year of economic growth, 
the stock market continues to reach record high after record high after 
record high. They wonder how much higher it can go. It became 4,000, 
and then it became 5,000, and then it became 6,000, then it became 
7,000, then it became 8,000. How much higher can it go? I could have 
become a rich man, perhaps, if I had known how to play the stock 
market. But I am one who remembers the stock market crash in 1929, so I 
have been afraid, afraid of that market ever since. Unemployment 
recently dipped below 5 percent. Think of it! And inflation has 
remained in check. The stock market has risen into the

[[Page S8445]]

stratosphere, beyond the opening in the ozone layer.
  Does this sound like an economy that needs a jump-start through a tax 
cut? We were on the right track in 1993. That was the right track. We 
don't need this tax cut now. To provide a tax cut now is like 
encouraging someone who has just paid off a huge credit card debt, 
complete with whopping interest payments to go on a wild and 
uncontrollable shopping spree. Where is the learning curve? Where is 
the learning curve?
  Mr. President, it appears to this Senator that the justifications for 
the tax cuts contained in the pending legislation do not extend beyond 
the realm of pure unadulterated politics, pure unadulterated politics. 
Tax cuts are now, as they have been in the past, the easiest vote a 
Member of this body could ever make--easiest vote. Tax cuts sell well 
on the campaign trail. They make even rubber chicken taste good. They 
seem to magnetically draw checkbooks out of our coat pockets, but in 
our current fiscal situation they do not represent sound fiscal policy.
  Tax cuts are not in the best interests of our Nation at this time. I 
cannot state that strongly enough. To fully prepare for the budget 
pressures of the next century, we will need fiscal discipline as never 
before envisaged. We will need budget surpluses, not a teetering see-
saw of a balance weakened by looming, back-loaded tax cuts whose costs 
continue to escalate and whose effect will be to tilt the see-saw back 
toward deficit spending. We will need to make many difficult decisions 
with regard to Federal entitlement spending.
  In short, Mr. President, we will need compromise on many fronts of 
our budget debate. However, if we are to be truly faithful to the 
principles of fiscal order and balanced budgets, and if we are going to 
be mindful of the America that we leave to our children--we hear so 
much about our children--if we are truly mindful of the America that we 
leave to our children and to our grandchildren, there is no place, no 
place for tax cuts in any compromise proposal at this time.
  Mr. President, I yield the floor.
  Mr. ROTH. Mr. President, my colleague's argument brings to mind a 
letter from a fellow Delawarean who reminded me of the wisdom of 
President Abraham Lincoln.
  Quoting our 16th President, Mr. Robert Hall, of Hockessin, DE, 
reminded me that:

       You cannot bring about prosperity by discouraging thrift. 
     You cannot strengthen the weak by weakening the strong. You 
     cannot help the wage earner by pulling down the wage payer. * 
     * * You cannot establish sound security by spending more than 
     you earn. You cannot build character and courage by taking 
     away man's initiative and independence.

  Only by keeping the economy strong can we balance the budget. And one 
certain way to strengthen the economy is to keep our burden of taxation 
reasonable, keep it at a level that provides initiative and incentives 
for risk-taking and thrift. History has proven that tax cuts stimulate 
economic growth.
  The Mellon tax cuts at the turn of the century created incredible 
prosperity for America. President Kennedy's cuts stimulated the economy 
in the 1960's, and in the 1980's, Kemp-Roth led to the longest 
peacetime economic expansion in history. Eighteen million new jobs were 
created, along with 4 million new businesses. Family income rose and 
homeownership boomed as interest rates and inflation fell. At the same 
time, Treasury revenues more than doubled, not because Americans were 
paying a higher percentage of their income to taxes, but because 
Americans had higher incomes.
  The truth is, Mr. President, that had Congress held the line on 
spending, the windfall to Treasury created by the Kemp-Roth tax cuts 
would have put a stake in the heart of the deficit. However, instead of 
controlling its appetite to spend--something we're trying earnestly to 
do, now, Congress shackled America with the 1990 tax increase. Then, 2 
years later, President Clinton imposed the largest tax increase in 
history on Americans.
  With this package, we begin to reverse these trends, and history is 
on our side. A responsible tax cut will strengthen the power of an 
expanding economy for our families and Nation.
  At the moment, the average American family pays 40 percent of its 
income to taxes, and the current Federal system is counterproductive to 
economic growth. It double-taxes savings, thwarts investment, hinders 
productivity, increases prices, stifles wages, and hurts exports. It is 
complex and places disincentives on work.
  As chairman of the Finance Committee, I intend, to see this 
reconciliation package through, and then, in coming months, I intend to 
turn our attention to comprehensive tax reform. We will work for a 
fairer, simpler plan that does away with the negative consequences of 
the current system--a plan that encourages savings and promotes 
American exports. But first we must keep our promise of the tax cuts 
we've proposed for the American people.
  This legislation keeps that promise.
  Mr. HATCH addressed the Chair.
  The PRESIDING OFFICER (Mr. Thomas). The Senator from Utah.
  Mr. ROTH. Mr. President, I yield 10 minutes to the distinguished 
Senator from Utah.
  The PRESIDING OFFICER. The Senator from Utah is recognized.
  Mr. HATCH. Mr. President, in a different vein than my colleague from 
West Virginia, I rise to speak in strong support of this historic 
balanced budget and tax relief agreement. On many occasions I have come 
to the floor of the Senate arguing the importance of curbing Federal 
spending and balancing the Federal budget. It is equally, if not more, 
important that we pass on the benefits of a balanced budget in the form 
of tax relief to the American people.
  Mr. President, I have long been an ardent supporter of tax cuts for 
the American people. This bill marks a very decided shift, a dramatic 
shift from the tax increases that have been prevalent over the past 
decade. The bill before us represents the first real tax cut in 16 
years. It was not easy to get here. We can all remember the partisan 
budget debates we have had in the past few years. The difference 
between those bills and the one before us today is the bipartisan 
cooperation that went into this year's legislation. It is because of 
unceasing bipartisan effort to end big government and the benefit of a 
strong and vibrant economy that we can stand here today debating such 
historic legislation.
  I maintain, Mr. President, that this bipartisanship developed because 
the American people insisted on it. They reelected President Clinton, 
but they also reelected a Republican majority in the House and Senate. 
And I have to say we would not even be debating a balanced budget bill, 
we would not be debating a tax cut bill if it was not for the 
Republican majorities in both the House and the Senate. The people who 
we each have pledged to serve decided that both points of view were 
necessary to get a balanced Federal budget. Congress and the President 
finally got the message, and the American people are the beneficiaries.
  The package before us contains a variety of tax cuts that will bring 
much-needed relief. These tax cuts allow the taxpayers in my home State 
of Utah and across the Nation to keep more of their hard-earned 
dollars. This bill provides significant relief through: First, a tax 
credit for families with children; second, lower capital gains tax 
rates; third, tax incentives for education; fourth, small business 
incentives; fifth, increased savings through enhanced IRA's; and sixth, 
higher death tax exemptions.
  The child tax credit is especially important for America's working 
families. Raising children in today's world becomes more expensive each 
year. This family tax credit will put the tax relief where it is needed 
most, in the pockets of parents with small children.
  This bill also contains a number of proposals to ease the burden for 
paying for college. I hear again and again from parents in Utah and 
throughout the country struggling to keep up with the high costs of 
college for their children. Mr. President, having put six children 
through college myself, I know exactly what they are going through. 
This bill will help these families by providing a tax credit for 
tuition expenses, a deduction for student loan interest and a new 
education IRA to promote saving for education. There aren't many things 
in this world that mean as much to us parents as giving our kids an 
opportunity that perhaps we didn't have or helping them to get along 
with good education.

[[Page S8446]]

  The bill also contains important tax cuts to stimulate economic 
growth and create new jobs. In the past two Congresses, I have 
introduced legislation to cut capital gains rates in half. I am 
extremely pleased that this tax package lowers the capital gains tax 
rate in half to almost 20 percent. This historical and important change 
will not only ease the current double taxation of capital income, it 
will encourage more capital investment and help maintain the strong 
economic growth that this country has experienced over the past number 
of years. In fact, ever since the original recession during the Reagan 
years, we basically have had a good economy. We had a couple of 
downturns during the Bush years, but the fact is, we are all still 
benefiting from having cut the marginal tax rates from 70 percent down 
to 28 percent.
  I might also add that a great deal of the credit should go to the 
distinguished chairman of the Senate Finance Committee, Senator Roth. I 
remember in those early days in the late 1970's and early 1980's there 
were a number of us who banded together under the leadership of Bill 
Roth and Jack Kemp to advance supply-side tax cuts which have proven to 
be successful. We are still benefiting from the cuts in those marginal 
tax rates from 70 percent down to 28 percent, still benefiting today, 
and this administration is benefiting from that. And to blame all of 
those deficits on Reagan kind of ignores the Great Society programs, 
kind of ignores the fact that during those years Reagan got his 
marginal tax cuts but Tip O'Neill got his great spending increases, 
and, of course, we had to increase spending on the military. 
Ultimately, because of Reagan and his spending, we actually ended the 
cold war. And we have saved trillions of dollars because of that.
  I want to pay particular tribute to my colleague from Delaware. 
Without his leadership, we would not have this bill. We would not have 
these tax cuts. And I have to say he has been a strong, firm, solid, 
steady leader in these matters.
  This capital gains tax rate reduction alone is going to prove to be 
very beneficial to our economy. There are trillions of dollars locked 
up in capital assets in this economy because people just don't want to 
pay a 28-percent top capital gains tax rate and corporations don't want 
to pay a 36-percent rate. Unfortunately, we couldn't do much for the 
corporations this year because of the limited amount of tax cuts we 
have negotiated with the President. But we have done a lot for the 
millions and millions of people, now, many in the middle class--50 
percent of whom are in the middle class--who now are getting robbed 
because of inflated values of their capital assets, which if they sell 
they are paying taxes on the inflated value rather than the actual 
value. It wouldn't have happened but for our distinguished chairman of 
this committee, the distinguished chairman of the Ways and Means 
Committee, Bill Archer, and of course my friend--both friends--Bill 
Roth, as well.
  This is important. For a long time we have made the case if we cut 
capital gains tax rates we are actually going to get an increase in tax 
revenues. I believe over the next 5 years that will prove to be true. 
Instead of losing actual tax revenues we ought to increase tax 
revenues. But if all we do is break even or even slightly below 
breaking even, it's worth it because it's the type of thing that will 
benefit so many millions of Americans, especially those of us in the 
middle class who put our hard-earned savings into mutual funds or into 
other areas of the stock market or into capital assets that literally 
will receive some benefit in the future from what is being done here 
today.
  Some of my colleagues from the other side of the aisle have 
categorized the capital gains tax cut as being for the rich. This is 
just not true. The capital gains tax cuts will help any American 
investing in a mutual fund, owning a home, or with an IRA which invests 
in stock. These are not the rich. These are hard-working middle-class 
families saving for their future and struggling to own a piece of the 
American dream.
  In addition, this bill provides much needed relief from the estate 
and gift tax. This so-called death tax is nothing more than a 
punishment for success. This tax has the damaging effect of forcing 
families to sell a business or a family farm just to pay their tax 
liability. Many farms in my State of Utah have been passed on from 
generation to generation. Under the current estate tax, it is 
inevitable that at sometime in the future these families may be forced 
to sell these farms unless this tax is eliminated. This is one area of 
unfinished business. I hope that we can continue the process we have 
begun here and work together in the future to further reduce this 
onerous tax on American family farms and businesses.
  This bill also contains a number of proposals that will help small 
businesses. Since 1993, I have attempted to clearly define what is a 
principal place of business for purposes of the home office deduction. 
This bill would clarify that definition and allow thousands of small 
business men and women deduct their legitimate home office expenses.
  In addition, this bill makes important changes to allow self-employed 
individuals to fully deduct the cost of health insurance. The bill also 
modifies the employee stock ownership plan rules and other pension 
provisions that will allow more small businesses to provide employees 
with savings and retirement benefits.
  Mr. President, I would like to commend the conferees for including 
provisions contained in the International Tax Simplification for 
American Competitiveness Act which I introduced earlier this year with 
Senator Baucus. This bill will extend the same export benefits to 
software products that are available to films and other recordings. It 
will also provide relief to U.S. financial services companies, 
including banks, security firms, insurance companies and brokers, and 
other finance and credit entities. The simplification and other changes 
to the most complex area of our Tax Code will enhance the global 
competitiveness of American products and companies.
  Mr. President, while this bill does, in some ways, create more 
complexity in the Tax Code, there are a few sections that simplify 
various areas of our tax system. One such provision is a provision that 
I have worked hard on--exempting State and local government pension 
plans from the cumbersome pension nondiscrimination rules. This 
provision reinforces the right that State and local governments have to 
determine the compensation of their employees without Federal 
Government intrusion.
  Mr. President, the passage of this tax relief bill is truly historic. 
The taxpayers in my State of Utah and across this country are deserving 
of this tax cut. They are overtaxed and over regulated. This bill 
provides broad tax relief in many important areas.
  The budget conference report also contains provisions to restructure 
and preserve the Medicare Program for a decade. These changes are 
nothing less than historic in nature and will help insure that Medicare 
remains solvent well beyond 2001--the date for financial insolvency for 
the Medicare part A hospital trust fund.
  Elderly Utahns can rest assured tonight that the Federal Government's 
health care commitment to them remains strong and undeterred. And, 
while work remains to be done, all future Medicare beneficiaries can 
rest assured that Medicare will be there as they become eligible early 
in the next century.
  I join my colleagues in the Senate and particularly those Senators on 
the Finance Committee, on which I serve, where this legislation was 
originally developed and drafted.
  We all have worked tirelessly over the past 7 months through numerous 
committee hearings and through countless committee meetings. We worked 
in a bipartisan fashion, resolved our differences on policy, and 
ultimately developed a consensus approach to Medicare reform.
  The effort has paid off, and the American people are the recipients 
of this great and historic dividend.
  Nevertheless, we must also recognize--and the American people must 
realize--that there still remains considerable work to be done with 
respect to long-term reforms of the Medicare Program.
  This is why I am delighted the conference report contains legislation 
I sponsored earlier this year to establish a National Bipartisan 
Commission on the Future of Medicare.
  This Commission will be comprised of 17 members who will be charged 
to

[[Page S8447]]

develop recommendations to ensure the long-term fiscal health of the 
Medicare Program. Those recommendations will be completed and sent to 
Congress by March 1, 1999.
  I have spent a great deal of time talking with my constituents in 
Utah, and I have found that one thing which matters very much to them 
is the ability to choose the health care which suits them the best.
  Clearly, one of the most significant and dramatic changes to Medicare 
will be the new Medicare Choice Program. Under this new program, 
Medicare beneficiaries will have the opportunity to choose from a 
variety of private health care plan options that best suits their needs 
and preferences.
  Such plans could include newly created provider sponsored 
organizations operated by health care providers as well as medical 
savings accounts combined with a qualified high-deductible policy. Utah 
providers have urged for several years that we change the law to allow 
them the ability to band together and form provider networks, locally 
based linkages of physicians and hospitals who will treat Medicare 
patients. That change will finally be made.
  As a strong supporter of MSA's, I am delighted the bill contains this 
provision even though it is a demonstration that is capped at 390,000 
enrollees and sunsets on December 31, 2002. Nevertheless, it is an 
important first step that I believe will be a resounding success and 
reauthorized beyond the 2002 deadline.
  This is an important change in Medicare which, since its inception in 
1965, has traditionally been structured as a fee-for-service plan.
  The Senate recognizes that beneficiaries want more choice in the 
manner in which they receive health care. With the introduction of 
managed care into the private sector, seniors are increasingly 
interested in participating in managed care plans which offer greater 
benefits such as prescription drugs and eye and hearing care.
  The conference report we are passing today will give seniors that 
choice. But it will do so without jeopardizing anyone's right or desire 
to remain in the traditional fee-for-service program.
  Moreover, we have incorporated protections and safeguards to ensure 
that those seniors who choose to participate in a managed care plan 
will have the necessary consumer protections such as access to 
emergency services 24 hours a day as well as appropriate appeals and 
grievance procedures.
  Another key interest of Utahns is the necessity of providing cost-
effective, high-quality care for our seniors and disabled who must 
avail themselves of either nursing home care or home health services. I 
am particularly delighted the report contains important and necessary 
changes in the manner in which the Federal Government finances skilled 
nursing home and home health care services.
  I have long advocated for the establishment of a prospective payment 
system, or PPS as it is referred to, for home health and skilled 
nursing care. I have introduced legislation--S. 913, the Home Health 
Care Prospective Payment Act of 1997 and S. 914, the Skilled Nursing 
Facility Prospective Payment Act of 1997--to accomplish this objective. 
The major components of that legislation are contained in the 
conference agreement we will approve today.
  The implementation of a PPS will help address the extraordinary 
escalation in program costs associated with home health and nursing 
care. These two programs are the fastest growing components of Medicare 
and efforts are necessary to address program growth without 
jeopardizing quality or access to care.
  Accordingly, I am delighted the report before us today incorporates 
many of the provisions in my bills including the implementation of a 
prospective payment system.
  With respect to the $5 copayment for home health care services 
originally contained in the Senate bill, I am pleased the final 
conference report does not contain this provision. While I recognize 
the need to place controls on utilization, I believe the most cost-
effective approach is through a prospective payment system which we now 
have in place.
  The legislation will also provide Medicare beneficiaries with new and 
enhanced health care benefits.
  I am particularly pleased that annual mammography screening, 
screening for prostate and colorectal cancer, diabetes self-management, 
and expansion of immunizations will be phased in and available to 
beneficiaries.
  In this regard, I am especially pleased that the conference report 
contains a provision I raised in the Finance Committee to eliminate the 
x-ray requirement as a condition of Medicare coverage for chiropractic 
services.
  Affording seniors greater access to chiropractic services will not 
only result in reduced Medicare expenditures, in the context of total 
program costs, but will also reduce needless back surgery for countless 
senior citizens.
  Mr. President, I would like to turn now to another provision, the 
need for which was brought to my attention by Ms. Michelle Newport, a 
Christian Scientist in Salt Lake City, UT.
  Under several provisions of Medicare and Medicaid law, reimbursement 
has been authorized for literally decades for nonmedical hospital and 
skilled nursing facility services provided in sanitoria operated by the 
First Church of Christ, Scientist.
  The need for reexamination of these statutory provisions was pointed 
out when the current law was challenged successfully last year in the 
case of Children's Healthcare Is a Legal Duty (CHILD) versus Vladeck. 
In this case, a Minnesota district court held that the law and their 
accompanying regulations violate the establishment clause of the 
Constitution as an inpermissible sectarian preference. Pursuant to that 
court decision, the Secretary was enjoined from further implementation; 
however through the efforts of a number of Members of Congress who 
disagreed with this ruling, including House Judiciary Committee 
Chairman Hyde, Senator Kennedy, and myself, the court's injunction has 
been stayed until August 1997.
  The provision included in the bill we are considering today is 
intended to address our concern over that ruling. It has been drafted 
to be sect neutral. It replaces existing law by providing for 
reimbursement of nursing services to individuals who decline 
conventional coverage due to sincerely held religious beliefs. The 
provision sets up conditions for coverage of religious nonmedical 
health care institutions under the Medicare and Medicaid Programs, with 
new mechanisms to ensure cost-control of the benefit.
  I want to thank Senator Roth and Chairman Archer, and especially 
their staffs, for their hard work in crafting a provision which meets 
the twin concerns of cost-control and constitutionality. I would also 
like to pay special recognition to Gioia Bonmartini of the Finance 
Committee staff, and Dean Rosen of the Ways and Means Committee staff, 
who worked so hard to make certain an acceptable provision was included 
in the conference agreement.
  With respect to the delivery of health care in rural America, I am 
pleased the report contains provisions I sponsored in the Senate to 
increase the level of Medicare managed care payments for rural areas of 
the country. The report provides a minimum payment amount of $367 in 
1998 that will be updated annually by the growth in Medicare fee-for-
service payments.
  Implementation of this provision, although extremely technical in 
nature, has been a key objective of Utah's managed care community, 
which will now have the incentives to develop and offer managed care 
plans in more rural communities.
  Before I close my discussion of the health care provisions contained 
within this legislation, I want to take a few moments to address one of 
the most important components of the conference agreement, the new 
child health initiative.
  As my colleagues are aware, Senator Kennedy and I introduced the 
Child Health Insurance and Lower Deficit Act [CHILD] on April 8. Now, 
only 114 days later, we are giving final approval to a substantial new 
program which is very similar to the Hatch/Kennedy bill.
  The CHILD bills, S. 525 and S. 526, proposed a program which is 
extremely similar to that which is contained in the conference 
agreement we are considering today. The CHILD bills, as with the 
conference agreement, proposed a State-run block grant program to 
provide health insurance services to

[[Page S8448]]

low-income children. The program was to be financed by a cigarette 
excise tax. Eligibility is to be determined by the States, cost-sharing 
is limited for the lowest income, and coverage cannot be provided to 
those who are currently eligible for Medicaid, all provisions contained 
within our legislation.
  It is no secret to Members of this body that the United States has a 
deplorable record in making certain that our Nation's most vulnerable, 
our children, have access to health care services. By many estimates, 
over 10 million of our children are uninsured. That is a situation 
which must be corrected, and I am pleased, indeed thrilled, that the 
conference agreement contains this new program.
  At this point, I would like to insert a summary of the new provisions 
for the edification of my colleagues.

       Funding level: Provides $24 billion in the first 5 years, 
     and $24 billion in the next 5 years. Note: the funding levels 
     add up to $39.65 billion over the next 10 years because 
     certain Medicaid costs have been taken off the top.
       Tobacco tax: Program starts in fiscal year 1998. It is 
     financed in part through a tobacco excise tax increase. There 
     is no increase in the first 2 years. For the next 2 years, 
     there is a 10 cents/pack increase. In the fifth year, fiscal 
     year 2002, and thereafter, the tax is increased by 15 cents/
     pack.
       Use of funds: Funds can be used for State block grants, or 
     expanded Medicaid, or both. Funding can be provided for 
     community-based health delivery systems, such as Community 
     Health Centers. The funds cannot be used for any other 
     purpose than those enunciated in the bill.
       Funding distribution: Funds are distributed by a formula 
     which is initially based on the number of low-income 
     uninsured children in the State and in subsequent years 
     blended with the number of children in the State. There is a 
     geographical adjustment for the costs of providing services. 
     No State will get less than $2 million/year. Funds are made 
     available for 3 years, and unused funds can be redistributed 
     among other States.
       Medicaid: If a State chooses to insure new children not now 
     eligible for Medicaid under Medicaid, they may receive 
     increased Federal matching equal to 30 percent of the State 
     share, with an 85 percent cap on the Federal contribution.
       Secretarial approval of plan: A detailed process is laid 
     out for submission of the State plan, or amendments thereto. 
     Secretarial approval is deemed unless she notifies the State 
     within 90 days that it is disapproved.
       Eligibility: States determine eligibility. Generally, 
     children can be covered up to age 19 and at 200 percent of 
     Federal poverty level. However, States which currently are at 
     that coverage level may expand their programs up to 250 
     percent of FPL. Covered children cannot be eligible for 
     Medicaid now and cannot be covered now under group health 
     plans.
       State responsibility: States must show they are: (1) trying 
     to cover Medicaid eligibles first; (2) not substituting the 
     new plan for current group health plan coverage; (3) covering 
     Indian eligibles. States will be required to enunciate 
     strategic objectives and performance goals, submit an annual 
     report, and be subject to regular evaluations as to 
     effectiveness of the plan.
       Benefits package: States must provide coverage which is 
     either equivalent to a benchmark package or a equivalent to a 
     benchmark-equivalent package, and they can provide even more 
     from a long list of services, which includes transportation 
     costs, mental health, home care and dental. The benchmark 
     package is either: (1) FEHBP-equivalent coverage, which is 
     Blue Cross/Blue Shield standard option for a preferred 
     provider organization; or (2) a plan generally made available 
     to State employees; or (3) the largest commercial, non-
     Medicaid HMO in the State. The benchmark equivalent package: 
     (1) Is actuarially equivalent to one of the benchmark plans; 
     and (2) covers the following basic services: Inpatient/
     outpatient; Physicians surgical and medical; Lab and x ray; 
     Well-baby and well-child care; including immunizations. The 
     State may also get approval from the Secretary to offer other 
     coverage. Current non-Medicaid State plans in New York, 
     Florida and Pennsylvania are grandfathered in.
       Cost-sharing: The amounts must be published in the State 
     plan, and imposed under a public schedule. Variations based 
     on family income should not disadvantage lower income 
     families. No cost-sharing for preventive services. If the 
     child has income below 150 percent of Federal poverty level 
     [FPL], the State may not impose a premium above that which 
     would have been charged under Medicaid, and any deductible or 
     other cost-sharing must be nominal, as in Medicaid.
       Maintenance of effort: States cannot change their Medicaid 
     eligibility standards in effect as of June 1, 1997.
       Abortion: Abortion coverage is specifically precluded, 
     except for rape, incest or life of the mother cases.

  Mr. President, I am extremely proud of this legislation. I think that 
a number of important modifications have been made to the final 
conference agreement, changes which improve the measure and which will 
give the States the flexibility they need to operate the program in a 
most efficient manner.
  I will say, though, that I am disappointed at the Congressional 
Budget Office's estimates that the bill will only cover 3.4 million 
children, 1.38 million of whom were previously insured. It is no secret 
that I have been critical of the CBO's earlier estimates which I felt 
were too low in terms of children covered. I still believe this is the 
case, and am hopeful that with the flexibility provisions added for the 
Governors we will be able to cover even more children.
  As many have noted, this will be the most important new program to 
help our Nation's children since enactment of the Medicaid Program over 
30 years ago. I am extremely proud to have played a role in its 
development.
  For not only will the bill help provide children with the health 
insurance they need, it will play the dual role of discouraging them 
from smoking or using other tobacco products, by increasing the tobacco 
excise tax.
  During this debate, which was often contentious, I asked my 
colleagues, ``Who do you want to help, Joe camel or Joey?'' Sometimes 
it didn't seem clear. But at long last, the Camel is losing, and that 
is a tremendous benefit for public health.
  I do want to take this opportunity to thank those who united behind 
this effort, and especially the six Republicans who joined me in 
drafting the original child health legislation: Senators Jeffords, 
Stevens, Snowe, Collins, Campbell, and Smith. I also want to pay 
especial tribute to two Senators who were extremely supportive along 
the way, Senators DeWine and D'Amato, who played a crucial role in 
supporting this legislation when support was sorely needed.
  It is important to note the tremendous leadership role that Senator 
Lott played in making certain this provision was incorporated in the 
final agreement. He is a true friend of our Nation's children. Finance 
Committee Chairman Roth must also be praised for his dedication to 
children's health and toward working out a compromise with the House, 
and his capable staff Dennis Smith and Julie James deserve especial 
recognition, as does Howard Cohen of the House Commerce Committee 
staff.
  Of course, no list would be complete without mentioning Senator 
Chafee, who did so much to advance this debate by pointing out the need 
to maintain a strong Medicaid Program and make certain it is enhanced 
as we expand children's health funding.
  Strong partners in this cause are Senator Daschle, who stood up for 
children's health when his national leaders would not, and Senator 
Moynihan, who played a crucial role on the Finance Committee. Senator 
Rockefeller, again, must be noted for his dedication to this cause, and 
for assuming a strong voice of reason role when cooler heads did not 
prevail.
  And finally, I must pay tribute to my partner in this legislation, 
Senator Kennedy. He is the most aggressive and successful legislator I 
know. And I am proud that when we can unite on a bill, everyone knows 
it will be a very good bill. Because the products of our legislative 
liaison always represent the center.
  Mr. President, in adopting this legislation today, we are 
representing our constituents, the large majority of which time and 
time again have signaled they want to do more for children's health. 
That day is here.
  Mr. President, I am pleased to have the opportunity to vote for this 
important tax bill.
  I, again, want to express my appreciation, love, and respect for the 
distinguished chairman of this committee and the distinguished ranking 
member, Senator Roth and Senator Moynihan, and the concomitant leaders 
in the Ways and Means Committee in the House.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, I want to express my appreciation for the 
generous comments the distinguished Senator from Utah had about me. I 
have enjoyed working with him on this most important matter.
  At this time I would like to make a point of order that a quorum is 
not present.
  Mr. DURBIN. Mr. President, if I might seek recognition before the 
Senator from Delaware makes that point?

[[Page S8449]]

  Mr. ROTH. I am looking for my Democratic counterpart.
  The PRESIDING OFFICER. Who yields time?
  Mr. ROTH. The Senator can yield to himself whatever time he needs.
  The PRESIDING OFFICER. The Senator from Illinois.
  Mr. DURBIN. Mr. President, we have reached a historic juncture. Our 
Nation has not had a balanced budget since fiscal year 1969, the last 
budget year of President Lyndon Johnson's tenure. The budget deficit 
began to grow under President Nixon, rose to $74 billion during the 
recession we faced under President Ford, dipped and then steadied under 
President Carter, until recession hit again and pushed the deficit to 
nearly $80 billion. Then it ballooned to more than $200 billion after 
the Reagan tax cuts in the early 1980's. It declined to around $150 
billion, then skyrocketed during the recession under President Bush. 
Quite a roller coaster ride; all of it in red ink.
  Many of us believed we could meet our responsibility to live within 
our means while helping our economy to move forward. What we needed was 
leadership, not only in the White House but on Capitol Hill. When 
President Clinton arrived, the deficit stood at an all-time high of 
$290 billion. The economy was in stall. It was not mere luck which has 
given us 7 years of economic growth and a declining deficit. Many 
circumstances are beyond the control of any political leader, but 
leaders can make a difference.
  President Clinton set a course for economic growth and spending 
reduction and invited the Nation to follow. It was difficult medicine: 
Tax increases for those who had benefited most from the tax breaks of 
the 1980s, spending reductions in programs most Americans support, 
targeted tax relief for working families, and targeted investments in 
programs that would strengthen the Nation.
  Congress took the decisive and difficult step of passing President 
Clinton's deficit reduction and economic growth package. It was a 
politically costly step. It cost many Members their political lives. 
Unfortunately, not a single Republican supported the President's plan 
and it passed in this Chamber only when Vice President Gore cast the 
tie-breaking vote. But it laid the groundwork for the budget package 
before us.
  The difficult votes some of us cast in 1993 helped to produce a 
strong, growing economy with a Federal budget deficit that has declined 
steadily. The deficit was $290 billion when the President took office. 
It is conservatively estimated to be $67 billion this year, and could 
end up below $40 billion. Deficit reduction and targeted investment 
stimulated economic expansion, which created more revenue and produced 
more deficit reduction, so that now some people really anticipate the 
possibility that we will achieve a balanced budget as early as next 
year. When we considered President Clinton's plan, it was called a 
deficit reduction plan. No one dreamed that it would end up being a 
balanced budget plan. To the surprise of most economists, that 
possibility is within our grasp, even this year.
  All of this occurred because of President Clinton's leadership and 
the support of the Democrats in Congress in 1993. We can be proud of 
these achievements. We can take some satisfaction in knowing that our 
hard work in 1993 made it possible for another exercise of leadership 
in 1997, to produce this balanced budget resolution. We can also take 
some satisfaction in knowing the economy is strong. Look at the report 
card. Unemployment and inflation, the combined rate, 8.7 percent, the 
best since President Lyndon Johnson.
  Mr. DASCHLE. Mr. President, will the Senator from Illinois yield for 
just a moment?
  Mr. DURBIN. I will be happy to yield to the minority leader.
  Mr. DASCHLE. I wonder, and I apologize again and thank him for 
yielding, I wonder if I might make a unanimous consent--or just note 
the absence of a quorum in order to consult with the distinguished 
Senator?
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. DURBIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. DURBIN. Thank you, Mr. President.
  I was speaking before the call of the quorum about the economic 
report card that we can point to with pride that we have 2.8 percent 
annual average inflation, the best since President Kennedy; 12.1 
million new jobs in this period of time, the best ever; 1.1 million new 
construction jobs, the best since President Harry Truman; a 14-percent 
increase in consumer confidence, the best since President Eisenhower. 
The list goes on and on.
  This budget agreement that we consider today continues the fiscal 
responsibility that we have shown since 1993. It includes the spending 
cuts we need to balance the budget by 2002 and sets the stage for 
continued balanced budgets beyond 2002.
  What this budget package shows is that the two parties can work 
together to make the necessary choices to balance the budget and 
address the needs of the American people.
  Is this the budget that I would have written? No, I would have 
changed a lot of the provisions. This is probably not the budget that 
any single Member of this body would have written, but it is a credible 
effort, a reasonable compromise. It is worthy of our support. No 
compromise is perfect, but this package will give many Illinois working 
families much-needed help in paying for the cost of raising kids and 
sending them to college. It addresses today's economic needs and 
realities, whether it is paying for day care, braces, health insurance, 
for kids or college tuition.
  In addition to providing fairness for working families, it provides 
fairness for seniors, extending the Medicare Program with reforms that 
protect the most vulnerable. It eliminates some provisions adopted on 
the Senate floor which would have raised, for example, the Medicare 
eligibility age from 65 to 67 over a 20-year period of time, and it 
addresses the concern that farmers and small businessowners should be 
able to pass on their business and their farm to their children without 
a great estate tax responsibility.
  The spending bill that we consider preserves the budget and 
strengthens the Medicare Program. The Republican Contract With America, 
which was considered several years ago by Speaker Gingrich and many 
Republicans Senators supported, would have cut $270 billion out of 
Medicare over 7 years, a massive cutback in Medicare that would have 
imposed excessive new burdens on our Nation's seniors. This budget 
package cuts $115 billion over 5 years, without excessive new burdens 
on seniors.
  It extends the solvency of Medicare for 10 years, keeping our word to 
seniors to keep this program strong. It limits the increased burdens on 
our elderly seniors who live on limited incomes and are already paying 
a large portion of their incomes in medical costs.
  It allows for increased numbers of Medicare health plan choices for 
our seniors, especially in rural areas. It includes a new package of 
preventive benefits, including annual mammograms, diabetes self-
management, and prostate colorectal cancer screening.
  It also includes nearly $1 billion in new spending for rural health 
initiatives.
  When it comes to Medicaid, this is also a good agreement. The 
Republican proposal in 1995 would have cut $163 billion from the 
Medicaid Program over 7 years. That would have risked the health of 
seniors, children, and pregnant women who count on Medicaid for basic 
health care and for many seniors' long-term care. This budget cuts only 
$13 billion from Medicaid over 5 years. We have balanced the budget 
without jeopardizing the safety net for Americans who lack health 
insurance.
  This agreement marks a historic commitment to our Nation's children. 
The package sets aside $24 billion for children's health insurance. 
Over 10 million of our children are currently uninsured. This bill 
could help up to 7 million of these children become insured. I am 
certain that in so doing, it will take a great burden off the minds of 
many working families who don't earn enough money to be able to pay for 
health insurance today or don't have a benefits package at work that 
provides health insurance for their families.

[[Page S8450]]

  The one thing this budget package does, which I think is long 
overdue, is it provides funding to restore the unfair welfare reform 
provisions that would otherwise cut off SSI legal immigrants who are 
playing by the rules and paying their taxes but have become disabled or 
may become disabled in the future. Without this budget agreement, over 
22,000 elderly or disabled legal immigrants in my State of Illinois 
would face the loss of their SSI in October. For many of them, this is 
their only form of support. I supported the welfare reform bill, but I 
agreed with President Clinton that this was one provision that needed 
to be corrected. This agreement, this bill, will correct it.
  This agreement also commits $3 billion to assist welfare recipients 
to move into work slots. The basic principle of welfare reform was that 
able-bodied adults should be put back to work. This assistance helps 
the States accomplish that goal. The Republican budget in 1995 would 
have imposed devastating spending cuts in education, environmental 
protection and crime prevention, but this budget protects the 
President's priorities in those areas, and the agreement on which this 
is based calls for a substantial increase in education funding.
  The tax-cut bill offers valuable tax relief to millions of working 
families, with a net tax cut of around $95 billion over the next 5 
years, tax cuts that are direct dividends of the 1993 budget bill.
  This package includes a $500-per-child tax credit for children under 
the age of 17, beginning in 1999, with a $400 credit in 1998. The 
credit will be calculated before the earned-income tax credit to 
maintain the valuable work incentives associated with that credit, and 
it would be refundable against the payroll tax for larger families that 
face the great expense of raising the next generation.
  This credit, which costs $85 billion over 5 years, is the largest tax 
cut in this package and one of its most important investments. An 
estimated 13 million children in families earning less than $30,000 
will receive this valuable assistance which they can use to pay for day 
care, braces, or any other expenses the family faces, or to save for 
the future. This child credit begins to phase out for individuals 
earning $75,000 and couples making $110,000, higher than the President 
sought. More importantly, some families earning as little as $18,000 
who pay payroll taxes but little or no taxes would also qualify, which 
Republicans have resisted.
  Education tax credits: This tax cut package also includes the 
President's education tax credit proposal, which I strongly supported. 
With a value of $40 billion over 5 years, it constitutes the largest 
increase in Federal education assistance since the GI bill after World 
War II.
  This package contains everything President Clinton asked for in 
educational tax benefits. If we as a society want to show our youth the 
value we place on education, we need to invest in education. This 
package does that, with tax relief for college tuition costs and 
increases in spending for scholarship grants, literacy programs, and 
student loans.
  This measure includes $31 billion over 5 years that will allow 
middle-income families to receive up to $1,500 in tax credits to offset 
the cost of the first 2 years of college. Families will be able to take 
the credit against the first $1,000 of costs, plus half of the next 
$1,000 of costs. Juniors, seniors, and part-time students can take a 
credit of 20 percent of the first $5,000 of costs, to help families 
afford the continuing costs of higher education.
  In addition, there are $9 billion of other education tax incentives, 
including an extension of the exemption for employer-paid undergraduate 
tuition, which allows companies to help their employees improve their 
skills and knowledge.
  Estate tax: The estate tax exemption for farmers and small businesses 
will be increased to $1.3 billion next year. This would allow family 
farmers and family-owned businesses to pass down the fruits of their 
hard work to their children and grandchildren. The estate tax will also 
be raised gradually for all other Americans, to $1 million over the 
next 10 years, which recognizes the effects of inflation on the 
existing exemption.
  Capital gains from home sales: For many families without children or 
whose children have grown, the most important tax break in this bill 
may be the capital gains exclusion for up to $500,000 in profits on the 
sale of a home. This will help retirees who want to move to a smaller 
home without adverse tax consequences.
  Improvements: There are a number of improvements in this bill over 
the original Republican plans: The extension of the airline ticket tax 
has been improved. Capital gains will not be indexed for inflation, a 
GOP proposal that would have mainly benefited the most wealthy of 
Americans and would have created enormous pressure on the budget in 
future years. Also gone is a GOP demand to pay less than the minimum 
wage to people who move from welfare to subsidized public and nonprofit 
jobs, and to deny coverage under worker-protection laws.
  Flaws: Unfortunately, the tax cut bill has a number of flaws.
  The bill waits far too long to increase the tax deduction for health 
insurance for self-employed people to 100 percent. I have worked to 
give farmers and small businessowners parity with the corporations they 
compete with. Corporations can take a 100-percent deduction for health 
insurance premiums. The self-employed should be able to do the same. 
This bill does not move the deduction to 50 percent until the year 2000 
and waits until 2007 to provide a 100-percent deduction. We can do 
better than that.
  The conferees also dropped the extension of the ethanol excise tax 
incentive. I will continue to work for this important measure as part 
of the highway reauthorization bill.
  The cigarette tax increase--which would discourage our young people 
from beginning a lifelong tobacco addiction--was reduced and delayed to 
the year 2000.
  And we must be vigilant in monitoring the impact of some of the tax 
cuts in future years beyond 2002, because some of the provisions that 
primarily benefit investors and the wealthy could explode in costs in 
the coming decade. We could have better used that money for provisions 
like the self-employed health insurance deduction and the ethanol 
incentive.


                               Conclusion

  On balance, both the spending cut package and the tax cut package are 
worthy of support. They will balance the budget without putting an 
undue burden on our most vulnerable people, take some important steps 
to address problems such as the lack of health insurance among our 
children, and give tax relief to working families who need it most. I 
am pleased to support this package.


                             POINT OF ORDER

  Mr. President, at this point, I raise a point of order that section 
1604(f)(3) of the bill, H.R. 2014, contains provisions that produce no 
change in outlays or revenues during the required period of time and, 
therefore, violates section 313(b)(1)(A) of the Congressional Budget 
Act of 1974.
  The provision which I make reference to would automatically assume 
that the tobacco tax increase, which is part of this bill, would be 
credited on behalf of the tobacco companies as part of any settlement 
that might be reached by Congress at a later date. This is a $50 
billion windfall for the tobacco companies, which would absolve them 
from responsibilities which they have publicly said that they will 
assume.
  This $50 billion would be taken out of programs that we think are 
necessary for public health, including enforcement of the agreement, 
public information campaign, smoking cessation clinics and the like.
  So, Mr. President, I raise my point of order at this time.
  Mr. ROTH addressed the Chair.
  The PRESIDING OFFICER. The Senator from Delaware.
  Mr. ROTH. Mr. President, I move to waive all points of order against 
the bill that lie under section 313 of the Budget Act. I do so because 
I rise in opposition to this point of order. The provision in question 
was agreed to at the leadership level in the context of the budget 
negotiations, and I have to point out that if this point of order 
succeeds, it will delay the bill and, once again, Congress and the 
Senate, in particular, would send the wrong message to the American 
people.
  By delaying the action, if this point of order were to succeed, it 
would mean

[[Page S8451]]

the legislation would have to be returned to the U.S. House of 
Representatives, acted upon there, before it could return here. I think 
that is a delay that the Senate does not seek to choose.
  I do not believe that we should delay this historic opportunity that 
is within our grasp and, for procedural reasons, I intend to vote 
against this point of order and urge my colleagues to do the same.
  Several Senators addressed the Chair.
  The PRESIDING OFFICER. The Senator from New York.
  Mr. MOYNIHAN. Mr. President, might I say that in the judgment of this 
Senator, the section that the distinguished Senator from Illinois 
wishes to remove is a meaningless provision, with no binding effect. I 
point out that the administration has agreed to it, and I offer the 
counsel, unsolicited but certainly well meaning, to my friend from 
Illinois, that if he feels he has an important issue here, may I 
suggest to him the issue would be a lot more salient in the months and 
years to come if it is in a statute. It can emerge and we can discuss 
it at that time. So I join the Senator from Delaware.
  Mr. KENNEDY. Mr. President, I support Senator Durbin's point of order 
under the Byrd Rule, which would strike from the tax legislation what 
should be called the ``Joe Camel Tobacco Loophole.''
  This loophole will allow the tobacco industry to credit the new 15-
cent cigarette tax against the $368 billion it must pay in injury 
claims and other health expenses under the so-called ``global 
settlement.''
  Over the next ten years, the loophole would add a $16 billion tax 
break for the tobacco industry, which peddles in deadly products that 
already addict 50 million Americans, and cost society $100 billion 
annually in medical expenses and lost productivity.
  The tobacco industry was also able to water down the 20-cent increase 
in the cigarette tax to fund children's health, despite the fact that 
it had overwhelming public support and passed the Senate last month by 
a vote of 80 to 19.
  The lesson is clear. Joe Camel still prowls the halls of Congress. 
When tobacco issues are discussed in the light of day, the American 
people win. When the debate moves into the back rooms, the tobacco 
industry's interests come first, and the public interest comes last.
  It's time that Congress stood up to the tobacco industry and said 
``no'' to Joe Camel and the Marlboro Man. This tobacco loophole has no 
place in this bill, and I urge my colleagues to support the Durbin 
point of order.
  Mr. LAUTENBERG. Mr. President, I rise in strong opposition to this 
motion to waive the Byrd rule.
  Mr. President, this has been a long budget process and we are near 
completion of these important bills. However we are still in the midst 
of a battle to save our kids from the health hazards and addiction of 
tobacco. This battle has just started. However, there are some in 
Congress who are hijacking this budget reconciliation process in an 
attempt to give the tobacco industry the upper hand in legislation 
implementing a global settlement of claims against the tobacco 
industry.
  We cannot allow this to happen. That is why I am opposing this motion 
to waive the Byrd rule. Mr. President, the distinguished Senator from 
Illinois has raised a point of order to a provision in the tax bill 
conference report that would credit the tobacco industry toward 
payments due on any legislative settlement with the revenue raised by 
the tobacco tax. This is ridiculous. This revenue is targeted toward 
children's health in this package. You can't have two uses for one 
revenue source.
  This is simply a nonsensical device designed to give yet another 
break to the tobacco lobby. Well, I will do everything I can to prevent 
this from happening in a global settlement.
  Mr. DURBIN addressed the Chair.
  Mr. ROTH. Mr. President, once again, I urge Members of the Senate to 
support my waiver. If my colleague is ready, I yield back the remainder 
of my time.
  Mr. MOYNIHAN. I yield back the remainder of my time.
  Mr. DURBIN addressed the Chair.
  The PRESIDING OFFICER. All time has been yielded back.
  Mr. DURBIN. Parliamentary inquiry, Mr. President.
  The PRESIDING OFFICER. State your inquiry.
  Mr. DURBIN. Mr. President, could the Chair inform whether this motion 
is debatable?
  The PRESIDING OFFICER. It was debatable, but time has been yielded 
back.
  Mr. DURBIN. Mr. President, I was seeking recognition during the 
course of debate. Does that give me----
  The PRESIDING OFFICER. The Senator from Illinois does not control the 
time. The time is under the control of the two bill managers.
  Mr. DURBIN. Thank you, Mr. President.
  Mr. MOYNIHAN. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the motion to 
waive all points of order with respect to the conference report on H.R. 
2014. The yeas and nays have been ordered. The clerk will call the 
roll.
  The legislative clerk called the roll.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The yeas and nays resulted--yeas 78, nays 22, as follows:

                      [Rollcall Vote No. 210 Leg.]

                                YEAS--78

     Abraham
     Allard
     Ashcroft
     Baucus
     Bennett
     Biden
     Bond
     Breaux
     Brownback
     Burns
     Campbell
     Chafee
     Cleland
     Coats
     Cochran
     Collins
     Conrad
     Coverdell
     Craig
     D'Amato
     Daschle
     DeWine
     Dodd
     Domenici
     Enzi
     Faircloth
     Feinstein
     Ford
     Frist
     Gorton
     Graham
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hollings
     Hutchinson
     Hutchison
     Inhofe
     Inouye
     Jeffords
     Johnson
     Kempthorne
     Kerrey
     Kerry
     Kohl
     Kyl
     Landrieu
     Levin
     Lieberman
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Mikulski
     Moynihan
     Murkowski
     Nickles
     Robb
     Roberts
     Rockefeller
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Warner

                                NAYS--22

     Akaka
     Bingaman
     Boxer
     Bryan
     Bumpers
     Byrd
     Dorgan
     Durbin
     Feingold
     Glenn
     Harkin
     Kennedy
     Lautenberg
     Leahy
     Moseley-Braun
     Murray
     Reed
     Reid
     Sarbanes
     Torricelli
     Wellstone
     Wyden
  The PRESIDING OFFICER (Mr. Abraham). On this vote the yeas are 78, 
the nays are 22. Three-fifths of the Senators duly chosen and sworn 
having voted in the affirmative, the motion is agreed to, and the point 
of order falls.
  Mr. MOYNIHAN. Mr. President, I move to reconsider the vote.
  Mr. ROTH. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. CHAFEE. Mr. President, I applaud the Republican leadership as 
well as the administration for putting together this tax bill, which is 
an integral component of the overall plan to balance the Federal 
budget. While I have not been an enthusiastic supporter of tax cuts at 
this time, there are provisions in this bill that I have vigorously 
sought to have enacted, and which will significantly help the people in 
my home State of Rhode Island, as well as the entire country.
  The centerpiece of the tax bill is the $500 per child tax credit. For 
a married couple with two children that's an extra $1,000 for them to 
spend as they see fit.
  The bill also includes several provisions that help families meet the 
cost of sending their children to college. Under the bill, low- and 
middle-income families can qualify for income tax credits of up to 
$1,500 to offset the cost of college tuition. To help families save for 
education expenses, the bill establishes education savings accounts. 
Contributions to these accounts are not tax deductible, but 
distributions are tax-free if used for tuition, room and board 
expenses.
  I am also pleased that the conferees chose to include an extension of 
the tax break afforded to employer-provided education. Under current 
law, an

[[Page S8452]]

employee is not taxed on amounts paid by an employer for educational 
assistance. The exclusion is limited to $5,250 annually. The anecdotal 
evidence indicates that this fringe benefit is most often utilized by 
lower income workers as a way to develop the skills necessary to land 
better paying jobs.
  This budget agreement includes several provisions that will encourage 
savings and investment. The most important of those provisions is the 
reduction in the tax rate on capital gains. The bill lowers the top 
rate on capital gains from 28 to 20 percent. For lower income 
individuals the rate on capital gains is reduced to 10 percent. At the 
turn of the century, the capital gains tax rate will be reduced further 
to 18 and 8 percent, respectively, for investors willing to hold their 
investments for at least 5 years.
  Last year, Congress created the work opportunity tax credit [WOTC] as 
a way to encourage employers to hire economically disadvantaged 
individuals. These are individuals who have little or no job skills and 
as a result are not attractive candidates for employment. The WOTC 
Program provides employers an income tax credit for a portion of the 
first year's wages paid to these individuals. The bill before us 
extends this program through June of next year.
  More importantly, this bill makes two improvements to the WOTC 
Program. First, the bill creates a two-tiered credit to make it easier 
for employers to utilize the program. This is necessary because many 
employers were finding it difficult to retain these employees for the 
full work requirement period, namely 400 hours, and as a result were 
losing the benefits of the tax credit. In many cases the employers were 
spending the money to train the employees only to have them leave 
shortly thereafter for higher paying jobs. Without some reward for 
their efforts, employers were simply dropping their programs.
  Under the new structure, employers would be eligible for a reduced 
credit if the employee works for at least 120 hours, even if the 
employee fails to meet the full 400 work hour requirement.
  The second change makes the work opportunity tax credit available to 
disabled individuals receiving SSI payments. These individuals were 
inexplicably excluded from participation when the WOTC Program was 
created last year, and I am glad this bill corrects that error.
  The agreement also includes two important provisions for small 
business men and women. It delays the implementation of the electronic 
funds tax payment system for 6 months to give businesses more time to 
get used to this new manner of paying their tax bills.
  The legislation also makes it easier for self-employed individuals 
who work at home to take an income tax deduction for that portion of 
the home used exclusively for business purposes.
  The bill also includes the repeal of the excise tax imposed upon boat 
diesel fuel. This tax, and the dyeing regime imposed by Treasury, has 
wreaked havoc with boaters across the country. It caused many retailers 
to choose between selling to recreational or selling to commercial boat 
owners, with the recreational boaters usually being left without 
service. This led to shortages in many parts of the country and 
numerous cases wee reported in which recreational boaters had to go far 
out of their way or travel many additional hours to obtain fuel 
legally.
  Finally, I am very pleased that this bill includes a version of 
legislation I authored that creates a powerful new tax incentive to 
encourage individuals to preserve open space. A serious environmental 
problem facing the country today is the loss of open space to 
development. All across the country, farms, ranches, forests, and 
wetlands are forced to give way to the pressures for new office 
buildings, shopping malls and housing developments.
  America is losing over 4 square miles of land to development every 
day. In Rhode Island, over 11,000 acres of farmland have been lost to 
development since 1974. These open spaces improve the quality of life 
for Americans throughout this great Nation and provide important 
habitat for fish and wildlife.
  In many instances, the loss of open space is simply the natural 
outgrowth of urbanization of our society. Other times it is the direct 
result of improper planning at the State and local levels.
  But frequently, the problem is created by the Federal estate tax. For 
those families where undeveloped land represents a significant portion 
of the estate's total value, the need to pay the tax creates powerful 
pressure to develop or sell off part or all of the land or to liquidate 
the timber resources on the land. Because land is appraised by the 
Internal Revenue Service according to its highest and best use, and 
such use is often its development value, the effect of the tax is to 
make retention of undeveloped land nearly impossible.
  The bill begins to address the problem caused by the estate tax. The 
bill includes a proposal that is modeled after legislation I introduced 
earlier this year along with Senators Baucus and Gregg. It excludes 40 
percent of the value of land subject to a conservation easement from 
the estate and gift taxes.

  In order to target the incentives under this bill to those areas that 
are truly at risk for development, the bill is limited to land that 
falls within a 25-mile radius of a metropolitan area, a national park 
or a national wilderness area, or within 10 miles of an urban national 
forest.
  Of course, as is the case with all major bills, there are a few 
provisions in this agreement that I do not support. One such provision 
is the restructured aviation trust fund taxes.
  As my colleagues know, currently the aviation trust fund is 
principally financed by a 10 percent ticket tax. High-cost airlines--
the so-called big seven--have been lobbying Congress for the past 2 
years to restructure the aviation trust fund revenues. The big seven 
argue that they want to restructure the fees so that the burdens of 
funding the Federal Aviation Administration are more fairly allocated. 
But this proposal does not do that. In reality, it is a thinly veiled 
attempt to shift a portion of their costs to other airlines--
principally low-fare airlines.
  Let me expose the folly of this new system. The big seven would have 
us believe that their system--which is more or less the proposal 
adopted by the conferees--is grounded in fairness. Yet, this new system 
does nothing to address the huge loophole under which they avoid paying 
the tax on their international flights.
  Let me explain. If Continental Airlines flies from Los Angeles to New 
York, stops for less than 12 hours, and then continues on to London, 
the new fee structure does not apply to that flight. In other words, 
the passengers on that flight do not pay the 7.5 percent ticket tax, 
nor do they pay the new head tax, notwithstanding the fact that this 
flight clearly utilizes the services of the Federal Aviation 
Administration as it flies completely across the country.
  It is particularly regrettable that the conferees have chosen to 
implement this new fee structure prior to the issuance of the report 
from the commission Congress established to study this matter. In 
October 1996 Congress directed that a commission be formed to assess 
the FAA's funding needs and the costs imposed on the system by each 
segment of the aviation industry. This report was originally scheduled 
for completion in April 1997, but its issuance was delayed until 
September. It is incomprehensible to me that the conferees would agree 
to take the unusual step of changing the makeup of the ticket tax 
before the commission's report was received.
  Mr. President, this is one aspect of this budget agreement that I 
hope we will revisit once the commission's report is received and can 
be reviewed.
  I also oppose the agreement's provision extending the diesel dyeing 
requirements to kerosene. Since 1995, there has been substantial debate 
about the proper tax treatment for kerosene. More than 90 percent of 
kerosene consumed in the United States is used for aviation purpose; 
accordingly, the fuel is currently classified and taxed as an aviation 
fuel.
  Kerosene is also blended during cold weather with diesel fuel and 
home heating oil to prevent those fuels from congealing; and it is 
treated, for tax purposes, as the fuel into which it is blended. Thus, 
if kerosene is blended with undyed diesel fuel, it is taxed as diesel 
fuel; if it is blended with dyed home heating oil, it is exempt from 
tax.
  This bill imposes a 24.3 cents-per-gallon excise tax on kerosene when 
it is

[[Page S8453]]

removed from the terminal, classifying it as diesel and subjecting it 
to the same tax and dye program.
  Because tankage in the Northeast is limited, terminals are likely to 
have space only for undyed kerosene. Such fuel is subject to tax when 
it is pulled from the rack; and, dealers who sell it directly as a 
heating fuel or as a blandstock for distillate, and farmers blending it 
as an off-highway fuel will be forced to apply for refunds of taxes 
paid.
  This proposal also raises safety concerns. The New England 
Association of Fire Marshals and the Consumer Product Safety Commission 
have raised health and safety concerns about the use of dyed fuels in 
unvented heaters. Most kerosene heaters have been certified by the 
United Laboratories and similar organizations as safe only if they burn 
clear, undyed fuel. Accordingly, there is little information available 
about the effects of dyed fuel on these heaters, and it would take 
several years to have them retested and recertified to burn dyed fuel.
  In closing, I would like to express my appreciation and admiration to 
the chairman of the Finance Committee, Senator Roth, who did a 
wonderful job of guiding this legislation to this point. Without his 
willingness to work with all members of the committee, and indeed the 
entire Senate, this bill would have had little chance of success.
  Mr. KERREY. Mr. President, I support this tax bill as a way to give 
working families tax relief and continue our economic growth.
  I'm delighted that the tax cuts for working families in this 
agreement were made more progressive by Democrats.
  I support estate tax relief targeted at family farms and small 
businesses as well as a phase-up in the self-employed health deduction 
to 100 percent.
  And I am pleased this agreement left out attempts by the other body 
to raise taxes on ethanol and make it too easy for employers to 
reclassify their employees as independent contractors. I would have 
been hard-pressed to support this agreement had the language on 
independent contractors survived knowing that having this provision in 
law would have had significant and harmful effects on the health and 
financial well-being of American workers. Consider that under current 
law, only 2 percent of independent contractors have health and 
retirement benefits, while 50 percent of private employees have those 
benefits--adopting the language proposed by the other body would surely 
have had harmful health and financial consequences for the American 
worker.
  Mr. President, I am pleased that a number of savings and investment 
incentives like expanded IRA's and education IRA's are included in this 
agreement. These provisions are good for what they are. However, I fear 
that the people who most need to generate wealth for their families--
middle- and lower-income people--will have the toughest time taking 
advantage of these provisions. That is why I am so sorely disappointed 
that the conferees chose not to include a robust form of KidSave in 
their final agreement. Indeed, given the option I would go further than 
KidSave by allowing taxpayers to keep a portion of their payroll taxes 
in personal savings.
  And I support the emphasis on education contained in this bill 
although I am not convinced the money we will spend on some of these 
initiatives is the most efficient or effective way to make sure more 
kids have access to higher education.
  Mr. President, in many ways voting for this bill is a close call for 
me. Much of what was good in the Senate Finance bill has been thrown 
overboard. And that bill, while complex, pales in comparison to the 
complexity of this bill.
  Still, I believe this bill will provide tax relief that working 
families need. I am especially pleased with the improvements Democrats 
secured to make this bill more progressive and in making this bill 
reach more working families. I'm also pleased by the emphasis on 
education in this agreement, if not by the details of that emphasis.
  So, Mr. President, while I intend to vote for this tax package, I am 
decidedly unenthusiastic about what we have not done in this tax 
package and in this balanced budget package overall: we have not taken 
the first steps toward long-term entitlement reform that recognizes the 
seismic impact the retirement of the Baby Boom generation will have on 
the budget, both in terms of its fiscal balance, the solvency of the 
programs that comprise our retirement safety net and the balance 
between mandatory and discretionary spending.
  Specifically, I am disappointed in two aspects of the tax bill.
  First, I am disappointed that the bill does not address what I 
believe is the most pressing challenge families face in a global 
economy: the need to build wealth.
  Mr. President, I ask my colleagues to take a step back from the 
rhetoric on this issue and consider the fact that increased income--
which is the object of these tax cuts--and increased wealth are very 
different things, and they are particularly different today because, in 
my analysis, the global economy is devaluing one--income--while 
enhancing the value of the other: wealth.
  Let me start with a set of definitions: Income is the regular inflow 
of resources on which we depend to pay our bills and live our lives. 
Wealth is the ownership of assets that gain in value.
  Anyone who's played the old board game Monopoly knows this 
difference. Most 10-year-old children who have played this game will 
tell you that you don't win by going around and around the board, 
collecting $200 every time you pass Go.'' You win by carving out some 
of that income to buy properties that grow in value. It seems to me, 
Mr. President, that focusing on working families' income--which is 
certainly important--while ignoring whether they have wealth is like 
trapping them in a game of Monopoly in which all we care about is 
sending them around and around the board, passing Go'' and collecting 
$200, while ignoring the fact that they don't have enough income left 
over to build a stake of ownership and get ahead.
  The difference may be best illustrated by the recent stock market 
boom and, just as important, who has benefited from it. Let me open 
with the simple proposition that those who own wealth in the stock 
market own more than a few shares in a mutual fund--they own a piece of 
our economy. They own a stake in it. When the economy succeeds, they 
succeed. And what they own--capital, and a stake of ownership in the 
means of production--is the asset that this economy is rewarding.
  Families need a stake of ownership, Mr. President, because I believe 
it is the principal factor that will determine whether the global 
economy works for them--because it rewards ownership of capital, the 
scarce factor of production that is in wide demand all over the globe--
or against them, because the expanding global labor pool means those 
who earn their income exclusively from work are facing more and more 
competition that is bidding the value of their services down.
  Wealth is also important in a global economy because it provides the 
security--for rainy days, for retirement--that a global economy 
requires. I do not believe that ownership of the means of production 
and ownership of a stake in our economy should be limited to the 
privileged few. I want every American to have access to it.
  I must say that therein lies my ambivalence toward the capital gains 
and estate tax provisions of this bill. I supported both, but I note 
for my colleagues' consideration that the estate tax only impacts 2 
percent of Americans who die each year. The other 98 percent do not 
have estates worth $600,000. I'd be willing to bet that a lot people in 
this country have only a fuzzy notion of what a capital gain is because 
they do not own capital. And I fear that we may have gone too far in 
rewarding people who generate income from capital to the detriment of 
those who generate income from getting up at 6 every morning and 
putting in an 8 or 10 hour day.
  And while I supported both of these provisions, I deeply regret that 
this budget does not address the ability of the other 98 percent of 
Americans to build estates and ownership of capital.

  Even as the importance of wealth is growing, the gap in who owns it 
and who does not is growing too.
  The question, Mr. President, is: Where does wealth come from and why 
do working families not have it? The answer is that wealth is built by 
saving and investing over a long period of

[[Page S8454]]

time, which requires disposable income that many families lack.
  I had hoped we would target tax relief toward freeing the disposable 
income that working families need. I have proposed doing so by cutting 
the biggest tax working families face: the payroll tax. I call this tax 
``The Forgotten Tax.'' I had lobbyists knocking on my door to discuss 
every arcana of tax law, but not once did someone knock on my door to 
talk about this tax. I hope we'll take a close look at it and talk 
about how this tax can be cut to give the working families on whom it 
imposes its greatest burden a way to generate wealth through personal 
savings.
  We missed another important opportunity to help families build 
wealth. KidSave, a term that is being bandied about to describe 
policies that are foreign to its purpose, would have converted the 
$500-per-child tax credit from one that increases consumption by $10 a 
week to one that allowed families to build a stake of ownership in the 
economy, which, as I have said, I believe is more important than 
increasing their income, as much as I support that goal. I believe this 
one provision, which was dropped, could have laid down the savings 
infrastructure that our children will need in the 21st century to build 
a stake of ownership in the economy.
  I am pleased that this bill would expand IRA's and allow parents to 
open higher education IRA for their children which would become IRAs in 
the child's name at age 30 if the child did not use them for higher 
education. However, the savings initiatives contained in this bill are 
voluntary and for most people they will probably not be ``sweet'' 
enough get the people who most need to build wealth, to do so.
  Second, I also fear this bill will come to be known as the Tax 
Complication Act of 1997. This tax bill is going to be a bear to 
administer and a bear for taxpayers to understand. As the Washington 
Post noted earlier this week, Conceivably an individual reaching 
retirement age could have an IRA with deductible contributions, 
nondeductible contributions, one rolled over from an employer plan and 
one of the new backloaded ones. As the Post dryly notes, calculating 
the required withdrawals and taxes would be ``an adventure.''
  As I am sure everyone in this chamber knows, not only are there 
different income phaseouts for the front and back-loaded IRA's in this 
bill, there is still yet another phaseout for rollovers from front to 
back loaded IRAs.
  I don't mean to single out any one provision for its complexity 
factor. Here is yet another: Your capital gains rate. Just what is the 
rate under this bill you might ask? That seems like a pretty 
straightforward question but not so fast.
  Assets held for zero to twelve months will be taxed under this bill 
at ordinary income rates--a top rate of 39.6 in other words. Assets 
held for 12-18 months and sold will be taxed at the current maximum 
capital gains rate of 28 percent. Assets held for eighteen months or 
more will get either a 20 percent, or ten percent rate. Assets disposed 
of between May 7 and July 29 and held for 12 months will get a 20 
percent rate.
  But wait, there is more. We have a new 5 year holding period rate. 
People paying taxes at the 15 percent rate would get an 8 percent 
capital gains rate on assets held for 5 years beginning now. People 
above the 15 percent rate would have to wait until the year 2001 to get 
the 5 year holding period going, could even take old assets and bring 
them up to current value without disposing of them, hold them for 5 
years, and get an 18 percent rate in the year 2006.
  Oh, and if you own commercial real estate, the rules are different as 
well. Under this bill, the depreciated portion of your real estate is 
taxed at 25 percent, the amount above that amount is at 20.
  If you are working, but not wealthy, and you have more than two 
children, you'll probably need to spend some of your child credit 
hiring someone to figure out your child credit. Under this bill, 
someone with one or two kids would get the child credit before their 
earned income tax credit. But if you have three or more kids, you would 
have the option of figuring your tax two ways: either take the credit 
before the EITC or take the credit up to your employee FICA and income 
taxes minus your EITC. At this point, as I understand it, you are no 
longer even receiving a child credit. If you get the child credit this 
way, you are getting a supplemental child credit, not, presumably and 
actual child credit.
  Just one more example. The education initiatives. Believe me, in 
order to figure them out, you are going to need a degree in accounting 
before you are able to do your own taxes. Under this agreement, the 
HOPE credit gives you a 100 percent credit up to $1,000 the first 2 
years, and 50 percent of $1,000 the second 2 years for ``eligible 
expenses.'' That is on a per student basis and it begins in January of 
1998. In addition, this agreement has a lifetime learning component 
which provides a 20 percent credit for up to $5,000 in expenses on a 
per family basis which in 2002 becomes a 20 percent credit against 
$10,000. That provision begins on July 1, 1998. The HOPE credit is 
indexed in 2001, the lifetime learning piece is not. Income limits for 
both are indexed in 2001.
  Having expressed those concerns, I do not want to underestimate the 
magnitude of the achievement. Continuing the job of balancing the 
budget will advance the goal of economic growth. The expanded reach of 
the $500-per-child tax credit means real relief for real families. The 
great American institution called the family farm will have a greater 
opportunity to stay in families. I repeat: I vote yes for what we have 
done here, for what we achieved, but with regret for the challenges we 
chose not to tackle. We have thrown a first down pass, and the cheers 
from the crowd are deserved. But a long distance remains to the goal 
line: a federal budget that can cope with the demographic challenges we 
face while still preserving our priorities as Americans.
  Mr. ROBERTS. Mr. President, I rise today to support--and reflect--on 
the Taxpayer Relief Act, which will be passed by the Senate tomorrow. I 
am pleased that at long last we are providing tax relief to our 
Nation's family farms and businesses and to many individual Americans. 
My philosophy long has been that if we can allow any American to keep 
one extra dollar of his or her hard-earned income, we have achieved a 
measure of victory.
  At the same time, I have serious concerns about major parts of this 
legislation.
  First, let me review some victories. As former Chairman of the House 
Committee on Agriculture, I helped steer Freedom to Farm legislation 
through Congress. It was an important step in returning agriculture to 
the free-market and removing the Government from the operation of 
family farms. However, that historic farm legislation will be 
successful only if we take steps on the other side of the ledger that 
give farmers the tools they need to compete. High on that list are 
capital gains and estate tax relief, which are included in this tax 
bill.
  I have received numerous letters and phone calls from constituents 
who purchased their farms and businesses 40, 50, or 60 years ago. These 
people want to pass their family farms and businesses to their 
children, but cannot because of burdensome capital gains and estate 
taxes. I have long argued that it is unfair to tax a family's income 
three times--once as income, once as capital gains, and once as an 
inheritance. Although this bill does not eliminate capital gains and 
estate taxes, the increased exemption for estate taxes and reduced 
capital gains rate will make it possible for numerous parents to pass 
their farms and businesses on to their children.
  I am also pleased we have achieved repeal of the AMT for deferred 
payment commodity contracts and income averaging. A farmer must deal 
with drought, floods, freezes, and insects, any of which can destroy or 
severely harm their crops. Thus, farmers often experience large 
fluctuations in income from year to year. These provisions provide 
important tools for managing these income fluctuations. While something 
is always better than nothing, I am disappointed that income averaging 
will only apply to the 1998 and 1999 crop years and not the full 
remaining 6 years of the farm bill.
  I am also pleased that the bill does not include the onerous House 
provisions that would have taxed the tuition

[[Page S8455]]

waivers received by graduate teaching and research assistants at 
universities throughout the country. Acceptance of these provisions 
would have sharply cut access to graduate school for many students, 
created teaching shortages, and greatly increased the cost of 
continuing important research projects.
  Mr. President, while I am happy to see these provisions included in 
the Taxpayer Relief Act, I also have serious concerns with several 
provisions of this bill.
  First, at a time when Americans have asked us to lower their tax 
burden and make the tax code less complex, this bill actually increases 
the complexity of the tax code. We have obtained a reduction in the 
capital gains rate. At the same time we have set up six different 
capital gains rates: 28 percent for collectibles; 25 percent for 
recaptured depreciation on investment real estate; 20 percent for all 
other capital gains, falling to 18 percent beginning in 2001 for assets 
held longer than 5 years; A 10 percent rate for those earning less than 
$41,200/year, falling to a rate of 8 percent in 2001 on assets held 
longer than 5 years.
  If you include the corporate capital gains rate, we now have seven 
capital gains tax rates. Only in Washington is an expansion from 3 to 7 
tax brackets called simplification.
  There are numerous examples where this bill will make the tax code 
more complex.
  High on that list is the incomprehensible maze of individual 
retirement accounts set up by the bill. There is no escaping the fact 
American families may need a tax lawyer to establish an IRA--but they 
most certainly will need a lawyer to sort through withdrawal of money 
from their IRA's.
  Additionally, this bill tells Americans: ``The Federal Government 
will reward you for having children. The Federal Government will reward 
you for limiting your income.''
  Have a child, get a $500 credit on your taxes. But if you are a 
family making over $110,000 per year you get none of the benefits. 
Nearly all of the bill's rewards, in fact, are subject to income 
limits.
  That is a clear message.
  That is more social engineering than tax policy.
  Could we achieve the same goal of tax reduction by spreading the cuts 
across the board to help every American taxpayer? You bet we could.
  Mr. President, we all agree with the goal of assisting families send 
their children to college. This bill provides several tax incentives to 
do that. But I must ask: ``Have we looked hard at these provisions to 
ensure they will not quickly inflate the cost of higher education so 
that any benefits to students and families are lost?''
  Finally Mr. President, I ask what is in this tax bill for those 
individuals who are not rich, who do not have large investments and 
savings, and who do not have children?
  I received a call this week from a constituent who works on the 
assembly line at Boeing Military Aircraft Co. in Wichita, KS. He labors 
side-by-side with another worker who earns a salary identical to his. 
However, his coworker is married, has two children, and paid $4,200 
less in taxes this past year than the single worker. This constituent 
commented that his coworker is now getting an additional tax break, 
while his taxes will not be lowered one penny by this tax bill. He was 
angry, upset, and wanted to know why his Government penalizes him for 
being single. Mr. President, I am not sure I have an answer.
  I received another call from a father of three college graduates. 
This man and his wife used most of their savings to put their children 
through college. He has heard about the $500 per-child-credit, tuition 
credits, and capital gains reductions. Yet, he had one very important 
question. How was this tax bill going to benefit him and his wife, 
since none of these benefits apply to them? These constituents are not 
unique. They speak for a large segment of decent, hard-working 
Americans who have been forgotten in this tax bill.
  These constituents have a particularly difficult time understanding 
why they are receiving no tax breaks under this bill, but someone who 
pays no income taxes can still receive the $500 per child credit as a 
refund towards their payroll taxes. My constituents want to know why 
these people are receiving a refund on their Medicare and Social 
Security taxes, but will still receive the same benefits when they 
retire, as those Americans who are working hard to make a living but 
who receive few benefits under this bill. Why are we failing to give 
tax breaks to people who pay taxes, while giving refunds to those who 
pay nothing? Why are we using a tax cut bill to develop and expand a 
new form of welfare?
  I do not argue that families with children do not deserve tax breaks. 
Everyone in America deserves a break from their onerous tax burden. 
Unfortunately, in our hurry to give tax breaks to families and people 
who do not even pay income taxes, we forgot about those middle-income 
Americans who are single, or married with no children, and who work 
just as hard to make ends meet as their counterparts with children.
  Mr. President, I will vote for the Taxpayer Relief Act because it 
contains many tax relief provisions long needed by American taxpayers.
  However, I would urge my colleagues to begin thinking seriously about 
the need to return to these issues as soon as next year and make new 
attempts to simplify our tax laws and make them fair to all classes of 
taxpayers.
  This tax bill is far from the best we can do.
  A good tax bill should not promote disparity between economic 
classes, it should not promote social policies, it should not expand 
welfare, and it should not create additional employment for CPA's and 
tax lawyers.
  Mr. LEVIN. Mr. President, I will support this bipartisan tax 
reduction bill. This package has the right priorities, emphasizing 
education for young people, health coverage for children, and tax 
relief for working families. It represents a significant improvement 
over the bill originally passed by the Senate, which I opposed.
  The improvements in the bill over the Senate bill are numerous. For 
instance, the $500-per-child tax credit has been greatly expanded to 
include more working families with children. Last week, I highlighted 
several Michigan families that would receive significant benefits under 
the $500 per child tax credit in the President's plan but would receive 
no benefit under the House or the Senate bills. The compromise 
agreement grants those Michigan families substantially the same 
benefits that the President's plan would. One of those working families 
is the Ginn family from Saginaw, Michigan, with an income of $25,000 
per year, who would receive no benefit under the $500-per-child credit 
in the Senate bill but would receive more than $1,200 in tax credits 
under the compromise version. Another family is the Shannon family, 
from Livonia, MI, with an income of $18,460 a year, that has a 1\1/2\-
year-old son. They too would receive nothing under the child credit in 
the Senate bill but would receive the full $500 under the compromise 
version.
  Mr. President, I ask unanimous consent that a summary of the tax 
benefits for six families from Michigan illustrating the improvements 
in this bill be included in the Record following my statement.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Mr. LEVIN. The education tax cuts that will make college more 
affordable for millions of families have been increased by nearly $7 
billion over the Senate bill under the compromise agreement. The 
legislation includes the $1,500 HOPE Scholarship tax credit which is 
available for students in their first 2 years of college. It also 
includes a provision that was not included in the Senate bill to give a 
20-percent tuition deduction for a student's junior, senior, and 
graduate educations. There is an extension of the tax exclusion for 
employer-provided education assistance for 3 years and a welcome 
reinstatement of the student loan interest deduction which allows those 
paying back their loans to deduct up to $2,500 per year.
  I am also pleased that the President insisted that the Empowerment 
Zone concept that has helped revitalize Detroit and other Michigan 
communities be added to the bill.
  While there is much to applaud about this legislation, it's not the 
tax bill I would have written. While the Treasury Department and the 
Joint Tax

[[Page S8456]]

Committee have been unable to supply an analysis of the distribution of 
the benefits of these tax cuts in time for this vote, I believe that 
more of the benefit of this bill is directed to those who need it 
least. I would have preferred a tax bill which targeted even more of 
its benefits to working families.
  The Corporate Alternative Minimum Tax [AMT] has been significantly 
weakened in this bill and a significant number of profitable companies 
will pay no tax as a result of this change. The AMT was added to the 
Tax Code to ensure that profitable companies pay some tax. While the 
capital gains holding period was lengthened by 6 months, I would have 
preferred a tax bill which more narrowly targeted the capital gains tax 
cut.
  There is one more area of this bill which could use some improvement. 
While many of the tax provisions that I have already mentioned I fully 
support, this bill as a whole does not do anything to simplify the Tax 
Code. In fact, it is likely to add a significant number of pages to the 
code and add a significant amount of time to the time it takes for 
taxpayers to prepare their return. I hope that in the near future we 
can improve the Tax Code and make it and the IRS easier to deal with.
  However, Mr. President, even with its imperfections, this bill is an 
improvement over both the House and Senate passed bills, includes more 
of the President's and Democrats' priorities emphasizing education for 
young people, health coverage for children, and tax relief for working 
families. For those reasons, I will support it.

                               Exhibit 1

     Michigan Families Gain Child Tax Credit Under Budget Agreement

                 (Source: Office of Senator Carl Levin)


                      Melissa Shannon, Livonia, MI

       Melissa Shannon is a full-time flight attendant for 
     American Trans Air at Detroit Metro Airport, currently 
     earning $18,460. She has one son, age 1\1/2\.
       Value of child credit: House proposal: $0; Senate proposal: 
     $0; Clinton proposal: $500; Budget Agreement: $467.


                       Cheryl Campbell, Flint, MI

       Cheryl Campbell works at Compensatory Education center as a 
     parents' assistant, currently earning $20,000. She is a 
     single parent with two children, ages 10 and 12.
       Value of child credit: House proposal: $0; Senate proposal: 
     $0; Clinton proposal: $900; Budget Agreement: $900.


                 Kirt and Cora Harold, Grand Rapids, MI

       Kirt Harold is a cosmetologist and Cora Harold does 
     accounting for a shipping company in Grand Rapids. Their 
     combined family income is $21,000. The Harolds have 2 
     children, ages 3 and 4.
       Value of child credit: House proposal: $0; Senate proposal: 
     $0; Clinton proposal: $525; Budget Agreement: $525.


                       Cathy Smith, Escanaba, MI

       Cathy Smith is a computer operator in Escanaba who 
     currently earns $18,512. She is divorced with two children, 
     ages 9 an 10.
       Value of child credit: House proposal: $0; Senate proposal: 
     $0; Clinton proposal: $677; Budget Agreement: $677.


                        Valley Ginn, Saginaw, MI

       Valley Ginn works as a secretary at the Saginaw Fire 
     Department. She has three children, ages 17 months, 28 
     months, and 7 years.
       Value of child credit: House proposal: $0; Senate proposal: 
     $0; Clinton proposal: $1,207; Budget Agreement: $1,207.


                     Liane Hagerman, Boyne City, MI

       Liane Hagerman works as a public health technician at the 
     Northwest Michigan Community Health Agency, currently earning 
     $21,000 annually. She has three children, ages 10, 15, and 
     18.
       Value of child credit: House proposal: $0; Senate proposal: 
     $0; Clinton proposal: $653; Budget Agreement: $653.

  Mr. GRASSLEY. Mr. President, I am privileged to be in the Senate 
today to support passage of this historic legislation. In my career as 
a Senator, a Congressman, and a State legislator, I have participated 
in thousands of bills. Posterity will probably remember only a select 
few of them. Of all, I expect, and hope, those who keep apprised of 
Congress will remember this tax freedom reconciliation bill among those 
remembered most fondly and most often.
  This bill is not only about the Government living within the Nation's 
means, but about the Constitution itself. Two years ago, the Congress 
proved that it could pass a balanced budget. It also learned that the 
Constitution anticipates a third participant in the legislative 
process, the executive branch. So, we arrive here today not only having 
anticipated the needs of the President, we have included the executive 
branch as an active participant throughout the legislative process.
  The words of the Constitution do not proscribe that Congress and the 
President should enter into an agreement defining legislation before it 
is actually written. Furthermore, the Constitution does not proscribe 
that the Congress should advance legislation with the continued advice 
of the Office of the President, the Treasury Department, and the Office 
of Management and Budget. The words themselves simply allow the 
President the express authority to either enact or veto the bills that 
we in the Congress produce.
  However, the partnership forged between the President and Congress 
prove that the President can, and should, make his intentions known 
throughout the legislative process. Since the President can veto any 
bill that is sent to him, the process should allow that their contents 
of bills should not come as a surprise. But, it is not the President's 
reaction that should be avoided. It is the surprise of taxpayers. As 
the legislative process has evolved, too much progress occurs behind 
the closed doors of committees and caucuses. The people of the Nation 
have come to think of the legislative process as a black box. The good 
intentions go in one side, but something wholly unknown can come out 
the other. The President has always had the authority to veto and the 
Congress the power to reconsider.
  But, in modern times, our legislative processes have become so 
cumbersome that Congress leaves itself without the days necessary to 
reconsider huge reconciliation bills. Therefore, we have effectively 
revamped the legislative process by allowing the President to play an 
earlier role.
  Some might say that this is a significant change. Since the 
Constitution does not direct such a partnership, it must be implied 
therein. Our Constitution intends that we pass laws, not only bills.
  Therefore, I turn to the product of this new process: The tax freedom 
reconciliation bill of 1997. Earlier today, we passed the balanced 
budget reconciliation bill. The latter is the first spending bill that 
anticipates a balance in almost 30 years of gridlock. The former is the 
first tax bill in 16 years that actually cuts taxes. Together, they are 
the first omnibus reconciliation legislation in 4 years that will 
become law.
  Presently we are considering the tax freedom reconciliation bill. I 
am particularly proud of several provisions contained in this bill. 
Some of these sections have national perspectives like both the renewed 
income tax deduction for interest on student loans and estate tax 
relief. Others have a more regional effect such as the law turning back 
the unauthorized IRS expansion of the alternative minimum tax against 
farmers. All, however, provide relief to hard-working families in the 
areas of education and income security.
  For education, this tax-relief bill renews the deductibility of 
interest incurred on student loans. I have introduced that particular 
bill in every Congress since it was repealed in 1986. In the last two 
Congresses I was accompanied by my friend from Illinois, Senator 
Moseley-Braun. Today, I am happy to announce our success.
  When Americans think of investing money, we think of investing in 
things--machines, natural resources or businesses. This student loan 
provision is an investment in human capabilities and talents. I would 
like to do even more than what is offered in this provision. But 
restoring the deductibility on the interest paid on student loans sends 
a message to college students across the country. Their talents are 
worth the investment of dollars.
  Students need to know the Federal Government and the Nation value 
their contributions. Understanding this, I believe they will have a 
greater appreciation of the effort necessary to successfully complete a 
higher education. We are clearly sending the message that the Congress 
recognizes the financial responsibility students undertake, and we are 
willing to do what we can to ease that burden.
  For farmers, I am pleased to announce that another of these new laws 
will forever repeal the unauthorized IRS advancement of the alternative 
minimum tax against traditional farmer deferred commodity contracts. 
The President may offer his views on legislation, but the IRS does not 
have unilateral power to legislate on its own.

[[Page S8457]]

 This is good news for family farmers and rural America. It reaffirms 
the intent of Congress that family farmers should be able to continue 
receiving the use of the cash method of accounting not limited by the 
AMT. The IRS decision last fall to unilaterally change a 16-year-old 
tax policy for these deferred payments. The IRS was dead-wrong. Sixty-
three of my colleagues joined my legislation with Senator Dorgan as 
solid proof.
  In addition to setting the record straight, turning back the AMT for 
farmers highlights the larger problem we face when the IRS disregards 
the intent and the will of Congress. Here, we had a tax policy in place 
for 16 years, and suddenly, the IRS decides to make a 180 degree turn, 
which caused a great deal of havoc and concern for thousands of 
taxpayers. But, in order to return the law to its original intent, we 
had to come up with hundreds of millions of dollars as an offset, 
because of the upside-down way we do revenue estimates around here. So, 
I hope the Joint Committee on Taxation will be addressing the revenue 
estimation problem in the near future.
  I am also proud of the future for estate tax relief for families. 
When thinking about estate taxes, you have to always keep your eye on 
the ball. Estates do not pay estate taxes, surviving families pay 
estate taxes. In this bill we do a number of things for death tax 
reform. All of these new laws are based on legislation that I 
introduced with my friend from Montana, Senator Baucus. Twenty 
cosponsors joined in our bill S. 479, the Estate Tax Relief for the 
American Family Act. It became the estate tax relief legislation 
embodied in this reconciliation bill providing over $675,000 of new 
relief.
  In current law, the general estate tax exemption is $600,000, but 
that number is more than $200,000 behind the rate of inflation. In 
nearly every area of my State and the Nation, we saw in the past decade 
estate tax ultimately confiscate many family farms. Estate tax reform 
is simply about fairness and equity for families.
  We've heard some make the faulty argument that the estate tax only 
affects a small percentage of taxpayers. Well, the point they leave out 
is that many other thousands of taxpayers have to waste a great deal of 
money in order to plan their estate so it will remain operational and 
in the family.
  In addition, without the relief under this bill, the number of those 
affected by the estate tax would increase substantially in the next 5 
to 10 years.
  Let me also add that I strongly support estate tax relief because it 
directly helps preserve our natural land. Our estate tax relief is very 
pro-environment simply because it helps keep family farms operational 
and defers the danger of over-development by urban activities.
  In this bill, capital gains tax relief is the partner of estate tax 
reform. Capital gains tax relief is similarly vital to my State of 
Iowa. A disproportionate amount of farmland is held by older 
landowners. To illustrate, studies in my state of Iowa show that 42 
percent of farmland is held by taxpayers over the age of 65. Last year, 
Iowa State University conducted its annual farm life survey. It found 
that in the next 5 years, 21 percent of Iowa farmers are planning to 
retire. This high rate of those leaving farming raises important 
questions about who will be the next generation of Iowa farmers.
  Some of those farmers who retire will want to hold onto the land and 
maybe rent it out. Many others want to sell the land, move to town, and 
be fully retired. Unfortunately, the capital gains tax has locked them 
on the farm. I support an even larger reduction in the capital gains 
rate. But, the reduction in the bill is certainly a very positive step 
in the right direction.
  Finally, I want to talk about the expanded availability of tax 
supported individual retirement accounts. With the constraints of the 
Tax Code reduced, we will have more people saving for their 
retirements. Homemakers will be able to save $2000 per year tax-free 
regardless of the tax free retirement program offered to the working 
spouse. These new pro-saving laws will reduce the strain on the Social 
Security system.
  This Congress produced all of this relief for families by using 
bipartisanship and cooperation with the executive branch. This 
cooperation was not expressed in so many words of the Constitution, but 
it must certainly have been implied.
  Thank you Mr. President. I yield the floor.
  Mr. ROCKEFELLER. Mr. President, before casting my vote for this tax 
portion of the budget plan, I want to comment on the aspects that are 
of most concern to me.
  The basic point I want to emphasize is that my vote for both the 
spending bill and this tax bill that make up the balanced budget and 
tax plan is the result of weighing its merits against its flaws. The 
fundamental job for Congress this year has been to agree on a plan to 
balance the budget, which is the main objective of the bills we are 
approving this week. Unlike the Republican budgets that I opposed over 
the last 2 years, this plan is the result of bipartisan negotiations 
and contains real benefits and important compromises in the interest of 
West Virginians and all Americans.
  At the same time, it has been clear that the only way we could finish 
the job some of us started in 1993, to balance the budget and start 
dealing with future priorities, was to find middle ground. I recognize 
that I cannot write or cause the passage of the budget plan that 
reflects exactly how I would chart Medicare's course, design the 
childrens' health insurance program, target tax relief, or address 
other priorities for West Virginians. Instead, I have worked hard in 
the recent months to influence these parts of the budget and make the 
best possible case for the approach I think is fair and balanced.
  The spending plan approved this morning and the tax bill before us 
today are improvements over the extreme Republican budgets that were 
rejected in the past 2 years and over the earlier versions of these 
very bills. With the many aspects that will benefit West Virginians and 
address national priorities, I made the decision to vote for both 
bills.
  The crucial part of the bill before us is the fact that it will 
provide tax relief to 27 million hardworking American families who are 
responsible for raising over 45 million children under the age of 17. 
Today, Congress joins the President to give those families a per-child 
tax credit much like the one that the bipartisan Children's Commission 
unanimously recommended when I chaired that commission 7 years ago. We 
are delivering real tax relief to American families so that they can 
share in the benefits of our sharply declined, and soon to be 
completely eliminated, deficit. That is an achievement I think we can 
be proud of, particularly because this tax conference report will 
benefit 5.9 million lower income families who were left out of the 
Senate-passed tax bill. The fight to make the child tax credit fairer 
was won by the President and Democrats who refused to ignore the 
millions of families struggling the hardest to provide for their 
families. Winning, improving the child credit so it is extended to more 
American families is important because it means we will more fairly 
distribute the benefits of the tax cuts in this bill than under the 
initial tax plans passed in Congress.
  I am pleased that I can report that 25,000 more West Virginia 
families will benefit from the child tax credit as a result of the 
changes in the conference report--changing the stacking order of the 
child credit, now placed before the EITC, and its partial refundability 
for families with three or more children. It is predominantly for that 
reason that I will cast my vote in favor of this tax package. Improving 
the child credit so it reaches more families, the families who need the 
most help to buy their children shoes, pay the mortgage, or deal with 
an unexpected medical expense, is a major victory in this tax bill. 
With this important improvement, I can support this tax package. The 
substantial dedication of funds to provide health insurance to about 
3.4 million of the 10 million uninsured children in our country--
totaling $24 billion in new dollars for kids' health--is another major 
reason to vote for this bill. The additional financing for kids' health 
comes from a hike in the tobacco tax. I think that is a smart way to 
pay for this new spending on children's health. I am deeply 
disappointed that we did not insist on a meaningful benefit package for 
those children, but I will be back another day to fight to improve that 
provision.

[[Page S8458]]

  But I don't want to cast my vote in favor of this 5-year budget bill 
without making it perfectly plain that I have serious worries about the 
long-term costs of some of the tax cuts in this bill. Certain 
provisions could be a potential tax timebomb because of how their costs 
explode in the 5 years following the 5 years in this budget, sometime 
after 2002. The explosion of costs in what we refer to as the 
outyears--years after the first 5 years of the budget--of the 
provisions that benefit the wealthiest Americans are very worrisome to 
me. I have to honestly wonder whether or not we will realistically be 
able to retain them. The long-term costs of providing such generous 
reductions in tax rates for estates and gifts, capital gains, and the 
expansion of individual retirement accounts [IRA's] may prove too 
expensive to sustain. I cite these particular provisions because they 
are the ones that score as relatively small costs in the first 5 years 
of this budget, but are projected to multiply 10 and 20-fold in the 
second 5 years, according to the scoring of both the Joint Committee on 
Taxation and the Treasury Department.
  Consider these numbers--estate tax relief costs $5.9 billion in the 
first 5 years and jumps to $33 billion in the second 5 years; capital 
gains relief scores as if it saves $123 million in the first 5 years 
but the cost of that relief increases to $20.2 billion in the second 5 
years; and the IRA expansions cost $1.8 billion in the beginning of 
this agreement, but rise precipitously to $21.1 billion in the next 5 
years. Those are enormous increases, and I worry that we cannot afford 
to include such narrowly targeted tax relief over the long term when we 
don't know how healthy our economy will be in the year 2002. We may 
well have to revisit these benefits and reconsider whether they are 
worth retaining. I would be thrilled if our economic growth and 
expansion continued at such a pace that we do not have to revisit this 
work, but I want my colleagues to know that this is one of my worries 
about enacting this tax bill.
  I remain very confident that over the next few years we have a unique 
opportunity to provide some tax relief to many Americans --and well 
understand the promise of that relief helps us deliver an agreement to 
balance the budget. At the same time, we are plowing $40 billion into 
education tax credits to help 5 million students with a $1,500 HOPE 
scholarship to make the first 2 years of college universally available 
and a 20 percent tuition tax credit for college juniors, seniors, and 
graduate students, along with working Americans to pursue lifetime 
learning and get the skill upgrades they need to compete in a changing 
economy. This level of tax support for education will help us prepare 
our children and our workforce for the new century. I congratulate the 
President for holding firm to his commitment.
  I am hopeful that both budget bills headed for the President's 
signature will make the steps forward that are being promised and 
celebrated today. I know that many provisions will directly benefit 
West Virginians in key areas. But I also urge everyone in Congress to 
keep a careful watch on the results of both bills, and maintain a 
commitment to correcting anything that may go wrong and budgetary 
effects that may go awry. Let's do our best to achieve the good 
promised in these bills, and work to make sure that the legacy of this 
legislation will be something we can continue to praise in future 
years.


                       air passenger tax formula

  Mr. MURKOWSKI. Mr. President, there are many elements of the tax 
package that I strongly support including the children's tax credit, 
the reduction in capital gains, and the first step in estate tax 
relief. For those reasons, I will vote for the tax package.
  However, I want to take a moment to discuss with my colleagues what I 
believe is a fundamental inequity in the structure of the package. What 
I am referring to is the new air passenger tax formula. The conferees 
rejected the Senate's approach, which would have maintained the current 
flat 10-percent tax and instead adopted a dual tax structure that 
imposes both a flat tax and per-segment, per-passenger tax.
  This new formula fundamentally discriminates against low-fare 
carriers, especially those who fly smaller aircraft that make multiple 
intermediate stops. The new formula will have an especially detrimental 
effect on flights to and from the lower 48 from Alaska and Hawaii.
  For several years, Congress has recognized the unique travel 
circumstances faced by citizens of these two noncontiguous States. In 
reality, the only way to get to Alaska and Hawaii is by air. And once 
you arrive in Alaska or Hawaii, air travel is often the only suitable 
way to get around.
  Unfortunately, the new passenger tax formula fails to recognize our 
States' strong reliance on the airplane. Passengers in small 
communities like Ketchikan could see their air tax bill jump by 30 to 
40 percent when the new formula is fully phased in. That is simply 
unfair to Alaskans, who already must endure close to the highest cost 
of living of any State.
  Moreover, the new structure has a hidden timebomb that would explode 
if we see a spike in inflation. Not only is the head tax indexed for 
inflation, but the special $6 departure fee that is only imposed on 
flights to and from Alaska and Hawaii is also indexed. What this means 
is that every year, flights to Alaska and Hawaii are guaranteed to see 
a double tax hike, whereas flights within the lower 48 will only see a 
tax rise on the per-passenger fee.
  I think that is fundamentally unfair and it is my intention to 
introduce legislation that will reinstate the current air tax structure 
for flights to Alaska and Hawaii.
  Mr. AKAKA. Mr. President, I echo the sentiments of my colleague from 
Alaska. The aviation provisions in this tax bill are unfair to 
residents of and visitors to Hawaii and Alaska and will have a 
disproportionate impact on carriers that serve our States.
  The bill fails to recognize that the 49th and 50th States are 
fundamentally different from the rest of the Union in our heavy 
reliance on air transportation. As the only noncontiguous States, 
Hawaii and Alaska are, for all practicable purposes, accessible from 
the continental United States only by air. Furthermore, for different 
reasons, travel within Hawaii and Alaska is feasible only by commuter 
airline. In effect, Alaska's and Hawaii's air routes serve the same 
purpose as other States' highway systems.
  The pending measure would abrogate a long history of congressional 
support for our States' special aviation needs--needs which are 
embodied in current law--by imposing a per segment charge on flights 
to, from, and within Hawaii and Alaska. This new tax discriminates 
against the low-fare, short-haul carriers that serve the people of our 
States as well as the larger carriers that maintain our communications 
links with other States.
  Carriers that serve Hawaii can ill afford this additional tax burden; 
the impact is especially heavy on our local commuter airlines. The 
taxes of Hawaiian Airlines and Aloha Airlines alone will rise by as 
much as $7.5 million and $6 million, respectively, in the next year as 
a result of the new segment fee.
  Mr. President, I appreciate the conferees' desire to make excise 
taxes reflect usage of the air traffic system. But I do not believe 
that the conferees fully understood the implications of the segment tax 
with respect to states whose residents and visitors are wholly reliant 
on air service for intrastate and interstate travel.
  This is clearly an issue that deserves further study. Certainly this 
is an appropriate topic of review for the Mineta Airline Commission. 
Should the tax bill pass, I hope that Members of this body would agree 
to revisit this issue at the earliest opportunity. In any case, I will 
join Senator Murkowski and my other colleagues from Hawaii and Alaska 
in supporting legislation to restore the current tax treatment of our 
two States.
  Mr. STEVENS. I also share the concern expressed by my colleagues 
about the new air travel segment fee in this bill. I regret that the 
Senate was not able to sustain its position of a simple extension of 
the 10 percent ticket tax in the conference committee.
  We had a vigorous debate last year over financing the Federal 
Aviation Administration in the Senate Commerce Committee on another 
congressional committees. We decided to establish the National Civil 
Aviation Review Commission to examine FAA's true funding needs and 
various mechanisms for raising the revenues to meet those needs.

[[Page S8459]]

  The Senate and the administration proposed extending the ticket tax 
during this budget debate to allow the commission to do its work.
  The new fee undercuts the work of the commission by prejudging their 
decision. This is not the way public policy should be made, especially 
on a matter of such direct importance to the pocketbooks and the safety 
of the American public.
  Mr. INOUYE. Mr. President, I share the concerns of my colleagues from 
Alaska and Hawaii regarding the new airline ticket tax formula. I, like 
Senators Murkowski, Stevens, and Akaka, am distressed that a bill that 
has so many important provisions that will benefit the Nation and 
citizens of Hawaii, badly misjudges the need for and importance of air 
transportation in both Alaska and Hawaii.
  Hawaii, unlike any other State in the Union, is completely isolated 
from any other landmass. In terms of interisland/intrastate travel, my 
State is totally dependent on air transportation. Maintaining the 
stable, low-fare air transportation system we currently have is 
essential to the State of Hawaii. Similarly, we must also maintain a 
low-fare environment to stimulate the influx of tourists. Tourism is 
Hawaii's No. 1 industry. Given this utterly unique feature of our 
State, I am most disappointed that this bill imposes not only a segment 
tax on our citizens who must travel between the islands to conduct 
daily business and to visit family members, but also imposes the 
segment tax, an excise tax and a departure tax on passengers coming 
from any other State in the Union to Hawaii. According to the local 
carriers in the State of Hawaii, in 1998, interisland customers would 
pay an additional 16 percent in taxes, increasing to 54 percent in 
2003. No other State, other than Alaska, will face fare increases as 
significant as those which the new legislation will impose on the 
residents and tourists of Hawaii. We must recognize that Alaska and 
Hawaii are unique and must accommodate these States' dependence on air 
travel in legislation that impacts the primary means of commerce on our 
States.
  I am pleased that Senator Murkowski plans to introduce legislation to 
rectify this situation and I will strongly support him in those 
efforts.


                               tiaa/cref

  Mr. MOYNIHAN. Mr. President, under the Taxpayer's Relief Act of 1997, 
the Teachers Insurance and Annuity Association [TIAA] and the College 
Retirement Equities Fund [CREF] are taxed under the same regime as life 
insurance companies. However, TIAA and CREF are separate companies with 
different structures and operations.
  TIAA is a nonprofit, legal reserve life insurance and annuity 
company. CREF, on the other hand, is a management investment company 
registered with the SEC under the 1940 act. CREF was organized in 1952 
under a special act of the New York Legislature. CREF predates the 
existence of separate accounts and in fact served as the model for the 
variable annuity products offered today by life insurance companies 
through separate accounts. No portion of a participant's pension 
contribution to CREF pays for guarantees or the maintenance of 
reserves.
  In light of the differences between TIAA and CREF, I would like to 
ask Chairman Roth, the distinguished chairman of the Finance Committee 
if he would be so kind as to comment on the intent of the bill as it 
applies to the taxation of CREF.
  Mr. D'AMATO. Mr. President, 2 million college faculty participants--
260,000 in my State of New York--rely on TIAA and CREF pensions to 
provide retirement security. Participants know when they choose CREF, 
every contribution dollar goes to the retirement annuity accumulations, 
or payout company, CREF offers no guarantees nor does it maintain 
contingency reserves. Yet CREF performs functions similar to a separate 
account of a life insurance company by allowing retirees to receive 
variable annuity payouts.
  I would like to join Senator Moynihan and ask Senator Roth, the 
distinguished chairman of the Finance Committee, to comment on the 
intent of the bill concerning the taxation of CREF?
  Mr. ROTH. First, I would like to say that I joined my distinguished 
colleagues, Senators Moynihan and D'Amato in opposing the repeal of the 
tax exemption for TIAA and CREF in conference. However, the Senate did 
not prevail.
  In light of this unfortunate result, I believe the intent of the bill 
is that CREF should be taxed consistent with its unique structure and 
apart from TIAA.
  Mr. REED. Mr. President, I rise in support of the conference report 
on the tax relief package. I believe the conference report represents 
significant progress from previous efforts to provide tax relief for 
hard-working American families that are struggling to pay their bills, 
educate their children, and save for retirement. As one who voted 
against the previous Senate version of the tax cut bill, I commend the 
conferees and the administration negotiators who worked to address some 
of the concerns that I and others expressed with the previous 
legislation to develop this compromise.
  However, I must also express strong concern with several provisions 
that remain in the bill. I believe that the provisions related to 
capital gains taxes, IRA's, and estate taxes unfairly benefit the 
wealthiest Americans, and threaten to upset the fiscally responsible 
decisions, such as passage of the 1993 deficit reduction package, that 
enabled us to reduce the deficit to its lowest point as a percentage of 
GDP since 1974. However, when considered in the context of the larger 
effort at bipartisan compromise and the willingness to expand 
healthcare coverage to millions of children, I believe this legislation 
presents a good deal for many working American families.
  In particular, the tax cuts contained in the conference report 
provide a greater amount of tax relief to middle income Americans than 
previous versions of this bill. For example, under the bill passed by 
the Finance Committee, the second lowest 20 percent of income earners 
would have experienced a tax increase, whereas under the conference 
report, these Americans would enjoy a tax cut. Although I still have 
concerns that a substantial share of the tax cuts will go to the 
highest income Americans, these concerns are counterbalanced by the 
fact that middle-income Americans will enjoy significant tax reductions 
and expanded educational incentives which were not as prominent in 
prior versions of this bill.
  As I have stated throughout the debate on this bill, I have 
reservations about provisions in the bill related to the capital gains 
tax, new backloaded IRA's, and the estate tax. Particularly disturbing 
is the fact that these tax reductions, which come at a significant cost 
after 2002, will almost exclusively benefit the wealthiest Americans. 
For example, the Joint Tax Committee has estimated that three-quarters 
of Americans receiving capital gains income are households that earn 
over $100,000 annually. Similarly, only 1.6 percent of estates are 
valued high enough to qualify for capital gains increases. Meanwhile, 
these tax cuts will cost $75 billion over 10 years.
  Beyond favoring the wealthy, I am concerned that the cost of these 
tax cuts, many of which are backloaded, will explode in the years after 
2002 and ultimately upset the progress we have made on deficit 
reduction. These concerns are supported by the 10-year revenue 
estimates recently released by the Joint Tax Committee which suggests 
that the cost of this tax bill will be $275 billion over 10 years. This 
level of revenue loss may prove difficult to sustain, and I would hope 
my colleagues will protect vital investments like education and 
infrastructure if difficult economic times arise.
  At the same time, I believe that the conferees have made significant 
progress on the education tax provisions included in the bill. Of 
particular note is the decision to extend education tax reductions for 
the third and fourth years of a college education. The Finance 
Committee-passed tax bill did not extend benefits to years three and 
four, and I believed this was a major shortcoming of that legislation. 
By providing benefits for the duration of the average college 
education, I believe the provisions included in the conference report 
better reflect the realities facing many individuals desiring to get a 
college education. Indeed, this compromise before us today provides $41 
billion in education tax incentives for those looking to invest in 
their education.

[[Page S8460]]

  I also support the changes that have been made to the child tax 
credit that will enable a greater number of middle- and lower-income 
Americans to utilize the credit. By making the credit partially 
refundable against payroll taxes, the legislation reflects the reality 
that the most significant tax burden of many low-income Americans is 
that of the payroll tax. The Senate bill provided no tax credit to many 
families making under $30,000. This compromise does.
  I would also like to express my support for the decision to keep 
provisions in the bill that will expand the use of IRA's to allow 
withdrawals for first-time home buyers. Perhaps the greatest hurdle 
faced by many first-time home buyers is the inability to get the 
necessary funds for a downpayment on a home. Provisions in the tax bill 
will lower this hurdle and enable us to continue to increase home 
ownership, which is currently at a 17-year high.
  In conclusion, I believe the tax bill will provide tax relief to 
hard-working American families who have faced stagnating wages and 
tough employment prospects. I am pleased that we in Congress have made 
the difficult budget decisions which laid the foundation for the tax 
cuts we are able to provide today. I would caution, however, that we 
must be ever-vigilant in ensuring that the tax cuts will not overheat 
the economy or lead to an explosion of the deficit. Indeed, we must be 
prepared to make the tough decisions that we will be called upon to 
make in the event that the revenue projections in this agreement do not 
come to fruition. As we prepare to vote on this legislation, I would 
encourage my colleagues to celebrate our success, but to consider the 
concerns that I have set forth.
  Mr. President, I will support this bill with reservations, but I also 
recognize as should we all, that this agreement is a compromise between 
a President and a Congressional majority of different political 
parties. As such, it embodies the often conflicting demands and ideals 
of each group. It is in this spirit that I will vote for the package.
  Mrs. MURRAY. Mr. President, I rise today in strong support of the 
conference report on H.R. 2014, The Revenue Reconciliation Act of 1997. 
This legislation represents the second part of the historic balanced 
budget agreement.
  As a member of the Budget Committee, I was originally concerned about 
enacting major tax changes which would jeopardize our deficit reduction 
progress. I did not want to repeat the mistakes of the 1980's. Back 
then, Congress did the easy thing in dramatically cutting taxes, but 
put off the tough decisions on spending cuts. As a result, the National 
debt increased from $1 to $4 trillion, and we've been digging the 
country out of that hole ever since.
  I also had to be sure that, if we did any kind of tax cut, it would 
be targeted, to working families who desperately need relief and that 
it was responsible. I had to be sure that it did not add to the deficit 
and would truly serve as an investment in our economic productivity.
  After months of working with the White House and Republicans, we have 
produced a tax relief package that is responsible, targeted, and will 
provide significant investment in our economy. It does not add to the 
deficit--we borrow nothing to offset these cuts.
  The tax relief package includes a $500-per-child tax credit that will 
go to every family earning less than $110,000 per year. This tax credit 
alone will be available for approximately 27 million families with 45 
million children, with 13 million of these children coming from 
families with incomes below $30,000 a year. This includes children 
who's parents are teachers, farmers, factory workers, police officers, 
and nurses--the real working families of this country.
  When I first came to the U.S. Senate, I made a commitment to the many 
small, familyowned businesses and farms in the State, that I would work 
to reduce the estate tax. I had talked to many people with concerns 
that their business or farm would have to be sold if they died, rather 
than being passed on to their children. Because the estate tax is so 
high, younger generations cannot afford to keep the business or farm in 
the family.
  I introduced legislation to reform the inheritance tax last Congress 
for two simple reasons. First, the current tax code hits my home State 
of Washington very hard, because we have a very high percentage of 
family farms, and tree farms in particular, as well as many 
entrepreneurial small, high tech businesses. Second, the impact of the 
current structure of the estate tax had to be changed in order to allow 
family owned businesses to stay family owned. I am pleased the bill 
included estate tax relief that is similar to my legislation.
  I am also pleased that included within this tax relief package is the 
accelerated phase-in of self-employed health insurance deduction from 
40 per cent up to 80 percent. This is a major victory for small 
business, farms, and their families. It will also allow more small 
business owners to purchase quality health care for their children. I 
have long argued that small businesses should be given the same tax 
allowance for health insurance as afforded large corporations. This 
accelerated phase-in will provide this equity and expand access to 
health insurance coverage for many children who's parents are self-
employed.
  Perhaps the greatest expense facing many families is that of a 
college education. I know many middle-class families in Washington 
State who are struggling to pay for their children's college education. 
I have also heard from many hard-working adults who cannot afford to 
upgrade their skills or further their education. We all know the value 
of investing in the education of our children and investing in our own 
skills and education. Yet, for many families a college education was 
becoming unreachable. The tax relief package before us today will give 
middle-class families that extra help to meet the ever escalating cost 
of a post secondary education.
  The legislation calls for a total of $35 billion in education tax 
credits and incentives. This represents the biggest single investment 
in the education of our children since 1965. It will give those 
families who are struggling to pay for a college education the help 
that they need. As we move in to the next century, it means our 
children have the skills and education to meet the challenges of 
tomorrow. Our work force will need to be one of the most 
technologically advanced in the world in order to maintain our 
competitive edge and our high standard of living. Investing in today's 
children is not just an investment in their future, but it is an 
investment that will maintain our position as a global, economic power.
  This bill also contains reductions in the capital gains tax. I am 
pleased that we have been able to craft this part of the bill so that 
it targets regular, middle-class families. Many middle-class families 
have been burdened with heavy capital gains when they sold a home or 
even sold stocks for retirement savings. In addition, the legislation 
drops the capital gains tax from the 20 percent called for in the bill 
to 10 percent for joint filers with incomes less than $41,200 who sell 
or transfer an asset held for at least 18 months. For higher income 
earners the top rate will be 20 percent for investments held for at 
least 18 months. Carefully crafted and targeted, a capital gains tax 
cut will encourage economic expansion and will provide equal relief to 
the middle class. This legislation meets this test.
  In 1993 our deficit was close to $300 billion annually. New estimates 
for 1997 by the Congressional Budget Office indicate that the deficit 
for this year could be as low as $67 billion. We have far exceeded even 
my expectations for deficit reduction. The spending plan just adopted 
by this body will eliminate this deficit by 2002. Now is the time to 
give working families their share of the deficit reduction dividend. 
This legislation will guarantee that middle class, working families 
benefit equally from the economic gains we have seen as a result of the 
Democratic deficit reduction plan of 1993.
  I know that this tax relief package and the balanced budget spending 
plan would not have been possible without a honest, bipartisan 
approach. While I know that many on the other side do not think that 
this tax relief package is big enough, any further attempt to cut taxes 
would have all but wiped out the $223 billion in deficit reduction that 
we witnessed since 1993. This legislation is fair and equitable, but 
fiscally responsible as well. For the sake

[[Page S8461]]

of our grandchildren and continued economic growth, we cannot enact 
deep tax cuts that force us to only borrow more to pay for these cuts. 
Balancing the budget must remain our No. 1 goal and priority.
  I urge my colleagues to support this conference report and I yield 
back the balance of my time.
  Thank you, Mr. President.

  

                          ____________________