[Congressional Record Volume 147, Number 17 (Wednesday, February 7, 2001)]
[House]
[Pages H210-H212]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]




              THE ECONOMIC RECOVERY AND GROWTH ACT OF 2001

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 3, 2001, the gentleman from Indiana (Mr. Pence) is recognized 
for 60 minutes as the designee of the majority leader.
  Mr. PENCE. Mr. Speaker, I thank the Speaker for this opportunity to 
address the House on a topic that is important to all Americans.
  Mr. Speaker, while the Federal Government prepares to inhale a nearly 
$6 trillion tax revenue surplus over the next 10 years, I join many of 
my colleagues here on the floor today to speak on behalf of American 
families who face a much less promising future.
  Our goal today is to call attention to the growing surplus here in 
Washington and the moral imperative to return this excess revenue to 
the people who earned it. My colleagues and I have claimed this time 
today to argue in favor of the economic recovery package of 2001, a 
package not unlike the one proposed by President Ronald Reagan in 1981. 
While not nearly as ambitious as its namesake, we are lucky

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that we do not confront nearly the same grave economic crisis. Today 
our challenge is preserving the economic prosperity first leveraged by 
that 1981 Reagan tax cut made some 20 years ago.
  Despite the not inconsiderable economic successes of the past few 
years, Mr. Speaker, Hoosier families in my district are confronting 
layoffs at a record number of major employers. Our hometown Cummins 
Engine in Columbus, Indiana, and DaimlerChrysler in New Castle, 
Indiana, have both announced layoffs that have garnered national 
attention. I am sure their employees and families are watching and 
waiting for some sign of what is ahead.
  So, too, I know that the small businesses dependent on these 
companies are fearful. Uncertainty stalks the heartland and these 
Americans are looking to this Congress to at least return the 
overpayment collected by the Federal Government, at a minimum.
  This House of Representatives, Mr. Speaker, is the heart of the 
American government, and as such it should resonate with the hearts of 
the American people.
  Mr. Speaker, the people's hearts are anxious with increasingly 
disappointing news about our economy. All this while income tax rates, 
as a percentage of the economy, are at the highest level ever recorded. 
The time has come to cut taxes for working families, small businesses, 
and family farms.
  Federal Reserve Chairman Alan Greenspan's decision to support a tax 
cut is not a change of heart, as some have characterized it. He has 
long argued that surplus revenues should not be used for spending 
programs. He, like me, recognizes that money not used to pay down the 
debt will be spent in Washington. This is one of the many compelling 
reasons for supporting tax relief. It is not, however, the reason that 
moves the American people. All the media attention devoted to the 
recent downward pressure on interest rates and the wonkery of supply 
side theories has done little to answer a very important question. Why 
is the government keeping so much of the Nation's wealth while watching 
the economy falter?
  The plan proposed by President Bush is an excellent start, Mr. 
Speaker. This plan will indeed reduce personal income tax rates. A new 
10 percent tax bracket would be created that would apply to a 
substantial portion of the income that is currently taxed at 15 
percent. The 28 percent and 31 percent tax brackets would be reduced to 
25, and the 36 percent bracket and 39.6 would be lowered to 33. This is 
good public policy for several reasons.
  Number one, the current tax rate on work, savings, and investment 
penalizes productive behavior and impedes economic growth. Because of 
steep personal income tax rates, highly productive entrepreneurs and 
investors can take home only about 60 cents of every dollar they earn, 
not including State and local taxes and other Federal taxes. This 
reduces the incentive to be productive. Lower tax rates will reduce 
this tax wedge and encourage additional work, savings and investment, 
risk taking and entrepreneurship.
  This is also good public policy because, Mr. Speaker, the budget 
surplus is growing. According to the latest Congressional Budget Office 
projections, the aggregate budget surplus for the 10-year period of 
2001 to 2010 will be at least $4.6 trillion. The CBO is expected to 
revise this projection upward. The Clinton White House reportedly 
projected tax surplus revenues between 2002 and 2011 of $5 trillion. 
President Bush's proposed tax relief package is expected to save 
taxpayers $1.3 trillion to $1.6 trillion over the next 10 years, not 
including revenue, feedback from the additional economic growth that 
will follow.
  Mr. Speaker, this is also good public policy because reducing the tax 
burden will help control Federal spending. Without the specter of 
deficits, lawmakers lose the will to say no to special interests and 
pork barrel projects. In the 3 years since the surplus materialized in 
1998, inflation adjusted Federal spending has grown twice as fast as it 
did during the three prior years when the government was running a 
deficit.
  Also, Mr. Speaker, lower tax rates are an important step toward 
fundamental tax reform. When tax rates are high, deductions, credits 
and exemptions provide large savings to some taxpayers, but roughly 70 
percent of all taxpayers receive no benefits since they claim the 
standard deduction. A simple and fair Tax Code would treat everyone 
equally, without creating winners and losers, by taxing all income once 
and at one low rate.
  Reducing marginal tax rates, Mr. Speaker, will move the Nation toward 
a low tax rate system and reduce the value of special interest tax 
breaks which are more valuable when rates are high. The economic 
distortions they cause, the political pressure they add, all command 
tax relief. Also, Mr. Speaker, tax increases did not cause the surplus; 
and tax cuts will not cause a deficit.
  Opponents of tax cuts often claim that the 1993 tax increase is 
responsible for today's budget surpluses. This is contradicted by the 
Clinton administration's budget documents. In early 1995, nearly 18 
months after the enactment of the 1993 tax increase, the Office of 
Management and Budget projected budget surpluses of more than $200 
billion for the next 10 years. Clearly, events after that date, 
including the 1997 capital gains tax cut and a temporary reduction in 
the growth of Federal spending, caused the economy to expand and the 
budget deficit to vanish.
  Finally, Mr. Speaker, this is good public policy because tax rate 
reductions and entitlement reforms are not mutually exclusive actions. 
Critics argue that a big tax cut would make it harder to reform 
Medicare or modernize Social Security by allowing younger workers to 
shift some of their payroll taxes into personal retirement accounts.

                              {time}  1130

  Given the magnitude of the projected budget surpluses, there is no 
conflict between these goals. Moreover, entitlement reform would be 
desirable, even without a budget surplus, because it would 
significantly reduce the long-run unfunded liability of both programs. 
Large projected surpluses simply make it easier for legislators to 
implement the necessary policies.
  Opponents once argued that tax cuts were unwarranted because the 
Federal Government was running a budget deficit. Now they argue that 
tax cuts are unwarranted because there is a surplus. Their real agenda 
is to block any tax reduction and a reduction in tax rates and increase 
the dollars they have available here in Washington, D.C.
  Mr. Speaker, the American people are wise to this game. Hundreds of 
layoffs in my Indiana district will attest, this economy is listing 
badly under the weight of 8 years of increased taxes and regulation.
  This Congress must again become the Congress of economic recovery. 
President Bush's tax plan plus the additional incentives for work and 
investment contained in the Economic Recovery and Growth Act of 2001 is 
the cure for what ails our economy. This Congress must turn this 
economy around. This bill will achieve economic recovery for the 
families, small businesses, and family farms that make this Nation 
great.
  The supporters of the Economic Recovery and Growth Act believe that 
the Congress should do all we can to give America's families a tax cut 
they will feel right away. We want American workers to see the 
difference in their weekly paycheck. As the President has said, this 
should include a cut effective at the beginning of this year. So, too, 
the cut should be designed to stimulate economic growth.
  Our Economic Recovery and Growth Act will, number one, continue to 
save Social Security and Medicare surpluses and thereby reduce the 
deficit; number two, keep all existing components of President Bush's 
outstanding tax reduction proposal; and, number three, the Economic 
Recovery and Growth Act would accelerate and expand the across-the-
board cut in income tax rates, accelerate and expand the repeal of the 
marriage penalty and death taxes; the capital gains tax reduction and 
small business tax relief all would be accelerated and expanded under 
the Economic Recovery and Growth Act. The bill will also repeal the 
1993 Social Security tax increase and provide IRA expansion and pension 
reform.
  While some have tried to argue that even the Bush plan is extreme and 
a

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risky scheme, a close analysis of the historical record, Mr. Speaker, 
will prove otherwise. Both Senator Bob Graham of Florida and Alan 
Greenspan agree that the Bush tax cut is average by historical 
standards.
  Consider, for example, this chart, prepared by the nonpartisan 
National Taxpayers Union. The Bush tax cut and the tax cut proposal we 
support in the Economic Recovery and Growth Act of 2001 are 
considerably smaller than either the Kennedy tax cut of the 1960s or 
significantly smaller than the Reagan tax cut of 1981 as a percentage 
of gross national product. So too, Mr. Speaker, the Bush tax cut and 
the Economic Recovery and Growth Act proposal represent a smaller 
portion of Federal revenues in constant 2000 dollars than either of the 
earlier tax reduction proposals.
  In fact, even Democrat Speaker Tip O'Neill, not exactly legendary for 
his support of big tax cuts, Democrat Speaker Tip O'Neill's alternative 
tax initiative in 1981 was larger than the plan that many of us 
conservatives in the Congress propose today. The Economic Recovery and 
Growth Act proposal is a well-reasoned and sensible alternative to 
plans that call for keeping more money in Washington, D.C.
  As the preceding comparisons demonstrate, Mr. Speaker, the Bush and 
our own Bush-plus tax cut are anything but dangerous or irresponsible. 
They are, instead, measured actions, taken to alleviate two serious 
challenges facing the American people today.
  First, by reducing rates and thus increasing the incentive for work 
and investment, both plans can help reinvigorate an economy that is 
finally beginning to collapse under the weight of 8 years of ever-
increasing tax and regulatory burdens. Secondly, the proposals will 
finally offer relief to American families who are currently taxed at a 
rate not seen since the world was at war.
  Hard-working Americans deserve to keep more of their wages, Mr. 
Speaker, so that they may provide for their families, not for bigger 
government bureaucracies.

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