|A SENATE TAX DEBATE|
July 28, 1999
The Senate debated components of a proposed $800 billion tax cut. Elements within the two parties continue to argue over the size of the would-be tax cut. Elizabeth Farnsworth leads a discussion with both Republican and Democratic Senators.
ELIZABETH FARNSWORTH: And we have four perspectives on tax cut legislation. Two Senate Republicans, Phil Gramm of Texas and Olympia Snowe of Maine; and two Senate Democrats, Richard Durbin of Illinois and John Breaux of Louisiana. Senator Breaux, is this process headed for a financial train wreck, as you put it, or can a compromise be reached that the President could sign?
SEN. JOHN BREAUX: Unfortunately, Elizabeth, right now I think it's headed for the train wreck. But there's always hope and optimism that we can come together somewhere between my colleague on my left, Phil Gramm's $800 billion tax cut, and my colleague on the right, who would support, Dick Durbin, who would support an approximately $290 billion tax cut; there's got to be that middle ground. Both parties cannot continue to say my way or no way. If we continue to take those positions, we will have a financial train wreck, and I think it would be bad for the country.
ELIZABETH FARNSWORTH: Well, Senator, is the arithmetic against you? The Republicans have the vote to -- the votes to defeat the compromise that you favor, right, this bipartisan compromise?
SEN. JOHN BREAUX: And the President has the right to veto it, so under that scenario, we could pass the Republican bill and it would not get signed into law by the President. I think what we ought to do is go ahead and pass the Republican version but not go to conference, hold back, let us go to our respective states in August and listen to the people, come back and do Medicare reform, and then combine real Medicare reform with prescription drugs, with a reasonable tax cut that the President could sign that package.
ELIZABETH FARNSWORTH: Senator Gramm, what's your view on the possibility for a compromise?
SEN. PHIL GRAMM: Well, first of all, let me say that John Breaux and I are together on Medicare. We both were on the Medicare commission. We agreed on a proposal. Unfortunately, Bill Clinton killed it. In terms of a compromise we have a trillion dollar surplus that is not Social Security money. The President has proposed spending one trillion, thirty-three billion dollars. Somehow he thinks that by giving back $800 billion that we're jeopardizing the economy, whereas, if we let him spend every penny of it, we're not. So I'm willing to listen to any proposal, but the bottom line is that we have a total accounting of Social Security of a $3 trillion surplus -- giving 1/4 of it back to working people in tax cuts is not unreasonable. We're talking about a 3.5 percent tax cut over 10 years. It seems to me that it's the logical thing to do; it's the right thing to do. I'm sorry the President is not for it. But basically I wish he would say, don't give it back, let me spend it. But that's what his proposal is, but he doesn't quite ever fess up. So we have a distorted debate as if he would reduce debt, rather than spend the money. And so it makes the debate harder, but in the end I think people will get the facts straight.
ELIZABETH FARNSWORTH: Senator Snowe, you said today we must not let political posturing turn the discussion in to a "my way or the high way fight." Is that what you think has happened?
SEN. OLYMPIA SNOWE: Well, I think it's certainly moving in that direction; it's sort of what Sen. Breaux has just indicated about the train wreck, sort of like the good news is you see the light at the end of the tunnel, the bad news is, is the oncoming train. And that's sort of what we're facing right now because of the statements, the ultimatums, the veto threats that have been issued by the administration. We all agree on a tax cut, but it's a question at what level. So why not preserve the middle ground, the viability of a tax cut, rather than going to conference and the President vetoing the legislation, see what can be worked out so that the American people can get I think a well deserved tax cut. And so that's what we're trying to do with this bipartisan compromise, to demonstrate that we can achieve a consensus. We want to keep the door open to compromise and consensus, rather than saying it's an "all or nothing" proposition, and that we can't do anything about it. We'll each vote our own way, send it to the President, veto it. Well, what does that do for the American people? And I think a $500 billion tax cut is a great middle ground between the President's proposal and the Republicans' proposal and frankly, more prudent, given the fact we don't know whether or not these surpluses will materialize. After all, they're just projections. Somebody once called them a hypothetical jackpot. So I think we have to be more cautious in our approach in terms of how much we do for tax cuts and spending.
ELIZABETH FARNSWORTH: Senator Durbin, what do you think about that $500 billion compromise proposal? You back the $290 billion Democratic alternative.
SEN. RICHARD DURBIN: Well, it's amazing that I end up being the conservative on this panel, because I'm the one who believes that most of the surplus, if it ever materializes, should be spent on reducing the national debt and making certain that we invest it into Social Security and into Medicare. My colleagues here are anxious to give it away in tax cuts; many of them are good and some of them I could never support, going to the wealthiest in America. When Senator Gramm says that President Clinton wants to spend money, I think he ought to finish the story. The President wants to spend some of the surplus on Medicare, so that we don't end up raising premium prices and cutting services for the disabled and elderly. He also wants to make sure that we keep up with inflation, on things like education, something which the Republicans have made no promise that they're going to do. And still the President says that we can have a targeted tax cut that will help working families, middle income families. I think you ought to consider that aside from all of the political figures who have spoken on this issue, the one person who is not political, who really has been credited with a major role in bringing about this economic recovery, Chairman Alan Greenspan, says that the Republican strategy of an $800 billion tax cut is exactly the wrong thing for the economy. It'll create inflation, raise interest rates, and make it tougher to pay home mortgages and business loans.
ELIZABETH FARNSWORTH: Senator Snowe --
SEN. PHIL GRAMM: Elizabeth, I'm sorry, but Alan Greenspan was before the committee I chair today. He said nothing of the sort.
SEN. RICHARD DURBIN: Last week he did.
SEN. PHIL GRAMM: He said the best thing is pay down debt. The second best thing is cut taxes, and if you believe that the surplus is going to be spent, you ought to give it back in tax cuts. And when the President has proposed 1 trillion, 33 billion dollars' worth of new spending and the surplus is $1 trillion, so he would actually have to plunder Social Security, you have got to conclude that this money is going to be spent if we don't give it back.
|Taxes - an election 2000 issue?|
ELIZABETH FARNSWORTH: Senator Snowe, you touched on this a little already but why do you think it's been so difficult to come to a compromise bill? You know, some people have suggested that many in the House and Senate don't want -- and the White House -- a tax cut because it makes a campaign issue for everybody. Is that the main reason, do you think?
SEN. OLYMPIA SNOWE: Well, I hope not. You know, I'm sure that there are those who are interested in making a political statement, scoring political points as opposed to achieving good policy. That was one of the reasons why we decided to get together on a bipartisan basis to demonstrate that there is support for a tax cut. In fact, we're all agreeing that there should be a tax cut. I mean, the President is, Democrats are, House and Senate, both bodies have indicated support. So, you know, what is the difficulty in sitting down and negotiating a compromise? We're not even that far apart, frankly, on the policy issue so -
ELIZABETH FARNSWORTH: What's the answer that? What is the difficulty?
SEN. JOHN BREAUX: Well, Elizabeth, let me join in because I really think this is a key point. I mean, if we can't figure out what to do with a $1 trillion surplus, within then a pox on both our parties. I think there are a few in both parties who would rather have a political issue for elections in the fall than accomplishing something and arguing about who did it. I'd much rather be arguing about success and who did it rather than failure and whose fault it is. I mean, there's got to be enough room for two parties to agree on what to do with a $1 trillion surplus. It's not an either/or situation.
ELIZABETH FARNSWORTH: Is that right, Senator Durbin? Can you see that?
SEN. RICHARD DURBIN: I've been around politics long enough to understand that we're probably headed for some sort of a compromise. But, keep in mind we're guessing on the economy and the state of the budget over a 10 year, 20 year, 30 year period of time. The economists who advise us frankly have trouble remembering their own Social Security numbers and yet they're telling us what it's going to look like in America eight or nine years from now. The people I speak to in Illinois and others really want us to focus on the bottom line, keep this economic recovery moving forward, creating good jobs and opportunities and pay down the national debt, make those your two first priorities. Tax cuts run a distant third.
ELIZABETH FARNSWORTH: Senator Gramm, do you think that Senator Durbin is right? Are you sensing that some kind of compromise is in the wind, or could this all be for naught? Could you pass a bill that the White House - that the President won't sign and this is just for naught?
SEN. PHIL GRAMM: I don't know in the end but I think it's important to remember that with the tax cut the Republican budget reduces the debt $200 billion more than the President's budget by CBO. Those are not my numbers. That's the non-partisan Congressional Budget Office. If I could do this my way, I would simply wait, have a presidential election and then have a tax cut, if people voted for one. The problem is, Elizabeth, we're already $21 billion over the spending caps in spending this year. The House is $30 billion over. Unless we give some of this money back, it's going to be gone by the time we have a new President because it's being spent. Dick talks about buying down debt. We are buying down debt with Social Security surplus, and everybody agrees on that, but there isn't any evidence we're going to buy down any debt with this general $1 trillion budget surplus, and if we're going to spend it, I'd much rather give it back to people because unlike Dick I don't believe government can spend it better than families can.
ELIZABETH FARNSWORTH: It sounds like, Senator, that there's not much wiggle room in your position.
SEN. PHIL GRAMM: Well, look, I'm willing to listen to any proposal but I'm not willing to listen to a President who while he's saying to us don't give this back to working people, it would be the end of the world. Yesterday it was going to be bad for the health of women, maybe today it's the black death is coming back if we give people a tax cut. But I could bear that if he were really reducing the debt. But knowing that he's trying to spend every penny of it, I just think he's disingenuous. I just think he's not telling the truth.
|A possible partisan comprise?|
ELIZABETH FARNSWORTH: Senator Breaux, do you think this could all be for naught, that there really won't be any bill in the end?
SEN. JOHN BREAUX: Well, Elizabeth, I certainly hope -
ELIZABETH FARNSWORTH: Any law in the end?
SEN. JOHN BREAUX: -- I certainly hope that that's not the case. I think the American people are pretty tired of hearing both political parties blame each other for failure in Washington. They sent us here to get the job done and they understand that getting the job done means compromising and working out our differences, not just blaming each other for a failure. We can never say that it's my way or no way. And I think many times both parties are put in that position today. There's a reasonable compromise that can be worked out here, and a group of us have I think offered something in that direction.
ELIZABETH FARNSWORTH: And, Senator Snowe, what message would be sent it the American people, in your view, if something isn't worked out? I mean, some people might say that's the way the political system works; if there's no bill, it's just because there's not the support for it.
SEN. OLYMPIA SNOWE: I would like to surprise them and demonstrate the fact that we can agree on a major issue that is so significant to America's working families. I mean, that's what this is all about, to help them with their health care, with child care, with education, eliminating the marriage penalty. So this would help average working families. And that's what we want to do. I can't see where there should be political differences on that issue. I can see where it could differ on the size of the package in which we do so that we're more prudent, but frankly, we're not that far apart. So I hope that we can avoid the political posturing and do what's right for this country in this Congress, not wait until after the election.
ELIZABETH FARNSWORTH: And finally, Senator Durbin, any wiggle room in your position?
SEN. RICHARD DURBIN: Well, of course, there is, but keep in mind here, people want bipartisanship, but the 1993 Clinton budget plan that really turned the corner away from deficits and got the economic recovery moving was a partisan vote, not a single Republican supported it and it really has done a great deal of good for the country. I hope we can find a bipartisan way to come out of this and be able to say to the country, this economic recovery will continue.
ELIZABETH FARNSWORTH: And, what's your response to the question if there isn't one, it's just the way it's meant to be that the politics aren't for it now?
SEN. RICHARD DURBIN: Well, let's face it, the American voters will then have the choice in the next election. They will decide which party offered the best recipe for the future.
ELIZABETH FARNSWORTH: Okay. Well, thank you all very much for being with us.