TAX RELIEF ON THE FRONT BURNER
Our country is experiencing an economic downturn, and there is no doubt action is needed. Congress is acting swiftly to set the nation's budget, determine its spending priorities -- and more important than ever -- give tax relief to hard-working Americans.
In the nearly eight years I've been in the Senate, the federal government has shifted from operating with deficits as far as the eye could see to policies that have produced a federal budget surplus. This has allowed us to begin paying off our crippling public debt. In 1994 and 1995, Congress made the tough choices necessary to get our books out of the red and as a result, the economy prospered. Now that there is a blip on our economic radar screen, returning to the taxpayers some of their own hard-earned money ought to be our first priority.
Congress is working on a budget that includes tax cuts designed to promote economic growth while reducing the record tax burden being shouldered by American families. In February the President proposed a $1.6 trillion tax-relief plan that provides a workable outline for accomplishing our financial goals of debt reduction, tax reduction and responsible government spending levels.
Now we are trying to move tax relief to the front burner. After paying down the debt to the maximum extent possible, we propose to give $60 billion in a tax cut this year to stimulate the economy.
When the Congressional Budget Office came out with its most recent budget estimates, one number practically leapt off the page: $5.6 trillion. That's the size of the projected surplus over the next 10 years. Running that kind of surplus is not good economic policy, and it's not good fiscal policy.
We can provide $1.6 trillion in tax relief over the next 10 years. Even that amount will account for only 6 percent of the revenues the IRS will collect during that time and less than 25 percent of the surplus. The immediate tax cut would be financed out of this year's anticipated budget surplus after we have set aside all of the Social Security and Medicare surpluses and paid for other government programs.
These plans move us toward several important goals, including continuing to pay down the debt and tax relief for all taxpayers under a simplified, more equitable tax code.
Another of those goals is to structure the tax system so that no one has to pay more than a third of his or her income to the federal government. We are looking at reducing all income tax rates across the board. If you pay income taxes to the federal government, they will be lower. It would offer marriage tax penalty relief. The harshly unfair death tax would be buried. The child tax credit would be doubled to $1,000. The charitable deduction would be made more generous.
On the spending side of the ledger, we also are going to protect the Social Security surplus. We are going to strengthen Medicare, including the creation of a timely prescription drug option. We are going to provide our armed forces with the resources they need to rebuild and strengthen our national defense structure. We are going to increase the support we provide to public education.
The budget policies outlined above will still pay off as much of the existing $3.4 trillion debt as we can, as quickly as we can, without paying a penalty to holders of long-term U.S. Treasury bonds and notes. Since 1998, Congress has paid off $363 billion of publicly held debt, and our plan will continue to pay it down even more aggressively.
The choice is clear: put more money in the pockets of the American people, through a tax cut, and let it go back into the economy where it can be invested, saved or spent by the people who earned it.
March 30, 2001