CONGRESSIONAL RECORD -- SENATE

December 3, 1969

Page 36657

TAX REFORM ACT OF 1969

Mr. BYRD of West Virginia. Mr. President, I ask unanimous consent that the Chair lay before the Senate the unfinished business.

The PRESIDING OFFICER. The clerk will state the unfinished business.

The BILL CLERK. H.R. 13270, the Tax Reform Act of 1969.

The Senate resumed the consideration of the bill.

Mr. BYRD of West Virginia. Mr. President, I ask unanimous consent that there be a brief quorum call, the time to be equally divided by both sides.

The PRESIDING OFFICER. Without objection, it is so ordered. The clerk will call the roll.

The bill clerk proceeded to call the roll.

Mr. PERCY. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

The PRESIDING OFFICER. Without objection, it is so ordered.

The question is on agreeing to the amendments of the Senator from Illinois (Mr. PERCY), which are being considered en bloc. The time of 1 hour beginning at 10:30 o'clock a.m. has been allocated to the consideration of the amendments, the time to be divided equally between the Senator from Illinois and the Senator from Louisiana (Mr. LONG).

Who yields time?

Mr. PERCY. Mr. President, I yield myself 5 minutes.

Mr. President, I should like to explain, first, the background of my having become involved in a tax matter. I am not a member of the Finance Committee, but all Senators are deeply involved in matters affecting the raising of revenue and the taxation of our citizens.

During the course of a rather long campaign in 1966, I mentioned many times my great desire to rectify, at some point, an inequity in the tax laws, which, for over 20 years, have maintained the $600 personal exemption.

The cost of raising a child or maintaining a dependent in the intervening years has increased greatly, and for that reason it has been my hope that we could, at some appropriate point, increase that personal exemption.

I have not done anything about it for the last 2½ years while in the Senate, simply because I felt we could not do it at a time when we faced a budget deficit, and that it would be irresponsible to do it under those conditions. But now, when a tax reform bill is before us, a bill which is, as the chairman of the Committee on Finance has said, the third most important tax measure ever to be considered by Congress, it seemed to be the proper time to do it. So long as I could be assured that it could be done on an equitable and fiscally sound basis, I felt it wise to do so.

I commended, last week, the distinguished Senator from Tennessee (Mr. GORE), for his initiative and his leadership in this area, but indicated to him that his amendment was of deep concern to me; that I certainly could not support a $1,000 exemption; and that I was concerned about supporting any exemption which would have an adverse effect upon the fight against inflation.

It is for that reason that, working with experts from the Treasury Department, I have tried to develop a balanced program, and I have compared this program with the letter from the President yesterday.

The President asked that several tests be met. He asked that the legislation on tax reform be meaningful, that it be equitable and fair, that it be fiscally responsible, that it be consistent with efforts to control inflation, and that there be even-handed tax rate reductions in all income brackets, affecting all American taxpayers. It is my earnest belief that the four amendments I have offered would actually accomplish those objectives.

As I have carefully analyzed the amendment offered by the distinguished Senator from Tennessee, I feel compelled to vote against that amendment, even though I am on record as favoring an increase in the personal exemption, because of the tremendous revenue loss impact it would have in the critical years of 1970 and 1971, when we still certainly will not have won the battle against inflation.

As to whether the amendments that I offer are meaningful, I can only turn to the tables that have been placed on the desk of each Senator, reprinted from page 36446 of yesterday's RECORD.

From those tables, it certainly can be demonstrated that the committee bill and the Gore amendment -- and, I trust, the Percy plan -- seek in every way to provide an equitable tax reduction for all Americans. But in those areas of great need, the low-income groups, there is a slight improvement in the pending amendments I have presented. They show that 73.7 percent tax relief is provided, as against very nearly the same percentage -- the difference is almost immeasurable -- of 72.5 percent in those offered by the Senator from Tennessee.

Again, in the area of income of $3,000 to $5,000, there is a slightly improved tax relief position, and in the area of $5,000 to $7,000 incomes, a more considerable increase -- now 3.3 percentage points -- over the proposal of the distinguished Senator from Tennessee.

In the area of $7,000 to $10,000 incomes, there is even greater disparity -- 22.1 percentage points relief as against 16.2 in the Gore proposal, and 10.9 in the committee bill. So I believe the test of meaningfulness has been met.

I want to make it perfectly clear that I feel quite certain the administration would prefer the Finance Committee bill. It feels that this bill has been worked on very carefully, and that, without any question, it has the least inflationary impact in the first 2 years.

But if we are to have personal exemptions, then I would feel that the administration and the Treasury Department would feel that, of the two choices that might be presented to us, the amendments that I have offered are more helpful and more meaningful, in the balanced sense that the President has discussed.

Mr. GORE. Mr. President, will the Senator yield?

Mr. PERCY. I am happy to yield to the Senator from Tennessee.

The PRESIDING OFFICER. The Senator's time has expired. Who yields time?

Mr. PERCY. Will the Senator make his statement on his own time?

Mr. LONG. I yield the Senator from Tennessee 1 minute for colloquy.

Mr. GORE. The distinguished senior Senator from Illinois made a statement which I am sure he will wish to correct. He stated that the amendment I have proposed would have a terrific inflationary impact in 1970. The record shows that, within the bill, there would be a balance in 1970, as nearly as one can arrive at a balance, between the additional revenue to be received as a result of reforms in the bill and the revenue decrease resulting from my amendment.

In other words, if the Senator will look on page 16 of the committee report, he will find–

The PRESIDING OFFICER. The Senator's time has expired.

Mr. GORE. I ask for 1 additional minute.

The PRESIDING OFFICER. Who yields time?

Mr. LONG. I yield the Senator 1 minute.

Mr. GORE. He will find that in 1970 there is a revenue pickup of $3,900,000,000 from the bill.

My amendment, as the Senator will see in the table prepared by the staff on page 36446 of yesterday's CONGRESSIONAL RECORD, involves a loss of revenue in 1970 of $4 billion. So that is as nearly even as one can calculate, and I hope the Senator will retract his statement.

Mr. PERCY. I have been provided with figures–

The PRESIDING OFFICER. Who yields time?

Mr. PERCY. I yield myself 2 minutes. I have been provided figures by the Treasury Department -- and they are reprinted on page 36446 of the RECORD, a reprint of which is on each Senator's desk -- which show that in 1970, the net revenue effect of the committee bill is $1.7 billion, the net effect of the Percy amendments is $2.3 billion, and the net effect of the Gore amendment, $4 billion. So there is a great deal of difference between the various positions.

Mr. GORE. Mr. President, will the Senator yield?

Mr. PERCY. I yield.

Mr. GORE. The Senator is misreading the table. Those are not net revenue figures. This is the gross revenue loss by the three amendments, but it is not net. To measure the net, it is necessary to compare the table with the income-producing provisions of the bill.

Mr. PERCY. I wonder if the distinguished Senator would care to give us the figures for 1971.

Mr. GORE. First let us agree about 1970. Does the Senator agree that the figures he cited as net on page 36446 are not in fact net revenues, but, on the contrary, ate gross?

The PRESIDING OFFICER. Who yields time?

Mr. PERCY. I yield myself 2 additional minutes.

I see the point of the Senator from Tennessee, and there does seem to be a balancing out, in 1970, with the figures on page 16 of the committee report.

Mr. GORE. Then, before we go forward, I hope the Senator will correct his statement that my amendment will have a terrific inflationary effect in 1970. That simply is not supported by the facts.

Mr. RIBICOFF. Mr. President, will the Senator yield?

Mr. PERCY. I yield 1 minute to the Senator from Connecticut.

Mr. RIBICOFF. Mr. President, do I correctly understand that the impact of the amendment of the Senator from Tennessee concerning the revenue effect or the shortfall is similar to the impact or the shortfall in the committee bill?

Mr. GORE. As nearly as estimates can be made. The revenue increase from the bill would be $3.9 billion. The revenue loss from my amendment would be $4 billion. So there is a difference of $100 million.

Mr. RIBICOFF. I wonder if the distinguished Senator from Louisiana at this moment might yield me 3 minutes to make an inquiry of the distinguished Senator from Tennessee, so that I will not deprive the Senator from Illinois of time.

Mr. LONG. Mr. President, I yield 2 minutes to the Senator from Connecticut.

The PRESIDING OFFICER. The Senator from Connecticut is recognized for 2 minutes.

Mr. RIBICOFF. Mr. President, the figures that we find in the table, showing the difference between the impact of the amendments of the Senator from Tennessee and the Senator from Illinois, are very confusing.

Would the Senator from Tennessee enlighten the Senate as to the differences and the impact of the actual differences in tax savings between his proposal and the proposal of the Senator from Illinois? What would they do for the average taxpayer of the country? We cannot find that information in the table.

Mr. GORE. Mr. President, the revenue effect of the Percy amendments would be an eventual revenue loss of $12.8 billion. The ultimate effect of the amendment I propose would mean a revenue loss of $8.9 billion from the tax reduction provisions.

The Senator will find that information on page 36446. In the last three figures in the second column, the Senator will see that the committee bill, the Gore substitute, and the Percy amendments are compared.

The figures are as follows: For the Percy amendments, $12.8 billion; for the Gore amendment, $8.9 billion; for the committee bill, $9 billion.

Mine is the lowest of the three. It is smaller than the committee figure by $100 million.

Mr. GRIFFIN. Mr. President, will the Senator from Illinois yield?

Mr. PERCY. Mr. President, I yield 1 minute to the Senator from Michigan.

Mr. GRIFFIN. Mr. President, the distinguished Senator from Tennessee has made some points which no one disputes. Over the long haul, over a 4-year period, in terms of revenue loss, I believe the estimated figures would be as stated. However, let us talk about the first 2 years, which are of particular concern to the administration at this time because of the effort to fight inflation.

Frankly, I do not fully understand the colloquy which took place a few moments ago. However, I do understand this: That in the first year there would be a revenue loss under the Gore amendment of $2.3 billion as compared with the committee bill?

The PRESIDING OFFICER. The time of the Senator has expired.

Mr. PERCY. Mr, President, I yield myself 1 minute. I would like to try to answer that question.

The PRESIDING OFFICER. The Senator from Illinois is recognized for 1 minute.

Mr. PERCY. Mr. President, if we took the figures for the 4-year period, the committee amendment would provide in revenue loss $24.8 billion; the Gore amendment, $29.3 billion; and the Percy amendments $29.3 billion.

So there is an equation there between the two amendments over the period of 4 years. However, the impact can be readily seen. The impact of my proposal would be mostly in 1972 and 1973, and very little in 1970 and 1971, whereas the impact of the proposal of the distinguished Senator from Tennessee would be all in 1970 and 1971, simply because he would provide full personal exemption in those years.

I have delayed the impact of the personal exemption in my proposal, feeling that we cannot afford to do this and cannot charge against the poor of the country that kind of inflationary cost in the next 2 years.

The PRESIDING OFFICER. The time of the Senator has expired. Who yields time?

Mr. LONG. Mr. President, I yield myself 2 minutes.

The PRESIDING OFFICER. The Senator from Louisiana is recognized for 2 minutes.

Mr. LONG. Mr. President, I was under the impression last night that the amendment of the Senator from Illinois was offered as a perfecting amendment to the substitute. However, in looking at the RECORD this morning and discussing the matter with the Parliamentarian, I am dismayed to find that the amendment was offered as an amendment to the committee bill.

I have no doubt that we would have a better bill without the Gore or Percy amendments. For that reason, I must be constrained to vote against the amendments of both Senators.

The Percy amendment, in the short run, is much more responsible from the point of view of the committee. In the first 2 years, the Percy amendment would lose $900 million more than the committee bill whereas Senator GORE'S amendment would lose $6.1 billion more than the committee bill. Not only that, Senator GORE's amendment can hardly be considered an improvement on the carefully constructed committee bill. This amendment strikes out the increase in the standard deduction which benefits people in the middle-income tax bracket and simplifies the law for them. In fact, there is no improvement on the bill under the amendments of either Senator.

I think the committee bill provides the desirable element of simplification that the amendments of both Senators would eliminate, at least for the immediate future. In that respect they are the same. I do not think they improve the bill.

Mr. PERCY. Mr. President, will the Senator yield?

Mr. LONG. I yield.

Mr. PERCY. Mr. President, I did not propose in my amendment to strike out the standard deduction. It is simply delayed and phased in later.

Mr. LONG. It would be delayed for 2 years.

Mr. PERCY. It would be delayed for 1 year. My amendment would preserve the principle but try to lighten the impact early in the period.

Mr. LONG. Mr. President, while the Percy amendment would be an improvement on the Gore amendment, in my judgment, it is not an improvement on the committee bill. In that respect, the committee bill would be better without the amendments of either Senator.

The PRESIDING OFFICER. The time of the Senator has expired.

Mr. LONG. Mr. President, I yield myself an additional 2 minutes.

The PRESIDING OFFICER. The Senator from Louisiana is recognized for an additional 2 minutes.

Mr. LONG. Mr. President, the Gore amendment would cost $2.3 billion more than the committee bill the first year, and $3.8 billion more than the committee bill the second year, on an excess of $6.1 billion in the first 2 years.

Looking at the situation, I would say that in any event the Government will need that money. If we do not get the revenue that the committee bill would provide, we will have to raise taxes on someone. While we can reduce taxes, it does not make much sense to reduce taxes so much that we will later have to pass a tax increase bill.

That was a mistake that was made 5 years ago. We reduced the taxes so much that we had to come in 4 years later with a big tax increase bill. It is politically very unwise to cut taxes so much in 1 year that we have to come back 2 or 3 years later with a big tax increase bill. I would have to object to the amendments of both Senators in that respect.

I might regard the Percy amendment as an improvement over the Gore amendment, but it is not being offered in that manner. It is being offered as an amendment to the committee bill. That being the case, I would feel constrained to vote against it. The Gore amendment is superior to the Percy amendment in one respect, however. The revenue shortfall is not as great as the Percy amendment over the long pull -- it would cost no more than the committee bill by 1972. But the Percy amendment would cost $6.1 billion more than the committee bill by 1973. In the short run, however, the Gore amendment, as I have previously indicated, loses considerably more than the committee bill. From a revenue standpoint, both amendments have serious flaws. I should think that we would have to get that revenue back from somewhere.

The PRESIDING OFFICER. The time of the Senator has expired.

Mr. LONG. Mr. President, I yield myself 1 additional minute.

The PRESIDING OFFICER. The Senator from Louisiana is recognized for 1 additional minute.

Mr. LONG. Mr. President, if the Percy amendment were adopted, the committee would then be required to bring before Congress a bill to increase taxes by even more, in the long run, than we would be required to do in the case of the Gore amendment. So, speaking for the committee, it seems to me that we are faced with a choice between two brands of arsenic. It does not make much difference which one be agreed to.

Either would still eliminate some or all of the desirable features contained in the bill. In speaking for the committee and for the committee bill, there is no doubt in my mind that we have a better bill, a bill that would take care of the low-income people and take them off the tax rolls, giving an across-the-board increase in the standard deduction, which helps those in the middle-income bracket very substantially, and then provides a rate reduction of at least 5 percent which would help all taxpayers.

I yield such time as he may require to the Senator from Delaware. How much time does the Senator require?

Mr. WILLIAMS of Delaware. Five minutes.

Mr. LONG. I yield 5 minutes to the Senator from Delaware.

Mr. WILLIAMS of Delaware. Mr. President, I concur in what the chairman of the committee has said. I hope the Senate will reject both proposals.

I compliment the Senators on their ability to come up with a tax suggestion in 24 hours. When I recall how our committee labored for 12 weeks, I marvel, with all respect, at the ability of my colleagues who can produce a substitute bill in 24 hours.

I point out that both these proposals are fiscally irresponsible. The Gore proposal, it is true, would result in the loss of less money after the first 2 years, but it still loses approximately $6 billion more than the committee bill in the first 2 years. Certainly we cannot afford that loss.

I placed in the RECORD yesterday a letter from the administration, indicating that it cannot accept that loss in revenue. We just do not have the money and will have to borrow the money to finance that extra tax reduction.

On the other hand, the Percy proposal would result in the loss of $900 million more than the committee bill in the first 2 years. We do not have the $900 million to lose. In addition, after it had become fully implemented 4 years from now, the Percy proposal, while it would lose less money in the first 2 years, would lose $3.7 billion annually more than the Gore amendment and more than the committee bill for an indefinite period in the future -- $37 billion over 10 years. Let us project it right. Why approve a tax reduction today that is not scheduled to go into effect until 1973?

I think we are living in the "promise" land. If we can afford to cut taxes 3 or 4 years from now I have enough confidence in Senators who will be sitting at that time to believe that they will not be bashful about cutting taxes. It seems to me that it is a false promise now to tell people that we are going to cut their taxes 3 years from now. I realize that every election year is a promising year, but if this is an indication of what promises we are going to have next year I wonder where we are going. We do not have the money to cut taxes as proposed in either the Percy or the Gore amendment.

Perhaps the committee bill goes further than it should, but we are not going to improve the committee bill by expanding it. I hope that both these proposals will be defeated.

Lest there be any misunderstanding as to the administration's position, let me say that I talked to members of the administration this morning, and they are strongly opposed to both the Gore amendment and the Percy proposal.

Mr. LONG. Mr. President, will the Senator yield on my time?

Mr. WILLIAMS of Delaware. I yield.

Mr. LONG. Mr. President, I have had the experience of seeing how easy it is to reduce taxes, especially when the administration requested it, even when we have a budgetary deficit. One experience we never have had is a chance to see how easy it is to cut taxes if we have a surplus.

Considering how easy it is to reduce taxes when we have a deficit, it seems to me that it would be like duck soup to reduce taxes when we have a surplus.

Mr. WILLIAMS of Delaware. I am not worrying about the ability or the willingness of Congress to cut taxes if and when we have the available revenue. I am worried about the ability or the willingness of Senators to cut expenditures so that we can then really cut taxes. I say to all my friends who are in support of cutting taxes that if they will only join some of us in cutting expenditures we will help them to give a tax reduction. Let us not get the cant before the horse because we will not go anywhere.

Mr. CURTIS. Mr. President, will the Senator yield?

Mr. WILLIAMS of Delaware. I yield.

Mr. CURTIS. Is it not true that either plan of tax reduction, the one proposed by the distinguished Senator from Tennessee or the one proposed by the distinguished Senator from Illinois, will have to be paid for by borrowing the money?

Mr. WILLIAMS of Delaware. That is correct. In order to finance the extra loss in revenue that is involved in raising these exemptions we will be forced to borrow the money, and at today's rates we are paying approximately 8 percent interest.

But even if we pay only 7 percent it means that we will have to pay more than $1 million a day interest on the money we borrow to finance this proposed tax reduction.

Mr. CURTIS. In this one amendment.

Mr. WILLIAMS of Delaware. In this one amendment.

The people back home are not so dumb that they think they can be given a tax reduction on borrowed money. I think they have more sense than some Members of Congress.

Mr. CURTIS. I should like to point out that a great many people in public life, Members of the Senate, and of the House, no doubt have expressed themselves back home as favoring an increase in the personal exemption. But I doubt whether any Senator has ever gone back home and said, "I am in favor of raising the personal exemptions, if we have to borrow the money to do it, and increase the national debt."

Mr. WILLIAMS of Delaware. That is the point I make. The people will not accept that. They want us to cut spending first. They recognize that as the first and most essential step.

Mr. CURTIS. As a matter of fact, the entire discussion of whether or not to reduce taxes becomes a matter of how much more debt burden will be placed on the people unless the budget is balanced.

Mr. WILLIAMS of Delaware. The Senator is correct.

I am seriously considering offering an amendment along with the Senator from Nebraska, and I think it would be a good amendment. It would provide that whatever tax reduction we approve would be effective if and when we balance the budget. Then we will see just how close we are really going to cut taxes.

Our national debt is still rising. Last year we had to increase our debt and borrow approximately $7 billion to finance the deficits. We are running an average deficit this fiscal year of $500 to $600 million per month to finance the Government. It seems to me to be fiscally irresponsible to talk about reducing taxes further at this time.

I ask that the amendments of bath Senators be rejected.

Mr. JAVITS. Mr. President, will the Senator yield?

The PRESIDING OFFICER. The time of the Senator has expired. Who yields time?

Mr. JAVITS. Will the Senator yield me 1 minute?

Mr. PERCY. I yield 1 minute to the Senator from New York.

Mr. JAVITS. Mr. President, I have not participated in this particular aspect of the debate, but I do wish to record my views for the benefit of the Senate and my own constituents.

I wanted to support Senator PERCY'S amendment as the lesser of two evils. My difficulty is -- if it were carried -- it would not be voted on again. On the fundamental proposition of tax reduction under the guise of a tax reform, I must say that the position taken by the Senator from Delaware, by other Senators, by myself and by my own constituents, makes much more sense. What we started to do was legislate tax reform and here we are legislating tax reduction -- this does nothing to distribute the income tax burden more equitably among our citizens. In addition, this type of tax reduction produces far greater tax benefits for higher income taxpayers and may therefore undo what we are really trying to do -- make the tax burden for all taxpayers more equitable. The Gore amendment also would work inequitable tax effects for the single taxpayer, the average married couple without children, and even the middle-income taxpayer with two children. We also have not deliberated or discussed its economic effect, and its economic effect is going to be bad.

For whatever it is worth to the Senate -- I come from a highly populous State, having only two Senators but 41 Representatives -- I do not think the people of my State sent me here to be foolish. I believe the people of my State understand that we cannot correct the whole inflationary situation by these votes; but I was not sent here to worsen it and the amendments we are considering would do just that. It is my profound judgment that we will seriously worsen the inflationary situation in our country, and will lose infinitely more for the very same families that we think we are going to benefit, if we at this time make a tax reform bill into a tax-cutting bill. I hope the Senate will not do that.

Mr. WILLIAMS of Delaware. Mr. President, will the Senator yield me 2 minutes?

Mr. LONG. I yield 2 minutes to the Senator from Delaware.

Mr. WILLIAMS of Delaware. I concur in what the Senator from New York has just said, but I call his attention to the fact that if the Percy amendments were offered as a substitute for the Gore amendment, the choice would be different. But the Percy amendments are offered as a substitute for the committee bill. The Percy amendments would lose an extra $900 million revenue in the first 2 years, and in the third year they would gain $300 million according to the staff study, but after that there would be a loss of $3.7 billion annually. So the Percy amendments do go much further in cutting taxes than the committee bill. The committee bill went as far as we thought we could stand, and some of us questioned the wisdom of going even that far.

Some Senators have the impression that they are voting as between the Percy amendments and the Gore amendment. That is not the choice before us. The choice is the Percy amendments or the committee bill; and then it will be the Gore amendment or the committee bill.

Mr. JAVITS. Mr. President, will the Senator yield?

Mr. WILLIAMS of Delaware. I yield.

Mr. JAVITS. Mr. President, I think the choice is practically political. That is what I was talking about. I do understand the parliamentary situation, and I did understand it in making my comments.

The PRESIDING OFFICER. (Mr. GRAVEL in the chair). Who yields time?

Mr. LONG. Mr. President, I yield to the Senator from Wyoming.

The PRESIDING OFFICER. How much time does the Senator yield?

Mr. LONG. I yield 2 minutes to the Senator from Wyoming.

The PRESIDING OFFICER. The Senator from Wyoming is recognized.

Mr. HANSEN. In terms of service, I am the youngest member of the Committee on Finance, and I wish to make clear my position. I am just as eager to do something that will truly help the beleaguered taxpayers of this country as anyone else, but I cannot be so deceitful as to suggest and support a course of action that will do precisely the opposite of that which we ostensibly intend to do.

I think that to pass a tax-cutting bill on the premise that we are doing something for the people of the country, which, in effect, would further feed the fires of inflation, and lessen the value of the dollar, will have exactly the opposite effect from what has been promised and proclaimed by some supporters of the Percy amendment and the Gore amendment.

I shall vote against the amendments of both Senators because they are deceiving. They cannot deliver what they would presumably attempt to deliver. They will not bring tax relief to the people, but rather a further budgetary imbalance which will add more to the inflationary pressures that are eating away so disastrously at the purchasing power of the people of the country.

Mr. President, I would like to underscore what the Senator from New York said. He is precisely correct. I wish to associate myself with the remarks of the distinguished Senator from Delaware and the distinguished Senator from Nebraska. If we are to be honest with ourselves, we have to recognize that we cannot cut taxes, add to inflation, and still help the people.

The PRESIDING OFFICER. Who yields time?

Mr. PERCY. Mr. President, I yield myself 4 minutes.

The PRESIDING OFFICER. The Senator from Illinois is recognized for 4 minutes.

Mr. PERCY. Mr. President, first, I wish to explain to the distinguished Senator from Louisiana that it was my intention to offer these amendments as a substitute for the amendment offered by the Senator from Tennessee. I was frustrated in this attempt by his offering of an amendment as a substitute for his own amendment. Therefore, there was no parliamentary way in which I could proceed other than to offer perfecting amendments to the bill itself. This was not a choice of mine; it was the only means available to make certain there could be a consideration of the amendments and a vote.

Mr. LONG. Mr. President, will the Senator yield?

Mr. PERCY. I yield.

Mr. LONG. Could not the Senator from Illinois have offered his proposal as an amendment to the first Gore substitute? I wish to address that question to the Chair. Is that correct? I ask the question on my time.

The PRESIDING OFFICER. The Senator from Illinois could have offered his amendment to the first amendment of the Senator from Tennessee (Mr. GORE) to strike out and insert.

Mr. LONG. Yes.

Mr. PERCY. But I was unable to do that once the Senator from Tennessee had offered his own substitute.

Mr. LONG. Mr. President, once again I wish to address a parliamentary inquiry. Could not the Senator have offered amendments in the nature of perfecting amendments to the first Gore amendment, while the first amendment was pending, and would not the Senate have voted on the substitute in the nature of a perfecting amendment prior to voting on the substitute offered by the Senator from Tennessee?

The PRESIDING OFFICER. The Senator is correct.

Mr. PERCY. That knowledge was not available to me at the time. Of course, I would have preferred to do it that way. Faced with the emergency we had on the floor of the Senate, we did present it in the way that seemed best, with the advice we had at hand.

But as to whether or not these amendments are deceiving, I wish to say there is nothing deceiving about them. All of the schedules have been clearly laid out. The revenue cost has been clearly indicated, and the benefits to be gained have been laid out in tables, as well.

I should like to comment on the remarks by several members of the Committee on Finance that they do not consider this a tax-cutting bill. I do not see that at all, because in the table on page 36446 it is clearly indicated that the bill of the Committee on Finance provides tax relief of $24.8 billion over a period of 4 years. The Gore amendment and the Percy amendments provide tax relief of $29.3 billion. Therefore, it is a matter of degree and not of kind; there is a $4.5 billion difference.

What we clearly have done is simply to indicate that some consideration should be given, especially to families with dependents and particularly families with children; and that there should be some equitable adjustment of the personal exemption which has not been adjusted for over 20 years. This is clearly indicated by the table at the bottom of the same page, which I have already mentioned, which indicates tax relief provided by income levels, and the tax relief is provided where it is most needed, at the lower-income levels. It also takes into account families with children who, as I understand it, have for many years felt it inequitable to try to raise a child on $600 a year. It cannot be done. In this respect the Senator from Tennessee and I concur.

The PRESIDING OFFICER. The time of the Senator has expired.

Mr. PERCY. Mr. President, I yield myself 1 additional minute.

The PRESIDING OFFICER. The Senator is recognized for 1 additional minute.

Mr. PERCY. Mr. President, the cost of $900 million in the first 2 years is not fiscally irresponsible. Many things have been done in this schedule, so we have shifted other tax relief to later years. It can be brought forward if we wish to, but the revenue impact in my amendments is felt in 1973, and if by that time we cannot recover the additional relief that has been granted to individuals, the situation always can be rectifled. However, the effect on revenues by the amendment of the Senator from Tennessee cannot be rectified. That will have its impact in 1970 and 1971 and it will substantially affect those years. If ways cannot be found to cut the expense or to have other revenue come in, there would simply be a net effect on the budget that could be very difficult. Under my amendments the greatest effect would be in 1973.

I do not feel that $900 million is fiscally irresponsible. I want to stay fiscally responsible. I am not up for reelection in 1970. In a large tax bill providing overall tax relief, I am trying to fulfill a pledge to take into account families with children. They should have additional relief.

The PRESIDING OFFICER. The time of the Senator has expired. Who yields time?

Mr. WILLIAMS of Delaware. Let us vote.

Mr. GOLDWATER. Mr. President, will the Senator from Illinois yield, so that I may ask a question?

Mr. PERCY. I yield.

Mr. GOLDWATER. Earlier this morning, I recall that the leadership position, which I assumed to be the Republican position on the Percy amendments, was in favor. It was confusing to me. I telephoned the White House, and I was told it is not the Republican position.

Will the Senator from Delaware clarify that?

Mr. GRIFFIN. Mr. President, will the Senator from Illinois yield to me so that I may respond?

Mr. PERCY. I yield.

Mr. GRIFFIN. Mr. President, I wish to make clear to the Senator from Arizona that the message was in error. A clarifying call was made to the Senator's office a few minutes later. Perhaps the Senator did not receive the message indicating that the Senator from Pennsylvania (Mr. SCOTT) and I were going to vote for the Percy amendments, and conveying the information which the Senator from Delaware received this morning that the official position of the administration is against both the Gore amendment and the Percy amendments.

I am sorry if the Senator from Arizona did not get that clarification. The first message was not correct.

Mr. GOLDWATER. Mr. President, I thank the Senator. It was a confusing statement. It confused me, but I left my office before the second call.

Mr. PERCY. Mr. President, because the Senator was not in the Chamber at the time of my opening remarks, I made perfectly clear that the administration, I felt quite confident, would prefer to stay with the committee bill as it stood, but that as there was this personal exemption in the bill, they would have preferred, in my judgment, the Percy amendments over the Gone amendment because of its impact in early years.

Mr. WILLIAMS of Delaware. I do not know what the administration prefers here; whether they prefer to be "shot or hung." They hope that the amendments of both Senators will be defeated.

The PRESIDING OFFICER. Who yields time?

Mr. PERCY. Mr. President, I yield myself 3 minutes to summarize the position I have taken.

The PRESIDING OFFICER. The Senator from Illinois is recognized for 3 minutes.

Mr. PERCY. I fully concur with the administration's program of fighting inflation. I fully concur with everything that has been done to try to hold down expenses. The military cuts which have been made are meaningful. The $3 billion of expenses taken out have been hard to take out, but I have supported the administration in reducing military expenses. We still have a long way to go in rectifying national priorities and cutting back on further military expenditures. I would hope that the Vietnam expenditures could be reduced substantially over the next few years. So I feel, in presenting tax relief, the large part of which will be delayed until 1973, that we can foresee areas which can be cut out of the budget. The increased revenues can be brought in as the gross national product increases, and we can easily absorb that $3,700 million expense by 1973.

I feel that further reductions in expenses can easily be made to meet the $500 million expense of my amendment in 1970 and the $400 million expense in 1971.

I present the amendments only on the premise that we can have not only a balanced budget but also a surplus, and show that we can fiscally manage our house in a way that can fight inflation.

We have not won the battle against inflation yet, but we see indicators now that seem to indicate that the continued battle that has been waged by the administration is beginning to be won. I have supported the restraint that has been shown in public works expenditures and other areas of meaningful cuts; but I think that when we take a tax bill of this consequence, the third most important tax bill that Congress has ever considered, if we are to provide, over a period of 4 years, for some $4.8 billion in tax relief, we should then give some consideration to families with children.

The United States is one of the few countries in the world today that does not make that extra provision for families having large numbers of children.

I think that the Percy amendments will benefit every category of taxpayer. They will benefit the single person. They will benefit married people without children.

The PRESIDING OFFICER. The time of the Senator from Illinois has expired.

Mr. PERCY. I yield myself 2 additional minutes.

The PRESIDING OFFICER. The Senator from Illinois is recognized for 2 additional minutes.

Mr. PERCY. My amendments will benefit married people with children in the low-income brackets and in the middle-income brackets. I, therefore, feel they are balanced with equitable and can meet the tests which have been set by the President, tests which are absolutely sound and should be met.

This is, first, meaningful legislation. It meets all categories of need. Second, it is equitable and fair. Third, it is fiscally responsible. Fourth, it is consistent with the administration's efforts to control inflation, and with that I am wholeheartedly in sympathy. It provides even-handed tax rate reduction in all income brackets. For these reasons I present the amendments. I feel that their adoption would be to preserve all of the good work of the Finance Committee. All the major provisions which have been worked into the committee report, and into the legislation now before the Senate, are in these amendments although they will be delayed, so that their early effect will not adversely affect the balance we now have in the budget, a budget which is precarious.

Mr. DOLE. Mr. President, will the Senator from Illinois yield to me for the purpose of offering an amendment to his amendments?

Mr. PERCY. I should be very happy to yield. I do not know how we can complicate the picture any more, but possibly this will.

The PRESIDING OFFICER. The Chair would advise the Senate that the amendment can be discussed at this moment, but it cannot be offered until all time has been yielded or used by both sides.

Mr. PERCY. I yield 2 minutes to the Senator from Kansas.

The PRESIDING OFFICER. The Senator from Kansas is recognized for 2 minutes.

Mr. DOLE. Mr. President, I have an amendment at the desk that I will offer at the appropriate time. My amendment provides the same relief as the so-called Percy amendments for the years 1970, 1971, and 1972. In 1973 it is the same except that it eliminates the personal exemption increase to $800 in the Percy amendment; my amendment ends with a personal exemption of $750 for 1972 and subsequent years.

My amendment has some advantages, I have listened to the debate between the Senator from Tennessee and the Senator from Illinois, recognizing that the committee bill, of course, is sound in most areas. I also recognize a deep feeling among Senators that something should be done to increase personal exemptions. Under the Percy amendments, there would be a $3.8 billion longrun loss over the committee bill. Under the amendment I shall offer, the longrun revenue loss will be $2.2 billion over the committee bill.

My amendment has several advantages oven Senator GORE's amendment. Senator GORE's proposal for an increase in the personal exemption to $700 in 1970 and to $800 in 1971, combined with a low-income allowance phased out only in 1970 would produce a net revenue loss in calendar years 1970 and 1971 of approximately $6 billion compared to the committee bill; my amendment would produce a net revenue loss in calendar years 1970 and 1971 of about $1 billion as contrasted with the committee bill -- a difference of $5 billion over the next 2 years. In view of our tight budgetary situation and the crucial need for fiscal restraint to combat inflation, the large short-run revenue loss of Senator GORE'S amendment is not acceptable. Although my amendment has a long-run revenue loss of approximately $2.2 billion compared with the committee bill, it has reduced the long-term revenue loss of Senator PERCY's amendment by about $1.6 billion.

It is my view that the additional long term revenue loss provided by my amendment is acceptable; the Congress will have the opportunity to review this proposal if the fiscal situation at that time has not improved, but I do not feel that given the present fiscal situation and our present inflation, a short-term revenue loss of the size which will result under the Gore amendment in the next 2 years can be tolerated.

In addition, my amendment, as does Senator PERCY's amendment, provides substantial simplification to many millions of taxpayers which will not result if the Gore amendment is adopted. Under my amendment it is estimated that about 11 million tax returns will switch to the standard deduction while only approximately 4.4 million returns will change from itemized deductions to the standard deduction under Senator GORE'S amendment. My amendment will thus relieve over 6 million more taxpayers from itemizing their deductions. This will provide a substantial simplification benefit for each individual taxpayer.

Mr. MUSKIE. Mr. President, will the Senator from Louisiana yield?

Mr. LONG. Mr. President, I yield 2 minutes to the Senator from Maine.

The PRESIDING OFFICER. The Senator from Maine is recognized for 2 minutes.

Mr. MUSKIE. Mr. President, I have many questions about the Percy amendments. First of all, there will be a significant additional revenue loss of $4 billion more than the Gore amendment.

More than that, that $4 billion additional loss will continue each year thereafter, at a time when I am sure we will be preoccupied with the cost of the domestic programs which we will need to rebuild our country here at home.

Second, I fear that the effect of the Percy amendments in terms of inflation may well be to stretch it out.

The assumption of the distinguished Senator from Illinois that inflation will be brought under control in the next year or two may be optimistic. If I am correct, then the projections of additional revenue losses 3 years from now, of the magnitude contained in the Percy amendment, may well stretch out inflation on the theory that the buyer who purchases today rather than tomorrow is doing so because it will cost more tomorrow.

An article published in this morning's Washington Post indicates that capital construction next year will rise over that of this year by 11 to 12 percent. This demonstrates the argument I have just made.

For these reasons, and others which I do not have time to mention -- these two are preeminent -- I shall vote against the Percy amendments.

Mr. GORE. Mr. President, will the Senator from Louisiana yield?

Mr. LONG. I yield 2 minutes to the Senator from Tennessee.

The PRESIDING OFFICER. The Senator from Tennessee is recognized for 2 minutes.

Mr. GORE. The amendments offered by the distinguished Senator from Illinois would postpone the benefits, I think unreasonably, to the low- and middle-income groups. This is how the newfound fiscal responsibility will be achieved. No rate changes would go into effect at all until 1972. And then what would be the tax reduction of a wage earner with approximately $5,000 in wages and a family of a wife and two children?

He would have an approximate tax liability of $100, and the Percy amendments would give him a reduction of one-fourth of 1 percent. That amounts to a quarter -- one 25-cent piece. By 1973 and thereafter, it would be increased to half a dollar.

Mr. President, this is piddling business for the low-income brackets, and so could only serve as an excuse to cut the rates for the high brackets.

The PRESIDING OFFICER. All time on the amendments has expired.

Mr. DOLE. Mr. President, I call up an amendment to the Percy amendments.

The PRESIDING OFFICER. The amendment will be stated.

The assistant legislative clerk read the amendment as follows:

On page 2. beginning with line 19, strike out all through line 21 and insert the following:

"(C) Increase to $750 for 1972 and subsequent years--effective with respect to taxable years beginning after December 31, 1971"

On page 3, beginning with line 7, strike out all through line 19.

On page 27, line 1, strike out "in" and in lieu thereof insert "after".

On page 27, line 2, strike out "during" and in lieu thereof insert "after".

On page 27, beginning with line 4, strike out all that follows.

Mr. PERCY. Mr. President, I ask unanimous consent that my perfecting amendments be modified by incorporating the Dole amendment.

The PRESIDING OFFICER. Is there objection? The Chair hears none, and it is so ordered.

All time on the perfecting amendments has expired. The question is on agreeing to the perfecting amendments of the Senator from Illinois, as modified. The yeas and nays have been ordered, and the clerk will call the roll.

The assistant legislative clerk called the roll.

The result was announced -- yeas 23, nays 72, as follows:

[Roll call vote listing omitted]

So, Mr. PERCY's perfecting amendments, as modified, were rejected.