August 6, 1976
Page 26188
ADDITIONAL STATEMENTS
Mr. MUSKIE. Mr. President, the mammoth tax reform debate of 1976 is coming to its end in the Senate 7 weeks after it began. It is a debate in which I have participated more than I personally would have wished — indeed more than many of my colleagues would have wished me to.
I have tried to relate the elements of this tax bill to the congressional budget we adopted in May at every major step of its evolution.
I argued in favor of a full-year extension of the general tax cut for all taxpayers, and finally we won that.
I have argued for the $2 billion in additional revenues we hoped to raise from tax reform when we passed the first resolution. We have lost that. Indeed this bill, instead of gaining $2 billion from tax reforms in fiscal 1977, will now lose about $200 million in fiscal 1977 and lose revenues in every subsequent year, rising to over a $3 billion loss by 1981.
It means that when we pass our second budget resolution on about September 15, the Congress may have to show the American taxpayers a 1977 deficit over $2 billion larger than it might have been.
I will vote no.
I will vote no because this Congress has scrimped and saved on the spending side of the ledger to come within its budget this year, and I cannot accept the failure of the Senate to act with similar restraint with respect to the revenue side of the ledger.
I will vote no because this bill mortgages the future — spends dollars for tax breaks in future years which we may want for other purposes — spends dollars which may prevent us from balancing the budget by 1980.
And I will vote no in sorrow and disappointment, I will confess. I had hoped that we could reverse the nibbling at the public purse — substantially trim back the Christmas tree that the American Tax Code has come to represent. I had hoped for tax simplification and tax reform.
But what we have done belongs to the old and not to the new. It belongs to what the American people reject and not to their hopes.
The distinguished chairman of the Finance Committee, Senator LONG, is correct when he says there are provisions of merit in this over-1,500 page tax bill. There are many sections I would strongly support as individual pieces of legislation.
But these elements unfortunately are now clearly outweighed by costly new and increased tax expenditures that will not accomplish the worthy goals their proponents claim for them. The bill now contains a billion dollar a year tax credit for higher education that is likely to only increase tuition costs. The bill also contains the ESOP billion dollar a year Federal Treasury giveaway of corporate stock to the employees only of our capital intensive industries. The so-called estate and gift tax reforms adopted by the Senate will reduce revenue collections by over $2 billion a year by 1981. Smaller special interest revenue losing provisions are sprinkled throughout the Senate bill — new benefits for insurance companies, railroads, airlines, percentage depletion for geyser energy, tax credits for windmill energy. The list goes on and on.
Not only does the Senate bill include new and expanded revenue losing provisions, it fails to incorporate numerous revenue raising reforms that should and could have been included. The most pressing reform — to sharply reduce the use of tax shelters — is not adequately accomplished in the Senate bill.
A bill that would have on balance raised revenues and constituted reform was not some figment of a legislator's dream. By comparison to the Senate estate tax provisions that will lose $2 billion annually by 1981, the estate tax bill just reported by the Ways and Means Committee will increase revenues in the long run. The House-passed reform bill will raise $1.4 billion in fiscal 1977 and almost $2.2 billion in 1981. Just contrast those figures to the figures I mentioned earlier of minus $200 million and minus $3 billion for the same years under the Senate bill.
If the tax bill currently before the Senate is passed, I still would hope a bill will emerge from conference which more closely resembles the House-passed reform bill in its revenue effects and also preserves the fiscal policy of a full year extension of the general tax reductions. However, this hope cannot substitute for the actual provisions of the bill now before us. A bill, which in its present form, I find unacceptable.
During the debate on this bill, I have sounded harsh at times, perhaps. And I apologize to my colleagues for that. It was done sometimes for emphasis, sometimes in frustration. And I know we have all felt our own frustrations as this debate has gone on.
But I would like now to reflect in retrospect on what our experience with this bill may mean — for Congress, for the budget process, for the next administration, if it is to fulfill the hopes of the average American family for a tax code they can understand and whose fairness they can trust.
Last spring the Budget Committee, in preparation for reporting the first concurrent resolution, was coming to the conclusion that $2 billion in additional revenues through tax reform was a desirable goal. We managed to pare roughly $8 billion off the spending side of the budget — about 2 percent and we hoped to do as well with the hundred billion dollars of tax expenditures — 2 percent or $2 billion.
My colleague, the distinguished chairman of the Finance Committee, came to the Budget Committee. He did not say our objective of $2 billion was wrong or unreasonable. He in no way suggested it was not within our power to recommend it if we wished. But he frankly said it could not be done.
He said that once you get into tax legislation, there is always a majority for "reform" but very seldom a majority — after the special interests have done their work — for any particular reform. It is easy to cut taxes, he told us and we have — and very hard to close loopholes.
The chairman was absolutely right, it turns out. And no arguments of fiscal integrity or budgetary responsibility can change that reality in the Senate it seems. Put the public purse on the bench to patch it, and they will nibble holes in it faster than you can stitch.
I am not here to point the finger of blame for the outcome of the bill in the Senate. The majority has spoken.
Nor am I pessimistic about the future of the budget process in general. We set a target in May for revenues. In August the Senate now is voting for a tax bill which will reduce revenues about $2 billion below target. Some or all of this shortfall may be made up in the tax bill conference.
At the same time, however, the appropriations process is moving forward with record speed. On the spending side we are well within our targets. We have a second resolution ahead of us which will give us the option to modify our budget before the fiscal year begins, accommodating the savings we have made on the spending side, acknowledging what we have failed to do with revenues, and accept the resulting deficit.
But I hope our lesson — and the advice of the Finance Committee chairman — is not lost on future administrations or on the public.
Tax reform comes hard in the legislative branch — very hard, if at all. Inertia and the weight of special interests is enormous. Something bolder than the initiatives represented in the 1,500 page bill and all its inscrutable amendments is needed to keep faith with the American public.
In closing, I would like to say that our experience with this bill can only make the forces which brought about budget reform in the first place stronger than ever.
Public demand that Congress develop an explicit and responsive fiscal policy — and stick to it;
Public demand that Government become ever more watchful and more rational in its use of public resources;
Public demand that Congress reassert its constitutional mandate to control the public purse strings;
And not least, public demand that we begin to apply the same scrutiny, the same sort of equity, to tax expenditures, the whole $100 billion of them, that we do to direct spending.