September 9, 1977
Page 28451
Mr. MUSKIE. Mr. President, how much time do I have?
The PRESIDING OFFICER. Twenty-two minutes.
Mr. MUSKIE. Mr. President, I yield myself 10 minutes.
May I say, first of all, to my good friend from Delaware that he has never voted for a budget resolution, I think the record discloses that, although he was a very important voice in trying to shape, he was involved in trying to shape, the Budget Reform Act.
Clearly then this amendment arises out of his own personal philosophical difference with every budget resolution enacted into law. He prefers his own economic policy to that adopted by the Congress as a whole, and it is out of that difference that this amendment arises, as I see it.
Second, the Senator said that the Budget Committee worries about deficits only when a tax cut is proposed. Well, I challenge that. Any examination of the record of Senate consideration of the budget resolutions in 1975, 1976, and 1977 indicates that this Senator, and a majority of the Budget Committee, and the Senate as a whole, have rejected proposals to increase spending because of the impact on the deficit, and we have lost only three of those.
I have never supported a proposal to increase the budget resolutions by amendments on the floor even when some of those amendments were very attractive politically, including yesterday's agriculture amendment, including last spring's housing amendment, including last spring's veterans' amendment.
So when the Senator says the Budget Committee is concerned with deficits only when he proposes a tax cut I take sharp issue with him.
Second, the Senator argues that we ignore what he regards as an economic truism, that the tax cut of 1964 caused an increase in revenues of $54 billion.
May I say to the Senator there has been no testimony before the Budget Committee by economists of any point of view in the 3 years the Budget Committee has existed which supports what he regards an economic truism.
A great deal of the increase in revenues that has taken place has been the result of growth in the economy. Undoubtedly there was a stimulative effect to the tax cuts of 1963-64. But to argue that revenue increases that have taken place since then are wholly caused by that stimulus simply is not supported by any economic opinion to which I have had access.
With respect to the Senator's amendment, if we follow one of the growth paths suggested by CBO for analytical purposes, if the economy grows fast enough under this growth path, to reduce the unemployment rate to 41/2 percent by 1981 without additional tax reduction, then individual income taxes under current policies will be $305 billion in fiscal year 1981.
Thus, a 10 percent permanent tax reduction would then result in a gross revenue loss of $30 billion by fiscal year 1981.
Mr. President, my opposition to the Roth amendment is not based upon any personal philosophical judgment that tax cuts are always inappropriate. As the distinguished Senator from Oklahoma has pointed out, the Budget Committee underwrote, approved and supported, tax cuts earlier this year amounting roughly to $18 billion in 1978. That is larger, incidentally, I might add, than the Kennedy tax cut of the early 1960's.
So if you want to use that misunderstood historical analysis, I mean we have already provided that kind of a tax cut. The question is do we want to do it now.
Let us look at the effect of the Roth amendment. These numbers are in the Roth amendment, as corrected. If the Roth amendment is adopted, revenues for 1978 will be reduced from the $395 billion now provided in the budget resolution to $383.6 billion, a reduction of $11.4 billion.
That would result in an increase in the deficit for 1978, which is listed in the budget resolution at $64.7 billion after yesterday's action, to $76.1 billion in accordance with the Senator's own amendment.
It would result in an increase in our total national debt from the $778.9 billion now in the budget resolution to the $790.3 billion, which is the figure that would end up in the budget resolution according to the Roth amendment. Beyond that, the increase in the national debt this year would rise according to the Roth amendment from $78.9 billion to $90.3 billion.
Mr. President, the question of whether or not the economy requires this kind of stimulus at the present time is an important question. It is a question which has been before the Budget Committee since the first of the year, and we have proposed a mix of policies, tax reductions and spending policies designed to accommodate a stimulative policy.
It has been our view that our stimulative policy must be a moderate and steady one in order to avoid not only the problems of a recessionary economy but also the potential problems of increased inflation, and this policy has been examined now by Congress on three occasions in this calendar year: in early spring before final action on the first concurrent resolution, at the time of the first concurrent resolution, and now at the time of the second concurrent resolution. I assure the Senate that no problem has been higher on the agenda of the Budget Committee than the examination of that problem, how you achieve a proper balance between the spending requirements of Government programs and the need to stimulate the economy and the burdens that we impose on our people by way of taxes.
I think the resulting policy, as to which Senator ROTH clearly on the record is opposed totally by voting against every budget resolution, has been supported by Congress, as a whole, on at least three separate occasions in this calendar year.
What this amendment would do is this: It would increase the fiscal year 1978 deficit from $64.7 billion to an unacceptable high area of $76 billion. The Senator speaks of business confidence. I wonder how business confidence would be supported by that kind of an increase in the deficit.
We already face the difficulty of achieving a balanced budget by 1981, beginning with a deficit of $64.7 billion in1978. How credible would be our argument that a balanced budget by 1981 is still our goal if we arbitrarily increase the deficit this year to $76 billion, which would be the new figure?
Second, a major tax reduction this year would undoubtedly limit our ability to produce a tax reform package of the kind the economy needs. We know that a major tax reform package will be proposed this year, and its goals should be these: to encourage capital formation, to simplify our tax system, and to improve tax equity. A tax cut will be necessary to achieve those goals. And I fail to understand how anyone who has been exposed to tax writing legislation in this Senate over the years would disagree with that point.
A tax reform package involving these kinds of goals must be accompanied by a tax cut as a practical matter if we are to achieve it.
The PRESIDING OFFICER (Mr. ANDERSON). The Senator's 10 minutes have expired.
Mr. MUSKIE. I yield myself another 5 minutes.
An across-the-board rate cut will not remove impediments to capital formation. It will not simplify the tax system. It will not improve tax equity.
Thus, it would be unwise, in my judgment and in the judgment of the Budget Committee, to lose the revenue associated with an across-the-board rate reduction when what is needed is tax reform. And to pretend that you can get tax reform after you have given away your tax cut I think is simply to be legislatively unrealistic in the extreme.
Finally, Mr. President, as we contemplate other problems with which this country is confronted, the cost of health care, the cost of welfare reform, the need to develop alternative energy sources and the capital requirements that may be involved, the tax incentives that may be required, the need to develop mass transportation systems and the public role that has yet to be defined fully, as one contemplates those kinds of problems, and others, to eliminate future revenues now in a misguided tax cut would be to limit our options in the future with respect to those problems.
These are the reasons, Mr. President, and I tried only to supplement the statement of my good friend from Oklahoma, Senator BELLMON, why the Budget Committee has taken the position it has on a permanent tax cut now. We oppose it for all these reasons.
May I say, finally, that no one has beena more articulate proponent of the concept of permanent tax cuts as against temporary tax cuts than the Senator from Oklahoma. He has already stated his own philosophical view that tax cuts are a more effective stimulus than some spending programs.
Nevertheless, putting all of the facts with which the Budget Committee had to deal in the context of his own philosophical beliefs, he had reached the same conclusion that I have. So that this conclusion is not the product of ED MUSKIE's liberal philosophy, or of HENRY BELLMON's conservative philosophy. It is a practical judgment.
As Senators know, we used to make economic policy on the floor of the Senate by ad hoc decisions of the kind involved in the Roth amendment, ignoring the overall context and balance that needed to be struck, the problem of setting priorities, the problem of fitting our spending and revenue policies into some rational economic goal. We used to do it that way. Apparently, it is the desire of some on the floor of the Senate to return to that way of doing business.
That way of doing business produced all kinds of consequences which led to the adoption of the Budget Reform Act. It led to excessive spending. It led to spending on low priority programs. It led to tax and spending programs that did not respond sensitively enough or quickly enough to the needs of the economy. It led to the proliferation of Government as new programs and new agencies, that might not have otherwise been justified if a system of priorities had been in effect, came into existence and proliferated, created the administrative chaos with which every Member of this body, I think, takes exception now, the public mood being what it is.
So what I am saying, Mr. President, and I have said over and over again on the floor of this Senate, is we have a budget process. It is Congress means for setting economic policy and a majority of this Senate has supported those resolutions and the policy after understanding its composition.
Senator ROTH does not believe in what we have done. He believes in the process because he supported it, but he does not support its results. I suggest that those of us who contributed to the policies which have been developed under that process should look carefully at his amendment for that reason as well as for the other substantive reasons which I have tried to outline.
Mr. President, I reserve the remainder of my time.
Mr. ROTH. Mr. President, in view of the fact that I have expended considerable time in the hearings on Mr. Lance, and was not able to come down here, the Senator from Utah and the Senator from California have both very generously agreed — and I want to ask at this time if they are willing — to permit me to have 10 minutes of the time that has been allocated to both of them for the subsequent amendments.
Mr. HAYAKAWA. I am happy to agree to that.
Mr. MUSKIE. I think in order to do that we would need unanimous consent.
Mr. ROTH. Yes. I wanted to ask them publicly if they were agreeable.
Mr. MUSKIE. Is that 10 minutes from each?
Mr. ROTH. Ten minutes from each, to be taken from their time.
Mr. MUSKIE. As I understand, the Senator's request is that the time available to each of them on their amendments be reduced by 10 minutes, and that that 20 minutes be allocated to the Senator from Delaware?
Mr. ROTH. That is correct.
The PRESIDING OFFICER. Is there objection?
Mr. MUSKIE. I have no objection.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. ROTH. I thank all the Senators concerned in permitting this modification to be made.
Mr. President, I think it is very important to make two points at the beginning. First, what I am proposing is in accordance with the budget process. It is true, and I take great pride in the fact, that I was a key architect in the formation of the new budgetary process; but I think it is only fair to point out that the purpose of the budgetary process is to permit debate and discussion on all alternatives, not only in the Budget Committee but on the floor of the Senate as well, so that the will of the Senate can be determined.
Mr. President, it is true that I have voted against the budget resolutions because they do not reflect what I believe to be sound economic policies for the future growth and development of this Nation. But before I get into some discussions on that, I would like to make very clear, because I think the issue has been clouded, what we are proposing here.
What my amendment does, and the only thing that it does, is permit Congress to enact a tax cut if it deems it desirable for 1978. If this amendment is not adopted, we will be prevented, under the budget resolution, from doing so. That is all it does.
Mr. MUSKIE. Mr. President, will the Senator yield?
Mr. ROTH. I would like to continue, if I may.
Mr. MUSKIE. The Senator does not wish to hear my question?
Mr. ROTH. I yield on the Senator's time, yes.
Mr. MUSKIE. I wish to make the point that the budget process inescapably establishes a budget resolution which imposes limitations applied to revenues and spending. Is the Senator saying it is unwise, as a permanent thing, to have that kind of restraint?
Mr. ROTH. What I am saying, in answer to the distinguished chairman, is that I think that under present conditions, it makes sound economic sense that flexibility be provided for a tax cut during the current year.
Mr. MUSKIE. Should we not have, then, a budget resolution at all?
Mr. ROTH. All I have suggested is that I am offering an amendment to the resolution to provide for that flexibility.
Mr. MUSKIE. Some other Senator may think yours is not big enough, and this may be a restraint on him.
Mr. ROTH. Mr. President, I would just point out that a part of the budget process is to permit the consideration of individual Senators' thoughts.
Mr. MUSKIE. Of course.
Mr. ROTH. There is nothing beholden or sacred about what the Budget Committee recommends. We are here right now to see whether the Senate agrees or disagrees with what the committee has recommended. All I am proposing at this time is, because of the economic circumstances, I happen to think it is wise, very wise, to permit flexibility during this year to permit Congress to propose a general tax reduction.
Mr. MUSKIE. If the Senator will yield again on my time, the point I am making is that the idea of flexibility, as I understand the Senator's definition, is that that flexibility ought to be available to any Senator. If that is the case, then any number adopted by the Senate as a whole is an undesirable restraint upon the flexibility available to Senators.
The budget resolution was adopted in the spring. The revenue numbers the Senator is talking about are the revenue numbers adopted by the whole Congress. The Senator says that is an undesirable lack of flexibility; so the inescapable conclusion, as I see it, is that the Senator is against any limitation on revenue collections in budget resolutions that does not conform to his own economic views.
Mr. ROTH. I shall answer; then I would like to proceed with my discussion.
In answer to what the distinguished Senator has said, it is my position that, because of the economic conditions in this country today, a general tax reduction is very much in order. I believe, therefore, that that flexibility should be built into the general budget resolution.
I emphasize again that we are not today proposing any specific tax cut. If the budget resolution gives us the authority to move forward with a general tax reduction for fiscal year 1978, then, of course, what kind of tax reduction will be enacted will have to be determined according to the congressional processes, which necessarily means that the House Ways and Means Committee as well as the Senate Finance Committee and the House and the Senate together, ultimately with the approval of the President, will determine what that general tax reduction should be.
It is a mistake and an error, as far as I am concerned, at this stage to confuse this amendment to the budget resolution with a specific or particular tax reduction.
It is true that I intend to continue to fight for an across-the-board tax rate reduction for working Americans, because I think it is the most important thing that can be done to provide jobs and to get our economy moving.
In all candor and all honesty, it seems to me that the thrust of the arguments of those opposing my amendment is the same one made year in and year out, because they want bigger spending and more Washington involvement. Mr. President, if there is one message that it seemed to me was very clear in the campaign last fall — and our President, who was elected, ran on that platform — it was that we should have less Government, less Washington, and less involvement in the life of the average American.
The fact that I have voted against every resolution does not mean that I am against the budgetary process. It means I was against the budget resolution proposed and amended on the Senate floor.
What I am trying to say is that these budget resolutions, every year, have reflected increases in Government spending, and that is the basic argument being made today against my amendment: "We cannot have any tax cut because we have to prepare for more Federal spending."
I say that there are always areas where we can have more Federal spending, but what concerns me — I say to the distinguished chairman, the Senator from Maine, and to the distinguished ranking Republican member, the Senator from Oklahoma, read that article in this week's Newsweek. The American people are fed up with high taxes. They are concerned about the fact that they are faced with downward mobility. The great American dream is no longer here. The American dream of buying a home, of sending your children to college, of taking a vacation — these are what make up the American dream, and this is what has propelled the American economy forward. But we are hearing the same old kind of arguments that have been made year in and year out, that have gotten us into this horrible combination of inflation and unemployment: "Well, we have to have more tax revenue because we need more Government spending."
What I am saying is that I have voted against those resolutions because I think what needs to be done — and somewhere, somehow, we have to make a start — is to bring down the size of the Federal Government.
I support a lot of these new programs, but I think much of the money we are spending could be better spent.
I am saying that a general tax reduction, if we do what Mr. KENNEDY proposed, is the way to provide more funds for more Federal programs and to have growth in the economy.
Mr. President, the economic indicators today are such that a general tax reduction is in order. I do not think there is any particular need of once again reviewing why I think that is desirable. I believe it is desirable because, as Mr. Heller said about the Kennedy proposal, by giving the private sector the opportunity to operate, we had people working, we had more productivity, we had people saving, we had more people move out of the ranks of unemployment and into meaningful jobs in the private sector, and, by doing so, we reduced many of the costs of spending — something like $14 billion for every 1 percent of unemployment. The whole thrust of the operation was to provide more revenue for the Federal Government so that new programs which were needed could be financed and supported.
That is all I am trying to do today, to provide the opportunity for this Congress to enact a meaningful tax reduction which will have that effect. What it would be like would remain to be seen. I have my own ideas as to what it should be.
I believe it is desirable because it is about time we start listening to middle America, the working people, and give them an opportunity to once more enjoy upward mobility and to further promote the economy of this country.
Mr. President, I yield the floor.
Mr. MUSKIE. Mr. President, I yield myself 5 minutes.
The PRESIDING OFFICER. The Senator only has 4 minutes remaining.
Mr. MUSKIE. I was told I had 7 minutes a moment ago.
The PRESIDING OFFICER. Some of that time was used. Four minutes remain.
Mr. MUSKIE. I think there is an essential correction of the RECORD to be made. No. 1, I have been in the Senate 19 years. There have been no increases in personal income taxes in all that period, except for the temporary surtax in the mid-years of the Vietnam war. But there has been a series of tax cuts over that period.
There have been increases in payroll taxes tied to increases in social security benefits. With respect to personal income taxes, the fact is that, as a percentage of personal income, income taxes were 10.8 percent in 1967 after the Kennedy tax cut, and were 10.7 percent of personal income in 1976. So there has not been this steady increase in income taxes that the Senator from Delaware implied in his statement.
Finally, Mr. President, I would repeat the essential objections to this amendment. If adopted, it would throw into disarray the economic plan which the Congress as a whole adopted early in the spring, which the Budget Committee recommends implementing with the second budget resolution.
It would face us with an increase in the deficit for 1978 of over $11 billion.
It would result in a permanent tax cut which would close our options, or sharply reduce our options, for tax reform and to deal with some of the other problems with which we are confronted, such as the cost of national health insurance, the cost of welfare reform, some of the energy problems we face, some of the mass transportation problems we face, and some of the environmental problems we face.
If we want to close off those options, abandon our own economic plan, then we should vote for the Roth amendment. If we choose not to stick with what the Congress put in motion in the spring by way of a budgetary and economic pro gram and plan, throwing the whole process overboard in terms of what it hasproduced this year, then vote for the Roth amendment. If Senators do not want to do that, then vote against the Roth amendment.
That is the essence of the issue. I am content to yield back the remainder of my time.
Mr. President, I ask for the yeas and nays on the amendment.
The PRESIDING OFFICER. Is there a sufficient second?
There is not a sufficient second.
Mr. ROTH. Mr. President, how much time have I remaining?
The PRESIDING OFFICER. The Senator has 12 minutes remaining.
Mr. ROTH. Let me make one brief comment.
In answer to the distinguished chairman that there has been no tax increase, I believe the average American would, in substance, disagree very sharply with that. It is a well known fact that inflation has caused a substantial tax increase for every American. As a matter of fact, I think CBO says that for every 1 percent increase in inflation, there is a 1.5 percent increase in taxes.
One of the things which I think has concerned so many of us is that in a very real way inflation has served the purposes of Government. By pushing more people into higher tax brackets, more funds flow into the Federal Government. The Federal Government is thereby able to finance new programs without voting to increase any taxes for that purpose.
Mr. MUSKIE. Will the Senator yield for a question? I have no time left.
Mr. ROTH. I will be happy to yield.
Mr. MUSKIE. May I point out that inflation is not an enacted tax increase. The Senator did not distinguish between increases resulting from inflation and increases resulting from deliberate congressional policy.
Secondly, just as inflation increases tax receipts, it also increases the cost of Government. It increases the level of interest payments, it increases the cost of many spending programs. Most of the increases in the Federal budget over the last year are attributable to inflation and the impact of unemployment on the levels of our people. So this increase in taxes related to inflation is not free money available to the programs.
Mr. ROTH. I would like to make two points:
One, as far as the man or woman back home, inflation has directly the same effect as increasing taxes. It can be argued that the policy of the Government has promoted inflation and thereby indirectly increased taxes.
On the second point, I think it is only fair to say that it has been shown that the Government does get taxes in addition to the inflationary increased cost of Federal programs.
I do not want to argue technicalities, but I am basically concerned with the impact on the average working man and woman. All I can say on that point is if we talk to any of them in Delaware or elsewhere, I am sure we will find the majority feel that taxes, in effect, have been increased.
I will be happy to yield
Mr. MUSKIE. Mr. President, may I ask for the yeas and nays at this point?
The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second.
The yeas and nays were ordered.
Mr. ROTH. I yield to the Senator from Utah.
Mr. HATCH. I would like to add to this discussion. With regard to some of the remarks of my dear friend and colleague, Senator BELLMON, I believe that a 10 percent permanent reduction in personal income tax rates may actually result in a smaller net revenue loss than the $11.4 billion proposed.
The $11.4 billion was the net revenue loss projected by the Congressional Budget Office, using their econometric models. However, all the conventional econometric models do not adequately estimate the revenue flows from a reduction in the tax rates. This is because they only reflect the increase in personal disposable income resulting from a tax cut. They in no way take into account the change in the relative attractiveness of work as opposed to leisure and consumption as opposed to investment. Thus, they are not constructed to take into account, it seems to me, the incentives to work longer, to work harder, to save more, to take greater risks, to be more innovative, et cetera, which are produced by what we are arguing for here today, a tax cut.
These shortcomings of the econometricmodels have been acknowledged by Dr. Alice Rivlin, by Mr. Bert Lance, and by Chase Econometrics. They are not recognized by the Budget Committee or most of the Congress. Therefore, I propose reducing the revenue figure in the second concurrent resolution by the greatest projected net revenue loss.
I think that the opponents to the Roth amendment have been speaking basically against the tax cut on the basis of these econometric models and have not taken these reflows into consideration.
Mr. MUSKIE. Will the Senator yield?
Mr. HATCH. I am delighted to yield.
Mr. MUSKIE. The $11.4 billion comes out of the amendment of the Senator from Delaware.
Mr. HATCH. That is true.
Mr. MUSKIE. Obviously, the Senators fear that may be the revenue consequences and they want to put plenty of room in the budget resolution to cover the $11.4 billion.
If we are ever going to have our own personal econometric model in order to control our votes on these tax measures, we are going to have the kind of chaos of the Smoot-Hawley tariff era, when we used to write tariff policy on the floor of Congress.
The $11.4 billion figure, as I am using it, is in Senator ROTH's amendment. I gather the same thing is in the amendment of the Senator from Utah.
Mr. HATCH. I understand that. The point I am making here is that it is one thing to say we are going to have $11.4 billion less in revenue, based upon faulty econometric models, which have been admitted to be faulty.
Mr. MUSKIE. If the Senator is citing Dr. Rivlin and Mr. Lance as authorities for that statement, I challenge it.
Mr. HATCH. I am citing the fact that all three have admitted that we are not taking into account the supply side feedbacks that could occur from a tax cut and the other econometric models upon which the Budget Office has based this figure.
Mr. MUSKIE. On the contrary, I have checked with the CBO and the reflows are taken into account with respect to the $11.4 billion figure. To estimate on this kind of thing is not a perfect art and far from a science. But to leap from that point to the conclusion that they are phony, upon what do we rely for the expert data upon which to base policy judgments?
Mr. HATCH. All I can say is I do not know who told the Senator that, but that is not true.
Mr. MUSKIE. I think our contacts with CBO are relatively close.
Mr. HATCH. That is the point I am making. I believe, and I think the Senator will find, on closer check, that Rivlin, Lance, and Chase Econometrics admit that they have not taken these into consideration and that they should be taken into consideration. In fact, Chase is going to change its econometric model as a result of some of the suggestions that have come inevitably from the arguments we are making here, today, frankly, from some of the people working with me.
Also, I might add that Senator LONG has complained about this, that we have really made some faulty projections in revenue estimates.
Mr. MUSKIE. As I say, I, myself, would agree, on the basis of testimony we have taken for 3 years, that these models are not perfect instruments for estimating anything. But we have to use what we have at the moment in order to maintain some consistency in policy making. If each of us is to enjoy the privilege of coming to the floor and, individually, changing these estimates to suit ourselves on the basis of our own evaluation of what the models ought to be producing, we shall have utter chaos on the floor. That is all I am saying.
To say they cannot be improved — of course, I am not going to put myself in that position. But to say, on the other hand, that the Senator has now come upon a perfect model is again something I am not prepared to say.
Mr. HATCH. Neither am I prepared to say that, except that we know the models that have been used are not perfect, are far from perfect, in fact are imperfect.
Mr. MUSKIE. So we toss out everything?
Mr. HATCH. No, but I hope the Senator is not advocating the position that individual Senators cannot come on the floor with amendments that may be appropriate and may, in fact, be accurate and may, in fact, be important to this country and may, in fact, save the average Joe American Taxpayer from being ripped off.
Mr. MUSKIE. I am. not saying that. I think it is permissible for me to say, on the basis of the provisions of the amendment itself, that what we are talking about is an $11.4 billion reduction in revenues.
Mr. HATCH. I think everybody agrees to that.
Mr. MUSKIE. Because that is what the amendment says. What the Senator has been trying to persuade us of is that it is not really going to be $11.4 billion. It is going to be something less. I have to take the amendment at face value and I am not going to agree to a verbal amendment, on the basis of the Senator's personal econometric model, that it is not $11.4 billion we are talking about, it is something less.
Mr. HATCH. I understand the Senator's argument very well. But my argument, and that of the distinguished Senator from Delaware, is that it is incomprehensible to us not to take into consideration that every tax cut in the last 30 years except one, to my knowledge — I cannot remember which one that was, but I think I have to allow an exception for one — has resulted in a net revenue gain rather than a loss.
Mr. MUSKIE. That, I challenge. The Senator cannot tell me that Dr. Rivlin and Mr. Lance and others support that, because that very proposition has been put to more than one economist before our committee.
Mr. HATCH. Does the Senator challenge the 1964 Kennedy tax cut?
Mr. MUSKIE. No, I do not challenge the tax cut, but I do challenge Senator ROTH's conclusion that that tax cut produced an increase of $54 billion in Federal revenues, because there is nothing in the record to support that kind of arithmetic.
That is not to say it had no stimulative effect. Of course it had a stimulative effect. May I remind the Senator that, as of 1977, the percentage of personal income which is paid to the Government as individual tax receipts is, today, 10.7 percent, as compared to 10.8 percent after the Kennedy tax cut.
Mr. HATCH. The Senator will admit, however, that the Kennedy tax cut did result in a net revenue gain?
Mr. MUSKIE. No, it resulted in some stimulus to the economy, which I was for. I voted for it. I was here.
Mr. HATCH. I know, and that is why I am surprised he is not voting for it now.
Mr. MUSKIE. I made a similar argument, but I have never made the exaggerated claims with respect to its effect on Federal revenues that I have heard here this morning.
Sure it was a stimulus.