April 29,1972
Page 12938
TAX REDUCTION AND SIMPLIFICATION ACT OF 1977
The Senate continued with the consideration of the bill (H.R. 3477) to provide for a refund of 1976 individual income taxes, and other payments, to reduce individual and business income taxes, and to provide tax simplification and reform.
AMENDMENT NO. 244, AS MODIFIED
The PRESIDING OFFICER. Under the previous order, the Senator from Maine (Mr. MUSKIE) is recognized to call up an amendment on which there will be 1 hour of debate.
Mr. CURTIS. Mr. President, a parliamentary inquiry.
The PRESIDING OFFICER. The Senator will state it.
Mr. CURTIS. Who is in charge of the time in opposition to the amendment?
Mr. LONG: Mr. President, I suppose that I would be it, but I would be perfectly happy to assign the time to the Senator from Nebraska.
Mr. CURTIS. Very well. I withdraw the request.
The PRESIDING OFFICER. The amendment will be stated.
The second assistant legislative clerk read as follows:
The Senator from Maine (Mr. MUSKIE), in behalf of himself, Mr. HATHAWAY, Mr. HUMPHREY, and Mr. WILLIAMS, offers an amendment numbered 244.
Mr. MUSKIE. Mr. President, I ask unanimous consent that further reading of the amendment be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. MUSKIE. Mr. President, I send to the desk a slight modification of the amendment, and will deal with it in due course.
The amendment, as modified, is as follows:
At the end of the bill, add the following new title:
TITLE VII— ANTIRECESSION PROVISIONS SEC. 701. This title may be cited as the "Intergovernmental Antirecession Assistance Act of 1977,"
SEC. 702. (a) Section 202(b) of the Public Works Employment Act of 1976 (42 U.S.C. 6722(b)) is amended to read as follows:
(b) AUTHORIZATION OF APPROPRIATIONS. Subject to the provisions of subsections (c) and (d) of this section, there are authorized to be appropriated for each of the twenty-two succeeding calendar quarters (beginning with the calendar quarter which begins on April 1, 1977) for the purpose of payments under this title—
(A) $125,000,000 plus;
(B) $30,000,000 multiplied by the number of one-tenth percentage points by which the rate of seasonally adjusted national unemployment for the most recent calendar quarter which ended three months before the beginning of such calendar quarter exceeded 6 percent.
(b) Section 202(c) of such Act is amended to read as follows:
"(C) LIMITATION ON AUTHORIZATION.
"
(1) INITIAL PERIOD.— In no case shall the aggregate amount authorized to be appropriated under the provisions of subsection (b) of this section for the five successive calendar quarters beginning with the calendar quarter which begins July 1, 1976, exceed $2,250,000,000.
"(2) SUBSEQUENT FISCAL YEARS.— In no case shall the aggregate amount authorized to be appropriated under the provisions of subsection (b) of this section for any fiscal year beginning on or after October 1, 1977, exceed $2,250,000,000.
"(3) FISCAL YEAR.— For the purposes of thissection, the term 'fiscal year' refers to a period of twelve consecutive months beginning on October 1, of any year.".
SEC. 703. (a) Section 203(b) (8) (D) of such Act is amended by striking out "for the one year period beginning on July 1, 1975." and inserting in lieu thereof "for the most recently completed entitlement period, as defined under section 151(b) of this Act (31 U.S.C. 1216(b) ) . ".
(b) Section 203(c) (1) of such Act is amended by striking out "paragraphs (3) and (5)" and inserting in lieu thereof "paragraph (4) ".
(c) Section 203(c) of such Act is amended by striking out paragraph (3) and redesignating paragraphs (4) and (5) as (3) and (4).
(d) Section 203(c) (3) (B) of such Act is amended by—
(1) inserting "or assigned" after the word "determined", and
(2) striking out the parenthetical phrase and inserting in lieu thereof "(in the case of a local government for which the Secretary of Labor cannot determine a local unemployment rate, he shall assign such local government the local unemployment rate of the smallest unit or subunit of local government for which he has determined a local unemployment rate and within the jurisdiction of which such local government is located, unless—
(i) the Governor of the State in which such local government is located has provided the Secretary of Labor with a local unemployment rate for such local government, and
(ii) the Secretary of Labor finds that such local unemployment rate provided by the Governor has been determined in a manner consistent with the procedures and methodologies used by the Secretary of Labor in determining local unemployment rates, in which case the Secretary of Labor shall assign such local government the local unemployment rate provided by such Governor) ".
(e) Section 203(c) (3) (C) of such Act is amended by—
(1) striking out "for the one year period beginning onJuly 1, 1975" and inserting in lieu thereof "for the most recently completed entitlement period", as defined under 141(b) of this Act (31 U.S.C.), and—
(2) striking out the parenthetical phrase.
(f) Section 203(c) (8) of such Act is amended by striking out subparagraph (D) and redesignating subparagraph (E) as (D).
(g) Section 203(c) (3) (D) (i) of such Act is amended by striking out "Social and Economic Statistics Administration" and inserting in lieu thereof "Bureau of the Census",
(h) Section 203(c) (8) of such Act is amended by striking out "For the purpose of paragraph (4) (D), the Secretary of Labor shall, notwithstanding any of the provisions of law, continue to make determinations with respect to the rate of unemployment for the purposes of such title VI".
SEC. 704. Section 204 of such Act is amended by striking out "and for construction unless such supplies and materials or construction are to maintain basic services." and inserting in lieu thereof, "or construction, except for normal supplies or repairs necessary to maintain basic services".
SEC. 705. Section 205 of such Act is amended by
(1) striking out "207" and inserting in lieu thereof "206",
(2) striking out "208" and inserting in lieu thereof "207", and
(3) striking out "209" and inserting in lieu thereof "208".
SEC. 706. Such Act is amended by striking out section 206 and redesignating sections 207 through 215 as sections 206 through 214,respectively.
SEC. 707. Section 209(c) of such Act is amended to read as follows:
"(c) TERMINATION.— No amount shall be paid to any State or local government under the provisions of this section for any calendar quarter if the average rate of unemployment within the jurisdiction of such State or local government during the most recent calendar quarter which ended three months before the beginning of such calendar quarter was less than 4.5 percent".
SEC. 708. Title II of such Act is amended by adding at the end thereof the following new section: "AUTHORIZATION OF APPROPRIATIONS FOR PUERTO RICO AND THE VIRGIN ISLANDS
"SEC. 215. (a) In general. There is hereby authorized to be appropriated for each of the 22 succeeding calendar quarters beginning with the calendar quarter which begins on April 1, 1977 for the purpose of making payments under this title to Puerto Rico and the Virgin Islands, an amount equal to one percent of the amount authorized for each such quarter under section 202(b)
"(b) ALLOCATIONS.
" (1) The Secretary shall allocate from the amount authorized under subsection (a) an amount for the purpose of making payments to such governments equal to the total authorized for the calendar quarter multiplied by the applicable territorial percentage.
"(2) For purposes of this subsection, the applicable territorial percentage is equal to the quotient resulting from the divisionofthe territorial population by the sum of the territorial population for both territories.
"(8) For purposes of this section—
"(A) the term 'territory' means Puerto Rico and the Virgin Islands.
"(B) the term 'territorial population means the most recent population for each territory as determined by the Bureau of Census.
"(c) The provisions of sections 208(c) (4) 204, 205, 206, 207, 208, 209, 210, 211, 212, and 213 shall apply to the funds authorized under this section.
"(d) PAYMENTS TO LOCAL GOVERNMENTS.
The governments of the territories are authorized to make payments to local governments within their jurisdictions from sums received under this section as they deem appropriate."
Mr. MUSKIE. Mr. President, I offer this amendment to the tax bill — Mr. president, may we have order?
The PRESIDING OFFICER. The Senate will please be in order.
Mr. MUSKIE. Mr. President, I offer this amendment to the pending legislation for several reasons.
First of all, the subject of the amendment is within the jurisdiction of the Finance Committee. I have discussed the question of moving on countercyclical legislation with the chairman of the Finance Committee over some period of time. I have discussed it with the leadership in the other House. It is an important part of the President's stimulus package, and in my judgment its importance has been enhanced by the President's dropping of the $50 tax rebate.
So I am offering it at this time as an important part of his program.
Mr. President, at this point I ask unanimous consent to have printed in the RECORD a fact sheet on the President's proposal, which can be compared by Senators with the pending amendment.
They are identical with respect to their principal provisions, if not in every detail.
There being no objection, the fact sheet was ordered to be printed in the RECORD, as follows:
THE COUNTERCYCLICAL ASSISTANCE PROGRAM: SOME FACTS AND ISSUES
THE PRESIDENT'S PROPOSAL
As part of his economic stimulus package, President Carter has proposed both an extension and expansion of the countercyclical assistance program. Specifically, his proposal would extend the program for five years beyond its current expiration date of the end of FY 1977. His proposal would also increase the authorization level, beginning with the April 1, 1977 calendar quarter, as follows:
Under the current program, $125 million is authorized quarterly when national unemployment is at 6 percent, with an additional $62.5 million authorized quarterly for every increase in national unemployment of one half percentage point.
Under the President's proposal, $125 million would be authorized quarterly at 6 percent unemployment, as above, but the authorization would increase by $30 million quarterly for every increase in unemployment of one tenth of a percentage point. Thus, under the current program, $250 million would be authorized quarterly at 7 percent unemployment, while under the President's proposal the amount would be $425 million.
The President's proposal is identical to extension legislation (S. 531) introduced by Senators Muskie, Long and Hathaway earlier this year, with one exception. S. 531 would save begun the increased funding level with the July quarter, while the President's proposal would begin it with the April quarter.
BUDGET IMPACT
The President's proposal would require an additional $925 million in FY 1977 for the increased authorization level for two quarters. This amount can be accommodated within the ceilings of the third budget resolution. Moreover, the economic stimulus supplemental appropriation, H.R. 4876, as reported in the Senate, provides $925 million in budget authority and outlays for the countercyclical program.
HOW THE PROGRAM IS WORKING SO FAR
While it is a bit early to make a definitive assessment of how the program is working (the first checks went out in mid-November), it seems clear from early analysis that the program is serving its intended purpose.
So far, four quarterly payments have gone out, with $1.18 billion allocated so far among 20,000 units of State and local government.
A recent study of the Senate Subcommittee on Intergovernmental Relations — using both Treasury Department data and the results of responses to a survey of nearly 400 units of government — has drawn the following conclusions:
That the targeting mechanism in the formula is working very well. Seventy-five percent of all funds allocated to local governments in the third payment period went to jurisdictions with unemployment in excess of 8 percent (the national rate at that time was 7.8 percent). Almost 40 percent of these funds went to jurisdictions with unemployment in excess of 10 percent.
That the program is having or will have a significant impact in terms of creating or saving jobs. The Subcommittee survey projected that the program will save or create approximately 87,000 jobs over a 12 month period. Although the survey was not a scientific sample, this estimate corresponds closely to that of the Congressional Budget Office for the program's job impact.
That there have in fact been widespread budget adjustments of the kind that are likely to work at cross purposes to Federal efforts to stimulate economic recovery. For example, among those jurisdictions responding to the survey with unemployment over 8 percent, 96.5 percent indicated that budget adjustments had been necessary to cope with recession related pressures. Of these, 37.9 percent had increased local taxes, 58 percent had instituted hiring freezes or layoffs, 16 percent had cut back services, and 20.7 had reduced or deferred capital expenditures. (Many jurisdictions had done more than one of the above.)
Mr. MUSKIE. Mr. President, I also have, from the Secretary of the Treasury, Michael Blumenthal, a letter dated April 28 supporting this amendment to this bill. I ask unanimous consent that the letter be printed in the RECORD.
There being no objection, the letter was ordered to be printed in the RECORD, as follows:
THE SECRETARY OF THE TREASURY,
Washington, D.C.,
April 28, 1977.
Hon. RUSSELL B. LONG,
Chairman, Senate Finance Committee,
U.S. Senate,
Washington, D.C.
DEAR MR. CHAIRMAN: I understand that an amendment extending the Countercyclical Revenue Sharing Program may be offered during Senate consideration of the Tax Bill. Since the Countercyclical Revenue Sharing Program is an integral part of the Administration's stimulus program, we fully support its prompt consideration by the Senate.
Sincerely,
W. MICHAEL BLUMENTHAL.
Mr. MUSKIE. The letter is addressed to Senator LONG as chairman of the Finance Committee, and it reads:
DEAR MR. CHAIRMAN: I understand that an amendment extending the Countercyclical Revenue Sharing Program may be offered during Senate consideration of the Tax Bill. Since the Countercyclical Revenue Sharing Program is an integral part of the Administration's stimulus program, we fully support its prompt consideration by the Senate.
Mr. MUSKIE. Mr. President, the amendment I am offering today, to H.R. 3477, would both extend and expand the program of countercyclical assistance for State and local governments, enacted by Congress last year as title II of the Public Works Employment Act of 1976. I ask that a detailed explanation of the amendment be included in the RECORD at the conclusion of my remarks.
When first proposed in 1975, the countercyclical idea was a new concept in Federal antirecession tools. It rested on the assumption that during a time of serious economic downturn, many State and local governments are forced to take restrictive budget actions which run counter to Federal efforts to stimulate economic recovery. Countercyclical assistance was proposed as a way to help these governments ride out recession related budget problems so that such actions would not be necessary.
As finally enacted last year, the program consisted of a modest but highly targeted formula aimed at providing general budget assistance to State and local governments where the impact of recession has been most severe.
To date, only four quarterly payments have been made under the countercyclical assistance program. However, I am pleased to note that thus far, the program has shown itself to be an extremely effective means of getting emergency budget help to those places most in need.
At the request of my Subcommittee on Intergovernmental Relations, the Office of Revenue Sharing, which administers the program, has provided a detailed breakdown of where the countercyclical funds have gone. These ORS figures show that the targeting mechanism is working, and working well.
For example, for the third payment quarter, 70 percent of the funds allocated to all governments went to jurisdictions with unemployment in excess of 8 percent. When only local governments are considered, 75 percent of the third quarter funds went to jurisdictions with unemployment at this level.
At the other end of the spectrum, jurisdictions with unemployment of 5.5 percent or less received only 1.4 percent of the third quarter allocations.
To my way of thinking, Mr. President,that is a pretty well targeted program.
To complement these numbers and explore some of the actual examples behind them, my subcommittee conducted its own survey of approximately 400 Stateand local governments. I would like to share some of our findings with my colleagues today because what we found was fairly strong evidence that this is a program which is serving its intended purpose and which merits our continued support.
Throughout the debate on the initial countercyclical proposal, the question was raised as to whether unemployment was a reliable measure of recession related budget difficulties. We had chosen to use unemployment in the formula for two principal reasons: first, in a 1975 study, the JEC predicted that there would be a significant correlation between unemployment and the incidence of restrictive budget adjustments which the program was intended to help avoid; and second, unemployment data was available for a great many local governments whereas many other suggested indicators were not.
The principal finding of the subcommittee survey confirmed the use of unemployment data as the measure of need in the countercyclical formula, by demonstrating that there is, in fact, a direct correlation between unemployment and budget difficulties, as the JEC had predicted. For example, of those jurisdictions responding to the survey which had unemployment in excess of 8 percent, an overwhelming 96 percent said they had had to make restrictive budget adjustments over the last 2 years in order to deal with recession related budget problems. Far fewer of those respondents with unemployment less than 6 percent had had to make such adjustments.
Almost 40 percent of the high unemployment jurisdictions had had to raise taxes. Only 20 percent of the low unemployment places had done so. And almost 60 percent of the high unemployment jurisdictions had imposed hiring freezes or laid off employees, while only 38 percent of the low unemployment jurisdictions had done so.
The interrelationship between these kinds of budget adjustments and recessionary pressures was best summed up by the response from Dade County, Fla., which had an unemployment rate of 11 percent at the time of the survey:
Paradoxically, in times of economic recession, service demands on local governments are highest, yet that is the time when communities are least able to bear a tax increase to finance the rising service demand.
Another significant finding of the subcommittee survey dealt with the question of jobs. Although the countercyclical assistance program was enacted as part of a jobs package, its principal purpose was not to create new jobs directly but rather to help maintain existing service levels, without reliance upon tax increases or job cutbacks. Its job impact is thus more indirect than other kinds of anti-recession programs. Even so, the subcommittee survey indicates that the program thus far is having or will have a substantial job impact. Though few new jobs have been created, many have been or will be saved — possibly as many as 87,000 per $1 billion spent over a 12 month period. Although not scientifically derived, this subcommittee estimate corresponds closely to that of the Congressional Budget Office in 1975, which rated countercyclical assistance second highest of various anti-recession tools in job impact.
A final significant finding of the survey, Mr. President, underscored the wisdom of having a countercyclical mechanism on standby authority, to be triggered on when national unemployment hits 6 percent and the national economy begins to head into a recession.
Of the responding jurisdictions with unemployment over 8 percent, almost 80 percent said that earlier enactment of the program would have helped them avoid some of the budget adjustments they have recently had to make.
The amendment I am proposing today does not provide for such a permanent countercyclical mechanism. It does propose to extend the life of the program for an additional 5 years beyond fiscal year 1977, or until national unemployment drops below 6 percent, whichever occurs sooner.
My amendment would also increase the authorization level for the program, although even at the funding level I am proposing, the program is still a bargain at a very modest price. Assuming a level of national unemployment of 7.3 percent for a full year, we are talking about outlays of roughly $2 billion. And, of course, it is not likely that unemployment will remain at that level for a full year. Under my amendment, the increased funding level would begin with the April 1, 1977, calendar quarter. An additional $925 million in budget authority will be needed for the two remaining fiscal year 1977 quarterly payments. This amount can be accommodated within the ceilings of the third budget resolution. Furthermore, the economic stimulus appropriation bill, H.R. 4876, as reported in the Senate, provides $925 million in additional fiscal year 1977 budget authority and outlays for the program.
Both of these principal changes in the current program were requested by President Carter earlier this year as part of his economic stimulus package.
My amendment also includes several other minor changes which are intended to eliminate wrinkles in the program encountered during the initial months of its operation. Most important of these changes is a provision that would provide for more specific unemployment data to be used in the formula for very small jurisdictions, in place of the aggregate balance-of-State rate now used under the current program. I know several of my colleagues on both sides of the aisle are interested in that. This change has been made possible by an increase in the number of local jurisdictions — primarily counties — for which the Bureau of Labor Statistics gathers and certifies unemployment data. The change will be of principal benefit to communities in low unemployment States where, under the current program, the balance-of-State rate was often below 4.5 percent, thus preventing any communities within the balance of State and assigned the same rate from receiving countercyclical assistance even if they had higher unemployment.
Mr. President, I am offering this amendment today so that the Senate can quickly achieve a clear congressional objective. That objective as demonstrated by the passage of a third budget resolution earlier this year, was to provide additional economic stimulus without incurring long term spending commitments.
That fiscal policy has as one of its keystones the extension and expansion of the countercyclical assistance program. I suggest that whatever one's views on the tax rebate recently withdrawn by the President, the need for the countercyclical assistance — particularly in the cities of this country — remains indisputable.
In the Nation as a whole, we still have unemployment that is unacceptably high. And in our urban areas, the side effects of the recession linger on with a special vengeance.
Unlike other anti-recession programs we have considered and put in place; countercyclical assistance has proven to be a most efficient vehicle for targeting aid to these kinds of places which need help the most.
And unlike other anti-recession proposals, countercyclical assistance is not likely to generate renewed inflationary pressures. In the first place, as I noted above, we are talking about a very modest amount of money. In the second place, the countercyclical program is designed to automatically shut off when national unemployment drops below 6 percent — a level clearly well above any definition of full employment and complete economic recovery. And finally, these funds are not intended to stimulate new consumption. In the vast majority of cases, the money is being used to maintain the general operating budgets of State and local governments. To the extent that the countercyclical program helps to avoid the need for local tax increases, the program is actually working against inflationary pressures.
In conclusion, Mr. President, let me say that seldom in my experiences here in the Senate have I seen a program get off to such a good start as this program has done.
Of course, there have been some problems. But in terms of its single most important objective — targeting the money where it is needed most — the program is succeeding with flying colors.
I urge my colleagues to support my amendment this afternoon.
Mr. President, at this point, I reserve the remainder of my time.
Mr. CURTIS. Mr. President, I yield myself 5 minutes. I wish to ask some questions of the Senator. Over how long a period does this extend the program?
Mr. MUSKIE. It would extend over 22 quarters beginning with April 1 of this year.
Mr. CURTIS. It is a little over 5 years,?
Mr. MUSKIE. That is correct.
Mr. CURTIS. Is it true that the total cost will be somewhere between $12 billion and $13 billion?
Mr. MUSKIE. That would depend entirely on what happens to unemployment in the 5 year period. If we assume 7.3 percent unemployment for 5 continuous years the economy would be a disaster. I have not computed what the cost of the program would be in that event, but I suspect that if that happened not only would we be supporting programs of this kind but other programs to deal with unemployment. There is no real way of projecting a 5 year cost for this: program.
Mr. CURTIS. So it may be a lot more
Mr. President, I would like to ask further, what committee has jurisdiction o the subject matter of this proposal?
Mr. MUSKIE. The Finance Commit tee, as I have already stated.
Mr. CURTIS. Has there been any hearing before the Finance Committee at all on this proposal?
Mr. MUSKIE. Not to my knowledge. There have been hearings before the committee which had jurisdiction prior to this year, the Government Operations Committee, and, in addition, the staff of the Government Operations Committee, because of its continuing interest in the program, has conducted an extensive survey of the impact of the program and its results over the few quarters it has been in effect.
May I add one other point? May I say to the Senator that last year on the basis of the hearings which we held in the Government Operations Committee the Senate approved a 3 year program. The Senate was sufficiently impressed by the evidence to approve a 3 year program, which we then had to cut back in conference in order to get House support.
Mr. CURTIS. Is it true that some significant changes are made in your proposal over the existing program?
Mr. MUSKIE. There is some increased funding which I have already described, but other than that the most significant improvement has been one that I think the Senator from Nebraska—
Mr. CURTIS. I did not say improvement. I said changes.
Mr. MUSKIE. Well, change and improvement. The most significant is one in which I believe the Senator from Nebraska is interested, unless I have a mental lapse concerning a letter I received from him. Prior to this change, small communities were subject to the statewide unemployment rate because they did not have unemployment statistics. The Bureau of Labor Statistics, since last year, now provides unemployment statistics for counties. That moves in the direction I think the Senator from Nebraska urged upon the committee. The change in this bill does that. That is the most important change.
Mr. CURTIS. Is it not true that it is being extended to Puerto Rico for the first time?
Mr. MUSKIE. Yes, we are extending it to Puerto Rico and to the Virgin Islands.
Mr. CURTIS. Is it not true that it is being extended to the Virgin Islands for the first time?
Mr. MUSKIE. Yes:
Mr. CURTIS. We have many, many other programs for both of those islands in reference to unemployment. Do I understand that the present administration favors this revenue sharing, this particular anti-recession revenue sharing, being extended to Guam, Puerto Rico, and the Virgin Islands?
Mr. MUSKIE. I do not believe the administration has a position on that.
Mr. CURTIS. I do not think they have heard of it. Have they?
Mr. MUSKIE. Yes, they have heard of it. They said to us they would prefer that we make the judgment on whether to go forward.
Mr. CURTIS. It was not in the President's proposal, was it?
Mr. MUSKIE. It was not .
Mr. CURTIS. I thank the distinguished Senator for his very frank answers.
Mr. MUSKIE;. Would this be an appropriate time for me to give the reasons why we included them or would the Senator prefer—
Mr. CURTIS. I only have 5 minutes.
Mr. MUSKIE. I would be willing to use 2 or 3 minutes of my own time at this point.
Mr. CURTIS. Perhaps after I finish my statement.
Mr. President, we are asked to vote for an amendment that, based on present unemployment, can run between $12 billion and $13 billion.
The PRESIDING OFFICER. The Senator's 5 minutes have expired.
Mr. CURTIS. I yield myself 2 additional minutes.
It has never been before the committee having jurisdiction of it. Never has there been any appearance there asking us to report this. It extends another welfare program to Puerto Rico. It extends another program to the Virgin Islands and to Guam. I am not familiar with what the effect would be on Guam, but on theother two, I know that, over a long period of time, because of their peculiar situation, we have dealt with them separately on a great deal of social legislation, including all the titles of the Social Security Act.
Mr. President, it is unthinkable that the Senate of the United States should be asked to give a blank check, that can go as high as $13 billion, on a floor amendment, which has never been before the committee and we have never had any hearings whatever on.
Mr. President, there are many things about this program that need correcting. There are some errors that have shown up that have occurred by reason of bad practice. The House is very unhappy with it. There is a chance that if the Muskie amendment should prevail and it should go to conference, it will bypass the committee in the House that does have jurisdiction. That is their problem, but this may be part of the strategy.
Mr. President, I reserve the remainder of my time.
Mr. MOYNIHAN. Mr. President, will the Senator from Maine yield for a question?
Mr. MUSKIE. Yes.
May I say, first of all, since we have a minute or 2, that with respect to hearings, the Subcommittee on Intergovernmental Relations originated this legislation. We created it, we brought it to the floor, we monitored it, and we put it into law. Last year, in discussions with the distinguished chairman of the Committee on Finance, I agreed that, over the long term, it made sense that this program go to the committee which had jurisdiction over general revenue sharing. It was in response to that we yielded jurisdiction and were happy to.
That did not eliminate our continuing interest. The reason that I offer this amendment now — and I would not ordinarily offer a major new program without hearings in the committee — is that what we are talking about is simply continuing this program at this stage of the recession so there will be no interruption, so we can continue with it on the basis of the case that was made for it last year in another committee. I think that is reasonable.
I yield at this time to my good friend from New York (Mr. MOYNIHAN).
Mr. MOYNIHAN. I ask a question of the Senator with respect to the matter which the Senator from Nebraska raised, and which is of particular interest to some of us. Is it not a question of the status of Puerto Rico in this legislation, or of the Virgin Islands or of Guam?
As the Senator knows, of all the jurisdictions in which the Bureau of Labor Statistics measures unemployment, none remotely approaches the present levels of unemployment in Puerto Rico, which, Mr. President, were last measured at 19 percent, maybe at 23 percent. There does not exist a State or a county in the Nation with that level of unemployment.
I need not remind the Senate that Puerto Ricans are American citizens. They fight in American wars, they partake in American activities. They are in a commonwealth relationship with us, a relationship of trust on our part. There is complete free movement between the Mainland and the island, such that in the intolerable conditions which at this moment persist, no right thinking Puerto Rican could do anything but look elsewhere in the American Commonwealth for employment.
Is it not the case, sir, that, given the extremity of the unprecedented nature of these levels of unemployment, the committee proposal is a modest one? I believe there is a 1 percent set aside for these three areas. I believe that would come, at present levels of unemployment,to $6 million a quarter.
Mr. MUSKIE. Six million dollars, with an "m," not a "b."
Mr. MOYNIHAN. It is not a blank check, sir.
[Unrelated intervening action omitted]
TAX REDUCTION AND SIMPLIFICATION ACT OF 1977
The Senate continued with the consideration of the bill (H.R. 3477) to provide for a refund of 1976 individual income taxes, and other payments, to reduce individual and business income taxes, and to provide tax simplification and reform.
Mr. CURTIS. Mr. President, I yield myself 3 minutes on the pending amendment. I should like to have the attention of Senators.
The pending amendment extends the program for 5 years. The cost, based on present unemployment, can run as high as $12 billion or $13 billion. It never has been before the committee having jurisdiction of it — the Finance Committee. There have been no hearings. It extends the program to Puerto Rico, the Virgin Islands, and Guam, which is a new venture.
Furthermore, the House is revising and will soon send us a bill very shortly.
The program runs until September 30 of this year. There is absolutely no justification for adding to this bill an item so significant in our budget — $12 billion to $13 billion — without a hearing.
The amendment provides that it goes on for 5 years. There will be an amendment to reduce it to two quarters, because that will give it plenty of time, since it does not expire until March 30, for the new bill to be acted upon. If that fails, an amendment will be offered to extend it three quarters, and so on. We are not going to extend this bill today for 5 years without a hearing and carry these new features.
Mr. LONG. Mr. President, the Senator has a point. I think some of us have problems in this area, because we have been importuned by the mayors and the Governors and various and sundry groups to do the kind of thing that the Senator's amendment would do.
I suggest a compromise, because sometimes we can get together on these things. It seems to me that everybody could live with a six quarters date, and I hope that both sides would be willing to agree to that. That would give us enough time to study the matter carefully and consider everything in the program, and during this Congress we could pass a bill to do what we think should be done about it.
It would reduce the concern of the Senator that this might become a big boondoggle and extend into areas far beyond the time the recession was over. If the Senator would be willing to agree to that in the nature of a compromise — I am not asking him to vote for the amendment — I think everybody could feel that they gave a little and that we accommodated various viewpoints.
I assure the Senator that during this Congress, or during the ensuing year from this moment, we will hold hearings on this matter and look into it and see what can be worked out.
Mr. CURTIS. Mr. President, I thank the distinguished chairman. I would be willing to do that.
Last night, in a spirit of cooperation to complete action on this bill, I made the mistake of agreeing to an hour of debate on it, so I have no weapon left but these amendments. However, the additional time is rather simple. I could offer amendments for 12 hours. I do not want to do that. I have an engagement tonight, beginning at 9 o'clock. But I can do it. I do not like to threaten. I am just boasting about my physical condition.
Mr. LONG. Mr. President, I have discussed this matter with the Senator from Maine, and I believe the Senator from Maine might be willing to be equally accommodating. Will he accept a modification that would limit this amendment to six quarters?
Mr. MUSKIE. Reluctantly, but with a sense of equity.
I understand the point of view of the Senator from Nebraska. I am troubled by the fact that the Finance Committee, preoccupied as it has been with the tax bill, has not had the opportunity it would like to have had.
With the assurance of the distinguished chairman of the Committee on Finance that he will proceed to hearings, so that the questions that the Senator from Nebraska may have will be explored fully, and that there will be expeditious movement on it, I think six quarters would keep us going until that could be done. I do not like it. I would rather have more. But around here you take what you can get.
I want to accommodate the Senate. This is Friday afternoon, and Senators would like to leave, including the Senator from Nebraska. I am going to be here all weekend, so I could stay quite awhile.
If the Senator from Nebraska is willing to let us go to a vote on that kind of a modification, I am prepared to do so.
Mr. CURTIS. Mr. President, on that basis, I would be willing to yield back my time in 2 minutes. I just want to put something in the RECORD.
Mr. MUSKIE. We have to modify the amendment.
Mr. LONG. The Senator can modify his amendment while the Senator from Nebraska is putting his information in the RECORD.