October 7, 1978
Page 34513
Mr. MUSKIE. Will the Senator yield for a question?
Mr. KENNEDY. Yes.
Mr. MUSKIE. The Senate Committee on the Budget has produced this document on tax expenditures. In the back of it there is an interesting series of essays on the mix of direct expenditures and tax expenditures that are used to promote various public policies.
For example, there is one on export promotion; there is one on energy supply development; there is one on pollution control; there is one on agriculture. In an amazingly large number of Government functions, we undertake to advance some of the policies, as the Senator from Massachusetts has said, by using both devices. But at no place — at no place — do we consider the mix to see whether, in toto, we are devoting the proper share of national resources to those programs, whether we have the right mix, whether we are using direct expenditures when we ought to be using tax expenditures, or using tax expenditures when we should be using the direct expenditures.
This is the first attempt I have seen to present without argument — there is no argument one way or another — just to present the nature of this problem that the Senator from Massachusetts is speaking of.
Mr. STEVENS. Will the Senator yield without losing his right to the floor?
Mr. KENNEDY. May I just make a brief comment, then I shall yield?
I think this is an extremely commendable report. It is completely consistent with the thrust of the Senator's amendment and the Glenn amendment. It is an extremely valuable report and I join in commending it to the Members of the Senate.
Just a final point. I ask both the Senator from Maine and the Senator from Ohio if they will agree: it is obvious to me, as one who has tried to follow the various tax programs in the past few years in the Senate, that there is a different climate in the Senate on tax spending as opposed to direct spending. I do not know whether the Senators will agree with me or not, but there seems to be a different climate for spending through the tax laws than there is for spending through appropriations. Some Senators show that they are extremely reluctant to increase appropriations, but they are more than willing to empty the Treasury in terms of tax subsidies.
Mr. MAGNUSON. That is because that is the easier way to do it.
Mr. KENNEDY. The Senator from Washington has, again, put his finger on the answer.
Mr. MAGNUSON. May I ask one question?
Mr. MUSKIE. I yield to the Senator from Washington without losing the floor.
Mr. MAGNUSON. In between, there is another chart: with this constant passing of legislation making appropriations mandatory, the uncontrollables are now taking over any discretion that we might have in expenditures. We just meet down there and we have to do this. So we have another villain in the piece, between both these things.
Mr. MUSKIE. That is right.
Mr. MAGNUSON. I think this is a great discussion to try to put this inter-reaction between those two and the third one.
Revenue sharing is the best example I know of that.
Mr. MUSKIE. That is right. We have uncontrollables on the revenue side—
Mr. MAGNUSON. On both sides.
Mr. MUSKIE. And uncontrollables on the spending side.
Mr. MAGNUSON. It is easy to say, "Oh, we will give you a tax cut; we do not know what it is going to cost, but it is not going to be added to the budget; therefore, it is not going to be listed as an expenditure." But when you turn it around, as the Senator from Massachusetts suggested, it becomes one and it is a drain on the taxpayers and the so-called Federal budget.
Any move that we can make to get this started, I assure the Senators, will be greatly welcomed by the chairman of the Committee on Appropriations.
Mr. MUSKIE. I thank the chairman of the Committee on Appropriations.
Mr. STEVENS. Will the Senator yield?
Mr. KENNEDY. I want to thank the Senator from Maine and the Senator from Ohio and indicate that I certainly hope the Senate will accept their amendment.
Mr. MUSKIE. Mr. President, I ask unanimous consent at this point to yield, without losing the floor, to the distinguished Senator from Ohio, who has not had an opportunity to make his own case.
Mr. STEVENS. I object.
Mr. MUSKIE. Mr. President, I have been yielding to Members on the Senator's side for this purpose. Apparently, the Senator from Alaska has been willing to grant that courtesy to Members on his side, but not to Members on this side. I have yielded to at least four Senators on the Senator from Alaska's side.
Mr. STEVENS. I do not see how any Member can appoint himself to the Rules Committee for the Senate. If the Senator wishes to engage in a dialog, that is fine. I have some comments to make about this and I just do not see that the Senator from Maine ought to be in the position of controlling the floor for the whole day.
Mr. MUSKIE. In other words, the Senator from Alaska would prefer to have me talk without debate? We have had a good debate this morning. The Senator has not been on the floor most of the time.
Mr. STEVENS. The Senator has been on the floor since 8:30 this morning, with one exception.
Mr. MUSKIE. I still have the floor, in part, because I have been doing this, granting time, asking consent. The reason I do not want to yield the floor is very simple: I do not want a premature or an inopportune motion to table made, by someone else getting the floor. The Senator is not unaware of that kind of protection, I am sure. He has been around a while.
But I have not used my right to the floor to stop debate. I have used it to encourage debate, something I should think the Senator ought to be interested in. But, if the Senator prefers that I do all the talking all day, I am prepared to do that. I am asking at this point that the offeror of the pending amendment be given the right to discuss that amendment without losing my right to the floor; and he objects.
Mr. STEVENS. Reserving the right to object, and I shall object unless people who oppose the Senator's position are heard at the same time, could the Senator tell me when those of us who disagree with the Senator will have an opportunity to challenge some of the statements that are being made?
Mr. MUSKIE. Of course.
Mr. STEVENS. When?
Mr. MUSKIE. Some of them have done so, already. Senator CURTIS has asked questions. Senator LONG was on the floor making observations during his colloquy with Senator ROTH.
Mr. CURTIS. I am not opposed to sunset.
Mr. MUSKIE. We do not want control on debate, I assure the Senator. We want to vote. We can agree on a time to vote before noon if that is what the Senator wants. But it appears that there will be ample opportunity to talk because the opposition to this amendment will not let us vote.
Mr. STEVENS. Reserving the right to object again, I am a cosponsor of the sunset amendment. I am opposed to the Glenn amendment, and I do not know whether we are going to get a chance to talk. I do not want to see them come in with these charts and a whole new concept of the jargon and misleading the public to think that those are expenditures. This is a whole new vocabulary that is being used in the Senate that I disagree with.
Mr. MUSKIE. May I ask unanimous consent that I may yield to the Senator from Alaska without losing my right to the floor so he may make these comments?
The PRESIDING OFFICER. Without objection
Mr. STEVENS. I object again. I am not seeking the floor now. I want to know when the Senator is going to allow me to do that.
Mr. MUSKIE The Senator objected to my yielding to him?
Mr. STEVENS. I wanted to ask a question. I do not seek to interfere with the speech of the Senator from Ohio.
The PRESIDING OFFICER. Does the Senator from Maine yield for a question?
Mr. MUSKIE. I do not yield for a question, since I have not been given the courtesy that I have seen the Senator grant to others. I have not had this courtesy. I have had the floor since 10 minutes to 10; an hour and 10 minutes. Most of that time has been used by other Senators. But, still the Senator objects, and says that I have had the floor too long without an opportunity for others to speak. What kind of even-handed evaluation of floor proceedings is that, Mr. President?
I have other speeches. I shall continue, and I shall make my speech. If that is the attitude on which discussion is going to be pitched today by the distinguished minority whip, we are going to have a long day.
Mr. President, obviously, the Senator is not going to consent. He wants me to do all the talking. He likes the sound of my mellifluous voice.
Mr. STEVENS. Again I ask the Senator if he wants to yield for a question.
Mr. MUSKIE. I am not interested in yielding for questions. I am interested in yielding for a meaningful discussion and debate. That is what I have done all morning.
The PRESIDING OFFICER. There is no pending request. The Senator from Maine has the floor.
Mr. MUSKIE. Mr. President, I strongly support the amendment offered by Senator GLENN to provide the mechanism to subject tax expenditures to sunset. The positive effects of sunset on spending programs should apply equally to tax expenditures — a phrase, apparently, that the Senator from Alaska finds unpalatable.
There is widespread agreement that tax expenditures are the functional equivalents of entitlement programs. Both result in benefits provided by the Federal Government to all qualifying persons; and both result in increased Federal deficits. Tax expenditures simply reduce the revenues the Government otherwise would collect, while entitlements result in increased outlays.
Tax expenditures and direct spending programs often have similar or related goals. Since sunset will facilitate retention only of those Federal programs efficiently and effectively accomplishing national policy goals, sunset should apply equally to tax expenditure and direct spending programs.
For example, if the Congress reviews Federal programs implementing national export policies, it is just as important to consider the DISC export tax incentive as it is to review the Export-Import Bank lending programs.
Indeed, without consideration of the DISC provision, the review of export policies would be incomplete.
The Senate Budget Committee has just published a document — a yellow-covered document to which I have just referred — a 358-page staff study that analyzes 84 different tax expenditure provisions and then relates tax expenditures and spending programs in 17 major policy areas, including export promotion, employment growth, housing, higher education and energy.
In many of the 17 areas, tax expenditures constitute a significant component of overall Federal effort. The study makes an impressive case for the need for Congress to consider tax and spending programs together when legislating in areas affected by both types of programs.
However, unless tax expenditures are included, the review and reauthorization procedures established under sunset will not reach the full panoply of Federal programs in these areas.
The comparability of tax expenditures and spending programs in the context of sunset is clearest in the case of a "refundable tax credit." This is a credit that qualifying persons may receive whether or not they have any tax liability.
And the opponents of this measure argue that refundable tax credits are different than spending?
That, we know, is to play games with the intelligence of the American people.
Refundable tax credits are credits paid out by Government — checks to people who have no tax liability. And, it is argued by the floor manager and by the distinguished Republican minority member of the Finance Committee that such provisions ought not be treated the same as direct spending programs which result in checks to the taxpayer.
Refundable tax credits are the same thing, and I will be interested to hear how they are different, at the appropriate time.
Mr. LONG. Would the Senator like to hear about it now?
Mr. MUSKIE. I will not yield now. I was prepared to yield, and would have been glad to yield now, if I had been given the courtesy. But the distinguished minority whip has denied me that, so I will continue with my remarks.
Mr. LONG. I am not complaining.
Mr. MUSKIE. I cannot yield for that purpose.
Mr. STEVENS. Will the Senator yield for a question?
Mr. MUSKIE. The Senator refused to let me yield
Mr. STEVENS. Will the Senator yield for a question?
Mr. MUSKIE. Yes.
Mr. STEVENS. I thank the Senator. Will the Senator tell me how long this is to go on?
Mr. MUSKIE. How long—
Mr. STEVENS. How long is the Senator going to continue?
Mr. MUSKIE. I have used about 15 minutes.
Mr. STEVENS. It is just a simple question. How long is the Senator going to yield time to those he wants to yield time to?
Mr. MUSKIE. This is the first time I can recall Senators trying to control the right of a Senator who has the floor to yield
Mr. STEVENS. Mr. President, I cannot remember in 10 years any Senator might, himself, yield 10 minutes to a Senator and 10 minutes to a Senator
Mr. MUSKIE. Mr. President, who has the floor?
The PRESIDING OFFICER (Mr. FORD). The Senator from Maine has the floor.
Mr. STEVENS. How long does the Senator intend to continue?
Mr. MUSKIE. Mr. President, I ask unanimous consent I may yield to the Senator so he may make his argument without losing my right to the floor.
The PRESIDING OFFICER. Is there—
Mr. STEVENS. I do not seek the floor now. I just want to know how we can discuss—
Mr. MUSKIE. Who has the floor?
The PRESIDING OFFICER. The Senator from Maine has the floor.
The Senator may proceed.
Mr. MUSKIE. The Senator wants to be intransigent — I will have to continue to be intransigent.
The Congress treats payments of credits which reduce tax liability as a revenue reduction, that is, as tax expenditures.
I will interrupt one more time for this observation. I take it that those who oppose the Glenn amendment are determined that we shall not have a vote on the Glenn amendment.
It is on that assumption that I am going to do my best to make sure that the tax expenditure amendment of Senator GLENN gets its hearing.
I have heard it and read it in the RECORD, the distortions that were made by the opponents of the Glenn amendment on Saturday afternoon, I think it was a week ago, and on another afternoon this week.
They have made their distortions and there has not yet been made an adequate defense against those distortions.
I am willing to do this, to make sure that defense is made possible, because the opposition, and I assume that includes the distinguished minority whip, are determined we should not have a chance to vote on the Glenn amendment. I am going to try to cooperate with Senator GLENN to make sure the statement on the Glenn amendment is accurately made and sufficiently made, so that if and when we are ridden off the floor in some fashion, the country will know what it is we were trying to do.
I have seen all this support on that side for tax cuts. I challenge you to respond by accommodating the Tax Code as well as the appropriations side of the budget to the deficits that can be risked by indiscriminately large tax cuts, and I urge that upon those who voted for the Kemp-Roth amendment yesterday and the astronomical tax cuts that would project over the next 3 years.
They ought to be as interested in cutting spending and reducing wasteful tax expenditures as anybody on the floor. But no, they who voted for Kemp-Roth are in the ranks of those who do not want to vote on tax expenditures — why? If they were so sure of the merits of their argument, if they were so sure that the Glenn amendment is wrong, why are they not willing to test the Glenn amendment by voting on it after sufficient debate? If we can get agreement on a time for a vote on the Glenn amendment, I would be willing to give them three-quarters of whatever time is made available to debate it. I would be content with one quarter, just enough to make the case and to answer the distortions that have been put in the RECORD over the last week and a half.
But, short of that, I am going to do what I can to protect my parliamentary rights and the rights of the proponent of the Glenn amendment (Mr. GLENN)
Mr. President, returning to my prepared remarks, credit payments in excess of the recipients' liabilities — we are talking about refundable tax credits — are treated as budget authority and outlays in the same way as are direct expenditures.
Thus, as spending, the latter payments would be subject to sunset. However, the payments reducing tax liability, which provide identical benefits, would not be subject to sunset under the reported bill because they would be tax expenditures. This makes no sense whatsoever.
In other words, we pass a tax reduction. We make it available to those with tax liability by making a credit against tax liability. But for those who do not have tax liability, we extend the same benefit in the form of refundable credits.
Now, the refundable credits would be subject to sunset, but not the tax liability, not the tax expenditure which has the same effect for those with the tax liability.
In other words, it hits at the poor and not at the affluent. That is the whole argument which Senator LONG and his colleagues on the Finance Committee, who oppose this amendment, are making.
This year Congress has been debating whether to provide college tuition assistance to middle- income families in the form of either a tuition tax credit or additional direct grants and student loans. These programs are viewed generally as alternative means of meeting the same goal. Nevertheless, under S. 2 as reported a tuition credit program would not be subject to sunset because it is a tax expenditure. But the direct spending tuition assistance alternatives would be subject to sunset. This makes no sense either.
The magnitude of all tax expenditures is very substantial when compared to Federal spending. The estimated revenue losses associated with the 84 provisions listed in the tax expenditure budget total $136 billion for fiscal year 1979. This is the equivalent of 28 percent of the direct spending total for fiscal year 1979 of almost $490 billion.
Therefore, exclusion of tax expenditures would omit a significant segment of budgetary costs from the scope of the sunset legislation. This omission will become more and more glaring in the future since Congress is now developing more and more major tax expenditures — for example, tuition tax credits, targeted jobs tax credits, and home insulation and other energy conservation tax credits, to name just a few of the major new and expanded tax expenditures currently being considered in Congress.
The usefulness of periodic review of tax expenditures implicitly has been increasingly recognized by Congress, since significant numbers of recently enacted tax expenditures have expiration dates. This is true, for example, for the "new jobs" tax credit enacted last year through 1987, for the ESOP credit enacted in 1976 through 1980, for the exclusion from an employee's income for prepaid legal fees paid by his employer which was enacted in 1976 through 1981, and for tax incentives to preserve historic structures which were enacted in 1976 through mid-1981.
However, almost all tax expenditures enacted prior to 1970 are permanent programs. Therefore, it is particularly important that these indefinite programs be subject to periodic review and reauthorization requirements.
The Glenn amendment provides a format and a schedule to extend sunset to tax expenditures. Specifically, the Glenn amendment would defer the actual extension of sunset to tax expenditures until the enactment of additional legislation in the next Congress that would list all tax expenditures subject to sunset and would provide reauthorization dates for all of these provisions.
Let me repeat that observation, Mr. President, because I have heard and I have read Senator LONG and Senator CURTIS describe the Glenn amendment as an automatic tax increase.
Whether or not it is accurate to describe it as a tax increase, which I challenge, there is nothing automatic about it. They know it. And they refuse to recognize the reality of the Glenn amendment. They prefer to distort it to make their argument against it, rather than read it for what it is.
Let me read again: Specifically, the Glenn amendment would defer the actual extension of sunset to tax expenditures until the enactment of additional legislation in the next Congress that would list all tax expenditures subject to sunset and would provide reauthorization dates for all these provisions.
I know that they know what this amendment actually says, because I have seen the chairman of the Finance Committee reading the Glenn amendment from cover to cover.
Thus, the Glenn amendment will provide Congress additional time to resolve any definitional differences concerning which tax provisions constitute tax expenditures, and time to resolve any technical issues that could arise with respect to the inclusion of tax expenditures under sunset.
The Glenn amendment appropriately provides the tax writing committees major roles in determining which tax provisions should be subject to sunset and in resolving any technical issues surrounding sunset for tax expenditures.
Opponents of extending sunset to tax expenditures make two basic arguments:First, that it would increase business uncertainty, and, therefore, impede investment; and, second, that it would result in indirect tax increases. Neither of these assertions can withstand careful analysis.
So many major political changes, economic changes, as well as tax and non-tax law changes affecting investment have occurred in recent years that, as a practical matter, a relatively constant set of investment factors no longer can be assumed by businessmen and investors. Moreover, the overall strength of the economy and anticipated sales projections are the principal determination of investment decisions, rather than tax considerations. Given these factors, it is unrealistic to believe that enactment of sunset for tax expenditures would have any substantial impact on investment decisions.
Moreover, as I have noted previously, an increasing number of tax expenditures — many of which are investment related — have been enacted by Congress in recent years for limited periods of time. With respect to these tax expenditures, sunset simply would regularize the review and periodic reassessment process they already must undergo.
Furthermore, despite these considerations, if it were still determined to continue certain major tax expenditures indefinitely in order to maximize "business certainty," the Glenn amendment would allow exceptions from the sunset reauthorization rules for such provisions comparable to exceptions in the basic sunset bill for spending programs. The tax exceptions would be developed in the legislation that must be enacted in the next congressional session to make sunset effective for tax expenditures. Thus, the Glenn amendment by itself cannot possibly result in increased business uncertainty.
Recent congressional experience strongly contradicts the validity of the other specter raised by sunset opponents that sunset would be used to raise taxes without requiring Congress to vote affirmatively for these increases. A general tax expenditure sunset mechanism would be no different, in principle, from the recent congressional practice I mentioned previously of enacting individual tax expenditures for limited periods of time. The mechanism also is no different from the enactment in recent years of a number of significant temporary general tax reductions. In all these cases, taxes would rise if the reductions were not extended at the time they were about to terminate. And in all these cases, taxes theoretically would rise without Members of Congress being required to vote for a tax increase. However, in fact, no such increases have resulted under present law.
As a practical matter, a sunset process for tax expenditures would be unlikely to raise taxes on an overall basis. If Congress decided to terminate one or more tax expenditures as a result of the sunset process, it could very well offset any additional tax receipts with equivalent reductions in the general tax rate structure which would benefit all taxpayers.
In summary, I urge the Senate to adopt the Glenn amendment as a significant first step toward integrating tax expenditures into the sunset process. Only if tax expenditures are included under sunset will the full panoply of Federal programs be subje:t to systematic review and reauthorization requirements.
Mr. President, originally, I had planned at this point to yield to the distinguished Senator from Ohio, so that he could make his case for his amendment; but, given the fact that I will not be permitted to do so at this point, I will continue with other remarks that may or may not be relevant. So, if I may extend my discussion of the Glenn amendment, I would like to summarize the Glenn amendment as a mechanism for subjecting tax expenditures to sunset.
Mr. President, may I put a question to the distinguished minority whip without losing my right to the floor?
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HANSEN. Mr. President, reserving the right to object, and I do not mean to be contentious, but the question was raised earlier as to brokering time. I am always interested in what my distinguished friend, the Senator from Maine, has to say. I ask whether he might be able to give us some indication as to how long he would—
Mr. MUSKIE. That is the purpose of my inquiry.
Mr. HANSEN. I have no objection.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator may ask his question.
Mr. MUSKIE. Do I correctly understand, I ask the distinguished minority whip, that if I am prepared to yield to the distinguished Senator from Ohio without asking to retain my right tc the floor, the Senator would have no objection to my yielding to the Senator from Ohio so that he may present his case?
Mr. STEVENS. That is correct, Mr. President. We have an objection here as to time agreement, and the Senator was asking for time agreements, in effect, and that is the basis for my objection.
We think that in time the yielding will include those who will be opponents, and I understand the problem about the tabling motion, but we do believe there should be no time agreements at this time.
Mr. MUSKIE. May I say to the distinguished minority whip as soon as Senator GLENN arrives in the Chamber, I will yield the floor to him and when he has finished his statement I hope there is general debate on both sides of the issue.
I understand the Senator has been serving his responsibilities as he is required to do so, and I apologize if I have indicated otherwise.
Mr. STEVENS. No apology is required.
Mr. HANSEN. Mr. President, may I ask a further question of the distinguished Senator from Maine?
Mr. MUSKIE. Yes.
Mr. HANSEN. What is the intention? Is the Senator from Ohio to follow the Senator from Maine? Who is to follow?
Mr. MUSKIE. Senator GLENN, who is the author of the pending amendment and has not had a chance.
Mr. HANSEN. Is it his intention to hold the floor also and yield only to those whom he chooses?
Mr. MUSKIE. Let me yield to him and let him answer the Senator's question.
The PRESIDING OFFICER. The Chair will say to the Senator from Maine that he has a unanimous consent agreement that he must yield the floor, and then the Chair will use the prerogative of recognition.
Mr. GLENN. Mr. President, I seek recognition, then, on that basis.
The PRESIDING OFFICER. The Senator from Ohio has the floor in his own right.