October 10, 1978
Page 35212
Mr. DANFORTH. Mr. President, the point that Senator JAVITS has made about uncertainty is extremely important.
It is argued, I suppose, that the principal argument against an out year tax cut, a long-term program, is that we should proceed 1 year at a time. This argument was made with respect to the individual tax cuts, that we should proceed 1 year at a time. Last night, it went the other way — that we should consider a long-term program for individual taxes.
The same is true, and more so, for corporate taxes because of the uncertainty; because business people, in making business decisions, want to have some idea as to what the results of those decisions will be down the road.
Arthur Burns made the same point that Senator JAVITS has just made. He said in a speech, in late 1977:
Many businessmen have a deep sense of uncertainty about what the longer future holds and, as a consequence, are discounting expected future earnings more heavily than they ordinarily would in their investment calculations. They voice concern about their inability to make meaningful projections of corporate costs and earnings for the years immediately ahead.
We cannot continue to have a policy which keeps people off balance and have the kind of healthy economy we need.
When we have the system we presently have, in which we have a tax bill virtually every year — virtually every year we come up with a tax bill — there is no way under that setup to have the kind of confidence which will lead people to be able to go out and make the kinds of investments that are necessary if we are going to have a healthy economy.
Mr. JAVITS. Mr. President, to continue for a moment or two: In 1976, the Council of Economic Advisors stated that U.S. business must invest at least 12 percent of the gross national product in order to obtain full employment and increase our productivity.
Let us see what the record is. In 1976, we hit a 13-year low of 9.1 percent of gross national product in our investment, and by 1977 we were only at 9.4 percent. The expectation is that we will do no better, if as well, in 1978.
Mr. President, we are the engine of prosperity or depression in the world because we represent so much of the world's production. We talk about the locomotives being Japan and Germany; but, as a matter of fact, we are the locomotive — the biggest locomotive there is. The reason we are in this serious inflationary situation is that we have not been pulling our weight on the train, considering our size. It is for that reason that we have had to appeal to the Japanese and the Germans to hook up their locomotives with ours.
That is all very good, but the Greeks always said, "Know thyself," and that is what we are trying to recommend by this amendment: to know ourselves and what really will make us the major locomotive for our own and the world's economic prosperity.
Mr. President, I know we all want to vote as quickly as possible, and I am very much a party to that, and I will not delay the Senate further, so I close as follows:
It is my profound conviction that this is the guts of the tax bill, that this represents the sophistication and the understanding of the American economic system, the way it works, its purpose, and how to make it work better. I hope all Senators will respond thoughtfully on that basis and support this amendment.
Mr. LONG. Mr. President, this amendment would reduce revenues further in 1981 by $3.150 billion from what we have now, and it would mean a reduction of $2.3 billion in 1982.
Each Senator is very proud of his own amendment, because he has given a lot of thought to it, and he is convinced that he is right.
We are being criticized severely — even by the Wall Street Journal — for the very large tax cuts we have approved. I think it is almost universally being regarded by responsible people as far more than the country can afford. This is just one more budget buster down the road. We are being criticized as irresponsible, as going too far in these tax cuts already. .
I yield to the Senator from Maine.
Mr. MUSKIE and Mr. CURTIS addressed the Chair.
The PRESIDING OFFICER. The Senator from Maine is recognized.
Mr. MUSKIE. Mr. President, I join the distinguished floor manager of the bill in his reaction to this amendment.
We were acting here last night and during the days of this debate and now this morning as though there were no end to the tax reductions that we could write into law today for 5 years into the future. We assumed that we can predict with precision what economic conditions are going to be, that there will be no recessions and no depressions and as a consequence no deficit and no problems.
Last night we adopted an amendment that cumulatively will cost us $142 billion, as I recall the figures; by 1983, and now we would add another $2.5 billion to that revenue reduction if the Danforth corporate rate reduction is adopted.
All the budget process is going to amount to, it seems to me, is a computer. We have been limited by the Nunn amendment now as to the level of spending increases. Revenues are going to be cut by what we adopted last night and what we are being asked to adopt this morning. We will not need a Budget Committee to exercise some judgment and make some tradeoffs to take into account economic conditions. We are acting as though we can predict precisely what is going to happen economically for the next 5 years and we can budget both revenues and overall spending today.
Our experience this year indicates that that is not so in a period of 8 or 9 months. We surely cannot do it for the next 5 years and have no fears about the consequences.
Mr. President, I join the distinguished Senator. I hope that economic conditions make it possible for us to do what the Danforth amendment proposes. If the budget process enables us to implement that kind of an objective, I assure Senators that we will try, but to write it into law at this point I do not think is the way to do it.
So I join the distinguished floor manager.
Mr. BENTSEN. Mr. President, will the manager yield?
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from Nebraska.
Mr. CURTIS. Mr. President, I yield myself 3 minutes.
Mr. President, it is not very often that I disagree with our distinguished chairman after the committee worked hard and threshed out a provision of a tax bill. However, this amendment so far as 1979 and 1980 is concerned is identical with the Finance Committee's version. Down the road in 1981 and 1982, it further lowers the corporate tax to 44 percent. At the present time it is 48 percent. The committee said make it 46 percent for the next 2 years. That is what this amendment does, and then down the road it has another one.
Mr. President, there is not anyone in this Chamber who can predict whether or not this will cost revenue. I want to venture a guess that it will increase revenue. The amount of revenue that flows in the Treasury is the amount of corporate profit times the rate, and we can move the rate up but if the profit goes down the money flowing in the Treasury is less. Therefore, none of us can predict just what the revenue effect will be.
The history of tax legislation is that when we lower the rate we get more money.
Now, of course, that must be within the bounds of reason and not carried to the extreme. But the fact remains that the better climate we have for a plant, the more it grows; the more fertilizer, the more water, the more care we give something, the more it grows. That is true in the economic world. If we create an atmosphere that causes men to want to do more and produce more in the hope that they will have more left for themselves we collect more revenue.
Mr. President, as I say, this gets us back for the next 2 years exactly where the Finance Committee recommended, and I think this expectation of a further reduction will increase the endeavor throughout our economy and will result in more revenue.
I respect the opinion of those who predict that it will cost revenue, but I say that there are no facts upon which any of us can base such a guess.
Several Senators addressed the Chair.
The PRESIDING OFFICER. The Senator from Texas.
Mr. BENTSEN. Mr. President, will the manager of the bill yield 2 minutes to the Senator from Texas?
Mr. LONG. Mr. President, the Senator had his own time.
I hope, Mr. President, I will be permitted to make a motion to table because this debate could keep going on and on, and we have so many other amendments to be considered.
Mr. BENTSEN. I will be happy to yield.
Mr. JAVITS. Mr. President, I suggest that there be a time limitation of 15 minutes on this amendment.
Mr. LONG. Mr. President, I will not debate the amendment at all. I just want to move to table.
I move that the amendment be laid on the table. I ask for the yeas and nays.
Mr. JAVITS. Mr. President, will the Senator withhold that a few minutes?
The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second.
The yeas and nays were ordered.
Mr. JAVITS. Mr. President, will the Senator withhold it a few minutes so we can continue the debate for another 10 minutes?
Mr. LONG. I am trying to get along with this bill.
Mr. JAVITS. I know the Senator is. But we do not want to choke this off. Wehave only dealt with it for a half-hour.
Mr. ROBERT C. BYRD. Mr. President,the manager of the bill was here at 8 a.m. and so was the ranking minority manager of the bill. We were pleading with Senators to get over to the Chamber and call up amendments, and we could not get them over to the Chamber.
Mr. JAVITS. Mr. President, will the Senator yield a moment?
The PRESIDING OFFICER. The motion to table is not debatable.
The yeas and nays have been ordered.
Mr. ROBERT C. BYRD. I say that in defense of the manager of the bill.
Mr. JAVITS. Mr. President, I ask unanimous consent that the debate may continue for 10 minutes evenly divided.
The PRESIDING OFFICER. Is there objection?
Mr. LONG. I object.
The PRESIDING OFFICER. Objection is heard.
The question is on agreeing to the motion to lay on the table the of the Senator from Missouri.
On this question, the yeas and nays have been ordered, and the clerk will call the roll.
The result was announced — yeas 44, nays 37, as follows:
So the motion to lay on the table amendment No. 4054 was agreed to.
Mr. LONG. Mr. President, I move to reconsider the vote by which the motion was agreed to.
Mr. HARRY F. BYRD, JR. I move to lay that motion on the table.
The motion to lay on the table was agreed to.