Providing for consideration of the bill (H.R. 4275) to amend the Internal Revenue Code of 1986 to permanently extend the 10-percent individual income tax rate bracket.

Mr. Speaker, pursuant to House Resolution 637, I call up the bill (H.R. 4275) to amend the Internal Revenue Code of 1986 to permanently extend the 10-percent individual income tax rate bracket, and ask for its immediate consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, today the House can make the 10-percent bracket permanent for working Americans by passing this legislation, H.R. 4275. The 10-percent bracket was created in the Economic Growth and Tax Relief Reconciliation Act of 2001. It has provided substantial tax relief for low-income workers by taxing the first $14,000 of married couples and $7,000 for singles at a 10-percent rate instead of a 15- percent rate. This tax relief was accelerated last year in last year's Jobs and Growth Tax Relief Reconciliation Act. H.R. 4275 would make this tax relief permanent.

If Congress fails to act to pass this legislation, Americans will see their taxes increase starting next year. Without action, the size of the 10-percent bracket will automatically shrink next year, so that more income will be taxed at a higher rate. In fact, the 10-percent bracket will vanish altogether after the year 2010 unless we act today to make it permanent.

If H.R. 4275 is not enacted, 73 million tax filers will see a tax increase starting next year. The effect will be particularly acute after 2010 when 123 million tax filers will see an average annual tax increase of $500.

It is worth noting that more than 20 million of these returns are low-income taxpayers and families who have all of their income taxed at this lower 10 percent rate. The public deserves a solid, dependable Tax Code that provides incentives and lets working people keep their money for their own needs. The 10 percent bracket provides such an incentive, one we can and should make permanent by passing this legislation.

Mr. Speaker, it is important that people know what taxes they are going to face in the future. By having all of these uncertainties in the Tax Code, not knowing whether you are going to be in the 10 percent bracket next year, the 15 tax percent bracket next year, it makes it difficult to budget for the future.

We are talking about the taxpayers who can least afford to have a big tax increase going from 10 percent to 15 percent on their incomes next year, let alone not having the knowledge of knowing whether or not this is going to happen. It is very important, Mr. Speaker, that families know what lies ahead, that businesses know what lies ahead, and let us all remember that two-thirds of businesses in America file their taxes as if they were individuals, not as corporations, but as pass-through entities where they file on the individual rate. Making sure that small businesses, which produce 70 percent of the jobs we have in this country and low-income taxpayers know what lies ahead in the Tax Code is very important to make sure that we sustain the economic recovery we are now engaged in.

Mr. Speaker, largely because of the tax cuts that this bill enacted, largely

because of the full implementation of the tax rate reductions that occurred just this last July, our economy has taken off. Just since last August, this economy, by the most conservative estimate, has produced 1.1 million jobs. In fact, since January 1 of this year, this economy, by this most conservative payroll estimate, has produced 881,000 jobs. This is no longer a jobless recovery; this is a recovery that is producing good jobs.

Even the manufacturing sector, which is so near and dear to my heart because it is such a big issue in Wisconsin, is producing jobs. The reason we are producing jobs in this economy is because people get to keep more of their own money to spend as they see fit. Businesses are reinvesting, rehiring people. The economy is working, and we cannot snuff out this economic recovery by yanking out the tax relief that was so instrumental in getting us onto the path of growth that we are on today. That is why I urge passage of this bill.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, let me just mention very briefly, the gentleman who just spoke is from California, and the taxpayers just in the State of California who are now only paying that 10 percent bracket, there are 2,605,960 taxpayers in the State of California alone who would experience a huge tax increase relative to their tax burden next year if this legislation is not passed. In fact, there are over 12 million taxpayers in California alone that would experience higher taxes next year if this does not pass.

So each of us represents people who are struggling to make ends meet who are at the bottom rung of the economic ladder who are staying just afloat and paying taxes at that 10 percent bracket who are making $16,000 or less as a couple. Those are the people that we want to help, and we want them to get on the upper trajectory of prosperity. The last thing we want to do is hit them with a big tax increase. If we fail to pass this bill, that is exactly what will happen.

Mr. Speaker, I yield myself 15 seconds.

Mr. Speaker, on May 5, 2004, the House voted 333-89 to extend the exemption amounts for the AMT, to index them for inflation; and I think the gentleman from California (Mr. Becerra) voted for the AMT relief bill. We passed the bill, making sure that we can go study the problem and figure out how to comprehensively fix it.

Mr. Speaker, I yield 4 minutes to the gentleman from Texas (Mr. Sessions), a member of the Committee on Rules.

Mr. Speaker, I yield myself 2 minutes to respond. There is a lot to respond to there, though. I do not know if I have enough time to respond to all of what my friend from Washington just said. I think that it would be good to have a little economic refresher course here for some of the Members of Congress.

I just want to point out a couple of things. Number one, the soapbox derby resolution was brought by the minority whip from the other side. But, number two, I think the Member from Washington ignored a lot of good things we just did in the last week here in Congress. Today we have the association health plans bill on the floor, helping small businesses, individuals, pool together to buy their health insurance in collective nationwide buying pools to get down the cost of health insurance. Yesterday we passed the FSA rollover to help bring down the cost of health insurance and we passed medical liability reform to help bring down the cost of health insurance.

So this Congress is obviously performing. I think he may have glossed over a lot of the accomplishments. In fact, we have 87 very important, substantive bills sitting over on the doorstep of the other body waiting for action because we have outproduced and outperformed the other body on legislation.

One final point is the unemployment rate that we are experiencing in America today is lower than the average unemployment rate of the nineties, the eighties, and the seventies; 1.1 million jobs have been created, good jobs, not all good jobs but many good jobs since August. This economy is pulling out of the recession it had experienced a year ago. This economy is producing jobs. We still, yes, have a way to go; but the point of the story is when you take a look at the fact that just this year, in the last 10 months since last July, we have had lower tax rates in America. Because of that, we actually have more revenues coming into the Federal Government.

But to make the point clear, last year where we had higher tax rates on the American taxpayer, we brought in less money to the Federal Government. This year with lower tax rates, where we have more economic activity, more people keeping what they earn and a lower tax rate, we are actually bringing in more revenue to the Federal Government. We believe the way to fixing our problems is jobs and by giving people a chance to upgrade their life-styles and get jobs in the economy, we will have more tax revenue, rather than increasing taxes and increasing spending. That is not our philosophy.

Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Florida (Mr. Shaw).

Mr. Speaker, I yield 2 minutes to the gentleman from South Carolina (Mr. Barrett).

Mr. Speaker, I yield 2 minutes to the gentleman from Wisconsin (Mr. Green).

Mr. Speaker, I yield 2 minutes to the gentlewoman from Tennessee (Mrs. Blackburn).

Mr. Speaker, I yield 2\3/4\ minutes to the esteemed gentleman from Illinois (Mr. Crane), a high-ranking member of the Committee on Ways and Means.

Mr. Speaker, I yield 2 minutes to the gentleman from South Carolina (Mr. Brown).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, since we are going into the debate on the substitute, I will not take too long to close, although I think some of what the gentleman from California just said bears some responding to.

I think this debate has done a pretty good job of showing those who are viewing it the differences, the differences between the two parties here

on the floor, the differences between the two approaches to fiscal responsibility, between two philosophies.

What you just heard the gentleman from California say is we have recklessly cut taxes by $500 billion over the next decade. It is important to put that in context.

Mr. Speaker, this Federal Government will spend about $2.7 trillion this year. Off the top of my head, we will be spending, with taxes coming in, about $29 trillion over that 10-year period. So we are proposing to allow the American taxpayer to keep about $500 billion out of that $29 trillion of their money we are about to spend.

It kind of comes down to this, Mr. Speaker, two points. Number one, we believe the best way to get ahold of our fiscal problems, to reduce our deficit, is to hold the line on spending and cut spending and grow the economy. The budget resolution we brought to the floor just a month or so ago was a resolution that froze spending and actually reduced spending in critical areas so we can get a handle on our Nation's finances. The other side did not vote for that budget agreement.

We also need to recognize the fact that when you cut taxes, economic growth occurs from that. One of the great stories being told right now, the success that we see in the data from this new economic recovery that is producing all these jobs, is the fact that this year, with the lower tax rates we are paying, we are getting more revenues coming in to the Federal Government.

What we see is that when you cut taxes on entrepreneurs, when you cut taxes on families, when you cut taxes on investors, they engage in more economic activity, they create jobs, and people go from being unemployed and collecting unemployment to going and working and paying taxes. That is what is happening today. That is a recipe for success.

We do not want to squelch this economic recovery. We do not want to raise taxes on people. We want to keep taxes low, watch our spending and reduce spending, and help people get work, so when they go to work they can provide for their families, and, yes, pay taxes, so that we can get the revenues we need to reduce and eliminate our deficit. That is the approach we are advocating.

What is the other side's approach? What is the substitute they are about to bring to the table? More tax increases. Okay, you can cut taxes to these people over here on the right hand, but we have to raise taxes to these people on the left. Net tax increases.

It is a fundamental difference in philosophy. Whereas they believe we have to keep taxes high and higher, that the emphasis should not be on spending, but we should raise more taxes, we believe the emphasis should always be on recognizing the fact that the taxes that this country collects is not our money, but the money of the American person, the man and woman in the marketplace, who is working hard to provide for their family, who is creating jobs, who is sweating and working every single day. It is their money, not ours.

So we do not believe philosophically, that is the root of what we believe in, that we should just cavalierly take more and more and more money out of a person's paycheck, out of their wallet. We believe they should keep more of what they earn.

What is so great about that philosophy is it is also good economic policy, and we are seeing that. We are actually getting more revenues because of lower taxes. How about that? And the good news is, this can be bipartisan. When John Kennedy did this, it worked. When Ronald Reagan did this, it worked. This has been done by Republicans and Democrats coming together in the past. When Reagan did it, it was because of good Democrats working with Jack Kemp and Bill Roth in the Congress to reduce tax rates on the American families. What happened? Economic growth was encouraged, tax rates went down and revenues went up.

This does work. It is working right now. What we are seeing in this debate is a difference in philosophies.

Mr. Speaker, I want to conclude by saying one thing. If a Member of Congress comes to the floor today and votes against this bill, they are voting to increase taxes on 23 million low-income workers. They are voting to increase taxes on 23 million low-income workers by one-third, to raise their taxes by one-third. They are also voting to increase taxes on 80 million taxpayers across the country.

It is a very clear vote. If you vote for this bill, you preserve these tax cuts. If you vote against this bill, you are going to raise taxes on 23 million low-income earners, the least of whom among us should be facing this kind of a tax increase.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I rise in opposition to the substitute

Mr. Speaker, I yield 4 minutes to the gentleman from Florida (Mr. Shaw).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, let me just bring three points up in respect to this substitute. Number one, my colleague from Florida sort of outlined the convoluted pay-for in this bill which will render this tax cut temporary, not permanent, by giving the decision whether or not to keep this tax cut permanent to some accountants at the Office of Management and Budget, to in 2010 speculate what is going to happen in 2014 to make sure that the tax cut becomes permanent. This is another way of saying this is a temporary tax cut, meaning they are going to increase this 10 percent bracket again.

The second point I think is important to make, they try to pay for their substitute with a tax increase. Now, what they will tell us is it is a tax increase on rich people, individuals making over 500 grand, couples making over $1 million. What they will not tell us, Mr. Speaker, is that half of those filers are small businesses. Half of those people are subchapter S corporations, partnerships, small businesses.

Mr. Speaker, small businesses create 70 percent of our jobs. Before the tax cuts that just passed last July, in this country we were taxing small businesses at a higher tax rate than we taxed the largest corporations of America. We finally now are in a fair, level playing field where we tax small businesses at the same tax rate that we tax large corporations. But they want to undo that.

They want small businesses, small mom-and-pop businesses who bring in revenues of $1 million or more, who maybe have 2 employees, 10 employees, 50 employees, to pay a higher tax rate than IBM, than Exxon, than Global Crossing, or WorldCom. That is wrong. I think that is unjust and unfair, yet they want to return to the days of taxing small businesses at higher tax rates than large corporations.

The third point is the way that they structure their Alternative Minimum Tax relief. Now, this is an issue where I think and hope we can get good bipartisanship support to fix this problem. We hear from both sides of the aisle that AMT is a problem and we have to fix it. Just last week we passed a bill to make sure that no new people fell into the trap of the AMT while we figure out at the Treasury Department and here in Congress how to really fix this mess, and I hope that we really do have bipartisan support to fix this mess.

But the way they structure it in this bill means that taxpayers are going to have to calculate their taxes three times in order to navigate their way out of the Alternative Minimum Tax. The Alternative Minimum Tax brings a lot of complexity to the Tax Code for taxpayers. This substitute makes it

more complex, more difficult to comply with. That is not the right direction, so I urge a no vote on this substitute.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself 30 seconds.

I will not go through tit for tat on all of that. Only to say that now that our Chairman Greenspan was invoked, he also said in that same speech that the first thing we should do is make these tax cuts permanent because they really help achieve the economic recovery we have underway right now.

Mr. Speaker, I yield such time as he may consume to the gentleman from Missouri (Mr. Blunt), the majority whip.

Mr. Speaker, I yield myself such time as I may consume to close.

Well, where to begin? Well, we have seen a lot of revisionist history practiced on the floor today during this debate. I think it is important to look at what this country has faced in the last few years.

What happened to this country? Well, in 2001 the President was sworn into office and we were going into a recession. What we found on September 11 of 2001 was that we were on the precipice of going into a recession. It looked inevitable that we were going to have a recession, but maybe we were going to pull out of it. But 9/11 put us into that recession.

We went into a recession where our revenues to this country dive- bombed. But what happened after that? Then we

found some people were crooked in the boardrooms of America, and we had corporate scandal after corporate scandal after corporate scandal. And what happened? We went deeper into recession and our revenues plummeted. Because we saw that Americans' faith in the corporations of America, because of the Enron scandal, the Global Crossing scandal, and the WorldCom scandal, shook the foundation of our enterprise system.

What happened also at that time? Well, Mr. Speaker, we were engaged in war in response to 9/11. We had to spend more money because we had a war in Afghanistan, we had a Department of Homeland Security to try to make ourselves harder targets to hit, to play better defense in the war on terrorism. That costs money. The fundamental and first responsibility of the Federal Government is to protect the safety and security of the American people. In post 9/11 government, that means we had to spend more money on security.

So, yes, spending went up. Spending went up, I would argue, for a very important reason. And, you know what? Revenues went down. They went down because we went into a recession, we got deeper into a recession with 9/11, and we got still lower revenues and a worse recession because of these corporate scandals.

But the great story in all of this, Mr. Speaker, is the incredible resiliency of the American worker, of the American citizen, of the American economy. The American economy is rebounding from all of that. Most times in America you get hit with one of these calamities, a war, an act of terrorism, or a recession, but they happened all at the same time in this country. And what is so wonderful about this is how well we have responded to it.

Now, yes, spending went up, the debt obviously went up, and revenues went down. But the good story in all of this, Mr. Speaker, is that in large part because of the tax cuts that passed, that helped ignite this economic recovery, and we are working and growing ourselves out of this. Now, we have many problems that clearly need solving. We are still involved in a war and we see that on other TV sets every day. We still have a lot of people who need work. But it is a wonderful thing that more than a million people found work since last August. It is even better that about 300,000 people found work last month.

Mr. Speaker, we still have challenges, and that is why we are seeing what is coming to the floor this week, all of these pieces of legislation to try and get this economy back on its feet, to get people their jobs back.

One of the things we are focusing on just this week and the next 7 weeks in the House of Representatives is to do things to make it so we are more competitive in the global economy. We look at what it takes to get jobs in this economy. How do we bring the lagging manufacturing sector back on its feet? When we look at the problems facing the competitiveness of the American company, we look at the problems facing the competitiveness of the American worker, taxes, number one; health care costs, number two; regulatory costs; litigation costs with lawsuits; and energy costs.

What is this Congress doing? Well, we had a comprehensive energy policy brought through the House of Representatives to bring down the cost of energy and make us less dependent on foreign sources of energy; filibustered in the other body. Regulatory reform, we are bringing a whole week's worth of legislation down to the floor in a matter of days to work on reducing the cost of regulations. Tort reform, we have passed tort reform bill after tort reform bill after tort reform bill. Class action reform, medical liability reform, all being filibustered in the other body.

What are we doing about taxes? This is an area where this Congress has produced because we have been able to get these bills passed through the other body and signed into law by the President. So we see this recovery under way.

One of the areas where this recovery has really rebound is in small businesses. As I mentioned earlier, small businesses create 70 percent of the jobs we have in America. Small manufacturers in America today pay higher taxes than our competitors overseas, especially China and India. We have to make our small manufacturers more competitive.

What this substitute does is it takes away the very policy that is igniting this economic recovery. It puts taxes on small businesses. More importantly, if we fail to pass this underlying legislation, it will put higher taxes on low-income workers. I mentioned earlier that over half of all taxpayers hit by the surtax in the Tanner substitute are small businesses. I misspoke. Seventy-five percent of all taxpayers hit by this surtax report small business income, sole proprietorships, partnerships, men and women in America who are putting their own capital at risk to start a small business, to hire people and bring them back to work. That is the engine of economic growth that is fueling this recovery.

Why on Earth we want to hit these people, the creators of jobs in America, with a new high tax to try to pay for a temporary tax cut which we are making permanent in the base bill is beyond me.

Now, it is important that Members note the differences in philosophy here. By raising taxes, as a vote against this bill will do, takes the pressure off the need to reduce spending. If we always go for the old answer of let us just raise taxes, let us allow taxes to go back up, raise taxes on small businesses, that will bring in more revenue to the government, possibly. Possibly.

But what it for sure will do is take pressure off the Congress and our Federal Government to cut spending. We want to cut spending. I think the gentleman from Tennessee (Mr. Tanner) was right when he said we could have done a better job over the last 8 to 9 years in cutting spending. I very much agree with that. I think we can do a better job; but what is also important to say, which was left out, over these 8 or 9 years, in passing the spending bills we have passed in this Congress, they have always done so by defeating higher spending increases that have been proposed time after time from the other side of the aisle.

So, Mr. Speaker, what this is about is ensuring the recovery continues, making sure that 23 million low-income Americans and 73 million taxpayers do not see a big tax increase next year. What this is about is making sure that the pressure is put on Congress in the right way, not raising taxes, but keeping taxes low and cutting spending. That is the emphasis that is placed in this bill. That is what we are voting for here.

I urge my colleagues to vote ``no'' against the Tanner tax increase substitute and vote ``yes'' for the base bill so that 23 million low- income Americans can see this tax relief in reality for the rest of their lives and so that the rest can make sure they are not going to wake up next year with a big tax increase.

Mr. Speaker, I demand a recorded vote.

Mr. Speaker, I yield such time as he may consume to the gentleman from Georgia (Mr. Scott) for a brief personal privilege matter.

(By unanimous consent, Mr. Scott of Georgia was allowed to speak out of order.)

Mourning the Passing of Gloria Aaron

Mr. Speaker, I yield myself such time as I may consume.

(Mr. FROST asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I am pleased to join the gentleman from Texas (Mr. Sessions) today in support of H.R. 4275, legislation to make the expanded 10 percent tax bracket permanent. In my district in north Texas and across America, scores of families work hard every day to make ends meet. By passing this bill, we will provide some much-needed tax relief to these hardworking Americans.

But I must admit, Mr. Speaker, I find it very odd that some Members of this House would champion the tax relief bill before us today when they have also at nearly every opportunity voted against other measures that would have provided significant economic benefits to a great many middle-class taxpayers. I am talking about measures like providing additional tax relief by reinstating the State sales tax deduction and ensuring overtime pay for America's police and firefighters.

I think it is important to consider these sorts of measures now, Mr. Speaker, because many of our constituents are suffering from the recent recession and the outsourcing of good American jobs overseas.

Do not get me wrong, Mr. Speaker, we all want to provide tax relief to our constituents. I voted last week in favor of the bill to provide relief from the Alternative Minimum Tax. I voted the week before to permanently eliminate the marriage tax penalty, and I will vote today to make the expanded tax bracket permanent. The bill on the floor today is a good bill and it is the very least we can do to help families in the country, but I think the American people deserve better than our least effort.

Others may be happy to limit our efforts to help American families to this bill, but I am not, Mr. Speaker. We can improve this bill by amending the rule to allow for the consideration of H.R. 720, a bill introduced by the gentleman from Texas (Mr. Brady). His bill will reinstate the sales tax deduction so that citizens of States without income taxes may deduct their sales taxes from their Federal tax bill. This is a very important issue for many Americans, including my constituents in North Texas who do not pay a State income tax but have been plagued by high sales taxes which may rise even higher if some in the Texas legislature have their way.

Our State comptroller has estimated that the average Texas family would save about $300 a year on their Federal taxes under the bill offered by the gentleman from Texas (Mr. Brady).

Last week, I attempted to bring a similar measure up for consideration, but that effort was defeated on a straight party-line vote.

This is a bipartisan issue, Mr. Speaker, and I want to give the entire House an opportunity to vote on a bipartisan bill. H.R. 720 has 78 cosponsors, 47 Republicans and 31 Democrats. I have cosponsored the bill, the gentleman from Texas who is managing today's rule on the other side of the aisle has cosponsored the bill, and dozens of other well-respected Members from both parties have cosponsored the bill. As a matter of fact, Mr. Speaker, the Republican leadership indicated last week that they too support this bill.

So why do we not vote on it? Is this about politics, or is it about tax relief? Last week, Republicans defeated my amendment and said it was about politics. Well, here is a Republican bill that has strong bipartisan support and will provide millions of families with $300 a year in tax relief.

The American people deserve to find out today whether the majority party will put partisan politics aside for just a minute to pass this badly needed tax relief. I bet our constituents just cannot wait to see how their elected Representatives will vote on this issue.

In the coming weeks, I hope we will have more opportunities to help more families. But in the meantime, if Members are serious about helping their constituents, they will not only vote to extend the 10 percent tax bracket permanently, they will also vote today to defeat the previous question and allow us to consider H.R. 720, to reinstate the sales tax deduction. It is a Republican bill with Democratic support. As my colleagues realize, a no vote will be a vote against tax cuts.

Mr. Speaker, at this point I would like to insert several things in the Record. I am inserting a special report from Carole Keeton Rylander, the Texas Comptroller of Public Accounts. In this report she says, ``Restoration of the IRS sales tax deduction should be one of Texas' main priorities in Congress. The current discriminatory treatment of Texas taxpayers is taking $701 million out of Texas pockets and costing our State more than 16,000 jobs.''

I would also at this point, Mr. Speaker, insert in the record a statement by my colleague, the gentleman from Texas (Mr. Brady), that he presented when he introduced this legislation. ``Washington should treat all States equally,'' Mr. Brady says. ``A broad bipartisan group pushes Congress to end bias against sales tax States.''

[Special Report, March 2002]

Restoration of the IRS Sales Tax Deduction Should Be One of Texas'

Main Priorities in Congress

(By Carole Keeton Rylander)

Currently, the citizens of Texas and eight other states

are discriminated against because they cannot take any tax

deduction comparable to the state and local income tax

deductions enjoyed by the citizens of 41 other states and the

District of Columbia. In an attempt to alleviate this

disparity, Comptroller Rylander proposes to restore much of

the federal sales and motor vehicle sales tax deductions that

citizens of Texas were last able to itemize on their federal

income tax returns for the 1986 tax year.

The Comptroller's plan would grant taxpayers in all states

the option of deducting either their state and local sales

and motor vehicle sales taxes or their state and local

individual income taxes on their Form 1040. While such an

option would not fully restore the original deduction, which

allowed deductions for sales as well as income taxes, it

would go a long way to restoring fundamental equity for

taxpayers in those states that no not impose income taxes on

their residents, and at minimal cost to the federal budget.

There is already legislation before Congress that closely

tracks the Comptroller's plan. Last year, Representative

Brian Baird (D-Washington) introduced H.R. 322, and Sen. Fred

Thompson (R-Tennessee) introduced a similar bill, S. 291, in

the Senate. Both bills would grant taxpayers in all states

the option of itemizing a deduction for either their sales

(including motor vehicle sales) taxes or income taxes paid,

but not for both. Both bills would limit the deduction to a

specific amount prescribed in a table (individualized for

each state) providing deductible amounts by family size and

income group. Taxpayers, however, would not have the option

of deducting actual taxes paid, as they had in 1986 and

before. The main difference between the bills is that H.R.

322 refers to state sales taxes, while S. 291 refers to state

and local sales taxes. The Senate version also would allow

the deduction against the Alternative Minimum Tax. H.R. 322

boasts among its 58 co-sponsors 18 Texans; S. 291 is co-

sponsored by both Texas senators.

Texans lost their sales tax deductions in the last-minute

deal-making behind the Tax Reform Act of 1986. Before passage

of the Tax Reform Act of 1986 (TRA86), all individuals were

allowed to take separate income tax deductions for their

payments of state and local sales taxes and motor vehicle

sales taxes. For the sales tax, they were allowed to deduct

either the actual amount paid, or they could use an optional

sales tax table that provided deductible amounts for each

state (based on its rate and base) by income group and family

size. For example, a family of four with an income of $33,000

was allowed to deduct $306 in state sales taxes in Texas, but

$508 in Tennessee; and in both instances, taxpayers were

allowed to include an additional amount for local taxes paid.

TRA86 was designed to simplify the federal income tax by

eliminating many deductions, exemptions and credits while

increasing personal exemptions and standard deductions and

lowering and compressing tax rates. The deduction of state

and local sales taxes was one of the last (and most

contentious) items considered by the Senate, but the final

efforts to restore at least some vestige of the deduction,

led in part by Sen. Phil Gramm, ultimately failed. The

argument put forth by members from the states that retained

their state and local income tax deduction was that the

losses attributable to the repeal of the sales tax

deduction would be more than made up for by the increased

personal exemption, and that the sales tax deduction only

benefited the rich, because lower-income groups are less

likely to itemize.

The Comptroller's plan could be put in place for less than

1 percent of the costs of existing state and local tax

deductions. The March 26, 2001 cost estimate provided by the

Joint Committee on Taxation estimated that H.R. 322 would

decrease federal receipts by $23.1 billion over the 10-year

period 2002-2011. The annual costs were expected to average

$2.0 billion for the first three years, rising incrementally

thereafter. Putting the federal cost in perspective, the 1999

cost for the current deduction for state and local income and

property taxes was $268.9 billion. As such, reinstatement

would produce an increased cost to the federal government of

0.8 percent.

The Comptroller's plan could be put in place with virtually

no increase in complexity. Although the sales tax deductions

were eliminated in part for reasons of tax simplification,

the proposed legislation before Congress would add only one

more line to Schedule A, for those taxpayers electing to

itemize on their Form 1040. Even if actual taxes paid were

allowed to be deducted there would be an addition of only two

lines: one for general sales taxes paid, and one for motor

vehicle sales taxes paid.

Equity and fairness demand that tax discrimination against

Texans be eliminated. Reinstatement of the deduction for

sales taxes would eliminate the fundamental disparity created

by TRA86, when citizens in states with a personal income tax

were permitted to deduct such taxes, but citizens in states

without an income tax had no corresponding deduction. The net

effect of this disparity is that Texans, as well as the

citizens of the eight other states without a general

individual income tax pay a greater percentage of taxes to

the federal government than do citizens living in their

neighboring states with income taxes. In other words, the

federal tax law currently treats the same individual

differently solely on the basis of residence. Providing

individuals in all states the choice to deduct one or the

other of their sales or income taxes would restore equity and

fairness for all U.S. citizens at minimal cost.

The Comptroller's plan would put more money in Texans'

pockets. As with everything else in the IRS Code, the devil

is in the details, and even subtle differences in proposed

legislation can have major revenue implications, making any

revenue estimates of the ultimate legislation difficult.

Assuming that the federal legislation fairly and accurately

portrayed Texans' sales tax and motor vehicle sales tax

payments, restoration of the sales tax deduction could be

expected to save Texans--in the aggregate--on the order of

$568.7 million (if only state sales taxes were exempted) to

$701.3 million (if state and local sales taxes were exempted)

in the 2002 Tax Year. The corresponding average savings per

itemizing Texas household would be $231 and $284.

While the deduction only would go to taxpayers who itemized

their deductions, more Texans at lower income levels would

find it to their benefit to itemize. Right now, only one in

five tax returns filed by Texans itemizes deductions,

compared to almost one in three nationwide. The chief reason

for this is that citizens of 41 states and the District of

Columbia enjoy a deduction that is not available to Texans.

Restoration of the deduction for sales taxes paid would go a

long way towards bringing Texas closer to the national

average. In other words, the availability of the deduction

would benefit not only those who currently itemize, but an

additional number of slightly lower-income households that

would find it to their benefit to itemize.

The Comptroller's plan would create more jobs, economic

growth, and state tax receipts with absolutely no state tax

or spending increase. Keeping as much as $701.3 million in

the hands of Texas taxpayers would provide a significant

boost to the state economy. Assuming that the legislation

passed this year and that the deduction could be taken on

income taxes filed in 2003 for the 2002 Tax Year, the tax

savings could be expected to generate 16,180 new Texas jobs,

$590 million in new Texas investment, and $874 million in

increased Texas Gross State Product in 2003. The increased

economic activity in turn could be expected to boost general

revenue by $66.5 million in the three-year period 2003-05.

Most of this revenue would come from increased sales and

motor vehicle sales tax collections.

The Comptroller's plan promises a win-win situation for all

Texans, even those who do not itemize. To the extent that

keeping more Texas income in Texas, where it belongs, instead

of sending it off to Washington, all Texans would benefit

from the increased employment opportunities and investment.

In fact, it is difficult to find a downside for Texas to the

reinstatement of the sales tax deduction.

The Comptroller's plan would be a straight-up win for the

state, a victory for tax equity among the states, and it

would provide a desirable, welcome boost to restoring

statewide economic and revenue growth.

salient features

Legislation tracking the Comptroller's plan would cost the

federal government somewhere between $2.0 to $2.5 billion per

year--less than 1 percent of the $268.9 billion 1999

deduction for state and local income and property taxes.

Texans would save as much as $701 million, or $284 per

itemizing household on their 2002 taxes.

The estimated tax savings would be expected to generate

16,180 new Texas jobs, $590 million in new Texas investment,

and $874 million in increased Gross State Product in 2003.

The increased economic activity could be expected to boost

2003-04 general revenue-related state tax receipts for the

three-year period 2003-05 by $66.5 million.

Assuming that the federal legislation fairly and accurately

portrayed Texans' sales tax and motor vehicle sales tax

payments, a family of four with an income of $60,000 would be

able to deduct an additional $1,015 to calculate taxable

income, and a single mother of one with a total income of

$35,000 could deduct an additional $641.

The current system discriminates against Texans and the

citizens of other states that have opted to finance their

budgets without personal income taxes. The Comptroller's plan

is necessary to restore fairness and equity in the treatment

of those state taxpayers who currently do not benefit from

the tax deductions enjoyed by the citizens of the other 41

states and the District of Columbia.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, it is interesting, my colleague from Texas talks about the legislation and, well, we will do that in all due time and all due course, in terms of the righting of the wrong that was committed 18 years ago. The sales tax deduction for my State and for six other States, it is not 17, it is 7, was eliminated by this Congress in 1986, 18 years ago.

Only a few bills come out of the Committee on Ways and Means, only a few favored bills, so we have to take the opportunity to present this very important piece of legislation on the floor today and to give the House an opportunity to vote to right this wrong on the question of the deductibility of State sales tax. There are no other opportunities to present this to the House. That is why we are presenting it today. I hope that the House will give us the opportunity to right that wrong.

Mr. Speaker, I yield 5 minutes to the gentleman from Washington (Mr. Baird).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, we have a good piece of legislation before us today that I intend to support. I think most Members of the House will support it. My only request is that, at the same time, we provide equity and justice to the residents of seven States who were denied that equity and justice in 1986.

Now, I know my colleague is a relatively junior Member and was not here in 1986 when that legislation was voted on, but I was here, and I voted against the legislation that denied the residents of my State the opportunity to deduct their sales tax, when residents of New York and California and other States could deduct their State income tax.

I feel very strongly about this issue, Mr. Speaker. As Members of this House, we can do so much to lend a helping hand to our constituents. Today we have a chance to do something good for millions of American families. We can pass the bill to make the extended 10 percent tax bracket permanent, and then we can also immediately consider the Brady legislation, H.R. 720, to restore the sales tax deduction for citizens of Texas, Florida and other States lacking a State income tax.

Now, as I mentioned earlier, last week I attempted to bring to the floor a similar bill to reinstate the sales tax deduction, but the Republican leadership indicated a preference for the Brady bill. So now we have a chance to consider the legislation that Republicans preferred. It does not matter to me which bill we consider. This is a bipartisan issue, with wide support on both sides of the aisle.

I just want to get it done.

So today, Mr. Speaker, to get it done, I urge a ``no'' vote on the previous question. If the previous question is defeated, I will offer an amendment to the rule that will allow the House to vote on H.R. 720.

Let me be clear, Mr. Speaker. Voting ``no'' on the previous question will not prevent this House from voting on the underlying bill. It will simply allow for the consideration of H.R. 720. A ``yes'' vote, however, will deny the House the chance to even consider the issue of reinstating the sales tax deduction.

The American people deserve to know where their elected representatives stand on the issue of restoring the sales tax deduction. This is not a partisan issue, and this is not a political issue. This is about whether the citizens of Texas and other States should have to pay for the privilege of living there. I hope Members realize it today, and I hope their votes reflect this as well.

I urge a ``no'' vote on the previous question and ask unanimous consent that the text of the amendment be printed in the Congressional Record immediately before the vote.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Mr. Speaker, I ask unanimous consent to claim the time of the gentleman from New York (Mr. Rangel), the ranking member of the Committee on Ways and Means, for the managing of the time on this side of the aisle.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, we have before us another proposal which in this case I think every single Member of Congress would like to step up to the plate and say we need to do something like this. We have a tax system where oftentimes folks who work very hard, those who are striving and obtaining middle-class status, sometimes find they are paying more taxes than people earning 10, 20, 100 times what they are. That seems very unfair, and it is very unfair.

When we have a tax proposal which actually reduces taxes by starting at the bottom, by taking the lowest tax rate and giving a tax break there, you guarantee giving a tax cut to everyone, not just those who are very wealthy, but those who are middle income and those who are of modest income. If you start at the bottom tax bracket, everyone will fall into that bracket, whether rich or poor.

So when we look at this particular proposal we have before us, H.R. 4275, from the onset we want to say, let us do something like this because it helps all of America. And so we should be able to say let us do this because it helps all of America. The difficulty is while we should do something like this, this bill, H.R. 4275, does not help all of America.

What is worse is if I can tell Members that those who are not helped are those in the middle of America, Members would be most surprised. Members would think perhaps it does not help everyone because we avoid giving the very wealthy, who got tremendous tax relief from previous tax bills that the President proposed, it would be unfair to pile on top of the more than $130,000 in tax cuts they have received in the last couple of years even additional sums; but that is not the case.

The folks who are losing here, and there are millions who would lose, are folks who make between $50,000 and $100,000. In other words, the one-fifth of America that most of us consider middle class is the group of Americans that are going to suffer, millions of them. Within the next 5 or so years, some 33 millions of those households that earn between $55,000 and $100,000 are the households that are not going to get to benefit from this particular tax cut proposal. As unfair as that sounds, that is the reality.

There are ways to cure it, and on this side of the aisle there will be a substitute proposal presented which ensures that every single taxpaying family, including those between $50,000 and $100,000 would qualify for the tax reduction in this particular proposal. It is a simple amendment, it just needs to be paid for; and we have come up with a way to pay for it which is not just fair but fiscally responsible.

Mr. Speaker, we have a proposal here that on its face can be sold to the American public, but in reality and in its implementation, not only is it unfair because it leaves out a good portion of middle America, at the same time it does nothing to cure what is going to haunt the rest of America for many, many years, and that is this growing deficit that we have in our Federal budget.

This year we are being told we will have a budget deficit exceeding perhaps $400 billion. That is more than $1,000 for every man, woman, and child in this country. Think of it as a birth tax. Any child born today automatically is born with that family owing the Federal Government as a result of President Bush's budget for this year over $1,000 to the Federal Government, just on bearing that child.

This proposal, which will cost billions of dollars, and as I said, it has no legitimate purpose behind it to help reduce the taxes for all Americans, if we do the right thing, is not bad because you are reducing taxes on one end, but if you are just raising them somewhere else, you are not getting much of a benefit. We will have an opportunity to get into this later.

I applaud the gentleman from Wisconsin (Mr. Ryan) for his efforts to try to move this forward. I would hope at the end of the day we realize we have not just an opportunity to reduce taxes for all Americans, but we have a way to do it so that the implementation really will reach all Americans, not just some; and we will do it in a fiscally responsible way by paying for the costs of this, rather than add to the costs of the national debt and the growing Federal deficit that we have today.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield myself 2 minutes.

Mr. Speaker, I do not disagree with some of what the gentleman just said, but the gentleman has to read the whole book to understand, not just look at certain chapters in the book. What the gentleman from Wisconsin (Mr. Ryan) has excluded from his reading of the book is that we have something approaching 13 million households in America today, today, that by the time they file their taxes for next year will not qualify for the benefits in this proposal. That is 13 million, and that is because of the AMT, the alternative minimum tax.

Remember back in the 1970s, early 1980s when we heard stories of the multibillion dollar corporations, the multimillionaires who at the end of the day when they filed their taxes would pay zero in taxes where the average American was having to give Uncle Sam some money?

Well, there was a law passed to make sure that everyone, not just middle class, but even the super rich and megawealthy corporations paid some taxes. That was the alternative minimum tax legislation. But we have seen incomes creep up some, we have seen inflation creep up some; and as a result, the alternative minimum tax has seen more people creep up into its brackets and now qualify to have to pay taxes under the alternative minimum tax.

There are 13 million households who next year when paying their taxes will not benefit from this proposal because they will fall under the AMT. And by 2010, in 5\1/2\ years, we will have 33 million households that will have crept up

into the AMT world. Therefore, while they may get a tax break under this proposal at first, when they have to switch over to do their calculation for their taxes under the AMT, they will get nothing. This bill does nothing to cure that. The Democratic substitute does.

We do not think it is fair to sell this as a tax cut for everyone when, indeed, middle-class America is the one that is losing out the most, and all at the expense of growing the size of the national debt. Let us be fiscally responsible and let us be fair. We have a way to do that. We would hope our colleagues on the other side of the aisle would join in that effort.

Mr. Speaker, I yield myself 1 minute to respond to something my friend from Wisconsin mentioned, that last week we passed legislation from this House that would take care of the Alternative Minimum Tax problem. Again, that is one chapter in another book. What he does not mention is the other chapters in the book say that that was relief for 1 year. So all those millions of Americans, the 13 million Americans of the 100 million Americans who are Tax filers would for 1 year, if that legislation takes effect, be saved. But in 2006, 2007, 2008, it jumps right back up.

What the gentleman does not say is that the reason we are in this fix to begin with is because the other side of the aisle, as is proposed in these bills, is not willing to put forth a permanent reduction right away because of the cost. So we are coming back every year doing this piecemeal because it seems to cost less, and the American public does not realize what the ultimate cost of this is. But you can only fool the American public so long.

Let us do things right, be fiscally responsible, and do it fairly. We do not mind doing it. Let us just be fiscally responsible and fair about it instead of cloaking this behind some device and some statement.

Mr. Speaker, I yield 5\1/2\ minutes to the gentleman from Washington (Mr. McDermott), a member of the committee.

Mr. Speaker, I yield 4 minutes to the gentleman from Massachusetts (Mr. Neal), a member of the Committee on Ways and Means.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, as I said before, there is the kernel of a very good idea in this legislation, and I believe that both sides have tried to extract the good idea from the proposal before us today. The difficulty is, as you ask any farmer, it takes time and it takes money and it takes a lot of sweat to have anything grow.

No one in America should believe that we can pass legislation that will cost more than $200 billion and not have it take some sweat and some cost for America. Money does not grow on trees. There is a cost involved. It is a worthwhile idea, because this is a tax cut that everyone can agree to, because it starts from the bottom and everyone would get it, if you corrected the AMT, which, unfortunately, this legislation does not do.

So while there is the kernel of a good idea, it is destroyed by the reluctance or the unwillingness to do what is right, and that is to take care of the 33 million Americans by 2010, in 5\1/2\ years, who will fall into the Alternative Minimum Tax and will see any savings from this particular tax cut washed out when they have to file their taxes using the Alternative Minimum Tax.

Secondly, when you are facing mounting deficits, the largest this country has ever seen, and you are starting to now see the consequences of it, you have to reflect back on the term used in the late 90s, early 2000, when we talked about this ``irrational exuberance'' of the stock market, where you kept seeing the stock market just rise and rise and rise, and people could not make sense of it. But everyone kept buying and buying and buying, because that is where we were headed.

All of a sudden the floor dropped out from under us, and people paid the price. Talk to the employees from Enron, who saw their company go bankrupt and saw their entire pension savings washed away not only because of Enron's corruption, but because of the drop in the stock market.

That irrational exuberance is now driving much of what we have seen on the floor this year. A quick example: this year alone in this House we have passed out, and I will say to all of America, I did not vote for these measures, not because I did not want to, but because I did not think it would be fiscally responsible, we passed marriage penalty tax relief, a kernel of a good idea, unpaid for, over $100 billion; the extension that my colleague from Wisconsin mentioned of AMT relief for 1 year only that will cost close to $18 billion to make sure those Americans don't fall into the AMT. Good, but only 1 year.

Three, a flexible spending plan that was on the floor yesterday for debate, which is, again, a good idea, to allow Americans who have health care costs to be able to have a pot of money that they can extend over to the next year if they did not use it up. A great idea. Cost, close to $10 billion, unpaid for.

Extension of the 10 percent tax bracket that we are debating today, about $220 billion, unpaid for.

The child tax credit extension done a few weeks back, again a good idea for families that have children. $161 billion, unpaid for.

Total, more than $500 billion this year alone in unpaid-for tax cuts, most of which have a good idea behind them. To add to the $400 billion- plus deficit for this year alone, which adds to, as you heard my colleague from Massachusetts mention earlier, the more than $3 trillion debt that the Nation owes as a whole.

Irrational exuberance? Take a look at today's paper, business section: ``U.S. trade deficit grows unchecked. $47 billion gap in the month of March.''

We are on track to have a more than $500 billion trade deficit with other countries. We are going to owe, at the end of this year, just for this year, to foreign interests, more than $500 billion. What they are going to do with those securities they get, that promissory note from us in its place, we do not know. If they dump it all of a sudden, we are in real trouble.

What else should we know? Gasoline prices. Gasoline prices a year ago were 50 cents less per gallon. If you are the average American, that means it has added about $50 a month in your gasoline bill. That is about $600 a year more in gasoline this year you will be paying.

On top of everything I have said before, the $400 billion-plus deficit for this year, that adds more than $1,000 for every man, woman and child. I will call it the birth tax. The $50 a month that you pay, call it a $600 birth tax, because if you have a child, let us put the debt on that child for the gasoline; and on top of that, there is $500 billion more that this House just passed, and, by the way, the Senate has not done it, because they know better, that would be added.

Before you know it, you have got to conclude that this is irrational exuberance. Let us get real. Great ideas. Every single time these proposals have come up, the Democratic alternative has said okay, good ideas; but let us pay for them where we can. Where we cannot, let us pare them down, because we cannot continue to sell the American public a bill of goods.

Someone will pay for this. Good ideas. We would all love to be there. If we had real discussions in committee, we could have hashed this out and come up with a bipartisan bill. But we bypass the committee process. Again, America does not know that. We are coming to the floor without having discussed this in committee. That is okay. That is the way it is going to work. We will live with that. But do not let the American public believe you can do this stuff and pluck it off trees and pay for it.

Let us do it the right way. Let us be fiscally responsible. Let us be fair. Make sure that those from the President's previous tax cuts of a couple of years ago, who received $130,000 in benefits if you were a millionaire in tax cuts, pay their fair share. If a guy in Iraq, one of our soldiers, a man or woman, can sacrifice a little bit, and probably not take advantage of any of these benefits, then certainly those folks who are the millionaires, who are taking home the lion's share of all of these tax cuts, can sacrifice a bit to help us pay.

That is what we do. We have a proposal that would say take the one- fifth of 1 percent wealthiest to help pay for this, for all Americans. We think you can do it. Sure, it hits millionaires; but it helps middle-class Americans. It is fiscally responsible, fair, and something that would get a bipartisan vote that could get signed by the President.

Mr. Speaker, we are going, I guess, to continue to do this in the House and not watch the Senate do any of this whatsoever; and we are going to end again this year without having given people what they keep thinking we are going to give them, and that is what I think damages this institution overall as a whole.

Let us move forward in a bipartisan fashion. We can do it, because there is a kernel of a good idea in these proposals. But we can be fiscally responsible and fair at the same time.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I thank the gentleman for yielding me 1 minute.

The gentleman from Tennessee called it Alice in Wonderland. I, a few minutes ago, called it irrational exuberance. And when we look at the bottom-line facts, not what projections are, because, by the way, 3 years ago it was projected that we would have a $5.6 trillion surplus, not deficits. When we look at the bottom-line facts, we are in some real trouble. Interest rates, which is really the determiner of whether or not Americans have more money in their pocket or not, have gone up in the last 2 months alone about a point, 1 percentage rate.

What does that mean? Well, if you have a mortgage of about $200,000, 30-year rate, fixed, not flexible and not one that goes up and down, you are probably going to pay about, on that $200,000 mortgage, you are going to pay about $120 more per month now. That means at the end of the year, you are some $1,500 more out of pocket, and over the life of that 30-year loan, about $43,000. That is the cost of seeing an economy that is not fiscally righting.

Finally, one last point. That same business section page that said, ``U.S. trade deficit grows unchecked'' has an interesting story at the bottom part: ``MCI awards $8.1 million severance.'' A gentleman who worked for 7 months for MCI WorldCom, which was in bankruptcy, was paid $8.1 million plus $400,000 more for vacation and so forth, severance, paid for 7 months work at the same time they are planning to announce that they are planning to trim their workforce by 12,000 people. Irrational exuberance.

Mr. Speaker, I offer an amendment in the nature of a substitute.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, the Democratic substitute recognizes the good public policy behind extending the 10 percent bracket. We believe that. But we also believe, unlike the majority, that it is irresponsible to do so by borrowing another $218 billion.

Let me talk a minute about why we say that. I do not believe that people in this country know exactly how fast the balance sheet of our Nation is deteriorating. I do not believe people in this country have focused on or realize what has happened over the last 36 months or so. I am going to try to lay that out today in this debate.

Mr. Speaker, we now owe collectively, all 290 million of us, over $7 trillion. We have borrowed an additional $280 billion so far this year. The majority approach is to borrow another $218 billion today with the passage of this bill.

The gentleman just said if you do not vote for this bill, you are going to raise taxes on 23 million people. If you do vote for the bill, you are going to raise taxes on 290 million people, because every American in this land is responsible for the mortgages that have been placed on our country over the last 36 months.

Mr. Speaker, it is heartbreaking to see the financial integrity of our country compromised like it has been. I would just like to know how far we are willing to go to sign the names of these young people that are sitting around here on this board today with a green light as a mortgage, a further mortgage on our country. I want the people of this country to realize that right now we owe collectively, in hard money, about $4 trillion. Foreign interests now own 37 percent of that debt. Mainland China alone holds over $200 billion. It is now the second largest buyer of our debt, exceeded only by the Japanese, who hold over $600 billion.

Secretary Snow was before the Committee on Ways and Means some time ago and I asked him the question, how do you characterize interest? He said, it is an obligation of this country. It must be paid. It must be paid off the top.

Mr. Speaker, when we are borrowing this kind of money and it is being financed by foreign interests, right now, we have awakened to suddenly realize that the biggest foreign aid package in this Congress is interest checks that we are sending to foreign countries. Not only are we doing that, but we are leveraging our country to people who may not see eye to eye with us on how the world ought to be.

Anyway, getting back to Mr. Snow, I asked him, what about interest? He said, it has to be paid. It has to be paid off the top. I said, it has to be paid first. He said, let me just say this: As a percentage of GDP, gross domestic product, this is not out of line historically.

The problem that he did not tell us is, when it was this far out of line before, it was Americans that were buying the bills, notes, and bonds. It was not the Saudis, the Japanese, the Chinese. We can go down the line. I have the list here.

How much we owe right now: Japan, $607 billion; China, $145 billion; plus Hong Kong, another 60 billion; so over $200 billion. The U.K., $137 billion; Taiwan, $50 billion; Germany, $45 billion; OPEC, OPEC, $43 billion; Switzerland, $41 billion; Korea, $37 billion; Mexico, $32 billion; Luxembourg, $26 billion; Canada, $25 billion; Singapore, and the list goes on and on.

This Congress and this administration is hocking our country to foreign investors.

Let me say that again, because I do not think people realize and understand what is happening here. Since 2002, the debt ceiling has had to be raised $450 billion. In July of 2002, a $980 billion increase the last Fourth of July, that is $1.4 trillion so far. Do my colleagues know what that means? That means every day since George Bush took office, when we have had a one-party government, White House, Senate and House, the Republicans have borrowed $1.1 billion a day, every day.

Now, we, all of us, have to pay interest on that, and anybody who is within the sound of my voice under 50 years of age ought to be so concerned about this that they would write or call or do something. Because we are literally squandering the wealth of this country by not paying for tax cuts and increasing spending on the war, and mentioning the war, the only people being asked to sacrifice anything right now are the men and women in uniform and their families. None of the rest of us are being asked to sacrifice anything to defeat the war on terrorism. In fact, we are told to take a tax cut if you are my age, and if things get bad enough, go shopping. This is the Alice in Wonderland that is going on here.

This bill is a good idea, but it is just a symptom of a far greater problem, and that is the breathtaking, breathtaking fiscal irresponsibility that is going on here in this town.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from California (Mr. Becerra).

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, before I yield to the gentleman from Maryland (Mr. Hoyer), I would like to say as far as the delegation to OMB, that was done under pay-go, it is a way of scoring, and if we do not have any other, I guess, arguments against the merits of the bill, they bring up procedural matters. I understand that.

I would also like to say, with the rate adjustment that we have in our bill, only 165,000 returns out of 32.8 million small business returns would be affected. That is less than one-half of 1 percent.

Mr. Speaker, I yield 7 minutes to the gentleman from Maryland (Mr. Hoyer), the minority whip.

Mr. Speaker, before I yield to the gentleman from Texas, I would just like to say it does make it permanent, but there are conditions.

Mr. Speaker, I yield 5 minutes to the gentleman from Texas (Mr. Stenholm), my friend.

Mr. Speaker, I yield myself such time as I may consume.

What this debate is all about is the financial balance sheet of our country. As I said in my opening statement, this bill is just a symptom of a far greater problem.

I really, honestly do not believe the people of this country realize when bills like this are passed, unpaid for, all of those green lights that go up there are in effect putting a $218 billion, in this case, mortgage, another mortgage on our country in all of their names; because these Members who are going to vote for it are not going to pay it, and I think that is wrong.

But it goes beyond that. It is now a national security matter, as I discussed earlier. When one realizes that 70 percent of the deficit, $370 billion deficit last year, was financed by foreign interests, they are gaining leverage every day on this country.

My grandfather told me one time, he said, John, it is easier to foreclose a man's house than it is to shoot your way in the front door. Now, you think about that. China is not always going to see the world the same as we do. Neither are the Japanese. Neither are any of these other countries around the world, because they have their own interests that they must see to. And when we are depending on foreign interests to finance record deficits, we are acting irresponsibly when it comes to the national security of this country. I firmly believe that. That is number one.

Number two, again, I do not think people understand that since President Bush took office, and we have had virtually a one-party government in this country, they have borrowed $1.1 billion every day. Now, if one were running a private enterprise like that, the stockholders would fire them, or they would be in Chapter 11 bankruptcy. The only difference is, with government, we can continue to borrow on the good faith and credit of the American economy.

But let me get back to this foreign thing, because I think that really is something that people can understand. Did you realize that a former official of the People's Bank of China, the country's central bank in Beijing, and now an economist in Hong Kong was recently quoted in the Washington Post as saying the U.S. dollar is now at the mercy of Asian governments? In the London Financial Times I read where Europe is incredibly worried about the fiscal irresponsibility of our country.

I just did some figuring. Just so far this year we have already written interest checks of over $100 billion, just in the first 7 months. That is $14 billion in interest a month this year. Said another way, we are spending $475 million a day on interest, every day. Since we started this debate a while ago, we have since spent $20 million in the last hour on interest. That is $330,000 a minute or $5,550 a second that we are spending on interest for which this country gets no health care, no education, no military, no anything that will enable private enterprise to grow, flourish and create jobs.

They say, well, you know, if we can just keep cutting taxes, the economy is going to grow. Under that theory, if you abolished all taxes, the country would be filthy rich. Somebody has to pay at some point a minimum level of taxes to buy aircraft carriers, to buy tanks, to buy body armor. I think the gentleman from Texas (Mr. Stenholm) said the free lunch is still being invented, and one cannot continue to reduce revenue, increase spending, borrow it all, and not expect to see a financial Armageddon down the line. How far down the line, I do not know. I know this: It is much closer today than it was when I got here 16 years ago.

And I know this: that the Chinese particularly will not continue to buy our paper at a relatively low rate of return to hold their yen, their currency, artificially low so they can kill us on the trade deficit. I know that that will not continue forever. And I know that sometime in the future, whether it is OPEC, Asia, or whomever, they are not going to view the world the same way we do. And by our actions here today, and again this is just a symptom of a far greater problem, by our utter refusal to ask Americans to either cut back or to pay for what we are getting, we are putting this country in real, clear and present danger with this foreign holding business.

I do not know how else to put it. I must tell you, this is not going to go away, and it is going to get worse with every passing day because we are now paying interest on interest. There is not a reputable economist that I know that does not say that our country is now in a structural deficit. This is not cyclical, where we have a recession. We are now in a structural deficit. The budget they presented, is $500 billion in the red this year, and they say, well, we are going to cut that in half in 5 years. But they borrow another trillion dollars under their game plan, which is the best they can do. At 5 percent, another trillion dollars is a tax increase on 290 million people of $50 billion a year every year.

Now, that is just on 1 trillion. They have already run through that, and now almost at $1.5 trillion at $1.1 billion a day. This is financial madness. And so when my friends complain about spending, the Republicans have controlled the House for the last 9\1/2\ years. The Democrats have not spent one thin dime. We do not have the votes to spend any money. We cannot spend any money, we do not control anything, the Committee on Appropriations, nothing. So when my colleagues talk about spending, I suggest they look in the mirror. You guys are the ones spending all the money. We do not have the votes.

So I just tell you, Mr. Speaker, our country is engaged in a death spiral financially. If we were in an airplane, unless we did something different, we are going to hit the ground. We cannot continue to do this. This bill may be good intentioned, but this substitute says, look, we have to pay for it. We have asked the top .02 percent of the people in this country to help us do that. I do not think that is too much to ask.

I had a friend who had an eighth-grade education. He was an old World War II guy who went out on his own and he made it big. I asked him one time, I said, John, what do you want to do in your life? He said I have two goals, two financial goals. I said, what are they? He said, the first one is I want to owe the bank $5 million. I said, that is crazy, man. He said, no, it is not, because if they will let me have $5 million, that means they think I have got 10. And he said, the other thing I want to do is I want to pay $1 million a year in income tax, because that means I made 3. And if this country allowed me, with an eighth-grade education to make $3 million a year, you bet I will be glad to pay a million for that privilege of living in this great land that I have known and I want to leave to my children.

What we are doing now is doing violence to what that man was willing to do coming out of World War II with an eighth-grade education. I just beg and implore people to think about this and let us see if we cannot work somehow together. I know you are going to mortgage the country for another $218 billion in a minute, but surely we can do better than this. This is an outrage to the future of this country and it is an outrage to those who came before us.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present.

Mr. Speaker, let us be honest about what is going on out here today. It is Thursday. We are going home. They have got a fund-raiser tonight. The Republicans wanted to hang around for that. We have got to have something to put in the Saturday news that will kind of blot out what is happening in Iraq. So let us get this tax bill out here. We load up the cannon and we will get the rubber-stamp Congress in here and they will go bam-bam, and whatever the President says. You know, I think if the President said, I want the Republicans to come and stand on their head in the aisles, they would be down here in droves. This Congress is not thinking.

Mr. Speaker, I submit for printing in the Congressional Record an article entitled ``All Quiet on the House Side'' from the Washington Post of May 11. That article goes on to lay out what this Congress has not done. Thirty-five of our people were killed in Iraq last week. Many more were injured. People have seen these pictures of abuse. They have been looking at it all. And what did the House do? Well, we named some post offices. That seemed pretty important. Last week, the Nation learned that the Federal debt reached an all-time high of $7.13 trillion. What did we do? Well, we said they could use the Capitol grounds to have the soapbox derby. That was a very important way we responded to that. Yesterday the Bush Department of Commerce announced that our trade deficit and the amount of money that this Nation borrows from foreigners to pay for our imports, from the Chinese to the Saudis, hit an all-time high. We are in the debt of the Chinese and the Saudis. Just do not ever forget that, because that is what we are doing. You are paying your taxes so we can pay interest on debt that we borrowed from the Saudis and the Chinese.

If you read some of the books around town, the President is probably going to call the Prince of Saudi Arabia and ask him to produce some more oil so we can lower the price. That is, if you believe Bob Woodward's book. Secondly, the majority leader has dismissed the idea of any kind of investigation. And, third, despite the record-high budget and trade deficit, they come out here asking for more tax cuts that will disproportionately help the wealthy.

When this passes today, there will be 225 Republicans or 300 Republicans, or whatever, I do not know how many, they will all be out here going home with their press release under their arm saying, I helped you. What they do not tell people is what this means in terms of long-term debt. They are going to say, well, but this is for the middle class. The amount of money that goes to the middle class is less than goes to the people on the top of the pyramid. This is not a tax cut for the middle class. It is really a tax cut for the people on the top, and there was no way to exclude the middle class so they had to get a few of the drippings off the edge of the table.

My colleagues remember that story about Lazarus the beggar who was sitting on the floor, waiting for some crumbs to fall off the table. That is the middle class of this country according to this President. He ought to read that story about Lazarus. There is a real message there that I think gets lost in this whole process.

In today's clips, you will also find a quote from our chairman, excuse me, our ranking member for the moment, who said, ``We don't want our grandkids to pay higher taxes tomorrow to pay for our tax cuts today. So all we are saying is don't take credit for extending the tax cuts on the one

hand while you're breaking your promise to balance the budget for your children.''

Nobody looking at what is going on in the world today could possibly say you know where you are going. You made these tax cuts in the first place when you were going downhill 100 miles an hour and you said, oh, if we cut the taxes, it will be all better. The proof is going to be in the pudding on election day. The fact is that on election day, you are going to find out whether all your hot air that you have blown into the economy really turns out to be real or not.

In February, you created 21,000 jobs. We have got to remember that it takes 250,000 jobs every month to keep up with the increase in population in this country. If you do not create 250,000 jobs, you are not even keeping up with the problem. They created 21,000 jobs. All government jobs, by the way. Not a single private sector. Then they came to March. This was their big winner, 308,000 jobs. Well, that is about keeping up. Then the next month they came up with 280-something thousand and, my goodness, they kept up one more month. But they have done nothing about the 2.25 million jobs that they lost over the last 3 years. They have also produced the highest long-term unemployment rate since the Second World War and they want to make another tax cut today.

There is an old country saying that some of the people probably know about: When you find yourself in a hole, the first thing is, stop digging. The Republicans believe that the faster you dig, the better you are going to get out of the hole. We had to dig you out in 1993 under Mr. Clinton. We dug you out and you just went back to get your shovel and start digging a hole again. Please stop digging.

Mr. Speaker, I include the following article from the Washington Post:

[From the Washington Post, May 11, 2004]

All Quiet On the House Side

democrats say gop is evading debate

(By Charles Babington)

The week of April 26 was eventful and troubling for the

nation, yet curiously brief and serene for the House of

Representatives. Thirty-five U.S. servicemen were killed in

Iraq. CBS aired shocking photos of Americans abusing

prisoners near Baghdad. The federal debt reached an all-time

high, more than $7.13 trillion.

In the House, meanwhile, members returned to Washington on

Tuesday of that week for three quick, unanimous votes at

nightfall. They renamed a post office in Rhode Island,

honored the founder of the Lions Clubs, and supported ``the

goals and ideals of Financial Literacy Month.''

The next day, Wednesday, was a bit busier. After naming a

Miami courthouse for a dead judge, House members debated how

to extend the popular repeal of the tax code's ``marriage

penalty.'' The only real issue was whether to pass the

Democratic or Republican version. The GOP plan prevailed, 323

to 95.

After two days and one night of desultory activity--roughly

their average workweek this year--House members packed up and

rushed home to their districts. Despite the burgeoning

scandal over U.S. treatment of Iraqi prisoners and persistent

concerns about the economy and the deficit, the House has

been keeping bankers' hours.

The House's lean schedule is no accident. GOP leaders who

set the agenda and floor schedule say they achieved most of

their top priorities last year--including enactment of a

Medicare prescription drug bill and the third round of

President Bush's tax cuts--and are content to rest on their

laurels through the election. While other House priorities

are stuck in the Senate, House Republicans believe they have

the best of all worlds: They can take credit for the enacted

legislation and blame Senate Democrats for bottling up the

rest of their agenda.

``Last year we sent a lot of legislation to the Senate, and

we don't want to overload them,'' House Majority Leader Tom

DeLay (R-Tex) told reporters last week. ``They're already

overloaded. . . . We need to be here passing good

legislation, doing the people's work and not doing a bunch of

make-work.''

House Democrats see a more cynical motive. The GOP

majority, they say, wants a complacent Congress that will

raise few questions about the Bush administration, despite

the international uproar over the prison abuse scandal in

Iraq and recent damaging revelations about Bush's decision to

go to war.

``Given all the issues and problems the country faces, it's

scandalous that we're only coming in to work three days a

week, and even then most of the time we're renaming post

offices,'' said Rep. Chris Van Hollen (D-Md.). ``This is a

deliberate effort to keep Congress out of town, keep us from

asking questions.''

House Minority Leader Nancy Pelosi (D-Calif.) noted that

senators held three committee hearings on the prison abuses

before House leaders summoned Defense Secretary Donald H.

Rumsfeld to the Armed Services Committee last Friday--a day

that the Senate was meeting but the House was not. DeLay

dismissed the idea of a full-fledged congressional

investigation, which he likened to ``saying we need an

investigation every time there's police brutality on the

street.''

Pelosi complained: ``Americans are out of work. Our troops

are in danger in Iraq. Our reputation is in shreds throughout

the world. And we're leaving early afternoon on Thursday.''

She also said, ``The House of Representatives has

demonstrated that it is nothing more than a rubber stamp for

the administration.''

Stephen Hess, a senior fellow at the Brookings Institution,

contends that the House's anemic work schedule is symptomatic

of the larger problem of political gridlock. He said

lawmakers are ``probably realistic in saying, `We're not

spending much time here because we know that nothing would

get done.' '' He added, however, that ``if they stuck around

and talked to each other, maybe they could figure something

out.''

Last week's House action was typical in many ways. It

featured bitterly partisan arguments over the Iraq war, in

the House chamber and in dueling news conferences. But the

main bills approved were a resolution condemning the prison

abuses and a long-expected one-year extension of a provision

to protect millions of Americans from the alternative minimum

tax--a temporary measure that postpones difficult decisions

about a major looming problem.

The week of April 19 was similar. The House held three

votes Tuesday night, all unanimous and all renaming post

offices. On Wednesday, members quickly passed five bills

without debate, under ``suspension'' rules. The one drawing

the most opposition--14 nay votes--endorsed research and

development into ``green chemistry.''

Thursday was that week's busiest day, as Republicans and

Democrats vigorously debated a ``continuity of government''

bill, meant to ensure that Congress could function if many

lawmakers perished in a terrorist attack. The measure, which

passed 306 to 97, would require states to hold special

elections within 45 days if at least 100 House members were

killed. As usual, members had Monday, Friday and most of

Tuesday free of Washington-based duties.

Meanwhile, the U.S. military campaign in Iraq had one of

its bloodiest weeks ever. Shells killed 22 Iraqi prisoners

near Baghdad one day, and suicide bomb blasts killed 68

people in Basra--many of them children--the next. Violence in

the besieged city of Fallujah continued, and 14 U.S.

servicemen were killed during the week.

The week before that, the House was in recess, as it plans

to be the week of May 24, the week of June 28, the six weeks

starting July 26, and all of October, November and December.

John Feehery, spokesman for Speaker J. Dennis Hastert (R-

Ill.), defended the House's accomplishments and pace. ``Last

year we sent a lot of things over to the Senate, and

they're sitting in Tom Daschle's back pocket,'' he said,

referring to the Senate minority leader, from South

Dakota. Those bills include tort reform to curb medical

malpractice suits, energy legislation, and welfare

reauthorization.

This year, Feehery said, ``we've passed a lean budget'' for

fiscal 2005. ``We're working very hard to keep the

president's tax cuts in place. We're monitoring the situation

in Iraq'' and will appropriate extra funds as needed. House

committees, he said, ``have done a lot of oversight on the

Iraq war,'' primarily aimed at seeing that money is well

spent.

The House does not need showy inquiries in front of cameras

to fulfill its watchdog obligations, Feehery said. ``Our

oversight is not politically motivated, which probably

frustrates the Democrats,'' he said. ``It's motivated by

better governance.''

Rep. Rahm Emanuel (D-Ill.), a top adviser in the Clinton

White House, is unconvinced.

``We can name post offices,'' Emanuel said, ``or we can ask

the hard questions about the direction of our nation.''