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But at this point, I want to focus on the school construction issue. The tax bill that we just passed out of this House dealt in a poor way with the crisis that is facing this country; and that crisis is the need to build new schools, to refurbish older schools, to renovate schools, to wire schools for the Internet, to do the things that are normally

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   The tradition in this country has been for this Congress to help school districts issue school bonds and to do so by using the Tax Code for us to provide a subsidy to those who hold school bonds, so that investors will buy school bonds, even though they yield a rather low rate of interest.

   We have done this in the past by providing an exemption from taxation for all of the interest paid on school bonds and other municipal bonds. We need to do more, because even when we exempt the interest, the school bonds end up having to yield 5 percent or 6 percent and many school districts cannot afford to pay 5 percent or 6 percent. So we on the Democratic side said we need to provide for the issuance of $25 billion worth of a new kind of school bond with even greater benefits under the Federal Tax Code and even lower costs to the school district.

   We did not design to bond where the interest was not merely tax exempt, but instead the school district did not have to pay interest at all, but the bond holder, instead of getting even a reduced interest payment from the school district, received a tax credit for holding the bond. An outstanding way to use our Tax Code to turn to school districts that would otherwise have to pay $100,000 a year to service a particular bond, tell them

   they can raise that same amount of money, build that same size of a school and only make annual payments of $66,000 a year, a greater Federal subsidy for those school districts that issue school bonds to renovate and build new schools.

   We thought that it was necessary to provide this $25 billion of special aid to our local schools over a 2-year period, roughly $12 1/2 billion a year. The Republicans decided instead to provide per year less than half of what was necessary, but rather to provide $5 billion a year over 3 years on a per-year basis less than half.

   They also, and this troubled me, weaseled the Davis -Bacon provisions so that these school bonds could be used to build substandard schools at substandard wages for those building them. We do not need slipshod workmanship. We do not need substandard schools. We do not need to weasel around the Davis -Bacon action that has assured that our public buildings built with Federal dollars are built well.

   Mr. Speaker, we have a very watered-down version of the Democratic proposal, which is clearly insufficient, but what is worse is that the same tax bill which came before this House, and which most of us on this side voted against, also provided for another method of helping school districts, a method that costs the Federal Government well over $2 billion, but was actually worse than nothing.

   What was this? How do we figure out a way to pretend to help school districts and actually hurt them? We changed the arbitrage rules, or at least the majority would have us change the arbitrage rules in the Tax Code. What are those rules? The rules say this: If a public entity, a school, a city, is going to issue tax exempt bonds for a public purpose, they need to use the money for that public purpose. This avoids the possibility that some school district would issue a lot of bonds at a real low interest rate, so they borrow money cheap. Instead of using the money for a public purpose, they would just use the money to invest on Wall Street.

   We have arbitrage rules for a reason. That is if the Federal Government is going to subsidize borrowing, the borrowing should be for something like building a school, not building a portfolio.

   But what the Republican bill would do is change those rules and identify that change as our way of helping school districts, a special encouragement from the Federal Government. Here, school districts, is how we are going to help you. How? Issue the bonds, issue tax exempt bonds. We are not going to let you issue those credit bonds because those would help you too much. The Democrats wanted to give you that much help, but the Republicans want to provide that only in very small quantity, issue regular tax exempt bonds, pay 5 percent or 6 percent interest and then take the money to Wall Street. We are sure you will earn 8 percent or 9 percent or 20 percent or 80 percent or 2000 percent on your money, and you will be allowed to keep the profit.

   This is the Republican way of building schools, by building portfolios. This is how Orange County, California went bankrupt a few years ago. We should be trying to build a school on Elm Street, not a skyscraper on Wall Street.

   We should not be turning to schools and saying we will not provide you with adequate help to issue bonds and use the money to build schools, but we will instead encourage you to issue bonds and use the money to play the market.

   I know that our friends on Wall Street would prefer that, a whole new customer, but I was surprised to find the real impetus for this proposal. It comes from people I used to work with, the tax lawyers who are subspecialists in tax exempt municipal bonds.

   Mr. Speaker, I am sympathetic with them. You see, I was a tax nerd for a lot of years. For over a dozen years, I practiced tax law, and after a day of reading the most complex regulations printed in the finest print, I had but one solace, one joy, one redemption, and that was that my job was not quite as boring as those of my colleagues who subspecialized in the tax law of municipal bonds, even among tax nerds that is regarded as a boring job.

[Time: 12:00]

   So this tax provision that is stated to try to help our schools was in essence designed to provide excitement to tax bond counsel, to say they are not just going to issue bonds and build schools and deal with, frankly, excessively complex provisions in doing it; but instead they are going to issue bonds and then, with the members of the school board, go play the market with the money.

   Mr. Speaker, we need schools. We need to see them built soon. We need the school districts to handle their fiscal affairs safely. That is the chief problem. The way to deal with it is to provide Federal subsidies to school districts who are issuing these school bonds by making those bonds tax credit bonds.

   There may, in fact, be another problem, and that is that my former colleagues, the tax bond counsel, lead excessively boring lives. But it would be cheaper to buy a Ferrari for every bond counsel than it would be to urge school districts across this country to play the market and keep the supposed profits as the federally encouraged way for the Federal Government to help them finance school construction.

   So when we return for our lame-duck session, if someone is concerned with the lack of excitement of tax lawyer subspecialists, let them put forward a bill to provide a free Ferrari to every bond counsel. But if we are concerned with building schools, let us not change those arbitrage provisions. Let us not pretend that we are helping schools by urging them to gamble school bond proceeds.

   Instead, let us instead adopt the plan that is bipartisan, that has been in this House for over a year that was put forward by the gentleman from New York (Mr. RANGEL), and by the gentlewoman from Connecticut (Mrs. JOHNSON). To put forward that bill and pass a full $25 billion of tax credit bonds to provide the maximum possible assistance to local schools.

   Let me now launch into a second topic, a topic about which I have addressed this House in the past; and that is the mischaracterizations of statements made by the Governor of Texas. I refer not to his comments about events long ago in Kennebunkport, but rather his own description of his tax plan.

   I do not know whether it is because the Governor has not read and fully understood his tax plan or whether the Governor just cannot get away from constantly mischaracterizing it to the American people. But there are several myths that are repeated, frankly, almost every day on the campaign stump. I would like to set them straight.

   The first is that the Bush plan would provide a tax relief to every taxpayer. This is simply false. See, Mr. Speaker, there are 30 million Americans who pay FICA tax, have it pulled out of their wages by the Federal Government every year, but who do not pay income tax. These 30 million Federal taxpayers receive not one penny of tax relief from

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   Now, I should caution that, of these 30 million taxpayers, a little fewer than half receive the earned income tax credit which we on this side of the aisle have fought for so hard and so long. So ultimately, one could say their total combined Federal tax liability was at zero. That may be the case. It may be that the Governor's proposal simply shortchanges 15 million Americans.

   But to repeat on the stump every year, every day, again and again, that one has a proposal which will provide tax relief to all American taxpayers while leaving out 15 million Americans who pay money to the Federal Government in excess of any credits they receive who are Federal taxpayers, no matter how one counts it, these 15 million should not be left out.

   But if the Governor wants to leave them out of his plan, he ought to have the integrity to say so and tell us that, yes, he wants to provide almost half of his tax relief package to the best-off 1 percent of Americans, but that he wants to give not one penny to those who clean up in nursing homes and in buildings, those who wash cars and those who clean up at restaurants. He wants to provide not one penny to 15 million of the most struggling, hard-working families in America who pay taxes. He ought to have the courage of his conviction. He ought to be forthright.

   There is a related aspect of the Governor's proposal, and that is the brouhaha over whether he is, indeed, providing over or close to half his benefits to the wealthiest 1 percent of Americans.

   This is clearly the case, but not something the Governor is willing to acknowledge. See, in the debates, he said that his plan provided only $223 billion of tax relief over a 10-year period to the wealthiest 1 percent.

   Now, $223 billion even over 10 years sounds like a lot of tax relief, but it is a lot more than that. See, the Governor, in his fiscal statements in adding up his

   program, the Governor leaves out the repeal of the estate tax.

   Now, in talking vaguely about his tax plan, in firing up the troops, he says he is going to eliminate the death tax. But in talking about the fiscal effect of his program, he forgets the fiscal effect of eliminating that tax.

   Now that fiscal effect can be hidden by phasing in the elimination of the tax and using fuzzy phase-in figures. But the fact remains that, over a 10-year period, once it is fully effected, the repeal of the estate tax will cost $50 billion a year. That is $500 billion over 10 years. Virtually all of that saving goes to the wealthiest 1 percent of Americans. A little bit is shared by percentile number 2, the people who are in the second percent of the wealthiest Americans.

   I mean, that is, I guess, what the Governor has to consider to be really sharing the wealth with everybody. He includes, not just the wealthiest 1 percent, but a small piece goes to that second 1 percent, leaving out only 98 percent of Americans.

   So we are talking about a plan which not only provides $223 billion of tax relief to the wealthiest 1 percent on their income tax returns, but virtually another $500 billion on the estate tax, well over $700 billion of tax relief.

   I wonder frankly why the Governor would state that he is only providing $223 billion. Again, he ought to have the courage of his convictions. He ought to be forthright; and he ought to have integrity. Integrity requires that he admit that it is, indeed, true that, under his plan, the wealthiest 1 percent of Americans receive more than he proposes to spend on strengthening our military and education and health care and pharmaceuticals for our seniors combined.

   The most important issues facing us receive less help than 1 percent of Americans and, frankly, 1 percent that perhaps need it least.

   Now I want to emphasize I have sympathy for all taxpayers. I wish we could abolish all taxes. They are each painful. But when we start to provide tax relief, to the extent that we can afford to provide tax relief, should we not focus on Bill Gates' maid before we focus on the as-yet-unborn Bill Gates, Jr. and his eventual estate tax return? Should we not focus on people struggling to get by rather than people struggling to hold on to multibillion dollar empires?

   I strongly support estate tax reform, which we can do at a rather modest cost. At a rather modest cost, we can make sure that every family in America will not pay a single penny of estate tax on its first $2 million of assets.

   We can provide that, when those assets are locked up in a farm or a family held business, that we can draw the line at $3 million or $4 million. That is the kind of estate tax reform that we can easily afford. But the absolute abolition of the estate tax is so expensive that, when the Governor adds up his own program, he leaves it out.

   It is troubling to me that the press has not picked this up. But eyes begin to glaze over, I see a few eyes glazing over now, as figures are reviewed. But we are in a great debate about figures. This is not a popularity contest, but rather is a focus on who will be running the largest economy in the history of the world.

   Which brings me to another issue, and that is, how has this economy run so well and who deserves the credit. I think we all agree that the lion's share of that credit goes to American working families, American scientists and executives and entrepreneurs whose hard work and ingenuity has built a new economy, the envy of the rest of the world.

   But wait a minute. Our people were hard working and ingenious in the mid-1980s, the late 1980s, and the early 1990s. In fact, during that period, Alan Greenspan was running the Federal Reserve Board. But Alan Greenspan at the Federal Reserve Board, the ingenuity of American entrepreneurs, the hard work of American people all together gave us a terrible economy in 1991.

   What was missing? A key ingredient was missing. That ingredient was fiscal responsibility here in Washington.

   Now, I realize that it is in the Governor's political interest to ignore that key ingredient, to say that we can have prosperity as long as Americans work hard. Well, Americans have always worked hard, but we have not always been prosperous.

   It is in his political interest to say that we can always have prosperity as long as Americans work hard because he does not want to admit that the Clinton-Gore administration provided that key element that had been previously missing in our economic life, and that was fiscal responsibility. That fiscal responsibility is the hardest thing to accomplish in Washington.

   I think the public understands the pressures on us and how often we buckle to those pressures. Here in Congress one can be very popular, standing behind this podium or that podium, and calling for a reduction in taxes or calling for an increase in those items of expenditures which are popular. Many of us have done that.

   But imagine how difficult it is for a President, for a political leader to stand before the country and suggest exactly the opposite on both fronts, how only incredible leadership fortitude can turn to a Congress and to a country and say, yes, we would be more popular if we cut taxes, but we are not going to, or at least we are not going to do so to an irresponsible degree.

   Yes, there are pressing priorities and pork projects that would be popular either nationally or in a particular region, and we are going to resist so many of them.

   Back in 1991, scholars wondered whether America was ready for self-government, because, after all, the incredible pressure to have lower taxes and higher expenditures seemed to be in control here in Washington.

   The Clinton-Gore administration came here and with great pain and with the political loss of some people who lost their careers in this House for the benefit of the country, we passed some very difficult bills, and that was hard.

[Time: 12:15]

   And then as the country got more prosperous and there were increased pressures from those who say, oh, the deficit is down, let us abolish the estate tax, as we had to stand up to those who would squander the surplus, the Clinton-Gore administration stood there again and again.

   How easy it would have been for this Federal Government to have engaged in an orgy of profligate spending and irresponsible tax cuts. But the Clinton-

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   What worries me most is that, for political reasons, the Governor has said that what goes on in Washington does not matter. Yes, he is under tremendous political pressure to say that 8 years of Clinton-Gore did nothing for the country's economy. But when he does this, he must argue that fiscal responsibility had nothing to do with the country's economy. And if that is true, then what is to prevent us from engaging in a wild frenzy of spending and tax cuts and deficit spending at that?

   When the Governor builds the rhetorical and philosophical foundation for the belief that what goes on in Washington has nothing to do with our prosperity, he grants a license to Washington to do whatever we want since it does not risk our prosperity.

   The facts are clearly otherwise. In the absence of fiscal responsibility, this economy will not work. It will not work because, under George Herbert Walker Bush, we had deficits of over $250 billion a year. What does that deficit mean? It means that those thinking of investing in bonds, those thinking of investing in stocks believe that we are going to have inflation in years to come, demand high interest rates, high rates of return and, as a result, a business cannot get the capital it needs to expand. It means that in a country that, frankly, does not save enough, the Federal Government is going into the private markets and scooping up almost a quarter, sometimes even a third, of the valuable capital not for investment, which is what capital is for, but, rather, scooping it up and using it just to deal with ongoing Federal operations.

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