THIS SEARCH THIS DOCUMENT THIS CR ISSUE GO TO
Next Hit Forward Next Document New CR Search
Prev Hit Back Prev Document HomePage
Hit List Best Sections Daily Digest Help
Doc Contents
The list also included many of the nation's labor unions, which are also
[Page: S11326] GPO's PDF
Regrettably, many of these institutions will see a return on their campaign finance investment in the pension provisions of this bill. More regrettably still, the working family is not likely to see much of any benefit at all.
Mr. President, I am troubled, as well, that the school construction projects in this bill--being paid for, in part, with Federal tax credits for the bondholders--will not be subject to the Davis-Bacon Act. The Davis-Bacon Act ensures that construction workers on Federal construction sites get paid a fair wage for a days' work by requiring that those workers be paid the local prevailing wage .
The worker protections embodied in the Davis-Bacon Act are essential, and one specific set of Federal construction projects--and the workers who build them--should not be deprived of these protections. I am deeply concerned that some in this body are attempting to alter the protections under the Davis-Bacon Act without a substantive debate.
Yes, Mr. President, this bill does include a long-overdue increase in the minimum wage . I have long supported that increase. Congress should have passed it two years ago, and we should have passed it in a straightforward bill, clean of tax give-aways.
Sadly, it has become the habit of this majority to extract a series of tax subsidies in exchange for a minimum wage increase. And what is worse is that the cost of these subsidies is increasing. In 1996, the Congress had to pass $20 billion in tax cuts to get an increase in the minimum wage . Sadly, the cost of that minimum wage increase in terms of tax subsidies extracted has grown exponentially.
Another section of this bill would reinstate and expand the Foreign Sales Corporation--or FSC--export tax subsidy. We ought to be skeptical of subsidies, whether provided through the tax code, through appropriated programs, or through entitlements. In general, the best policy is to let free markets work. The FSC export tax subsidy does not do that.
While the FSC export tax subsidy may provide a very small benefit to certain firms that produce exports or that produce goods abroad, it also triggers increases in U.S. imports, so that its net effect on our balance of trade is probably negligible. As the Congressional Research Service explains, the FSC tax subsidy increases foreign purchases of U.S. exports, but to buy the U.S. products, foreigners require more dollars. That, in turn, increases demand for U.S. dollars, driving up the price of the dollar in foreign exchange markets and making U.S. exports more expensive. This partly offsets the effect of the FSC in increasing U.S. exports. This effect also makes imports to the United States cheaper, which causes U.S. imports to increase.
The bottom line, Mr. President, is that while some firms may enjoy increased export sales, other firms will lose business and jobs because of increased imports.
This special tax subsidy thus has benefits and costs. The firms that qualify for this export subsidy gain a benefit, of course, but so too do foreign consumers. CRS notes that the FSC
tax subsidy produces a transfer of economic welfare from the United States to consumers abroad when part of the tax benefit is passed on to foreign consumers as reduced prices for U.S. goods. U.S. taxpayers are paying to keep these exports cheap for foreign consumers.
But there are other costs, as well. First, and perhaps most obviously, the billions of dollars we spend through the FSC export tax subsidy could otherwise be used to lower the tax burden on businesses and individuals, or to lower the level of our massive national debt. And as with other special tax breaks, the FSC export tax subsidy distorts the marketplace, and makes our economy less efficient.
There is also an additional and potentially huge cost that may be imposed on American firms and workers because of this FSC subsidy: what amounts to a possible multi-billion dollar tax imposed by the World Trade Organization on American products that are purchased in European Union countries that could mean lost business and jobs.
I am no fan of the World Trade Organization. I opposed the 1994 legislation that implemented the most recent General Agreement on Tariffs and Trade, or GATT, in large part because it created this undemocratic, unaccountable, often secretive international organization known as the World Trade Organization or WTO.
As my colleagues know, the reason we are considering changes to the FSC export tax subsidy is because of a WTO ruling that this tax break is an illegal subsidy. If we fail to change our tax laws to comply with this ruling, we can expect billions in punitive tariffs to be levied against American goods exported to the European Union.
While the FSC tax subsidy may be bad tax policy, it is our tax policy--a policy arrived at through the elected representatives of the people of this Nation. The ability of some international bureaucracy to effectively impose punitive taxes or tariffs on American goods should offend us all. Unfortunately, that is what we face because of the action Congress took in 1994 to ratify the GATT, and unless we eliminate the FSC export tax subsidy, American firms and American workers are at risk.
Regrettably, the proposed expansion of the FSC may not remove this threat. Mr. President, I have grave concerns that the WTO will see this expanded tax break as little more than a reconfiguration of the existing tax subsidy for exports. At a briefing for Senate staff on this issue, the Treasury Department conceded that not a single business currently able to use this export subsidy will lose its tax break. Indeed, the export tax subsidy has been expanded to provide an even larger subsidy for foreign military sales.
If the WTO rules that this change does not comply with its previous ruling, our businesses and workers will face billions in punitive tariffs on the goods they produce. That is what is at stake here. The proponents of this legislation are willing to risk billions in tariffs on American goods rather than eliminate this questionable tax expenditure.
It would be better economic policy and better fiscal policy simply to repeal the FSC altogether.
I am particularly troubled, Mr. President, by the provision of the FSC export tax subsidy section of this bill that would actually double the current tax benefit for arms sales.
That is right, Mr. President, this bill would double the tax benefit currently enjoyed by U.S. companies that sell weapons abroad.
Had the Senate been able to consider this bill under the Senate's regular procedures, I would have joined in an amendment by the Senator from Minnesota, Mr. WELLSTONE, that would have sought to correct this problem by reinstating the current tax benefit for arms sales.
United States arms manufacturers continue to lead the world in conventional arms sales to developing countries, both in terms of arms transfer agreements and in terms of arms delivered to the countries of the developing world. Conventional arms sales include such items as aircraft, tanks, complete weapons systems, spare parts, upgrades for previously purchased items, and munitions; as well as training and support services for the items purchased.
This August, the Congressional Research Service released its annual report, Conventional Arms Transfers to Developing Nations. This 79-page report details the worldwide arms transfer business conducted with developing nations from 1992 through 1999. During that eight-year period, the United States entered into arms-transfer agreements with developing nations worth in excess of $62.7 billion. Our nearest competitor, France, entered into agreements with developing nations worth just about half of that total, $31.6 billion.
During that same eight-year period, the United States delivered arms worth in excess of $84 billion to the countries of the developing world. The United Kingdom ranked a distant second with deliveries totaling $37.7 billion--less than half the value of the arms delivered by the United States.
And those numbers represent only the arms agreements and deliveries
[Page: S11327] GPO's PDF
And during those eight years, the United States delivered a total of more than $124 billion worth of arms worldwide. Russia again came in second with $21.6 billion in deliveries.
In both instances--arms transfer agreements and arms actually delivered--the vast majority of United States arms transactions were conducted with the countries of the developing world.
As you can see from these numbers, Mr. President, the United States has no real competitors in the arms transfer business. And the United States will continue to lead the world in arms sales into the foreseeable future, because those who would buy arms want to buy them from American manufacturers. It is that simple. These companies are already making millions and millions of dollars from these sales each year. And they are already receiving substantial tax benefits. There is no need to double that benefit.
In fact, as I noted earlier with regard to the entire FSC export tax subsidy, I would argue that we should actually be talking about eliminating this benefit entirely. At the very least, we should maintain the current level--we should not double this subsidy.
This 100 percent increase in the tax benefit for arms sales is opposed by such groups as the Council for a Liveable World Education Fund, the General Board of Church and Society of the United Methodist Church, the Justice and Witness Ministries of the United Church of Christ, NETWORK, the Church of the Brethren, the Friends Committee on National Legislation, the National Council of Churches of Christ in the USA, the Mennonite Central Committee, and the Maryknoll Mission Association of the Faithful.
The world is already a very dangerous place. The Congress should not be increasing the subsidy for U.S. companies to sell weapons abroad.
Make no mistake about the importance of this piece of legislation to arms manufacturers and other business interests who would benefit from the various tax subsidies contained in this bill. As you know, wealthy interests don't just sit idly by on the sidelines waiting for us to act on this kind of legislation. They
lobby to insert favorable provisions into a bill, and once they secure a special deal, they lobby to keep it in the bill. And when I say ``lobbying,'' I mean more than a visit or a phone call to staff--I mean campaign contributions, Mr. President, millions upon millions of dollars worth.
As we discuss the legislation before us, we cannot ignore the presence of powerful monied interests. I have often likened campaign contributions to an 800-pound gorilla that's in this chamber every day--nobody talks about him, but he cannot be ignored. On this issue as well, I refuse to ignore the 800 pound gorilla who's throwing his weight around in our political process. Instead I choose to Call the Bankroll, to inform my colleagues and the public of the contributions made by wealthy interests seeking to influence what we do here on this floor.
On this provision of the bill, I feel it is once again very important to take a moment to review the campaign contributions of the defense industry. As I have said, this bill would double the tax benefit currently enjoyed by U.S. companies that sell weapons abroad. This bill means a huge bonanza for arms manufacturers. It is only appropriate to take a look at the bonanza of contributions they have provided to the political parties.
Many members of the Business Roundtable, an organization which has urged the passage of this legislation, are some of the biggest arms manufacturers in the U.S., and some of the biggest political donors. I'd like to review the contributions of some of these companies. These figures are for contributions through at least the first 15 months of the election cycle, and in some cases include contributions given more recently in the cycle.
Lockheed Martin, its executives and subsidiaries have given more than $861,000 in soft money, and more than $881,000 in PAC money so far during this election cycle.
United Technologies and its subsidiaries have given more than $293,000 in soft money and more than $240,000 in PAC money during the period.
During that period, Raytheon has given more than $251,000 in soft money to the parties and more than $397,000 in PAC money to Federal candidates.
Textron has contributed more than $173,000 in soft money and more than $205,000 in PAC money.
And last but not least, Boeing has given more than $583,000 in soft money since the election cycle began, and more than $593,000 in PAC contributions.
Mr. President, these defense companies are getting a one hundred percent increase in an already unnecessary tax break, and frankly I wonder why. I wonder why we would double a tax break for the defense industry, when we haven't passed a Patient's Bill of Rights, when we haven't provided Medicare coverage for prescription drugs, and when we haven't passed so many other important measures that Americans really care about.
Sadly, it appears that there is a pretty simple way to figure out why we dole out corporate tax breaks while we neglect the priorities of the American people. All you have to do is follow the dollar.
Mr. President, this bill thus amply proves the adage that ``a bad tree cannot bear good fruit.'' We should revise the procedures that allow such a monstrosity to be loaded into a conference report on an unrelated matter. And we should reject this bill, whose rotten provisions outnumber its sound ones.
Exhibit 1
Say Goodbye to the Surplus
Congressional Republican reached agreement yesterday on the contents of the tax cut bill they intend to send the president before adjourning. They suggest it's a relatively minor measure, but it's not. If it becomes law atop all the spending increases also agreed to in this session, Congress and the president will have used up, before the election, well over a third of the projected budget surplus--the $2.2 trillion over 10 years in other than Social Security funds--that the presidential candidates are so busily distending on the campaign trail. It's an astonishing display of lack of discipline and misplaced priorities.
The president sent a letter implying that he might sign the tax bill even while objecting to major parts. He ought instead to veto it if congressional Democrats won't block it first. As with the other Republican tax cuts he vetoed earlier in the year, this would cost too much--an estimated quarter-trillion dollars over the 10 years--and too much of the money would go to the part of the population least in need.
In the name of increasing access to health care, the legislation would grant a new tax deduction to people who buy their own insurance. The deduction would mainly benefit those in the top tax brackets who tend already to be insured. The president observed that, far from increasing access, it would have the perverse effect of inducing employers to drop insurance they now maintain for their employees. Among much else, the bill would also increase the amounts that can be contributed annually to tax-favored retirement accounts, a step that by definition benefits only those who can afford to save the maximum now.
The health insurance deduction was part of the Republicans' price for the $1-an-hour increase in the minimum wage that the bill also contains. The price is too high. Also in the bill will be so-called Medicare givebacks, increases in payments to providers that the president earlier objected were tilted in favor of managed care companies already overpaid. This is on balance a bad bill dusted with confectioner's sugar and offered up at year's end on a take-it-or-leave-it basis. The right response would be to vote it down.
--
Exhibit 2
CENTER ON BUDGET
AND POLICY PRIORITIES,
Washington, DC, October 26, 2000.
Leadership's Tax Plan Reinforces Inequities in Health and Pension Coverage
TAX CUTS PRIMARILY BENEFIT HIGH-INCOME HOUSEHOLD AND COULD REDUCE HEALTH AND PENSION COVERAGE FOR LOW- AND MODERATE-INCOME WORKERS
Congress will shortly consider a significant tax package developed by the House and Senate Republican leadership. Despite some beneficial provisions in the bill, such as the $1 increase in the minimum wage phases-in over the next two years, the bill's tax provisions will primarily benefit those-with high incomes. In developing the package, the leadership dropped bipartisan provisions--such as the retirement savings tax credit and the small business tax credit adopted by the
[Page: S11328] GPO's PDF
The Joint Committee on Taxation estimates the cost of the package to be $240 billion over 10 years. But when combined with anticipated discretionary appropriations, the repeal of the telephone excise tax, new health benefits for military retires, and Medicare give-backs as well as the resulting interest costs, this bill brings the 10-year cost recent of congressional actions to close to $1 trillion (see box at the end of the paper). This Congress will therefore use a substantial share of the available surplus without addressing key priorities, such as reducing the ranks of the uninsured or funding prescription drug benefits. The benefits of the leadership's plan remain focused on these who have benefitted the most from the economic boom, offering little to those who continue to struggle to get ahead.
THIS SEARCH THIS DOCUMENT THIS CR ISSUE GO TO
Next Hit Forward Next Document New CR Search
Prev Hit Back Prev Document HomePage
Hit List Best Sections Daily Digest Help
Doc Contents