January 25, 1996 CONGRESSIONAL RECORD — Extensions of Remarks E 97 kidnaped from the parking lot of a vacant the same year. It is regrettable that Geor- larger can be unhealthy and becoming small- shopping center on January 13. For a week, gia’s only team killed the Ohio I–71 World er can be beneficial, yet that is exactly the volunteers and police searched the city of Ar- Series by knocking out the southern end, thinking we must apply to our government if and that it then compounded its inconsider- we are to return national growth to the lington hoping that they would find her safe ate behavior by depriving the northern end places were we want growth. and sound. Her body was found almost a of the championship. Still, for Ohioans, it I submit that we want growth in personal week later on January 17. The authorities are was the greatest baseball year ever. Until opportunity. We want growth in personal still searching for her killer. next year. freedom. And for Americans to have more Arlington citizens, deeply disturbed by the The Season was still in full swing when I personal opportunity and more personal free- incident, have held numerous community began thinking about what I would say here dom, we have to reduce the intrusion of gov- meetings and are urging passage of more today. Perhaps that is why a baseball story ernment into our lives at all levels, but espe- from the sixties came to mind. Even for non- cially at the federal level. State and Federal laws to strengthen prosecu- fans, the name Frank Robinson should ring Today our most conspicuous area of na- tion of sex offenders. bells. My first paying job was selling peanuts tional growth is in the national debt. Some I share the concerns of my constituents and at old Crosley Field, and one of that job’s people think that our nation has been in agree that there is an urgent need to toughen most important fringe benefits was watching hock from the time we fought the Revolu- the sentences for sex offenders. Frank Robinson play ball. Frank was a more tionary War on borrowed money, but this is I urge my colleagues to support legislation than adequate defensive player in the out- not so. It is true that we entered the nine- addressing these types of crimes. It is high field and at first base, but he is remembered teenth century with a debt of almost one because he was an offensive dynamo. He hit time that we lock up these repeat sex offend- hundred million dollars, about fifteen dollars for average and he hit with power. He made per capita in the money of that time. This ers and throw away the key. Stricter sentenc- all-star teams in both the National and would be roughly one hundred fifty dollars in ing laws can prevent sex offenses and protect American Leagues, he played in World Series today’s money. The debt went up to finance our citizens from such heinous crimes. for teams in both leagues, and he was voted Thomas Jefferson’s Louisiana Purchase, but f MVP in both leagues. Frank became the first it was then steadily worked down under African American hired to manage a major James Madison, James Monroe and John J. KENNETH BLACKWELL AND league team. He also had the dubious distinc- Quincy Adams. In 1832, Andrew Jackson was STEVE ENTIN, TWO TREASURES tion of becoming the first one fired. He was elected President, and, believe it or not, to- IN MY DISTRICT one of two players in what some people con- ward the end of the first term of the first sider the worst baseball trade ever made. modern Democrat, thanks to rapid economic Reds management called him old-at-thirty growth and pruduent fiscal management, the HON. STEVE CHABOT and traded him to Baltimore for Milt debt was eliminated. Our political landscape OF OHIO Pappas, which had the unfortunate side ef- today would have a very different look if IN THE HOUSE OF REPRESENTATIVES fect of laying a bad Trivial Pursuit rap on a Jackson’s Democratic successors had been very good pitcher. equally tightfisted. Thursday, January 25, 1996 The story, which I confess may be apoc- Through our first century and a half, the Mr. CHABOT. Mr. Speaker, the Cincinnati ryphal, takes place after Frank became a national debt reached its highest levels as a district that I am privileged to represent has an Baltimore Oriole. It is the bottom of the consequence of wars, and it was always paid ninth. The Orioles are down by one run, but down between wars. Expressed in terms of abundance of treasures. One of them is a the bases are loaded, and Robinson is coming good friend and former colleague of mine from Gross National Product, the debt was close to bat. The crowd is going wild. You can cut to half of GNP coming out of the Revolution- our days together on the Cincinnati City Coun- the tension with a knife. ary War. From zero in 1835 and 1836, it went Earl Weaver, the legendary Manager of the cil, J. Kenneth Blackwell. After leaving the over twenty-five percent of GNP in the after- Orioles, looks over at Frank in the on-deck council, Ken went on to serve as Assistant math of the Civil War, and again after World circle. He must see visions of grand slam Secretary for the Department of Housing and War One. It reached its all-time high, about dancing in Frank’s eyes. Weaver crooks his one and a quarter times GNP, following Urban Development and then as ambassador finger to beckon Frank over. He puts his face World War Two. It came down in the sixties to the United Nations Human Rights Con- in Frank’s face. In a low, deadly tone-of- and seventies, but its low then was still ference in Geneva during the Bush administra- voice, Weaver says, ‘‘Listen up, Mr. All-Star! higher than the highs following the previous tion. He recently became the first African- Not too hard, and not too soft! Just la-de- century’s wars. And from about a third of da!’’. American ever elected statewide in Ohio and GNP in 1980, the debt has soared to more now serves as State treasurer. He also serves Frank smiles at his manager. He nods. He goes to the plate, and he lays that beautiful than half of GNP today. as a member of the National Commission on What has caused this growth where we do grooved swing of his on the first pitch. He not want growth? Well, it is not low taxes. Economic Growth and Tax Reform, which last hits a frozen-rope single to center and drives Total tax revenues have more than doubled week issued its much heralded recommenda- in the tying and winning runs. tions for a new Federal tax system. Goodness ‘‘Not too hard, and not too soft! Just la-de- since 1980. Taxes now consume more than knows, the present Internal Revenue System da . . .! forty percent of the income of the average American family. Taxes cost that family is an atrocious mess in need of complete That is what we must learn to do with our government as we enter our third century of more than food and clothing and shelter overhaul. combined. Taxation at the state and local I was privileged this last Martin Luther King nationhood. We are a nation of home run hit- ters. We have a two hundred year history of levels in most parts of the country is rel- Day to attend the Cincinnati ceremony in swinging from our heels. More often than atively restrained. The lion’s share of the which Ken and his distinguished wife Rosa any nation in history, we have hit home American family’s confiscatory tax burden were presented the prestigious Dreamkeepers runs, but all too often these days, we strike goes to the federal level. Award. Today, I would like to enter into the out. Our federal government is a five hundred pound baseball player. There is no meal of CONGRESSIONAL RECORD a November 15 Especially at the federal level, we have for- gotten that our national game is baseball, tax dollars large enough that it will not wolf speech delivered by my friend, Ken Blackwell, it down and growl for more. We have to get at Ashland University's Ashbrook Center for not sumo wrestling. We have considered it acceptable to weigh five hundred pounds as the monster on a diet before it kills itself Public Affairs (established in honor of the late, long as we stayed strong. It is time now for and us with it. legendary Ohio Congressman John M. us to get back in shape. It is time for us to The first steps in curbing the federal appe- Ashbrook). Additionally, I'd like to include an learn to be disciplined at the plate. We have tite for our money have just been taken by article written by Mr. Blackwell and Steve to make our government not too hard and both houses of Congress in passing budget Entin, resident scholar at the Institute for Re- not too soft, not too fat and not too lean, not bills which will eliminate the deficit in seven too big and not too small . . . just la-de- years. Differences between the bills will soon search on the Economics of Taxation, pub- be worked out in conference committee, but lished in the January 18 edition of the Cin- da . . . This will not be easy for us because there is no assurance that they will go into cinnati Post. imbedded in our national character, indeed, effect in the form they are passed because of The speech and article follow: imbedded in our language, is the idea that a threatened veto. There is a straight forward solution to this DEVOLUTION—REVOLUTION IN THE THIRD bigger is better and smaller is worse. kind of obstacle to balanced budgets and ul- CENTURY Expansion is good. Shrinkage is bad. Generous people are big people. Selfish timate elimination of the national debt. It is (By J. Kenneth Blackwell, Treasurer of State people are small. the balanced budget amendment to the Con- of Ohio) Successful companies are green and grow- stitution. Forty-nine of our fifty states had For baseball fans in our home state, 1995 ing. Unsuccessful companies are contracting balanced budgets last year. Forty-eight of was a remarkable year. It was when Ohio be- and dying. those have balanced budget requirements in came the third state to have two teams in- Not until we are talking about diets or tu- their constitutions. There is no doubt that volved in major league post-season play in mors do we arrive at the idea that becoming some members of all of those legislatures E 98 CONGRESSIONAL RECORD — Extensions of Remarks January 25, 1996 could, and would, have found ways to spend can reduce Form 1099 to a postcard and vir- money and power and sends it back to levels more tax money than their states took in, tually eliminate the Internal Revenue Serv- of government which are closer to the people but they did not because they could not. We ice. governed. need the same discipline at the federal level. I am serving on a National Commission to The modem centralized welfare state—and If the subject were not so serious and the reshape the tax code for Senator Dole and like it or not, we are living in one—is built need for the amendment so clear, the argu- Speaker Gingrich. Our mission is a major on a foundation of three wrong ideas. ments of its opponents last year would have overhaul, not an academic review. I cannot The first is that government can do a bet- been funny. They remind me of a wonderful discuss the deliberations of the Commission ter job with our economy than the market. song in an album made some years ago by at this point in our work, but I can discuss Wrong. Harry Belafonte and Odetta. Odetta tells some ideas I believe have merit as we move The second is that bureaucrats can make Harry, her husband in the song, to fetch toward a better system. better decisions about what is good for fami- some water. He can’t fetch the water because I have a strong personal bias toward sys- lies than the families themselves. Wrong, the bucket has a hole in it. She makes a se- tems which encourage savings and invest- wrong. ries of suggestions for solving the problem. ment. I would prefer a system which would The third is that the work ethic is out- He has a new objection to every suggestion. tax consumption instead of income, but for dated, and that we can have a healthy soci- Toward the end of the song, she tells him to solid, practical reasons, mostly rooted in the ety which has disconnected effort from re- use a straw to mend the hole. He cannot use inseparability of our national economy from turn. Wrong, wrong, wrong. a straw because it is dry. She tells him to the global economy, I think we need to con- We must reawaken our recognition of the wet the straw. He cannot do that because he tinue to rely on the basic structure of an in- fact that in most domestic matters, the has no water. She tells him to fetch some come tax. states can perform more effectively and effi- water, and that brings him full circle. He We can and must vastly simplify our in- ciently than the federal government. Our cannot fetch water because the bucket has a come tax. The starting point is a single-rate founders knew this. Senator Dole and Con- hole in it. tax at about twenty percent of income. I gressman Bob Dornan have repeatedly re- The opponents of the balanced budget favor a substantial exclusion from paying minded their audiences of the tenth amend- amendment came up with an array of arm- this tax, perhaps thirty thousand dollars for ment to the constitution, the amendment waving objections to it, some on lofty, if a family of four. This structure passes the which has been honored in the breach for somewhat vague, constitutional principles, tests of fairness and progressivity. As in- most of the twentieth century. It reads, in but the bottom line is one reason is as good comes go up, the percent taxes represent of one powerful sentence, ‘‘The powers not dele- as another when you do not want to do some- total income go up, though in no case will gated to the United States by the Constitu- thing. If only one Senate opponent changes they reach the single-rate because the initial tion, nor prohibited by it to the States, are his or her mind during the session, the exclusion will not be subject to recapture. reserved to the States respectively, or to the amendment may yet pass during this ses- We can eliminate the marriage penalty by people.’’ sion, but if that does not happen, the Amer- setting the exclusion for a single taxpayer at It does not stop there. In most domestic ican people will surely change the composi- one-half the level of a married couple filing matters, cities and counties can perform tion of the next Congress to pass it. And if jointly. By setting the exclusion well above more effectively and efficiently than the that prediction is correct, I have to believe the poverty level, we will also eliminate the states. that the legislatures of three-fourths of the disincentive of today’s tax structure to poor In many domestic matters, neighborhoods states will hear the message clearly enough families working their way off welfare. can perform more effectively and efficiently to make it happen in short order. I favor retaining three deductions from than cities and counties. Requiring the Congress and the President gross income. And in matters having to do with what to to go on the line for the taxes necessary to One is mortgage interest. This helps young do with their money, families can perform support their spending will help immensely wage-earners achieve home ownership with- more effectively and efficiently than any in reducing the federal appetite for our out having to wait through a lifetime of level of government. Colin Powell says it money, but in my judgment we need action wealth-building. I realize that this amounts very well in his autobiography: ‘‘Every tax which goes beyond that. to accomplishing a social objective through dollar taken away from a consumer or a Ten states now require a super-majority in the tax code, but I believe the benefits to business is a dollar that will be spent less ef- their legislatures to increase taxes. I am a families and neighborhoods make it worth ficiently than if left in private hands.’’ strong advocate of this form of taxpayer pro- this exception to theoretical purity. We are only just beginning to apply this tection, and I believe that Ohio will soon The second is money placed by individuals thinking at the federal level, but successful join the ten states which have it in place. in savings toward retirement. We can tax state and local models are out there to show The super-majority idea should be applied that money as it comes out of savings, but what can be done. One standout example is at the federal level. Opponents say it is while it is saved, we should let it grow. And Indianapolis where Mayor Stephen Gold- somehow anti-democratic to require more the effect of exempting savings is to turn an smith reduced the size of city government, than a simple majority to raise taxes. They income tax into a consumption tax without law enforcement functions not included, by apparently think it is all right to require a the complexity or wrenching transition that an astonishing thirty-eight percent in three two-thirds majority when the subject is would be involved in moving to a national years. What he did was to systematically re- amending the constitution, or going to war, Value Added Tax or sales tax. view city functions one by one using a team or impeaching a president, but such a re- The third deduction is charity. As we move of entrepreneurs which he called the Service, quirement is not all right when the subject to replace governmental largesse with pri- Efficiency and Lower Taxes for Indianapolis is taking the property of one citizen to give vate initiatives, we need to stay away from Commission, SELTIC for short. The rec- to another. It would be interesting to see tax disincentives. ommendations from SELTIC alone helped what the result would be if this question We should apply the same single-rate to in- him trim $100 million from the city budget. were put to a national referendum. I have a dividuals and to corporations. Doing so Indianapolis opened the operation and hunch it would pass by a super-majority. eliminates the historical incentives to move management of the city’s waste-water treat- The third area of taxation which belongs in in or out of incorporation. We should apply ment plants to competitive bidding. The the federal government’s diet is the tax code. the same single-rate to capital gains as to winning bid improved water treatment and All of us know it is a mess, but just how income. This will eliminate a ton of IRS cut costs by forty-four percent. much a mess strains belief. rules designed only to distinguish between Trash collection was opened to competi- In 1950, the tax code had one hundred and the ways people make money. tive bidding. The cost of trash collection has three sections. It now has one thousand five At the corporate level, we should treat div- dropped from eighty-five dollars per house- hundred and sixty-four sections. In the past forty years, Congress has on av- idend payments the same way we treat inter- hold to sixty-eight dollars. Competitive bidding cut street repair costs erage changed the tax code every one point est expense. This will eliminate the bias of by twenty-five percent. three years. the current system for debt over equity. Since the last major overhaul in 1986, there These, then, are the key elements at the Microfilming public records was privatized have been four thousand changes in the tax intake end of our federal diet: one, a bal- for an annual cost reduction of sixty-three code. anced budget amendment to compel our gov- percent. There are seventeen thousand pages of In- ernment to live within its means: two, a What do the people of Indianapolis think of ternal Revenue Service rules. super-majority tax increase requirement to all this? They answered that question last Each year, the IRS prints eight billion compel government to look first to its spend- week by reelecting Mayor Goldsmith in a pages of tax forms. ing habits to balance its budget; and three, a landslide. And if the Republican elected Americans spend five point four billion clean, simple, fair system of taxation to re- President in 1996 continues the work begun hours filling them out. store incentives to work, save and invest. in this session of Congress and applies the Individuals and corporations spend, or The next question is what we do at the Indianapolis approach, we can look for a should I say waste, in excess of two hundred outgo end. landslide reelection in 2000. and fifty billion dollars worth of time per The answer is devolution. The answer is The principle of subsidiarity can help us year to pay their taxes. governmental change which is faithful to the deal with two of our most intractable na- I believe that the time is right to simplify principle of subsidiarity. The answer is tional problems, what to do about Social Se- the federal tax system to the point that we change which reverses the upward flow of curity and Medicare. January 25, 1996 CONGRESSIONAL RECORD — Extensions of Remarks E 99 The cynicism of our young people toward needs and get an economic head start before Some people worry that setting the system Social Security is a matter of real concern. the federal government takes a part of their right will cost the Treasury revenue. But the A recent poll of 1600 Americans between the income. The exempt amount should not be so current tax code is costing the economy and ages of eighteen and thirty-five showed that high, however, that too great a share of the everyone in it a fortune in lost income. That more of them expected to see a UFO in their population becomes insensitive to the cost of lost income, and the added taxes that would lifetime than a social security check. government. be paid on it, must be factored into the cal- I was in Santiago, Chile last week to re- Above the exempt amount, the Commis- culation. That, and a modicum of federal view what has been done there over the past sion favors a single low tax rate that would spending restraint, could make a growth- fifteen years with their Social Security sys- treat all citizens equally before the law. In- friendly tax system a reality. There is no tem. In 1980, their approach looked a lot like come is a measure of what one contributes to reason not to scrap the current tax system ours, a system of transfer payments featur- the economy through work, saving, and in- and set things right. Everyone would be a ing high withholding taxes and an endless, vestment. Anyone contributing to the econ- winner. futile struggle to keep benefits up with infla- omy by producing additional goods and serv- tion. In 1981 the government offered workers ices should be equally rewarded. A single f their choice of staying in the old system or rate system allows that. The current system of graduated tax rates moving to a new system in which a manda- IN HONOR OF THE 46TH ANNIVERSARY OF INDIA’S REPUBLIC DAY tory ten percent of wages are automatically slaps increasing tax penalties on people the h invested in an individual investment ac- more that they add to the economy. It pun- ∑∑∑∑∑∑∑∑∑Ω ∑∑∑∑æ∑∑∑∞∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑∑§¶x∑—ContinuedE 99 count, with an option to add as much as ten ishes people who take the time to get an edu- percent voluntarily. The worker chooses one cation and earn higher income over a shorter of several private Pension Fund Administra- working life. It punishes people who take the HON. ROBERT MENENDEZ risk to start their own businesses in hopes of tion companies to invest the account. These OF NEW JERSEY AFP’s are like mutual funds, putting money a greater income. It punishes people the in stocks, bonds and government debt. Work- more that they save and invest. These pen- IN THE HOUSE OF REPRESENTATIVES ers are free to move from one AFP to an- alties hurt not only the individuals who pay other, so there is competition among compa- the higher rates, but all the people they Thursday, January 25, 1996 might employ or who might work at higher nies to provide higher returns and better Mr. MENENDEZ. Mr. Speaker, I rise today service. About one-fourth of the Chilean wages with the plant and equipment that work-force signed up for the new system in more saving would make possible. to honor the Indian-American community and the first month, and more than ninety per- The Commission favors extending the de- the people of India, celebrating the 46th anni- cent are now in it. The results have been duction of payroll taxes, now allowed only versary of India's Republic Day. Throughout phenomenal. More than half of Chile’s retir- for employers, to employees as well. The ob- the United States, members of the Indian- ees have done so well that they have taken ject is to increase employment and to reduce American community will hold festivities to early retirement. the burden of the payroll tax on the incomes mark this occasion. I believe a lot of Americans would choose of middle income workers. a system like this over Social Security or Savers and investors are treated very On January 26, 1950, the Indian Constitu- UFO’s. The thirty-eight million beneficiaries badly under the current tax system, unless tion became law and the day was named Re- of the current system and the number of they have access to a very good pension plan. public Day. This document symbolizes the workers in their forties, fifties and sixties People pay tax when they earn their income. principles of democracy and secularism, which who cannot have a full working career under If they use the after-tax income for con- India cherishes. Its author, Dr. B.R. Ambedkar, sumption, there is generally no further fed- a savings plan present transition problems as was influenced greatly by the U.S. Constitution we change systems. We cannot break faith eral tax. If they buy a bond, there is tax on the interest. If they buy stock, there is cor- and the Bill of Rights. Since India became a with these people, but we do not need to. The republic, it has continued to hold free and fair problems are formidable, but they are sur- porate tax on the earnings, individual tax on mountable so long as we fund the transition the dividends, and capital gains tax if the elections, to support a multiparty political sys- through reduced governmental spending in earnings are reinvested and the share price tem and to transfer power peacefully. other areas, not future borrowing. rises. If they buy a machine for their busi- The relationship between the United States A conceptually similar idea is emerging to ness, complex depreciation schedules result in understated costs and over-stated taxable and India is still unfolding. The United States deal with Medicare. The idea is medical sav- and India share many similarities. Both of our ings accounts. In these, individuals would be income. There is an estate tax if the saver able to put an amount like three thousand doesn’t live to spend the money. Current law countries are former British colonies. English dollars into a tax-free account. The money is clearly biased against saving and invest- is a vital language of communication through- could come either from the employer or the ment. out India. Democracy continues to thrive in employee. Some form of catastrophe insur- The Commission would end these biases. It both places. The Indian judiciary system is ance would cover expenses beyond this first would let savers defer tax on their saving based on English common law. In addition, three thousand, but the effect would be to until they withdraw it for consumption, as in a pension; if saving is not deductible, the India is proceeding with its economic reforms put individuals in charge of expenditures for to develop a vibrant market economy. routine care, medication, eyeglasses and the returns should not be taxed, as with tax ex- like. This would bring most health care ex- empt bonds. Either approach would put sav- India still faces the challenges of achieving penditures under the control of the market- ing on the same basis as income used for con- economic development while ensuring har- place, with all the attendant benefits of com- sumption, and would let people save more mony between its many ethnic, religious, and petition and price comparison. easily for a home, an education, or retire- linguistic communities. In spite of these obsta- This, then, is the shape of the revolution ment. An individual saving $1,000 per year from age 20 onward could build a retirement cles, India has strengthened its democratic in- which can see us safely through our third stitutions by harnessing the potential of its and fourth centuries of nationhood. nest egg of more than $400,000, compared to Devolution to give us a lean, responsive about $250,000 under current law, providing a multireligious, multiethnic and multilinguistic government with the power and the money 60% increase in retirement income and secu- citizenry. where it belongs, closest to the people. Not rity. Bilateral trade between the United States too big and not too small. Just la-de-da. The Commission would end the estate tax and the double taxation of businesses and and India is flourishing. The activities of Amer- A NEW TAX SYSTEM FOR THE 21ST CENTURY their shareholders. It favors deducting in- ican companies have made the United States (By J. Kenneth Blackwell and Steve Entin) vestment in full when the outlay is made, in- India's leading trade partner. Recently, a con- The National Commission on Economic stead of stringing the write-off out over sortium of American companies, led by the Growth and Tax Reform has just issued its years or decades, as under current law, los- Enron Corp., successfully renegotiated a deal recommendations for a new tax system for ing value and depressing investment and em- to complete a $2.5 billion power plant in the the 21st century. The Commission wants to ployment. state of Maharashtra. United States compa- scrap the current tax system, with its biases What would such a tax system do for the against saving and growth and its com- average family? Professor Dale Jorgenson of nies are positioned to fill India's appetite for plicated rules that give favors to some tax- Harvard University told the Commission services and products. payers and impose penalties and uncertain- that a tax system that ended the biases India is committed to maintaining its democ- ties on most of the population. In its place, against saving and investment would lift the racy and economic reform program. The In- the Commission favors a similar, fairer sys- level of output and income in the economy dian-American community, with over 1 million by between 15 and 20 percent within a few tem that will reward thrift and hard work, people, has taken a particular interest in pro- raise employment, and lift family incomes. years. Investment, productivity, wages, and The Commission would like the new tax employment would all rise. Gains of that size moting United States-India relations. Please system to have a generous exempt amount, would rise the yearly income of a typical join me today in honoring the world's most high enough to enable lower income families working family by between $4,000 to $6,000, populous democracy, India, on the 46th anni- and individuals to take care of their basics and by more if they are savers. versary of its Republic Day.