Tax Relief Extension Reconciliation Act of 2005

TAX RELIEF EXTENSION RECONCILIATION ACT OF 2005

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Mr. GRASSLEY. Mr. President, we are back at taxes once again. What the people of this country are going to be hearing in the debate for the most part is very similar to what we discussed in this Chamber back in the second and third week of November of last year. Thinking of how to give a picture to this debate, I picked as a starting point the fact that tomorrow is Groundhog Day. I think you see a portrait of Punxsutawney Phil, the famous groundhog. Tomorrow, is he going to see his shadow? If he does, then we have 6 more weeks of winter. If he doesn't, then spring is here. I guess that is the way it has been for 100 years or maybe longer.

Punxsutawney is in Pennsylvania, and Phil is the name of the groundhog. In thinking of Phil and his impending weather report, I also thought of a popular film entitled ``Groundhog Day,'' which starred Bill Murray, in which a man relives the same day, Groundhog Day, over and over and over. This film has taken on greater significance for me as I seem to be in a similar situation. More than just a sense of deja vu, I feel I am reliving a past experience because starting this hour, we are going to begin debate on a Senate tax reconciliation bill. Yet I seem to remember that we had this debate. I referred to these debates in the first words of my time when I said that we did this starting Wednesday, November 16, 2005. That was at 3:35 Wednesday afternoon. We took up S. 2020, the Tax Relief Act of 2005. I want to hold this up here. This isn't just any little document we took up; it is a tax bill, expiring provisions. Everything in this, when we were discussing this on November 16, was reenacting provisions that sunset December 31, 2005, so that there would not be an automatic tax increase on the American people. We are in a situation that if we don't get this done pretty soon and a year from now people are filing their taxes for 2006 and 2007, they are going to have big tax increases. One that is very obvious to everybody is the alternative minimum tax, which I will discuss in a minute. The alternative minimum tax is going to hit no fewer than 14 million people and maybe as many as 19 million people who would not otherwise be paying the alternative minimum tax. All these people would be basically middle-income Americans. The alternative minimum tax was meant to hit very wealthy people who took advantage of every tax relief available or every tax loophole that was legally available within the Tax Code and still didn't pay any taxes, that they ought to pay some tax. So it was referred to as the alternative minimum tax so that everybody, regardless of how wealthy they might be or how high their income might be, paid a little something into the income tax fund for the privilege of living in America. That privilege is a constitutional right, but everybody contributes something to it. That was the theory behind it.

Well, that was not indexed. And since that wasn't indexed, we have to change the Tax Code from time to time so it doesn't apply to more people. Actually, the thing ought to be repealed because it is not serving the purpose it was intended to serve.

First of all, it was not meant to hit middle-income taxpayers. Secondly, a lot of people today, because they hire the right people to do their income tax, have legally found ways of avoiding the alternative minimum tax. So it is not even hitting the people it was supposed to hit. Yet it is hitting millions of people it was never intended to hit. How you keep tax policy like that on the books, I don't know. I would like to repeal it. If I could get 51 votes to repeal it, that would be my first amendment. But under the way we do things in the Senate and the points of order that can be made, I am not apt to get that sort of an approach. So what we do is, we kick the can down the road.

I wish to get back to this history--deja vu--of seeing the shadow and the Groundhog Day and all that stuff to give you the history of why the question is, Why are we going through this now on February 1 and 2, and it will probably carry over into next week, to February 4, 5, and 6? Why are we going through this when we spent all that time back in November doing exactly the same thing?

The rules of the Senate provide the minority--or maybe I should say not just the minority, every Member, but in this case it looks to me as if it is mostly the minority which is taking advantage of it--certain motions that have to be given to get to conference to iron out the differences between the House and the Senate. In this case, the minority is going to take full advantage of that even if we redo all the debate.

I will bet you can take speeches out of November 2005 and you will read the same speeches today and tomorrow and next Monday and Tuesday in the debate on this bill. If you take out speeches of a month ago and can repeat them, there is no end to the speech-making you can do in this body. We started this debate at 3:35 on Wednesday, November 16, 2005. We took up this bill, S. 2020. As we were considering this bill, we dealt with 80 different amendments. They were filed. Maybe we didn't deal with 80, but at least there were 80 ideas out there by people who wanted to change this bill. They were filed. Now, seven of them were agreed to. It was a very lively debate. It culminated in 18 rollcall votes about whether amendments ought to be included in the bill or whether there ought to be final passage. We finally got to final passage at 12:05 a.m., Friday, November 18.

According to the Secretary of the Senate, at least 97 of us were there at that midnight hour to vote on this bill, so I am not the only one reliving this experience. There are going to be 97 Senators who were there at midnight on November 18--or I guess you would say that Friday morning at 12:05 a.m. As we considered the Senate amendment to the House version of this bill--the House version is the Tax Relief Extension Reconciliation Act of 2005--I have to ask myself--but in a sense, I am asking each of the Members--why are we still here? Didn't we already go through this exercise? Are we not finished with the Senate debate?

I conclude that there is no rational reason for still being here because, normally, it would be a unanimous consent motion that we ought to go to conference to work out the differences between the House and Senate. Unless you do that, you never get anything to the President. It has to pass both bodies in identical form. That is usually a pro forma operation here. We could have done that in 5 minutes--Senator Baucus and I--or the leaders could have done that, but we are still here because maybe people want to slow up the process. Maybe they don't want to get to the asbestos bill next week, which is very important to get to. The fact is, we already went through this exercise, and we ought to be finished with the Senate debate, but we are not.

In the face of a multitude of other important issues this body needs to deal with, does the Democratic leadership really want to reenact recent debates and resuscitate old talking points? Our tax reconciliation bill already passed, and not just by Republican votes because 64 of us voted for that, including 15 Democrats. The only way you get anything done in the Senate, because of protection of minority rights, which the Constitution allows, is by bipartisanship; otherwise, nothing gets done. So we had bipartisanship on this bill.

While I believe this legislation is extremely important, and I will, as chairman of the committee and manager of the bill, debate it as long as is necessary, quite frankly, as I have indicated in my points, I question the necessity of going through a long process that resulted in the bipartisan passage of the same bill just 2 months ago. So that is my first point.

This is a very curious exercise. It is an exercise with no purpose, no apparent purpose other than simply delay. Is the delay on the part of the Democratic leadership important? The answer is yes. Ask the American taxpayers, and you will get an answer. The answer is yes, if you are one of almost 20 million families waiting for certainty that you are not going to be caught up in the clutches of the alternative minimum tax.

We hear a lot about the AMT, the alternative minimum tax. You will hear about it in this debate over the next few hours. This bill does something about the AMT: it extends the hold-harmless provisions so those 14 million, up to 19 million Americans won't get hit with it. I have a chart here that will tell you exactly the number of people in the respective States, based upon the previous year, 2003, so it doesn't add up to the 14 million to 19 million people we think will be hit by 2006. But the number of people who will be hit by it in my State of Iowa is 65,813.

In the State of Nevada, even more people--68,273 people--are going to be hit by it. Why would anybody from Nevada not want to do something yesterday rather than tomorrow about the alternative minimum tax? As I said, these numbers understate what this problem is today because there are going to be a lot more people getting hit by it.

The basis of the bill the Senate passed, and the bill that is once again before us, is an extension of the alternative minimum tax hold-harmless provision. So every Member who is participating in this deliberate strategy of delaying--delaying our entrance into the conference with the House of Representatives is delaying the certainty these millions of American taxpayers deserve.

I emphasize the word ``certainty'' as far as the Tax Code is concerned. There is nothing that does more economic good than knowing what the future holds in the way of taxes as it affects spending and investment. So if you want to improve the economy of this country, if you want to keep this economy strong, certainty of tax policy is very important.

These are the facts on the AMT. Look it up in the Internal Revenue Code. The AMT relief provision expired already, on December 31, 2005. I ask my friends in the Democratic leadership to take a look at the calendar. One month now has passed, and the AMT hold-harmless provision has not been extended. That is the cornerstone of this very massive piece of legislation. It also happens to be the cornerstone of a bill the Democratic leadership is delaying. So I don't want to hear folks talk about some sort of AMT problem and at the same time delay real action to help those millions of taxpaying families.

This bill goes way beyond helping people who would be hurt by the AMT. It also includes popular and broadly applicable tax benefits. I wish to talk about some of them and talk about them individually and use charts as I move along.

For instance, the deductibility of college tuition is a very important part of that 2001 tax bill. This is a benefit for families sending their kids to college. By definition, this benefit is geared toward helping middle-income families who always have a hard time educating their kids. They might not qualify for Pell grants or guaranteed student loans, yet they need help to send their kids to college because they are not millionaires. These are not high-income people. They get the full benefit of the deduction if they make up to $65,000 as a single person and up to $130,000 as a couple. Beyond these levels, the benefit phases out. A lot of these folks are paying significant Federal, State, and local taxes, and they get no help in defraying the high costs of a college education for their kids. This tax deduction helps provide and helps these hard-pressed, middle-income families with a benefit, and it furthers a very important national goal of supporting higher education--not an end in itself, but to keep America competitive in the global economy.

This deduction runs out at the end of this year. It did run out December 31, 2005, but we have to be ahead of the curve as people plan to send their kids to college. Will this be around for 2007? Not unless this bill passes. So these folks are going to face a tax increase without even a vote of the Congress. Automatically, taxes are going to go up if we don't enact this piece of legislation which we already passed back in November.

Here I have a chart that shows for each Member how many families in their respective States are going to be hit next year if we don't enact this legislation. Again, I will speak to my State of Iowa, where the number is 37,364 taxpayers. In Nevada, it is 25,776 taxpayers. Why would anybody want Nevada taxpayers to pay more taxes? And why would you not want them to know that today rather than tomorrow? Why not get this bill to conference and get this issue behind us so that the taxpayers in Nevada know that in the year 2007, their families are going to be able to take advantage of the college tuition exemption from the income tax? Once again, in that particular State, it is 25,000 families.

There is another benefit that is addressed in this bill, S. 2020. It is called the small savers credit. Here I am talking about a tax credit for low-income people to save through an IRA or a pension plan. We are talking about people who don't know about saving or don't have the ability to save, that we are going to give an incentive to save and can get an ethic for saving because saving for retirement is something not enough Americans have done and particularly not enough low-income Americans have done. So as a matter of public policy, to encourage savings for people who cannot afford to save or don't have the ethic to save, give them an incentive to save through the small savers credit. We all think that savings is important. We all want low-income people to save for retirement.

I have a chart that shows the number of low-income savers who benefit in this bill on a State-by-State basis, which benefit won't be there if we don't pass this, or it is being delayed by 4 or 5 days because we have to go through the same debate we went through back in November.

Again, in my State of Iowa, there are 95,000 people who could take advantage of this small saver's credit but who will not be able to.

Let's take another State, Nevada. There are 36,923 people who are low income who will not be able to take advantage of this provision.

Again, if you want to establish an ethic for saving, you should not pass tax policy to encourage that ethic for saving and then sunset it and expect people to establish a lifelong pattern of saving. You cannot stop and start tax policy and expect people to develop an ethic to conform to saving, and I believe we all think the ethic of saving is very important.

The bill before us will also extend a tax deduction for teachers who buy their own supplies for their students. I think this provision was developed in the 2002 tax bill by Senators WARNER and COLLINS to give teachers who go that extra mile by paying out-of-pocket expenses some help through the Tax Code.

Who is going to argue with that? One might argue that we ought to pay teachers more, so they don't have to do that. We ought to appropriate more money for schools so they don't have to buy the supplies out of their pockets. But we have 40,000 school districts in the country, and we are not going to be able to make policy here for every school district. We know that some teachers are so devoted to their students that they are going to spend some of this money out of their pockets, so Senators COLLINS and WARNER came up with this idea of a tax credit for teachers who pay for supplies out of pocket.

Again, on a State-by-State basis, I have a chart that shows how many teachers benefit from this provision. I will pick out Nevada again. Nevada has 21,853 teachers who took advantage of this provision. In Iowa, we had 33,812 teachers take advantage of this provision. Why wouldn't you want teachers who devote a life to a profession at relatively low pay--compared to what other people with the same amount of education get in other segments in the economy--because they are devoted to doing good or they wouldn't be teaching in the first place--why would you want to question this so they won't have it this year?

Right now those teachers are buying supplies and probably don't think the least bit that Congress would have sunsetted this legislation on December 31, 2005. So they are going out and buying all these supplies thinking they are getting a deduction, and then when they file their income tax a year from now, they are going to be surprised.

I wish I could tell every one of them that the Democratic leadership won't let us go to conference so we can keep that provision. I am not going to be able to tell all 33,000 teachers in Iowa. They are going to find it out the rude way when they go to file their income tax. I would really like to tell the teachers in Nevada about this as well.

We don't have to have this problem. All we have to do is get to conference. We can get to conference in 5 minutes and work these provisions out, and by next week, we can have this bill to the President of the United States, or give us another week to work out the differences between the House and the Senate. We can get this all worked out, get the bill to the President, and we don't have to worry about that.

There is another point. We all think of small business. There are small business provisions in this bill, S. 2020, that passed the Senate by a bipartisan vote at the midnight hour way back in November, and here we are piddling around with procedural motions to get to conference.

Everybody advocates small business because it creates 70 to 80 percent of the new jobs in America. This bill would extend the small business expensing. Many small businesses use this benefit to buy equipment on an efficient aftertax basis. It is good for small business, it is good for small business workers, and it is good for economic growth.

I have a chart on a very important issue, at least to the people of Alaska, Florida--and Nevada, again, is going to benefit--South Dakota, Tennessee, Texas, Washington, and Wyoming. This is because we established in the tax bill the deductibility of State and local taxes. This bill will help 12.3 million taxpayers in these States--Alaska, Florida, Nevada, Washington, Texas, South Dakota, Tennessee, and Wyoming. Tennessee is involved. It is the home of our distinguished leader. Senator Frist has worked very hard to get this bill to the floor, and for the second time. He is frustrated because we can't move this along.

Nevada is one of these States. It is the home of my friend, the Democratic leader. Unfortunately, the Democratic leader has fought this bill tooth and nail, even though his constituents benefit from it, particularly in this instance with the deductibility of State and local taxes.

I ask them to focus on the taxpayers of their respective States, whether they are from Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, or Wyoming, to get this bill passed so their taxpayers will know their local and State sales taxes can be deducted. I hold out hope that the Democratic leadership will see the light. I hope they will work with me to see their folks in their State will be able to deduct these State and local taxes this year and know they can do it very soon this year.

These provisions are bipartisan and millions of American taxpayers rely on them. Every Senator ought to help us pass this bill for these provisions alone.

The bill before us addresses expiring business and individual provisions that I have not talked about yet, what we call extenders. These provisions include research and development tax credits and the work opportunity tax credit, just to mention a couple.

This bill also includes many of the charitable incentives that were introduced in what we refer to as the CARE Act and which have previously passed the Finance Committee and previously passed the Senate. I appreciate the work of Senator Santorum and Senator Baucus in working with me to balance these incentives with several of the much needed reforms that are supported by the charitable sector, the Treasury Department, the IRS, the donors, and the taxpayers to make sure charitable giving and the tax exemption for it serves the purpose intended and that charitable organizations use the money that was donated to them for the purpose they asked for it.

Beyond the CARE Act, this bill contains loophole closures and tax shelter fighting provisions that raise revenue.

This bill is bipartisan. I have not thanked my friend and ranking member, Senator Baucus, for his cooperation. We had cooperation going way back when we first started working on this bill in the summer of last year so we could be ahead of the curve. He and I, when we first started, were not partners, but we teamed up in the Finance Committee. We teamed up in the first Groundhog Day floor debate and, as always, his cooperation and, more important with something as serious as this, his good humor makes a difference.

I thank those Democratic Senators, and that is 13 others besides Senator Baucus, who joined me in a bipartisan effort on our first floor journey. I ask them to help me persuade their leaders to let this bill proceed. I ask them to ask their leaders to focus on taking care of the legislative business and put a damper on the political games that appear to me to be nothing but going through what we went through last November. We waste enough taxpayer money. There is no point wasting it again, duplicating the debate of 3 days back in November.

We can move on to other important items, including a lot of items the Democrats want us to bring up on the floor of the Senate. I yield the floor.

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Mr. BAUCUS. ...... I might say to my very good friend, the chairman of the committee, we face an alternative. Frankly, I hope we can work this out in a way that is amicable to Senators. We have two options. One option is to fill a tree; that is, prevent any amendments from coming up until we get to the expiration of the 20 hours. At that point, Senators can offer amendments because when you get off the bill and pass the bill, we have to start taking down the tree.

When the tree starts coming down, amendments come down, and Senators can offer amendments then. Although we will be in a vote-arama situation, time will not have expired for the purpose of offering amendments. Senators will still be able to offer amendments. The question is, Is it better all the way around to have the tree filled and offer those amendments when we get to the so-called vote-arama, or is it better to let Senators offer their amendments earlier and accommodate Senators a little more because we are going to get the 20 hours one way or the other?

It is my thought that probably if Senators are allowed to offer amendments earlier on--that is, the tree is not filled up--and there is an accommodation made to Senators who are going to offer amendments anyway, that we may be able to proceed more expeditiously because Senators will be accommodated and won't be upset and so forth. On the other hand, if the tree is filled and Senators are not allowed to offer amendments until afterward--I don't know this; I am just saying this because it is a possibility or speculation--that Senators may say: I was denied my opportunity, and I can't offer it now. They didn't give me an opportunity to offer my amendment. Maybe he wasn't going to offer it anyway.

I raise that question for the majority to think about as we decide how to proceed on this bill. Many Senators have come up to me and said they wanted to offer an amendment. That is a Senator's right. I have said to them I understand that, but I am not sure when they will be able to offer them. They will be able to anyway, but the question is whether they will be able to do it earlier or later. I know that is not a decision that is going to be decided at this point, but it is a decision I think we are going to have to deal with. My general view is it is better to work with people than not. Generally, if you work with people, you are more likely to get matters resolved more expeditiously and more amicably. I raise that point for the consideration of all concerned.

The PRESIDING OFFICER. The Senator from Iowa is recognized.

Mr. GRASSLEY. Mr. President, my response to that is a friendly response. It is not a very definitive response because I think my friend from Montana knows that some of these negotiations go on at a little higher level than he and I are in leadership.

Mr. BAUCUS. No negotiation goes on higher than the chairman of the Finance Committee.

Mr. GRASSLEY. Well, there are other considerations that come into this. I will put it in this perspective. First of all, I hope what he says could happen. It seems to me that, No. 1, we are kind of in an environment where we believe we are wasting some time, in the sense that we are going through a lot of procedural motions that redebate something that was decided in a bipartisan way by this body back on December 18 on a 64-to-something vote, a very bipartisan vote. Normally, what we are doing now is trying to go to conference. We are faced with a lot of amendments--some that might be the same as what we dealt with previously. So that is kind of an environment that maybe a lot of us believe we should not have to go through because it is a waste of time. But now that is a fact of life. That is how the Senate operates.

So as what my friend, the distinguished Senator from Montana, said, it boils down to this: To the extent we can have a massive amount of transparency on what might be offered, with some limit on the number of amendments that might be offered, and get that settled very soon, then what happened in the sense of him saying we would fill up the tree with amendments, we would not do that.

That is what we would like to do. But it seems to me there has been some inability to know exactly how many amendments might come from the Democratic side of the aisle, what they were, and the extent to which they were germane versus nongermane. Obviously, the more that are nongermane as opposed to germane makes it even more difficult. If we can settle those things--I know Senator Baucus and I could settle those things, and we could be on our way to not filling the tree. So far we have not seen that sort of transparency.

Mr. BAUCUS. Mr. President, my good friend makes a very good point. I had a chuckle to myself because, I say to my friend, I am not even aware of all of the amendments. The Senators don't come to me, frankly, as I would like them to. It makes it difficult to decide some of these issues. The Senator makes a good point. Over the next hour and a half or so, let's sit down and see what we can do to work out a list the best we can to get a sense of things so that we can proceed more expeditiously.

Mr. GRASSLEY. Mr. President, I always anticipate the picture show that we are going to have now from the Senator from North Dakota. Anyway, I hope he will be tolerant. I have always wanted to engage him in some debate on these issues because I think he always tells half the story. I don't think he ever says anything that is wrong, but the whole story could give a different impression to the public.

I yield the floor.

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Mr. GRASSLEY. Mr. President, I want to comment on what the Senator from Massachusetts said.

First of all, I think everything he said about the AMT, I agree with; what he said about the capital gains, I disagree with.

I am only going to comment on that part that I agree with him on about the AMT.

But let us have a little history in the process of doing that.

No. 1, either in 1998 or 1999, we repealed the AMT. President Clinton vetoed it.

So we wouldn't be dealing with this issue if President Clinton had signed that bill.

In a sense I am kind of asking for support from anybody on the other side of the aisle who thinks we are not doing enough on AMT. I happen to be one of those who even today, 6 to 7 years later, is for repeal. I believe it ought to be repealed. We ought to have a standup vote, without any points of order, and get rid of this.

There are Republicans who would say if we do that in the out years, our budget might look like it has a much bigger deficit than it has, and over here there might be people who say if you are going to get rid of this tax, you ought to have an offset for it,

so the budget deficit does not look different. The reason neither one of those concerns is legitimate is because in this bill we are talking about having the AMT hit the middle-class Americans whom it was not intended to hit.

The Senator from Massachusetts is right in the sense that for parents with children and the larger the family the more it hits them. It was never intended to hit but a few wealthy people who used every legal loophole to avoid paying taxes and that somehow everyone who makes a lot of money ought to pay a little something of income tax into the Federal Treasury. A little something or big something, whatever the case might be, whatever the alternative minimum tax hit them with, they ought to pay that.

If Senator Baucus will bear with me, he has heard me say 150 times how ridiculous it is to have this side of the aisle say we ought to offset a tax that was never intended to be collected in the first place from the people who otherwise will be hit with it if we did not pass this legislation, and over here, people are worried if we do away with it, the budget deficit will look bigger because we do not have the phantom tax income coming in from people who were never supposed to pay the alternative minimum tax in the first place. If we have a tax hitting people who were never intended to pay it in the first place, it should not be showing up in the budget figures, anyway. So we have to worry about an offset or we have to worry about whether we have a burgeoning budget deficit over here if it is not there. It is a phantom. We ought to do what you do with phantoms, hit them with a needle, let the air out, get rid of them.

Also, particularly what the Senator from Massachusetts said about hitting people, it is like a geographical tax to some extent because a lot of States, such as New York, New Jersey, and California, have a lot of high-income people. Therefore, they have a disproportionate number of people getting hit by the AMT. If you fall into that income class, you will get hit with it. More of these people live in higher income States and it happens that some of the States are what we call blue States instead of red States, so I don't know why we do not have a massive drive on this side to force Republicans to do something that is hurting your constituents.

Let's do away with the darned tax. People aren't supposed to be paying it in the first place. Why are we spending a lot of time working the issue? I would like to have the Senator from Massachusetts solve this problem forever and help us repeal it, like we did in 1998, with a President who I am sure will sign it.

On a procedural matter, I wish also to make a comment. My good friend from Montana asked if we could see what we could work on, on amendments. I will briefly comment even beyond what he has asked us to do and try to help speed this along as best I can, as to where we are.

It has been suggested on this side that Republicans work with Members to help them get their amendments up and voted on. First, we should not even be in this situation, a truly unprecedented situation, where we are essentially being forced to do a reconciliation bill over. Yes, we are doing a reconciliation bill over, within 2 months of when we first did it. We could be doing the Nation's business of problems that have to be solved, not waste 3 days on this bill now when we spent 3 days on it in November. We could be working on lobbyist reform. We could be working on asbestos reform and a lot of other things that Members want before the Senate. However, leadership on the other side is wasting the Senate's time and the American people's time. Surely there is a better way.

For those who thought this was over back in November, we are in the middle of a rude awakening. Cooperation is a two-way street. Even though we should not be in this position where the minority party is trying to reopen the bill, we have said we are willing to entertain a limited number of amendments. Another way to put this, I said to Senator Baucus privately that we need total transparency on this, get everything on the table. We do not get a response from the Democratic leadership.

They have taught me a few lessons from our first go-around on this bill. I learned that you do not vote on amendments too early because we know what happens if you do that; they get their press release out, they lose the amendment, then it comes back within a matter of hours, sometimes two or three different versions of the very same amendment. We end up voting on all of them, wasting everyone's time. So the extent to which we lay everything on the table and level with everyone on what we are faced with, we will be able to get this bill completed. We could finish this late tomorrow night.

Unless we can get an agreement for a limited number of amendments or amendments in total, I don't see any reason but to wait until the time has expired on the bill and let the so-called vote-arama begin one vote right after another and we spend a couple of minutes debating an amendment back and forth, to have that vote-arama without an agreement. I am convinced this will save the Senate a lot of time in the end. Either way, we have a limited number of amendments. Let us know what they are, have some sort of agreement so we can get done, or have a vote-arama.

I yield the floor.

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Mr. GRASSLEY. Mr. President, I hope every taxpayer in this country knows that what they heard was a philosophy that every dollar you make belongs to the Government, and we are going to let you keep a little bit of it.

We kept hearing about tax cuts costing us, tax cuts costing us. If we give you a tax cut, it is costing us in Government, and we can't do as much for you as if we tax you more.

So there is a basic philosophy behind this legislation whether we ought to let tax cuts stay in the pockets of Americans and let them spend it and do the economic good and let the marketplace decide how the goods and services in this country be divided or whether we ought to tax at a higher rate and bring it to Washington and let a few politicians make a decision on how to spend it.

I opt for trusting the American people with how they spend their money and the growth that comes from the investment that creates jobs that causes our economy to expand.

I will have more to say about some of the other speakers who have been in opposition to this bill as soon as the Senator from New Hampshire concludes. I wanted to make that point before my good friend got out of here because a lot of times he never gets a chance to hear what I say, and I wanted to make sure he heard it.

I yield whatever time he might consume to the Senator from New Hampshire.

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Mr. GRASSLEY. Mr. President, I appreciate hearing from all my colleagues, both Republicans and Democrats, about everything that is wrong with the AMT because there is a lot wrong with the AMT. But I take great pleasure in trying to remind, particularly my Democrat colleagues, that a Republican-controlled Senate and House in 1998 completely repealed the alternative minimum tax. They completely repealed it, sent it to President Clinton, and he vetoed it. So I don't want anybody telling me how bad the alternative minimum tax is and that something ought to be done so that middle-income Americans, who were never intended to pay the tax, don't get caught paying it.

Besides the repeal that we proposed in 1998, I can also point to a lot of tax bills since then where we have done what we call hold-harmless so no more people are hit by the alternative minimum tax because of tax changes that you make in any tax bill which indirectly, then, affects who might pay the alternative minimum tax.

So I specifically want to take issue with the remarks of my colleague from Iowa, Senator Harkin. It was suggested the tax cuts have contributed to this AMT problem. That demonstrates a complete misunderstanding of what we have done in several tax bills, going back to the year 2001, or it at least doesn't give us credit for proposing repeal of the AMT in 1998.

It is true that we are required to act to extend the hold-harmless provision as the Senate has done in Senate-passed reconciliation bills and in the years going forward--the bill we are on now and in the bills going forward. But that is the point of the hold-harmless. Of course, it is critically important that we included AMT relief in our bill. Moreover, it has been the subject of public debate, as all my colleagues likely know. But we take issue with analyses that suggest that tax cuts are the source of enhancing the AMT problem. Quite to the contrary, the fact is that failure to index the alternative minimum tax for inflation for the last 35 years is the key source of the problem.

I don't know why folks cannot own up to that fact and recognize that at a minimum we are going to have to index the alternative minimum tax going forward, if it is meant to serve its original purpose of hitting just very high-income people who avoid paying any income tax through use of legal loopholes and not hit middle-income Americans.

Again, for the understanding of my colleague from Iowa who spoke on this point--but other people have spoken on it as well, mostly from the other side of the aisle--in 2001 and 2003, in those tax bills, we made sure that the alternative minimum tax would not impact any more taxpayers as a result of the tax reductions of those bills.

So it is entirely wrong to say that tax cuts bring about the AMT problem or that we don't care about that problem or that we didn't do anything about that problem because we did in each of those tax bills.

We have to continue to uphold the promise that we made that we were not going to tax any more people with the alternative minimum tax.

This is a very important part of this reconciliation bill that we passed back in November that we are now making a rerun of this year.

This bill includes $30 billion of alternative minimum tax relief to ensure that Senator Harkin's argument is, in fact, untrue, and it is also untrue as far as the 2001 tax bill and the 2003 tax bill is concerned.

I wish to give some figures so people know what this is. It is not just in the State of New Jersey, as we heard from the junior Senator from New Jersey. It is not just a problem in Illinois, where we heard from the junior Senator from Illinois. It is not just a problem in Massachusetts, as we heard from the Senator from Massachusetts. The alternative minimum tax problem is a problem in Iowa as well.

Another point that my colleague brought up--I don't think anybody else has talked about the arcane issues of what we call PEPS and Pease. I don't want to say those things without explaining what they are. They were put in, I think, in the 1990 tax bill because nobody wanted to go over the 40-percent marginal tax rate. Yet they wanted to raise more money and have a higher marginal tax rate on a little higher income people.

What was done in that tax bill to camouflage a higher marginal tax rate was to leave the marginal tax rate at 39.6 percent, but for certain people above--for certain people of higher income--then phase out a lot of the exemptions that every other taxpayer can use and effectively raise the marginal tax rate--I do not know for sure, around 42 percent--maybe people who were involved in subchapter S corporations, maybe even a marginal tax rate around 45 or 46 percent. I am not sure exactly what those percentages were.

But the idea was the terms ``PEPS'' and ``Pease'' were put into the Tax Code to camouflage higher marginal tax rates by making it look like nobody ever paid a tax rate above 39.6; whereas, the fact was a lot of taxpayers got hit at a marginal tax rate above 40 percent--in some cases quite a bit above 40 percent.

I am very troubled by the comments of my colleague regarding PEPS and Pease because they are hidden in the marginal tax increase that affects millions of Americans, including thousands of Iowans. We have 32,906 Iowans that are hit by the Pease part of the Tax Code on their returns. And we have 14,000--almost 15,000--Iowans that are hit by what we call the PEPS part of the Tax Code on their returns.

If somebody tells me that these are tax cuts for the millionaires, let me tell you, I know that we don't have 32,900-plus, or 14,900 millionaires in my State of Iowa.

So we are talking about camouflaging the Tax Code to raise the marginal tax rate on a lot of middle-income Americans.

That was done in the 1990 tax bill. Starting this year, under the 2001 tax bill, these are gradually going to be phased out.

I think it is truth in taxing, truth in packaging, that if you have a marginal tax rate of 35 percent, it ought to be a marginal tax rate of 35 percent. And you shouldn't remove a lot of exemptions from a certain number of people to raise it up to 40 or more percent. If you want to tax people that high rate of taxation, you ought to have the guts to do it.

We took those camouflage things out of the Tax Code because we wanted a marginal tax rate of 35 percent which was transparent, with no hidden additional taxes.

Now it is said that we are trying to benefit millionaires through this, when 33,000 and 15,000 people--that would be 48,000 people in my State--are being hit by those taxes.

To listen to my colleagues, you would think that PEPS and Pease was paid only by millionaires. Nothing could be further from the truth. PEPS and Pease hit millions of families, two-income families that are struggling to pay their mortgage, as most Americans do, struggling to send their children to college, as most families do, or people who want to contribute to their churches and charities, as most middle-income Americans do.

In fact, the families hit by PEPS and Pease are very often the same families hurt by the AMT that my colleague was expressing so much concern about.

PEPS and Pease is bad tax law. It is dishonest tax law. It complicates the Tax Code. It hurts families and discourages charitable giving. It is bad tax law that needs to be shown the door.

We did that in the 2001 tax bill, truth in taxing, and somebody is finding fault with it. It isn't a millionaire tax. Keeping PEPS and Pease is a ``Full Employment for Accountants Act'' because of that complicated Tax Code, and the people who have to deal with it are going to hire more accountants to accomplish the goal that we have.

We have heard from many Senators today, singing the old song that the problem of the deficit before us, the budget deficit, is because we cut taxes. The tax cuts that have brought about our economic growth and created millions of jobs is good policy. I don't expect anybody to accept Senator Grassley, the Senator from Iowa, making that statement. There is no one with better credibility on economic and tax policies than Chairman Greenspan. And he has made it very clear that the 12 quarters of economic growth that we have had, creating 4.6 million new jobs, and a higher rate of growth than we had even during the 1990s--and most of my Democrat colleagues would think the 1990s was the best economy you could ever have. But in fact, the economic growth of the last 12 quarters is higher than the average growth we had during the previous administration. Chairman Greenspan said that the tax cuts are responsible for this growth.

To get back to the reality of deficits, it is caused by record spending. It is done by Republican Congresses or Democratic Congresses, whether we have a Democratic President or a Republican President. Spending beyond our means has caused our budget deficit problem.

Because of the tax cuts, revenues are way up--record highs projected.

Chairman Greenspan gives Congress credit for the tax cuts of 2003 bringing about the best economic growth we have ever had and which has resulted in $270 billion more coming into the Federal Treasury from income taxes in 2005 than we had in 2004; in fact, so much beyond projection that we had $70 billion more coming in throughout 2005 than we even thought we would have coming January 1, 2005.

The answer is not to raise taxes and hurt our economy. The answer is to do something on the spending side of the ledger.

We can say, after the vote in the House of Representatives this very day by a 2-vote margin, they passed our budget reconciliation bill, saving $39.6 billion over the next 5 years that Congress would have otherwise spent if we had not passed that measure. We didn't get any help from the other side of the aisle on getting this budget reconciliation through.

That came from the fiscal responsibility of people on this side of the aisle.

Whether it is tax cuts, spending cuts, tax increases, whatever the issue might be, if you listen to your people in town meetings--and I only have the opportunity to listen to Iowans in my town meetings because I don't represent anyplace else in the country--I know I don't have people coming to me and saying: I am undertaxed, tax me more. But I surely have people come to my town meetings and saying: You guys are responsible for your spending there in Washington, DC. Get your spending down.

I yield the floor. I suggest the absence of a quorum.

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