Date: 1982-08-19
Speaker: ST GERMAIN (democrat)
Chamber: H

Mr. Speaker. given permission to revise and extend his remarks.) Mr. St GERMAIN. Mr. Speaker. after careful consideration I have concluded that the Tax Equity and Fiscal Responsibility Act is a compromise bill which. ultimately. will improve economic conditions by reducing the Federal deficit. Many provision of the legislation are controversial. but the bill clearly improves the equity of our tax system and eliminates some of the excesses of last years tax bill. For example. the legislation before the House today will: Create an emergency unemployment compensation program which will provide 6 to 10 weeks of additional unemployment aid for those who have exhausted current benefits. In Rhode Island. where unemployment reached as high as 10.3 percent this year. these benefits are crucial to the survival of many of my hard working constituents who have been idled by Reaganomics. Repeal safe harbor leasing provisions which allow large corporations to buy and sell tax breaks and thus avoid tax payment. Increase taxes paid by wealthy individuals. international oil companies. and insurance companies and eliminate preferential depreciation and contracting rules for businesses. Amend the industrial development bond program to insure the continued availability of a financial tool critical to Rhode Islands economic development. Alter the mortgage subsidy bond program to assist the housing industry and promote construction of multifamily rental housing. Focus the burden of cuts in the medicare program to hospitals and service providers rather than on elderly recipients of health care and encourage restraint on the growth of hospital costs. The new tax liability will fall most heavily on corporation. Corporations will pay 43 percent of the revenue raised. individuals will pay 17 percent. Approximately 80 percent of these revenues will come from improved collection of taxescollection of tax revenues already owed to the Federal Government. but iot now being paid. This is not a perfect bill. I introduced legislation specifically opposing the new withholding of tax on dividends and interest because it is both unwise and unnecessary. This will discourage savings. create mountains of paperwork for financial institutions. and hurt those dependent on their savings for income. I fought this proAugust A19. 1.982 posal In 1964. in the last administration in 1979. and again last year. This year. I have repeatedly sought a separate House vote on the new withholding proposal during consideration of the entire tax act. Under the parliamentary situation approved to considjer this legislation. it is not possible to obtain separate votes on the withholding issue. So. if we are to do what we must to help right the economy. some of the less attractive features of the bill will have to be accepted in the spirit of bipartisan compromise. With the prospects of a 1983 Federal deficit reaching $140 billion. the additional revenue raised by this legislation is essential to stop an economic disaster from becoming a fullfledged catastrophe. As chairman of the Banking. Finance and Urban Affairs Committee. the signs of the corrosive effects of the Reagan deficits on the American financial system and our countrys economic health are perfectly obvious to me. Already this year. 27 banks have failedthe highest number since 1940. Hundreds of thrift institutions have had to be merged. and loan losses at financial institutions are rising at a disturbing rate. The threat to our financial system from burgeoning deficits and the roller coaster interest rates that accompany them must be halted. The 1982 Tax Equity and Fiscal Responsibility Act will reduce future deficits. and therefore. despite its other prQvisions. must be passed. It is not enough to pass this tax act and reduce the deficit. We must understand how and why the Federal borrowing got out of control in the first place. Though the answers are not easy. they can be summarized quickly. The administrations 1981 Economic Recovery Tax Act cut taxes for the wealthy and business. and so dramatically reduced Government rev. enues that large deficits were inevitable. The spending cuts imposed by the administration were cruel. illchosen. illtimed. and nullified by increases in defense spending. The administrations high interest. tight money policies implemented by the Federal Reserve guaranteed a deep recession which. in turn. has added tens of billions of dollars to the sums government must borrow to meet its obligations. Passage of the 1982 Tax Equity and Fiscal Responsibility Act alone will not bring us out of a recession. That will require a wholesale reevaluation and repeal of much of the Reagan economic program. Passage of the 1982 Tax Act will reduce the deficit. however. and this is essential if we are to prevent our Nations economy from slipping even deeper into recession. The alternative to passing this new tax legislation is grim. If we do not raise revenues. we must cut more spending. The administration has declared that defense spending is sacrosanct. Congress has already cut billions from people programs but. unless this legislation is adopted. we will be forced to further reduce spending for human service programs. In Rhode Island this would mean more cuts in health services. more reductions in student aid. elimination of job training programs. reduced aid for handicapped. vocational. and bilingual education. more reduction in veterans benefits. and more cuts in environmental prptrction and energy development programs. This could also further reduce programs for senior citizens and add more burdens on them. In conclusion. Mr. Speaker. I want my vote for the 1982 Tax Equity and Fiscal Responsibility Act to be seen for exactly what it isan effort to bring deficits under control. to correct the imbalance of benefits under previous Reagan tax and spending programs. and to close some of the huge tax loopholes created in the 1981 act. and to avoid any further cuts in people programs and essential services. My vote Is not in support of the Presidents economic program. it is an effort to minimize its consequences.