Date: 1981-07-10
Speaker: ROBERT C. BYRD (democrat)
Chamber: S

Mr. President. the Senate will soon have an opportunity to vote. once again. on the KempRoth tax plan. In 1978. the Senate rejected the KempRoth plan when It was offered to the 1978 Tax Reduction Act. In June of 1980. the KempRoth tax cut was offered. together with the 1053 depreciation plan. as a floor amendment to a debt limit extension bill. The Senate rejected KempRoth then as an illconceived. unfair. and reckless way to reduce Individual taxes. I recognize that the arithmetic in the Senate has changed somewhat since lnst year. But I would remind my colleagues that opposition to KempRoth has not always been a partisan matter. Many responsible Republicans as well as Democrats have warned that large. acrosstheboard. multiyear tax cuts threaten the stability of financial markets. Not only has Vice President GEoaoz BUSH referred to KempRoth as "voodoo economics." but Senators may recall that last year. when the Finance Committee was markIng up its tax proposal. KempRoth was not even offered by Its principal Senate sponsor. the Senator fronm Delaware. There are those who will argue that the bill reported by the Finance Committee ii much Improved from that originally proposed by the President. I would concur with that assessment. but simply because KempRoth has been "sugarcoated" with proposals such as marriage penalty reductions. estate tax changes. child care credits. reduction of the top rates on unearned Income from 70 to 50 percent. and increased savings Incentivesall of which were originally Democratic proposalsno one should miss the point that this bill remains KempRoth in sheeps clothing. It is still a multiyear. acrosstheboard. large tax cut. now of 25 percent rather than the original 30 percent. but clearly the same unfair and reckless concept it always has been. Whenev.er major debate ensues on a portion of the administrations economic program. one is bound to hear about the mandate of the 1980 Presidential election. I spend a great deal of time In West Virginia. talking to my constituents there. I have yet to hear a chorus of voices saying that they believe that the 1980 election was a mandate for a tax cut which. after subtracting the Impact of inflation and social security tax Increases. would distribute about 60 percent of Its benefits to tax payers earning $50.000 or more. I have met no one in West Virginia who Would argue that by 1984. after subtracting for the affect of inflation and social security. people earnIng under $20.000 a year should be payIng more taxes while people earning more .S7446 C01 than $20.000 a year should be paying less. After all. Mr. President. who needs the benefits of the tax cut if not the of fice worker and the factory worker and the cab driver and the department store employee and the mine worker and the great mass of people in this country who are struggling desperately to make ends meet? Democrats will offer amendments to the tax bill to help the hardpressed middle and working classes In this country. I hope that my Republican colleagues will support our efforts. KempRoth . and Its unfair distribution of a very large tax cut. was a campaign device. The campaign ended 8 months ago. It Is time that we examine this tax cut on its merits. And I believe that any dispassionate analysis of the distributional affects of the KempRoth tax cut will show that an effort should be made to give more of the benefits of the tax cut to the people who really need it. Senators BRADLEY. HART. KENNEDY. and others have been developing proposals which would accomplish this end. Yesterday. according to the Washington Post. the distinguished chairman of the FInance Committee. Mr. DOLE. IS quoted as saying that compromising with the Democrats on tax relief for middleand lbwincome Americans "would not do violence to Reagans tax plan.". I believe Mr. DOLE Is quite right In his analysis and In his statement. if It Is a correct statement. But a White House official is quoted as saying that the administration wants to avoid "any sign of weakness."1 which would encourage compromise. What kind of a plan would suffer from a fairer distribution of the tax cut? Why should an administration. which already has embraced tremendous changes In its original plan. suddenly plant its feet on the question of distribution? I commend the distinguished Senator from Kansas for his comments and his willingness to work for the best tax bill possible. I only wish that administration officials placed less weight on Images of victory and more weight on the national Interest In framing this tax -bill. But the fairness Issue Is not the only problem with KempRoth. It Is also an exceedingly reckless way to manage the Governments finances In an era of 20percent Interest rates and persistently high Inflation. What If the administrations rosy economic predictions do not work out? What If we have high Inflation and high Interest rates In early 1983? Can anyone reasonably predict the state of the economy in early 1983? Should we have another 10percent tax cut effective July 1. 1983 If we still have high interest rates. which have been brought on by a tight money Policy In combination with large deficits? Of Course we should not. But the KempRoth tax cut Is blind to economic. -reality. It Ignores the Possible state of the economy In future years. Therefore. an effort will be made by Senate Democrats to install a safety valve on the KempRoth Pressure cooker. We will attempt to insure that. if Interest rates and inflation have not fallen to the level Projected by the administration. the