For the first time in many years, our nation ran an annual budget surplus under the last 3 years of the Clinton administration. These surpluses allowed us to reevaluate our tax structure and provide appropriate tax relief.
As I evaluated a wide variety of proposals for tax relief, I was guided by three principles:
1. Our tax system must be fair, and all Americans should share in tax relief 2. Any tax relief package must not lead the nation back to deficit spending 3. Any tax relief package must not threaten the future of Social Security and Medicare.
I strongly supported a legislative proposal that would have cut income tax rates in a more fiscally responsible way and would have done a better job of targeting tax relief to average working families and individuals. This proposal would have provided a rebate of payroll taxes, to ensure that all taxpayers received relief. In addition, it fully protected the Social Security and Medicare surpluses while setting aside sufficient resources for investments in education and a Medicare prescription drug benefit. Unfortunately, that proposal was defeated.
I voted against the President's $1.35 trillion tax cut proposal because it violated all of these principles.
First, that tax relief bill--which became law in early 2001-- left out millions of Americans who pay payroll taxes, but not income taxes, while giving over 38% of the total tax relief to those with incomes in the top 1%--people with a minimum annual income of over $373,000. The average income of people in the top 1% is over $1.1 million per year. The proposal gave the very wealthiest Americans more than their fair share of relief, while shortchanging those with lower incomes.
Second, that tax cut bill, threatened our ability to shore up the Social Security trust fund for future generations, and could make it impossible to provide a prescription drug benefit under Medicare for the millions of baby boomers who are expected to retire soon.
Third, the magnitude of the tax cut will make it difficult to keep the federal government from reverting back to deficit spending and will prevent us from paying down the national debt. It will also thwart our ability to meet today's challenges and respond to unforeseen emergencies.
Even before the terrorist attacks on September 11, 2001, the American economy was in the midst of a gradual decline: unemployment had risen to 4.9 percent and the previous quarter's economic growth fell to just 0.1 percent. Since then we have entered a recession. Now, as our nation faces terrorist attacks, a war, and an economic recession, our ability to address these needs without significant deficit spending is virtually impossible.