Conference Report on H.R. 4297, Tax Increase Prevention and Reconciliation Act of 2005

CONFERENCE REPORT ON H.R. 4297, TAX INCREASE PREVENTION AND RECONCILIATION ACT OF 2005 -- (House of Representatives - May 10, 2006)

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Mr. HOLT. Mr. Speaker, I rise in opposition to the tax reconciliation bill. Today's tax budget reconciliation bill will give the average American family an average of $10 per year from the extension of this tax benefit, or about enough to cover 3 gallons of gas. They will receive no benefit from the extension until 2009. Despite the popular GOP rhetoric about the large percentage of Americans that benefit from the rate reduction, the average American family's share of the total tax cut is approximately 2 percent.

Taxpayers with annual incomes greater than $10 million will receive approximately $500,000 in tax reductions per year.

While I do believe we need to create a fix to the Alternative Minimum Tax problem, today's bill just pushes off the problem by another year. I have voted numerous times in favor of AMT relief far larger than the provisions included in the conference report. The conference report has limited relief that only applies in 2006, but protects dividend and capital gains benefits through the close of 2010.

We are paying for this $70 billion tax cut by deep cuts of $39 billion over 5 years in programs like Medicaid and child support enforcement. The other $31 billion will be added to the debt.

Medicare funding was cut by $6.4 billion; the social security index by $732 million. In New Jersey alone three thousand mothers will be dropped from the Women, Infants, and Children (WIC) program, which helps mothers care for their babies before and after birth. Four hundred children in New Jersey currently attending Head Start will be cut out of this important childhood education and development program. More than 3,200 low-income and disabled people will be cut from Section 8 housing vouchers, all in New Jersey alone.

They have also made a college education more expensive. Cuts--more than $12.76 billion--to federal student financial aid were made by increasing rates that students pay, charging students more fees on their loans, and reductions in subsidies to lenders. This is the largest cut in history in student loans. The result will be nearly $8 billion in new charges that will raise the cost of college loans--through new fees and higher interest--for millions of American students and families who borrow to pay for college. For the typical student borrower, already saddled with $17,500 in debt, these new fees and higher interest charges could cost up to $5,800. Once again, New Jersey families were hit--over 125,000 college students in New Jersey will be affected.

Today's tax bill cuts $70 billion in taxes and the reconciliation bill cut $39 billion in spending, so how will the other $31 billion be made up? By adding to our national debt, putting the burden on our children and grandchildren. According to the Treasury Department, major foreign holdings of U.S. Treasury securities total $2.18 trillion. Currently, China is the world's second-largest buyer, exceeded only by Japan. Furthermore, China's purchases of U.S. government securities have exploded by more than 211 percent since the beginning of 2001 and now total $311 billion.

This situation is dangerous because it is a major way that we are funding the federal government--by selling our debt to the Chinese. In 1980, 17 percent of the federal debt held by the public was in foreign hands. By 2006, 45 percent of the debt held by the public was owned overseas. Unfortunately, this trend seems to be increasing rapidly. During the past year, approximately 90 percent of the debt we have accumulated has been purchased by foreign banks, individuals and governments.

The high level of foreign holdings of U.S. securities could have a debilitating impact on our economy and foreign policy. If China threatened to sell large volumes of U.S. Treasury securities, it could easily fuel higher inflation and put pressure on the Federal Reserve to increase interest rates, putting our economy at risk for a large-scale recession.

Mr. Speaker, I ask my colleagues to oppose this tax reconciliation bill, because we can do better.

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