DAILY DIGEST SENATE - SOCIAL SECURITY AMENDMENTS OF 1983

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85-00003R000200120004-9
• Release Decision: RIFPUB
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• Document Page Count: 44
• Document Creation Date: December 21, 2016
• Document Release Date: October 6, 2008
• Sequence Number: 4
• Publication Date: March 21, 1983
• Content Type: OPEN SOURCE

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Monday, March 21, 1983
Daily Digest
Senate
Chamber Action
Reatine Prscee+diags, pages S3453-S3546
Measures Introduced: Nine bills and two resolu-
tions were introduced, as follows: S. 865-873, S.
Con. Res. 19, and S. Res. 95.
rag. S3517
Measures Reported Reports were made as follows:
S. 126, to remedy alcohol and drug abuse, with
amendments. (S. Rept.. No. 98-29)
raa.53517
Measures Passed:
Extension of Certain Enlists sent Bonuses: Senate
passed H.R. 1936, amending title 37, United States
Code, to extend certain expiring enlistment and
reenlistment bonuses for the Armed Forces.
ran. x3345
Social- , Security Amendments of 1983: Senate con-
tinued consideration H.R. 1%u, o t the
consensus recommendations of the National Com-
mission on Social Security Reform, taking wtion on
additional amendments proposed thereto, as follows:
ft" sun
Adopted:
Heinz unprinted amendment No. 102, requiring
the Quadrennial Advisory Council to study and
make recommendations on the increase in the retire-
ment age and its effects on supplemental security
income, disability insurance, and unemployment
compensation programs. F "s S3479
Rejected:
(1) By 30 yeas to 61 nays, Bradley Amendment
No. 520, to provide disability benefits to persons
aged 62 and above who are unable to continue to
engage in their current occupation or employment.
Fe" $3472
(2) By 35 yeas to 57 nays, 2 voting present, Dole
unprinted amendment No. 104 (to Melcher unprint-
ed amendment No. 103), to delay implementation of
the withholding provisions on interest and dividends
income until January 1, 1984, provided, however,
that the delay shall take effect only if the average
prime interest rase charged by the Nation's ten larg-
est banks is 6 percent or less on June 30, 1983, and
that delay shall remain in effect only as long as that
average prime rate remains below 6 percent, and
providing for a $300 minimum for money market
deposit accounts.
Pow $ssm
Pending:
(1) Melcher modified unprinted amendment No.
103 (printed Amendment No. 531), to delay imple-
mentation of the withholding provisions on interest
and dividend income until Januay 1, 1984. (By 37
yeas to 58 nays, Senate failed to able the amend-
ment. )
r.a. s
(2) Dole unprinted amendment No. 105 (printed
Amendment No. 532) (to Mekcrer modified un-
printed amendment No. 103), to delay implementa-
tion of the withholding provisions an interest and
dividend income until January 1, 1984, provided,
however, that the, delay shall take etlfect only if the
average prime interest rate charged by the Nation's
ten largest banks is 8 percent or less on June 30,
1983, and that delay shalt teme n m effect only as
long as that average prime rate s+e:aaitis below 8 per-
cent, and providing for a $500 atinieutrt. for money
deposit accounts.
r.a. saso9
Appointment of Conferee: By unanimous consent,
Senator DeConcini was appointed as a conferee on
H.R. 1718, Emergency Jobs Appropriations, 1983,
replacing Senator Burdick.
ran. sum
Executive Reports of Committees: Senate re-
ceived the following executive reports:
Ex.. W, 96-1, Treaty of Friendship Between the
Government of the United States and the Govern-
ment of Tuvalu. (Ex. Rept. No. 98-5)
Ex. A, 96-2, Treaty of Friendship Between the
Government of the United States and the Govern-
ment of Kiribati. (Ex. Rept. No, 96-6)
Ex. P, 96-2, Treaty Between the United States
and the Cook Islands on Friendship and Delimita-
tion of the Maritime Boundary Between the United
States and the Cook Islands. (Ex. Rept. No. 98-7)
Treaty Doc. 97-5, Treaty Between the United
States and New Zealand on the Delimitation of the
Maritime Boundary Between the United States and
Tokelau. (Ex. Rept. No. 98-8)
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CONGRESSIONAL RECORD
STANDING COMMITTEES OF THE HOUSE Committee on Howe Administration
Committee on Agriculture Messrs. Hawkins (chairman), Annunzio, Gaydoa,
Messrs de Is Gatza (chairman), Foley, Jones of Jones. of Tennessee, Minish, Rose, Swift, Coyne,
North Carolina. Jones of Tenanessee, Brown of Cali- Foley, Ms. Oskar, Messrs. Coelho, Bates, Frenzel,
fornia, Rose Weaver, Harkin, Bedell, English, Pa- Dickinson, Badham, Gingrich Thomas of Callfor.
netta, Hucaaby, Glickman, Whitley, Coelho,
Daschle, Stenholm, Volkmer, Hatcher, TallOn, ~. Mrs. Martin of Illinois, and Mr. Chandler.
CS}teaogrgaerrs, Durbin, Evans of Illinois, Thomas o~ ! Committee on Interior and insular Affairs
of Missouri LMPenny, , Hopkins MAdiffaM JHansen of Ido me=M Udall (Chairman), Burton of California,
Stanaeland, Roberts, Emerson, Skeen, Morrison of Kasen, Selberling, Won Pat, Weaver, Florio, Sharp,
Washington, Gunderson, Evans of Iowa, Chapple, Markey, Corrada, Murphy, Rahall. Vento, Huck-
Committee on Appropriations
Messrs. Whitten (chairman), Boland, Natcher,
Obey,, Rf Stokes Addabbo
, BBeviLong of l1. ChappellAlAlexa ender,
Murtha, Trrailer, arl , W Mrs. Boggs,
High-
toDicks, Dixn, McHugh. o Hefner,
ton fner AuuCooin, A ,
Wkins, Gray, Dwyer Ratchford, Boner of Ten-
aeoee, Hoyer, Carr, D1{rasek, Coate McDade, Ed-
wards of Alabama, Myer Robinson B[tller of
Ohio Coug~a, Young of Florida, Kemp, Regula,
OBrten, Mrs. Smith of Nebraska, Messrs. Rudd,
PurselL Edwards
Lewis of oolahonu, Liv ton, Green,
rata, Porter. and Rogers.
Committee on Armed Services
Messrs. Price (chairman), Bennett, Stratton,
pin, Mrs.
N1Schroeder, Messs. me ,t s
tto.
Mrs. Byron, Messrs. Mavroules, Hu Sltel n,
I.eath~aas, McCrady, Fogliessr Dyson HRertelay
Of Mtsy BoutatuaOrdrSsM~~ss Slslaty
Dickinson, Whttehur t, Spence, Mrsle Hox It fMessrs.
Hillis, Badham. Stump, Courier, Hopki s, Davis,
Kramer
of New Hunter. Hartnett Kssich, , Daniel B. Crane, Martin
Cork, and
Committee on Banking Finance and Urban Affairs
Messrs. St Germain (chairman) Gonzalez,
Miniah, Annunzio, Mitchell, Fauntroy }Leeaal1,, Patter-
son, Hubbard, LaPalce D'Amours, ~Lundine, Ms.
Oskar, Mass. Vento, harnand, Garcia, Lowry of
Washington, Schumer, Frank, Patman, Coyne,
Roemer, Lehman of Califoe~la Morrison of Con-
necticut, Cooper, Kaptur, Erdreich, Levin of Michl-
gan, Carpe ,hTom essWylie. MccKi ey. of
I
1'atrls McCollum. Wortley, Mrs. Roukems Meals
of California, Bereuter, Dteler of Califor-
nia, Hiler, Ridge, and Bartlett.
Committee on the Budget
Messrs. Jones of Oklahoma (chairman), Wright,
lSolars Wirth, Panetta, Gephardt, Nelson, Aspire,
Hefner, Downey of New York, Donnelly. Lowry
of
Washi ngton Derrick. Miller of California, Gray,
Williaam of Montana, Ms. Ferraro, Messrs. Wolpe
Frost Faslo, Latta, Shuster, Frenzel, Kemp Beth-
une, Otamm, Mrs. Martin of Illinois, Ms l'ledler,
Messrs. Loeffler, Gradison, and Mack.
Committee on the District of Columbia
Mears. Dellum, (chairman Stark, Leland, Gray, Barnes, )byma~lly, McKiMazzo
nney
Parris, Bliley, and Mrs. Holt.
Committee on Education and Labor
Mesas. Perkins (chairman), Hawkins Ford of
Mich n, Burton of California, Gaydos, Clay,
SAndrews of North Car101na, Simon, Miller
of ornia, Murphy, Correda, Kildee, Williams of
Montana, Kogovsek, Washington, Martinez, Owens,
Harrison, Boucher, Erlenborn , Jefforde,
k Mee rsol Gunderson Missouri, Petri, Rou.
and -.
Committee on Energy and Commerce
Messm Dingell Waxman, Wirth, Sharp, Florio, Mkey Ottinger,
Walgrea Gore, Ms. Mikulski, Messrs. Swift, Leland,
Shelby Mrs. Collins Messrs. Synar, Tauzin,
Wydea, Ralph M. Ball, Fckart, Dowdy of Missis-
sippi, Richardson, Slattery, Slkotati, Bryant Bates,
Broyhill bent, Madigan Moorhead, Rinaldo, Cor-
coran, Dannemeyer, Whittaker, uke, Ritter,
Costs, Bliley. Fields. Oxley, and Nielson.
Committee on Foreign Affairs
Messrs. Zablocki (chairman), Faecell, Hamilton,
Yatron, Solars, Bonker, Studds, Ireland, Mica,
Barnes, Wolpe. Crockett, OeJdenson
Lantos, Kostmayer, Torricelll, Smith of Florida,
Berman, Reid Levine of California, Feigtran, Weiss
Garcia, Broomfield, Winn, Gilman Iagoma lino,
Pritchard, Leach of Iowa, Roth, Bars. Snows,
Messrs. AL Hyde
, Solomon, Bereuter, Slljander, and
Zscha
Committee on Government Operations
Messrs. Brooks (chairman), Fascell Fuqua, Con.
yers, Mrs. Collins, Messrs English, Levitas,.
Waxman, Weiss, Synar, Neal
Lantos Coleman of Tease Wise Mm BBo fixer
Messrs. M1
&.X ctr~g~n, Levine of Cali-
fornia, Owens f owms spratt ells Erdreich
Horton, Itrlenborn, Kindne s, Walker, VVillians of
Ohio. Clinger, McGrath, Gregg, Burton of Indiana,
McKernan, Lewis of Florida, McCandless, Craig,
and -,
Byron, Messrs. de Lugo, OeJdenson, Patman, Kost-
mayer, Moody, Mofohan, Clarke, McNulty,
Lehman of California, Lujan, Young of Alaska, La-
gomarsino, Marriott, Marlenee, Cheney, Pashayan,
Craig. Brown of Colorado, Denny Smith, Hansen of
Utah, Emerson, McCaig, and Mrs. Vucanovich.
Committee on the Judiciary
Messrs. Rodin (chairman), Brooks, Kastenmeier,
Edwards of California, Conyers, Selberling, Mas-
soli, Hughes, Sam B. Hall, Jr., Synar, Mrs. Schroe.
der, Messrs. Glickman, Washington, Frank, Crock-
Schumer. Morrison of Connecticut, Feighan,
Smith of Florida, Berman, Fish, Moorhead, Hyde,
Kindness, Sawyer, Lungren, Sensenbrenner, McCol-
lum, Shaw, Oekas, and DeWine.
Committee on Merchant Marine and Fisher es
Messrs. Jones of North Carolina (chairman),
Biaggi. Anderson, Breaux, Studds, Hubbard,
Booker, D'Amours, Oberstar, Hughes, Ms. Mi-
kulski, Mass. Hutto, Tauzln, Foglietta, Sunia,
Hertel of Michigan, Dyson, Lipinski, Borskt,
Carper, Bosco, Tallon, Thomas, of Georgia, Mrs
Boxer, Messrs. Ortis, Donnelly, Forsythe, Snyder,
Pritchard, Young of Alaska, Lent, Davis, Carney.
Shumway, Fields, Mrs. Schneider, Mass Sawyer,
Bateman, McKernan, and Franklin.
Committee on Post Office and Civil Service
Messrs. Ford of Michigan (chairman), Udall,
Clay, Mrs. Schroeder, Maas, Garcia, Leland, Al-
bosta, Yatron, Ms. Oskar, Mrs. Hall of Indiana,
Messrs. Slkorskl, Daschle, de Lugo, Schumer,
Bosco, -. Taylor, Gilman, Corcoran, Courter,
PPashhayan, Dannemeyer, Daniel B. Crane, Wolf, and
Mack.
Committee on Public Works and Transportation
Meals Howard (chairman), Anderson, Roe,
Breaux, Mineta, Levitas, Oberstar, Nowak, Edgar,
Young of Missouri, Raha)1, Applegate, Ms. Ferraro,
Messrs. Donnelly, Albosta, de Lugo, Savage, Sunia,
Mrs. Hall of Indiana, Messrs. Bosco? McNulty,
Moody, Borskl, Kolter, Valentine, Towns, Lipinski,
Andrews of Texas, Vandergriff, Rowland, Clarke,
Wine, Snyder, Hammerschmidt, Shuster, Stange-
land, Gingrich, Clinger, Molinari, Shaw, McEwen,
Wolf, Petri, Daub. Mrs. Martin of Illinois, Mass
Weber, Robert F. Smith, Sundquist, Mrs. Johnson,
and Mr. Packard.
Committee on Rules
Messrs. Pepper (chairman), Long of Louisiana,
Moakley, Derrick, Bellenson, Frost, Bonior of
Michigan, Hall of Ohio, Wheat, Quillen, Latta,
Lott, and Taylor.
Committee on science and Technology
Mass. Fuqua (chairman), Roe, Brown of Califor-
nia, Schauer, Ottinger. Harkin, Mrs. Bouquard,
Messrs Walgren, Glickman, Gore, Young of Mis-
souri, Vollmer, Nelson of Florida, Lundine, Ralph
BE Hall, McCurdy, Dymally, Simon, Mineta,
Durbin, Andrews of Texas, MacKay, Valentine,
Reid Torriceui, Boucher. Winn. Lufan, Walker,
Carney, Sennenbrenner, Gregg, McGrath, Skeen,
Mrs. Schneider, Messrs. Lowery of California,
Chandler, Bateman, Boehlert, McCandless, and
Lewis of Florida,
Committee on Small Business
Messs. Mitchell (chairman), Smith of Iowa, Ad-
dabbo, Gonzales, LsPalce , Bedell, Nowak, Luken,
Ireland Skelton, Stenholm, Massoli, Mavroules,
Hatcher, Wyden, Ec kart, Savage, Roemer, Sisisky,
McCloskey, Torres, Vandergrlff, Cooper, Olin,
Britt, Ray. McDade, Conte. Broomfield Williams of
Ohio, Hiler, Weber, Daub, Smith of New Jersey,
Dreier of California, Molinari, Roth, Chapple,
Boeblert, Billrakis, and -,
Committee on Standards of Official Conduct
Messrs Stokes (chairman), Rahall, Jenkins,
Dixon, Fazio, Coyne, Spence , Conable, Myers, For-
sythe, Brown of Colorado, and Hansen of Utah.
Committee on Veterans'Affairs
Messrs. Montgomery (chairman), Edwards of
California, Edgar, Sam B. Hall, Jr., Applegate,
Leath of Texas, Shelby. Mica, Daschle, Dowdy of
Mississippi, Martinez, Evans of Illinois, Ms. Kaptur,
Messrs. Harrison, Mollohan, Penny, Staggers, Row.
land, Slattery, Bryant, Richardson, Hammer-
schmidt, Wylie, Hill's, Solomon, McEwen, Smith of
New Jersey, Denny Smith, Gramm, Burton of Indi-
ana, Sundquist, Bilrakis, and Mrs. Johnson.
Committee on Ways and Means
Messrs. Rostenkowski (chairman), Gibbons,
Pickle, Rangel, Stark, Jones of Oklahoma, Jacobs,
Ford of Tennessee, Jenkins, Gephardt, Downey of
New York, Heftel of Hawaii, Fowler, Guarini, Shan-
non, Russo, Pease, Hance, Matsul, Anthony, Flippo,
Dorgan, Mrs. Kennelly, Messrs. Conable, Duncan,
Archer, Vander Jagt, Philip M. Crane, Frenzel,
Martin of North Carolina, Schulze, Gradison,
Moore. Campbell, and Thomas of California.
UNITED STATES COURT OF APPEALS FOR
THE DISTRICT OF COLUMBIA CIRCUIT
(Washington, D.C. 20001, Phone [phone])
Spottswood W. Robinson III-Chief Judge
Circuit Judges
James Skelly Wright Patricia M. Wald
Edward Allen Tatum Abner J. Mlkva
George E. MacKinnon Harry Edwards
Roger Robb Ruth Bader Ginsberg
Malcolm R. Wilkey
Senior Circuit Judges
David L. Bazelon Carl McGowan
UNITED STATES COURT OF APPEALS FOR
THE FEDERAL CIRCUIT
(National Courts Building, 717 Madison Place NW.,
Phone [phone])
Chief Judge-Howard T. Markey, of Illinois, Hyde
Park, 4141 North Henderson Rd., Arlington, Vs.
22203.
Judge-Daniel M. Friedman, of New York, 3249
Newark St., NW. 20008.
Judge--Giles S, Rich, of New York, 4949 Linnean
Ave., NW. 20008.
Judge-Oscar H. Davis, of New York, 1101 Third
St., SW. 20024.
Judge-Philip Nichols, Jr., of Massachusetts, 2801
New Mexico Ave., NW. 20007.
Judge-Phillip B. Baldwin, of Texas, Route 1, Box
407, Avinger, Tex. 75630.
Judge--Shiro Kashiwa, of Hawaii, 2510 Virginia
Ave., NW. (Watergate East) 20037.
Judge-Marion T. Bennett, of Maryland, 3715 Car.
diff Rd., Chevy Chase, Md. 20815.
Judge-Jack R. Miller, of Iowa, 5417 Kirkwood Dr?
Bethesda, Md. 20818.
Judge-Edward S. Smith, of Maryland, 3708 Taylor
St., Chevy Chase, Md. 20815.
Judge-Helen W. Nia, of Maryland. 0804 River-
crest Ct., Bethesda, Md. 20816.
UNITED STATES DISTRICT JUDGES
District of Columbia
(Washington, D.C. 20001, Phone [phone])
Chief Judge John Lewis Smith, Jr.
District Judges
William B. Bryant Charles R. Richey
Oliver Gasch Thomas A. Flannery
Aubrey E. Robinson, Jr. Harold H. Greene
Gerhard A. Gesell Louis F. Oberdorfer
John H. Pratt John Garrett Penn
June L. Green Norms Holloway Johnson
Barrington D. Parker Joyce Hens Green
U.S. COURT OF MILITARY APPEALS
(Fifth and E Streets NW,, Phone [phone])
Chief Judge ....,. ................. Robinson O. Everett
Judge ................................ ... William H. Cook
Judge .................................. Albert B. Pletcher. Jr.
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CONGRESSIONAL RECORD - SENATE March 21, 1983
sions-in professions in which manual
labor and occupational strain and oc-
cupational safety are very real threats
to their physical well-being-if they
choose to retire at age 62, they should
have the same rights and benefit
levels as they do under current law
prior to the proposed changes in the
social security retirement age. That is
all this amendment says. It will be
characterized by some as an enormous
new disability program. It is not. It
simply holds harmless those people
who are out there today who would
qualify for early retirement and get 80
percent of the social security benefit.
I say let us not cut him back arbi-
trarily to 75 percent of their full bene-
fits. Why 75? Why not 85, why not 70,
why not 80? What is the rationale for
75 percent?
Mr. President, this amendment is, I
think, a prudent amendment because
it has a much smaller eligibility pool
than the disability program. There are
about 100 million workers in - the
United States today, and all are poten-
tially eligible for disability benefits,
but the eligibility pool for people
helped by this amendment is not all
100 million workers. It is, rather,
about 6 million workers-those people
who are between the ages of 62 and 66.
So this is not a new large disability
program that 100 million people will
be eligible for. This is a very narrow
program that attempts to hold harm-
less those people who themselves have
had very dangerous work experiences
and deserve the same retirement bene-
fit as they would receive under current
law.
Another point, Mr. President, is that
the cost per award for this new pro-
gram is significantly smaller than the
regular disability program. The aver-
age disability worker with a family
who qualifies for disability insurance
now receives about $841 per month.
For our program, the average increase
over the regular OASI benefit that a
worker with a spouse would receive is
about $35 to $50 a month. That is all.
It is not a new disability program cost-
ing an additional $800 a month per
worker. It says to those 6 million
workers between the ages of 62 and 68
that if they, indeed, are in a line of
work that is adverse to their health,
they should have the right to get the
same benefits as they would under
current law, which means an addition-
al $35 to $50 a month.
Mr. President, to say to someone
who has had a very dangerous occupa-
tion, someone who has worked in a
steel mill for 30 years, or someone who
has worked in an asbestos factory or in
a coal mine, or whatever, "Yes, you
can retire at age 62 but if you retire,
you can only get 75 percent of your
benefit instead of 80 percent," I think,
is the wrong message to send to a large
number of American workers.
Mr. President, the growth in the dis-
ability program, indeed, has exceeded
expectations and the question has to
be asked: Will the same thing happen
to this program? Mr. President, I say
no for two reasons. First, we have a
smaller eligibility pool-not 100 mil-
lion workers eligible but only 6 million
workers eligible. And, second, the cost
per award is much smaller-not $841
per month but $35 to $50 per month.
Mr. President, we are legitimately
addressing a very ciritical issue-the
long- and short-term stability of the
social security system. We should not
neglect what a majority of the mem-
bers of the Social Security Commis-
sion itself said about the need for this
kind of amendment. Mr. President, a
majority of the members of the Social
Security Commission, including Sena-
tors DoLz and Hssxz, recommended
that the retirement age be raised, that
is true. In addition, these same mem-
bers recommended a liberalization of
the disability program for those aged
62 or above, and I quote from the
Commission report:
Disability benefits are now available
under somewhat less stringent definitions
for those age 60 to 64. However, because
some workers, particularly those in phys-
ically demanding employment, may not
benefit from improvements in mortality and
be able to work longer, we assume that the
disability benefits program will be improved
prior to the implementation of this recom-
mendation to take into account the special
problems of those between age 62 and the
normal retirement age who are unable to
extend their working careers for health rea-
sons.
Mr. President, that is not the Sena-
tor from New Jersey speaking. That is
not the Senator from Louisiana speak-
ing. That is not the Senator from Iowa
speaking. That is a majority of the
members of the Social Security Com-
mission, composed of that wide spec-
trum of American political life, that
came together and gave us a solution
in very difficult political times to the
threat that exists out there to our
social security system. The recommen-
dation I have just read comes from the
Commission, not from any one Sena-
tor, and it says very clearly, "Let us do
something about those who will have
their benefits reduced if they, indeed,
fall under, as they will if we do noth-
ing, this change in the retirement age
of the social security system."
So, Mr. President, it finally comes
down to a question of timing- Do we
pass an amendment such as this that
clearly expresses the intent of Con-
gress to hold harmless these older
workers in ill health who are in dan-
gerous professions? Do we provide for
these people the right for an early re-
tirement benefit or do we simply com-
mission a study and say to these
people, "Your day will come in the
future. Maybe."
Mr. President, I think that my con-
clusion is quite clear. It is important
for us to include this amendment in
this bill to say.to that group of Ameri-
cans that they still count, and that
they will be protected. Mr. President, I
prefer to act now and tell these people
out there who are working that we are
going to be able to hold them harmless
against charges in the retirement age.
The Secretary still has 17 years to
devise regulations that will answer the
worry of every Senator about the pos-
sibility that this program might be
abused, which, as I have said, because
of a smaller eligibility pool and a
smaller increase in benefit, is highly
unlikely.
Mr. President, I do not think that
that is too much to ask, and that is,
indeed, why I have offered this
amendment. It comes again at the
time when we are proposing to raise
the retirement age from 65 to 66-the
House has raised it to 67-and, indeed,
to reduce early retirement benefits.
The amendment is quite simple, and I
hope that the Senate will see its merit
and adopt it.
Mr. President, I ask unanimous con-
sent that the following individuals be
added as cosponsors: Senators HOLL-
INGS, SASSER, HART, GLENN, and BIDEN.
Mr. SASSER. Mr. President, I rise
today to offer my support for the
amendment offered by the distin-
guished Senator from New Jersey (Mr.
BRADLEY). The issue of raising the re-
tirement age is one which certainly
cannot be taken lightly. The amend-
ment offered by the Senator from New
Jersey sufficiently addresses serious
inequities which would exist if the re-
tirement age were simply raised with-
out regard for those who find that
they no longer can work past a certain
age.
I have had grave reservations over
raising the retirement age above 65 be-
cause of its adverse effects upon the
early retirement benefit formula. For
many workers, particularly those in
stressful or physically demanding oc-
cupations, it is important to keep the
option to retire early open. Very
simply put, there are many individuals
who cannot work past the age of 62.
These individuals must be afforded
protection from an unwarranted re-
duction in early retirement benefits.
The Bradley amendment provides this
protection.
Supporters of raising the retirement
age point to demographics: longer life
expectancy rates and labor supply
shortages in the coming century.
These statistical calculations, however
accurate, fail to take into account
workers with poor health, low skill
levels, and inconsistent work histories
who will be unable to work or will be
unable to find employment when they
are older. The Bradley amendment
would establish a new program that
will allow a limited group of workers
aged 62 up to the "normal retirement"
age to qualify for "disability retire-
ment benefits." Workers qualify for
these benefits if they can demonstrate
inability to perform the major occupa-
tion they had held during the 10-year
period before the onset of their dis-
ability. The costs of the program are
minimal, estimated to be 0.04 percent
of payroll, and benefits would be paid
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March 21, 198J' CONGRESSIONAL RECORD - SENATE S 3475
out of the Old-Age and Survivors In-
surance Trust Fund.
Without this amendment, I believe it
would be very hard for many of us
here to support raising the retirement
age to conform to the Senate Finance
Committee recommendations. Thus, I
urge my colleagues to join me in lend-
ing support for this needed amend-
ment.
THa DIBMIIdTY a=TlaallalT sAISTY NET
? Mr. GLENN. Mr. President, I am
please to cosponsor - the disability re-
tirement amendment offered by the
Senator from New Jersey (Mr. BRAD-
LEY), which would all a measure of
fairness to the provision of the social
security bill which raises the retire-
ment age for full benefits.
if we increase social security's retire-
ment age, we need to have a safety net
for older persons, who for health rea-
sons, cannot continue working. This
amendment provides that a limited
number of workers between the axes
of 62 and 66 would receive a "disability
retirement" benefit if they are unable
to continue their jobs because of poor
health. These benefits would be paid
according to the current law retire
ment benefit formula.
The disability retirement amend-
ment's purpose is to provide financial
protection for those older workers who
cannot keep their jobs because of poor
health, yet cannot meet the stringertt
standards of the regular disability in-
surance program. It would allow these
workers to. retire with dignity and se-
curity. Older workers would be eligible
for benefits If they can show they can
no longer perform the' major type of
work they did before the onset of
health problems. This Is of particular
importance for manual laborers.
The savings provided for in the Fi-
nance Committee bill slightly exceed
those estimated as necessary to insure
the long-term solvency of the social se-
curity system by 0.08 percent of pay-
roll. Since the amendment is targeted
to help a.specific group of workers-an
estimated 10 percent of future retir-
ees-it would not be *solvency buster.
Rough calculation show its long-term
cost to be relatively low-0.04 percent,
of payroll-which can be accommodat-
ed by the bill's savings.
Overall life expectancy has. In
creased since the 1930's. This has not
been at issue In the debate over in-
creasing social security's retirement-
age. One of the major questions has
been whether there will be parallel Im-
provements in health and the ability
to work, and whether certain groups
of people will be unable to participate
in a trend toward longer working life.
The National Commission on Social
Security Reform had two witnesses
who testified on the issue of increasing
social security's retirement age. They
were Dr. Jacob Feldman from the Na-
tional Center for Health Statistics and
Dr. Robert Butler. formerly Director
of the National Institute on Aging.
Their testimony supported the conclu-
sion that an increase In retirement age
would have a disproportionate impact with the program costing about three
on some future retirees. times as much in terms of percent of
Dr. Feldman testified that the down- payroll, as the Senator from Georgia
ward ttend in mortality for men aged estimated at that time.
50 to 69' had been matched by in- As a cosponsor of the amendment. I
creases in the incidence of disability; know that I was in good faith in sup-
For men aged 60 to 64. Dr. Feldman porting it and voting for it, and so
said that during the past decade the were the other cosponsors. I am sure
rate of longevity has Improved 10 per- the same applied to every' Senator who
cent, but during this same time, the voted for that disability proposal.
disability incidence rate has increased What happened down through the
26 percent. years was just human nature, I sup-
Dr. Butler told the Commission that pose, among those administering such
minority citizens in physically de- a program, which would cause them to
manding jobs largely retired before be more tolerant toward those persons
age 65. Unfortunately, at this time: who were handicapped, who were par-
these c ittizens still endure poorer try disabled but not totally and per-
health and mortality rates nearly manently disabled. ~ '
double of other workers. They Buffer We have a program today costing
the addition burden of a higher unem- about $18 billion in social security
ployment rate. alone because of disability, in terms of
Dr. Butler's testimony is consistent percent of payroll, about three times
with data from the Department of what we estimated that program
Labor's national longitudinal survey, would be coating us at this point.
which has shown health and one's em- I am not here to look with scorn on
ployment history tend to interact to those judges and the administrative
cause retirement from the labor force personnel who handled this program
before an 65. A study published just a down through the years: I believe that
few months ago in the.8oeial Security with regard to maapr of these people
Bulletin, "Mortality and Early Retire- who obviously had a severe disability,
ment." offered additional analysis. that looking at it personally, they would be
workers seeking retirement at age 62 hiciined to be sympathstle toward the
were more likely to suffer health prob- applicant. In many slse the appll-
lems and higher death rates than cant would know than he could retire
other workers.. on disability if he could persuade
Available . evidence demonstrates others that he was 4babied. JIB would
that workers Who retire early for the start out by persua4ing: hisamelf he was
reason of poor hesylth tend to be the disabled. and them ,parade others
recipients, of lower social security that he. was disabled,. Including the
benefits, Mary of them spend .a life- persons who had the rapponAbility to
time in physically `demst ding job& handle the admin'dratwe appeals.
These are the people who ' cannot I can just picture a. Judge, havim re-
afford significant reductions in their versed. the, people in the Department
social security checks and are most in who found that this applicant was not
need of ,full," early' retirement benefits. disabled, saying to himself: "Well, I
I coma fend. Senator isir for his think I Will sleep. welt-tonight. I know
work on this r the Seth e's for rail- that person wasn't really totally and
lag the issue for the S consider- permanently disabled, but I felt sorry
ation. I urge all my colleagues to vote for that man and his tangly. They
for the LONG addressed addressed the Chair. the need the Income, and that fellow prob-
Th LPRESI ably couldn't find a jab anywhere else.
The PRESIDIIisiOFFICER. The ~, thanks to my deddon, he will be
Mr. Senator from
LONG. m. L Mr. President, I regret taken care of, at the taxpayers' ex-
that I cannot support the amendment. pense, from this day until the good
The Senator from Louilsiana wasone Lord calls him ., home. While I know
of those who sponsored the amend- that. is not what Congress had in mind,
ment many years ago to provide dig. I don't feel bad about It. I feel good
ability benefits both under,public wet- about it. I'll have a good night's rest
fare and under social security. by deciding that can In' that person's
Mr. President our experience in favor."
that program has been; tbssppointlng I have no doubt that that Is the way
in that we had so many more people a lot of judges looked at It when they
who have claimed and obtained the were restoring to the rolls those
disability benefits than we had In people who had been found not to be
mind. I recall when Walter George, a totally and permanently disabled and
Senator from Georgia at the time and who were never intended to go under
former chairman of the Senate FI- that program.
nance committee, made the closing We are having great difficulty trying
speech for the amendment on. social to get the genie back Into the bottle,
security. He laid out the number of and so far we have not succeeded in
people that we expected to be affect- doing that.
ed. His estimate was based on what he I think that if Congress at this point
could obtain from the Department and voted a benefit for occupational dis-
from other sources, ability, which would obviously be in-
Looking at our disability program tended to be a liberalized standard of
today, we have about three times the disability, this would indicate that
number of people in: that program, Congress is not really serious about
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$ 3476 CONGRESSIONAL RECORD - SENATE March 21, 1983
staying to the strict definition of dis- benefits for occupational disability at But I would argue to the Senator
ability that is in the law. age 62. That is agreed in the law. from Louisiana that this is a different
Things have happened in recent Having agreed to that, why should he kettle of fish-that the pool of poten-
years to give signals to those who are have to be 62? Why not 60? Why not tial eligibles for this new program is
trying to administer programs for us 56? Why not 52? Why not 50? How can not 100 million workers as it is under
out there, tough though it may be to you be so cruel? This person is dis- the disability program. It is only about
reject people who are severely hands- abled from doing that job, and he is 6 million workers who find themselves
capped, but not totally disabled. The only 49 years old." between the ages of 62 and 66.
signals coming from Congress have Mr. President, from what begins to Mr. President, I understand how the
not always been as clear as they are be a small acorn, a giant oak grows; so Senator can say that it is very difficult
today. For us now to put into the law a that the taxpayers, in due course, are to know whether someone is really dis-
program for occupational disability picking up the tab for all this. abled when he is there before a judge
can only be construed by those who That has been the history of many with his human case. Indeed, judges
are out there In the field, trying to do of these spending programs, particu- possibly allow more people on the dis-
what Congress intended-and that is larly in the social welfare area. Some- abity rolls under the law because of
to provide disability benefits only one starts out with something, makes this human factor.
where somebody is so disabled that an eloquent appeal, such as today, and Same paragraph but under my
the person is incapable of holding any in due course he sells Congress on it, amendments, that human factor is
job, incapable of earning any substan-
tial income without Congress thinking about the limited by one thing, and that is demo-
from gainful employment ramifications and what happens fur- graphics. There are only a certain
of any sort-that Congress is retreat- ther down the road. number of people between the ages of
ing from the position it took.
Mr. President, if this I know there is no particular joy to 62 and 66 and they are only a fraction
provision is to
be me-and there is no particular joy to of the number
approved by the Congress, I have potentially eligible for
no doubt that if it becomes the law, the Senator from Kansas-to stand disability.
long before the effective date of this here and oppose more and more bene- Mr. President, the Senator's other
provision, long before the year 2000, fits, to advocate that we tighten up on fear is that if we take this step to hold
there will be other amendments trig- programs rather than loosening up on harmless those people who are out
gering more benefits to persons who them. But that sort of duty besets one there working in manual jobs and dan-
are occupationally disabled; and I have when he assumes a position of respon- gerous occupations, some4ow or other
a lot of sympathy with that. sibility. we will lower the age from 62 to 60
It was my, father, as a young lawyer, It was a degree of pressure this Sen- and then 55. I think it is important to
and his brother, a more senior lawyer ator never experienced before, when remember that it was in 1956 that
to him, in the State of Louisiana, who he became the ranking member of the early retirement for women was put
played a major part in winning the Finance Committee and at one time into the law and 1961 that early retire-
lawsuits to have a person construed in the chairman of the committee, to ment for men was put in the law. So,
our State has being totally and perma- have to be the one to oppose all these Mr. President, I argue that It would be
nently disabled when a person was oc- proposals that were going to do many unlikely that we would do anything ir-
cupationally disabled; this Is, disquali- things for many people, at great ex- rationally on the retirement age since
fied to do the job that person had pense-some of them at not such great we have not done anything since 1961
done previously: expense-knowing that we do not have for men and 1956 for women.
The State law had provided that the money to pay for them. I think the best way to get at the
there would be a certain benefit sched- But, Mr. President, this would do no modesty of this amendment is to take
ule if a person lost a hand, and there good for anyone for the next 18 years. a human situation and look at what
would be a larger benefit schedule if As the Senator from Kansas, the dis- the law is today, what It would be
he lost two hands, and a still larger tinguished chairman of the committee under the bill presently pending, and
benefit schedule if he were totally dis- has pointed out, if this is right we then what it would be if this amend-
abled. In the case of my father and his have plenty of time to do this during ment is passed.
brother, they were successful in per. this next 18 years. If it is not some- Mr. President, right now let us say
suading the court that If a person had thing we can afford, we would be that one is a steelworker. He reaches
been a switchman on a railroad and unwise to set a precedent that would age 61 or age 60 after working 30 years
had a job that required two useful lead to a great deal of additional cost in the steel mill. He has problems
hands, he was totally disabled if he in other areas that the mind of man breathing. He has gone to work every
lost one hand. I find much sympathy cannot fully anticipate at this morning before dawn for 30 years. He
for that type of proposal because it moment. realizes that his health will not allow
runs in my family tradition. I hope that the amendment will not him to continue to work to age 65. He
However, Mr. President, must we do be agreed to at this point and that this would like to spend some time with his
this now, understanding that during proposed liberalization, along with family. So this person under current
the next 18 year this will be setting others that will be suggested, will be law decides he will opt for early retire-
the stage for large increases in disabil- reserved by the Senate for hearings on ment at age 62 and accept 80 percent
ity payments in other programs, total- future social security and public wel- of the benefit that he would receive if
ly unrelated to this? fare bills, because this is an area that he worked until age 65.
It challenges the imagination to we will continue to explore. This is an That is the calculation that the
think of the many different situations area that in time we may want to lib- worker makes today: "I am in bad
in which one can urge that this prece- eralize. But I submit that the time is enough shape that I will retire early
dent be used to advance disability cov- not yet here. and take 80 percent of what I would
erage to others. If we put this into the Mr. BRADLEY. Mr. President, I ap- get if I continued to work until age
law, how can anyone contend that, preciate the comments of the distin- 65."
once having provided a special benefit guished Senator from Louisiana. Mr. President, all this amendment
for disability on an occupational basis Indeed he found himself in very diffi- does is to say that this person will con-
at age 62, we should stop at age 62? cult positions when he was chairman tinue to receive 80 percent of his bene-
Cannot Senators understand how a of the Finance Committee in the fits if he retires at age 62. If this
Senator in the future could appear Chamber arguing against expansions amendment is adopted, . there is no
with his amendent and say, "The Con- of the disability program. I under- greater incentive to retire at 62 than
gress has already agreed that this stand his long record of responsible there is under current law. There is
person ought to receive retirements spending policy, and I understand it is simply no greater incentive because
not easy to do what he has done over the person would still only get 80 per-
the years. cent of his benefits. Right now the
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CONGRESSIONAL RECORD - SENATE March 21, 198.E
Mr. DOLE. I think we ought to with-
hold judgment on it until we have had
hearings.
The PRESIDING OFFICER. With-
out objection, Senator RIEGLE will be
added as a cosponsor.
Is there further debate? If not, the
question is on agreeing to the amend-
ment of the Senator from New Jersey.
The yeas and nays have been ordered,
and the clerk will call the roll.
The bill clerk called the roll.
Mr. STEVENS. I announce that the
Senator from New Mexico (Mr. Do-
pENIcr), the Senator from South
Dakota (Mr. PREssLER), the Senator
from Indiana (Mr. QUATLE), the Sena-
tor from Texas (Mr. TOWER), and the
Senator from Wyoming (Mr. WALLOP)
are necessarily absent.
I also announce that the Senator
from Maryland (Mr. MATHIAS) and the
Senator from Oregon (Mr. PACKWOOD)
are absent due to a death in the
family.
Mr. BYRD I announce that the Sen-
ator from California (Mr. CRANSTON)
and the Senator from Colorado (Mr.
HART) are necessarily absent.
The PRESIDING OFFICER (Mrs.
HAwKIxS). Are there any other Sena-
tors in the Chamber wishing to vote?
The result was announced-yeas 30,
nays 61, as follows:
(Rollcall Vote No. 35 Leg.]
YEAS-30
Biden
Glenn
Metaenbaum
Bingaman
Heflin
Mitchell
Bradley
Hollings
Pen
Burdick
Inouye
Proxmire
Byrd
Jackson
Randolph
Chiles
Kennedy
Riegle
DeConcini
Lautenberg
Sarbanes
Dodd
Levin
Sasser
Eagleton
Matsunaga
Tsongaa
Pord
Meicher
Zorlnsky
NAYS-61
Abdnor
Goldwater
Moynihan
Andrews
Gorton
Murkowski
Armstrong
Grassley
Nickles
Baker
Hatch
Nunn
Baucus
Hatfield
Percy
Bentsen
Hawkins
Pryor -
Boren
Hecht
Roth
Boschwitz
Heins
Rudman
Bumpers
Helms
Simpson
Chaise
Huddleston
Specter
Cochran
Humphrey
Stafford
Cohen
Jepsen
Stennis
D'Amato
Johnston
Stevens
Danforth
Kassebaum
Symms
Denton
Kasten
Thurmond
Dixon
Laxalt
Trible
Dole
Leahy
Warner
Durenberger
Long
Weieker
East
Lugar
Wilson
Exon
Mattingly
Gam
McClure
NOT VOTING-9
Cranston
Mathias
Quayle
Domenid
Packwood
Tower
Hart
Pressler
Wallop
So Mr. BRADLEY's amendment (No.
520) was rejected.
Mr. DOLE. Madam President, I
move to reconsider the vote by which
the amendment was rejected.
Mr. HEINZ. Madam President, I
move to lay that motion on the table.
The motion to lay on the table was
agreed to.
The PRESIDING OFFICER. The
Senate will be in order, please.
UP MUMBSCiNT NO. 102
(Purpose: To require the Quadrennial Advi-
sory Council to study and make recom-
mendations on the increase in the retire-
ment age and its effects on SSl. DI, and
unemployment compensation programs)
Mr. HEINZ. Madam President, I
send an amendment to the desk and
ask for its immediate consideration.
The PRESIDING OFFICER. The
clerk will report.
The legislative clerk read as follows:
The Senator from Pennsylvania (Mr.
Ha1Nz) proposes an unprinted amendment
numbered 102.
Mr. HEINZ. Madam President, I ask
unanimous consent that further read-
ing of the amendment be dispensed
with.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The amendment is as follows:
On page 100, between lines 12 and 13.
insert the following:
(dXl) The 1987 Quadrennial Advisory
Council on Social Security appointed pursu-
ant to section 706 of the Social Security Act
shall study the effect of raising the normal
retirment age, and shall recommend to the
Congress changes in the supplemental secu-
rity income program, disability insurance
benefits, and unemployment compensation
which may be necessary to meet the special
needs of individuals between the ages of 62
and 66, effective in the year 2000 who are
unable to work because of poor health or
lack of employment opportunities.
(2) In order to adequately address the
issues described in paragraph (1). the Secre-
tary of Health and Human Services shall
appoint to such Council representatives of
organized labor, and experts on the prob-
lems of older workers, disability and em-
ployment, and the labor market. Such ex-
perts shall be appointed subject to the ap-
proval of the chairman of the Senate Com-
mittee on Finance and the chairman of the
House Committee on Ways and Means.
Mr. HEINZ. Madam President, the
amendment I am offering would direct
the 1987 Quadrennial Social Security
Advisory Council to study the effect of
raising the normal retirement age in
social security, and to report to the
Congress on changes which should be
made in the supplemental security
income program, the disability insur-
ance program, and unemployment
compensation to assure that the needs
of those who will be unable to work
longer are met.
Madam President, the proposal to
raise the retirement age gradually to
66, beginning in the year 2000, is a par-
tial recognition of the dramatic
changes that have taken place and are
expected to continue to occur in life
expectancy. Over the last 40 years, life
expectancy at age 65 has increased
among men by 2 years, and among
women by 5 years. By the year 2000,
life expectancy is expected to increase
by another 1% years among men and
another 2 years among women. It is
also a proposal which is expected to
coincide with changes in preferences
for work and the demand for labor
which should occur before the turn of
the century. By the year 2000, we fully
expect that our older citizens will not
only be living longer, but that they
will want to and be able to work longer
as well. Demographers today project
that toward the end of this century
there will be proportionately fewer
younger workers in the labor force,
leading to labor supply shortages and
an increasing demand for older work-
ers. In addition, today's younger gen-
eration, which entered the labor force
later, has developed a higher level of
education and skills, and has worked
in less physically demanding occupa-
tions than their elders, may prefer to
work longer than the current genera-
tion of retirees. -
But, Madam President, while the
average worker may be able to work
longer, there will be those who will
need to maintain the option to retire
early. During the deliberations of the
National Commission on Social Secu-
rity Reform last year, those of us who
participated in those sessions had the
opportunity to hear from two experts
on the question of life expectancy and
health trends. It was apparent to me
from their testimony that there is no
clear evidence at this time that im-
provements in life expectancy are
going to be accompanied by improve-
ments in morbidity. Even though we
fully expect people to live longer in
the future, there is no assurance that
they are going to be any healthier.
Today nearly two-thirds of those
who retire under social security re-
ceive benefits which are reduced for
early retirement. While many of these
people are receiving reduced early re-
tirement benefits by choice, perhaps
as many as one-third of them had to
stop working for health reasons.
Workers who have spent 40 years in
back-breaking labor frequently find it
impossible to continue in their line of
work by the time they reach 62. With
few other job opportunities, older
workers who have to stop working in
one job stand little chance of finding
employment in another line of work.
In addition to those no longer
healthy enough to work in the same
occupation, there are those in hazard-
ous jobs demanding physical skills
such as balance and timing which
cannot be relied upon in later years.
While the average worker of the
future may choose to delay retire-
ment, there will still be those in stress-
ful or hazardous jobs who will need to
maintain the option to retire early.
There will continue to be workers with
poor health, low skill levels, and incon-
sistent work histories who will be
unable to work or find new employ-
ment when they are older.
For those who can work longer, rais-
ing the retirement age will conform to
their choices and their opportunities.
Combined with the incentives in this
package,. to delay retirement-the in-
crease in the retirement age should
help to dilute the strong association
which has existed in the past between
age 65 and retirement.
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CONGRESSIONAL RECORD - SENATE March 21, 1989
As I understand the . Senator's
amendment-we do not particularly
need to understand it fully, but it is in-
fecting withholding back into this
debate. If that is the intent of some of
the Senators on the floor, we ought to
find out right now, because that will
change how long we stay tonight and
how long we stay the rest of the week.
I am prepared to yield the floor.
Mr. MELCHER. Madam President.
The PRESIDING OFFICER. The
Senator from Montana.
Mr. MELCHER. I think perhaps,
from the kind remarks of the Senator
from Kansas, he misunderstands the
amendment. The amendment is not a
sense-of-the-Senate resolution; the
amendment goes directly to the imple-
mentation date of the withholding tax
on savings and interest. It would move
that date from July 1 to the end of the
year.
For all the reasons that have been
debated on the floor concerning the
Kasten amendment, which would have
repealed the withholding tax provision
on interest and dividends, it is clear
that there does need to be further con-
sideration, as the Senator from
Kansas, the chairman of the Commit-
tee on Finance, has often stated, and
complete and thorough discussion, as
the chairman has repeatedly stated re-
garding the Kasten amendment to
repeal withholding. To accomplish
that purpose, Madam President, I
have introduced this amendment. This
will give time for Congress, both the
Senate and the House, if they are so
inclined, to look at the proposal, to
look at whether or not the withhold-
ing of taxes should go into effect is
reasonable.
Mr. DOLE. Will the Senator yield?
Mr. MELCHER. Yes, Madam Presi-
dent.
Mr. DOLE. The Senator said with-
holding tax. It is not a tax.
Mr. MELCHER. Withholding of the
tax on dividends and interest. I thank
my friend from Kansas. We want this
to be clear. We want this to be thor-
oughly understand. I know this is not
a new tax.
If there is any doubt in the minds of
the taxpayers just what the advan-
tages or disadvantages of this are for
the Nation of the withholding of taxes
up to 10 percent on interest and divi-
dends, it should be thoroughly and
completely reviewed by Congress. It
was clear that the Kasten amendment
for outright repeal created some prob-
lems, although I support repeal.
It was clear that the Kasten amend-
ment created *some problems for the
administration. Treasury strongly ob-
Jected to it. Some of the members .of .
the Finance Committee of the Senate
very vigorously disagreed with it.
So this amendment I am offering
today is to give us time for a thorough
consideration of the question. The
Senate has agreed by unanimous con-
sent to debate the issue on another
bill starting April 18.
The chairman of the Finance Com-
mittee, the Senator from Kansas, my
good friend, has stated that it will re-
quire considerable discussion at that
time. The Senator has frequently
stated that whatever the discussion of
the matter, it should be throughly
aired and that it can be throughly
aired and he hoped defeated at that,
time.
Recognizing the feelings and the
overwhelming vote for repeal that oc-
curred on the Kasten proposal when
we had the vote on cloture, it seemed
to indicate a rather strong feeling for
consideration of the matter, for thor-
ough debate of it and thorough discus-
sion as- to the merits or demerits of--
Mr. HELMS: Will the Senator yield
for a question?
Mr. MELCHER [continuing]. The
withholding provision in the tax bill of
1982.
Yes, I yield to the Senator from
North Carolina.
Mr. HELMS. Looking at the amend-
ment of the Senator, it is not a sense-
of-the-Senate vote, is it? I thought I
heard reference to "sense-of-the-
Senate."
Mr. MELCHER. I thought I heard it
also from the Senator from Kansas,
but it simply is not a sense-of-the-
Senate amendment.
Mr. DOLE. I might Just say that we
had not been furnished a copy of the
amendment. We understood there was
going to be a sense-of-the-Senate
amendment. We also understood some
on this side were drafting different
amendments. We now know it is not a
sense-of-the-Senate amendment; it
simply delays the effective date.
If there is any hope that the banks
were serious about implementing it on
that date, that might be worth discuss-
ing but, having been taken for a ride
by postponing it for 6 months in the
first place on my motion in the confer-
ence, I think all we are doing is provid-
ing another 6 months to kill withhold-
ing, which we can discuss when the
Senator from Montana finishes.
Mr. MELCHER. Madam President,
whether or not this provision is re-'
pealed will depend upon the votes of
the Senate, the votes in the House and
the question of whether or not the
President wants to veto a bill that has
it in it. That is a separate matter.
What my amendment seeks to ac-
complish is to set a timeframe for that
discussion and that debate and,
indeed, it is a debate that is thought to
be very important by a great number
of Americans across the country.
Mr. LONG. Will the Senator yield?
Mr. MELCHER. Yes, I yield to the
Senator from Louisiana for the pur-
poses of a question.
Mr. LONG. Do we understand that
the amendment of the Senator is not a
sense-of-the-Senate amendment?
The Senator, as I, understand it, is
offering a legislative proposal to defer
the effective date of the withholding.
for 6 months?
Mr. MELCHER. That is absolutely
correct.
Mr. LONG. He would defer with-
holding until January 1 or December
31 of this year? Is the date December
31 or January 1?
Mr. MELCHER. Not before Decem-
ber,31. So, if nothing is done, then the
withholding provision. would be in
effect on January 1.
Mr.: LONG. So if the amendment of
the Senator becomes law, then with-
holding would start on January 1, not
before?
Mr. MELCHER. That is absolutely
correct.
Mr. LONG. It will be on January 1,
1984, not prior to that time?
Mr. MELCHER. That is right.
Mr. LONG. I thank the Senator.
Mr. MELCHER. That is absolutely
correct.
The reason we are in this box is this:
The provisions in the tax bill of 1982
had a number of tax increases which
affected telephones, airline tickets,
aviation fuel, tip reporting by people
who worked in food and beverage es-
tablishments and motels and hotels, a
tax increase on some forms of insur-
ance provisions and deductions of
health costs.
For instance, if you cut the allow-
able deduction in the health care or
health insurance the taxpayer is al-
lowed, that resulted in a revenue gain
for the Treasury, but it also included
within that package this provision,
that on unearned income from interest
and dividends the institutions would
start withholding income taxes at 10
percent of the amount of the pay-
ments.
Now, that in itself is surely, as the
Senator from Kansas has very aptly
described, not a tax increase. It is a
collection of taxes due. It is patterned
somewhat after the Ruml provision in
1943 of withholding taxes on wages
and salaries of individual taxpayers,
which is a wartime measure that was
very much needed because the Treas-
ury needed to get additional revenue
very rapidly, and this was one way of
doing it. But in turn for that provi-
sion, the taxpayers that were required
to have withholding on their wages
and salaries were forgiven the taxes
for the preceding year, whatever they
might have owed. Since that time, we
have had provisions for estimating
taxes due on income of self-employed,
partnerships, farmers and ranchers,
all sorts of people, and withholding is
really the name of the game.
For well over a decade that I can re-
member a requirement by law for
withholding of income taxes on un-
earned income such as interest and
dividends has been a very big issue. As
the 1enator from Xansas has very cor-
rectly said,, the wage earner says, "If
you are, going to withhold it from me,
why. do you not withhold it from
somebody on unearned income?" And
labor organizations for a number of
years, for well over a decade that I can
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remember, have picked up that argu-
ment and been very persuasive about
it. They insisted that Treasury and
Congress consider it. We have Just
never done it. Indeed, during the
debate the Senator from Kansas re-
ported to us about a note that he re-
ceived from off the floor from the
United Food Workers signed by
Arnold that said, "Anything we can do
to help?" And it portrayed the inten-
sive interest that labor has had on
making everybody pay their share of
taxes, closing what they figured was a
big loophole.
Well, we have had a long history of
attempting to establish withholding
on unearned income, but during that
long period of time much has changed
about collecting the income taxes due
on interest and dividends. One of
those changes was the requirement for
these institutions paying interest or
dividends to file 1099 forms. We all re-
ceive them if we have any income at
all on interest or dividends, and even
holders of insurance policies get a 1099
form.
While my experience with this type
of income is not all that great, I think
in our house my wife and I get prob-
ably a half dozen 1099 forms every
year from institutions saying, "Well.
here is what you received from us on
income; report 'it on your income
taxes." That goes a long way for every-
body understanding that indeed that
is income and they had better pay
their taxes on it, because there Is a
form sent 'to you, as an individual tax-
payer. You get that 1099 form and the
IRS gets It, too. So it is known. Maybe
that gap is closed. But there are other
steps to be taken.
In the tax bill of 1982, the question
of reporting interest from 'Treasury
notes as well-'as from other types of
bonds was taken up, and the require-
ment for that type of reporting by the
people who are handling those bonds
was required, to close the gap, so that
people could not escape paying their
taxes that are due on that type of
income.
We hear about underreporting, of
tax evasion in this area, outright
cheating.
As we review what studies are availa-
ble, the Treasury presents us with one
that says that! 88 percent of the tax
money is collected on interest and divi-
dends. That is a startliisg figure; be-
cause if that study is accurate, ' it
means that about 12 percent is uncol-
lected.
A further study of the Treasury De-
partment says that 97 percent plus of
individual people pay all the, tax that
is due from interest and dividends.
So the question really is, with the
aid of 1099 forms and the revisions in
the 1982 tax bill itself, which closed
the gap on the reporting of interest on
Treasury notes and similar bonds,
whether or not the gap is pretty well
closed. Could it be, if now the same
study was made by the Treasury De-
partment, it would find 96 percent of
the money is collected and that, 99 per-
cent plus of the people who report are
the people who pays taxes on interest
and dividends? I do not know. But
there is a way to tell, and that is by
matching up the 1099'8 with the
amount 'actually -paid- in taxes and
seeing whether or not all the taxpay-
ers paid what they were supposed to
pay. That would be complete checking.
The IRS assures us that at present,
with the computer ability they have
currently, they cannot do that; but
they protect that sometime in the
future, perhaps next year, that would
be possible, but very costly. They say
there might be some errors, anyway.
Of course, there might be some errors.
What we are after is cheaters, and the
errors are both ways. Some people
overpay, never get it back, do not real-
ize they have overpaid. An audit might
show that they had some money
coming back. But if the audit showed
they had not paid their taxes, .those
individuals would' be identified and
they would get their dun plus the pen-
alty from IRS to pay it up. .
What does this provision in the 1982
tax bill do? Instead of collecting all
the taxes, it simply says 10 percent
will be withheld. Ten percent of divi-
dends and interest will be withheld as
if it were a tax obligation. That to not
a new tax. That Is Just paying part of
your taxes that way.
It is claimed by IRS,. Treasury, and
the chairman of the Flnanoe Commit-
tee that this will be a net gain of ap-
proximately $4 billion per year in reve-
nue. Part of that 1s early collection of
taxes due. For fiscal year 1984, it
would be more than $4 billion, if the
figures are correct, because it is really
early collection in that -particular year,
but in subsequent years, the early col-
lection part of this is just a fraction.
What they really feet is that about $3
billion a year from years after 1984
would be produced in .new revenue
from taxpayers who simply are not
paying what they are supposed to pay
on interest and dividends. .
The IRS states that for $85, on an
average, they can track down a non-
filer. That is the biggest area in which
this supposedly $3 billion a year is
going to bring in additional revenue to
the Treasury-from nonfilers, people
who do not file an income tax form.
If you can find a nonfiler and bring
that nonfiling taxpayer into the
proper fold with the rest of `us who are
'paying our taxes, who are filing their
.1040 forms and paying their just
taxes, it would seem that $85 to track
down a cheater is not that much
money.
We can project all kinds of figures
on the floor of the Senate. We can
quote all kinds of studies and all kinds
of figures proposed, by the agencies or
by independent gr pa We all know
that those figures axe' Just as good and
Just as sour as the particular agency
or the particular' private group that
proposed. them -and how. sound. the
study and the-reasoning are.'
S 3481
There was a reason for a lot of
people asking us this simple question:
Why not go after the cheaters? I ask
that question, too. Why not? Is it too
costly? Certainly, 885, on average, to
track down a nonfiler is not too costly.
That seems to me a very good business
for the Treasury Department and the
IRS to engage in. -
The people who ask- that question,
ordinary taxpayers, are asking it be-
cause they know that they pay their
taxes on interest and dividends. They
say, "What is this new requirement in
the law that forces upon us a new
method of collecting taxes?" Many of
them state in their letters to me-and
I assume to every other Senator.-that
they do pay their taxes; they do view
it as income and report it. They attach
their 1099 forms to their tax form at
the end of the year, the 1040 form.
They know they are paying it. Why
put another level on this?
I might say this, in sort of rebuttal
to what has been said here previously
when we are discussing the Kasten
amendment for repeal.
I do. not believe that we should take
too lightly the complaints of these
taxpayers. That In No 1. I think these
taxpayers are, leglthnate in saying to
us in their letters:. "Why' is it.neces
sary to have a new ultajeut placed.
on myself and nay - we have
been re porting all of #he'interest and
dividend income that we' have? Is this
not another intrusion ar another layer
of IRS regulations And who
good is it?" Those ob1$?ts or state-
ments are simply inquiries. I do not'
think we should take those too lightly
because we must be able to Justify why
this is in the law if it is going to stay
in, the law. They are the people who
provide the money for the Treasury.
They are the people whom we repre-
sent and the people who are really in s
representative form of government
supposed to be heard and listened to.
I am not too much imreby the
counterargument that anything deal-
ing with this-the Kasten, amendment
for an outright appeal or my amend-
ment now for simply a delay in imple-
mentation of withholding provisions in
the law-is a ploy of the American
Bankers Association. I do not believe
that has had much effect on me indi-
vidually. I cannot recall ever a time
when I became real concerned about
what the American Bankers Associ-
ation had to say on a tax matter that
affected individual taxpayers.
I look to the banking association to
give me a viewpoint of banking law,
but I am not overly impressed either.
by whatever they have to say on this
particular provision of law or by any
counterargument that says "Well, all
you are doing is sort of a _kneeJerk re-
action to what the American Bankers
Association position is."
I think that. that . probably holds .
true for all -the Senators of this body. I
think it probably holds true for all the
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Members of the House of Representa-
tives.
I simply cannot believe that the
American Bankers Association takes a
stand and then immediately that gen-
erates thousands upon thousands of
letters from Montana to me and scores
of thousands of letters to Senators
from larger States.
I do not even recall that we men-
tioned much about the savings and
loan people to date. I believe they
share about the same position as the
American Bankers Association. Hardly
ever do we have much comment on
what the credit unions feel about this,
although I believe and am well aware
that they are opposed to this provi-
sion; and later on, I will submit some
studies that they have provided just
recently in a letter to me on March 18
on what they feel from their point of
view are the objections of the credit
unions both as managers and individu-
al members of a credit union.
What I really believe is that what we
are experiencing now is a true form of
representative government, where a
lot of people all at the same time are
zeroing in on something that they feel
is not a good tax provision that affects
them personally because taxes, after
all, for a taxpayer are a very personal
thing whether or not you are bearing
your share or whether 'or not you are
burdened with a new form or whether
or not you put a new requirement of
IRS on when you pay or how you pay
your taxes. They simply seem to be
saying to me they do not feel that this
particular provision has merit and
they have had too much of this. They
want to get rid of some of it.
I do not believe it serves any purpose
to glibly overestimate what this partic-
ular tax provision would gain in reve-
nue for the Treasury. I think there
has been overestimation, and the
reason I think there has been overesti-
mation is that I think it has been un-
derestimated how many people will ac-
tually readjust their tax payments be-
cause of withholding on some of the
interest and dividends that they re-
ceive.
Why do I say that? If it is an ordi-
nary wage earner or salaried individu-
al who has a certain amount of with-
holding out every month or, every
week or every 2 weeks out of every
paycheck and he, after July 1, finds
that there is additional withholding
out of some of the interest income
that he has, then he is going to make
an adjustment, and that is, our course,
provided by law. It is required. It is
one of the provisions. How else would
it be fair, unless on the same basis of
the taxes you have already paid in you
decide you do not want to have either
overpayment or that much overpay-
ment of tax obligations? So you read-
just the amount of taxes simply by
changing the number of withholding
individuals that are listed as depend-
ents and provided by law. It is a
common way of doing it, a common
way of adjusting.
I think that it is worth noting right
here that the Treasury Department's
Office of Tax Analysis in connection
with this issue in 1980, when President
Carter asked for the withholding pro-
posal, indicated taxpayers would be
able to offset this increase through le-
gitimate adjustments, and the Treas-
ury's Office of Tax Analysis in 1980
said approximately 95 percent of the
acceleration effect of withholding on
dividend and interest income would
simply be offset by adjustment.
For the individuals who estimate
their taxes due and do it on a quarter-
ly basis, whether they are salaried or
self-employed or farmers or ranchers
or partnerships, they can also, accord-
ing to law, change their estimates of
what their taxes are due-under exist-
ing law, and after July 1 it is reason-
able to believe that when they make
those quarterly estimates they are
going to adjust those quarterly esti-
mates on the basis of how much may
have already been withheld in taxes
from unearned interest or dividends or
would be through the remainder of
that taxable year.
So a statement that simply says this
is a gain of $3 billion for the Treasury
may or may not be correct, plus sever-
al days ago I submitted a study done
by Puglisi, who came out with an en-
tirely different set of figures and com-
putations for the amount of revenue
that would be gained by this provision.
A note about people who write us
letters on this: Many of them are el-
derly, and they say that they are very
careful about their tax obligation and
that either way they are going to pay
it. They are going to continue to pay
all their income tax obligation, but
they really query and they have
strong doubts that this provision will
really generate much additional reve-
nue. It seems to them that if there is
that many people who are evading
taxes, cheating on their income tax
and not paying on this, surely there
must be a way of getting them and
making sure that they pay their taxes.
This was pointed out to us as very
obvious: What does the 10-percent tax
on dividend or interest payment actu-
ally mean in the tax obligation for
someone who is cheating?
Treasury says if they are nonreport-
ing, if they are just one of those mil-
Ions of people-and they say 5 million,
and I find that a little difficult to be-
lieve, nevertheless I accept it for the
sale of argument right now-I will just
concede it is 5 million-they are going
to pick up a lot of people who have
never reported and really owe taxes.
Well, we have already gone over that a
little bit earlier, there is a method of
doing it: Just go out and search for
people who are nontaxpayers, non-
filers of the 1040 form, and the Treas-
ury, according to the Joint Committee
on Taxation, says that costs about $85
per individual.
The other method is to compare the
1099 form with the taxpayer's state-
ment and see whether or not he really
did file and look for that. We have the
1099 form, and look for that individual
and see whether he has got a 1040
form, because surely there ought to be
some reason for them to file a 1040.
So. people are saying, "Well, you
know it is pretty hard to believe you
can get away without paying taxes and
without really being an out-and-out
crook, and being a very determined
crook." I think there is a lot of merit
to that simple statement and there is a
lot of truth to it. So they say, "What
is that burden?" First of all, it is a
withholding provision that would start
to come out of their payments on in-
terest and dividends. Then, second, if
they do not think they really should
be covered at all they can file what is
called a W-6 form. That is just some-
thing else they can file. They file that
with each institution.
Well now I have already stated that
while in our household my wife and I
receive about half a dozen of these
1099 forms per year, we are not very
big in this field and there are a lot of
elderly who are receiving more income
from different institutions than what
is represented in our household, of my
wife and me. So let us say many of
those households have about 10 differ-
ent 1099 forms. So they can file a W-6
form if they feel they would be
exempt, they can file that W-6 form
with each of those institutions and
then they are exempt. Those are filed
presumably also with the IRS by the
institutions. We are told that that
figure might be as many as 200 million
W-6 forms.
So you begin to understand the mag-
nitude of what this complaint is about.
It is about paperwork. It is about addi-
tional forms, and it is about really
wondering, when it is all over, about
that number of forms, about that
number of individual transactions with
the institutions and the individual tax-
payers and then relate it to whether
or not the IRS really comes up with
any additional revenue.
I happen to believe the estimates for
this gain in revenue for the Treasury
has been overestimated by the Treas-
ury Department. But even if it were
not overestimated I would say to
Treasury, I would ask them the same
simple question that is asked in so
many letters I receive from taxpayers
of Montana and that is, why not go
after the cheaters then? Why not
match up these forms and go after
them and collect the money from
them, gather them right into the tax-
paying fold where they belong?
UP AMENDMENT NO 103-MODIFIED
Madam President, without losing the
floor, .might I inquire If this amend-
mentis properly drafted to modify the
committee substitute?
The PRESIDING ; OFFICER. It is
drafted to the bill.
Mr. MELCUER. I ask it be modified
to be drafted to the committee substi-
tute.
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Mr. DOLE. Does that require unani-
mous consent?
The PRESIDING OFFICER. No. it
would not. The amendment is so modi-
fied.
Mr. MELCHER. So we are at the
point where we are really questioning
whether all the paperwork is neces-
sary and whether it is really going to
bring in the amount of revenue that it
is projected to bring in.
Madam President, I would suggest
that is the reason for my amendment
because there are legitimate questions,
because there are unanswered ques-
tions, because there is really some con-
cern about this, being dust another
batch of forms to be filed by individu-
al taxpayers without really benefiting
anybody very much, and particularly
not benefiting the country and the
Treasury with additional revenue.
Why? Because, No. 1, how much
does It cost to handle all the paper,
just to file to be exempt? That Is No.
1. We do not have the anser to that. If
you ask the Treasury Department, if
you ask the Joint Committee on Tax-
ation, if you ask the Senate Finance
Committee what does that cost, you
will get an answer that is honest and
very short; they do not know. They
have no idea.
The next ;point is, what does it really
cost the Individual taxpayers? Well,
there is a most, sure it Is not a new tax,
it is Just paying your taxes early, but
there is a cost because it is an adjust
ment, and the adjustment is this: That
10 percent that will be 'withheld from
the unearned interest and dividends
could have been reinvested for the bal-
ance of the year or there may be a
provision in the particular setup with
a savings account, whether it is in a
credit union or an S&L or in a bank or
with a particular-whatever the insti-
tution is, there may have been an ar-
rangement for, that just to be added
right back into that-that interest be
added right back ' into the principal
and it would be generating new inter-
est income or dividend. Income.
So that is an amount that would be
taken away from the individual saver,
and the Individual taxpayer, and it too
can be calculated, and it is part of the
additional revenue that is received by
the Treasury by this particular provi-
sion of law, this-withholding provision.
The concern comes in. estimating
how much that is and really whether
the individual taxpayer feels that the
loss to that Individual saver is not all
that great.
Let me point out what we are trying
to do in this very sick economy of the
United States is to get additional reve-
nue for the Treasury so the deficit is
not as large as it is, and also to encour-
age savings by individual Americans,
and the reason we want to encourage
savings is because we realize that the
amount of savings per individual : in
America is lower than any other Indus-
trial country, and that is one of the
reasons which prevents us from bring-
ing down interest rates as rapidly as
we would like to see them brought
down.
We have done a lot in the last year
or two around here in encouraging
savings. Individual retirement ac-
counts come to mind immediately and
it is a very, sound mechanism, a very
sound provision in our tax law to en-
courage savings, and it is having some
advantages.
Now, this, if this is viewed by indi-
viduals who have savings as, a bad
piece of tax law there may be some in-
advertent discouragement for greater
savings on the part of individual
people. That will be counterproductive
if that happens to be the case and that
should be thoroughly evaluated so
that all taxpayers understand "Well,
really this is something that does not
bother me very much" or "We estab-
lish this indeed as something that does
bother me as an individual Senator
and I tj-ink your point is well taken."
and I think we ought to reconsider
this, and I am hoping for reconsider-
ation.
Our amendment would do that and
allow us time for that reconsideration.
Is there a need to consider this pro-
posal if this method gains net dollars
for the Treasury? In all candor and in
all honesty, I would have to state that
it is my judgment that this is the crux
of this particular law. If this really
gains much in dollars for the,Trees-
ury; we have to' be very 'sUft- that 11, it
is going to be repeated, it Is-going to be
considered that `there Is some offset-
ting revenue gains.
Now, I did not. happen to vote for
this particular bill In. 1982. I objected
to this provision in It and several other
provisions in ' it and thought it was a
rather poor tax revenue bill. But that
is just my judgment.
But I felt the proponents of a tax
bill, that tax increase, had merit to
the- argument that additional taxes
were necessary; that the economy was
at a very fragile stage; that further in-
crease In the deficit over and above
what was projected would be very
damaging to an economic recovery.
So part of the consideration I believe
that must be given to this. issue is
indeed what ttie Senator from Kansas,
the chairman of the Fgnauce Commit-
tee, has so correctly stated. If it is
going to be repealed, where Is the reve-
nue lost going to be made up?
That presents two points, of course.
The first Is, what will be the revenue
loss? I voice my judgment that reve-
nue gain, as indicated by the Treasury,
is overexaggerated; that there simply
is not that much revenue gain for the
reasons I have outlined and perhaps
for others that I have not noted. That
can be better addressed, I suspect, in
the coming months when we review
not only the updated presentation of
the Treasury but also updated points
that will be made by the opponents of
this and see what the merits of the ar-
gument are.
But we are going to be looking at a
lot of different tax revenue measures.
S 3483
The first one I suspect we are going to
be looking at is whether or not the
July 1 tax cut that Is scheduled will go
into effect in its entirety or parts of it
or maybe none of It. I suspect *e are
going to be looking at that.
I suspect we are going to be looking
very seriously at all of the interest
that has been generated by the Treas-
ury Department telling us that there
are so many people who do not pay
their legitimate taxes and we want to
be reassured by the Treasury Depart-
ment that they indeed are on top of it.
Because if all they are going to get is
10 percent of somebody who does not
report, 10 percent of tax obligation of
somebody who does not report. I
would say that most of us or all of us
are going to be dissatisfied. Because if
they are really cheating, if they are
really evading what their tax liability
is, we do not want just .10 percent of
that interest and dividend payment,
we want whatever they are required to
pay, whether it is 12 percent, 15 per-
cent, 38 percent, 45 percent, or 50 per-
cent.
I earlier stated that one of the provi-
sions of the 1982 tax bill was that
there would be a correction in differ-
ent reporting procedures on the
middle people that handle these
bonds, Treasury notes, or other types
of bonds they would have to be report-
ing. Part of that comes from States.
The State of Montana officials wrote
me and said they could not be ready to
meet all the requirements of this with-
holding by July 1. And I suspect other
States wrote their Semitora, and said
the same thing.
So a few weeks ago, on March 2, the
Treasury Department out out a press
statement, a very lengthy explanation,
to the effect that there would be with-
holding rule revisions on the interest
off of Treasury notes and other like
instruments, which covered, mind you,
what the State of ;Montana Official
wrote to me saying they' could not
comply with by July 1. It takes care of
them, too, and they changed the date
to January 1.
Now, that leads me to the point of
the purpose of this amendment, which
Is to just simply delay all of the with-
holding to January 1. not just take
care of Treasury Department and the
people that handle those Treasury
notes and Treasury bonds in the
States and the State people that
handle those State bonds-just delay
it for everybody until January 1 and
let us take a real good, long look and
let the full discussion of the Senate
and the House, too, take place and see
whether or not this provision in law
should be retained or it should be re-
jected and repealed.
The people'who expect us to react to
these queries or complaints that they
lodged with us through their letters
and postcards are very sincere. Some
stated that, "Well. they have been
misled; that there has been some false
advertising or rumors have been circu.
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lated by banking institutions that
would somehow mislead them on what
was involved with this."
Well, I have long ago learned that,
when you are dealing with taxpayers,
the biggest mistake you can make is to
feel that they are misled. Quite a few
of the letters I have received come to
me only from individual taxpayers
after they have consulted with their
accountants. Quite a few of the letters
have come from individual accounting
firms themselves and they say, "Well,
this is what the requirements, as we
view this new procedure, will be and
we find it rather burdensome and per-
haps unnecessary." Now that is a very
quiet way of saying that they would
like to have this looked at very thor-
oughly again.
So I certainly repeat their feelings
and repeat it in all candor believing
that it is a legitimate judgment that it
should be looked at very carefully.
The credit unions have provided me
with a study they have done which in-
dicates what the costs would be for
credit unions throughout the country.
They come up with a first payment of
about $26 million for implementing
computers or bookkeeping mecha-
nisms that would be necessary to put
this into effect. They view that as an
ongoing cost each year.
I would point out that the smaller
the credit union is, the more it costs
them as a percentage of their earn-
ings. They correctly point out that the
withholding on dividends and interest
will also cost additionally, which they
can figure either out of their own
pockets or out of the pockets of the
credit union members. So, as you add
up their figures, which seem to be well
documented, you come up with in
excess of $76 million per year.
Mr. President, I ask unanimous con-
sent that their study be made a part of
the RECORD at the conclusion of my
discussion of this amendment.
The PRESIDING OFFICER (Mr.
MATTINCLY). Without objection, it is so
ordered.
(See exhibit I.)
Mr. MELCHER. I feel, very simply
put, that we have the opportunity to
review very thoroughly and very close-
ly, in light of all the complaints that
we received about this provision of
law, whether or not it was wise to have
it. I feel that it is dependent upon us,
as a representative body of the people
of this country, to take heed of their
queries and their protests and their
complaints and review it carefully.
The amendment does not seek to
delay passage of this bill. It does not
seek to create any distress for the
chairman of the Finance Committee
or those who are proponents of this
particular provision. What it seeks is
just a fair airing, one that is in more
detail in light of new facts that have
been gained and garnered over the
past several months after it became
law and to review whether or not
there were sound judgments in making
it part of our Tax Code.
I think that is a fair proposal to
make. I think it is obvious that with
such a provision, so long as it is so vig-
orously opposed, even though it seems
on its face to be very fair-opposed by
the chairman of the Finance Commit-
tee and also the administration-it is
fair to attach it to a bill of some note,
of some importance, that might have a
chance of wending its way through
both this body and the House and
then down to the President's desk to
be signed into law.
Since it only is a delay for further
review and does not do much damage
to anybody's point of view on the
merits or demerits of this particular
withholding provision in our Tax
Code-it simply says let us look at it
again before it goes into effect and see
whether it is worth it, and if it is
worth it, it is Justified-I would hope
we can accept it. I do not in any re-
spect want to abuse anybody's interest
in quick passage of the bill. I simply
believe it is a method for accomplish-
ing the purpose which we are all here
to do, to be fair in the matter of taxes.
It does become a very personal point
and is very much on the minds of the
individual taxpayers. With evidence
that it is on their minds, I think it
only just and wise that we heed that
evidence and allow for time for a thor-
ough consideration of this provision
before it goes into effect in 5 months.
This amendment would accomplish
that.
EXHIBIT I
CREDIT UNION NATIONAL
ASSOCIATION, INC.,
Washington, D.C., March 18, 1983.
Hon. Jolla MELCHER,
U.S. Senate,
Washington, D.C.
DEAR SENATOR 11: The Credit Union
National Association, Inc. (CUNA) supports
repeal of withholding of taxes on interest
and dividends in favor of more reasonable.
less costly measures to improve taxpayer
compliance in this area
Before presenting our arguments against
withholding, we would like to make you
aware of what CUNA has been doing to edu-
cate credit unions about compliance with its
new withholding law. Our interest is in re-
pealing the law, but our obligation is to
obey the law; so we proceed on both fronts.
On November 15, 1982, the day IRS issued
temporary withholding regulations, CUNA
published a "Special Withholding Edition"
of our newsletter, devoted entirely to edu-
cating credit unions about withholding.
CUNA has conducted six seminars on
withholding, one of which Senate Finance
Committee staff helped secure appropriate
IRS staff to explain the regulations to us.
For that we are grateful
CUNA has published; a 153 page compli-
ance manual and over 5,500 manuals have
been ordered to date.
A 90-minute compliance video tape pro-
gram has been distributed to state credit
union leagues as part of our educational
video network.
Another. six national seminars are being
conducted in April 1983, with hundreds of
compliance seminars being conducted by
credit union leagues and chapters through-
out the country.
QUANTITATIVE ARGUMENTS
TABLES 1 AND 2.--COST TO CREDIT UNIONS
Our data suggests that for the first full
year of compliance credit unions will have
to spend $78 million in order to comply with
the new withholding law and regulations.
TABLES 3 AND 4.-VALUE OF FLOAT TO CREDIT
UNIONS
The provision for a 30-day float provided
by Congress to compensate financial institu-
tions for the start-up costs of withholding
10% of interest and dividend earnings is
woefully inadequate. A credit union in the
$2 million to $5 million asset category is ex-
pected to experience an average cost of
$4,000 to be in compliance with the law
during the first year. Use of the float for 30
days (really 19 banking days) will provide
the credit union only $189.00 during that
same year. _ -
Totals indicate that the $76 million first
year cost will be reduced by only $3.8 mil-
lion through float, and that credit unions
will therefore have to absorb a $72.2 million
operating cost increase the first year in
order to collect and deliver withheld taxes
to the federal government. This cost is over
and above current costs associated with 1099
reporting.
TABLE 5.-TOTAL CREDIT UNION DIVIDENDS PAID
IN 1982
This table summarizes some of the major
quantitative estimates CUNA has made re-
garding withholding at source as it applies
to all 23,000 credit unions.
That information can be used to define
the average impact of withholding on our 45
million members, and on our 23,000 credit
unions.
Average impact of withholding per credit
union
Based on 20,000
CU's
CUNA estimates:
1st year startup costs (tables 1,
2) $72.7 million .......................... $3,600
Lost interest at 8 percent
(table 6. column 7) $27 mil-
lion .............................................. 1,350
Subtotal .................................. 4,950
Dividends withheld (liquidity
drain) (table 6, column 4) $314
million ............................................ 15,700
Total average impact............ 20,650
TABLE 8.-ESTIMATE OF TREASURY RECEIPTS
If withholding of 10 percent of the inter-
est and dividends earnings of individuals be-
comes a reality, the Treasury will be able to
earn interest on those withheld funds.
Our data in Table 8, adjusted for probable
individual exemptions from withholding,
suggests that at a 8 percent rate, $27 million
dollars will be earned yearly by the Treas-
ury, based on 1981 credit union dividend
levels.
This is $27 million dollars in foregone in-
terest to credit union savers, and a $27 mil-
lion in credit union liquidity loss. This must
be added to the actual dollars removed from
credit unions through 10 percent withhold-
ig $529 million (no exemptions) to $341
million (with anticipated exemptions).
Based on the foregoing figures, credit
unions and their members are about to
assume significant cost increases because a
minority of citizens do not pay their fair
share of taxes.
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Afarch 21, 1989 CONGRESSIONAL RECORD - SENATE
TABLE 7.-IMPACT Or START-UP COSTS ON
CREDIT UNION INCOME
Table 7 takes a look at the withholding
startup costs as a percentage of operating
expenses, net income and as a percentage of
individual earnings. This information is
broken down by asset category and note
should be made of the significant cost in-
creases withholding causes, especially for
smaller credit unions.
Is It necessary?
Are there other, more reasonable alterna-
tives?
Withholding of taxes on interest and divi-
dends, as a solution to the taxpayer compli-
ance problem, IS an expensive and labor in-
tensive operation for the majority of the
20,000 credit unions In this country. With-
holding Is a matter of concern, Inconve-
nience and complication for all taxpayers-
and particulary frustrating to a majority of
your constituents who honestly and fully
disclose and pay taxes on their Interest and
dividend income.
Fairness arguments
Point 1
When the people don't pay their fair
share of taxes, the honest taxpayer bears
the burden. Honest taxpayers are now being
told they must shoulder a new government
burden because a few do not pay taxes.
Rather than focusing: on tax evaders, the
Congress Is requiring taxpayers to relin-
quish 10 percent of their interest and divi-
dend earnings to the federal government,
generally, at the moment any earnings are
credited to their accounts. More reasonable
approaches to gain tax compliance are avail-
able that will raise nearly the same revenue.
Point 2
Much, if not all, of these withheld Interest
and dividend taxes will be returned because
IRS states that 75 percent of the taxpayers
overwithhold now and receive tax refunds.
Does it make sense to put individuals and fi-
nancial institutions through this process
only to return a substantial portion of it
later?
When taxpayers fail to pay their taxes or
pay less than they should, the government
charges them interest on the taxes that
they owe. Yet the new withholding law
forces taxpayers with interest and dividend
income to make an interest-free loan for
several months to the government whether
they owe taxes to Uncle Sam or not.
Point 3
Sure, the withholding law exempts certain
people from the withholding requirement,
but implementing this system will be com-
plicated, costly and confusing to credit
unions and members alike. The smaller the
credit union, the more expensive it will be
to put the law into effect, as a percentage of
earnings.
The cost of implementing the withholding
program will, of necessity, be passed on to
savers and borrowers. This Is especially true
for credit unions-non-profit, cooperative,
member-owned Institutions. Figures sup.
plied by the Credit Unions National Associ-
ations' Economic and Research Division
reveal that the net cost will approach $76
million in the first year alone.
Point 4
At a time when federal tax policy is trying
th encourage people to save more of their
money, withholding of taxes on interest and
dividends appears to be a puzzling deviation,
as savers and investors may be financing
some of their own tax cut next July,
On July 1, 1983 paychecks will be larger as
taxes on wages are reduced by 10 percent.
But, on that same day, 10 percent of the in-
terest earned from savings and stock divi-
dends will begin flowing to the Treasury,
and the national savings and Investment
pool will be depleted by some $28 - billion
yearly.
Credit unions, which paid $5.29 billion .in
dividends to members in 1981, will see a
$314 million drain In liquidity as a result of
withholding, Savings growth in credit
unions will thus be slowed by the loss of 10
percent of the dividends.
Point 5
Besides withholding, TEFRA did a great
many things to tighten compliance not the
least of which was to get tie Treasury to
begin reporting interest and dividends on
billions of U.S. Government obligations. All
of the compliance tightening positions in
TEFRA should be given a chance to work,
and evaluated before withholding should be
considered. We an not so far from a high
compliance level that abandoning the volun-
tary compliance system Is warranted.
In October 1980, IRS Commissioner
Jerome Kurts testified before a Congres-
sional subcommittee on the "Its Adminis-
tration of the Tax laws:. (Income Informa-
tion Document Matchings)"
"Document matching for information re-
turns Is done through the Information Re-
turns Program (IRP). The purpose of this
program is to increase the Service's ability
to enforce the tax laws equitably and there-
by foster a high degree of voluntary compli-
ance. The goal of IRP Is to identify income
reporting discrepancies or nonfiling of tax
returns, and to correct any such discrepan-
cies by collecting any additional tax or re-
funding any overpayment. IRP is a high pri-
ority program which complements the Serv-
ice's other compliance programs."
"Finally, I would like to discuss several as-
pects of the draft GAO report on our com-
puter capabilities for document matching.
The Service's existing computer system Is
adequate to accommodate a 100 percent doc-
ument matching program. We are now be-
ginning a 3-phased plan for replacing and
Improving our computer capabilities. Our
new computer system will have the capabili-
ty for 100 percent matching even if there Is
an annual rate of growth in workload of 8
percent. We believe this provides a suffi-
cient margin for both growth under existing
requirements and new programs that would
increase the number of documents re-
ceived."
"The'draft GAO report did conclude that
inefficient design of thetnformation returns
processing system and mismatches between
Job requirements and computer resources
are limiting the productivity of the IRS
computers. Several IRS study groups have
analyzed these problems and made recom-
mendations for future actions. Changes are
now being made to implement some of these
recommendations but we cannel Immediate-
ly undertake the total redesign of the
system."
This statement leads CUNA to the conclu-
sion that IRS has the ability to do Its job
with some help, without creating a new fed-
eral bureaucratic system.
Make no mistake: credit unions, and all of
our members, welcome simple and just tax
laws which ensure that all taxpayers pay
their fair share. But the withholding law
enacted last year will punish the honest ma-
jority of savers and their credit unions.
We stand ready to work with the Senate
Finance Committee, the Department of
Treasury and the IRS In arriving at interest
and dividend compliance Improvement
measures that will more deliberately pre-
serve the goals of a fear eftllcient and volun-
tary tax collection system.
Sincerely,
Jana C. Bata, CAE.
S 3485
TABLE 1.-*W UNION WITHHOLDING STARTUP COSTS
TrsMdog
SYsten
...
Total co
(2)
(3)
(4)
(5)
(6)
...... .._...._......... _....... _........ __ ......_........... _............ ............................................... ..._......... -...-..... _..._...-................... _......................
0
05 b 0
10
153
$100.60
$440.00
$100
00
$64
06
704
6
.
.
......_ ................... _._........._...._ ..._..._......._.................. ................... ............................._..........._.......................__.._....._._......__._...........
0
10 b 0
25
207
136.10
440.00
.
100
00
.
67
61
.
743
71
.
.
....___ .__._...... .... ......... _----._ ..................................................................................................................._.............................................._...
0
25 b 0
50
.
316
207.77
440.00
.
500
00
.
114
78
.
1
262
55
.
.
.. _._.._...... _
.......... _ ................... _.......................................................... .................................. ............. _.............................................................
1
0
501
0
508
334.01
440.00
.
500
00
.
127
40
,
.
1
401
41
.
.
0
......._._ ....................................................................................................................................................._................_......_.._,..........._..........._.... 1.010 2
0
809
531.92
440.00
.
1,508.00
.
370.79
,
.
2,842.71
.
........ _........................................................................................................................................... ................... .............. _._..... _.....................................
2
0k 5
0
1,340
881.05
440.00
1,500.00
423.16
3
244.21
.
.
..........._ ............__..................__..................._........................_...................._............................_..................................................................?.
01. 10
5
0
2,392
1,572.74
440.00
500.00
1
526
91
,
4
039
65
.
.
..........................................................................._..............................................................................................._...................................._.......................
10
0b 20
0
4,716
3,100.77
1
060.00
,
2
500
00
.
999
12
,
.
7
65.089
.
.
...._ .................. _..................... _...................... _..................... .............. ........................................ _..._.............. _.................... , .............. _...... ..........
....
20
0 t
50
0
8,278
5,442.79
,
1
060.00
,
.
2
500
00
.
2
350
42
,
102*21
.
o
.
_ .................... ....._............... ._..................... -._................... _.............................................................................. _.......................... ..............
..............
50
0 t
100
1
17,172
11290.59
,
1
060.00
,
.
2901
00
,
.
1
227
59
17
07818
.
o
.
_._ ............... _................... ._...__............... _.... _.................................................................................. -...... _..... _._.................... _._.............. ..........
100
0
31,614
,
20,78621
.
1,350.00
.
5
0100
,
.
4
010
43
,
31
20864
.
+ ..... _...... ............. _ ..............._..._............----..................-................_................................ _.......... _.................. _._......... .................... :.............
87
951
44,677.78
1,740.00
,
5,010.00
,
.
7,712.67
,
50,1*45
TABLE 2.-ESTIMATE OF T O T A L STARTUP COSTS TABLE 2.-ESTIMATE OF T O T A L S T A R T U P COSTS-
And ra y (On M NO. d a's Total rod Total slit
in c+" per CU up cosh
(1) (2) (3)
0.0 to 0.05 ...................................... 1,160 $704.66
0.05 b 0.10 .............. __.......... ..._._ 1,590 143.71
0.10 b 0.25..............................3,610 1,262.55
0.25 to 0.50.._..._..... _.._._......_ 3,103 1,401.41
1,182.5
4,557.8
4,348.6
Asset or
or7 (do8as in
Na of M's
Tote cot
TOW slant
m~Ians)
in ahlap
pe ql
op ads
0.50 b 1.0 ................ _.......... _.... -
3,377
2,842.71
9,599.8
1.0 b 2.0............................... ._._
2,982
3,244.21
9,706.7
TABLE 2.-ESTIMATE OF TOTAL STARTUP COSTS-
CROMMI
Ave ca=(Man to
No. d 01's
IN mum
Trial ad
per CU
(1)
(2)
Is 5.0 .._..._.._........ _.......... _.
2,735
4,039.65
to 10.0 _............... ............ _
1,352
7,669.80
Total start
up cosh
(3)
11,048.4
10,356.2
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S 3486 CONGRESSIONAL RECORD - SENATE March 21, 1983
TABLE 2.-ESTIMATE OF TOTAL STARTUP COSTS- TABLE 2.-ESTIMATE OF TOTAL STARTUP COSTS- TABLE 2.-ESTIMATE OF TOTAL STARTUP COSTS-
Continued Continued Continued
Asset ca tegory ((do0a a in No. of CU's Total cost Total start Asset category (dollars in No. of CU's Total cost Total start Asset ca tegory dollars in No. of CU's Total cost Total start
per CU up costs millions lo category per CU up costs
mignons) in category per CU up costs millions) in category
(1) (2) (3) (1) (2) (3) (1) (2) (3)
10.0 to 20.0 .................................... 749 10,353.21 7,754.6 20.0 to 50.0.................................... 514 17,078.18 8,778.2 50.0 to 100.0.................................. ,162 31,206.64 5,055.5
100.0+ ........................................... 56 59,130.45 3,311.3
Total ........................................................................................ 76, 517.0
0.0 to 0.050 .................. ............ _.....................................................................................................................................................................................................................
$1,011
$101.10
$4.03
0.050 to 0.100.._ ........................................... _............................. .......................................................................................................................... ............ ............................
3,283
328.30
13.08
0.100 to 0.250 ................................... _.... _............................................................................................................................................................................. _.......................
8,648
864.80
2588
0.250 to 0.500 .................................................................................................................................................................................................................................................
19,963
1,996.30
19.68
0.500 to 1.0 .....................................................................................................................................................................................................................................................
38,315
3,831.50
31.78
1.0 to 2.0 .................. _...... _....................................... .._.................................................................................................................................................................................
82,908
8,290.80
81.14
2.0 to 5.0 ....................................._..................................................................................................................................................................................................................
192,411
19,241.70
189.71
5.0 to 10.0 ............... _......................................................... ....................................................................................................................................... ....... ....................... ......
458,786
45,878.60
301.56
10.0 to 20.0 ....................... _.................................................................................................................................................................................................... .......................
956,436
95,643.60
628.67
20.0 to 50.0......_ ....................................................................................................................................._......................................................................................................
2,226,118
222,611.80
1,463.23
50.0 to 100.0 ............................................................................................................_....................................................................................................................................
5,215,909
521,590.90
3,428.42
100.0 + ...........................................................................................................................................................................................................................................................
17,306,557
1,730,655.10
11,376.07
No. of CU's in category
Annual earnings per CU
Total earnings for
category (in thousands)
0.0 ta 0.05 .......................................................................................................................................................................................................................................................
1,160
$4.03
$4.67
0.05 to 0.10.......... _ .........................................................................................................................................................................................................................................
1,590
13.08
20.80
0.10 to 0.25.... _............ _ .......................... _................................................................................................................................................. ............................ ..... ................
3,610
25.88
93 43
0.25 to 0.50 .....................................................................................................................................................................................................................................................
3,103
19.68
61.07
0.50 to 1.0 .............. _........................................................................... _........................................................................................................... ...... ......... ............ ............ ........
3,377
37.78
127.58
1.0 to 2.0 .........................................................................................................................................................................................................................................................
2,992
81.74
244.57
2.0 to 5.0 .........................................................................................................................................................................................................................................................
2,735
189.11
518.86
5.010 10.0 ......................................................................................................................................................................................................................................................
1,352
301.56
407.71
10.0 to 20.0 .....................................................................................................................................................................................................................................................
749
628.67
470.87
20.0 to 50.0 .....................................................................................................................................................................................................................................................
514
1,463.23
752.10
50.0 to 100.0 ...................................................................................................................................................................................................................................................
162
3,428.42
555.40
100.0+ ......................................................................................................................................._.................................................................................................................
56
11,316.07
637.06
Total ....................................................................................................................................................................................................................................................................................................................................... 094.12
Total dividends paid by credit unions in 1981 ................................................................................................................................................................................................................................................................................................... $5.299 billion.
Acceleration of tax collections: ....................................................................................................................................................................... ......................... .. ........... . .................... ........ ...................... ..................... ....... .. ............... .
.Total dividends to be withheld at 10 percent as per TEFRA' .................,~....,.{............................................................................................................................................................................................................................................ 529.9 million.
Of CU dividdbs withheld, On already fully reported to IRS (89 percent)' ..................................................................................................................................................................................................................................... 471.1 million.
Of CU dividends withheld, portioni representing additional compliance obtained (11%) ' assumes 100 percent compliance................................................................................................................................................................. 58.8 million.
Estimated withholding start up costs, less float ................................................................................................................................................................................................................................................................................................ 72.7 million.
I Assumes no withholding exemptions by credit union members.
' Internal Revenue Service figures, Report of the Committee on Finance on N.R. 4961, July 12, 1982, p. 228.
Assumptions do not take into account application of minimal interest and annual interest rule.
Source: Credit Union National Association, Inc., Economics and Research Division.
Total
dividends
withheld I
(dollars in
millions)
Adjusted
dividends
withheld'
(dollars in
millions)
Total
withholding
(dollars in
millions )
Adjusted
withholding
(dollars in
millions)
Total
dividend
withheld
(dollars in
thousands)
Total
dividends
times cash
flow
adjustment
(dollars in
thousands)
dividends
times cash
flow
adjustment
(dlollars in
thousands)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
0.0 to 0.05 ...................................................................................................................................................................................................................
0.117
0.0
0.0
0.0
9.4
0.0
0.0
0.05 to 0.10 ................................................................................................................................................................................................................
0.522
0.0
0.0
0.0
41.8
0.0
0.0
0.10 to 0.25 .................................................................................................................................................................................................................
3.122
1.635
1.717
0.899
249.8
131.4
71.9
0.25 to 0.50 .................................................................................................................................................................................................................
6.195
3.245
3407
1.185
495.6
272.6
142.8
0.50 to 1.0 .......................... .............. ........... ................... ........... ...... ....:.......................................................................................................................
12.939
6.177
7.116
3.127
1,035.1
569.3
298.2
1.0 to 2.0 ....:............... .......................... ................. .................................................. ........... ...... .............. ............ .............................. .......... ........ .........
24.206
20.409
13.643
11.225
1,984.5
1,091.4
898.0
2.0 to 5.0 .....................................................................................................................................................................................................................
52.626
43.298
28.944
23.814
4,210.1
2,315.5
1,905.1
5.0 to 10.0 ...................................................................................................................................................................................................................
62.028
51.034
52.724
43.319
4,962.2
4,211.9
3,470.9
10.0 to 20.0 .................................................................................................................................................................................................................
71.631
58.940
60.891
50.099
5,131.0
4,871.3
4,007.9
20.0 to 50.0 .................................................................................................................................................................................................................
114.422
94.141
97.259
80.020
9,153.2
7,780.7
6,401.6
50.0 to 100.0 ...............................................................................................................................................................................................................
84.498
69.521
71.823
59.093
6,759.8
5,745.8
4,727.4
100.0+ .......................................................................................................................................................................................................................
96.917
79.739
82.379
67.778
7,753.4
6,590.3
5,422.2
r Average withholding (table 3, col. (2)l times number of credit unions.in category [table 2, col. (1)].
' The credit union has approximately 46 percent of funds in accounts of less than $2,000. We assume that credit unions with less than $1 million in assets who are using a paper based reportin system would choose to exempt these
accounts on the basis of annual dividends being less than $150. We also assume one-third of larger asset sized credit unions also would exempt these accounts. For credit unions with assets of less than 100,000 the Treasury would receive no
r with assets between $100,000 and $5 million, the nature of cash flow is such that Treasury would have an average of 55 percent of dividends withheld to earn
money during the year since annual withholding is less than $500. For credit union
on throughout the year. For credit unions with assets above $5 million, the Treasury cash flow would approximate 85 percent of dividends withheld. In addition 3 percent of member deposits will be assumed to qualify for an exemption.
Note From the data found in Table 6, we can estimate that the earnings available to the Treasury from the early receipt of credit union withholding would total $27.3 million when adjustments are made to the expected withholding. For
credit unions with assets of under $1 million (12,840 credit unions) Treasury earnings would total $512,900. [The estimate would be $1.83 million if Treasury were assumed to receive the unadjusted withholding at the beginning of the year.]
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March 21, 1983 CONGRESSIONAL RECORD - SENATE
Darulrrroxs/CoISPUTATIoNS roc
WrrmmoLDnoo TA=zs
TABLE 1
(1) Avg. Members-average number of
members per credit union In the asset cate-
gory (Source: NCUA Annual Report)
(2) Member Contract-assumes that all
members receive a mailing from the credit
union; 5% of members request additional in-
formation either by letter or telephone: 3%
of members file an exemption; and 1% of
members require help in filing for exemp-
tion.
(3) Training Costs--costs associated with
obtaining the information necessary to
comply with the regulations and transmit-
ting the information to the staff.who must
implement the program. Each credit union
is assumed ttqq send at least one person. to, a
league training program. The number of
persons who must be trained Increases as
the asset she of the credit union Increases.
(4) ayslem Preparation-costs associated
with preparing the credit unions' account-
ing/data processing system to comply with
the new regulations. Costs we relatively low
for relatively small asset sized credit unions
who are likely to use a hand-posting system.
It Is,assumed that Abe costs of preparing an
in-house system would be similar to charges
imposed by service bureaus.
(5) Overhead-assumed to be 10% of other
costs for credit unions with assets of less
than $1 million and 15% of other costs for
larger asset sized credit unions. Includes
printing costs and cost of space, manage-
ment time, etc.
(8) Total Costs per CU-the sum of (2),
(3), (4) and (5)
TABLE 9
(1) No. of CVs in Category-the number of
credit unions in the sent category. (Source:
CUNA Economics & Research)
(2) Total Costs per CU-;teen Cdumn (8),
Table 1
(3) Total Start Up Comb-Sad. t of (1)
times (2)
S 3487
TABLE e
(1) Avg. Dividends Paid-the dollar divi-
dends paid by each credit union in the asset
category is 1981 (Source: NCUA Annual
Report)
(2) Average Withholding-assumed to be
10% of average dividends paid with no
member exemptions.
(3) Annual Earnings Per CU-Is based on
as effective -annual Interest rate of 8%.
Credit unions are assumed to hold withheld
dividends until $599 is accumulated. Once
ON is accumulated. the credit union would
forward the?inoney to the Treasury within
15 days of the end of the month following
its accumulation. Once $000 is accumulat-
ed. the eight month rule I. assumed to be in
operation.
TAUS 4
(1) No. of CUs in Category-,same as
Column (1), Tale 2
(2) Annual Earnings per CU-from
Column (3), Table 3
(3) Total Earnings for Category-product
of (1) times (2)
TISIE 7.-IMPACT OF STARTUP COSTS ON CREDIT UNION INCOME, ABILITY 10 ADD TO RESERVES
(Del- awarb IN alias) .
FEW
p mw a :Aeon perasM A18 MITA 4
Grass 4-ft pet tme TwaLm to
iecas . easW V*AW
W aced mews sn
0 to $0.05........ ............. _._..._ ...............................................................................
.05 to .10..._....._ _ .... ... _ >_ -__>____...>. _ _..._ _.....
.10 M 25.__ ..._...___ ....._.... _.> _ _.._._....._
.25 b .50 ........... .....>...................................................... ....................
........... _.......
.50% 1_...... ~ >. _ __.. ...__ _ ... _ ....._.......
b
to 5._..._._..._..._....__....._......_ ....................................:........>............._.........
,to 10_. _ .._._ ._.. _ ...._.___ _ .._. W..._..__...-.......
10 to 20.._.>............__....-.
to ..............._.._........>.............._..................... .........................
b 100........._._.
100
Mr. DOLE. ' I thank the distin-
guished Senator from Montana for
what I consider to be an objective dis-
cussion of this matter, one of the few I
have heard recently. I commend the
Senator from Montana for his
thoughtful approach to this whole
issue. Again, It Is a matter that has to
be debated at great length. I am pre-
pared to do that If-necessary.
Mr. ? President, I know the distin-
guished Senator from West Virginia
would like to speak on an unrelated
matter. I wonder if I might ask unani-
mous consent to yield to the Senator
from West Virginia for that purpose
without losing my right to the floor or
recognition. -
The PRESIDING OFFICER. Is
there objection? Without objection. it
is so ordered.
The Secretor from West Virggnia.
Mr. RANDOLPH. Mr. President, I
will. be speaking on social security. I
will drop back 48 years and give, I
think, some interesting comments
about the measure passed at that
time. I am the only Member of the
Congress serving today who was here
in 1935. I supported the measure and,
$704.66
24.29
40.41
51.17
60.75
324.73
$2901
$1,713
0
'
377
$1
$1460
$117
743.71
. 9.13
17.90
23.63
18.62
112.12
9147
4
'
,
3,
991
8
610
1,262.55
7.01
13.34
19.10
12.96
;
,
1,401.71
328
7.07
All
6.13
433.43
42,676
19
,812
3 081
22 864
32227
2,742.71
3.34
7.57
12.00
6.00
45.29
94954
,
37,541
18411
41,410
6 397
,
3,244.21
1.89
4.51
7.4
3.24
29.40
171
895
71,908
13,355
se,91i
11
033
4,039.65
1.06
2.81
4.67
1.70
14.18
341,519
143,791
512
237,614
,
21,491
7,659.89
10,353.01
.n
.60
2.11
73
0.
4.01
2.19
1.39
.93
13.81
1425
886,446
11118,231
118,!0!
519,595
} 971
551,131
1,111,636
55,476
91
993
11,01818
.46
13E
2.29
69
1155
3,721761
1,260,213
41
2,460,056
,
141
891
31,206.64
.38
1.26
2.0I
.55
18.78
8,141,506
2,415,278
1,
5
066
815
,
869
611
59,130.45
.23
1.04
.70
.29
340
25,978,923
9,686,121
3,
,
,
20.115,791
,
824,016
of course, voted for it as a Member of
the House of Representatives.
I am very grateful to the Senator
from Kansas (Mr. Dots) for permit-
ting me to step back for almost a half
century, not just to be nostalgic, but
to give some of the reasons why social
security came to passage almost a half
century ago.
I am very grateful also to the man-
ager of the bill on the Democratic
side, the Senator from Louisiana (Mr.
Loco) for the type of candderation
being given this important legislation
over oonsiderble time here in the
Senate.
I have listened, of course, with a
process of learning-I am always
trying to learn-to the able Senator
from Montana -(Mr. Msicnn), who
has been talking on a specific subject
related to the possible inclusion of an
amendment relating to withholding on
interest and dividends during the con-
sideration of this measure.
The social security program, Mr.
President, does have a special -signifi.
cance for me because It was my privi-
lege-yes, It was my responsibility-as
a Member of the House of Representa-
tives of the United States to actively
support and to vote for the original
legislation 48 years ago this April. I
point out the date. August, 14, 1935,
when Franklin Roosevelt signed this
.monumental bill, a breakthrough bill.
Into law.
I recall very vividly on April 19, 1935,
when the House, after a long, arduous,
ofttlmes very spirited i-day debate, ap-
proved the social security package by
vote of 372 to i3,
The Senate, on June 19, passed the
measure by an impressive vote of 77 to
a.
At that signing of the bill on August
14, 1935, there were certain words
spoken by the President of this Re-
public. I quote these words from
Franklin Roosevelt. He said:
We can never insure 100 percent of the
population against 100 percent of the haz-
ards and vicissitudes of life, but we have
tried to frame a law-
Said the then President thinking In
terms of the Congress-
which will give some measure of protection
to the average citizen and his family ? ? ?
against poverty-ridden old age.
Mr. President, I believe the program
has been extremely successful during
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S 3488 CONGRESSIONAL RECORD - SENATE March 21, 1989
the years. I think it is an example of a All of this leads to a present rather Mr. RANDOLPH. I thank the distin-
Government program that has worked complex, confused, and troubled situa- guished Senator from Kansas.
and fulfilled its original promise. tion. Congress is reacting to the prob- Mr. MOYNIHAN addressed the
From a simple premise of assuring lems, frankly, and that is understanda- Chair.
our citizens that old age would be free ble, of this system. We need to provide The PRESIDING OFFICER. The
of financial anxiety to a complex pro-
gram of this very hour that provides
tens of millions of Americans with
monthly retirement checks as well as
health care. Approximately 36 million
Americans are now receiving, as we
know, monthly checks.
Mr. President, I recall for our col-
leagues a statement I made on April
15, 1935, during the debate which per-
haps is pertinent as I speak today:
We have passed through the worst, and
we now have it behind us; but there are mil-
lions of worthy older people in this country
who now and in the future will face a real
cause of fear a hundred times greater than
the fear of depressed business.
Ingratitude is among the more reprehensi-
ble of human vices!
Let us not be ungrateful for our delivery
from the fear of poverty, and let us demon-
strate our gratitude for this blessing by
helping to provide protection to those who
are not in position to provide it for them-
selves.
It is a great blessing to possess riches, but
it is a greater blessing to possess, also, a
heart that is willing to use riches in behalf
of those who are helpless.
Mr. President, in 1935 one-third of
all elderly Americans were impover-
ished. Let us not forget that fact.
People do not like to look back and
talk about the situation then. There
are some parallels even today. Let us
think of today.
Today, less than 15 percent have
poverty-level incomes. The social secu-
rity program has proved that America
can, at times, be at its best helping
others to help themselves. Since the
inception of social security, many sig-
nificant changes have reshaped Amer-
ica and the program. I quote now from
President Jefferson, who said:
As new discoveries are made, new truths
discovered and opinions change with the
change of circumstances, institutions must
advance also, and keep pace with the times.
Mr. President, the social security
program has been expanded through
13 expansionary laws and seven auto-
matic benefit increases since 1935. In
the beginning-I think this is an im-
portant fact to state-men dominated
the work force. Now, almost half our
work force is women. There was a dif-
ference then in the work force from
the work force now.
In the beginning, there was no Fed-
eral minimum wage. It was thought
that if we enacted social security, we
could partially replace earnings lost
through retirement or death.
At the time of the passage of this
legislation in 1935, only 5 out of 10
jobs in America were eligible for bene-
fits at age 65. Today 9 out of 10 jobs
are included in social security.
In 1940, there were 16 workers sup-
porting each beneficiary. Today, as I
speak, there are 3 workers to every 11
who is a recipient.
There has been a lifespan increase
of 20 percent over the last 40 years.
the financing concerns of not only the Mr. DOLE. I am happy to yield to
present but the future. I have no the Senator from New York.
doubt that the membership of Con- Mr. MOYNIHAN. I thank the Sena-
gress, regardless of party, regardless of tor.
the occupant of the White House, that Mr. President, I, too, should like to
all of us working on Capitol Hill and join in expressing the gratitude of this
downtown can plan for social secu- body and, if we can be surrogates of
rity-that, in fact, we may clarify the people we represent, of the people
many of the situations which are very, of the United States for the role the
very troublesome at this hour. Senator from West Virginia (Mr. Rnx-
Mr. President, what we are doing aoLPH) played in enactment of this leg-
today will Boa long way toward cor- islation and that he plays in its preser-
g the present financing of the vation today. Fifty years ago, almost,
program. There is much remaining to he helped enact it. Today, he has
do. I know Senator DoLa and Senator spoken to the urgency of the legisla-
LoNO, the two managers of this impor- tion before us.
tant legislation, are in a position to im- Mr. President, there are not a great
prove and can improve it, with their many Members of the Senate in the
expert handling of measures of this Chamber. Some will be listening on
kind over the years. I think that Con- our radio system. I should like to call
gress will not renege on its basic prom- attention, if I may, to the urgency
ise of 48 years ago. Changes, yes, will here, first having said, as I said some
be made. Provisions will be modified. weeks ago, I guess, in the jobs bills,
Mr. President, I am gratified to havbe- e that I am committed-it is a commit-
lielt voted thaact the has original served the legislation. I try ment from last year-to vote against
weep on the repeal of withholding as it is
well. I am sure that out of the work we called. I voted against it in committee
Capitol Hill now, in both bodies, we 1 year ago; I voted against it on the
shall be able to make ho necessary however, , we have ~- floor. It is a matter of concern to the
provements. I think,
to cto o financing savings institutions of New York, but
co come o grips with the fina ncth the commitment I made I shall keep.
changes which bill that is before before are us. We necessary cannot the But we now have a time on which it
bill that pass can be kept. Whether it will prevail or
them by. not, I do not know, but April 15 is set-
say package of will wi the come bill, out, will bill, wI tied for that debate to begin.
say to the e managers manaaltgerf What I would like to call to the at-
mises s a perfect already been made, package. The c in part, r, tention of the Senate is a detail, one
and on-subsequent equent votes will, might say, of the arrangements that
and made. I am not , perhaps,
encouraging have been put in place to do what the
my colleagues further nother on a Senator from West Virginia has said,
pending aguees one
amendment o wh amendments. which is to preserve the social security
t System and to try to make clear how
in o o my opinion, it
am only saying tor
that,
is absolutely necessary for the Con- precarious they are.
gress to pass a measure coping with It is not just that so many different
the problems of social security as it groups have had to make concessions
exists today and that the President of which they have not wanted to do but
the United States be in a position to did in the public interest as they
sign the measure that comes to him judged, but with the understanding
from Capitol Hill. that others would make concessions
Mr. DOLE. Mr. President, I thank and if any try to withdraw, the whole
the distinguished senior Senator from is risked, but there is a matter of time.
West Virginia (Mr. RANDOLPH). I think Senators know that the authority for
it is remarkable that he is standing interfund borrowing expired on De-
here today, reciting personal experi- cember 31. Prior to that date, the
ence with reference to the first Social trustees borrowed enough funds to
Security Act. It is another indication bring the system through July 1. The
of the Senator's commitment and dedi- first actual change in outgo in this
cation. system takes place in effect on July 1,
I advise the Senator that we are July 2, or July 3, when the checks go
going to do our best to keep our com- out. That is when the 37 million
mitment, without getting into the checks-36.4; it changes hourly-go
merits or demerits of the pending out. The provisions of the bill provide
amendment, as the Senator from West for a 6-month delay in the cost-of-
Virginia stated. I deeply appreciate living allowances from July 1.
the Senator's statement. It should That delay is necessary because the
demonstrate to all of us the serious- funds will not be there to meet the ob-
ness of what we are about and what ligations otherwise.
we should do-hopefully before this In terms of the enormous task in-
coming Friday. volved in the Social Security Adminis-
I thank the Senator very much for tration adjusting the retirement bene-
his eloquence. fits of 36 million-plus Americans, the
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March 21, 1988 CONGRESSIONAL RECORD - SENATE S 3489
absolute last minute they can have Ilse-?critke would say inflame--wolfs opin- You may have such a letter bearing ny
this statute on the books such that ion. name and address but let me assure you
they have the authority to make the This to how they did W. that neither my wife nor I wrote or sent it.
changes is May 7. In the focus-group sessions in Chicago, Does this not lend credence to Senator
We are recessing this week. We will put together by the American Bankers Asso- Dole's contention that the purported mas-
come beck an April 5. There are 4 elation diverse people were aesembia~i sive public opposition to this measure Is not
short weeks, as I count them, during around a table and probed for their atti- truly public but a strong initiative on the
that 26-29 days in which this legisla- tudes toward government, taxes. asv>zigs part of serVice ki-serasts, such as the bank-
th ing lobby?
and banks. They were paid $25 apiece for 90
thinng has lets to it slip by become today statute. or If at any the - minutes of their time and thoughts. They That is only one letter, but I am
very asoet, noon tomorrow, prospects were not told who paid the.
of getting a conference with the We want them to tell what come out
House, of getting a final bill-it is a of the leafs groups.' What we do not
large bill; it is not as long as many, but have--and I hope that somebody wHl
It is a bill filled with details, not just now tell us-is what these people were
dealing with social security-and get-
ting it to the President, who now ex-
pects to sign the legislation as it has
passed the House. and tarns out of the
Finance Committee, that is, nonethe-
less, fraught With the kinds of delays
that are natural to the legislattre
process-if we delay by an extended
debate on any extraneous issue, we are
putting In peril this entire enterprise.
I do not want to exaggerate, but I do
not think what has been done here
can be done a second time. Already the
strains on the alliances are showing,
and to give up that opportunity to
show that we can govern, that what
we have created we can preserve,
seems to me reckless and not in the
told. We have been saying for days an
this floor that this was an underhand-
ed campaign-
Mr. MELCHER. Will the Senator
yield?
Mr. DOLE. Later, because I want to
keep my thoughts here-that this was
an underhanded, heavyhanded cam-
paign by the American Bankers Asso-
ciation. I hope that we will now have
from the American Bankers Associ-
ation, whoever might have aenaetcted
this "focus group," where you Pat
people in a room and you use two-way
mirrors to get their reaction, what
questions they Were asked about with-
holding. what they . were told about
withholding. I Just assume from the
urge that we speed along, it seems to
me I ought not to talk at too great
length myself,. but I wanted to make
clear that we have a deadline and we
can meet it, but we are beginning to
fritter away that opportunity.
I hope Senators wlr understand
what could be the consequences. It
would be ruinous of our reputation
and it would be detrimental to the sta-
bility of our people, and their confi-
dence in us would be gone.
Mr. DOLE. Mr. President, I thank
the distinguished Senator from New
York. I certainly share the views ex-
pressed by the Senator.
We have agreed on a date to debate
withholding. It is difficult to be re-
strained in talking about this lcifbying
canpaion by the ABA. particularly
when you read yesterday's Wssiaing-
ton Post. I hope we can finally dater-
mine the full truth of how this cam- Now, I will say, to his credit th$t the
paign originated and lssw they picked Senator from Montana said very clear-
those who were engaged in this cam- ly "This is not a new tax" It is not a
paign. But I understand that the new tax, but I must say that I begin to
American Bashers Association- wonder Just how far the banks may
borseed a technique commonly used by have gone because today I received a
markem'g !~tm~ and ceaducted letter from a man in Chicago. Of
focus-sroap' sessions with customers, course, I guess that is where all these
They discovered that once people were started. But he -said, "At-
made aware of the new law they were "af- tashenanigans uhed is a copy of a let>ler to Con-
Con-
fronted" by ft. That, the lobbyists admit, is
just they took that ]Manger and thhouugh migh of interest to you."
molded it into an outpouring of public This is addressed to Congressman
wrath that burled Congress beneath a YATES. a good friend of mine on the
mountain of mall, gummed up the floor of 'House side who ha
p
n
t
be
i
g
,
p
s wee
e
s
0
s
a prom
-
the Senate for a week, generated a flash of nent Democrat. cover, should have highlighted "Tax
voked temper from threats of President retaliation Reagan from and pro Treasury He said: Cheattnng-Bad and.Oetting Worse."
what we are suggesting is the
Secretary Donald T. Regan and Senate Fl- Dma Coirolnasauir Y5Tas: This week I re- That problem.
nance Committee Chalon Robert J. Dole. ceived a card from you acknowledging re-
The whole effort also touched off an argu- ceipt of a letter from me opposing the with- Does somebody want to stand up and
ment over what the boundaries of fair play holding of 10 percent of k~erest and dM- support tax cheating? It is said, "How
are when an interest group sets out to mobs- dend income. are we going to pay for eliminating
can Bankers Assaciaitien they were
probably told It was anew tax. That is
what the credit unions told everybody:
"We are against this withholding tax."
People were told by the American
Bankers Association that we were
going to loot the savings accounts of
their depositors, we were going to pick
the .pockets of their customers, and
that their savings were going to disap-
pear.
And now the truth is starting to
come out. That is why this Senator be-
lieves this deserves a long discussion.
I did not realize that they had really
gone quite that far, using a two-way
mirror system to probe and to feed
people propaganda, and then get - the
proper answer, decide what to put In
their advertisement and then flood
this country with ads and the Cen-
wondering how many thousands of let-
ters have been mailed to Senators
saying that they have been signed by
some bf our constituents. This was an-
other part of the bankers' heavyhand-
ed campaign to mall in fictitious let-
ters, or take the list of their depositors
and flood us with mail and say, "All
these people are opposed to withhold-
~?
To me, I think it is disgraceful. Here
we are, having just passed the jobs
bill-we have not even finished it yet-
and the social security bill should have
been finished last week, had it not a
been for the American Bankers Associ-
ation gearing up the Senate and trying
to repeal withhoiding.
The so-cared I!;aster recess starts on
Friday or Thursday of, this week,' and
now we have another' effort, I assume
the American Bankers Association is
geared up again because now they
have the old people hostage. Now they
want them to wait while they tie up
the Senate.
The social security system is about
to go bankrupt. We we talking about
$165 billion that we need to infuse into
this system in the next Several years.
But some seem to be saying, oh, no,
we cannot do that. We cannot worry
about the senior citizens in America.
We first have to take care of the
American Bankers Association and
their interests. They almost beat the
bill to relieve the homeless and the
Jobless, and now they are after relief
for the senior citizens. I wonder to
what lengths the American Bankers
Association; yes, the Savings and Loan
League: yes, the credit unions, will go.
We set a time for debate on with-
holding, April 15, and we said we will
have a full and Complete debate. I
thought they would be satisfied with
that. But it seems to me that there is
no way to satisfy the American Bank-
ers Association lobby.
I wonder how long some of the bank-
ers in say State and other States will
put up with this kind of campaign.
The American Bankers Association po-
sition does not reflect the view of the
bankers In my State or in the State of
Montana. This Is a shameful cam-
paign, carried on in an unfair way, by
a lobbying group known as the Ameri-
can Bankers Association.
I thought it was rather interesting
that Time. ma
azine
on thi
k'
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S 3490
CONGRESSIONAL RECORD - SENATE March 21, 1983
withholding? We will take it away
from the third year of the tax cut,
take it away from the working people
instead of those who are paying their
taxes."
If we have to debate withholding on
social security, we will debate with-
holding on social security.
I will suggest later that we table this
amendment and get on, because I
share the view of the Senator from
New York. There are a lot of other
things to concern us around here
rather than a mail campaign that has
many Senators quaking in their boots.
I believe that once we have the full
story of how this campaign was start-
ed and generated and how it was sus-
tained, many Senators who now have
the pro-bank position will suggest that
maybe you cannot really support a
campaign of that kind.
A lot of my friends say, "Bob, you
can't take on the bankers." The Sena-
tor from Kansas is not taking on
anyone. The Senator from Kansas is
supporting the President of the
United States, who in has 1983 budget
said we should have better collection
of taxes so that the system is fair. It is
not a new tax. It is a collection of tax.
There are 20 million Americans who
do not report all their interest and
dividend income. That is a substantial
number. I do not suggest for one
moment that it is because they are dis-
honest. Much of it is inadvertent and
honest mistakes. But what is wrong
with collecting taxes that are due? I
think that is the issue.
There was another story that ap-
peared in. the Washington Post this
morning by Jane Bryant Quinn cap-
tioned "The Truth About Withhold-
ing, Minus Tall Tales From Banks,"
which I ask unanimous consent to
have printed in the RECORD.
There being no objection, the article
was ordered to be printed in the
RECORD, as follows:
THE Ta9TH ABOUT WITHHOLDING, MINUS
TALL TALES FROM BANKS
NEW Yoax.-You may have been misled
by the widespread disinformation campaign
that the banking industry is conducting
against the new tax withholding system on
interest and dividend income.
Big headlines in ads are scaring savers, by
saying that "Congress wants a piece of your
savings," or that "10 percent of the money
you earn in interest is going to disappear."
Those headlines mean only that most
Americans owe taxes on their interest
income, and the government will be trying
harder to collect the legal taxes due. But
the ads have frightened many savers, espe-
cially the elderly, into thinking that the
government is grabbing something extra.
Even President Reagan criticized the bank-
ing industry last week for the sound and
fury of its campaign.
Congress created the new tax-collecting
system during its desperate search for rev-
enues last summer, when it became appar-
ent that the budget deficits were getting
much worse. An estimated 10 percent of the
people who owe taxes on their interest
income don't pay-either because they
cheat or because they forget. Taxes are also
evaded by an estimated 18 percent of the
people who earn dividends.
The most efficient way to collect income
taxes is to withhold them automatically at
the source. That is what's done for the
taxes due on wages; they are deducted from
every paycheck you get. Automatic tax
withholding on pensions and annuities
began this year. And starting July 1. there
will be automatic withholding on the
income you earn from your savings.
Banks, savings and loan associations and
credit unions have been trying to repeal this
new law. They stacked protest postcards on
their counters, and urged their customers to
mail them to congressmen and senators.
Some of the banks collected signatures and
mailed the cards themselves. Some provided
stamps. Altogether, they generated more
mail on a single issue than most legislators
can remember. Cards have been pouring
into the Senate Finance Committee at the
rate of 30,000 a week.
The banking institutions object to the
cost of tax withholding, which will be paid
either by their customers (in higher fees) or
by their shareholders (in lower profits).
A majority in the Senate and House of.
Representatives now backs a bill to repeal
tax withholding on interest and dividends.
But the leadership of both Houses opposes
repeal, as does the public official- with the
biggest vote of all. Reagan announced last
week that he would veto the jobs bill if it
came to him with a rider repealing interest
and dividend withholding. (The Senate fi-
nally passed the jobs bill Thursday after the
withholding amendment's sponsor was per-
suaded to withdraw in return for its consid-
eration on the floor April 15.1 The govern-
ment estimates that automatic tax with-
holding will pick up an extra $4 billion to $5
billion in taxes next year.
To straighten out the disinformation you
have been getting, here is what's scheduled
to happen July 1:
Ten percent of your interest and dividend
income will be withheld toward your income
taxes due. This is not a new tax. It is simply
a new way of collecting the present tax.
The government is not withholding 10
percent of your total savings, as some
people believe. It is withholding 10 percent
of the interest earned on your savings
which, for most taxpayers, is less than the
actual tax due.
When taxes are withheld monthly from
your savings account, you will have a little
less money earning compound interest. The
banks have been making a great deal of this,
claiming that the government is "looting"
your savings. But the cost is small. At 9 per-
cent interest, tax withholding will cost you
50 cents a year on each $1,000 in savings.
And you need not even lose that. Banks are
allowed to withhold taxes all at once, at the
end of the year, which would leave all your
money free to compound all year.
All low-income people and most of the el-
derly can exempt themselves from tax with-
holding. You are exempt if you paid no
more than $600 in federal income taxes last
year ($1,000 on a joint return); or if you are
65 or older and paid no more than $1,500 in
federal taxes last year ($2,500 on a joint
return). The Treasury estimates that 87 per-
cent of the elderly will not be subject to tax
withholding.
But to get your exemption, you must file a
new withholding form (Form W-6) with the
companies that pay you dividends and with
each banking institution where you keep in-
terest-paying accounts. That won't be hard.
When July 1 rolls around, there will be
plenty of information about where those
forms can be found.
Mr. DOLE. Mr. President, I think
that once the people understand that
this is not a new tax, they are going to
support what we are trying to do. Does
anyone want to stand on this floor and
say that you should not pay your
taxes; that we are going to make cer-
tain you do not pay your taxes; that
we have to make up for what you do
not pay, so we are going to take it
away from the working people?
The Senator from Kansas had a
note last Friday from Mortimer
Caplan, the IRS Commissioner under
President Kennedy. Among other
things, he thought we were doing the
right thing. However, he said:
Withholding is the backbone of our self-
assessment system and represents almost
half of what the IRS collected in 1982. Yet
it has been under frequent attack through-
out our tax history. At the same time, its
soundness has been proven by the long ex-
perience both in England and in this coun-
try dating back to the 19th Century. It is
hard to conceive of a sound income tax
system that does not have the backing of a
reasonable withholding procedure.
Tax withholding on dividends and interest
was first introduced in the United States by
the Revenue Act of July 1, 1862. It applied
at an initial 3 percent rate to interest and
dividends paid by all railroads, banks, trust
companies, fire, marine, life inland, stock
and mutual companies. In 1864, the with-
holding rate was increased from 3 percent to
5 percent and was extended to include inter-
est and dividends of canal, turnpike and
canal navigation companies. Only the sala-
ries of government employees were also sub-
ject to withholding during the period, as it
evidently was regarded as too difficult to
extend withholding to the salaries of out-
side employees. In short, withholding on
dividends and interest was workable, but
withholding on salaries of non-governmen-
tal employees was not.
I have a very extensive history of
what happened from 1862 to 1962, 100
years, when we have had withholding
in this country. It is not just in this
country. Other countries have tried
withholding successfully. In Belgium,
they have a withholding rate on inter-
est and dividends of 20 percent; in
France, 10 percent; in Germany, 25
percent on corporate bonds and divi-
dends. We do not have the informa-
tion for Italy. In Japan, it is 20 per-
cent on interest and dividend. We do
not have the precise percentage in the
United Kingdom.
It seems to this Senator, to the
President of the United States, to the
Speaker of the House of Representa-
tives, and the chairman of the House
Ways and Means Committee that we
should take a very careful look at
withholding. This Senator believes he
has an obligation to do so. I cannot
expect my colleagues on the House
side to defend withholding if we are
not willing to defend withholding on
this side.
If there is some reason why at is not
defensible, or if the President suggests
we are going to drop withholding, that
we are getting too much heat from the
bankers, or of the Senator from Mon-
tana can agree that the bankers will
start withholding on June 1, 1984,
then maybe we will have something to
discuss. But until that happens, I
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CONGRESSIONAL RECORD - SENATE 83491
think all we can do is discuss withhold-
ing.
It would be a budget loss. The
amendment is subject to a point at
order under the Budget Act, because
the loss in 1983 is $L1 billion, and in
1984 it would be about $0.3 billion.. So
there is a point of order to be rude
under the Budget Act.
I know there has been a big question
about who is going to be first. There
have been meetings on the Republican
side of the aisle today, the Steering
Committee. trying to find who is going
to offer the first withholding amend-
ment. The Senator from Kansas
knows that it is popular politically and
that you will get a lot of. fan mail If
you repeal or delay withholding. But
that does not mean it is the right
thing to do.
The Senator from Kansas is fairly
sensible and reasonable, but I really
believe there is going to be revulsion
in the Senate when we finally learn
how this campaign was put together
and how it has been sustained.
Mr. MELCHER. Mr. President, will
the Senator yield?
Mr. DOLE. I will yield for a Ques-
tion.-Mr. MELCHER. The Senator has
asked how the campaign was put to-
gether. I wonder if he would mind my
stating-before I ask my question-
that in the case of one taxpayer, who
happens to be the wife of the aide who
sits in this chair-he is out for a cup of
coffee right now-who Is a school-
teacher, she received this form, notice
662-A, to which the Senator from
Kansas referred, last week I believe,
from the Treasury Department.
This is a form that goes out with
every tax refund that is being mailed
right now. It say, "Attention, recipi-
ents of interest and dividends. New
withholding program begins July 1. "
So far as that individual taxpayer is
concerned-the wife of my aide, who Is
a schoolteacher-that was the first she
heard of it, The first thing she did was
buttonhole my aide when he got home
that night, and she said to him:
Have you seen this notice? Now do you
know what they are going to do to us? They
are going to start withholding tax on inter-
est and dividends. Why do you not say
something to Senator Mxrorna, to see
whether he can do something about that, to
block it?
I daresay that millions of other tax-
payers are going to find out about this
withholding to become effective July 1
from the explanation mailed to them
either with their refund checks or, as
the Senator from Kansas pointed out
several days ago, in the 36 million
checks which are going to be mailed
out to social security recipients on
April 1. They are going to learn of it
for sure.
Can the Senator tell me does not the
reaction, of this schoolteacher wife of
my aide, just learning of it through
the Treasury Department, by receiv-
ing this form from the Treasury De-
partment with the refund check point
out that there are a lot of people who
are completely. unaware of it and
whatever this big campaign has been
by the banks they do not necessarily
set the word out? Is it not apparent
that the IRS is doing their duty? They
are now getting the word out. Would it
not also be fair to may that a great
number of taxpayers ark; going to have
the some reaction as that pchoolteach-
er did who objects to it?
Mr. DOLE, Mr. President, if the Sen-
ator will permit we to answer the
question, I cannot believe the school-
teacher did not know it beforehand if
she teaches in this area because it has
been rather 'widely reported and the
banking lobby has not missed many. I
do not know if they have been into the
schools but they have been every-
where else. I am certain 9 she had an
account she has gotten a notice in the
bank account. If you walk into the
bank you are hit with one of these
forms to fill out.
But I would also assume they with-
hold from her Check. U she has with-
holding on her wages as a schoolteach-
er. and I do not know whether she is
objecting to that also, but that is an-
other matter.
Mr.11 R addressed the Chair.
Mr. DMX. I am not going to yield
for more Questions:
Mr. MEL,C?!ER. I think that is the
point. I think the point of farther
withholding is what she is objecting
to.
Mr. DOLE. The point the Senator
from Kansas makes is why-should we
withhold from the werliig people on
wages and salaries?
Mr. MEL CHER. She is working.
These are working people.
Mr. DOM I said why should we.
Mr. MELCH'1 L. lam giving the Sen-
ator a fair reaction. I am giving him a
fair reaction of si taxpayer.
Mr. DOLE. If the Senator wants to
broaden the amendment and change
withholding on wages and salaries, we
might be able to do business. I do not
know why he wants to (aver the rich
and keep gapping the working people.
Mr. Imo. This Is not the rich.
Mr. DOLE. If we are going. to have
withholding we should have withhold-
ing. If we are going to have special ex-
emptions because the banks are pow-
erful, the savings and loans are power-
ful,. and the credit unions are power-
ful, we should have the exemptions
for the working people. the people out
there working with their hands every
day.
We have had withholding. With-
holding has been around for a long,
long time, and I know a lot of working
people who would like it if we did not
take it out of their checks every 2
weeks. They could put that aside and
earn interest on it and do it the next 2
weeks, the next 2 weeks, the next 2
weeks. At the end of the year next
April they could pay their taxes.
The banks are arguing that we are
npt letting people keep money there
for investments.
What about the millions and mil-
lions of working people who should
have the some right?
I wish to say again, just to include in
the Rncena a dew editorials--here is
one from the St. Petersburg Times:
"Baloney from Banks," which I
thought made a lot of sense. It talks
about this coompaign and bow they
give yau a little easinple here.
It has been 40 yeah since Uncle Sam
started taking his place of every pay check.
Had.faienees been the ynk1 , that's hew long
income taws would hasp been withheld
from bank interest and stock dividends also.
However money is earned, it ought to be
treated'alike.
It takes more than fairness, unfortunate-
ly, to make Wad0bgton, tick; In this case, it
took the lengthening shadows of $200-bil-
aon burled deAcba The r+ederms that Con-
arm passed last year. who rally effective.
will mean some Herat a year in new revw-
nue-mbar!? all ef'1t voy esentlns tones that
are presently being and" by people who
"forget" their dividend and interest income
when filing their lW '&
It went an to nay.
The baatess, It aonma, at not good losers.
eympouIr womb comae mare a Allly for
their valid points, such as the antra paper-
work they fac% if they woes candid about
their real stake in the'isnae. Corporations
and pension plans are $l.o newly subject to
withholding, but few area protecting. Why
the bangs? The eoaeptcsoms diit'erence is
that os.,,e. loam we adaaatoessd to paying
out dvidand s gaasbM INWO the Wake or*
accustomed in setakdog and astms and In-
terest they endit to tbeit depositors.
Savings deposits, machoy market funds.
time deposits and other.islieaesi.beering ac-
counts pay household. epodtses some $220-
billion a year. using the bAustry's own fig-
ures. Most of It Is credited directly to those
accounts, where it re~maibq on deposen.
isrging the banks' own portfolios, raising
.their l reservrs?add1humeising their
potential profits. At the wdform 14 percent
quarterly witldsolding ftbk that's an aver-
age of $11-billion a year ben on the banks'
books. with a corresponding increase In the
government's accounts.. Much of that, of
course, eventually would be paid by deposi-
tors who are honest with the IRS regarding
their interest Income. Batt ' if wage-earners
have no choice . in the matter of withhold-
Ing, why should anyone else?
And that Is the $4 question.
I have not seen the banks up here
pleading that we should repeal with-
holding on those who work in, their
banks. What about the people who
work in their banks? What about all
the depositors who work for a living
and pay their taxes and have taxes
withheld on their wages?
So if the banks want to make a uni-
form, balanced presentation, then we
can listen to those arguments.
But there are literally dozens and
dozens of editorials. Once the truth
comes out, the people will understand
that we had this two-way mirror set
up and we had people stashed away
being paid $26 by the ABA, and then
they probably fed thorn a lot of propa-
ganda and arid, "What do you think
about that?" If you only hear one side
of the argument you do not have
much choice-most of us could con-
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CONGRESSIONAL RECORD - SENATE March 21, 1983
vince nearly everyone with one side of
the argument. If I tell 10 people in the
room that this is a new tax, I assume
10 people might believe it is a new tax.
If I tell 10 people that this is going to
pick your savings or reduce your sav-
ings, I imagine 10 people would believe
that.
That is how this campaign was gen-
erated. So we owe a debt to Paul
Taylor who reported that in yester-
day's Post about the bank's psycho-
logical ploys to stoke the savings rebel-
lion. They have stoked the rebellion
already. They have stoked a rebel-
lion-no doubt about it. The genie is
out of the bottle.
Now we must be treated with this
issue every time a bill comes up to
help someone or carry out the Presi-
dent's program, or to carry out the bi-
partisan Social Security Commission
efforts, which was endorsed by the
President, by the Speaker of the
House of Representatives, and by a
vote of 18 to 1 in the Finance Commit-
tee, Democrats and Republicans. We
have to lay that aside now so we can
debate this for 2 or 3 days. Social Se-
curity should have been passed last
week. But no, we could not do that.
We had to take care of the bank inter-
ests. We should have passed they jobs
bill early last week. But no, we could
not do that. We had to take care of
the bank interests because they are
the ones rushing into town and send-
ing letters and calling on the tele-
phone and flooding you with mail.
They may eventually win, but not on
this bill. If we are going to have a
social security bill, it is not going to
have this amendment on it..
Mr. CHAFEE. Mr. President, will
the Senator yield for a question?
Mr. DOLE. I yield for a question.
Mr. CHAFEE. I wish to say to the
Senator from Kansas that coming into
the middle of this debate after the
weekend gives one a horrible feeling
that it is a long day's journey into
night. We were through this all last
week.
Am I not correct in asking the distin-
guished Senator from Kansas that the
Senator from Kansas and the majority
leader have promised to those propo-
nents of this legislation that in April
the Senator will give these folks who
desire a repeal of the withholding on
interest and dividends a vehicle and a
vote.
Mr. DOLE. Yes. In fact, we decided
to take it up on April 15. We thought
that was an appropriate date. That is
the date for filing deadline for tax re-
turns. We will not vote on April 15 be-
cause that is on a Friday. We would
not want to delay anyone's travel
plans on Friday. But I think within 2
or 3 weeks after that we might get to a
vote.
Mr. CHAFEE. So, in effect, they are
going to have their day in court sooner
or later, as I understand it.
Mr. DOLE. The Senator is correct.
Mr. CHAFEE. I do not understand
the reason that the proponents have
brought this legislation up now. We
thrashed around, lost a whole week
last week, and finally got it set aside
while we went to the jobs bill, and now
we are on one of the most important
pieces of legislation we will consider in
this Congress, namely saving of the
social security trust fund. I personally
believe we have to get on with this. We
are running up against deadlines. Not
only are we running up against dead-
lines, but we have a series of other se-
rious amendments that are going to
come up.
Am I correct in asking the Senator
from Kansas-there are some major
amendments that are going to be pro-
posed on the floor dealing with social
security; is that not correct?
Mr. DOLE. The Senator is correct.
We still have about a half dozen
amendments and the distinguished
Senator from Louisiana has a major
amendment.
Mr. CHAFEE. I do not know wheth-
er we have reached time agreements
on those amendments or not.
Mr. DOLE. No. The Senator from
Kansas is not willing to give anyone a
time agreement for the reason we are
now here on this. Had we given a time
agreement the Senator from Kansas
would be locked into voting on this
amendment within 30 minutes or 1
hour or 1 day or 2.
Mr. CHAFEE. So we have a real
problem here in getting on with this
legislation, getting it passed, and I
think I would be correct in saying to
the Senator from Kansas that if this
social security legislation is not passed
within, say, 2 or 3 days, then it has to
go to conference, it has got to come
back and be passed, and if that does
not happen then we will move to the
end of the Easter recess, which is 10
days or so away after that.
Meanwhile pressure will be building
up from every group that does not
want to be in it, those who do not
want to postpone the COLAs, those
who do not want an increase in taxes,
those who do not want the Federal
employees included. Am I not correct
in suggesting that this very, very deli-
cate and important compromise is
liable to become unraveled the longer
we wait around and deal with what I
might say are extraneous amend-
ments, not going to the substance of
the Social Security Act?
Mr. DOLE. There is no doubt about
it. This amendment plays right into
the hands of the Federal employees
who do not want the bill to pass in the
first place, do not want to come under
the bill. I find this rather strange, the
ABA and the Federal employees
unions working together. But you
come to learn in this area, and I am
not unsympathetic to the Federal em-
ployees, do not misunderstand me. I
am not particularly sympathetic to
the ABA.
Mr. CHAFEE. Am I not correct in
saying that we have a jobs bill confer-
ence report to come back here?
Mr. DOLE. We cannot rush to these
things. We have to take care of the
banks. We cannot worry about the
homeless and the jobless. The banks
are the ones with the power, and all
the mail in our office comes from
them.
Mr. CHAFEE. This legislation helps
the crippled and the blind.
Mr. DOLE. I think some in the ABA
have a problem, but I am not going to
get into that. Yes, it does.
Mr. CHAFEE. I think my real ques-
tion to the Senator from Kansas is, as
I see it: There is a sense of urgency
about this matter because we have got
to pass it, the conference has to pass
it, we have a conference on the jobs
bill to wrestle with, and we have a
good-sized menu before we get out of
here for the Easter recess, if we do get
out, and I would presume-well, I
think the House is going to go
anyway-so the longer we take here
the greater it seems to me we endan-
ger the prospects of these two very im-
portant bills.
Would the Senator agree with me on
that?
Mr. DOLE. The Senator does agree.
The thing that concerns this Sena-
tor is we are not going to finish the
debate on this amendment in time to
take up the one on April 15. We have,
been tugging and hauling. If we do not
finish the bill this week, and we come
back on April 6 or 7, we are still on
this amendment which, I assume, we
will still be on, then we have to debate
that for the next 8 or 10 days, and
how are we going to accommodate the
distinguished Senator from Wiscon-
sin? I would not want him to feel left
out of this. I know there is a rush to
get in on this. It is a horse, a nice
horse to ride, it is popular. Everybody
wants to get on it. But we cannot ac-
commodate the Senator from Mon-
tana and the Senator from Wisconsin,
if we never finish the debate on this,
but I am sure the Senator from Wis-
consin understands these technical
things will happen.
I thank the Senator from Rhode
Island.
It seems to me-and I do not quarrel
with the Senator's right to offer his
amendment. I think he made an objec-
tive statement, one of the first I have
heard in opposition to withholding on
the Senate floor, and so I commend
the Senator from Montana for that.
He did not call it a new tax. He indi-
cated what he thought it was, what he
thought it was not, and I do not quar-
rel with anything he said except I
hope he will let us move on with social
security, that he will withdraw his
amendment. He understands that
there is some concern about it.
Certainly the Senator has the right
to be concerned about it, every Sena-
tor on this floor has the right to be
concerned about it. But I hope he un-
derstands our position. There is not a
single so-called nongermane amend-
ment-I know they say it is a revenue
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you can bet the non-reporters weren't the
ones with just meager savings.
Because it takes the tax money up front,
interest withholding is aimed at those who
have not paid their fair share. What we
keep hearing from the banks, however, is
that withholding is something subversive.
Withholding taxes from or savings inter-
est robs us of some of the benefit of com-
pound interest, the banks warn us. Defiled
by the government again.
I won't claim to be an average saver-I
don't know what the average saver is-but I
do have interest-bearing accounts with a
money market and with a local savings insti-
tution. And I'll tell you what effect with-
holding would have had on me last year.
About $1.70 in lost earnings.
Those who have a tidy nest egg and are
earning $10,000 a year in interest on a
$100,000 acount may face a more significant
loss. But I can't feel particularly sorry for
them. And I have better ways to spend my
time than petitioning Congress to get an
extra $1.70 a year. '
Yet Congress is listening. There already
are several bills in Congress this year to
repeal the provisions, including one intro-
duced by Springfield's new congressman,
Dick Durbin. In fact, withholding is the
only subject about which Durbin has felt so
strongly that he's introduced his own bill.
Durbin's spokesman says the congressman
is for repeal because he believes the with-
holding provisions run counter to economic
recovery. They're a disincentive for saving
or investing. Durbin says.
Well, I'm sure not going to pull my money
out of an account because I'm not getting
an extra $1.70. What's my alternative?
Spend it all and lose all the interest? Put it
in a mattress?
I think the real reason we're being asked
by the banks to get all upset about this is
because the banks don't want to have to
deal with it.
They claim the program is onerous and
will increase their costs. The provisions of
the act, however, allow the banks to invest
the funds themselves for a month, keeping
the interest, before sending it on to the IRS.
Over the long term, that will more than
cover the cost- of setting up a withholding
system.
The banks say they want to protect my
right to control my money. I don't think
they're concerned about me at all-because
I'd rather pay the IRS a little at a time
than in one lump.sum next April 15.
(From the Washington Post, Feb. 21, 19831
THOSE "UNTOLD BILLIoxs"
What's so wrong with asking people to
pay their taxes? Senate Finance Committee
Chairman Robert Dole posed that. question
the other day to leaders of the American
Bankers Association. It's a question that
needs a much better response than the cam-
paign of obfuscation and hysteria launched
by the bankers in opposition to the new law
requiring partial withholding of taxes on in-
terest and dividends.
The bankers know full well that the new
law will put no burden on any honest tax-
payer. No one is being asked to pay any-
thing he does not already owe. People who
are elderly or have modest incomes are
exempt. The interest lost from quarterly
withholding of taxes would amount to a
maximum of 50 cents a year on a deposit of
$1,000. Would that bank service charges
were so low.
But protesting bankers also know that it
is easy to confuse people about tax law
changes. So instead of preparing to put the
law into effect, they have bought ads, given
speeches alleging that Congress is "looting"
savings, and mailed misleading fliers to ployed persons who face dividend and inter-
their depositors with form letters to con- est withholding can offset the new deduc-
gressmen enclosed. tions by having less withheld from their
Like most such tactics launched upon an paychecks.
uninformed and frequently elderly public,
these have had their effect. The form let-
ters have poured into Congress. A substan-
tial number of senators and representa-
tives-who, alas, are frequently no better in-
formed than their constituents-are said to
be considering repealing the withholding
provision.
What prompts this disingenuous behav-
ior? Surely no real concern for the conven-
ience of depositors. As a matter of fact,
bankers opposed the exemption provisions
for elderly and low-income people when the
law was being drafted. What they really
appear to be worried about is their own con-
venience-and the prospect that withhold-
ing might scare off depositors with an incli-
nation to tax evasion.
Banks already send quarterly information
forms to the IRS on all dividends and inter-
est. Accompanying them with a 10 percent
fund credit would amount to no more than
the electronic equivalent of the flicker of an
eyelash. The cost would be minuscule com-
pared with the cost of having the IRS track
down and collect from each of the distress-
ingly large number of tax evaders. But the
banks would still have you believe that this
new chore would cost them and their de-
positors, as it is regularly said, "untold bil-
lions."
But the thing about untold billions is that
the usual reason they are untold is that tell-
ing them would require using numbers with
several zeros immediately to the right of the
decimal point. Somehow a number like $.001
billion has a lot less impact. But speaking of
untold billions, you might want to remem-
ber that these bankers who now claim to be
so concered about prudent operation are the
same ones who have been recklessly invest-
ing overseas and who would now like to
have government protection from the conse-
quences of their folly. Here the billions in-
volved are more unspeakable than untold-
and certainly uncollectable.
You might also remember, as Sen. Dole
has done, that banks now pay notoriously
low taxes. If Congress unwisely decides to
repeal the withholding provision, one very
good way to replace the $22 billion in
unpaid taxes that will be lost over the next
five years would be to repeal some of the
provisions that now favor banks over other
taxpayers.
[From the Los Angeles Times, Feb. 27, 19831
LET'S GIVE IT A CHANCE
The U.S. government does better than
most when it comes to collecting taxes owed
it, thanks largely to the payroll-withholding
tax introduced 40 years ago. But not all
income is subject to withholding. Dividend
and interest payments, which last year
amounted to about $525 billion, have up to
now been exempt. The Internal Revenue
Service estimates that evasion of taxes due
on these earnings cost the Treasury $8.2 bil-
lion in 1981. In last year's tax bill, Congress
moved to round up some of that missing rev-
enue by subjecting interest and dividends to
10% withholding, beginning July 1.
At the same time, Congress provided cer-
tain exemptions so as not to impose hard-
ship on small investors. Taxpayers over 65
can avoid withholding if their 1982 income
was under $14,450 for an individual or
These exemptions, the Treasury says, will
exclude from withholding provisions fully
60% of those who receive interest and divi-
dend payments. They can also be expected
to reduce by about half what the Treasury
says it would be getting if it could be sure
that all taxes due on interest and dividends
were paid. Still, $4 billion in hitherto uncol-
lected taxes due is a worthwhile start.
Lending institutions have been lobbying
vigorously to get the withholding provision
repealed. They argue that the paperwork
costs for banks and corporations could run
as high as $1.5 billion a year, with those
costs passed on to investors in the form of
service charges and lower yields. The Treas-
ury responds that the real cost of withhold-
ing would in fact be only about one-tenth
that figure, meaning a highly favorable rev-
enue-to-cost ratio-$4 billion raised on $150
million spent-of 25 to 1. Further, the
Treasury says, the interest lost by investors
on withheld money would be very small.
Equity pretty clearly requires giving the
new withholding plan a chance. Payroll tax
withholding is a proven means for assuring
that taxes due are paid. The same rule
ought to be applied to dividend and interest
income to narrow the opportunities for tax
evasion. If experience shows that the costs
of complying with the new law are exces-
sive, then revision or repeal should be con-
sidered. Until that can be demonstrated,
Congress should stick with the decision that
it made last year.
[From the New York Times, Feb. 24, 19831
POISON PENS AND A SENSIBLE TAx
There's no precedent for the deluge of
Congressional mail that the banks have
stirred up against the new tax withholding
from interest and dividends. There's also no
sound reason for it; it should all be forward-
ed to the dead letter office.
The campaign is financed and orchestrat-
ed by the American Bankers Association. It
is flooding its thousands of members with
propaganda to feed to their millions of de-
positors. For instance, along with their Jan-
uary statements some customers received
printed postcards addressed to their two
Senators, ready to sign and send. Anyone
needing a stamp was invited to "bring this
card to the bank."
Withholding on interest and dividend pay-
ments was part of last year's $99 billion tax
bill. Effective July 1, 10 percent will be
withheld from each payment. This is not a
new tax; interest and dividends are already
taxable as ordinary income. Neither is it a
gross imposition on the banking system, or
an unfair penalty on honest taxpayers, as
some insinuate. It is simply an effort to
catch the cheaters who now escape paying
tax on $30 billion of legitmately taxable
income.
The banks are understandably agitated
because the voluminous paperwork falls to
them, along with all the grief they will get
from grumbling taxpayers. But this burden
has its reward. The banks get free use of the
withheld funds for a month before they
must turn them over to the Treasury.
There are two other anti-withholding ar-
guments that appear to make sense, but nei-
ther bears scrutiny. First, it is said that
$22,214 for a couple. Those under 65 can withholding deprives taxpayers of earnings
qualify for exemption if their 1982 income that they would be saving or investing to
was less than $8,000 for an individual or earn more money. That's true, but the loss
$15,300 for a couple. There will be no taxes is small. An example: the annual compound
withheld on accounts paying dividends or interest on a $1,000 savings account paying,
interest below $150 a year. Finally, em- say, 9 percent is little more than $90. In the
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S 3496 CONGRESSIONAL RECORD - SENATE March 21, 1989
This Is not a new tax. It is simply a way The W-6 form is what they are mail- postcard by calling it a tax. They know
for the Treasury to collect taxes more ing out and, of course, it is not compli- it is not a tax. But, beyond that, they
promptly and more completely. It will cated. But, you see, the banks are in a have been fairly circumspect in their
impose no intolerable inconvenience on bind now because they have been tell- lobbying efforts as has, I might say,
either you or your bank, and it will help the ing people about all this complicated the savings and loans league.
billion the dollars. annual budget redtape, all this Government redtape, But even if the banks did not fill in
deficit onomy by by several reducing
de
All of this being so, you may wonder what Government intrusion, and all the advance the name and address and the
the bank or savings institution is really time they have got people in their account number, Which they do when
saying in its message. Could it be suggesting banks whose wages have been with- they mail it out, you would have to fill
that the only reason you entrust it with held for the last 40 years, 20 years or out the name, address, city, State, ZIP
your savings is that you think you can hide 30 years or 5 years, depending on how code, and account number, and make
that interest you earn from the tax collec-
tor? long they have worked there, and I do one check and sign your name. And it
f trust write that isn't so. And we hope not suggest that they are telling all is a permanent exemption. You just
tives that it it you will be i t wro say your that elected you support represents- this these people that we ought to repeal say:
t
way of making sure that everyone pays his withholding on wages and salaries. I My tax liability for last year was $600 or
fair share of taxes. have not heard from a single banker less.
Mr. DOLE. It is obvious that one who wants to repeal withholding on If that is the case, you are exempt.
reason for the bankers' rush to vote on wages and salaries. That is earned .1 am 65 or older, and my tax liability for
withholding now is that many of them income. They just do not want any last year was $1,500 or less.
may soon be in an embarrassing posi- withholding on unearned income. You are exempt.
tion. In fact, I think that was reported Again I want to underscore that it is
today in a story in the New York not a new tax. I notice the distin- My spouse and I filed a joint income
Times, but they are now beginning the guished Senator from Wisconsin has a return for last year, and our tax liability
process of mailing exemption forms to little mailer of his own which goes on was $1,000 or less.
their customers, as indicated in a to say that we have to repeal this new You are exempt.
recent article in the New York Times. tax. The Senator from Wisconsin I or my spouse or both are 65 or older, and
Some bankers may be caught because knows it is not a new tax. The bankers we filed a joint income tax return last year,
they have been telling these people know it is not a new tax. But if you and our tax liability was $2,500 or less.
about all this complicated redtape, write and tell them you are going to You are exempt.
how they are going to get all this com- have a new tax they will say, "We are I was (we were) not required to file an
plicated redtape, and all these people opposed to it." But if you write to income tax return last year.
are going to mail out 8 million of these somebody and say, "Do you think you That is all you have to check. If you
W-6 forms to all their people with sav- ought to pay your taxes?" They fit in any of those categories, you
ings accounts, and they are going to answer, "Yes, we ought to pay our make one check. You do not even say
find out it is not complicated at all. taxes." - But somehow 20 million which one, so you do not reveal any-
In fact, it might be well just to read Americans do not, and fail to report thing about yourself. You say that in
into the RECORD the comments that their dividends and interest income. one of those five instances you are
appeared in the New York Times on Some of them do not report any at all. exempt. You make the checkmark.
March 17 of this year. It says: Some of it is because of errors and That is all there is to it.
BANK BY MAIL some is willful evasion. But we are not Let me say that the President of the
The nation's banks are waging all-out war here to argue that point. We are told United States is not known to be look-
against tax withholding on interest and divi- we can quarrel about the IRS and ing for more ways to interfere with
dend payments. They are stuffing anti-with- quarrel about Treasury figures. We the lives of the American people. I
holding fliers in their customers' monthly are talking about $11 billion over the think we have had a lot of good regu-
statements, along with postcards for them next 3 years from lost revenue. Again, think
budget This for chan1983. ge ge was as in the
in the
to sign and send to their senators demand- to the Senator from Montana's credit latory reforms.
ing votes for repeal. Legislators are even he recognizes that. It is one thing to for from Kansas and others talked to
complaining that the bank mail volume stand up and say, "Repeal withhold-
makes it impossible to locate letters about stand ? Wdo we do about the adds the President directly about withhold-
other matters. ing. he ddo tit? ing interest and dividend income. We
The banks argue that withholding will tion to What
knew how it would create a firestorm,
create an administrative nightmare-confus- We are told we ought to bring defi- but never in our wildest dreams did we
ing customers, intimidating the elderly and cits down, bring interest rates down if believe they would cook up something
people with low incomes who qualify for ex- we keep the deficits down. I do not people $25 to
emption, forcing them to reveal personal in- want to add $20 billion to the deficit in a sort closed ed room met and d testing on pay pay pwhat to
formation about themselves. over the next 5 years, and that is what
It's instructive, then, to take note of an- we do if we repeal withholding unless say to stoke a rebellion of their deposi-
other kind of bank mailing currently going we replace it with other revenue or tors. And they have been successful.
on all over the country-to stockholders of some spending cuts. I have yet to hear They have been successful.
American corporations, even bank corpora- Every office in this Congress is filled
lions. The banks that handle the corporate a single proponent of repeal of with- with postcards. Some may not have
dividends are mailing shareholders simple holding stand up and say: been mailed by the people whose
forms to file if they qualify for exemption OK, the Senator from Kansas is right. We names appear thereon, as is evidenced
from withholding-as they are required to are going to lose so many billions of dollars, by the letter I have from the gentle-
This by the hated law. and this is how I suggest we get it.
This is all they have to do, this is We get it through new taxes. We get it man from Chicago. But somehow we
that complicated form we have been through new spending. We take away the have a lot of mail to answer. We esti-
hearing about in all the bankers' ads. tax cuts for the working people in the third mated in our office that it is going to
One check-mark and a signature are all year of the tax cut. We defer indexing. cost the taxpayers $300,000 just to
they require before being mailed back to the It seems to me, once we understand answer all the postcards that have
bank. what the options are, unless we are been sent in by banks, S&L's, and
So you sign your name and make a going to have it both ways, as some credit unions. In addition, you have to
checkmark. It might take 30 seconds if would have it, then I think we have to put on more personnel.
you work at it. There is nothing com- be very careful in what we do. Someone said, "Don't answer your
plicated about that. The story goes on: The Senator from Kansas has talked mail." If you do not, people will write
Nothing complicated about that; no se- about the W-6 form, the so-called back and say, "Why don't you answer
crets revealed. It's almost as if the banks complicated redtape that the banks your mail? If you say the banks are
were trying to help make withholding work and the S&L's advertise. The credit wrong, what is your reply"?
smoothly, as well they should. unions, I must say to their credit, So we are in the process, in my
That makes the point. make only one mistake in their little office, of writing two-page letters, with
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March 21, 1983 CONGRESSIONAL RECORD - SENATE S 3497
enclosures, to everyone who has writ- Time Magazine, it.. says, "Tax Cheat- tax returns. That is the story we get
ten us about withholding. Right nowit Ing, Bad and Getting Worse." As the from a lot of people. "Why don't you
is about 500,000 letters. We are up to article points out, it is getting worse. Just match that 1099 against the tax-
20,000. We have answered 20,000. They And why is it getting worse? Because payers, then you don't lose any money
are coming in, the mail has leveled off, so many people do it and they are not at all?"
but the rate I think is still about 2,000 caught, so other people do it. I do not Believe me, If we could figure out
a week a week ago, but it is beginning know where it is going to stop, any way to do that,. the Senator I
to I know the Senator from Montana theree w~ork1ng for ata is eli fving peo 99 per- l would drop this wholo tbeen
has no intention of withdrawing the cent-99 percent. The compliance rateconvinced, li>oee a hot potato. But I haves not been
amendment. I will, at the appropriate for interest and dividends is around 86 and the IRS it is not
feasible. or the majority leader will at the percent. Now, why should this not be has The 97'3 percent study that
dlvi-
appropriate time, offer to table the 99 percent? It is not 99 percent. zeeabeen latd ed to as all this
interest floor and cannot
amendment so,that we can get on with ' Somebody was quoting a study. It de d p m t and ex
soelal security. I make a plea to the was not a study based on compliance elu ~~ because the ex-
American Bankers Association. I know on interest and dividend income. It milli--the estimated what the stony en6
of no one in the Senate unwilling to sit was only a study. If you met three con- i--the 5 million 60' 6 million down with representatives of the ditions. the rate was 97.8 percent, I fadividto e t who do not taxpayers file
in-
American Bankers Association, but I will recite that for the Racoon in a fall to supply tax returns ' identi l o
know of no one in the American Bank- moment. numbers t to o financial correct Institutions, sod
era Association who even wants to talk I do not particularly enjoy railing at taxpayers bofai fail to supply co sad
about withholding. the banks. I would like to pass the identification who supply correct
I hope some of the bankers across social security bill. The Senator from elentliicatbn numbers to the IRE.
the country will take a look at some of Kansas spent a year on the Social Se- We have a 97.3 percent compliance,
the ads and some of the campaigns curity Commission along with the Sen- excluding all. these things.
that they have been paying for, I ator from New York. We have had This is why the Treasury and the
assume they have been paying for, hearings in our committee, It has Joint Committee an Taxation estimate
somebody has been paying for them. I passed the committee by a vote of 18 that the local compliance rates of In
do not know how many mfllons of dol- to 1. The chairman of the House Ways terest and dividends can only be sub-
lars it is, when you add the cost of and Means Committee and the chair- stantlally Improved by the withhold-
postage. And most banks pay the post- Man of the subcommittee, Congress- tee Ing system. ddeeed, the joint commit-
age. Kea postcards and all the mail man Picks.,did an outstanding job, estimates
revenue loam from
we bane received' was paid for by along with Congressman Conners and withholding would be $11 billion in
banks and in some cases run through others, of getting the bill passed fiscal 1984 through 1986. They take
their umbers. So I do not imagine any- through the House. with the Speaker's into account the Improved compliance
body who, mailed in any card is out assistance. And we ha3 a lot of very which result from the major improve-
any a pense, touchy issues in social security. We meats in information and reporting
But when you run ads that -say, have some left. The Senator from Lou- passed ip 1982.
"Ten percent of your money is going isians wants to delay bringing in Fed- I would assume the amendment of
to disappear," which is an outright eral employees a year. which is an- the Senator from Montana does not
misstatement, I can understand why other way of not bringing in Federal mean we will have withholding next
you might excite the fears and emo- employees at all. That is going to be a January. Have the bankers said. N w,
tions at somebody who Is 85 or 35 or 25 hotly contested amendment. Just get this amendment and we will
years of age. I do not know why we have tospend try to help the Government collect
I wmdd just remind my colleagues 2 or 3 hours or 2 or 3 days debating taxes."
that this is the President's budget for withholding again, As the Senator Mr. MELCHKR? Will the Senator
fiscal year 1983. This is where withoid- from Rhode Island just pointed out, yield?
Ing came from. It was not plucked out we just finished that debate last week.
Mr. DOLE. Yes.
of the sky. I do not really believe it is in the inter- Mr. MELCHER. I think I have made
It has been recommended by Presi- est of the bankers of this country to
dent Franklin D. Roosevelt, by Fred- hold up every piece of legislation. to it clear that it is the bankers and taa-
tax-
dent Ssanedy. by President Nixon, by hold legislation ,hostage. to hold the payers in Montana who are talking to
Presiiko t Ford, by President Carter. next piece of legislation hostage until me. I would not prejudge the action of
and hV President Reagan. You may we just cave in to the bankers. the Senate or the house. the final
not No any of them, but I have to be- The Senator from Kansas has no in- action of the Congress? on this propo-
lieve that, overall. they were trying to tention of doing that. The Senator sitiou. I simply believe that it is really
do what they could to make certain from Kansas may lose, but if I setting around to the point where
that people who owed taxes paid their thought I was mistaken or if I thought people are beginning to wonder wheth-
taxes. It was not in any President's in- this was a new tax or if I thought we er this is the imposition of. another
terest to take on the banks of America were, penalizing senior citizens or the layer of bureaucracy or whether it is
or to take on the savings and loans, handicapped or low-income Americans, really worth it. I think the Question is
nor was it in President Reagan's inter- then I would be on the side of the Sen- here in the Senate and 1, hope the
eat to do that and that was not the ator from Montana. amendment carries so that we will
purpose of suggesting withholding. But this may be an irritation to the have time between now and the end of
We are told by the IRS Commission- banks. They do not like it. They do this session of Congress to properly
er that there is still 9100 billion out not have to like it. They have a right debate it, the same as happened in the
there In taxes not being collected. and to oppose it. ? House.
much of it in the private sector. Yes, But I wondered what had happened. Mr. DOLE. I might say I am waiting
some is in drugs and some is in prosti- We passed this last August. We did net for the majority leader to arrive.
tution and some in gambling, but the hear a word in September, October, I would say that few of the Members
large part of it is in the private sector. November, or December. It was not of Congress who were concerned with
If we had that $100 billion right until this massive campaign of deaep- the proposal to withhold tax on divi-
now, we would not have the deficit we Lion was unleashed, in January, that it dendec, Interest, said patronage re-
have and interest rates would be a- lot really started to hit us in February. funds. contained in the Revenue Act.
lower. But we do not collect all of our This study, the IRS study. reports a and this I. going back to 1962. realize
taxes. and we never will. high compliance rate of 97.3 percent that their predecessors in Congress
I would again refer to the Time Mag- where information returns were 100 years before were debating similar
azine story today. On the cover of snatched against selected individual legislation.
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S 3498
CONGRESSIONAL RECORD - SENATE March 21, 1983
Early in the Civil War, the Revenue
Act of July 1, 1862, was enacted. This
act for the first time in the history of
the Federal Government applied the
principle of tapping revenue at the
source, which had first been used by
the British in 1803.
The law imposed a tax of 3 percent
on salaries and other income over $600
and under $10,000, and 5 percent on
income over $10,000. The 3 percent tax
was also levied on certain corporation
dividends and interest. Applying the
withholding system for the first time,
the bill required that the 3 percent tax
on salaries received by all persons in
the civil, military, and naval services
of the United States-including Sena-
tors, Representatives, and Delegates in
Congress-after August 1, 1862, was to
be withheld by all paymasters and
other Government disbursing officers
at the time of paying the salaries.
The disbursing officer was also re-
quired to "make a certificate stating
the name of the officer or person from
whom such deduction was made, and
the amount thereof, which shall be
transmitted to the office of the Com-
missioner of Internal Revenue, and en-
tered as part of the internal duties."
That is pretty much about the 1976
form. Maybe that is where Don Regan
thought of that.
The withholding system was also ap-
plied to the tax on interest and divi-
dends paid by all railroads, banks,
trust companies, and fire, marine, life,
inland, stock, and mutual insurance
companies. These companies were re-
quired to withhold the tax of 3 per-
cent on all money paid out as interest
and dividends, and pay it to the Gov-
ernment. A $500 penalty was provided
for failure to render the return and
pay taxes withheld when due.
That was 1862 when we first enacted
withholding.
The act of June 30, 1864, enacted be-
cause of the increased necessity for
war revenue, increased the 3 percent
tax do income up to $5,000, and on in-
terest and dividends paid by banks,
railroads, insurance companies, and so
forth, to 5 percent. Deduction of tax
at the source was also extended to in-
clude a 5-percent tax on the interest
and dividends of any canal, turnpike,
canal navigation, or slack-water com-
pany. Paymasters were required to
withhold 5 percent on salaries of Gov-
ernment employees over $600.
Company engaged in slack-water
navigation -would dam or impede a
stream by erection of dams or locks to
produce stretches of deeper water for
navigation, in case anybody has a deep
interest in that.
The withholding of tax on salaries
of Government employees, and on in-
terest and dividends continued until
the end of 1871, as the Revenue Act of
1864 expired by limitation in 1872.
This brief and very limited applica-
tion of the stoppage-at-source tax
principle is of great significance in the
development of the present tax
system, which relies heavily on tax
withholding as a means of revenue col-
lection.
The Revenue Act of July 1, 1862, has
been called the basis of the present in-
ternal revenue system, both as regards
objects taxed and organizations for
collecting the taxes. It is interesting to
note that this act also provided the
first use of tax withholding in this
country, and proved the value of this
method of tax collection.
I am reciting this so that we know
this is not something that just hap-
pened or just been talked about. It was
around long before the President put
it in his 1983 budget.
WITHHOLDING AGAIN USED IN 1894
The act of 1894, based almost entire-
ly on Civil War legislation with a few
important exceptions, also contained
provisions for withholding. Again, tax
was collected at source on certain cor-
poration dividends and on the salaries
of Government employees. Students of
the tax system have noted that an ex-
tension of the withholding system at
this time would have been a powerful
check against evasion.
THE 1913 INCOME TAX LAW
The 1913 Income Tax Law, enacted
October 3, 1913, saw the most exten-
sive application up to that time in this
country of the collection-at-source
method. The principle of stoppage at
source, used so successfully in Eng-
land, was applied wherever possible, to
secure maximum revenue and to pre-
vent evasion.
The normal tax on individuals was
to be collected at the source as far as
possible. A corporation, employer, or
other source of income was required to
deduct the tax and pay it to the Gov-
ernment, provided the income was reg-
ular, definite, and amounted to $3,000
or more. Interest, rent, salary, or any
other form of fixed annual income was
covered by withholding.
I can debate this in greater detail if
it would become necessary, but I
would hope that now that we have an
agreement to debate this fully we
might get on with the business at
hand. When the majority leader comes
to the floor I am suggesting that we
can move to table the amendment.
I yield to the Senator from Utah.
Mr. GARN. I thank the Senator
from Kansas.
Mr. President, I rise in opposition to
this amendment. It is not because I do
not agree with the substance; I do. But
I think that the patience of the
Senate is worn rather thin when we
continue to go over and over on
amendments that are not germane to
the Senate.
Last week I supported Senator
KAsTxN. I voted against cloture on the
bill, on the jobs bill. I voted for cloture
on the Kasten amendment.
I am in favor of repeal. I disagree
with the Finance Committee chair-
man. I am in favor of repeal of with-
holding, totally. I will so vote when
that opportunity comes up.
The reason I rise in opposition on
the floor is the procedure. It is not
that the distinguished Senator from
Montana is violating any procedures.
He is totally within his rights to do as
he is doing. But the reason I voted
against the Senator from Kansas and
with the Senator from Wisconsin is be-
cause we had no guarantee as to when
we could fully debate this issue and
come to a decision. But we got that
guarantee. There is a bill that will
come up on April 15. The Kasten
amendment is already attached to
that bill. The distinguished majority
leader will facilitate that being
brought up on that date. And if a clo-
ture petition is necessary, he will make
certain that the Senator from Wiscon-
sin is able to file that cloture petition.
Those of us who are opposed to
withholding will have our day in court.
We will have our opportunity to say
why we think it is wrong, why it
should be repealed, and we shall find
out who wins on the floor of the
Senate-whether it is the Senator
from Kansas or the Senator from Wis-
consin. Again, I shall support the Sen-
ator from Wisconsin.
But, after delaying the jobs bill for 3
or 4 days last week, now to do it again,
I think, is wrong. It would be different
if we did not have that guarantee of
this being debated on the 15th of
April. Then I would be supporting the
Senator from Montana. But we were
able to get a cooperative agreement
where we could.do that.
Mr. President, I want to make it very
clear on the issue: I am opposed to
withholding. I shall vote for repeal
when that opportunity arises. But I
am opposed to once again bringing it
up as a nongermane amendment on
social security. We have an agreement.
We ought to abide by it. We ought to
be willing to debate it on April 15.
I thank the Chairman.
Mr. DOLE. Mr. President, I thank
the distinguished Senator from Utah.
I regret that he will support repeal. I
want to assure him that it is not a con-
test between the Senator from Kansas
and the Senator from Wisconsin. If it
is a contest at all, it is a contest be-
tween the President's budget recom-
mendation for 1983 and those who
oppose it.
The Senator from Kansas feels
strongly that withholding is the right
way to collect tax on interest and divi-
dend income. I do believe, as the Sena-
tor from Utah pointed out, that this
would be a proper debate, had we not
had an agreement, to put the repeal
amendment on the reciprocity bill.
There is no doubt in my mind that
sooner or later, there is going to be a
vote on the repeal of withholding in
the Senate and in the House. I assume
if the repeal of withholding gets a ma-
jority in Congress, the President will
veto it and it will come back and we
shall vote on whether to override the
veto.
That is probably the procedure we
are going to have to follow. Neverthe-
less it seems to me there ought to be a
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S 3500
CONGRESSIONAL RECORD - SENATE March 21, 1989
Common Cause is especially concerned
with current efforts to repeal withholding
on interest and dividend income. According
to the Joint Committee on Taxation, with-
holding will raise nearly $20 billion over the
next five years and increase taxpayer com-
pliance on interest and dividend income-
compliance that is now less than 90 percent,
compared to 99 percent for wage income.
Without the additional compliance that
withholding will bring, honest taxpayers
will have to face higher taxes or fewer serv-
ices in order to reduce government deficits.
And, without improving compliance with
our tax laws, there is danger that taxpayers
will continue to lose faith in a tax system
that relies fundamentally on voluntary co-
operation.
Withholding is justified. It treats interest
and dividend income in the same manner as
wage income by withholding taxes at the
source, as income is paid, rather than col-
lecting them at the end of the year. It also
promotes equity among income groups be-
cause those who receive substantial interest
and dividend income are disproportionately
upper-income taxpayers.
Unfortunately, financial institutions are
trying to frighten Americans into opposing
this equitable instrument of compliance.
Unwilling to help the government collect
taxes-a responsibility most employers and
retailers have shouldered for decades-fi-
nancial institutions have mounted a massive
campaign against withholding. Using such
deceptive slogans as "ten percent of the
money you earn in interest is going to disap-
pear," they have implied that withholding
will deprive depositors of substantial income
beyond what they already owe the govern-
ment, and may even drive them to financial
ruin. That, of course, is not true. The Treas-
ury has estimated that the actual cost of
withholding to taxpayers-the loss of com-
pounded interest-will be one-half of one
percent of the interest they would other-
wise have earned, or about 50 cents on a
$1,000 account.
Withholding is neither dangerous nor
ruinous. The improved compliance it brings
will reduce federal deficits and introduce
more fairness into the tax system. Congress
should not bow down to the pressure of spe-
cial interest scare tactics. Instead, it should
expose the misinformation behind the
repeal campaign and defend last year's legis-
lative achievements.
The American public is looking to Con-
gress to rebuild our nation's deteriorating
tax system and to reduce our huge deficit in
ways that are reasonable and fair. TEFRA
neither eliminated the inequities of the tax
system, nor solved the deficit crisis; but it
did make an important step in the right di-
rection. Common Cause urges you to contin-
ue in that direction by further restricting
unfair tax preferences, and preserving the
requirement for withholding on interest and
dividends.
Sincerely,
FRED WERTHEIMER,
President
WARNING: 10 PERCENT OF THE MONEY You
EARN IN INTEREST Is GOING TO DISAPPEAR
Recently, Congress quietly passed a with-
holding law that will cost American savers
and investors the use of 10 percent of their
interest and dividends.
In simple terms, effective July 1st, 1983,
this new law requires banks and other fi-
nancial institutions to deduct 10 percent of
the interest or dividends you earn on your
savings and investments. That money then
goes to the Internal Revenue Service in
much the same way as payroll deductions
are now handled.
The sponsors of this law have told us it
was designed to catch a small minority of
Americans who evade taxes on their interest
and dividends. But the truth is the law pe-
nalizes the great majority of America's
savers and investors who pay their taxes
faithfully. What's more, the federal govern-
ment is now receiving all the necessary in-
formation to curtail tax cheating.
Though the law does include exemptions
for some low income and elderly Americans,
if they go through the red tape of filing an
application, most savers and investors will
forfeit some of the money they could earn
in compounded interest.
We urge you to join our efforts by writing
letters to your representative in Congress
and to the two senators from this state. Tell
them you want the 10-percent withholding
tax repealed, because it would impose an
unfair penalty on savers like yourself.
For assistance in contacting your repre-
sentative and senators please ask, any of our
bankers. If we all act now, Congress will get
a clear message from the voters back home,
and they will work to repeal this needless
law.
Mr. DOLE. Mr. President, that is an-
other indication that once the people
have been alerted and once there has
been an opportunity-that is all we
ask, an opportunity to stand up and
debate the issue of withholding.
Talk about frightening those out in
our States. I think they have fright-
ened a number of Members of Con-
gress who voted for the withholding
and the tax bill last year into rushing
to repeal withholding.
The Senator from Kansas is willing
to support the President on this issue,
because I think the President is right.
I say to my friends in the American
Bankers Association, in the banks
across the country, the S&L's, and the
credit unions, if there is any willing-
ness to discuss this issue, then we
ought to discuss it. The Senator from
Kansas does not detect any willingness
to discuss the issue.
When you put millions of dollars
into a deceptive campaign, you want to
see it work. That investment did not
come out of the bankers' salaries, I
bet. It probably came from their de-
positors..
They have a right to oppose it, but
they ought to tell the truth. We had
ads in the Topeka Capital that cost
$4,000 to run, showing Uncle Sam
dripping with diamonds, saying, "This
time they have gone too far." Then
they want to talk about the withhold-
ing tax. It is not a withholding tax, it
is withholding of taxes on interest and
dividend income that you owe.
The Senator from Kansas does not
underestimate the power of the
American Banking Association. They
have it. They know how to use it. But
I am willing to warn others on this
floor, if we succumb to the efforts of
this powerful lobby, just get ready for
the next one because, if the banks can
send in a million pieces of mail or a
half million pieces of mail to one Sen-
ator, I bet there is somebody out there
who.has even more money than the
bankers. I cannot think of anybody
offhand, but somebody out there prob-
ably has more money and a bigger
lobby than the bankers of this coun-
try.
I do not want to get into the effec-
tive tax rates banks pay, but it is not
very much. The 20 largest banks paid
an effective tax rate of about 2 per-
cent. Some had negative. tax rates.
Giant, billion dollar credit unions paid
no tax on their worldwide operations.
If you looked at the chart in the
New York Times a few days ago, it
showed all these companies and the
taxes they paid. Most companies paid
20 percent, 25 percent, 40 percent.
Most individuals paid 20 to 25 percent.
What do the banks pay, the 10 largest
banks? Two percent. So they have a
lot of money to spend for lobbying ac-
tivities, and they spent a lot on this ac-
tivity. But if they do it and get away
with it, as they are trying to do, then I
think we must get ready for the next
mass mailing.
Others who disagree with me on the
merits of this issue join me in-
criticiz-ing this lobbying blitz.
Senator GARN favors repeal of with-
holding, but as chairman of the Bank-
ing Committee he issued a statement
last week saying he did not agree with
the massive campaign the American
Bankers Association was undertaking.
I think the distinguished Senator
from West Virginia, the minority
leader, indicated he was not totally
pleased with this massive mail cam-
paign, although he, too, favors repeal
of withholding.
Now, in the Washington News is a
comment that I think deserves notice,
but the Senator from Kansas, when-
ever the majority leader arrives, is
willing to yield to him.
Mr. MELCHER. Will the Senator
yield briefly?
Mr. DOLE. I want to put this little
bit in the RECORD. I would not want to
forget it.
The credit unions have a little maga-
zine called Washington News. CUNA
Supply printed 8 million statement
stuffers, 4 million response cards ad-
dressed to Senator ROBERT DOLE and
Representative DANIEL ROSTEx-
KOWSKI, and 2.8 million response cards
that CU members can send to their
own Members of Congress, so we are
in the privileged class. I get 8 million
statement stuffers and I get 4 million
response cards. That adds up to 12 mil-
lion. I am not certain how somebody
can answer that mail. But if we do
2,000 or 4,000 a day-I have 4 years
left on this term-we might be able to
start answering some of that mail-8
million. And the credit unions are tax
exempt. They do not pay any taxes.
Even though we have credit unions of
almost a billion dollars in assets, with
worldwide operations, they pay zero
taxes. It bears noting that even the
commercial bankers pay slightly more
tax than the credit unions. So they
can afford to have 8 million stuffers,
whatever they are, and 4 million re-
sponse cards.
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March 21, 1988 CONGRESSIONAL R1 CORD - SENATE S 3501
Now, it seems to this Senator that think we just want to help one special third or. less than the industry esti-
we ought to answer this question:- If interest group with a multimillion- mates, and these costs can be offset by
the banks and the others are so con- dollar media ' campaign and multimil- the extended float allowed on with-
cerned about their depositors losing 50 lion-dollar political action committees. held amounts and by the income tax
cents, or less, on $1,000 accounts as I would like to find out some day deductions available for such costs-at
they have indicated they were in all how much money the 14,000 commer- least for those financial Institutions-
their ads, I again ask the bankers and cial banks have spent on this cam- other than the big banks and credit
the S&L's and others, "If that to the paign. I bet it is staggering. Incidental- unions-that actually pay any Federal
case, why can't somebody walk into ly, none of those expenses are deduct- income tax.
their bank and buy a .money 'market ible. I doubt it could ever be computed Secretary Regan continues:
fund for $500?" They cannot, of how many millions of dollars were Since we, have so little data, we cannot be
course; they have to have at least spent by the banks at the direction of certain that the total startup costa are
$2,500. the American Bankers Association on within that range. Nonetheless, it does
The reason is simple. If you do not this campaign. appear certain that startup costs are only a
have $2,500, you leave your money in I am certain the Senator from Mon- fraction of the claimed $3 billion.
passbook savings and that pays 5.5 tans wants; to lower interest rates. I Someone said, "All you, have to do is
percent. By contrast, the money think every Senator wants to lower in- hire more IRS agents."
ci
mare
s pay a to 9 percent. The
bankers are making a lot of money be-
cause they keep the money market
certificate high, which keeps out most
working people who must keep their
savings in passbook accounts. The
banks make high profits because they
loan out that passbook money at 8 or 9
or 10 or 11 or 12 percent.
I believe that if the - banks really
want to help, I would be willing to
delay this for 6 months. in fact, if the
motion to table fails, we have a bar-
gain that'we think you will want to be
aware of. It would be my hope that
the motion to table the repeal amend.
ment passes, but, if not, then the Sen-
ator from Kansas would hope to offer
a second degree amendment. We
would go along with that delay. We
would delay the implementation of
withholding and we would amend sec-
tion 308A of the Tax Equity and Fiscal
Responsibility Act of 1982:
by striking out June 30 and inserting in lieu
thereof December 31: Provided, however,
the foregoing delay shall take effect only if
the average prime interest rate charged by
the Nation's 10 largest banks is 6 percent or
less on June 30, 1983, and that delay shall
remain in effect only as long as that prime
rate remains below 6 percent. '
It would seem to me, if you really
want to help the American people and
the economy, that you may even want
to accept this amendment. Then we
can really talk about what banks can
do for the-American people.
We have been told for a long time
that-there is no reason for the prime
rate to be 11 or 12 percent and a lot-of
people can buy homes and a lot of
people can buy can if the banks would
lower their interest rates.
The inflation rate is 4 percent, and
the interest rates are still 12, 13, 14,
and 15 percent. Someone Is making a
terest rates. Those who *ant to delay
withholding certainly want to lower
interest rates. The Senator from
Kansas Is even willing to delay with-
holding until we get the prime rate
down to 6 percent. We might even
make it 7 and really give them an
edge. But if'we could do this, then we
really have made a contribution to the
banks and the S&L's and credit unions
and, 'above all, the taxpayers and the
people out here paying those high in-
terest payments, people who cannot
buy a home. People are being driven
out. of business, and there are record
numbers of bankruptcies, because of
high Interest rates.
That is another Item I should like to
discuss more fully when the starting
debate starts on April 15.
But while I am waiting for the ma-
jority leader-
Mr. MELCBER.' Will the Senator
yield briefly while he Is waiting for the
majority leader?
Mr. DOLE. We-hear all these things
about costs, the banks saying this is
too costly, even though they privately
tell you that cost is not even a prob-
lem because they get what , we call a
float. They'get to hang on to the with-
held money long enough to recover
their costs. They earn interest on the
money they hold. We hear all these
exaggerated claims about $2' billion of
$134 billion or $3 billion. They would
make you think that this Is going 'to
cost more than will be collected
through the withholding process.
I should like to include in the
Racoan a'letter I received from Treas-
ury Secretary Regan dated March 15
in which he says:
I am concerned about certain exaggerated
As I understand it, we average about
a 2-percent audit, and to recover this
much money through the audit proc-
ess, you would have to audit perhaps
as many as 20 percent of all tax re-
turns-1 out of 5. That incresed audit .
activity would cost the Federal Gov-
ernment about $3 billion.
Then, there is talk about IRS har-
assment. If you are auditing every
fifth tax return we would be flooded
with real letters, from real people,
abour'real harasamen$.frem the IRS,
and we are trying to a rbid that. With.
holding Is the least intrusive means we
have. -
Mr. President, I ask unanimous con-
sent that this letter 19ron the Secre.
tary of the Treasury be printed in its
entirety in the Rioco#m.
There being no objection, the letter
was ordered to be printed in the
Racoan, as follows:
Tax Sacax zy or In 'I' SIUMY,
Washington, March 15, 1983.
Hon. Robert Dole,
Chairman, Senate Finance Committee,
Washington, D.C
Dsa Ma. Caamaar I am concerned
about certain exaggerated estimates of the
costa financial Institutions may Incur to In-
stitute, withholding on Interest and divi-
dends. while precise estimates of the costs
that will be incurred are not available, some
of the figures that have been discussed can
be clearly shown to be euagfdrations.
Estimates of the total startup costs of $3
billion are greatly overstated. Such esti-
mates are accounting cost allocations rather
than eathastes'of genuine incremental costa
that would be incurred seep without the
new withholding law. True incremental
costs will be significantly below cost esti-
mates that Include all allocated costa.
A few banks, ranging from Small to very
large Institutions, have informally and con-
fidentially supplied the Treasury Depart-
ment with their estimates of the administra-
tive startup costa of withholding. We have
far too little data to constitute a useful
sample, but for those banks on which we
have figures, true incremental startup costa
appear to average less than $2.00 per ac-
count. If this small number of banks is rep-
resentative of all payors of Interest and divi-
dends (Including banks. savings and loan in-
stitutions, mutual savings banks, and credit
unions), then total startup mats would be
approximately $600-$700 million. These
costa can be offset by the extended float al-
lowed on withheld amounts and by the
income tax deductions available for such
costs. Since we have so little data, we cannot
be certain that total startup costs are within
this range. Nonetheless, it does appear cer-
estimates of the costa financial institutions
may Incur to Institute withholding on inter-
est and dividends.
lot of money at the expense of a lot of Now they are talking in the neigh-
American taxpayers. If we are so con- borhood of, I think, $3 billion. We are
cerned, as I know the banks are, then I talking about thousands and thou-
think we ought. to couple with this sands of banks.
delay a real incentive for the banks to The total cost just to put this with-
eliminate withholding. The banks ad- holding system into place where it is
vertise all these incentives for savings. going to remain, hopefully, for' a long
This would be a real incentive. time and collect $20 billion over the
So if the motion to table fails, as I next 5' years and' billions and billions
hope it will not, then I would hope, if I and billions over the next decade, the
can be recognised, that we might offer < next 20 to 30 years, the total startup
a second-degree amendment that cost, according to the Treasury De-
would really help the bankers and the partmefrt, is going to be only $600 mil-
American people, because I do not lion to $700 million, which is about a
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CONGRESSIONAL RECORD - SENATE March 21, 1983
tain that startup costs are only a fraction of
the claimed $3 billion.
If enough resources were allocated to the
Internal Revenue Service to provide the
same improvement in compliance and to col-
lect the same additional revenues as will be
collected under withholding, the costs to
the Government would be well above the es-
timated $600-$700 million in costs to finan-
cial institutions to institute withholding.
Small increases in IRS enforcement efforts
may recoup relatively high revenues per
extra dollar of IRS coats. The enormous in-
crease in IRS audit activity that would be
needed to raise $3 billion (an increase in
audits by well more than 200 percent)
would, however, inevitably result in much
lower additional revenues per dollar of IRS
costs. Indeed, the Incremental IRS costa re-
quired to raise the almost $3 billion a year
in revenues gained from withholding would
be well above $1 billion, perhaps as much as
$2 billion. Further, this additional effort
would involve such a dramatic increase in
IRS staffing that it would take several years
for the IRS to add and train the needed
agents.
It must be remembered that attempts to
reduce noncompliance through greater IRS
effort involve significant cost to the IRS.
These arise from the burden more than two
million additional audits will impose on tax-
payers' time and resources. Inevitably these
audits will inconvenience many taxpayers
who have correctly. paid their taxes.
In contrast, withholding on interest and
dividends only requires those taxpayers who
correctly pay their taxes on interest and
dividend income to pay some of those taxes
during interest and dividend income to pay
some of those taxes during the year rather
than at the time that they file their returns.
Requiring those who receive interest and
dividends to pay a portion of their taxes as
promptly as wage earners pay is not, in my
view, unfair.
I recognize that banks must incur some
costs to institute a system of withholding on
interest and dividends. As I stated above,
those costs have been frequently exaggerat-
ed. Nonetheless, there is legitimate concern
that we not impose an undue burden on the
banking system. If, at some later time, it is
reliably demonstrated that the true incre-
mental cost that most banks must incur ex-
ceeds the value to the banks from the ex-
tended float on the withheld amounts that
has been allowed, then I would support al-
lowing the extended float for a longer
period.
Sincerely,
DONALD T. REGAN.
Mr. MELCHER. Mr. President, will
the Senator yield for a question, a pro-
cedural question?
Mr. DOLE. Yes, I yield only for a
question, not for the purpose of any
amendments.
Mr. MELCHER. In view of the fact
that the Senator is waiting for the ma-
jority leader, I wonder if he would
object to my responding to some of
these points for 5 minutes. Would that
be objectionable, before there is fur-
ther procedure?
Mr. DOLE. I have no objection to
the Senator from Montana respond-
ing, if there is a unanimous-consent
agreement that there will not be any
amendment or modification of the
pending amendment and that the Sen-
ator from Kansas will not lose his
his objectivity. But I do not want to
disturb what I consider to be the ap-
propriate way to approach this, and
that is a motion to table. If that fails,
the Senator from Kansas would like to
retain the right to offer an amend-
ment.
Mr. MELCHER. Certainly.
The PRESIDING OFFICER. Is
there objection? The Chair hears
none, and it is so ordered.
The Senator from Montana.
Mr. MELCHER. I thank the Sena-
tor.
Mr. President, first of all, I point out
that the provision in the 1982 bill for
this withholding of taxes on interest
and dividends passed by a vote of 49 to
48, a very tight vote, and absentees in-
dicated that had they been present
and voting, they would have voted
against it, which would have defeated
it, and it would have been removed
from the bill.
The prospect of what we are going
to do on April 15, when the Kasten
amendment for repeal is brought in
the Senate, is rather dim-what the
final outcome of that would be if the
Senate would adopt it as a part of an
extraneous bill and send it to the
House. It is not clear that the House
would agree to it at all or, for that
matter, that the House even would
take it up. As a matter of fact, its
future on April 15 is very obscure, no
matter what the Senate would do at
that time.
The purpose of this amendment is
simply to allow a longer period of time
than April 15 to see what really hap-
pens and to give both the Senate and
the House some change of action on
this before it is locked in, perhaps for-
ever-not necessarily-but locked into
the procedures of withholding these
taxes. Once they are withheld, there is
a tendency to leave them alone.
It is bad enough trying to repeal
something we did just last summer,
without contemplating what might
happen after the whole procedure got
in motion.
It is clear that there would be $1.1
billion lost in fiscal 1983 from rev-
enues if my amendment were to be
adopted and accepted by the House
and became part of the law. In other
words, a delay of 6 months is going to
lose; for fiscal 1983, $1.1 billion in rev-
enue; but during this time, we will
have the chance to decide whether
this was wise and whether there are
better ways of gaining revenue that is
needed.
I am advised by the Joint Committee
on Taxation, which states that today
the Treasury Department agrees with
the $1.1 billion estimate for fiscal 1983
in revenue loss, that in fiscal 1984 the
figure would be $300 million.
It is not my contemplation and it is
not my purpose in offering the amend-
ment that we lose revenue. It is merely
my purpose in offering the amend-
right to the floor. ment that the Senate and the House
I want to conduct a debate with the have sufficient time to discuss this
Senator. I commend the Senator for very thoroughly and consider it and
see whether we want to reconsider it,
possibly repeal it, or modify the provi-
sion.
The third point I should like to
make is with respect to the question of
the large banks and what their pur-
pose has been on this amendment. I
simply do not know. I believe that
most of the large banks, what people
refer to as large banks-such as Bank
of America, Chase-Manhattan, and Ci-
tibank of New York-are in favor of
retaining this withholding provision.
They are not for repeal, so far as I
know. It is my understanding that
they are against repeal. So I do not be-
lieve we are hearing from them with
fictitious or false advertising or any in-
fluence on Members of the Senate or
the public at large, saying, "Let's
repeal it." I do not think that is their
position. I think their position is that
we should retain it.
Fourth, the point has been made
about W-6 forms. This is the form
that a person who wants to be exempt
from this withholding would fill out
and file with their institution. We
have inquired in Montana whether
they are available at the banks, sav-
ings and loans, and credit unions-
those three groups-and we are ad-
vised that, as of last Friday, they are
not available.
So it points out the fact that this is
a process that takes a lot of paperwork
and a lot of time and a lot of delay. I
think my amendment has some merit
just for their sake in getting out the
W-6 form. Who is "they"? The Treas-
ury Department, in sending out the
W-6 forms. If we do not reach them in
the next 30 days, maybe the time will
be a little short for sending them out
by July 1.
Fifth, the point has been made by
the Senator from Kansas, very elo-
quently, that he is supporting the
President in this endeavor to block
any delay of reconsideration. I will
read into the REcoiD a portion of the
Republican platform of 1980:
We also oppose Carter proposal to impose
withholding on dividend and interest
income. They would serve as a disincentive
to save and invest and create needless pa-
perwork burdens for government, business,
industry, and the private citizen. They
would literally rob the saver of the benefits
of interest compounding and automatic divi-
dend reinvestment programs.
I have received a lot of letters, and
evidently they are from Republicans
who are following the Republican
platform, because some of these let-
ters almost repeat what this platform
statement says. I seldom receive a
letter saying, "I am a Republican" or
"I am a Democrat," but I have to de-
termine that a lot of people writing
me are Republicans. They are saying
exactly what the Republican platform
said in 1980.
Also, I point out that the Senator
from Kansas, the chairman of the Fi-
nance Committee, very profoundly
stated, in a consideration of last year's
tax bill:
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I would like to note at the outset that with me, and who is a schoolteacher
these proposals generally do not substitute who learned that there would be a
a mandatory withholding system ? ? ? withholding program when she re.
He is speaking about the withhold- ceitied her notice from the Treasury
ing on the interest and dividends from Department with a refund check.
savings and investments. The notice was a 662A which ex-
He said: plains that recipients of interest and
I would like to note at the outset that dividends will be faced with a new
these proposals generally do not substitute withholding program which begins on
a mandatory withholding system fora work- July 1.
of dinformation o so in particular system That happens to be-the first time
est and dividend payments I believe that that she was aware of the actual pro-
sucli proposals may be premature until we posal that is now law and will go into
have seriously tried to improve our Informa- effect July 1, and she, says to my aide,
tion reporting system. her husband:
It is a fine system, and it was true. I
think it is obvious that our reporting
system has not been addressed ade-
quately.
Mr. DOLE. Mr. President, will the
Senator yield? I did not get whose
statement that was.
Mr. MELCHER. It was the state-
ment of the Senator from Kansas.
Mr. DOLE. That was in reference to
the compliance bill we introduced. The
Senator is correct-that did not in-
clude interest and dividend withhold-
ing. We included some compliance
measures. It was a separate measure
that that the President included iri his
budget.
Mr. MELCHER. It was on the tax,
payer compliance improvement ' of
1982. The Senator is, correct. It was
said in March 1982, a few months
before we adopted this provision in
the tax bill. The Senator is correct.
It is not really my intehtion to hold
up the social security bill. I should
just like to have a vote on this. It is
not an earth-shaking amendment. It 'is
a delay as to when the withholding
will take place on interest and divi-
dends of individual taxpayers. It
tracks what the Treasury Department
has already announced, the delay they
are going to have on the reporting of
interest payment from Tresury notes
and Treasury bonds and from some
other bonds that are handled by
States and for that matter other
Can't you get Senator MW ARM to do
something about that because I have al-
ready paid more than 'I should and this will
be something more that was added to it that
will be withheld andi will lust have to raffle
for that much more? -
That is one group.
The second group that are particu-
larly concerned, Judging from the com-
ments I received and the letters I re-
ceived, appear to be the elderly. I will
read this short letter which is typical.
It says:
Would you please work to repeal the 10
percent withholding provision of the "Tax
Equity and Fiscal Responsibility Act of
1982"?
The net result of this provision is to cheat
the small investor out of his money for up
to 1% years at a time, while waiting for a
tax refund. And believe me. I don't like
being cheated.
My wife and I scrimp and save each
month so we can put money ad& for retire-
ment. We need to be able to compound our
interest so that when we do retire there is
enough to live off of.
My wife and I fully realise that by the
time we retire, the Social Security system
will be bankrupt, and we will get little or
nothing back that we put In. I've read that
Congress doesn't trust Social Security for its
retirement program and frankly I don't
either. Anyone with a high school education
can look at the numbers and figure that out
for himself.
'So please-allow us-the little guys to
keep one opportunity to save for ourselves
and provide'for ourselves.
S 3503
Mr. DOLE. Mr. President, I think we
will be ready to vote in a few mo-
ments.
I shall read an editorial that ap-
peared in the Minneapolis Star and
Tribune on March '16 by Jim Klobu-
char, apparently an outstanding col-
umnist. At least, he is on the ,right
side.
Before I do that, I wish to thank the
Senator for reading that letter about
the social security system going bank-
rupt. That is why we an trying to con-
vince the Senator not to .hold it up. It
is about to go bankrupt and we want
that couple to get their social security
check.
Mr. MEICHER. Mr. President, if
the Senator will yield. I think I made
it abundantly clear that I have no
desire to hold up the bill.
Mr. DOLE. That is what Senator
KASTxtt said.
Mr. MELCHER. I think it is a good
point to adopt this amendment so we
know exactly where we are and go on
with the remainder of the bill knowing
we have plenty of time considering
this matter.
Mr. DOLE. I appreciate that. I know
the Senator does not want to hold it
up too long.
This column from Jim Klobuchar,
says:
The money wizards around town have
been telling me for days 'Mat the federal
government is about to stomp out the last
ember of liberty and decency by putting a
tax withholding system on the. money we
make from investments.
They are furious because Tm having trou.
ble absorbing the purity of their intentions
and lpgic.
Two days ago I was ostracized from a
steam room where we have gathered as
peers for years. Two of the others were
bankers and one was a broker. We have
been pals and confidantes, brothers In the
struggle against sloth aqd overweight.
They shunned me unanimously when the
talk got around to withholding on interest
and dividends.
They began politely by calling me i
no-
g
groups that sell bonds. Please repeal the 10 percent withholding rant. As a variation they called me barbaric.
So it is not meant at all to hold up provision of the "Tax Equity and Fiscal Re- From there it got personal
.
this bill but is merely an opportunity sponsibility Act of 1982." They accused me of giving comfort to
to make sure there is time for a proper Of course. he appears to be. elderly. I those who would rip out the fabric of the
review by Congress of the question. am not sure. They say they are saving American savings ethic and they asked, par-
,
also was ready to support
I trust that the Senate will accept for their retirement. But, neverthe- incest est at and d if I
my proposal or at least consider my less, they are thinking about earning rabies.
proposal for delay as a fair method of from interest and what it would mean being All of hypnotized d by by Ronald.
on Ronaalldd , Reagan. inc of
agan.
representing taxpayers. if some of their taxes are withheld. Stricken mute, I groped for the door.
The first group of taxpayers that I They could file and..get them back. Meditation seemed to be the only sensible
am thinking about are those who al- this is true, and I am not trying to escape. What was there in this simple prin-
ready paid all their taxes and. are apply that they are not going to get ciple of tax collection-one we have lived
having the ' taxes withheld from their their full credit for their money. They with for more than 40 years without geno-
wages or from their salaries and who certainly are. dde-that could create such conversational
know they pay them all and many of These points lead me to believe that carnage?
whom already pay more through the the amendment Is sound, fair, and tary I telephone Ditto Maly, a paralegal secre-
sng a~uaintance at one of the local
withholding process. equitable to all and above all fair to firms.
As to 75 percent of those people, I the taxpayers who are writing these Ditta," I said, "as I understand it, all
am told, there is already over with- types of letters so that we can be sure that's involved here is extending the income
holding. In other words, -more is with- that we have given them adequate tax withholding principle to savings and in-
held from the taxes than are due and consideration. vestments. The banks and the savings and
they have to file for a refund. 'I hope the Senate can agree to the loans and brokerages would withhold 10
That is exactly to the point of the amendment. I realize the constraintsest cent of what the investor earns in inter-
taxpayer of this particular person to of time, and I hope that we can have a and dividends. The government believes,
whom I referred earlier who is the resolution of this problem very-quick- with ac evidence, that there are people
who actually ually chisel nceon n those earnings. . so
So
wife of my aide, who is sitting right ly. ? the government figures it can take in $4 or
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83504
$5 billion more a year in taxes that aren't
being paid now, and also .make use of the
money sooner, which is what it already does
on income taxes."
She said this more or less squared with
the facts, yes.
"So why are so many people sounding as
though they thought they're about to be
disemboweled?"
"If you want to be unpopular," she said,
"tell the people you think this dividend
withholding is OK. From all the calls we've
gotten from our tax clients, a lot of them
are feeling that they're being deprived of
one of their rights."
But their right to what?
A certain amount of creative amnesia in
the filing of income tax reports is not exact-
ly unheard of in this country.
Still, most citizens try to report accurate-
ly.
One of their hovering suspicions and wor-
ries is that the next guy might not. Worse,
he might be getting. away with it.
The income tax withholding eased one of
those suspicions and made the income tax
substantially more democratic.
What's different about dividends and in-
terest?
The banking industry is arguing that it's a
bleeding shame because, in the language of
one of the form letters it has put in the
hands of thousands of its customers, "it's
unfair to those of us who have always paid
our taxes on interest."
How is it unfair?
If we're talking about poorer people and
older people, anybody can file an exception.
It's a piece of work, sure. But so is paying an
extra tax share for the $5 billion or so being
chiseled or slopped away unintentionally by
investment earners.
If we're talking about using that interest
money now, instead of turning over some of
it to the government before the deadline,
how much of an oppression is that for the
average investor?
For most of us, it is pretty small change.
But there is literature coming out of the
money houses that makes it sound as
though this is actually a new tax.
They also are citing horror stories about
thousands more hours in paper work and
giant new computers, but if you compare
the government's collection predicaments
and budget goals with those of any corpora-
tion you deal with, you have to give the gov-
ernment the same allowances.
The gas and phone companies collect from
you every month. Every company is auto-
mated. The newspaper does the same thing.
Some collect before you receive.
It's the way the world spins now, and the
way bills are paid.
So I called one of the chummier of local
banking presidents, Dick Hillyer of Summit
ins Richfield.
"You guys pay an average of 2.7 percent
income tax," I said. "Only the paper and
wood products companies and the crude oil
producers pay leas, according to the congres-
sional people. Tell me what's so unforgiva-
ble about asking the investment industry to
help the government bring dividend tax col-
lections into the 20th century."
"I personally don't object to it all that
much," he said. "I think there are better
ways to get those dividend reports to the
government without making us send 1099s
to you, and all the rest. I think a lot of
banks feel.that because of the extra service,
they may have to pass on some of those
charges to the customers."
This is not a virginal concept.
"Will it be a huge imposition on the banks
and bgokerages?"
"Well, they scream and yell. You can't
blame them. We all have our own interests.
But they'll survive."
Which is more than you can say of the
jobs bill unless some of the congressional
lions rediscover their backbones.
The point of it is after you talked to
the banker, the banker really did not
have that much objection, and I think
that is essentially the case.
Mr. President, I have a lot of other
things I would like to say but, hopeful-
ly, will not have the opportunity to
say on this bill.
0 Mr. HATCH. Everyone knows that I
am very much in favor of repealing
the withholding of dividends and in-
terest language. However, since Sena-
tor KASTEN has worked out a time cer-
tain and a reasonable bill upon which
to debate this matter, I believe the
Senator from Montana should with-
draw this amendment. All he will ac-
complish is to extend this debate into
the filibuster mode and cause millions
of people, who are afraid of the bank-
ruptcy of social security, to become
unnecessarily concerned.
I would recommend to my President,
and those who advise him, to allow the
repeal of this provision because,
sooner or later, we are going to repeal
it. However, this is not the bill upon
which to debate the matter.*
Mr. BAKER. Mr. President, will the
Senator yield?
Mr. DOLE. I yield to the distin-
guished majority leader.
Mr. BAKER. Mr. President, we
really should get on with this bill if we
can. I indicated to the Senator from
Kansas and the Senator from Louisi-
ana, the managers of the bill, that I
still entertain the hope that we can
finish this measure tonight. But to do
so we will have to move with more dis-
patch than we have so far. In order to
facilitate that and move things along,
I move to table the Melcher amend-
ment, and I ask for the yeas and nays.
The PRESIDING OFFICER. Is
there a sufficient second? There is a
sufficient second.
The yeas and nays were ordered.
The PRESIDING OFFICER. The
question is on agreeing to the motion
of the Senator from Tennessee to lay
on the table the. amendment of the
Senator'from Montana. The yeas and
nays have been ordered, and the clerk
will call the roll.
The assistant legislative clerk called
the roll.
Mr. STEVENS. I announce that the
Senator from Vermont (Mr. STAFFORD)
and the Senator from Wyoming (Mr.
WALLoP) are necessarily absent.
I also announce that the Senator
from Oregon (Mr. PACKWOOD) and the
Senator from Maryland (Mr. MATHIAS)
are absent due to a death in the
family.
Mr. BYRD. I announce that the
Senator from California (Mr. CRAN-
sToN) is necessarily absent.
The PRESIDING OFFICER. Are
there Senators who have not voted
who desire to vote?
The result was announced-yeas 37,
nays 58, as follows:
March 21, 1989
[Rollcall Vote No. 36 Leg.]
YEAS-37
Andrews
Hart
Moynihan
Baker
Hatch
Murkowaki
Bingaman
Hatfield
Roth
Chafee
Hecht
Rudman
Danforth
Heinz
Specter
Dodd
Jackson
Stennis
Dole
Kassebaum
Stevens
Domenici
Kennedy
Thurmond
Durenberger
Lautenberg
Tower
Gam
Laxalt
Weicker
Goldwater
Leahy
Wilson
Gorton
Lugar
Grassley
Metzenbaum
NAYS-58
Abdnor
Exon
Nickles
Armstrong
Ford
Nunn
Baucus
Glenn
Pell
Bentsen
Hawkins
Percy
Biden
Heflin
Pressler
Boren
Helms
Proxmire
Boschwitz
Hollings
Pryor
Bradley
Huddleston
Quayle
Bumpers
Humphrey
Randolph
Burdick
Inouye
Riegle
Byrd
Jepsen
Sarbanes
Chiles
Johnston
Sasser
Cochran
Kasten
Simpson
Cohen
Levin
Symms
D'Amato
Long
Trible
DeConcini
Matsunaga
Tsongas
Denton
Mattingly
Warner
Dixon
McClure
Zorlnsky
Eagleton
Melcher
East
Mitchell
NOT VOTING-5
Cranston
Packwood
Wallop
Mathias
Stafford
So the motion to lay on the table
Mr. MELcmcR's amendment (UP No.
103), as modified, was rejected.
The PRESIDING OFFICER. The
Senator from Kansas.
Mr. DOLE. Mr. President, I think
while most Senators are here, we
ought to just take a minute to under-
stand where we are not going if this
amendment is not eventually disposed
of. That is, we are not going to finish
any social security legislation this
week. Maybe that is not important be-
cause we are coming back April 6. But
it was the understanding of this Sena-
tor that we agreed to debate withhold-
ing on April 15, a free-standing debate
where everyone would have the
chance to debate, offer motions and
modifications, and we could then dis-
pose of that issue.
But here we are again, with the jobs
bill having been held hostage for sev-
eral days, and now it is the social secu-
rity package. I would just suggest that
I will stay here as long as it takes to
defeat this amendment. If you are not
concerned about social security, if
there is not any real urgency-we have
only worked for a year or year and a
half to put this package together-
then I think we ought to keep playing
the bankers' game.
UP AMENDMENT NO. 104
Mr. DOLE. Mr. President, I send a
second-degree amendment to the desk
and ask for its immediate considera-
tion.
The PRESIDING OFFICER. The
clerk will report.
The bill clerk read as follows:
The Senator from Kansas (Mr. Dora) pro-
poses an unprinted amendment numbered
104.
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In lieu of the language proposed to be In-
serted by unprinted amendment 103 insert
the following:
"Delay Implementation of Withholding
of Interest and Dividend. Income."
Sac Section 308A of the Tax Eklulty
and Fiscal Responsibility Act of 1982 is
amended by striking out 'June 30' and in-
serting in lieu thereof 'December 31; pro-
vided however, the foregoing delay shall
take effect only if the average.prime inter-
est rate charged by the Nation's ten largest
banks is 6 percent or lees on June 30, 1983,
and that delay shall remain In effect only as
long as that average prime rate remains
below 6 percent."
aEG . MINIMUM FOR MONEY MAMW DElosrr
ACCOUNTS.
Section 204(cXl) of the Depository Insti-
tutions Deregulation Act of 1980 (12 U.S.C.
3503(cXl)) Is amended by adding at the end
thereof the following: "The Committee
shall not establish or maintain a mit~aum
balance requiremegt higher than $300 for
deposit accounts authorized by this subsec-
tion.".
The PRESIDING OFFICER. The
Senator from Kansas.
Mr. DOLE. Mr. President, if we are
going to help the people of this
counrtry, here is the way to do it. You
can help your bankers in the process.
and the depositors as well. For all
those people out there who want to
invest in a money market fund but
cannot do it because they do not have
$2,500, this amendment will lower that
to $300. The amendment will allow in-
dividuals to take. their money out of
passbooks savings, the 5.5 percent that
bankers never talk about in their ads,
and put it into the money market
funds at 8 or 9 percent. ,
I cannot think of anyone on this
floor who would not want to do that
for their constituents. This is part of -
the 'second-degree amendment. I
cannot think of any of us who want
the high interest rates to stay up
there, particularly those running for
high office, even the U.S. Senate.
This amendment presents a deal
that should be hard to resist. We will
delay withholding, as . the Senator
from Montana wishes, if the prime
rate decline to 8 percent. That ought
to be a real incentive for the banks to
reduce interest rates in loans. We
know they are not holding up the
rates }rtificially, at least they tell us
they arenot holding up the rates arti-
ficially.
I think we ought to debate this
amendment, unless my colleagues are
prepared to adopt it now.
SEVERAL SENATORS. Vote, vote.
Mr. DOLE. Would the Senator be
willing to accept the amendment?
Mr. MELCHER. Mr. President, I can
only answer the question by saying
that I personally think it is impossible
to get the rates down that fast, but I
would like to hope no.
Mr. DOLE. Well, let us try. We tried
everything else.
Mr. MELCHER. I think this sort of
belies a statement that we want to get
on with the bill. Let us get the vote
over with.
Mr. DOLE. Mr. President, I ask for
the yeas and nays on the amendment.
The PRESIDING OPFICER. Is
there a sufficient second? There is a
sufficient second.
The you and nays were ordered.
SEVERAL SENATORa Vote, vote.
The PRESIDING OFFICER. Is
there debate? If not, the question is on
agreeing to the amendment of the
Senator from ? Kansas. The yeas and
nays have been ordered and the clerk
'1D111 call the roll.
The bill clerk called the roll.
Mr. MURKOWSKI (when his name
was called). Present.
Mr. D'AMATO (when bib name was
called). Present.
Mr. STEVENS. I announce that the
Senator from Vermont (Mr. STArroan)
and the Senator from Wyoming (Mr.
WALLOP) are necessarily absent.
I also announce that the Senator
from Maryland (Mr. MAauias) and the
Senator from Oregon (Mr. PACSwooo)
are absent due to a death in the
family.
Mr. BYRD. I announce that the
Senator from Florida (Mr. CHILES) and
the Senator from California (Mr.
CRANSTON) are necessarily absent.
The PRESIDING OFFICER (Mr.
PRESSLER). Are there any other Sena.
tors in the Chamber wishing to vote?
The result was announced-yeas 35,
nays 57-as follows:
(Rollcall Vote No. 37 Leg.]
YEAS-38
Abdnoc Gorton McClure
Andows Oraeeley Metosobsum
Baer Boechwits Hatch Pressler
Chafee HMfleld Roth
Cohen Hecht Rudman
Danforth Heins specter
Dodd Kasebaum Thurmond
Dole Kennedy Tower
Domenici Lautenbert Welcker
Durenberger Laxalt Wilson
darn Lugar
NAYS-67
Armstrong Goldwater
Bauws Hawkins
Bentsen Heflin
Bider Hehns
BingaMan Holltnss
Boren Huddleston
Bradley Humphrey
Bumpers Inouye
Burdick Jackson
Byrd Jepson
Cochran Johnston
DeConcini Kasten
Denton Leahy
Dixon Levin
Eagleton Long
East Matsunaga
Exon
Ford Melchor
Glenn Mitchell
"
ANSWERED
PRESENT"-2
D'Amato ' Murkowaki
NOT VOTING"
Chiles Matht. Stafford
Cranston Packwood Wallop
.So the amendment (UP No. 104) was
rejected.
Mr. DOLE addressed the Chair.
The PRESIDING OFFICER (Mr.
The Senator from Kansas
is recognized.
Mr. DOLE. Mr. President, may we
have order?
I think we are making progress. I do
not know how much, yet. I want to see
S 3505
how high my colleagues think the in-
terest rates ought to be. We have an
amendment for 7 percent, one for 8
percent. I want to know how high
people want the interest rates to be.
Maybe prime is Just right.. I thought it
was high. But we will have a chance to
see. We have really got the issue fo-
cused now between the bankers and
the people, and that IS sort of where
we have been trying to get it for sever-
al weeks. We may not get the social se-
curity bill passed as quickly as I had
hoped, but that maybe all right if
enough of my colleagtes believe we
have to protect the bankers and their
interest rates.
Mr. President, I would like to discuss
this for 30 or 40 minutes and give
people a chance to refresh themselves
and then maybe offer another amend-
ment or two on this.
I say, very seriously, I Just do not be-
lieve that this amendment to delay in-
terest and dividend withholding be-
longs on the social security bill. Some
others may disagree with me, but I do
not propose to let it become a part of
the social security bill unless we can
properly amend it to make certain
that we are helping the banks and
their customers at 'tile same time. I
also would point out that the amend-
ment is still subject to a point of order
under the Budget Act. I think as we
get nearer the deadline for the social
security package Members Will under-
stand this Is a very important piece of
legislation which should ,pot be hin-
dered by an additional6.month delay
on withholding. We have already
agreed to a debate an the withholding
issue with the distinguished Senator
from Wisconsin, which I thought was
done in good faith, and that that
would end the matter for a few weeks
and give us a chance to pass the social
security legislation before the Easter
recess.
Mr. President, may we have order?
The PRESIDING OFiPICER. The
Senate will be in order.
Mr. DOLE. Mr. President, I do not
want to unduly.detain anybody, but I
would like to pass the social security
bill. There are 152 million Americans
waiting for us to pass the social secu-
rity bill.
The PRESIDING OFFICER. The
Senate will be in order. Those holding
conversations Will please retire to the
cloakrooms. The Senator from Kansas
is trying to be heard. Staff who are
conversing Will please retire to the
cloakrooms.
Mr. DOLE. We can play the games
on withholding for the next several
days, if that is what the Members
want.
There are a lot of things in this bill
on which the Senator from Kansas is
trying to accommodate a number of
his colleagues, on both sides of the
aisle. but withholding is not one of
them. It does not belong on the social
security bill.
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S 3506
CONGRESSIONAL RECORD - SENATE March 21, 1983
If anyone is going to insist on put-
ting it on the social security bill, the
Senator from Kansas has to protect
his rights and protect the social secu-
rity provisions and try to defeat it
somehow. If it cannot be done toniglit,
we will try tomorrow. If it cannot be
done tomorrow, maybe Wednesday. If
it cannot be done Wednesday, maybe
Thursday. Maybe sooner or later the
Senator from Montana will be success-
ful, but I must oppose his efforts.
We still have a number of social se-
curity amendments-by the Senator
from Florida, the Senator from Colo-
rado, the Senator from Louisiana, and
the other Senator from Montana. We
thought we had five or six amend-
ments on which there would be rollcall
votes. But until we set this matter
aside, we cannot proceed on the social
security bill.
Mr. President, I do not want to bore
people with recounting the reasons
why we should not be doing this on
this legislation, but I would not want
any of my colleagues to leave the floor
of the Senate thinking that we must
inevitably take care of the bankers in
this legislation.
Mr. GARN. Mr. President, will the
Senator from Kansas yield?
Mr. DOLE. The Senator from Utah,
who is the chairman of the Banking
Committee and who supports repeal of
withholding, stood on this floor about
an hour ago and said he did not think
it belonged on this bill. I thank the
Senator for his support. We have an
agreement to debate withholding on
April 15, and he stated he would sup-
port me at this. time, even though he
does not agree with my views on with-
holding.
If we are not acting in good faith, if
any of my colleagues thinks we have
reneged on the April 15 agreement,
that would be one thing. But I can
assure my colleagues I am prepared to
uphold that agreement. I must say
however, that I am going to do all I
can to frustrate the withholding
amendment on this bill; and if it is
necessary to put off social security, I
will do the best I can to do that.
I yield to the Senator from Utah.
Mr. GARN. Mr. President, I want to
repeat what I said before we came to
that vote. We totally disagree on that
issue. I am in favor of repeal. I have
always opposed withholding at source.
It is another example of Government
asking the private sector to do its work
for them. I will'vote for repeal when
we get that opportunity. When we get
to April 15, I will vote with Senator
KASTEN, and I will vote with him pro-
cedurally, and I will do everything I
can to repeal withholding. I supported
him last week, not only the substance
but also on the procedural votes, on
cloture. I voted with the Senator on
his cloture motion.
We had a unanimous-consent agree-
ment worked out by the leadership. I
have been here only 8 years, and that
is a relatively brief period of time, but
I think we have seen the Senate at its
worst demogoguery tonight, because
what I have seen is political position-
ing against an avalanche of mail. To
hell with the Senate or any routine
procedure for social security. We have
to be on record for a 6-month delay;
and when it is going to lose, we see a
bunch of people running down there
to get on the side of the angels. It is
absolutely disgusting, in light of the
agreement to debate this issue sepa-
rately.
Nobody can be more against with-
holding than I, because I am chairman
of the Banking Committee. A lot of
those letters think it is JAxz GAM'S
fault and not BOB DoLs's.
Mr. DOLE. I do not think I deserve
all the credit.
[Laughter.]
Mr. GARN. I say it is a revenue
issue, not a banking issue. But I have
received a lot of heat.
This is not the right place nor the
right time to play political demagogu-
ery. We have our opportunity. I said
before to the Senator from Kansas
that if we did not have an agreement,
I would have noted with the Senator
from Montana tonight. If we had not
worked that out, I would do every pro-
cedural thing I could to repeal with-
holding. What is the matter with that?
I used to read about how the Senate
worked. Now, on every issue that
comes up, we have Senators wanting
to get in the press to report what they
are doing. I hope the press will report
tonight what is going on and let the
American people know there is an
agreement to discuss this issue, up or
down, on April 15, and that some of us
will do everything we can to see that
the Senator from Wisconsin prevails
and that we repeal-not just a 6-
month delay, but repeal. But here we
have to play with it now on social se-
curity and delay that. I do not under-
stand; I really do not. I have frustra-
tion and irritation with the political
game which goes on on this floor.
Mr. GOLDWATER. Mr. President,
will the Senator yield?
Mr. GARN. I will be happy to yield.
The Senator from Kansas has the
floor.
I do not understand. It is the easiest
political issue in the world to go home
and explain: I voted to table that be-
cause we have a unanimous-consent
agreement to debate it on April 15.
If we have not got the guts to ex-
plain to our constituents that we have
an agreement and we will have an op-
portunity to try to defeat the proce-
dural motions of the Senator from
Kansas at that time-but, no, on
March 21, we have to delay the Senate
so that we can get press. Let the press
report over and over and over that
there was an agreement, by unami-
mous consent, to bring this up on the
reciprocity bill, prejudicing nobody's
rights. In fact, it put us in a better po-
sition to try to debate it and defeat it
at that time. But we have to play
games with it tonight.
I have not changed my mind. There
is no Senator in this body more op-
posed to the substance of getting rid
of it than I. But I am not going to be
part of the demagogery games for
press purposes, when we can do it on
April 15, 3 weeks away.
So I will continue to support the
Senator from Kansas on procedural
issues until we get to that date, and I
am going to leave it. I am going to go
back to the Senator from Wisconsin
when it can be done in a proper, order-
ly manner.
Let us be statesmen. Let us go back
to being a deliberative body, instead of
parading for the press in here.
Mr. DOLE. I thank the Senator
from Utah. I do not want to get all the
credit for this. I know there is enough
to to around. I do not see anybody else
claiming it. I do hope, however, that
the administration will come in more
actively in supporting the President's
1983 budget.
I must say that I do not quarrel with
the right of the Senator from Mon-
tana to offer the amendment. I have
several amendments I am going to
offer to his amendment. I would
rather it not be on this issue, that we
get on with social security. But if it is
the will of the Senate not to pass
social security before the Easter
recess, I am willing to accommodate
that wish. We can all go home right
now. We will not miss many votes on
this package.
I am committed to pass the social se-
curity bill as nearly as we can in the
form recommended. It is not a perfect
package, but I do not think it is helped
any by this amendment.
I yield to the Senator from Arizona
without losing my right to the floor.
Mr. GOLDWATER. Mr. President, I
just want to comment that I stand
with the Senator from Utah (Mr.
GARm) on this. I oppose withholding as
strongly as he does.
However, I suggest to the Senator
from Kansas that he is probably losing
this fight himself. I am getting
damned sick and tired of hearing
about the American Bankers Associ-
ation.
I am a stockholder of a bank. My
brother is a director of a bank. I have
not had any mail from any banks. I do
not even get checks from them any
more.
[Laughter.]
I think the Senator should realize
that the American poeple do not like
this, and they do not care where you
put the amendment, whether it is the
15th of next month or now, or wher-
ever you want to jam it. Sooner or
later, the American people are going
to convince this Congress and the
President that they do not like the
withholding tax, or whatever you want
to call it.
I suggest to my friend that maybe
he should sit down and counsel with
himself in the quiet of some room or,
if the moon is up, maybe out under
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the moon, and maybe decide that his
tactic is not working.
Mr. DOLE. I say to my friend from
Arizona that I do not question his in-
tegrity or logic when he is debating
Issues, and I do not appreciate his
questioning mine, but that is a right
he has.
I will say, as long as I have breath to
say it, that I am going to fight to
retain withholding on interest and
dividends becduse it is a good provi-
sion. You do not have to agree with
me, but, if not, you should agree that
we should not have withholding on
wages, either, and that repeal of both
will make the tax laws fairer. If you
are going to talk about earned Income
and earned income, you can.
I am going to spend my time on the
Senate floor to preserve this provision.
If you have not had any mail from
your banks, you have missed a great
treat, because some of our offices are
literally covered with mail.
I will be happy to send some over to
the Senator from Arizona if he wants
some mall. The Senator from Kansas
has lots of mail.
I do my beat to accommodate Sena-
tors in this Chamber, and I do my best
to accommodate the President. If the
President calls me and says, "Senator,
forget about withholding," I would not
be offended. It Is not a personal
matter with me.
I just repeat again that this is a part
of the President's 1983 budget. I think
it has already been made a part of the
Racoiw. We could all get personal
about these things, and I hope that we
do not succumb to that, but it Is not
very easy to try to retain this provi-
sion, In the face of this campaign of
preprinted post cards. But I do not be-
lieve any of us were elected Just to re-
spond to the this sort of mail.
I know. the Senator from Arizona
would,not do that. When I supported
him in 1964, it was for that reason.
You have to stand up sometimes even
though it may not be the popular
thing to do.
However, I would emphasize again
that withholding was included in the
President's budget of 1983. It was not
dreamed up by the Finance Commit-
tee chairman, and it is not going to be
frittered away by the Finance Com-
mittee chairman.
The Senator from Kansas may lose
on this Issue, but I will continue to
criticize the American Bankers Associ-
ation for a deceptive campaign,,-and
they know it is deceptive.
If you read the Washington Post
yesterday, you know it is deceptive.
The Senator from Arizona would not
condone that kind of tactic, and no
one In this Chamber would. +
It is a deceptive, shameful campaign
by the American Bankers Association.
That does not mean It is being carried
on by all the banks in our States. I
think that, despite the association's
ads, some of my bankers are beginning
to understand that we are not picking
anyone's pocket, that we are not loot-
ing their savings, that this is not a new
tax, that peoples' savings are not going
to disappear.
I would say that when the Senator
from Kansas and the Senator from
Iowa, Senator OnASBLSY, put together
a tax compliance bill last year, we did
not Include withholding. In fact, the
Senator from Montana referred to a
statement I made at that time about
an hour ago. We knew that If we in-
cluded withholding on interest and
dividends we would create a firestorm.
What we tried to do is what every-
one else is now suggesting that We
should do. We tried to put in enough
other compliance measures to collect
the revenue. But the- IRS, the Treas-
ury, and the revenue.es imates from
the Joint Tax Committee staff told us
that our compliance bill would not col-
lect the taxes we were trying to col-
lect.
But withholding was in the Presi-
dent's budget at that time. I recall him
telling Treasury Secretary Don Regan
that we would have a hard time enact-
Ing withholding. But we had. a tough
decision, in 1989. The Senator from Ar-
izona did not support it, but it was a
tough decision. We had galloping defi-
cits, we had galloping interest rates,
we had a sick stockmarket, and the
President said we had to do something
to get the economy moving again. So
we enacted $100 billion In taxes recom-
mended by the President, not the
chairman of the Finance Committee,
and we got to that revenue number for
the most part not by adding new
taxes, but by collecting taxes already
in the law from people who have not
been complying with the tax laws.
I am not going to defend people who
do not pay their taxes. I do not care
whether they be bankers, lawyers,
Senators, or anyone else.
If that Is being stubborn, then I
guess I will Just have to be stubborn.
What is at stake here Is a social secu-
rity bill. We agreed in good faith to
debate withholding on April 15. I have
not reneged on that promise. and I do
not intend to. That does not, mean I
have to cave in because someone else
jumps up with an amendment 3 days
after that agreement and says, "I want
to delay withholding 6 months."
I remind the Senator from Arizona
and others it was the Senator from
Kansas who, because the ABA com-
plained about the effective date of
January 1, 1983. made the motion to
delay withholding for 6 months. My
record with bankers, S&L's, and credit
unions is probably as good as anyone's
in this Chamber.
However, that is not the point here.
The point Is we have at -stake here
about $20 billion .in revenue over the
next 5 years. - We must make the
choice. Do you want to charge it to the
deficit? This Senator does not. Do you
want to collect taxes from someone
else who is paying his taxes now, do
away with the third year, do away
with indexing, raise taxes on business
to pick up the deficit? This Senator
S3507
does not. Do you want to cut spending
$20 billion the next 5 years? I would
like to cut spending In some places,
but not just to take care of those who
are not paying their taxes. To me. that
is not very efficient spending reduc-
tions.
So we will have to debate it awhile.
it is not because the Senator from
Kansas has anything personal at
stake, but I would hope if you have a
conviction and if you have a responsi-
bility, you have a right to carry out
that responsibility. That is what this
Senator Intends to do.
The Senator from Arizona may be
correct that there -Is a - majority who
would like to get rid of withholding.
We could all write back and say,
"Well, this was a bad thing to do."
But I have not yet been convinced
that, if It is so bad to have withholding
on unearned income. why it is so good
to have withholding on wages and sal-
aries? Can no one tell me why, if it is
so good to take it out of the worker's
check, it is not right to withhold on
everyone else's check? Why should it
not be taken out of Interest and divi-
dend Income?
And I may say those who pay out
dividends are not complaining. The
corporations are not complaining.
They are simply complying with the
law.
It is the savings institutions and the
banks who have led the charge. and
maybe we should give In. I guess that
is the way you get ahe"Well. around here;
Just cave in and say. I cannot
stand the heat. My colleagues are
upset. They want to get rid of with-
holding. It is causing a lot of pain and
a lot of grief."
But I just suggest I must be con-
vinced of two things First of all. if we
had this delay and the bankers said,
"OK, we want 6 more months to make
it work," then I would say we should
talk about that. If I were convinced
the banks had-made only an honest
effort to repeal this. then I would say,
"OK, we did the best we could."
But I believe, and I can see It in my
own mall, that the. tide Is starting to
turn. Many have listened to one side
only. We have been covered up with
hundreds' and thousands of postcards
from people who did not understand
the law at all. We have cards saying
this - is a new tax. It is not a new tax.
The senator from Montana does not
claim it Is a new tax, to his credit. We
have cards saying, "You are taking
away my savings and I am frightened;
I am 65 years of age," or "You should
not collect taxes on interest."
That is not even the issue. IRS col-
lects taxes on interest and dividends
income with certain exceptions.
I do not know what the answer is.
The answer as far as this Senator Is
concerned is. not just to cave in. The
answer Js to debate it, to keep the
agreement we made last week to bring
it up on April 15, and then try to have
it out.
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CONGRESSIONAL RECORD - SENATE March 21, 1983
It is going to be a freestanding
debate. The Senator from Kansas has
his rights and every other Senator has
his or her rights, but there are Sena-
toes in this Chamber who strongly
support withholding-not just one
Senator. I would guess there are prob-
ably 38 to 40 Senators who feel pretty
strongly about withholding.
We do have veto provided by the
Constitution but we cannot just
govern by veto. If we have to start ev-
eryone adopting the popular thing
around here, I think we should repeal
all the taxes. A lot of people do not
like income tax at all. Why have it?
Just have a voluntary system. Mail in
what you want at the end of the year
and we will see how it comes out.
Let us not pick on the working
people. Most of them, like me, do not
care who owns stock in banks. They do
not own any stock in banks, or intend
to own stock in banks. I do not own
any banks. I am not a director in any
bank. I do not have much interest
income from the banks. I do not care
if they withhold on that interest.
So I would just say I have a feeling
this debate is starting to heat up, and
I would hope that we could stick with
the issue.
We came here prepared to dispose of
the social security package last week.
It should have been done, but no, we
could not do that because we all had
to cringe because of the bankers, and
we delayed the jobs bill.
Maybe that is all right. Maybe the
jobs bill is not that important. Now we
are faced with social security, and
maybe that is not that important. But
if somebody has a better idea on how
to handle the social security package
and we still have got five or six amend-
ments which are going to be debated,
then the Senator from Kansas will
welcome the idea. But I do not intend,
just because one Senator criticizes me,
to walk off the floor. I do not want to
displease anybody in this body. I do
not want to displease- any Senator in
this body, but I do want to make my
point, and once the point is made,
some may change their view. Let us
take a look at this Kiplinger Tax
Letter. That is a fairly respectable
letter, it is something I did not talk
about earlier that might be of interest.
I kind of believe if we ever have an
issue, and it is very important, I would
rather have somebody up fighting for
what he thought was right than yield-
ing to pressure.
This is what the Kiplinger Tax
Letter said on February 25:
First, withholding. It is not a new tax ...
or an extra tax, as some opponents have
said. Nor does it make 10 percent of savings
disappear.
That is what they are saying in the
bank ads. I do not know whether you
have ever seen the bank ads, "Are
your savings going to disappear?"
That is not my answer, that is Ki-
plinger's answer. "Small savers are
exempt."
It goes on:
The amount of tax that is withheld does
not disappear.
It is used to reduce what you owe when
you ante up in April ... or you can trim
your estimated tax and payroll withholding
during the year.
Your savings account needn't be reduced
by the 10% tax. Your bank can tap your
checking account for it or you can deposit
that much more.
Withholding is aimed at tax cheaters ...
to make them pay something instead of
having their share picked up by hiking
taxes on honest folks.
I do not even agree with that last
statement. I think a lot of it is inad-
vertent. Most taxpayers are honest,
but we are told by IRS that there are
20 million Americans who do not
report all their interest and dividend
income, and I have to believe most of
it is inadvertent and not dishonest.
What do we say? Do not worry about
it, we will get it from the workers? We
will get it from somebody else? It just
seems to me if there is a principle in-
volved here, it is tax fairness.
I have heard a lot of speeches on tax
fairness. A lot of people have intro-
duced a flat-rate tax proposal, to make
everybody pay, with no exemptions or
no deductions or a few exemptions or
no deductions. That is tax fairness,
and withholding is one way to make
sure everyone pays their fair share.
So, Mr. President, I hope there will
be some resolution of this, something
that will satisfy those who want to
leave to fight another day on this
issue.
I can tell the Senator from Arizona
-or anybody else that I do not get any
great pleasure in coming over here
every day and fighting withholding.
There are a lot of other things in our
committee we ought to be addressing,
including health care for the unem-
ployed, medicare, trade, a lot of issues
that affect a lot of States that we
cannot get to because every day we
have to come over and fight withhold-
ing. So from a personal standpoint,
the easiest thing to do would be to say,
"Get rid of it and let the President
worry about It."
So, Mr. President, I would like to
yield to the distinguished Senator
from Idaho for a motion without
losing my right to the floor.
Mr. MELCHER. Mr. President, re-
serving the right to object-
Mr. LONG. Reserving the right to
object, Mr. President, has the Senator
been given consent to yield without
losing his right to the floor?
The PRESIDING OFFICER. The
Senate has not been given such con-
sent. Is there objection?
Mr. LONG. I object.
Mr. DOLE. Mr. President, I do not
know what the motion was, but it was
in some way to end the impasse and
get on with the social security bill.
But if that is not going to be permit-
ted, then I think we will either offer
additional amendments-
Mr. MELCHER. Mr. President, will
the Senator yield?
Mr. DOLE. The Senator will yield
for a question without losing his right
to the floor.
Mr. MELCHER. Yes. If the Senator
will yield for a question, and I thank
the Senator for so doing, this would
properly be described not as a debate,
but it would most properly fit into the
category of a filibuster; is that cor-
rect?
Mr. DOLE. Not yet. But I think it
could be properly classified at some
point. I do not make any bones about
it. If this amendment has to be on the
bill to get social security, then it is a
filibuster. I am making the choice we
have to make particularly since we
have agreed to debate it later on. I
may have to yield on that someday. I
am not suggesting I can hold the floor
that long, and I am certain a lot of
people are eager to get up here and
help me, but they are a little slow
about it, but it will come.
I think the more we discuss this
issue, the more people understand this
has been a multimillion-dollar cam-
paign. You can defend the banks all
you want to, but you cannot defend
them on this issue, and the Senator
from Kansas has defended the banks,
and I think my record is as good as
that of anyone else with the banks.
But I do not have to stand here and
accept a deception or have my integri-
ty questioned by the banks or their
ads or some of those who contact you
who have no idea what even some of
the bankers think-and I cannot be-
lieve bankers if they understood all
that was going on-I hope they all
read that Washington Post story-I
cannot believe that they would enter
into a campaign like this one, as
though you were getting ready to
market tomatoes or gasoline or auto-
mobiles; put people in a room where
you can look through a one-way
mirror and see what their reactions
are. The only thing we do not know is
what questions were asked and what
information they were given.
I will bet that I know what informa-
tion was given. I will bet they told the
people that this is a new tax, and the
response from the participants was, "I
don't want a new tax." This Senator
does not want a new tax either. I will
bet the bankers told them they were
going to take money out of their sav-
ings accounts, maybe even that the
Government was going to loot those
accounts, and were told, in turn, "We
wouldn't want that" and I would not
want it either. We do not know what
the bank lobbyists told the partici-
pants, although they had this market-
ing seance and they paid each $25.
They questioned them a while, and
then probably concluded, "we can
really rev this thing up. We can really
frighten the people and, in turn,
frighten the U.S. Congress."
It has been very effective. I just read
a while ago where the credit unions
themselves are going to send me 12
million pieces of mail, 8 million stuff-
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era and 4 million response cards all
coming to me. That is flattery. I will
have the best mailing list in America.
We do not have all of them yet, but
they are coming in. That seemed to be
a little bit of overkill. The credit
unions have been tame by bank stand-
ards, and so have been the savings and
loan institutions.
I do not know what motion the Sen-
ator from Idaho had in mind, but I
cannot do it because I was on the
wrong side. So that takes we of that.
RECESS UNTIL 10 A.M. TOMORROW
Mr. BAKER. Mr. President, will the
Senator yield to me without losing his
right to the floor in order for me to es-
tablish a time for the Senate to con-
vene tomorrow?
Mr. DOLE. I yield.
'Mr. BAKER. Mr. President, I ask
unanimous consent that when the
Senate completes its business today It
stand in recess until 10 o'clock tomor-
row morning.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
Mr. DOLE. Mr. President, if the
Senate recesses at this point, I guess
the pending business will be this
amendment: is that correct?
The PRESIDING OFFICER. The
pending question will be the amend-
ment of the Senator from Montana.
VP ALIT NO. lag
(Subsequently numbered amendment No.
532.)
Mr. DOLE. Mr. President, I send an
amendment to the desk and ask for its
immediate consideration. '
The PRESIDING OFFICER. The
clerk will state the amendment.
The legislative clerk read as follows:
The Senator from Kansas (Mr. Dols) pro-
poses an unprinted amendment numbered
105: In lieu of the language proposed to be
inserted by unprinted amendment 103 insert
the following:
DELAY IMPUKE ITATION OP wrTIMOLDINO ON
D TIREST AND DIVIDEND INCOME
Sze. Section 308A of the Tax Equity
and Fiscal Responsibility Act of 1989 Is
amended by striking out 'June 30' and in-
serting in lieu thereof 'December 81? pro-
vided however, the foregoing delay shall
take effect only if the average prime inter-
est rate charged by the Nation t ten largest
banks is 8 percent or less on June 30, 1983,
and that delay shall remain in effect only aa=~
long as that average prime rate reml-in8
below 8 percent."
SRC. . MINIMUM VOR MONEY MARKET DEPOSIT
AVCOUN'W.
Section 904(cXi) of the Depository Insti-
tutions Deregulation Act of 1980 (12 U.S.C.
3503(cXl)) is amended by adding at the and
thereof the following: "The Committee
shall not establish or maintain a miniiuum
balance' requirement higher than $500 for
deposit accounts authorized by this subsec-
tion.".
MOTION TO RECONSIDER THE VOTE TO TABLE UP
AMENDMENT NO. 103 ENTmtED
Mr. McCLURE. Mr. President, I
enter a motion to reconsider the vote
by which the motion to table unprint-
ed amendment No. 103 was rejected.
The PRESIDING OFFICER. The
motion has been entered.
Several Senators addressed the
Chair.
The PRESIDING OFFICER. The
Senator from Kansas.
Mr. DOLE. Mr. President, let mE'ex-
plain the amendment. The Senator
from Kansas offered a similar amend.
ment earlier-maybe the interest rate
appeared too low, maybe everybody
does not believe that we can get it
down to 6 percent, so we raised it to 8
percent. If that happens then, of
course, you delay withholding, as the
Senator from Montana wishes to do,
for a 6-month period.
Apparently Members here do not
want small savers, working people to
buy money market funds, so we raised
it from $800 to $500. The minimum
now is $2,500. I hope that, with this
change, again we can focus on the real
issue.
Now, if we are concerned about
delay and if we are concerned about
depositors, let us make it clear. You
cannot put your $500 savings in a
money market insured account. It has
to be at least $$500. Why can you not
put legs in a money market account?
Because that means that much of the
money will come out of the passbook
savings which pay only 5.5 percent.
This would make it possible for people
with only $500, which would be most
Americans, to go in and get a money
market fund rate of interest, to receive
9 percent rather than their passbook
savings rate of 5.5 percent.
It is a serious amendment. If, in fact,
you are concerned about the delay of
withholding, as the Senator from
Montana is, then I believe this would
tie It to that and would make it feasi-
ble.
So, Mr. President. I hope that at the
appropriate time we might act favor-
ably on the amendment.
Mr. LONG addressed the Chair.
The PRESIDING OFFICER. The
Senator from Louisiana.
Mr. LONG. Mr. President, I would
like to make clear ' for the record that
there are many of us who were here
when the agreement was made with
Mr. KASrnr that his amendment
would be considered in connection
with a trade bill at a future date.
Mr. President, I was here at the time
that unanimous-consent agreement
was made. I made it clear at that time
that I personally would object to in-
cluding in that unanimous-consent
agreement a stipulation that would
preclude any Senator from offering
either the Kasten amendment or any-
thing that has to do with withholding
on the social security bill.
"I did not have In mind at that time
offering such an amendment, Mr.
President. I was aware of one Senator,
not Mr. Mai cn n, but another Senator
who was thinking about offering such
an amendment. basically the Kasten
amendment, on the social security bill.
And with that Senator being absent
from the Chamber, I thought it was
my duty to protect his rights. So far as
I know, he has not chosen to offer
such an amendment.
I think it should be clear, Mr. Presi-
dent, that if there was some agree-
S 3509
ment with Mr. KASrese or with some of
his supporters that they would not
offer or not vote for a withholding
amendment on some other measure
other than the trade bill that Mr.
KAsTSN had an agreement about, that
did not apply to many of us. I know it
did not apply to the Senator from Lou-
iaians and I am not aware of anybody
who agreed to be foreclosed from of-
fering an amendment dealing with
withholding on some other revenue
measure.
It was my view all the time that Mr.
KASTEN, in complete good faith and
complete sincerity, made a noble fight
for the position that he believed in. He
carried on that fight with a great deal
of adverse publicity from a daily news-
paper here in Washington, D.C., and
with some perhaps unfair presentation
against him in other areas of the
media to suggest that he was not
within his rights or he was doing
something improper by offering that
amendment on the Jobs bill.
Mr. President, I would have had
some difficulty supporting Mr. KASTEN
U a point of order was made that his
amendment was legislation on an ap-
propriations bill, because the Senator
from Louisiana likes to uphold the
Chair when he thin-, the Chair is
right. Generally speaking, he knows
the Chair is ruling aftergetting the
advice of the Parliaments an and so,
in most cases, the Cha =1 t. Cer-
tainly, in most cases, the Is com-
pletely sincere in his rplipig, az}d the
senator from Louisiana feels an obli-
gation to support 014 Chair when he
believes the Chair is VW 4 I may have
deviated from, that on occasion. but
very seldom. '
I had advised Mr. KAS1XN that. in
my Judgment, the Jobs bill was not a
good bill on which to offer the amend-
ment, because I would not be able to
vote with him on a point of order of
germaneness if that point of order was
made on that bill. The Senator from
Wimonsin, for reasons best known to
him-and I think I understand what
some of those reasons were-elected
not to offer the amendment on some
other bill. but izutead to offer it on
the Jobs bill. He made a noble fight
and I applaud him for the effort he
made.
Mr. President, the fact that the Sen-
ator from Wisconsin offered his
amendment on what I believe to be
the wrong bill should not preclude
those who strongly believe in repeal-
ing withholding on interest and divi-
dends from offering their amendments
on some other measure. It is clear to
the Senator from Louisiana that if
they are going to get any action, they
are not going to get there on some
minor money bill. They are going. to
have to have something that is headed
for the President's desk and they are
going to have to offer it on something
that has a lot of steam underway.
I oftentimes make a - comparison
when you offer something as a rider to
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CONGRESSIONAL RECORD - SENATE March 21, 1983
a bill, a comparison to a rider on a
horse. For an amendment that has the
opposition of the chairman of the Fi-
nance Committee, has the opposition
of the President. has the opposition of
the Speaker of the House, has the op-
position of the chairman of the Ways
and Means Committee, in order to get
that type of revenue amendment to
the President's desk and have any
chance to be written into law. that
rider has to be on a big, strong horse.
It cannot be on a very weak horse be-
cause. otherwise, it is not going to go
anywhere.
Mr. KAsxzu was persuaded to agree
to debate his amendment and offer it
on a trade bill, a bill that is favored by
the administration, but a bill that has
not even passed the House of Repre-
sentatives. The bill would be subject to
a constitutional objection in both
Houses in that revenue bills must
originate in the House of Representa-
tives. In the judgment of this Senator,
if that is all the Senator has an agree-
ment on, it does not have a strong
enough force to carry his rider any-
where, even as far as the House of
Representatives; and certainly not
past the House of Representatives.
The Senator from Louisiana has felt
all along that If this matter was to be
acted on favorably, it would have to be
added to a very significant measure,
something that was headed for the
White House.
Now I can appreciate the position of
the chairman of the committee. He
feels strongly about the matter. I have
no doubt that he is just as sincere as
everybody else who has taken part in
this matter. I realize that he is making
a noble fight for his position as the
good Lord gives him the light to see it.
But, Mr. President, I do not think
the chairman of the committee, or any
single Senator charged with a parallel
respohsibility, over a period of time
can stand in the way of major meas-
ures that he has the responsibility of
passing through this body and sending
over to the other House for the House
of Representatives' judgment, and on
down to the President.
I have been accused of filibustering
some measures when I was managing
on occasion. From my point of view, it
was not a filibuster. It was a very
informative, well-considered debate-
because over a period of time I got my
way about the matter and if you do, it
is not a filibuster. If by delaying the
matter and prolonging it, whoever is
the manager of the bill proceeds to
have his way about the matter, that is
not a filibuster. That is very effective
debate in the best tradition of the
Senate.
So, in a way, one might say it is the
other guy, it is the fellow who was just
sitting there and listening, who was
doing the filibustering. Because if you
win,' it is apparent on the face of it
that the speaker convinced the audi-
ence to see it his way.
But I do think. Mr. President, that
the record should be clear that there
are a lot of us here, and I think per-
haps a majority-we will see whether
it is a majority, but certainly a lot of
us-who have taken the position that
we will vote to repeal the withholding
provision. Having done so, we believe
it our duty to vote to do so at every op-
portunity.
To make that stick you cannot vote
to do it on this bill but not to do it on
that bill. You cannot afford to take
the attitude: "Well, you see, we tried
this time, but we led off on the left
foot and we should have led off on the
right foot. So we cannot vote for it
this time. We have to wait to start off
an the other foot." If you do that,
there will be somebody who thought
you started out on the right foot to
begin with.
You simply have to be consistent in
taking the view that this matter ought
to be changed and that the amend-
snent should be offered on a signifi-
cant bill, not just one bill, but just
keep offering it on significant bills up
until you finally get it on something
that is going to the House of Repre-
sentatives. If the House of Repre-
sentatives, for some reason, escapes a
vote over there, then offer it on some-
thing else headed that way.
I do not believe, Mr. President, that
those of us who happen to agree that
it was a mistake to enact withholding
and that the matter should be re-
pealed ought to be held up to oppro-
brium and scorn for doing what we
think is right. I am not sure anybody
wants us to do that. We are voting as
we think we should on this occasion.
I would hope that in due course we
would have the opportunity to vote on
the amendment.
I do not challenge the right of. the
chairman of the committee to do what
he is doing. He has every right to
debate the matter at length, to offer
amendments, and to resist, in every
way he knows how to resist, an effort
by those who would like to change
something that he thinks is very good
law and thinks should remain in the
law.
But I do think that he and all of us
in due course will, and I think should,
agree that this is a matter which has
sufficient support in both Houses. The
majority of the U.S. Senate thinks this
provision ought to be repealed. A ma-
jority of the House of Representatives
thinks it ought to be repealed. In the
name of democracy, why can we not
vote on that measure? Why should we
not be permitted to have a vote?
This Senator knows how to delay
matters. He has done it many, many
times, and I am sure that I will do it
again between now and the time the
good Lord calls me. I think it is in the
best tradition of the Senate that one
who feels strongly against the view of
the majority should make himself
heard, should. fight for what he be-
lieves in. So I applaud the Senator
from Kansas for the fight he is
making. But I do think, on behalf of
the rest of us, if we in the majority
have told people we are going to vote
to repeal this-and I have answered
those 58,000 letters telling them that I
will vote to repeal that provision-if
we are sincere ourselves, then it seems
to this Senator that we have no busi-
ness being weak in our resolve, that we
should steadfastly support the posi-
tion to which we have committed our-
selves until such time as we have a
vote on it, until such time as we send
it to the House of Representatives to
see what the House will do on the
matter.
Mr. DOLE addressed the Chair.
The PRESIDING OFFICER. The
Senator from Kansas.
Mr. DOLE. Mr. President, I do not
quarrel with my distinguished friend
from Louisiana, but even though there
might be a majority on this position. a
majority here and a majority in the
House, as I indicated earlier the Presi-
dent could still veto any measure
which passed, and it would require a
two-thirds vote to override that veto.
I cannot speak for the President on
the social security package, though I
know he wants this very badly. I may
speak long enough to find out from
the President, to find out if he intends
to veto the social security package if
this amendment is on it. We might as
well find out so everybody knows what
the ground rules are. If that is what
we want to do, then I think that is the
choice we have to make.
I can recall-and I do not want to
get into a quarrel with the Senator
from Louisiana or the Senator from
Arizona or anyone else-I remember
on the windfall profit tax, they
wanted to tax royalties, and the Sena-
tor had 70-some votes, but he would
not stop talking. I supported the Sena-
tor from Louisiana. Do not give me
that line about a majority. The point
is when you think you have a major-
ity. That took several days, as I recall.
I supported the Senator from Louisi-
ana and the Senator from Missouri
stood there with 20-some votes when it
was over. That was a clear majority on
the windfall profit tax vote. I tucked
that in my mind for the day when
someone would say, "I have a majority
against it, why not everybody give
up?"
Mr. LONG. May I say to the Sena-
tor, if I had known I had 70 votes, I
would not have been talking so long.
Mr. DOLE. Well, the Senator had a
pretty good whip check. I think he was
off by one.
I do not quarrel with the Senator
from Louisiana. Some issues depend
on who has the responsibility of lead-
ership. The Senator from Kansas has
that responsibility in this Congress. If
I did not have the responsibility, if I
were not in the majority, maybe I
would not be supporting withholding.
I have been guilty of a lot of game
playing over the years, and I have
been on both sides of the withholding
issue-I voted with the Senator from
Louisiana for withholding in 1976, I
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March 21, 1989 CONGRESSIONAL RECORD -SENATE
put out a strong statement in 1980
that it was a bad idea, I am now find-
ing out it may not be a very good idea
as I hear my colleagues discuss it and
discuss me in the process-the point is
it is the law since 1942 for wages and
since 1982 for interest and dividends:
I might also say that it is in the law
in Japan, where 20 percent is withheld
on interest and dividends; In the law in
Germany at 25 percent on dividends;
35 percent in toe United Kingdom on
interest; in the law in France at 10
percent on corporate bonds;. in the law
in Belgium where it is 20 percent on
interest and dividends, and in the law
in Italy where it is 30 percent on inter-
est and dividends.
This is not an idea that has sprung
up overnight in this country. In fact, I
believe it has been in the law, off and
on, for well over 100 years.
I will be happy to yield to the Sena-
tor from North Carolina for a ques-
tion.
Mr. HELMS. I do not have a ques.
tion, Mr.. President, but I. wonder if
the Senator will yield with the under-
standing that he would not lose his
right to the floor.
Mr. DOLE. I will be happy to-yield
but'not for the purpose of any amend-
ment.
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The Senator from North Carolina.
Mr. HELM. I thank the Senator
from Kansas, and I thank the Chair.
Mr. President, I do not agree on this
issue with the distinguished Senator
from Kansas, but unless I misread this
Senate, he need have ? no concern
about many Senators not admiring the
fight he has made. I know from some
small experience it takes a little bit of
guts to stand up against a difficult
proposition. As a matter of fact, I had
a confrontation with "Rudolph the
Rednosed Reindeer" last December,
and now the Senator from Kansas is
apparently going to have one with the
"Easter Bunny."
But, Mr. President, I do admire the
Senator even though I do not agree
with him on this particular issue,
though I may later on with the per-
suasive powers which he has.
I do want to refer to a comment
made earlier that it was demagoguery,
as I heard the comment, to vote in
favor of repeal or delay in the imple-'
mentation of the withholding on divi-
dends and interest.
It is not demagoguery. I would say.
furthermore that when the unani-
mous-consent agreement was offered
and agreed to, I specifically asked the
leadership if that would exclude this
matter being considered on the social
security bill. The answer of the major-
ity leader, of course, was it would not.
I even asked if anybody would be of-
fended if the repeal were to be consid.
ered, and the answer to that was in
the negative.
I will say that in my judgment, Mr.
President, the offer that the distin-
guished Senator from Wisconsin ac-
cepted and agreed to was scarcely any
offer at all because the reciprocity bill
on its face is unconstitutional. It is
never going anywhere. A vote on that
would be absolutely meaningless.
I did not mean to digress 'S6 far, Mr.
President. I simply wanted to pay my
respects to the distinguished Senator
from Kansas and' to assure him that
insofar as I know, certainly speaking
for myself, I have only the highest ad-
miration for him for fighting the fight
that he feels should be fought. I thank
the Senator for yielding.
Mr. DOLE. Mr. President, I thank
my colleague from North Carolina. I
hope the record shows that even last
Christmas the Senator from Kansas
was not one of those who was seeking
to limit any Senator's rights because
this Senator happened to be on the
other side of an issue. In fact, as I
recall the debate, I think I said, "Well,
this has gone far enough." Many were
critical because they wanted to go
home for Christmas. The gas tax prob-
ably secondary in many _c ases. I hope I
did not step over that dine.
Mr. HELMS. The Senators did not.
The Senator is always honorable.
Mr. DOLE. Again the bankers have
done an effective Job. They, have lots
of money. They do not pay much in
taxes; so they have a lot of money to
spend on things they mail out. This is
a little speech they sent out marked
"Speech Copy." Just in case you could
not write one yourself, they provided
one. On this issue, I do not. need any-
body to provide anything, but on most
things, it is a question of whether we
can read or not.
I might say I agree with the Senator
from Arizona; if the staff ever left the
floor, the Senate would probably ad-
journ in May of every year, but some-
body always finds something for us to
say or an amendment to offer.
This little speech is entitled "The
Government Wants a Piece of Our
Savings." The title itself would not in-
dicate anything wrong with this law.
It just says they want a piece of our
savings.
Then the copy says:
There's something I'd like to talk with
you about that's part of the tax legislation
passed this year. This part of the new tax
-law did not receive a lot of attention, but I
believe it's a consumer volcano that is about
to erupt.
It was not about to erupt when this
speech was drafted, but put a few mil-
lion dollars along with the speech and
you can get anything to erupt..
A out of the new law due to go into effect
in July of next year requires to make a man-
datory interest-free loan to the government.
That is a little overstatement. I
imagine the working people of this
country feel a little concern about
that. They have been making interest-
free loans to the Government for the
past 40 years. And other taxpayers
who pay estimated tax will likewise be
skeptical. Again, the point I make is
why should we withhold on the work-
S 3511
ing people of this country, but not on
those who receive unearned income?
The speech goes on:
This will happen-and you will have no
choice in the matter-because the govern.
ment will be requiring all inttitutions that
make interest and dividend payments to
their individual customers to withhold for
federal taxes ten percent of the interest and
dividends you have earned.
That is a little misleading, because
many taxpayers are exempt-
This means the Government will have
free use of your money. It means you and I
and the other Americans who earn interest
on dividends will lose a lot of money.
What about all the wage earners?
They lose a lot of money all year, be-
cause -we are withholding it on a,
weekly basis, every 2 weeks, every
month:
Savers and investors will lose an estimated
$1.5 billion in reinvestment and compound-
hng on their earnings.
On July 1. 1983, the government will cut
taxes by 10 percent. On the same day, the
government will reach into your savings ac-
count withhold 10 percent of your inter-
est earnings.
The obvious ploy there is to indicate
that you did not get a tax cut; we are
going to take it all back because you
are going to pay taxes on your inter.
est. Most people pay taxes on their in-
terest and I assume most people pay
taxes in any event.
Then.they go on to talk about the
Government's purpose in this law.
Then they say:
But let's look at the facts. According to
the Treasury Department, Taxpayers are al-
ready paying taxes on 95 percent of their in-
terest and dividend Income that Is subject to
reporting.
That is not accurate. They know
that is not accurate. That, study was
based on three conditions that have to
be met. I shall come back to that.
When you consider that approximately 75
percent of individual tax returns submitted
end up with refunds, it is pretty obvious
that instead of real income to the Treasury,
there will be a surge of unreal new money in
1983. most of which will have to be returned
to the taxpayers the following year.
Then they went on to talk about dis-
incentives to savings. I think that was
probably fairly accurate. They did
point out that there were exemptions.
I must say the bankers thought we
added too many exemptions. That is
one objection they had. Maybe we did.
Maybe it made it difficult for the
banks. Maybe they had to put two
computer buttons on instead of one.
While I am thinking about it. not all
the big banks are for withholding. Ci-
ticorp and Citibank is a strong oppo-
nent of withholding and it is a fairly
substantial bank. The make a lot of
loans to foreign countries. They have
urged other banks not to seek a resolu-
tion of this issue.
The procedure for getting an exemption
brings up a major privacy concern.
Then they go on to make it appear
that you are going to have to reveal a
lot of facts about yourself and your
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S 3512 CONGRESSIONAL RECORD - SENATE March 21, 1983
income when you want an exemption Mr. METZENBAUM. The Senator campaign. They should not be deduct-
certificate. That is a flatout mistake. from Ohio is perplexed as to how the ed. I am not certain what the Senator
All you have to do is fill out boxes to banks have been able to send in so from Kansas can do about it, but I
say you fit in one of five categories. many thousands of pieces of mail or hope to-
You do not have to say how old you cause them to be sent in. Obviously, Mr. METZENBAUM. Certainly the
are, anything, just check the box. Just they had been printed up. I have Senator from Kansas is in a position
put yaw name, your State, your ac- before me the Tax Code, which pro- to prod the IRS to make some neces-
count sasmber, and you sign. That is vides that provisions of paragraph 1 sary inquiries to see that this lobbying
all you have to do. shall not be construed as allowing the
How would you like your bank teller who deduction of any amount paid or in-
may be your neighbor or a memler of your curred in connection with any attempt
church, to ear how much tax you pay? to influence the general public or seg-
That is deception. Where is. the W-6 ments thereof with respect to legisla-
form? That is Ilatout deception It tive matters, elections, or referenda.
goes on to say: "Isn't this a personal My question is, how have the banks
matter?" been able to figure out a way in which
Here they are planting the seeds of they can deduct from their expenses
distrust and doubt, saying, "Oh, you all of the costs which they have in-
can.'t trust the Government. They are curred in connection with this lobby-
going to make you pay." ing campaign when the code specifical-
All you have to do is oheck one box. ly spells out that that is not permissi-
You do not have to check that your ble?
tax liability was $600 or less, that you What steps, if any, will be taken by
are 65 or older, that your spouse, the IRS to cause the banks to pay out
along with you, filed a joint. return, if of their own funds these dollars? As I
your tax liability was $1,040 or less. see it at the moment, it appears that
You do not have to say, "My spouse the taxpayers are actually, subsidizing
and I are both 65 we filed a joint this lobbying campaign to influence
return last year." You do not have to the results of this vote that is on the
check any of those: You just check a floor of the Senate at the moment. I
box. The bust says, "To claim an ex- wonder if the distinguished Senator
emption on the account above,. check from Kansas, chairman of the Finance
here.? These Is no mention d specif- Committee, can explain how the banks
tea. Your neighbor is not going to are able to do this at the taxpayers'
know anythin& expense?
Then, on the next paw the speech M. DO Mr. President, I appreci-
says- ate the question. We have been won-
,h wean banks and other utims dering about that ourselves. I must say
will be required to file more repeetk g forms in faknneBS to the banks, I do not be-
and the IRS will be required to improve its lieve many banks are going to try to
recordkeepina. These approaches we much deduct this as a business expense. In
more effective than withholding, which pe- fact, some d the ads I have seen clear-
nalizes millions of taxpayers. ly state that this is not de inctible.
And besides costing savers and investors I must say, again alluding to the
$1.5 billion in lost reinvestment and con- W~ post story of yesterday, it
pouedlag, advance witithobling will cost the here-
'
Tres ury millions of tax dullacat it could be says
earning on tares papable an those earnings. Perhaps as many as 80 million such
That is not trite, either. Then is no "statement staffers" went oat; no one has
an exact count. The returns were daaznMic.
expense at all became we have a Boat
built Into the law, which am to class mail vo)nme has reports from 5 mu-
banks, whether they are big, smaf, or lion pieces In the first two months of 1982
medium-sized banks, you are going to to 9.5 mffion in January and February this
recover enough from the float to pay year, with the withholding issue accounting
your expenses. for virtually aS of the increase.
Then they say the Government will In other words, in most of those, the
be literally picking the taxpayers' bankers paid the postage. They ran
pockets, This will give the Govern- them through their ^reters. I am not
meat permission to what? To loot your certain how we are going to determine
savings account, they say. how much the taxpayers paid for all
That is the American B=ikers Asso- this misinformation from the Ameri-
ciation speech. They sent it out to can Bankers Association.
people all around the country. Accord- But I assume it is a substantial
ing to them, we are going to be picking amount. We are investigating that, I
their pockets and we have permission might say to the Senator from Ohio
to loot their savings account. Mr. METFZENBAUM. It seems to
If you listened to that speech and this Senator that maybe we could help
you were 65 or 45 or 25, you would be balance the budget if we could get the
mad. You would be outraged. You bankers not to deduct all the expenses
would be very willing to fill out a few they incurred in connection with this
cards and send them to your Congress- lobbying effort on their part
men, particularly when the banks pay Mr. DOLE. I certainly share the can-
the postage. All you have, to do is sign tern expressed by the Senator from
your name. In some cases, you do not Ohio, but I have seen, I must say,
hto sign your name. many cases where it is explicitly stated
have
Mr. ME'TZENBAUM. Will the Serm- but, as the Senator knows; the section
tor frown Kansas yield for a question? he referred to prohibits the deduction
Mr. DOLE. I ens happy to yield to of grassroots lobbying costs. And we
the Senator from Ohio. - have been told this is a grassroots
campaign is not deducted and that the
banks, savings and loans comply with
the language of the law, which is obvi-
ously very specific, and I would hope
the Senator would do so.
Mr. DOLE. I appreciate that, and I
think I am prepared to take whatever
appropriate action I can to make sure
the law is complied with; that is all, no
more, no less. I would guess that may
banks are in total compliance and
some may not be, but I appreciate the
question, and it is a matter that I hope
to discuss with the Senator after the
debate.
I would just like to conclude and
then I will yield to the majority
leader.
I was going to wrap up on this little
prepared speech that the bankers sent
out all across the country. I might jest
say again that some bankers, after
they read the speech, refused to use it.
The point is it was distributed all
across the country. In addition to
saying we had authorized looting-
that is what the bankers said, looting
of savings and picking pockets-they
wanted to issues, challenge to:
Ask your Congressmen and Senators to
commit themselves on this issue. Let them
know that this issue Is important enought
to sway your vote.
And on and on. I do not really quar-
rel with that, but they talk about this
grassroots movement to get this re-
pealed. Arid they conclude:
The Government wants a piece of our sav-
ings.. Instead, let's give Congress a piece of
our mind.
Well, again "a piece of the savings"
is a misrepresentation. All the Con-
gress wants, all the Government
wants, all the people ought to
demand-in fact, if I were a taxpayer,
I would demand it-is, that the Con-
gress not give in on this issue. If I were
paying my fair share of taxes, I would
not want my neighbor, or my neigh-
bor's neighbor, or someone in the next
town, or somebody in the Senate, or
some physician, or some banker, or
some worker, or whatever not to pay
their fair share.
We have spent a lot of time in this
Chamber talking about unfair tax-
ation, and raising taxes, and spending
the taxpayers' dollars foolishly, but I
cannot believe we can justify telling
the American taxpayers, ' the people
who pay their fair share of taxes, that
we do not really believe in fairness and
we do not believe that we should with-
hold taxes on unearned Income, only
on earned income.
I hope that we can continue to
debate this issue. I know that it is
going to be frustrating; and again I do
not want to get at odds with any
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 Approved For Release 2008/10/06: CIA-RDP85-00003R000200120004-9
March ,21, 1983 CONGRESSIONAL RECORD - SENATE
Member of this Senate; the Senator The Senator from California's ques-
from Kansas plans to be here awhile. I tion pertains to the scope of the study
understand that you cannot make and report to the Conte-required
these things personal, so the Senator by clause (iii) of section 303(aX2XC)-
from Kansas is willing to debate it on "the application of severity of ill-
fairly but ? debating it fairly means mess, intensity a care, or Other modifi-
giving us the same opportunity the cations to the diagnosis-related
bankers have had the last 60 days groups, and the advisability and feasi-
without any opposition and giving us bility of providing for such modifica-
the opportunity to inform the Ameri- tions." The concern here is whether
can people. I have to believe that these DRO modifications would take
people in my : State trust me for the account of the proportion of severely
most part, and I really believe that ill patients that hospitals serve, the
those who have written letters that proportion of high-intensity care that
were less than friendly, if they really they provide, and the proportion of
focused on the issue and if they are cases in which they provide complex
paying their taxes-and most of them care. More specifically, the question is
are-will say: "Well, we made a mis. whether the Secretary is intended to
take." In fact, I will bring letters to study and report on whether hospi-
read on the floor tomorrow, or the taus-typically large urban hospitals-
next day, or the next day where that treat disproportionately large
people who have the facts apologized numbers of severely ill patients, and
for sending the postcard. There are a provide complex or highly intensive
lot of those people out there. They are care in a disproportionately' large
good people. They are like anybody
else, however, it you tell them some-
thing long enough, they will believe it.
If we take money out of their savings,
they ought to come back and talk to
us. -
We ought to set the RzcoaD straight
and we have to have both sides of the
argument. I know it is difficult to take
on a powerful lobbying group, and I
am certain others have done a better
job than.this Senator in other issues
at other times, and'I know this time
will pass. But until It passes, the Sena-
tor from Kansas is going to make
every effort he can to make certain
that the law I. nnt' repealed or delayed
unless we can assure the depositors
across this country that the banks are
going to cooperate in lowering interest
rates and permitting people who do
not have $2,500 to buy money market
funds and some other basic changes.
We may not succeed in that. I am
almost convinced that the bankers
may be too powerful for any change at
Mr. BAKER addressed the Chair.
The PRESIDING OFFICER. The
majority leader is recognized.
Mr. BAKER. Mr. President, first let
me say that I congratulate the Sena-
tor from Kansas. I not only agree with
him, but I admire him for the coura-
geous stand he is taking. I think he Is
correct, and I think time will prove
that he is correct.
IIRDICARE STUDY ON IMPACT OP PROSPaCTIY&
PAYMSRT MNrHOD
? Mr. LONG. Mr. President, my good
friend and colleague, the Senator from
California (Mr. CRANSTON), has asked
me to ask the distinguished chairman
of the Finance Committee (Mr. Doles)
a question regarding _ section
303(aX2XC) of S. 1 as reported. That
provision requires the Secretary of
Health and Human Services to con-
duct and report to the Congress on
studies rela to the advisability of
making chases in the diagnosis-relat-
ed group prospective payment method
in certain situations.
number of cases - receive equitable
levels of payment under the new
system and, If they do not, what
changes in the payment methodology
should be made to insure that they do.
Mr. DOLE. Mr. President, I assure
my good friends, the distinguished
Senators from Tennessee (Mr. Loco)
and from California (Mr. C sToN),
that this study provisidip definitely is
Intended. to require, an evaluation of
the impact of the new prospective pay-
ment system on tertiary care institu-
tions providing complex care and
having a high case-mix Intensity. The
study is also intended to focus on
what, if any, remedies would be appro-
priate to insure that they receive equi-
table : treatment under the new prop-
sective payment system.
Mr. LONG. Mr. President, on behalf
of the Senator from California and
myself, I thank the very able chair-
man for that very helpful clarifica-
tion..
? Mr. DOLE. Mr. President, the Sena-
tor from Kansas has been questioned
by the Senator from Georgia (Mr.
MArrINOLY) and others-about the effect
of the Finance Committee provision
clarifying the effect of dictum in the
Supreme Court's decision-in Rowan on
the issue of the taxation of fringe
benefits. I would like to assure ekch of
my fellow colleagues that this provi-
sion which limits the scope of the
Rowan case is not intended to change
the law on the issue of the taxation of
fringe benefits either for income tax
or social security tax purposes.
Some employers have argued by
analogy that the Internal Revenue
Service regulations under IRC section
61-defining gross income--or Internal
Revenue Service regulations under
IRC section 3401-defining wages for
S 3513
excludible from the gross income of an
employee are also excludible from the
social security wage base of the em-
ployee. it also stated that the defini-
tion of wages for social security tax
purposes and the definition of wages
for income tax withholding purposes
should be interpreted in regulations in
the same manner. This dictum has
been interpreted by some employers as
supporting their exclusion of employ-
er-provided benefits from the social se-
curity wage base of employees.
The provision in the Finance Com-
mittee bill states that:
Nothing in the regulations prescribed for
purposes of chapter 24 (relating to income
tax withholding) which provides an exclu-
sion from "wages" as used in such chapter
shall be construed to require a similar exclu-
sion from "wages" In the regulations pre-
scribed for purposes of this chapter.
This provision does not require that
employer-provided benefits be Includ-
ed in the social security wage base of
employees and no inferences can be
drawn that this provisions expands
the authority of Treasury to include
employer-provided benefits in the
wage base of employees.
When the committee Included this
provision it was only reversing the
dictum in Rowan by providing that
the determination of whether or not
amounts are includible in the social se-
curity wage base is to be made without
regard to whether such amounts are
treated as wages'for Income tax with-
holding purposes. There was no discus-
sion of the fringe benefit issue and no
intent to express an opintoli' on wheth-
er or not any employer-provided bene-
fits should be included In to emloyee's
gross income or social,aethrity wage
base. The provision merely decouples
the definition of wages fax Income tax
withholding purposes and the defini-
tion of wages for social security tax
purposes. No inferebeft should be
drawn from this provision concerning
the issue of including or excluding em-
ployer-provided benefits from the
social security wage base of employees.
Congress has enacted a moratorium
prohibiting the issuance of regulations
on the inclusion of fringe benefits in
gross income of employees. This mora-
torium expires on December 31, 1983.
Hopefully, we will address this issue
before the moratorium expires and
settle the issue once and' for all. The
provision' in the Finance Committee
bill on the Rowan-ca" does not imply
or Congress to address.*
purposes of income tax withholding- ROUTINE MORNING BUSINESS
exclude certain employer-provided Mr. BAKER. Mr. President, I do not
benefits from Inclusion in the social think we will pass this bill tonight.
security wage base of employees. Therefore, I ask unanimous consent
When the Supreme Court decided that there now be a brief period for
Rowan Companies, Inc., against the transaction of routine morning
United States, which held that the business to extend not past 8:15 p.m.
value of meals and lodging which are in which Senators may speak.
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