Sens. Grassley, Baucus, Lincoln and Snowe Hold News Conference
GRASSLEY:
Thank you all very much for -- oh, Mrs. Snowe came in.
Thank you all very much for waiting for us. And we're glad to be with you with a compromise on the child tax credit. And I am very pleased that we've reached such an agreement.
Kind of the background of why we're here is that if you remember in the 2001 tax cut, we phased in the $1,000 per child credit over a long period of time. The president then this year, as he did other provisions of the 2001 tax bill proposed advancing that to $1,000 to this year. And advancing refundability to 2003 was added in our Finance Committee by Senator Lincoln.
Unfortunately, it did not survive Congress -- the conference committee. And I, along with my colleagues here, want to revive that. All senators here were interested in that on an equal basis. Senator Baucus and both leaders were also interested. With all of the cooperation that we were able to reach agreement and I want to thank everybody for that cooperation.
The agreement has four parts. A refundable formula is added back. Marriage penalty in the credit is addressed. We provide a uniform definition of the word child, and that's going to save a lot of complication on tax forms. And our bill is offset -- fully offset.
My bottom line is to get a bill to the president's desk as soon as possible. That bill should, at a minimum, should address the refundable child credit and the definition of a child. I'd like to see all of these folks included when the round of checks are sent out this summer.
The bill the president signs should also address the marriage penalty in the child credit. And finally, I'd like to do more for the child tax credit. Obviously, that can't be done in this particular bill. But hopefully will be done later on.
Families should be able to count on a permanent tax relief. And that's what we're talking about making as much of the 2000 tax bill as permanent as we can where we can get the votes to do that. And that probably is going to require 60 votes in most instances.
This compromise goes far in advancing those goals. And I hope the House will act quickly on this and help us get this bill to the president's desk so that those checks can get out this summer.
Senator Baucus?
BAUCUS:
Thank you.
This is a good resolution today to a very unfortunate predicament which clearly is the failure of conferees to provide for refundability of the child tax credit. And this legislation -- and I highly complement Senators Snowe and Lincoln for their steadfast, their persistent, their conscientious efforts to draw attention to this inequity and this legislation corrects it. And we are very happy that -- I am happy and very pleased. And as I know Senator Grassley has that they have worked so hard to help us reach the position where we are now in.
And it also does not add to the deficit. This is paid for and I think that's very important and one of the reasons why this all came together.
I'd like to also concentrate a little bit in not only children generally, but also on the military aspects of this. And as a lot of you know, the Department of Defense has estimated there are approximately 192,000 military families that earn between $10,000 and $25,000. And most of those 192,000 military families will not receive any tax relief from the big tax cut bill that was recently passed.
And to make matters worse, the families of military personnel who are stationed in combat zones and killed in the line of duty are really left out of that big tax cut. For example, a Marine gunnery sergeant with eight years of service stationed in Afghanistan for the last six months of 2002. She served in Iraq through January -- from January through March of 2003 and she has two children. She receives an annual salary of $32,015, hazardous duty pay of $150 per month. Because the income earned by our military while they are stationed in a combat zone is not included in taxable income, only $24,000 of her income is subject to tax. Under the bill passed last week, the check she gets this summer will be only $150.
I am pleased that she will at least be getting something. But if the Lincoln child tax credit had been preserved in the $350 billion tax bill, this Marine gunnery sergeant and her family will receive a check for $675 this summer. And unless we fix that problem, she will not see a dime of this.
And here is an even more dire example. Imagine the following, an Army corporal specialist, three years of service spent most of 2002 in Afghanistan. The U.S. invades Iraq, he was transferred. Sadly, killed in action in Iraq in February of 2003. Corporal, married, one child and his spouse began working after he was killed. He had an annual salary of $19,947. Because he was stationed in a combat zone, his pay, under law, in 2003 is exempt from income taxes. His wife made a total of $15,830 for the 10 months that she worked.
She does not get $1 from the child tax bill that was just pushed through Congress. She also does not get one dollar from any provision in that tax bill. In contrast, Senators Snowe and Lincoln would make sure that she gets a check this summer for $200 from the child tax credit.
I believe it's time to correct this disparity and provide our working men and women and our military personnel with the relief that they deserve.
Without going any further, I'll let the senators who are the prime movers, and who should receive most of the credit, speak. But I just am very pleased at the way we have all worked together, the chairman of the committee as well as two valiant members of the committee, Senators Lincoln and Snowe. And I am very proud to be part of this effort.
LINCOLN:
Well, thank you all for being here and being as concerned as we are.
I want to say a very special thanks to the chairman and the ranking member, Senator Grassley and Senator Baucus, for their hard work and the work of their staff. They have all been very wonderful to work with, as they always have been, and I appreciate that very much.
I also have to say an incredible thanks to my colleague from Maine, Senator Olympia Snowe. If it had not been for Olympia's effort in that 2001 tax bill where we joined arms and decided how important it was for the refundability of a child tax credit, we wouldn't be here today because it would be as -- it wouldn't be an issue.
And I want to thank her very much because she is definitely one of those members that you can go to and talk to, work out the issues and recognize how important they are to the working families of this country.
I just want to say how very pleased I am that we have reached an agreement to restore this advance refundability of the child tax credit. You all have heard me an awful lot on this issue and I feel extremely passionate about it because it means an awful lot of my home state of Arkansas and to the many, many families that I represent.
When you represent a state where 80 percent of the people have an adjusted gross income of less than $50,000 and you find that just under 60 percent of those people have an adjusted gross income under that $26,625, you realize that we would have lost out tremendously in this tax package had we not been able to craft a way for these working families to get a benefit, to get some return for the hard work that they put in to helping to stimulate the economy of this country. And in turn, to strengthen our nation.
I have said it all along that the purpose of stimulating our economy was to stimulate and strengthen our country. And there is no better place to start than with the American working family. These are hardworking people who put in a hard day's work, sometimes twice as much. They are trying desperately to raise a family, to do it the right way, to present the values as well as the necessities that their children and their families need to do all of the things that we all try to do for our families. And so it is critically important that we give them the resources and the ability to do that.
As Senator Baucus mentioned, many of those families in Arkansas and nationally are military families. Almost 200,000 of them in the military would not have seen any type of relief from this tax package. When the base pay of a private in the U.S. Army is $16,000, you have to understand that they need that extra help. When they are trying to raise families while they are off in other countries defending our freedoms, it is not too much to ask of us to make sure that this bill is comprehensive enough that it includes them and their families.
I have to also say that I want to send a word of encouragement to our members in the House, our colleagues over there, to let them know how important this is to all working families in this country.
You know, we've heard some quotes and some ideas that perhaps some of our colleagues in the House have been urged to discuss the issue as a welfare provision, not a tax provision. I have to say, I find that description especially offensive since we are talking about not only the 200,000 military families, hundreds of firefighters, police officers, law enforcement officers, teachers and hardworking Americans. I don't think a single one of them views themself as a welfare recipient and I don't think you do either.
So I encourage our colleagues in the House to take this amendment -- this bill seriously, to move forward with it quickly. As Chairman Grassley has mentioned, this gives us an opportunity to reach out to these hardworking Americans. Give them the same opportunity of relief from this tax bill that we're giving everybody else in this country.
When Senator Snowe worked on this refundability in the child credit in 2001 and this recent tax bill came up, this is the only provision that did not receive acceleration. This was the only -- the refundability of the child credit was the only thing, except for, I guess, the marriage penalty under EITC, but still, this was the only provision.
So our objective here was not to increase the debt. It was not to open up another can worms. It was simply to correct a wrong that was done.
And again, I want to applaud the chairman and Senator Baucus for working with us and making that opportunity available to be able to correct a wrong. And hopefully it shows the American people that we ourselves know that legislation is not a work of art, it's work in progress. And we do -- when we do recognize that something has inadvertently has been done that is not best for the American people that we can come together and correct it and make it right.
So I applaud all of my colleagues. I especially want to thank the people of Arkansas who have given me the opportunity to come here and to work hard in a framework, with my colleagues on both sides of the aisle, to do what is right for all of America. But I do know that the people of Arkansas will benefit tremendously from the efforts we are doing here.
I also want to compliment Senator Hatch, who is not here. He co- authored the uniform definition of a child with me in the recent markup that we did on the tax bill. And I appreciate the reforms there. And as Senator Grassley's mentioned, it will be a tremendous help in trying to reform and minimize some of the complications in the tax code.
But a very special thanks to my colleagues. And more importantly, what a great day for the people of Arkansas and for the working families of this great country who are now going to benefit as well. And who will also be given the opportunity to help us strengthen this nation through stimulating the economy.
Thank you very much.
My colleague, Senator Snowe.
SNOWE:
Thank you.
Very briefly, first of all, I do want to compliment and commend Senator Lincoln for her advocacy, for being such a great ally on behalf of working families in the Senate Finance Committee and for championing this provision throughout it all. And certainly she has demonstrated the value and the importance of looking at many of the issues in the tax code and making sure there is equitable tax treatment for all Americans. And I just want to commend her for doing what she has done to reach this point here today.
And to Chairman Grassley, I want to thank you, Chairman Grassley, for moving so quickly to correct this inequity in the growth package.
And to certainly, Senator Baucus, for helping to bridge the differences so that we could reach this resolution today to redress this wrong.
As all have said, this clearly is a win for working families. It's a win for the economy. And it's certainly a win for fiscal responsibility because we do provide the offsets in here to address this issue in order to finance it.
But more than anything else, I think it's essential to make sure that working families are equitably treated in a tax code. A hardworking family should not take a back seat when it comes to tax relief. And that's why it was so important to restore the refundability acceleration in the growth package so that 6.5 million families could benefit from this provision, 12 million children.
Now some have asserted, "Well, they shouldn't have access to this refundability because they don't pay taxes." Wrong. They do pay taxes. They do pay taxes. They pay payroll taxes. Payroll taxes happen to be the greatest burden for many working families in America.
So this is long overdue relief. I do think it will make a material difference in their lives. We should give a helping hand to these families, help them up the economic ladder by providing and mitigating their necessities in life and what they need to pay for.
So I am delighted that we have reached this resolution because clearly it is an important day for these working Americans who certainly deserve the benefit of this refundability.
QUESTION:
Senator Grassley, can you take us back to the conference agreement where this provision was dropped and kind of walk us through that and why you think a bigger piece now would overcome the difficulties that existed before?
GRASSLEY:
I can't take you back step-by-step. Obviously I can't because some of this was where Vice President Cheney was involved as well as my involvement. So I just can't recreate that for you.
But what we're trying to do here is simply do what Mrs. Lincoln did and Mrs. Snowe did in the committee and went through the Senate. And it was dropped simply for the reason of squeezing everything into $350 billion.
BAUCUS:
Let me just add -- if I might add to that, this is not apropos directly to your point, but Senator Lincoln mentioned Senator Snowe's effort in the 2001 tax bill. Let me tell you how true that is.
I was a conferee. And I am sure Olympia remembers well all the conversations that we had. And I kept telling Olympia, I said, "Just hand in there. We're going to get your child tax credit provision", over and over and over again. So we are here in large part, as Senator Lincoln said, because of the earlier provision enacted in 2001. Now, as part of that conference, I can just tell you, it made a huge difference.
QUESTION:
Mr. Chairman, how are you going to -- as you know the House is saying (inaudible) other provisions of the 2001 law. How are you going to -- have you talked to the White House about that? And how do you (inaudible)?
GRASSLEY:
I don't want to say that I have talked to the White House, but I know the White House has been involved in urging to move this along and bring people together. And I think the only thing that drives it is the extent to which everybody in Congress feels that the group of people that benefit from this legislation ought to get their checks the same time as everybody else gets the child tax refund.
QUESTION:
Why do you (inaudible)?
GRASSLEY:
I think that it would probably be subject to a great deal of amendment on the floor just like we are trying to avoid here with this compromise.
QUESTION:
Senator Grassley, can you (inaudible) how this is offset? And also...
GRASSLEY:
It's offset, yes. Very simply...
(CROSSTALK)
GRASSLEY:
... very simply. Well, it's not as complicated as what you heard yesterday. It's offset by custom fees.
QUESTION:
And you mentioned...
GRASSLEY:
Total -- the full $10 billion, or 10 billion bucks.
QUESTION:
And also (inaudible) you briefly mentioned Vice President Cheney was involved in discussions. Are you saying...
GRASSLEY:
I am not saying he was involved in any questions on this. The question was asking me to retrace the steps of two weeks ago. I can't do that. Part of it was because there was a disjointed discussion and decision making at times when different people were involved. And it wasn't all done in one setting.
Yes?
QUESTION:
Sir, if you can't get (inaudible)...
GRASSLEY:
Well, I assume -- we're assuming we can get -- you see here today, I sure expect to or we've wasted an awful lot of time trying to put this together.
(LAUGHTER)
Go ahead.
QUESTION:
What happens -- I mean, you seem like you had a conference agreement, the bill was done, this was over (inaudible) this is the time when you move on next (inaudible) revisiting a portion of the bill which had been very consciously dumped from the bill. What changed in the last two weeks? What happened?
GRASSLEY:
I think what happened that something that was taken very casually at the time the conference report was adopted was all of a sudden a great big enlightenment that is a very important unfair treatment of one segment of people. And also the political volatility of it.
QUESTION:
(inaudible), how quickly do you have to pass the bill to (inaudible)?
GRASSLEY:
I think the president should sign it by June 16th, June 23rd or early that week.
Yes?
QUESTION:
Senator Grassley, I wonder what (inaudible)? What's going to make them accept (inaudible)?
GRASSLEY:
I have no vote in the House, obviously. And what's going to make them accept it is whether or not they want this group of people, particularly people in the military who are sacrificing their freedom for our freedom, to get the same benefit everybody else is going to get who has children in their family.
QUESTION:
Do you think that the intentions of the bill (inaudible)?
GRASSLEY:
That's not only the purpose of making it easier for the House to accept it. It makes it easier for members of my party to accept it in the Senate.
OK. Thank you all very much.