Grams and Hutchinson: Fathers of the $500 Per Child Tax Credit
December, 1997
On Nov. 20, U.S. Senators Rod Grams of Minnesota and Tim Hutchinson of Arkansas spoke with Minnesota Family Council supporters.
Grams and Hutchinson served together in the US House of Representatives after the 1992 elections, before being elected to the US Senate. As freshmen in the House, Grams and Hutchinson championed a "Families First" budget plan with a $500 per child tax credit centerpiece - a proposal strongly supported by the Minnesota Family Council. The tax credit eventually became known as the "crown jewel" of the Republican "Contract With America," was signed into law earlier this year, and will begin impacting millions of families in 1998.
The following is excerpted from their comments.
$500 Per Child Tax Credit
Rod Grams: There were a number of Republican plans laid on the table in 1993, but they were all missing an element that we thought was important, and that was tax relief, and especially family tax relief. We worked very closely with the Minnesota Family Council and with other groups.
When I was working on this I found a great ally in Tim Hutchinson because he was also championing the same things that I was. Tim and I joined forces. And I remember the first news conference we held: there were like two of us in the room-that was Tim and I-so there wasn't really anyone else out there talking about tax cuts when we put it on the table.
[Tim and I proposed] a pretty comprehensive budget. The $500 per child tax credit was the crown jewel or the centerpiece of it, but it was a complete budget proposal as an alternative that we finally got the ranking member [of the budget committee], John Kasich, to introduce as the Republican budget alternative. We put enough pressure on him that he kept the name "Families First" for the tax credit in the budget, and it became the alternative then in 1994. It became the budget of the Republicans in 1995 and 1996, which Bill Clinton vetoed.
But it's been a very important part of the Republican philosophy for the last three Congresses to include family tax relief in this bill, and it finally passed.
Tim Hutchinson: It's been great to work with Senator Grams. I'm glad to be here for a good cause, and that's making sure Senator Grams gets the kind of recognition that he deserves- because of his efforts on behalf of the families in this country and for the $500 per child tax credit.
It is really a good lesson in how long it takes for something to become a reality: from an idea, to legislation, to an alternative budget, to inclusion in the Contract With America, eventually to being signed into law by a president who wasn't enthused about this at all back in 1993. It's really a privilege to be here to honor Rod in his efforts on behalf of families.
When we first introduced that "Families First" budget in 1993 it was pretty lonely at the time. [But] we had the pro-family groups gathered, with children, with pins saying "$500 per child tax credit," and lobbying the Republican members of the budget committee and trying to get them to include this in the Republican alternative.
In 1994 when we wrote the Contract With America we tried to get the $500 per child tax credit included. Well, it was, and it became the "crown jewel"-it impacted the most Americans.. Rod and I would go and testify before the budget committee and hear the criticisms that the families of America didn't need it. And we'd point out that, if you'd look at what's happened since the 1940s when the per child exemption was written into tax law-with the erosion over time-if it'd been indexed over time for inflation, it'd be over $8000 per child instead of the $2300 or $2400 you could claim today. Public policy makers were essentially saying families weren't as valuable today as they were a generation ago. And we thought it was just playing catch-up to give that $500 per child.
It went into the Contract With America. To see it come to reality now is really very, very gratifying-the first tax cut in 16 years.
Grams: I want to underscore one thing that Tim said: All the times we were fighting for this, outside in the halls were groups like the Minnesota Family Council and others that kept up the pressure. If it wasn't for our allies in the public-in the family groups-we couldn't have done it. That's how important what you do is, and what a difference you can make. We're proud to have been allies with you in getting this passed. We can applaud you for this.
For Minnesota it means about $400 million per year stays in Minnesota. That's a sizeable chunk of change. It won't make anybody rich, but it sure can help a lot of people-whether it's a night out at the movies once I a while, or being together with the family over pizza, or doing something else like putting it in an education savings account, or whatever it might be. But the family decides.
Further Reforms
Hutchinson: If there's one complaint I've heard, it was, "At least you're cutting taxes and not raising taxes, but all you did was further complicate an already too-complicated tax code." And they're right. All of [the new tax cuts] further complicate the current tax code. 3500 pages-about 10 times the length of the Bible-with none of the good news. The American people agree the tax code needs to be replaced. and I hope that'll be the next step in tax reform for American families.
Grams: [Regarding the marriage penalty in the tax code:] I met one young lady who'd gotten married the year before, and they'd just figured out their income tax, and they had to pay $1800 more as a couple than they would have if they would've remained single. There's also the story about the elderly man who'd been to the accountant, and he called his wife to say [facetiously] he thought they needed to get a divorce. She said, "Why?" He said, "It'd save us about $3500." It's unfair. It needs to be dealt with in the next stage of tax reforms.
Liberal Political Machines
Grams: I've got to say one thing. You've got to take your hats off to the liberals - they are political machines. While we're busy trying to do policy, they're out there strategizing and plotting politically. In fact [for example, on the issue of federal disaster relief for the floods in the upper Midwest this past spring] when I was in the back room with Dorgan and Conrad of North Dakota, Wellstone [of Minnesota], and Daschle [of South Dakota], the only thing they talked about was how this could be politically advantageous if they could do this, this, and this. They weren't talking about the needs of North Dakotans or Minnesotans. They were talking about, "What can we advocate that's going to make us look good."
Hutchinson: [Regarding the way Clinton operates compared to when serving as governor of Arkansas:] Clinton operates on the national level very much the same way he did in Arkansas. What makes him so difficult to deal with, in my opinion, is there isn't any real core-no core principles that anchor him. So, you're dealing with somebody who will, if it's politically advantageous, embrace whatever.
Clinton was governor of Arkansas for 12 years. I was in the state legislature for 8 of those years. But during his entire 12-year period he straddled the fence on abortion and actually portrayed himself as being a friend of life, signed legislation putting restrictions on third term abortions, and signed a parental notification bill. The moment he announced for president, he totally went the other way and repudiated everything he'd done as governor for 12 years because it was politically advantageous. He opposed repealing the sodomy law [in Arkansas], but now he has been one of the strongest promoters of the gay agenda on the national level.
He just doesn't have any core convictions, and this makes him very tough to deal with, I think.
Future Election Issues
Grams: We should be still talking about the same things we were talking about two years ago and four years ago.
I think tax cuts are still very important. I think regulatory relief is still very important. I think streamlining the government is still very important.
Killing some of the agencies like the IRS-we talk about eliminating that. This year its funding is going up $700 million. How do you do that with a program you want to kill? We've got to eliminate the Department of Housing and Urban Development [HUD]. We've got to eliminate the Department of Energy. And that makes sense because it's going to streamline government and make it more effective. With the Department of Energy alone we could save $10 billion a year. We could give it back in tax relief, rather than feeding the bureaucracy.
So, I think our campaign message can be as sharp as it was in '94 and in '96.
Hutchinson: I think if there was one lesson out of the elections-and there weren't that many elections-it was this: taxes were a powerful issue. Whether it was sales taxes going down, or the car tag issue in Virginia.
The second thing is that we ought not be afraid to talk about cultural issues-social issues. The Attorney General candidate in Virginia was more closely aligned with social conservatism than the gubernatorial candidate, and he out-polled the gubernatorial candidate. And Christie Whitman [the governor of New Jersey] almost got defeated because of her veto of the partial- birth abortion ban.
So, if we take those two messages and draw a bright line on taxes and tax relief and tax reform, and resolve that we're not afraid to address the cultural concerns of Americans, then I think we're really in good shape.
Grams: 70 percent of the people agree with us-whether it's education, partial-birth abortion, or the tax issue. So, we shouldn't look to the newspapers and see their goofy headlines. If we respond to those, then we're not the statesmen that we should be.
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