Jobs and Growth Tax Relief Reconciliation Act of 2003

May 14, 2003

JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003

Ms. CANTWELL. Madam President, I rise today in support of the Kennedy amendment, and I hope my colleagues will see that the essence of this amendment is about setting priorities in America.

Yes, we are discussing a tax bill that could end up including $350 billion in tax cuts directed at the most wealthy people in America. While we are doing that, we are doing it in the face of the fact that millions of Americans are unemployed and that their unemployment benefits are running out.

So what are we saying by setting this priority, setting a bill in motion out of the Senate that some Members believe is going to help stimulate the economy, that it will really start us on the right track? And instead of paying attention to the very people who have helped build this economy, those in the aviation sector who lost their jobs because of the downturn in aviation after 9/11, those who lost their jobs because of corporate manipulation in the energy crisis, who lost their jobs because of those market schemes and manipulations, and those people who are simply just out of a job because of 9/11 and the economy has not returned, we are saying, we don't have a plan to help you. Instead, we want to propose one of the biggest tax cuts in history hoping that somehow this will trickle down to help you.

The point is, when in our history as a country have we proposed a dividend tax cut as a way to stimulate the economy? Yet we have had two of the last administrations, a Democrat and Republican administration, which said one of the best things we can do during times of high unemployment is to make sure we extend unemployment benefits. Why is that? Well, it is quite simple. For every dollar spent on unemployment, it generates $2.15 of stimulus. This is a proven economic plan. For my State in Washington, where over 100,000 people would be impacted by this amendment and would qualify, we are talking about real numbers. We are talking about millions of dollars to our economy over the next several months that can help pay mortgage payments, health care costs, and as Senator Kennedy said, keep the lights on at home in a region of our country that has seen some of the highest energy rates in a long time.

What we are doing in this amendment Senator Kennedy is proposing is putting forth an idea of how to help stimulate the economy that has been tested and proven successful by two administrations, both Republican and Democrat. Instead, we are saying we are not going to include this in this package.

I must remind my colleagues that we came to this brink in December of last year. While some of us might think we rectified it when we came in in January, there were people in my State, as those unemployment benefits were curtailed in December, who did lose their health care benefits. They did lose the ability to take care of the health care needs of their families. I am sure there were people who probably even lost their homes because of that time period, because of the uncertainty, because of our lack of commitment for these unemployed workers. So here we are at the same point again, 2, 3 weeks away from having this unemployment benefit extension evaporate on May 31 and no commitment, no commitment to say we will extend unemployment benefits, again at a time when we have had administration after administration say, in times of tough economic situations and no job growth, the best thing we can do is keep the stimulus going by making sure there is unemployment.

So where are we? Well, as we know, the impact over the last 2 years, the private sector has lost more than 2 million jobs. Unemployment has jumped by 50 percent. As a State that has 7-percent unemployment now and as a region, the Pacific Northwest, with Oregon, Washington and Alaska, that has the highest unemployment in the country, this is no simple matter. This is about priorities. This is about whether we are going to take care of the working families who have helped build this economy and sustain them until job opportunities increase again.

We will look for other opportunities to make sure the training programs and the educational opportunities are there to retool the workforce for the jobs of the future.

One of the amendments we were successful in getting on the budget bill earlier in setting our priorities was to say that we should not cut the job training programs. We still have people in Washington State who are willing to hire this workforce that has been laid off, but they want them to be retooled. They want them to gain expertise. What better time to do that than now, as they are working through their unemployment, to offer to give them training benefits, make sure they are retooled for the economy of the future—whether it is in nanosciences, in biotechnology, in new aviation construction, in new IT fields, or in nursing where we have over 130,000 openings for nurses in this country, and the people who want to have those jobs. Instead, we are allowing outside people to come in and take them because we are not willing to take care of American workers. This is not a priority. We are simply saying instead of giving the largest tax cut in history, and passing this out of the Senate, knowing that thousands of workers are going to lose their benefits in 3 weeks, we believe we should give them that helping hand.

Make no mistake. Nobody in America wants an unemployment check. They would rather have a paycheck. But until we can guarantee to these people that we are going to get them that paycheck, we better extend that opportunity, from a trust fund that they have paid into, the things that they and their employers have paid into, the opportunity to sustain them and benefit our economy.

The PRESIDING OFFICER. The Senator has used 7 minutes.

Ms. CANTWELL. I yield the floor.
    

Ms. CANTWELL. Madam President, I rise today, along with my colleagues, Senator Nelson of Florida and Senator Baucus, to offer an amendment to revise and extend the research and development tax credit.

I know my colleagues will be familiar with this amendment, but I want to clarify three things this amendment does. First, it will extend the research credit through June 30, 2014, which is the end of this reconciliation period. Second, it will increase the rates of the alternative incremental credit; and third, it will create a new alternative simplified credit for qualified research expenses.

This language is identical to the language that was originally included in S. 664, introduced by Senator Hatch from Utah and cosponsored by 27 bipartisan Senators. The amendment pays for this tax credit by eliminating the underlying legislation's section reducing the dividend tax credit.

Since its increment in 1981, the research tax credit, I believe, has demonstrated that it is a powerful incentive for companies to increase research spending. The tax credit lowers the cost of doing research in the United States, so it encourages companies to continue to make investments in critical R&D. The bottom-line benefit is that research and development creates new jobs in the United States.

The current R&D tax credit is expected to expire on June 30, 2004. Many of my colleagues know we play this annual game of continuing to say the R&D tax credit is important, but not renewing it on a permanent basis, thereby saying to companies and organizations: You don't know whether you will actually get this research credit or not. It is important for companies to have access to this information because the kind of planning it takes to do research and development, to increase productivity in America, is not necessarily done in 1 year or 2 years. The major investments in nano technology and biotechnology, in software, and in the computer sciences take several years of investments. So what we are talking about is giving businesses the predictability they want to see in research and development so they can move ahead.

The long-term nature of these research projects, I believe, is something Congress should recognize today and make part of a priority package for reinvigorating America. This is a tried and true program, again, for creating jobs in America.

In this tax cut bill—we are trying something that is new, effectively saying, let's cut taxes on dividends for individuals, and hope it trickles down to create jobs in America. We know the R&D tax credit works—it works, and it works effectively.

The point I want to make to my colleagues is, what we need to understand, is the changing nature of businesses today in an information economy. So many of the businesses that have been the great engines of growth in the 1990s are companies that now spend 27 percent of their overall dollars on research and development. So research and development has become a bigger percentage of a company's overall plans, and predictability about that research and development has become more important.

That is why two years ago Federal Reserve Board Chairman Alan Greenspan told a Senate Budget Committee:

Had the innovations of recent decades, especially in information technologies, not come to fruition, productivity growth during the past five to seven years, arguably, would have continued to languish at the rate of the preceding twenty years.

So here was someone in charge of advising us on Federal investment and tax policy basically saying these companies have been able to invest in R&D, and have gotten us to that productivity rate we are so interested in. So why aren't we including that in this package—something we know is tried and true, something we know many organizations have come before us to argue for, asking, why not make this permanent? So in my amendment, we expand that tax credit through June 2014—which will help the economy turn around.

I would like to enter into the RECORD comments—I have no idea where my colleague will be on this particular amendment, but I would like to enter into the RECORD, or reenter into the RECORD, I guess—comments from my colleague from Utah, who I think spoke eloquently on this particular issue. As my colleague from Utah said:

As it stands, companies have to take account of the fact that Congress could allow the credit lapse for a few months, as it did a number of years ago. So companies hedge their bets, they spend a little less on R&D, and our economy suffers as a result. By contrast, permanence helps planning. The sooner we make this permanent, the sooner companies can begin to enlarge and expand their research and development units, and the sooner their innovations will strengthen economic growth.

He quoted a variety of studies that I think are very important. He went on to say:

A permanent extension of this credit may seem costly in terms of lost revenue. However, when you consider the value this investment will create for our economy, it is a bargain. In fact, one study estimates a permanent research credit would result in our gross domestic product increasing by $10 billion after 5 years and by $31 billion after 20 years.

The Senator is quoting a study and analysis of various economists who are saying this is really how we get to productivity in our economy. I am quoting the Senator because I believe in what he said.

I understand my colleagues may not think that now is the time for this particular amendment. I argue that it is exactly the time for this amendment because let's think about it. Who has created jobs in the last decade? Who has stimulated our economy to move forward? It is a lot of companies that have invested in R&D. It is the Microsofts. It is the Amazons. It is the variety of companies from my State and others that have made the investments which increase the productivity of their workforce, where they can then hire new people as new products and services are delivered.

That is something with which we have had good experience. I want to get back to 3.5-percent economic growth. I know the economic engine that will take us there will be these companies and corporations that know about producing product and services in an information age economy. What they tell us is important to them, is making permanent the R&D tax credit. They say this because there is currently no certainty—they come to us every few years to try to understand whether we are going to give them these tax credits.