Executive Calendar
Floor Speech
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Mr. GRASSLEY. Madam President, I rise for two reasons: one, for a very short comment on political prisoners in foreign lands, and the other one on how the CARES Act is developing and the reaction to it.
First of all, our country is now hopefully recovering from COVID-19, so I want to take this opportunity to address the plight of an extremely vulnerable population--political prisoners abroad.
In Turkey, Syria, China, and a lot of other countries, political prisoners remain locked away in crowded prisons without adequate medical care. The spread of COVID-19 among this population dramatically increases the risk of serious medical consequences or even death.
Authoritarian regimes only risk further destabilization of their countries by jailing the innocent. Political prisoners ought to be released, and they ought to be released now. HEROES Act
Madam President, at the beginning of March, we worked to get ahead of the COVID pandemic, and an amazing thing happened. Congress came together quickly and developed a broad package of measures to provide relief to families, workers, and businesses to weather the COVID-19 event and the crisis that it is.
Coronavirus aid, relief, and economic security--those words make up the CARES Act--included a broad range of tools: first, direct payments to individuals and families; second, it expanded unemployment insurance benefits for the unemployed; third, lending programs for businesses of all sizes; and fourth, targeted tax relief to help businesses continue operations and keep workers on the payroll.
Our objective for the tax provisions in the CARES Act was twofold: first, to help individuals, families, and businesses weather the storm caused by the stay-at-home governmental decisions, and second, lay as much of a foundation as possible for restarting the economy once businesses could start to reopen and Americans could get back to work.
The CARES Act came together through a bipartisan process, and that process took place over 8 short days and ultimately and amazingly passed the Senate 96 to 0 on March 25. The House passed it by a voice vote 2 days later, and President Trump signed it into law that same day.
As chairman of the Finance Committee, my approach for tax relief was to provide as much liquidity as possible and as quickly as possible. For individuals, that meant providing the Treasury Department with authority to issue nearly $300 billion in economic impact payments to families across the Nation. This economic impact payment was $1,200 for an individual, $2,400 for a couple, and $500 for each child. That went out in checks or direct deposit. It also meant giving individuals access to cash in retirement accounts, suspending required distributions from retirement accounts already hit by steep declines in the stock market, and giving employers more flexibility to help employees with student loan payments.
Many of these tools are similar to ones made available to help families recover from natural disasters in recent years. So we were not reinventing policy for this pandemic; we were making use of things we had already tried before. Each of these changes I just mentioned is a tool that can be implemented very quickly to help families access the care they need to get through these difficult times.
Going through the business tax relief measures, our approach was to modify existing provisions of the Tax Code, easing limits and restrictions so that businesses could apply for this help easily and quickly. The key was for businesses to keep cash on hand if they hadn't already filed or give refunds to give them the liquidity to keep the doors open, the machinery running, and most importantly, employees paid, at least to the greatest extent possible.
Most of these tax measures have been employed in previous economic crises and natural disasters. Again, these policies were not reinventing the wheel; we were taking advantage of things that had worked in the past.
Particularly, we expanded the ability of businesses to use net operating losses--or, as we call them in tax jargon, NOLs--just like Congress did in 2002 after 9/11, in 2005 for taxpayers affected by Hurricane Katrina, and again in 2009 after the financial crisis.
Those were actually bipartisan relief efforts just like the CARES Act. These provisions are temporary. They are designed to terminate after the recovery is in full force.
While it seems longer, you have to remember the CARES Act was enacted just over 7 weeks ago. In that time, Treasury has distributed economic impact payments far faster than expected. Americans have received approximately 140 million economic impact payments worth $249 billion. Over 4.3 million small businesses have been approved for more than $500 billion of loans under the Paycheck Protection Program and businesses of all sizes have started to use the tax tools that we provided for their liquidity.
But in that time, the critics have also done what they do best: They criticize. The media has seized on an opportunity to perpetuate every negative story that critics can manufacture. You can imagine my surprise when Democrats criticized the net operating loss carryback provisions in the CARES Act. Oddly, Democrats previously supported the last three bills, where we expanded the net operating loss carrybacks in 2002, 2005, and even in 2009--in the last instance, with all- Democratic rule.
I don't recall, in any of those instances, any partisan attacks from Democrats about this previously bipartisan, anti-recessionary policy tools. So why now? Sadly, that irresponsibility has led our Democratic colleagues in the House to pass legislation that would take back important tax tools that we have provided in the CARES Act to the tune of $254 billion, and that is a tax increase on the American businesses, and with more taxes, less employees.
It is hard to understand how the House Democrats think that this policy makes any sense. Imposing tax increases when you have a downturn--imposing a quarter of a trillion dollar retroactive tax increase on businesses in need of cash to restart their operations as States begin to lift shutdown orders--is a recipe for further disaster, as opposed to the disaster we are already in.
It makes one think that House Democrats don't want an economic recovery, at least until they can defeat President Trump. Imposing such a tax increase when the country is facing unemployment levels not seen since the Great Depression fails the common sense test.
It is even more disturbing to the extent that the House Democrats' proposal targets small businesses and other pass-through entities. Aren't these losses just as real as larger corporations and their need for liquidity possibly even greater?
According to the Tax Foundation, more than 90 percent of American businesses in recent years operate as pass-through entities. Pass- through businesses include some of those hardest hit by this pandemic we are in, like farmers, restaurants, manufacturers, retailers, and healthcare providers. They employ over half of America's workers. Yet the Democrats want to take them on.
It is critical that these businesses also survive this pandemic to ensure that Americans have jobs to return to as it becomes safe to go back to work. I have heard some critics even suggest that allowing small businesses and pass-throughs to use their net operating losses is kind of a tax gimmick or loophole. Apparently, they don't understand that these are real economic losses that businesses incur because there isn't enough income to cover payroll, rent, utilities, and other fixed expenses.
The whole goal of the CARES Act is to help businesses tap cash paid as taxes in prior years when times were very good, so that they can survive through this current crisis. When we drafted the CARES Act, we didn't pick winners and losers, and government shouldn't pick winners and losers. The tools generally apply to all types and sizes of businesses, from farmers and sole proprietorships to partnerships, to LLCs and S corporations, to the large corporations. They apply across all industries, since nearly every sector is bearing the burden of stay-at-home and shutdown orders across our entire Nation.
Most importantly, we didn't try to decide which jobs were more worthy of saving than other types of jobs. Our goal was to help preserve as many jobs as possible, regardless of whatever business they were in. Those objectives were the right ones.
This partisan tax increase also flies in the face of anti- recessionary fiscal policy 101. Find me a credible economist who says that we should raise taxes in a normal recession. It is just common sense not to. In a normal business cycle downturn, tax increases hurt, rather than help, the recovery. Why double down now, as the House is doing, in the greatest and sharpest economic contraction in modern history?
The House Democrats have reverted to partisan politics, as usual, in the middle of the worst pandemic in more than 100 years and the worst economic crisis in nearly that long. Maybe, they should think about former President Obama's support for this kind of anti-recessionary fiscal policy back in 2009. What former President Obama said then should apply now: Don't raise taxes in a recession.
Nevertheless, I am hopeful that we can maintain the bipartisan spirit of the CARES Act in the Senate as we chart the next steps to reopen the economy and get Americans back to work.
While some businesses will feel the impact of this pandemic more than others, none of these businesses are doing well. They all deserve as many tools as we can provide to weather this storm. What is more, employers across the country who have been relying on the CARES Act shouldn't be deterred by the misguided tax hike proposed by the House Democrats. The messaging bill that the House just passed can't be allowed to undermine access to capital needed to reopen their businesses, bring back employees, and win back the customers that made them successful before the pandemic attack.
And to the Democratic critics, I say this: Let's put away the partisan attacks. Let's put away the political pandering. Let's keep working for the good of the country, so our families, businesses, and economy really can come out of these tough times on a strong footing and with the best shot at a rapid recovery.
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