American Recovery and Reinvestment Act of 2009

Floor Speech

AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 -- (Senate - February 05, 2009)

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Mr. THUNE. Mr. President, I rise in support of the McCain amendment. Before I speak a little bit to the amendment itself, I want to remind my colleagues why this debate is so important and why the McCain amendment is so important to this debate.

Again, we are talking about a $1 trillion bill--$800 billion, up now into $900 billion. When you add in interest, it is $1.2 trillion and change. It seems as if every amendment that has been offered--we have had a lot of Republican amendments that have attempted to cut out some of the wasteful spending, eliminate some of what I think is probably most egregious about the bill, none of which has been accepted, ironically. Ironically, the only amendments that have been accepted so far have not decreased the size of the bill. They have added to the size of the bill. This bill has gotten bigger.

I remind my colleagues--and I think it is important for the American people to tune in because we throw numbers around here in Washington in an abstract way: millions, billions, trillions of dollars--exactly what the dimensions are of what we are talking about.

A trillion dollars: If you took one-hundred-dollar bills and lined them end to end, you could literally go around the Equator almost 39 times; 969,000 miles of one-hundred-dollar bills lined end to end, going around the entire Earth right at the Equator almost 39 times.

That is what we are talking about when we talk about the dimensions of $1 trillion. I might also add that if we look at where this is coming from, we are borrowing. Let's be honest with the American people. We are borrowing this money from future generations. A lot has been said on the floor about who is going to get hurt if we don't do this, and I agree there are a lot of people hurting. Unemployment is high. Frankly, let's think about the people who are going to be hurting the most, and that is the next generation of Americans who are going to inherit this enormous debt we are passing on to them.

To put it into perspective, between the Revolutionary War and Jimmy Carter's Presidency, the United States of America borrowed $800 billion. From the entire time of the Revolutionary War to the Carter Presidency, there was $800 billion worth of borrowing. We are borrowing more than $800 billion for this one piece of legislation, not to mention what comes next. We know we have a $1 trillion catchall spending bill coming at us which is the first time that the discretionary appropriations bill is going to exceed $1 trillion. We know we are going to have a request for additional moneys coming from Secretary Geithner to stabilize the financial markets to the tune of several hundred billion dollars. We know there is going to be a supplemental spending bill request for the ongoing conflicts in Iraq and Afghanistan. Ironically, according to CBO, the bill that was passed previously on SCHIP actually leads to $41 billion of deficit spending.

So all this spending we are doing, all this borrowing we are doing is being passed on to the next generation, and they are the people who are going to feel the brunt and the impact and hurt the most if we don't do the responsible thing here today.

I think it is important that this particular amendment Senator McCain has put forward and a number of us are cosponsoring be heard and fair consideration be given because I think there are several things about it that differentiate and distinguish it from the bill we are debating, the Democratic proposal that is on the floor.

One of the most important distinctions--and Senator McCain already mentioned it--is it comes in at less than half the cost: $421 billion. So we are talking about borrowing over $800 billion--all the time from the Revolutionary War to the Carter Presidency is the equivalent of what we are doing here--versus a much smaller approach and, in my view, much more fiscally responsible approach and, frankly, much more targeted. Because the criteria that has been laid out at the beginning of this debate for what makes sense in terms of a stimulus is it should be targeted, temporary, and timely. What we have before us is none of the above. It is slow, it is unfocused, and it is unending. Mr. President, $140 billion of this bill is going to be very difficult to shut off because it adds to the baseline as a lot of mandatory spending is included.

I wish to also show my colleagues what the President's chief economic adviser, Larry Summers, said. He said this in the Financial Times on January 6 of this year: ``Poorly provided fiscal stimulus can have worse side effects than the disease that is to be cured.''

Now, we have all talked about what is in this bill, and all the spending in it, including the $600 million for cars for Federal employees, the money that goes into the seven-point-whatever-billion-dollars it is here that goes into Federal buildings--all good things. Senator McCain talked about smoking cessation. That is something we all support and believe in. But that ought to be handled in regular order. Those are not stimulus. Those are things that do nothing to contribute in the short term to creating jobs and helping get our economy back on track. In fact, the CBO said that 12 percent of the total amount in the bill we have before us would be spent in this year--2009--and less than half in 2009 and 2010, so much of what we are talking about is going to be pushed off into the future when it is not going to do anything to stimulate the economy.

It does create some jobs--most of them are jobs here in Washington, DC--at great cost. For example, there are some jobs created at the State Department. The average cost per job created at the State Department according to this is over $1 million. On average, you take $900 billion and you divide it by about 3 million jobs, which is the estimate of what this would create, and we are talking about $300,000 per job.

Now, I might add that the average annual salary in my State of South Dakota is under $30,000. Imagine how difficult it is to explain to my constituents that we are going to borrow $1 trillion from their children and grandchildren to create jobs at a cost of $300,000 per job. That is an awfully difficult sell, particularly when they look at how a lot of this money is spent. We have some requests from mayors and city officials around the country, and these are all good things. I am not downplaying at all the importance of many of these projects, but there are requests here for 42 swimming pools, water slides, golf courses, all sorts of things that you can't argue we ought to be borrowing $1 trillion from our children and grandchildren to fund and to support. So it is important we have something we can be for and that does, in fact, create jobs; that does, in fact, add to the economic recovery, and that is fiscally responsible.

I wish to point out, as Senator McCain mentioned in his opening remarks, some of the things that are in his bill. It is appropriately focused on housing because we believe--and I think rightly so--that housing got us into this recession and housing is going to lead us out of this recession. It is focused on getting dollars into the hands of the American taxpayers. The debate about whether you want to have government spend the money or the American people spend the money is a very simple one. I happen to believe if you allow the American people to spend the money, you get a much better return. When we get money back into the hands of Americans, they will help grow the economy. Two-thirds of our gross domestic product is in the form of consumer spending. You provide incentives for small businesses which create two-thirds or three-fourths of the jobs in our economy and that helps get the economy back on track. That is in this bill.

Reducing marginal income tax rates from 15 down to 10, 10 down to 5, cutting the payroll tax in half for a year for employees gets money back into the hands of the American people so they can go out and help stimulate the economy and create jobs.

It also, as was noted earlier, makes some changes with regard to the underlying bill where defense is concerned. We have some very serious needs. Senator McCain mentioned this in his remarks and he talked about the defense spending in his bill. There is some, frankly, defense money in the Democratic proposal--about $10 billion--mostly for military construction projects, but there is no money for reset. We have serious needs out there. Senator McCain's amendment adds $7 billion for reset, to repair military equipment and replace direct battle losses, including $6.5 billion for the Army, $600 million for the Marines, $62 million for the Navy, and $83 million for the Air Force, which adds money for direct repair of military infrastructure and facilities. These are things that need to be done and can be done quickly that will put money to good use, that do create jobs and serve an important national purpose.

Now, the other thing his bill does is it puts money in for infrastructure. Infrastructure arguably is something that does create jobs out there, if they are shovel-ready projects that you can actually get going quickly. I think that is a good use in a reasonable way, not adding all kinds of projects that you are not going to do for many years to come. But if you are getting money out there that actually can help fund projects that can get done in the short term, that is a good thing.

Unfortunately, much of the money in the Democratic proposal, as I said earlier, isn't going to get spent out for years. I offered an amendment last night not to fund new programs, assuming it was going to take new programs a long time to get implemented and up and running. That amendment was defeated. The point of all this is to do things that in the short term create jobs. So there is $45 billion in the McCain proposal for infrastructure.

The other thing I will say, which I think is critical--critical--in this debate, because I said earlier that if we don't put some restraints or some safeguards in here, this is going to get--the spending is going to go on forever. Senator McCain's proposal includes a hard trigger so that when we recognize two consecutive quarters of economic growth, positive GDP, this funding terminates. It is a fiscally responsible approach. He offered a freestanding amendment last night that received 44 votes. I haven't seen any evidence in this Chamber yet that anybody here is serious about adding any measure of fiscal responsibility or sanity to spending $1 trillion of our children's and grandchildren's money.

I think it is important that this amendment get a vote. I urge my colleagues on both sides to support this amendment, to try and do something that is fiscally responsible, that reduces the overall size of this, that addresses substantively the things in the bill--the shortcomings in the Democratic proposal--and do some things that actually will help stimulate the economy and create jobs. Senator McCain's proposal represents a much better direction in which to head. It costs a lot less, it does a lot more, so I hope my colleagues will be able to support it.

One of my colleagues on the Democratic side got up a little earlier and said, Well, if it costs a little bit of money this year to do this or that, there isn't anything in this bill that costs a little bit of money. Everything in this bill costs a lot of money, and the people who are going to get hurt the most are the next generation who are going to be handed the bill.

I hope my colleagues will, in fact, support the McCain amendment, and I yield the floor.

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AMENDMENT NO. 197

Mr. THUNE. Mr. President, I rise to speak today in support of my substitute amendment, which is No. 197. This amendment has been modeled after the substitute amendment that was offered by the Republicans in the House of Representatives.

I think the big question we have to ask, and the question before the House is, if we are serious about doing something for this economy to recover and to create jobs, what is the best and most effective way to do that? We have in front of us a proposal that emphasizes more heavily government spending and doing it through government programs. What I have chosen to offer to my colleagues here in the Senate is an opportunity to vote on something that does it in a different way. It allows the American people to spend the money that we use to infuse the economy with dollars that hopefully will grow the economy and create jobs.

Our Nation has lost millions of jobs over the last several months. Families are hurting and businesses are struggling to survive. As our Nation weathers this turbulent economic time, we do have this decision to make: Should the Congress take hundreds of billions of tax dollars and invest them in an expanded Federal Government or, on the other hand, should Congress return tax dollars directly into the economy in the form of tax relief, which will create jobs and economic opportunity?

The response the Democratic majority has put in front of us is to put more money into Federal agencies, to renovate Federal buildings, and buy new cars for Federal employees. I believe we ought to follow a different path and let the people of this country keep more of their hard-earned dollars and let them decide how best to spend, save, invest, and to turn this economy around.

People know better how to spend their money than unelected bureaucrats here in Washington, DC. And tax relief, not government spending--reductions in taxes for the American people--will create jobs and get us out of this recession. This is what President Kennedy knew, this is what President Reagan knew, this is what I believe the American public, with their lackluster response to the $1 trillion spending program in front of us, knows as well.

This substitute amendment does several things. It shifts, as I said, the focus from government spending to meaningful tax relief in four ways: First, it provides tax relief for individuals and families; second, tax relief for small businesses--the job creators in our economy; thirdly, it provides housing assistance; and, finally, it provides temporary assistance to those who are dealing with the current recession.

Now, first, the bill provides meaningful tax relief for working taxpaying families. Under the ``Making Work Pay Credit,'' the tax provision in the bill--the majority bill--7 million households are going to receive a check from the government that is larger than both their payroll tax and their income tax liability.

In other words, rather than a one-time credit, what my amendment would do is reduce the lowest two marginal income tax rates for years 2009 and 2010. Essentially, the 10-percent rate would go down to 5 percent and the 5 percent rate will go down to 10 percent. This is a real tax reduction and will benefit all income taxpayers in this country.

In total, there are 100 million taxpayers who would receive, on average, tax relief of $1,250 per filer each year. Married couples could receive up to $3,400 in lower taxes each year.

Consumer spending accounts for 70 percent of our gross domestic product. As consumer spending declined for a record 6 months in 2008, it is no surprise that our economy contracted over the same period of time. If we want to spur consumer spending, we should not implement single shot policies like a one-time credit, and we certainly should not pour hundreds of billions of dollars into Government programs. Instead, the best way to stimulate consumer spending is an immediate meaningful reduction of marginal income tax rates.

With respect to small businesses, the second part of this bill focuses on small business tax relief. Small businesses, as I said, create up to 80 percent of all new jobs and represent 99 percent of the 27 million businesses in the United States. If we want to create new jobs, we should start with helping small business, not expanding Federal bureaucracies. This amendment expands small business bonus depreciation and expensing to encourage investment in this current year, which is when we need it the most. The amendment expands the net operating loss carryback period, permitting businesses to carry back their operating loss deductions for 5 years rather than 2.

Several of these provisions, granted, are included in the underlying bill. This amendment, however, provides an additional $47 billion of small business tax relief. My amendment includes a new provision that would allow small businesses to deduct 20 percent of their business income. This provision significantly reduces the tax burden on small businesses which would allow them to continue to hire and retain hard-working Americans. This provision would also allow small businesses to maximize their earnings and increase in value, which will also give them better access to credit markets and another critical component to a recovery.

Small businesses are the backbone of our economy and, unbelievably, only 2 percent of the total in this bill, the underlying bill, the majority bill, is dedicated to tax relief for small businesses. The lack of small business incentives in this bill, in my judgment, is a serious flaw, and my amendment seeks to improve it substantially.

I also understand people are hurting on account of the economic downturn. Across America we have hard-working men and women who are being layed off because of no fault of their own. Today they are sitting at the kitchen table wondering how to make ends meet.

Earlier this year, Congress acted to extend unemployment insurance to provide a safety net for those who are in need. My amendment would extend the expanded unemployment insurance provisions through the end of this year. Additionally, the amendment would eliminate the income tax on unemployment insurance. This is an automatic increase in the real benefit of unemployment insurance to those who derive it. It never made sense to me that individuals would pay taxes to the Government to fund unemployment insurance and, once they are unemployed, receive the benefits and then have to pay taxes on the benefit as well. This amendment would correct that. It would also make health care more affordable for the self-employed and other families without employer-provided health insurance because, for the first time, this amendment would provide an above-the-line deduction for health insurance costs.

Finally, with respect to the housing market, this amendment addresses our housing market prices. The housing market is what led us into this recession. In fixing the housing market, we will help lead us out. My amendment would extend the $7,500 home buyer tax credit through December 31, 2009, while expanding the benefit to all primary residences. This amendment would eliminate the complicated recapture rules which currently require home buyers to pay the Government back if they claim this credit. In the end, this provision would help stimulate the faltering housing market and encourage responsible home ownership.

According to the Congressional Budget Office, there are some real issues associated with the decision we make about whether to stimulate the economy with Federal spending, with Government spending or with tax relief. I wish to read for you a couple things the CBO has said:

Reductions in Federal taxes [would] have most of their effects ..... in 2009 and 2010.

That is the very period we are targeting to provide the greatest economic stimulus and hope of job creation.

They also stated: ``Purchases of goods and services, either directly or in the form of grants to States and local government, would take years to complete.''

They go on, it will be ``difficult to properly manage and oversee a rapid expansion of existing programs.''

Finally, they say: ``[M]any of the larger projects initiated would take up to 5 to 7 years to complete.''

If we want to approach this problem with a solution that delivers assistance quickly, that is quick hitting, that gets money into the economy quickly, that creates jobs quickly, the way to go about doing that is not to have the Government spend the money, to have it come out of Washington, send our money to Washington, have the Government take more money out of the economy, and then decide how to spend it here. It is to get money into the hands of hard-working Americans and small businesses, where the real power for job creation exists.

Interestingly enough, this legislation, the amendment I offer, was run through an analysis that was used--it is a methodology that was developed by the President's chair of the Counsel of Economic Advisers. Her name is Dr. Christina Romer and Dr. Jared Bernstein, the adviser to the Vice President. This was a methodology they used back in 2007, that considers the multiplier effect of various policy decisions and fiscal decisions that are made by the Congress. What they suggested in that analysis is, if you reduce taxes on the American public, you get a 2.2 multiplier in terms of GDP. My amendment reduces taxes as a percentage of our gross domestic product by 2.8 percent. If you take that by their multiplier 2.2, you get 6.1 percent in GDP growth as a result of cutting taxes.

If you go on further, they suggest that for every 1 percent increase in GDP, you get three-quarters of a percentage change in jobs. So if you take the 6.1-percent growth in GDP and multiply it by .75 you get a 4.6-percent increase in the number of jobs. You take the full size of our workforce today, about 133,876,000 employees, and you plug in that 4.6-percent increase and you get a job growth increase--a job increase over the course of the next 2 years, as a result of making these changes in tax policy, of almost a 6.2-percent increase in jobs.

The proposal we have before us suggests they could get up to another 3 million jobs, perhaps, from this. But I suggest, if we can create double that amount, 6 million jobs, as a result of reducing taxes, it is a much better solution for our country to get our economy back on track and is also done at a lot less cost. The overall cost, according to CBO, of my amendment, is about $440 billion, compared to the $900 billion it will cost for the proposal the Democratic majority has in front of us; twice the jobs at half the cost. That sounds like a solution that makes a lot of sense. It makes a lot of sense to the American people, who understand clearly you do not send your money to Washington and hope the Government can spend it to create jobs. The way to create jobs is to get money back in the hands of the American people, back in the hands of small businesses. That is what will lead us to that growth in gross domestic product, the expanding economy and the job creation associated with that. Twice the jobs for half the cost. I hope my colleagues will support this amendment. It is a much better approach to dealing with what is a very serious economic crisis for this country. I think the American people believe that. I hope my colleagues in the Senate will support it as well.

Let me say, the cosponsors on this amendment are Senators Kyl, DeMint, Johanns, and Hatch. I yield the floor.

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AMENDMENT NO. 197

The PRESIDING OFFICER. Under the previous order, there will now be 2 minutes of debate equally divided prior to a vote in relation to amendment No. 197 offered by the Senator from South Dakota, Mr. Thune.

Mr. THUNE. Mr. President, with my amendment we get more with less, more job creation at less cost. What this amendment would do is substitute the underlying bill with an amendment that consists primarily of tax relief for families and small businesses. Specifically the legislation would provide $444 billion of tax relief, more than the tax relief contained in the Senate stimulus bill. It provides $34 billion in spending which is $598 billion less than the underlying bill. According to the economic models developed by the President's economic advisers, this proposal would create twice as many jobs for half the cost. It would create 6.2 million new jobs at $480 billion, compared to the 3 million or so which, with the latest from CBO, may be a lot less than that under the Democratic proposal. I urge support for the amendment.

The PRESIDING OFFICER. The Senator from Montana.

Mr. BAUCUS. Mr. President, the Senator is correct. It is more for less--more tax breaks for upper income Americans, less tax breaks, in fact, no tax breaks for low-income Americans; 49 million Americans will get no tax benefit under this amendment, and 49 million Americans do get some tax benefits from the underlying bill. It eliminates the rest of the substitute--nothing for energy, nothing for education and the other parts of the bill. I urge rejection of the amendment.

I raise a point of order that the pending amendment violates section 311(a)(2)(b) of the Congressional Budget Act of 1974.

Mr. THUNE. Mr. President, I move to waive the applicable provisions under the Budget Act with respect to my amendment and ask for the yeas and nays.

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