American Recovery and Reinvestment Act of 2009

Floor Speech

AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 -- (Senate - February 06, 2009)

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Mr. THUNE. Mr. President, as many of my colleagues have already noted, the jobs numbers today were very bleak and should cause great concern for all of us as we look at steps we can take to get this economy growing again. But that is why the CBO report that came out yesterday also is so troubling because it indicated the Democratic proposal, the stimulus plan before us, would create as few as 1.3 million jobs--as many as 3.9 million, to be fair, but as few as 1.3 million jobs. Well, a trillion dollars is a terrible price to pay for a bill that may create as few as 1.3 million jobs over, I might add, a 2-year period.

It also went on to say, the CBO report did, that it would reduce the GDP growth in the outyears. So not only does it create potentially a very small amount of jobs--1.3 million over a 2-year period--but it also diminishes the amount of GDP growth we would experience in later years.

Now, if it, in fact, does create only 1.3 million jobs, if this trillion dollar plan--again, all based on borrowing from future generations--does create as few as 1.3 million jobs, if you do the arithmetic on that, if you spend $1 trillion, and you only create a little over a million jobs, that is $800,000 per job. Try and think about how you can convince your constituents back in your home States about the need to spend $800,000 to create a single job.

I mentioned this yesterday, but I will repeat it again: For the people in my State of South Dakota, the average annual salary is about $30,000 per year. So to think about spending $800,000 to create a job is something that is going to be very hard to accept for a lot of people around this country, which is why I believe, and so many people around the country are rallying and saying, this is the wrong direction in which to head.

I happen to agree with that assessment, and I think there are some things that could be done that would make this process more fair in terms of including ideas that Republicans have to put forward but, more importantly, to get a product that is more effective--more effective--at creating jobs at a lower cost.

Now, many of us have tried to improve this bill. I supported a McCain amendment yesterday, a comprehensive approach that is much better in terms of addressing the issue and much better focused in terms of job creation at about half the cost of the underlying bill, the majority bill we are debating today. So we tried to make this bill more focused and more fiscally responsible. I think putting the focus and the emphasis on job creation is the right place to be. But many of the efforts we have made to that end have failed. We have also offered amendments to cut much of the wasteful spending out of this bill, most of which have been defeated.

So what I have sort of concluded is, as much as we tried to make this a better bill by cutting wasteful spending, by making the focus on job creation, by trying to reduce taxes on small businesses and middle-income taxpayers, which would get more money back into the economy, and emphasize less spending on Government programs in Washington, DC, where the bulk of this is committed, that is a much better approach, and many of our amendments have been focused in that direction. But, as I said, none have been accepted.

I have one more amendment I have filed and I hope to have an opportunity to call up. It is sort of a last-ditch effort to bring some reason to this whole debate. But what it essentially would do is take the total cost of the Democratic bill--about $900 billion without interest; $900 billion, when you add in the interest costs, as I said before, you get up to about $1.2 trillion or north of that, all of which is borrowed money, borrowed from future generations--but take that total amount of $900 billion and divide it by every tax filer in this country--anybody who files an income tax in this country--and basically write them a check.

Now, it is probably surprising to most of us here what you could do with that. But for an average individual filing a tax return in this country, you could write them a check for $5,143; for a couple filing jointly, $10,286.

Now, to be fair, I also wrote the amendment so anybody making more than $250,000 a year would not be eligible. I tried to make this so you cannot argue this is a tax cut for the rich. So anybody who makes more than $250,000 would not be eligible. All filers who have under $250,000 in taxable income would be eligible under this amendment. You could actually write a check to an individual filing for $5,143 dollars; and to a couple filing jointly, a check for $10,286.

I think that is a lot of money in most people's family incomes and it makes a lot more sense, in my judgment, than spending $900 billion on programs that many of us know will not work, creating new bureaucracies in Washington, DC, at a very high cost per job. As I said, if the CBO numbers are right on the low end--1.3 million new jobs--and you divide that, do the arithmetic on that, you are talking, in round numbers, about $800,000 per job. What kind of sense does that make?

It is pretty clear, in my opinion, and I think in the opinion of most of the American people, this is very misdirected in terms of the mission of this whole thing. The intention is great, but the substance of this particular piece of legislation is very flawed.

I would add one last thing; that is, we talk about economic models and analysis and methodology, but the President's own chief economic adviser put together a methodology about a year ago--a little over a year ago--that said for every dollar of tax cuts you get a multiplier of 2.2 percent increase in GDP. So if you cut taxes by a dollar, GDP increases by 2.2 times.

It seems to me, at least, that you can take that methodology--and it seems intuitive to most Americans--when you reduce their taxes, middle-income families' taxes and taxes on small businesses, which create the jobs in this country, you get a much better outcome in terms of GDP growth, in job creation, than sending a bunch of money into Government programs here in Washington, DC, many of which, I might add, are new programs that will not get up and be started for a very long time. There will be a tail on them. As a consequence, you will not see the result in the short period of time we are trying to target here--the temporary approach to this--that actually creates jobs and helps pull us out of the economic crisis we are in.

That is an amendment I have filed. It takes that total amount--$900 billion--breaks it down on a per-filer basis, and if you are an individual filing, you can get a check for $5,143, and if you are a couple filing jointly, you can get a check for $10,286.

But I wish to see us approach this in a different way. A lot of amendments, as I said, have been offered--some good alternatives. The McCain alternative we voted on yesterday makes a lot of sense to me. It does it at about half the cost, and is a lot more effective at creating jobs. That was defeated, as have been all the other amendments we have offered to make this more fiscally responsible, more focused, and more targeted on job creation.

With that, Mr. President, I yield the floor and thank the Chair.

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AMENDMENT NO. 538 TO AMENDMENT NO. 98

Mr. THUNE. Mr. President, I thank the Senator from Montana, the manager of this bill, for yielding and for the opportunity to offer this amendment.

As I have indicated, I will start by saying I am very uncomfortable with the notion of spending almost $1 trillion--over $1 trillion if you include interest--on this undertaking when, in my view, it is not timely, temporary, and targeted--as has been suggested should be the criteria for this legislation--but, rather, it is slow, unfocused, and unending. As a consequence of that, as I said, I am very concerned about the size of this and I am very concerned about the substance of it.

I don't believe we ought to spend this amount. I have supported amendments, including Senator McCain's amendment, that were significantly smaller in terms of the size, much more, in my judgment, fiscally responsible, much more targeted and focused on job creation, and doing the types of things I believe will help get the economy growing again. Unfortunately, those amendments--those amendments I have supported, and I have even offered a substitute of my own--have all failed.

I say that to preface my comments as I offer this amendment, to make the point that I am not in favor of or supportive of this size of spending and this size of borrowing from future generations in order to accomplish what, in my judgment, are very questionable job creation goals--frankly, I think based on the CBO study we saw yesterday, very questionable goals in terms of what this might achieve.

I have concluded, however, that with all the amendments that have been offered, many of which are amendments that in my view would reduce some of the wasteful spending in this bill, some of which would refocus it more toward tax relief, more toward infrastructure, and more toward housing--things I think are important in this debate--I have concluded that the way to perhaps shape this is to offer an amendment that, frankly, will clarify what the difference is in this debate. Because I think it all comes down to who spends this money: does Washington spend it or do the American people spend these dollars that are going to come in?

If we are going to commit to spending $936 billion, what my amendment essentially would do is to say that the $936 billion ought to be divided evenly among people who file income tax returns in this country. There are 182 million filers, all of whom would have a significant tax cut if you took a $936 billion pricetag and divided it up among those 182 million filers.

My amendment I think also illustrates the simplicity of this debate, because this is nine pages long. This amendment is nine pages long. The underlying bill is 735 pages long. It takes 735 pages, I would argue, to go through all the various types of spending programs that are created in this bill, many of which are new programs that are going to create liabilities and obligations for the taxpayers well beyond the so-called targeted period in which this assistance is designed to take effect. But my nine-page amendment basically spells out a clearer option that I think we ought to rally around.

Again, as I said before, it is very straightforward. If you are a taxpaying person in this country, if you are someone who files an income tax return--and there are 182 million filers in America--and you make less than $250,000--if you have $250,000 or less in terms of adjusted gross income--then you would be eligible for, if you are a single filer, $5,143 in terms of a tax cut or tax rebate in 2009. This would all spend out in 2009. If you are a married couple filing a joint return, you would get a tax cut totaling $10,286 in 2009.

One of the Democrat arguments for the $1 trillion stimulus is they believe the GDP will shrink by that amount in the near future, primarily because of a decrease in consumer spending, which accounts for approximately 70 percent
of gross domestic product. This amendment would inject $936 billion into the economy by the end of 2009 in the form of a recovery rebate for middle-class tax filers. These tax cuts total approximately 6 to 7 percent of our gross domestic product.

Consumers and taxpayers, not government bureaucrats, would determine how to spend this money. Consumers could decide to make a downpayment on a new home, purchase a new car, get ahead of day-to-day bills, or save and invest for the future. I suggest this is a far more efficient way of stimulating the economy relative to improving fish barriers or designing polar ice breakers or purchasing supercomputers for climate research.

One of the primary arguments my colleagues on the other side, I am sure, will make against this amendment is that most consumers decided to save their tax rebates in 2008 rather than spend the checks they received in the amount of $600 for a single filer and $1,200 for married filing jointly. Well, first, this economic recovery rebate is much larger, which increases the likelihood of a positive impact on consumer spending.

Second, with the advent of the financial crisis, we are at a very different situation relative to January 2008. Even if individuals choose to save half of this tax cut, that would mean a $450 billion infusion of capital into our banking system, which would also help stabilize our financial institutions, and that is a critical part of our economic recovery.

I believe the American people are tired of business as usual in Washington. I think the stimulus package we have before us is a perfect example of how Washington works. It is loaded with a lot of spending, in many cases, as I said before, spending on new programs and a lot of special interest spending. I hope my colleagues will listen to the American people, who I think are following this debate and are, frankly, outraged with the size of the stimulus plan and the notion that it is going to be spent on many of the things they find objectionable. I argue that the American people should be given the choice between a 9-page, very simple and straightforward approach to this, which puts money back in their pockets--in fact, a lot of money; $5,143 if you are a single filer and $10,286 if you are a married couple filing jointly--or a 735-page bill which includes spending for all kinds of things that in my view are not going to be successful when it comes to creating jobs or helping get this economy back on track.

That is the amendment. It is very straightforward. It is very simple. It takes $936 billion and divides it by 182 million tax filers. If they make under $250,000 year it gives them a tax rebate in the amount of $5,143 for a single filer, $10,286 for a married filer filing jointly, married couple filing jointly.

I yield the floor. I ask my colleagues to support the amendment.

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Mr. THUNE. Will the Senator yield for a clarification?

Mr. BAUCUS. I am happy to.

Mr. THUNE. I appreciate the question because I think that is one of the arguments that have been made against a lot of the tax amendments we have filed. This was drafted in a way so it is refundable, so all the Americans that you are talking about would also receive that benefit.

Mr. BAUCUS. I might say, Mr. President, reclaiming my time, this amendment strikes the underlying bill. What about States taking people off Medicaid, called FMAP? This bill gives about $86 billion to States so they can keep people on Medicaid, so they are not thrown off Medicaid. What about all the dollars in here that go to help build roads and highways and bridges?

Earlier, I asked my colleagues to remember two figures. What were they again--99 and 79. What is that? Just to repeat, 99 is the percent of dollars in the Finance Committee portion of this bill that are spent in the first 2 years; 99 percent of the whole Finance Committee bill is spent in the first 2 years. That is CBO, and it is Joint Tax. It is their figures. Just do the math.

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Mr. THUNE. Just a couple of points, if I might. I appreciate the observations of the Senator from Montana regarding the amendment, but I do want to make a couple of corrections. One, of course, is we did apply this in a way that it is refundable so everyone benefits from it. It is delivered in a very straightforward way. It doesn't matter where you are on the income scale, as long as you make under $250,000 a year. I might add, as well, people who make above that amount, I agree, probably are less likely to spend than are those who make under that amount. But this was capped. Eligibility for this refund is based upon how much you make. Your adjusted gross income has to be less than $250,000 a year. So it is not skewed toward the rich. It does skew toward those who are more likely to spend these dollars and put them back into the economy.

I still believe when you start talking about over $5,000 for a single person, over $10,000 for a couple, that is real money to most families, and I suggest a lot of that money is going to be spent. Granted, there will be some who will put it away and save it. As I said before, I don't think that is necessarily a bad thing. We ought to encourage saving, and furthermore it will help get liquidity in the banking system. If they put half into the banks, that is $450 billion that will go into the banking system of our country.

Just with respect to the multiplier effect--there are lots of different analyses that have been done, spending versus tax relief. I draw, of course, on history. If you look back, in the 1960s under Kennedy, 1980s under Reagan, more recently under President Bush, the impact when you reduce the marginal income tax rate, when you reduce the taxes on investment and job creation, in most cases you get more revenue and not less, and you also get a better return in terms of jobs created. In fact, the President's own economist, Dr. Christina Romer, back in March of 2007 did a study that suggested for each dollar of tax cut, you get a 2.2 multiplier effect. In other words, for each percent of GDP that you reduce taxes, you get 2.2 times that in terms of economic growth.

So I simply say, again, when you are allowing American families to keep more of what they earn, and particularly when you start talking about the amounts that we are discussing here, and when you cap it at $250,000 for eligibility so it is not a tax cut for the high end, for the rich--it is for people who are actually more likely to need it, to be able to do all the things they have to do to keep their families going on a daily basis--and you also write it in such a way so that it is refundable so income-tax payers on the lower end of the income scale are also eligible for it, as the Senator from Montana noted, and it is true--it is a very simple approach if you are going to do this--sometimes I think the simple approach is the best approach.

Arguably, 9 pages versus 735 is in the underlying bill. It is a small amount of ink and print by this city's standards. But it is a very straightforward approach which I think the American people will understand and appreciate because they are going to receive this, rather than having this money, all this money we are going to be borrowing from future generations, going into spending programs from which they may not derive any benefit.

I yield the floor.

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