Stimulus Package

Floor Speech

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Mr. GRASSLEY. Madam President, earlier today the junior Senator from California was discussing President Clinton's 1993 tax hike bill that broke his campaign promise to cut taxes on those making $200,000 or less and instead raised taxes on those making more than $20,000 a year. The junior Senator from California said this morning:

Charles Grassley: I do not think it takes a rocket scientist to know that this bill will cost jobs. That is what he said of the Clinton plan that created 23 million jobs.

That is the end of the quote of what this Senator said. It is an accurate quote, but I want to make sure there is a context.

I made that statement about the 1993 Clinton tax hike bill on seniors and the vast majority of other Americans. The junior Senator from California is saying that one tax hike bill in 1993 is solely responsible for the creation of 23 million jobs between 1993 and the year 2000 and, in a sense, we should ignore all other economic events, including the work of the Republican Congress, free-trade legislation, and many other factors that actually caused the job creation during that period. Other than being simply wrong, it revises fiscal history. I felt the need to respond to those remarks because the junior Senator from California called me out by name on the Senate floor.

I gave a speech on the Senate floor just yesterday that clearly rebuts her mistaken assertion that the Clinton 1993 tax hike bill was the cause of 23 million jobs. Perhaps she was involved in partisan negotiations on the stimulus bill instead of watching my speech at that time.

I will note that as one of five Senate conferees on the stimulus bill, I have been excluded from participating in conference negotiations and instead will only be invited to a photo op today scheduled at 3 p.m. which the Democrats are referring to as the one conference meeting that is required under the rules. Dave Camp, the only other Republican tax writer who is a conferee, has also been excluded from conference negotiations.

There will not be any negotiations, give or take, or compromise at that meeting; it will simply be to ratify a deal that Democrats and three Republicans out of 219 Republicans in the entire Congress have agreed to. In fact, there were more Democrats--11 in the House of Representatives--who voted against the stimulus package than there were the three Republicans who voted for it. This bill was handed over to the House Democratic leadership to write, and they wrote a bill that was loaded down with a lot of unnecessary--well, I shouldn't say unnecessary spending; I should say spending that goes way beyond the 2-year window of stimulus; a window that Dr. Summers, the President's economic adviser, said ought to be timely, temporary, and targeted. That is 2 years, that is not forever.

So this bill is not stimulative, then, or goes way beyond being stimulative, and it tended to include items that reward Democratic supporters such as unions and environmental groups. It has an enormous bailout of States that overspent their budgets and a lot of spending that belongs in an appropriations bill but which has no place in a stimulus bill. Less than 34 percent of the Senate bill was tax relief, according to the Congressional Budget Office, which is the official scorekeeper on that matter. Less than 1 percent of the Senate bill was tax relief for small business, and small businesses are the engine for job growth in our economy, creating three-fourths of new jobs in our economy.

Since the junior Senator from California clearly did not hear my speech from yesterday, I wish to go over some of the key items she has overlooked. Two days ago, and again this morning, there was a lot of revision or perhaps editing of recent budget history. Our President alluded to it. I agree with the President there is a lot of revisionism in the debate. The revisionist history basically boils down to two conclusions: that all of the so-called good fiscal history of the 1990s was derived from a partisan tax increase of 1993; and No. 2, that all of the bad fiscal history of this decade to date is attributable to bipartisan tax relief plans earlier this decade.

Now, not surprisingly, nearly all of the revisionists who spoke generally oppose tax relief and support tax increases. The same crew generally support spending increases and oppose spending cuts. In the debate so far, many on this side have pointed out some key, undeniable facts. The bill before us, with interest included, increases the deficit by over $1 trillion. The bill before us is a heavy stew of spending increases and refundable tax credits, seasoned with small pieces of tax relief. The bill before us has new temporary spending that if made permanent will burden future budget deficits by over $1 trillion. All of this occurs--all of it occurs--in an environment where the automatic economic stabilizers are kicking in to help the most unfortunate in America with unemployment insurance, food stamps, and other benefits--things that are part of the social fabric of America that are meant to take care of people in need, and particularly right now when we are in a recession, they automatically trigger in to higher levels of spending. That antirecessionary spending, together with lower tax receipts and the TARP activities, has set a fiscal table of a deficit of $1.2 trillion. That is the highest deficit as a percentage of the economy in post-World War II history, not a pretty fiscal picture. It is going to get a lot uglier as a result of this bill. So for the folks who see this bill as an opportunity to recover America with Government taking a larger share of the economy over the long term, I say congratulations.

If a Member votes for this bill, that Member puts us on the path to a bigger role for the Government, but supporters of this bill need to own up to
the fiscal course they are charting. That is where the revisionist history comes from. It is a strategy to divert, through a twisted blame game, from the facts before us. One can ask: How is this history revisionist? So I would take each conclusion one by one.

The first conclusion is that all of the good fiscal history was derived from the 1993 tax increase. To knock down this assertion, all you have to do is take a look at this chart--not a chart produced by the Senator from Iowa but a chart produced from data from the Clinton administration, and it is right here. It is the same chart I had up a couple of days ago. The much ballyhooed partisan 1993 tax increase accounts for 13 percent--you can say 13 percent or you can say just 13 percent, and I prefer the latter--just 13 percent of the deficit reduction through the decade of the 1990s.

The biggest source of deficit reduction, 35 percent, came from, as you can see, cuts in defense spending. Of course, that fiscal benefit originated from President Reagan's stare-down of the Communist regime in Russia before 1989, and we didn't have to spend as much on defense because the Cold War was--well, there wasn't a Cold War, I suppose you could say. The same folks on that side who opposed President Reagan's defense buildup take credit for the fiscal benefit of a peace dividend.

The next biggest source of deficit reduction, 32 percent, is other revenue. It came from various sources. Basically, this was the fiscal benefit from progrowth policies, such as the bipartisan capital gains tax cut of 1997, and the free-trade agreements President Clinton, with Republican votes, established.

The savings from the policies I have pointed out translated into interest savings. So you get the 15 percent that is from interest savings.

Now, for all the chest-thumping about the 1990s, these chest thumpers who push for big social spending didn't bring much to the deficit reduction table of the 1990s. That contribution was the 5 percent you see up there.

What is more, the fiscal revisionist historians in this body tend to forget who the players were. They are correct that there was a Democratic President in the White House. But they conveniently forget the Republicans controlled the Congress for that period, where the deficit came down and turned to surplus. They tend to forget they fought the principle of a balanced budget that was the centerpiece of our policy at that time, the Republican Party's policy.

Remember the Government shutdown in late 1995?

They ought to remember that. Remember what it was about? It was about a plan to balance the budget. Republicans paid a political price for forcing the issue. But, in 1997, President Clinton agreed. Recall, as well, all through the 1990s what the year-end battles were all about. On one side, congressional Democrats and the Clinton administration pushed for more spending. On the other side, congressional Republicans were pushing for tax relief. In the end, both sides compromised. That is the real fiscal history of the 1990s.

Let's turn to the other conclusion of the revisionist fiscal historians. That conclusion is that, in this decade, all fiscal problems are attributable to the widespread tax relief enacted in 2001--which was a bipartisan bill--2003, 2004, and 2006.

In 2001, President Bush came into office and inherited an economy that was careening downhill. Investment started to go flat in 2000--you know, the NASDAQ bubble that lost 50 percent of its value. In February 2000, we started down the road of more than 40 months of downturn in the manufacturing index. Then we had the economic shocks that related from the 9/11 terrorist attacks and then you can add in the corporate scandals to that economic environment.

It is true, as fiscal year 2001 came to a close, the projected surplus turned to a deficit, and we have a chart that shows the start of this decade's fiscal history.

The PRESIDING OFFICER. The Senator's time has expired.

Mr. GRASSLEY. Is it possible to get 3 more minutes?

Mr. BROWN. Madam President, if the Senator would like an additional 5 minutes, that is OK with me.

Mr. GRASSLEY. I appreciate that. I have to get out of here at that time anyway. I have a radio program I have to do.

The PRESIDING OFFICER. The Senator is recognized for 5 additional minutes.

Mr. GRASSLEY. Madam President, we have the chart that you have seen before, and nobody has disputed the chart. Maybe you can dispute the interpretations of it, but these are figures you can rely upon.

If my comments were meant to be partisan shots, I could say this favorable fiscal path from 2003 to 2007 was the only period, aside from 6 months in 2001, where Republicans controlled the White House and the Congress. But unlike the fiscal history revisionists, I am not trying to make any partisan points; I am trying to give you the fiscal facts.

We have another chart that compares tax receipts for the 4 years after the much ballyhooed 1993 tax increase and the 4-year period after the 2003 tax cut.

On a year-by-year basis, this chart compares the change in revenues as a percentage of GDP. In 1993, the Clinton tax increase brought in more revenue as compared to the 2003 tax cut. That trend, though, reversed as both policies moved along in years. You can see from the chart how the extra revenue went up over time relative to the flat line of the 1993 tax increase, which ought to make it very clear that you don't necessarily bring in more revenue because you increase taxes, and you can decrease taxes, stimulate the economy, encourage business activity, encourage investment, and bring in more revenue.

The progrowth tax and trade policies of the 1990s, along with the ``peace dividend'' had a lot more to do with deficit reduction in the 1990s than the 1993 tax increase, which was only 13 percent of deficit reduction. In this decade, deficits went down after tax relief plans were put in full effect.

That is the past. We need to make sure we understand it. But what is most important is the future. In fact, the last election, based upon President Obama's very own statements, was about the future, not about the past. So we should not be talking about the past. People in our States sent us here to deal with future policy. They don't send us here to flog one another similar to partisan cartoon cutout characters over past policies. They don't send us here to endlessly point fingers of blame. Now let's focus on the fiscal consequences on the bill in front of us. That is what this vote, before we end this week, is all about.

President Obama rightly focused us on the future with his eloquence during the campaign. I would like to take a--paraphrase a quote from the President's nomination acceptance speech:

We need a President who can face the threats of the future, not grasping at the ideas of the past.

President Obama was right.

We need a President, and I would add Congressmen and Senators, who can face the threats of the future. This bill, as currently written, poses considerable threats to our fiscal future. Senator McCain's spending trigger amendment showed us the way. We can rewrite this bill to retain its stimulative effect, but turn off the spending when the recovery occurs.

Grasping at ideas of the past or playing the partisan blame game will not deal with the threats to our fiscal future.

It is not too late to do a clean stimulus bill, which is what the American people want and need. There is a way to reach a real bipartisan compromise, not just picking off a few Senators that frequently vote with the Democrats. We can have a significant amount of infrastructure spending for roads and bridges. Even though some on our side of the aisle have issues with the making work pay credit, we could take that and expand it to cover all those making up to $250,000--which is the level that President Obama and his surrogates said during the campaign that he wants to cut taxes for people. Instead, the making work pay credit phases out starting at $70,000 for individual workers. So we are saying a large part of the middle class by President Obama's definition won't get the tax cut. In fact, the ``we give a tax cut to 95 percent of working families'' number that has been bandied about is wrong. According to the Joint Committee on Taxation, 87 percent of workers qualify for some or all of the credit, and even less get all of the credit. So there is a way forward. It is a clean stimulus bill. All the Democratic agenda items and spending items that should go in the appropriations bill can get done in regular order. The Democrats have the votes. They don't need to push that agenda on the American people and dig a deficit ditch an additional $1.2 trillion deeper with this bill, when interest on the bill is considered. They have the votes to push their agenda later in the year. For now, let's give the American people what they want, a clean stimulus bill, and not scare them into thinking that the Democratic agenda needs to be pushed in the stimulus bill. It is reminiscent of that famous chicken--Chicken Little, who said ``The Sky is Falling.'' Let's do a clean stimulus bill instead.

I think this clears up the record. I yield the floor.

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