Tax Extenders Act Of 2009

Floor Speech

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Mr. THUNE. Mr. President, yesterday, one of my colleagues criticized me for trying to redirect unspent stimulus funding to pay for tax relief for small businesses by citing all the jobs the stimulus bill supposedly created. I, as many people do, have my doubts about some of these estimates, but I can guarantee this much: none of these jobs have been created or saved by the unspent funds.

There is a lot of money in the stimulus bill that has yet to be spent, according to recovery.org, which is the administration's Web site. About 38 percent of the stimulus money approved last year out of that $1 trillion amount--round numbers--has been spent. So there is a lot of unspent and unobligated money.

Frankly, many of us, at the time it passed last year, suggested it would be a much wiser use of those funds if we directed those toward small businesses. Small businesses are the creators of jobs in our economy. They create two-thirds of the jobs. They are the economic engine that drives the economy in this country. Ironically, less than 1 percent of that $1 trillion that was approved last year in stimulus funding was directed at incentives for small businesses to create jobs. We put money into all kinds of other things which, to date, have shown little evidence that any jobs have been created. It seems to me, at least, and the argument that was made at the time by many of us, was that allowing or creating more of these incentives, putting more policies in place that would incentivize small businesses to create jobs would have been a much better use of stimulus money.

What my amendment very simply says is, of those unspent, unobligated funds--and that universe of funds represents about $160 billion that has not only not been spent but not obligated--we use some of those funds to do what we should have done in the first place; that is, to create incentives for small businesses to hire new people, to put people back to work, and to make capital investments.

I take issue with what was said on the floor yesterday, that somehow my amendment was going to cut the Economic Recovery Act short. It doesn't do that at all. In fact, what this does is simply say those funds that have not been spent, not been obligated in the stimulus bill that was passed last year, be redirected toward these particular provisions that will provide incentives for small businesses to create jobs. Very simply, what are those? It extends by 1 year the bonus depreciation that allows small businesses to accelerate the way they write off equipment purchases; accelerated depreciation schedules so they can take more of that cost upfront as a deduction.

It also makes permanent the section 179 deduction and increases that as well so that small businesses are able to expense more of those types of investments--again, an incentive for them to invest more, hopefully to create jobs.

It eliminates the capital gains tax on investment in small businesses. By the way, that is something the President, in his State of the Union speech, came out in support of. So this is something the White House has already endorsed.

Finally, it provides for a 20-percent deduction for small businesses against their income. Why is that necessary? Many small businesses, and, in fact, half of small business income, we are told, when tax rates go up next year would be subject to that higher tax. If a small business that passes through their income to their individual tax return is currently paying at the 33-percent tax rate, they are going to see that tax rate go up to 36 percent of that income. If they are currently paying at the 35-percent tax rate, they are going to see their tax rate go up to 39.6 percent starting next year, in 2011. This allows them to take a 20-percent deduction against their income that will help in some ways limit or mitigate the impact of the higher tax rates that they will be subject to beginning in 2011.

Again, I think it is a fairly straightforward amendment, and I simply argue, again, to my colleagues that it makes sense for us, in my view, to be making investments, be putting policies in place that will incentivize job creation in this country, and that job creation, again, occurs in the private economy with small businesses.

Small businesses, we are told, create two-thirds of the jobs in our economy and, in fact, about half of the people in this country who work, who are employed currently, work for small businesses. They have a tremendous impact on our economic well-being, on job creation.

It is important, in my view, that we take steps here that will add to the ability of our small businesses to get out there and do what they do best; that is, make investments and create jobs.

I take issue with what was said yesterday about this amendment: that it would cut short the Economic Recovery Act. It does not do that at all. These are not funds that have currently been spent or obligated. These are funds that are unspent, unobligated out of the $1 trillion bill passed last year which, as we all know, to date has not created the jobs promised. In fact, since the bill passed last year, we have lost 2.7 million jobs in our economy.

I think, frankly, one of the reasons for that is it was misdirected in the first place. We should have been focused on job No. 1, and that is helping those job creators in our economy, which are small businesses.

I want to point out that the National Federation of Independent Business, which is the largest trade organization representing small businesses in this country, at least the largest small business advocacy organization, has written a letter in support of my amendment. I want to read one paragraph from that letter. It says:

The Thune amendment is a necessary step in helping to provide more certainty to small businesses about their future tax liability, whether to make long term capital expenditures, and hire more workers. We hope this amendment will provide momentum to clear other obstacles in the path to job creation.

I guess what I would say by way of closing is that although there is a great debate here about how best to create jobs, I think we can all agree a lot of the $1 trillion stimulus bill that passed last year has not been spent. The argument that it would be timely, targeted, and temporary, I think all of those criteria have not been met. More important, the ultimate metric by which I think we judge whether it has been a success or not has not been met either, and that is job creation.

Look at the economy today. Unemployment stands at 9.7 percent. The commitment made when the bill was passed a year ago was that if we pass this stimulus bill, we will hold unemployment below 8 percent. We know it is well past that.

If you look again at the job numbers and the number of people in this country still looking for work, still struggling, still struggling with the loss of income, the best thing we can do is get them back to work, and the best way to do that is not to create jobs in Washington, DC, or invest in government programs; it is, frankly, to get the small businesses in our economy, the creators of jobs, the engine that drives this economy forward, liberated in a way, providing certainty with regard to tax policy so they know that in 2011, when their tax rates go up--at least those who pass their income through their individual tax return--they are going to have some relief, allowing some relief with regard to capital gains taxes by exempting small business investment, allowing for bonus depreciation so they can write off business purchases, and increasing section 179 expensing, that deduction that currently exists in the Tax Code making that permanent.

Those are all steps, small steps, but at least important steps, in my view, that will move this economy forward and do what I think many of us want to see done; that is, create the conditions and the economic climate where jobs can be created where we get people back to work.

We are going to have a vote on this amendment this afternoon. Again, my colleagues who were debating an underlying bill that has tax extenders, COBRA extension, unemployment benefits extension--all of those sorts of things, all of which I understand are important, particularly right now when we have a lot of people who are out of work. But, again, the best remedy we can offer to the American people is to create jobs and get people back to work. That will make it less necessary for us to act on the legislation we have to act on today that addresses all the economic dislocation and hurt the American people are experiencing as a result of this economy.

A year ago when this stimulus bill passed, less than 1 percent of the money was directed toward small businesses. We can fix that today with this amendment by directing these tax incentives, using unspent, unobligated stimulus money to do it. It is all paid for. It is all offset. It does not pass debt to future generations. It does not add to the deficit. It is all paid for. It puts the money where it should have been put in the first place and directs it in a way that will be adding to job creation in this country.

I ask my colleagues to support this amendment. I think it will be voted on in a couple of hours.

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