Federal Aviation Administration Extension Act of 2010--Continued

Floor Speech

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Mr. REED. Mr. President, I rise to discuss the tax proposal before us. We are in a critical moment. Our economy is slowly climbing from the depths of a deep recession but without additional support it could easily backslide. We cannot afford to let that happen.

There are still too many Americans--15 million--who desperately want the opportunity to work but cannot find a job in this difficult environment. My top priority is creating jobs and sustaining demand to continue job growth in this country.

I have serious concerns about several of the provisions of this bill that will not help us accomplish that goal of creating and sustaining jobs, but I will support this package because right now, back in my home State of Rhode Island, there are approximately 65,000 men and women from all walks of life who are unemployed and need this bill. Many of them are individuals in the middle of their careers who have worked since they were 18 or 21 continuously, productively, and now they find themselves for the first time in their lives without any job. If we do not act, they will be without the means to support their families and provide for their children.

This bill preserves emergency unemployment insurance to help these individuals make ends meet and help them to hold their families together. It will help ensure they can buy the groceries, pay the utility bills, and literally keep a roof over their heads in many cases. Their situation is one of my primary concerns in these difficult times.

Moreover, these unemployment benefits don't just help the jobless, they boost the entire economy as the unemployed spend their benefits at local businesses. Americans want us to focus on creating jobs and generating economic growth. Indeed, for much of the past 2 years, Democrats proposed many things that would help middle-class families and small businesses only to be thwarted or slowed by procedural roadblocks and sometimes disingenuous claims.

Just two Saturdays ago we could not break filibusters of two bills that would have passed the middle-class tax cut and also renewed unemployment benefits without un-needed additions. On several occasions over the past few months we have had legislative initiatives for tax extenders that would have included key elements such as a national housing trust fund and key infrastructure incentives. Again, those two were thwarted by procedural roadblocks.

But now we are faced with the specter of a tax increase on the middle class during this dispiriting economic time if we do not act. Perhaps we could have avoided this situation. The Bush tax cuts, which I opposed, had an artificial termination point in order to fix them into budget projections. But, again, we are here today at the last minute, and it appears the only path our Republican colleagues will accept is the one before us. Indeed, Republicans will not let this train leave the station unless the very wealthiest hitch a ride too.

The challenge we face is the need to sustain and accelerate growth so employment increases while also recognizing the need to reduce the deficit once the economy is stable again. That is no small challenge. As a number of budget deficit commissions have suggested in recent weeks, we may have to consider reforms to Medicare, Social Security, defense funding, tax expenditures, and investment in domestic programs--all of them to stabilize the deficit in the long term. I do not relish those tasks, and I do not imagine America's families relish it either. However, this is a reality we must confront as our economy improves. It is a reality that will be difficult. It is a reality that will be a great challenge, but it is one we must face.

This bill includes many provisions that will provide economic growth. As I have mentioned before, the effect of an unemployment insurance extension is not just on the individual recipients, it is estimated by nonpartisan experts that nearly $2 of economic activity is generated for each $1 in benefits. That is a very effective stimulus for the economy.

The bill also includes a 2-percent cut in the payroll taxes paid by workers, and after local or State sales taxes, reductions in the payroll tax have the biggest impact on families living on the average wage. Again, this provision is estimated to create more economic activity than it costs, and it will, in essence, be the first raise many workers have seen in several years.

In addition, the proposal contains a host of other benefits for working- and middle-class families--by extending the child tax credit for 10.5 million families as well as an extension of a partially refundable tax credit of up to $2,500 for the cost of college tuition. All of this economic activity means jobs and more money in the pockets of hard-working Americans.

These are targeted, well-designed provisions worthy of support. Indeed, private sector forecasters as well as economists such as Mark Zandi suggest this bill will help maintain the fragile recovery and could lead to a 1-point drop in the unemployment rate and perhaps as much as a 1 percentage increase in GDP in 2011 as compared to previous baselines that took into account only the extension of the middle-class tax cut and expiring provisions such as the AMT.

There is, from experts, considered opinion that this legislation will help grow the economy, reduce the unemployment rate, and put people back to work. The bill also recognizes the need to build on the small business lending and tax credit bills we enacted this summer and fall. Indeed, the provisions to allow businesses to expense 100 percent of all their investments in 2011 is expected to generate more than $50 billion in additional business investment next year. That is private companies investing in private enterprises to put people to work on a private payroll.

The bill also encourages businesses to invest in future products by extending the research and development tax credit to keep us competitive in a very competitive world.

The bill also recognizes the need for clean, domestic energy by continuing the renewable energy production grants for wind, solar, geothermal, and a host of other technologies.

This legislation responsibly ensures that the tax rates in place for lower income and middle-income families stay as they are today. It maintains the middle-class tax cut. Indeed, the great bulk of the benefits of this bill will be directed at stimulating the economy and assisting the average American family.

But in the face of this deficit, it is very difficult to justify the provisions of the bill for the wealthiest Americans because they provide negligible economic growth while adding to the deficit. In fact, these provisions work against the two great issues we must grapple with, stimulating growth and beginning to control the deficit. According to the nonpartisan Congressional Budget Office and other experts, the decision to provide millionaires and billionaires with tax breaks will not generate many jobs because they are more apt to save these benefits than circulate them in the local economies throughout the United States.

In particular, the decision to insist on such an aggressive estate tax proposal is very difficult to justify. Instead of adopting a commonsense proposal that would have exempted well over 95 percent of all estates, our colleagues on the other side of the aisle demanded that the bill contain a tax break worth more than $25 billion over the next 2 years for the top one-quarter of 1 percent. Let me repeat that, a $25 billion provision that benefits one-quarter of 1 percent of all estates.

It is a slight comfort that these provisions are not permanent. While I would gladly support an effort to remove or modify these provisions immediately, at the very least they have to be the first on the list of those tough decisions we have to face in order to reduce the deficit in the future. We do have to address the deficit and part of that effort must clearly be through tax reform and eliminating tax expenditures.

I think there is too often a perception that tax cuts are free. As my colleague from Illinois suggested, failing to link the debt ceiling with this particular legislation could give the impression that we can cut taxes with no effect on the deficit. These tax cuts do add to the deficit. We have to recognize that. When we come back to face the difficult issues as we did in the 1990s--I supported President Clinton's efforts which led to a balanced budget, which led to a surplus, which led to employment gains--those decisions involved revenue, cutting entitlements, cutting defense spending, and making a lot of difficult choices. We will have to face those choices again.

We are at a point where the benefits of this bill are necessary to accelerate economic growth and to help the unemployed and struggling middle class families. That is why I will support this bill.

Thank you, Mr. President.

I yield the floor.

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