Unemployment Insurance
Floor Speech
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Mr. REED. Mr. President, first, let me thank my colleague from South Dakota, Senator Thune, for allowing me to precede him.
Mr. President, I come to the Senate floor this morning to urge my colleagues--all of us--to move very quickly to pass tax relief for middle-income Americans. We have a crisis in this country: a crisis of jobs, a crisis of income for middle-class families. One of the ironies is I was here in 2001 when the Bush tax cuts were proposed. One of the major premises of those tax cuts was, well, this is going to free up the engine of job creation. It is going to result in such economic growth that our surplus--and at that time we had a surplus--is going to be sustained, if not increased.
The record is that we have seen the worst private sector job creation in this decade since pre-World War II. We have seen the incomes of middle-class Americans stagnate, while we have seen the incomes of the very richest expand dramatically.
One of the phenomena that was taking place at the end of the 1990s and in 2000 and was a function of several things--first, tough tax votes by Democrats alone in 1993 to begin to balance the budget; second, Federal Reserve policy that recognized those tough votes and was appropriate in terms of providing an adequate interest rate level; and the third was something, frankly, we did not even recognize: the explosion of information technology in terms of how it made us more productive--but those three factors together led us to the year 2000, to a situation where we had a surplus. We had unemployment rates that were very low, particularly relative to today.
Then the Bush administration came in and decided tax cuts, particularly tax cuts for the upper income Americans--because that was the implicit argument, that they create the jobs--if you give those tax cuts to the wealthy, they will create the jobs. Well, we have had 10 years of real experience, and that has not worked.
There are other factors that intervened. We have had two wars we chose not to pay for, increasing the deficit; we vastly expanded entitlements--not reforming them really but expanding them--through Part D of the Medicare Program, which was also unpaid for.
Now we are looking at the worst economic performance we have seen since the 1930s. We need to do two hugely challenging missions: First, we have to grow jobs. We have to continue to sustain demand. That is why in that context a tax cut for middle-income Americans makes some sense now. I did not think the package of tax cuts made any sense in 2001. I voted against it. I think we should have stuck with the hard-won surplus, investing in the country. Or if we were going to provide tax relief, give it to the middle class, give it through a reduction in payroll taxes that will encourage more employment, give it in a way where it is targeted to those people who are struggling with jobs, with college tuition. That was not the choice that was made though. I think that choice back in 2001 was the incorrect choice.
But now we have another choice, and this choice--again, mission 1: How do we keep this demand going? How do we sustain it? There is a strong argument to provide a continuation of the middle-class tax cuts.
But the next mission is, how do we rein in this deficit? That requires tough choices. To me, the idea of withholding further income tax breaks for the wealthiest Americans, that is something that in terms of deficit reduction is probably a lot easier to do--and, frankly, there is nothing easy to do around here these days--but a lot easier to do than some of the glib discussion or claims that we will just reform Medicare, or we will reform this entitlement, or we will cut this defense program, et cetera. All of that may have to be done, but ask yourselves: If we cannot do this, how likely will we be able to take on even tougher issues that confront us?
So I think this is a defining moment in terms of our continuation of supporting working families, expanding the economy, growing jobs in America, and also taking at least a small step to begin to deal with the deficit. We know the addition of these tax breaks for the wealthiest--and let me put the tax issue in context. We have a progressive tax system. People who make a lot of money will enjoy all the tax reductions that stay in place for middle Americans. They will not enjoy the tax cuts that were imposed by the Bush administration for the wealthiest. That cost to the Nation over 10 years will be $700 billion of additional deficit.
We are already in a hole, and we are going to dig ourselves much deeper. We can decide--and I hope we do--to continue to try to provide support to middle-income Americans, and at the same time achieve that other objective which must be dealt with: somehow trying to get a handle on the deficit--a deficit that the President inherited, along with an unemployment rate that was unacceptable. Progress has been made, not enough progress in terms of employment, and we have to keep up the effort.
So this is an issue of providing support for working Americans and beginning the long-term difficult task of getting the deficit under control. It is a difficult task. I was here in 1992 and 1993 and 1994 when it was done--and it was a difficult, arduous task.
The bill that Chairman Baucus is offering today will also extend the Making Work Pay tax credit that gives all working Americans a $400 tax cut in their paycheck through 2011--again, to encourage work in the United States. It will make the child tax credit permanent. It cuts taxes for families paying college tuition, State and local sales tax, and property taxes. All of that is aimed at working families, our constituents. It also cuts taxes for business research and development, other programs that are going to help, we believe, stimulate job creation.
These are very important.
At the crux of it, though, is this decision to support working Americans, middle-income Americans. Again, there is a tendency in these kinds of debates to be stereotypical and to misunderstand. People who have been very successful in the country and make a lot of money work awfully hard, but I use the term to refer to those middle-income Americans who are working very hard, facing real challenges, and don't have the same kind of support they just had, if you will, 2 or 3 or 4 or 5 years ago to fall back on.
There is another aspect of this legislation that is pending before us. One point I wish to make is that there is a national housing trust fund that was discussed being included. That is not included, and I hope we can include it. That is another program that is going to help put people to work, and I hope we can do that.
Then, of course, there is the other aspect of the Baucus bill; that is, the emergency unemployment compensation. We just received a report from the Council of Economic Advisers, and they have pointed out that this program has helped 14 million unemployed workers as of October 2010, and at that time, there were nearly 5 million unemployed workers benefitting from these programs each week--5 million Americans. These people were working. They got caught up in this recession. This is, for many of them, the only constant source of support they have now as they look for work.
We have seen this benefit not just the recipients but their families. In fact, there has been an estimate of about 40 million people--spouses and 10.5 million children--who have depended in part on getting these unemployment benefits.
It has also been able to maintain employment. There is an estimate that 800,000 jobs have been maintained and created because of this unemployment compensation. That is because when someone gets their check, they do not usually toss it aside; they cash it. They go to the grocery store. They go to the gas station. They go to places they have to go. They put a little tuition down if they have to pay tuition on a child's education because they desperately need these funds. So in that regard, it creates and sustains jobs.
We are in danger, frankly, of seeing this UI program terminated. I think we have to continue it. I think it will add immensely to the efforts under way to help middle-income Americans. The average benefit is about $300 a week. That is certainly not an inducement to say: I don't need to look for work; I want to spend the rest of my life making $300 a week. The program provides up to 99 weeks of benefits. There is no attempt to extend it, but it would be the same 99 weeks people were able to benefit from 2 years ago. So I think we have to do that. That is part of this debate also. I would hate to see that the only thing we do at the end of this day is pass tax cuts and not also include unemployment compensation.
I think we have to have a middle-class tax cut, but we also have to have unemployment compensation benefits extended. I don't have to tell anyone in this room that the unemployment rate is too high everywhere. In my State, it seems to hover between 10 and 12 percent. We have never withheld emergency unemployment benefits nationally as long as the unemployment rate was above 7.2 percent. Republican administrations, Democratic Congresses; Democratic administrations, Republican Congresses--in every combination, we have always understood that this program needs to be renewed.
So I have heard other proposals such as, let's do this, but let's offset it by unobligated funds. But these unobligated funds could include many things. For example, they could include a border fence in Arizona and California because there are funds there that are unobligated. Now, I ask some of my colleagues on both sides of the aisle, is that what they intend? Border Patrol stations in Texas, Arizona, California, and Washington. Construction of Coast Guard ships and planes and the National Security Cutter built in Mississippi. Then there are cyber security investments to secure Federal information systems. We have just been briefed on the profound and deleterious impact of the WikiLeaks. We have a lot of work to do to improve our security systems. Are those unobligated funds coming out of that program? Homelessness assistance grants that go to help people who, in many respects, are homeless because of a combination of factors: They have lost their jobs; they have different problems. So, literally, are we borrowing from Peter to pay Paul? Are we telling someone they can't get Section 8 housing because we paid someone else's unemployment benefits?
So the proposal to pay for this by unobligated expenditures might have some rhetorical appeal, but I ask, what are these expenditures? If we are so committed to being clean and transparent about what we are doing here, then list them out: We are going to cut funds for border fence, Border Patrol stations, the Coast Guard. This is how we are paying for it. Otherwise, I think, frankly, we should go ahead and pass this as we have always done--as emergency spending--because it has a stimulative effect. For every dollar of unemployment compensation, there is estimated to be $1.90 of economic activity. It goes right back to the obvious, simple point we all grasp: When that check comes in, it is not tossed aside. It is cashed immediately for grocery store visits--all of those things are done. It gets the economy moving.
We are at a crisis, at a critical point. We have 10 years of experience that, despite all the rhetoric, tax cuts that go to the wealthiest Americans probably don't contribute directly and immediately to jobs in the United States. We can save not only working Americans by giving them a little help in their tax check, but we can begin the long, difficult struggle of going from a deficit to a surplus. I have done it once. It is not easy.
Frankly, I think the choice before us in the next 6 or 7 months will look a lot clearer and more graphically in favor of the position we are advancing than some of the proposals that are floating around in terms of programs such as Medicare and defense spending, et cetera. All of them have to be looked at. But if we can't do this, I think a lot of Americans and people around the globe are going to start asking the question: Do they have the political capacity to make the difficult choices that are necessary?
A final point. Many of my colleagues say, and I think with great insight, that the real judge of some of our economic policies is the marketplace, the people who buy our Treasury securities. I wonder if they see us as literally unable to make this choice between stimulus for the middle-income Americans through tax cuts but saving $700 billion. We can't make that choice? I wonder what that is going to do to their confidence in our ability to make tough choices down the road, the confidence that keeps them buying Treasury securities. We should think about that.
I urge passage of the proposals we have before us that would provide a middle-income tax credit while saving money and preserving further deficit spending under the Republican proposal.
I yield the floor.
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