Unemployment Figures

CONGRESSIONAL RECORD
SENATE
Oct. 11, 2004

UNEMPLOYMENT FIGURES

Ms. CANTWELL. Madam President, I rise today to address the legislation we passed earlier, but I say to the Senator from Texas, it has been a pleasure working with him and the senior Senator from Texas on issues that we are going to talk about, the sales tax deduction for individual States.

But I also say that I know this side of the aisle very much believes in pro job-creation activities. As somebody who has been in the private sector and seen the job creation that can happen in the private sector, no, I do not believe Government creates jobs, but I do believe Government has an investment strategy, that we are a partner with the private sector; and a good investment strategy then allows for capital to flow to people who need it most.

I guess I would say that this bill is not the perfect solution, and not what 51 Members on this side of the aisle would have drafted, as there are certainly things that have been overlooked. I think we have heard about them, including Senator Landrieu's language about a $15,000 tax credit to employers that would help them maintain their employees who have been called up by the National Guard and Reserve on their payrolls.

As the Senator from Maryland has articulated, another item is the unemployment benefits that would have worked to benefit many Americans while they can't find jobs, because jobs the job growth we have been promised has not happened. Unemployment benefits are, therefore, something to help keep economic stimulus in our communities.

Another is the fact that when we talk about community colleges and job creation, we really are not keeping pace with the training and retraining dollars from the previous years' budgets to actually help make this transition.

I would just point out that while we are having this discussion today about where we go further with the policy, it is a fact that this side of the aisle definitely believes in investing in the human infrastructure, not just in the corporate side of the equation but in individuals, for unemployment, for job training, for our National Guard, for people who need the help and support to continue to do their jobs.

But let me address, if I may, the key issue I wanted to talk about; which is, the issue of tax fairness. It is ironic. My colleague talked about this side of the aisle and tax fairness, the two issues about which I am going to talk.

The first one was actually implemented under a Republican administration and a Republican Senate. That was in 1986, not allowing the State of Washington and six other States in the Union to be able to deduct their state and local sales taxes in lieu of state and local income taxes from their Federal income tax.

Now, since I have been in the Senate, since 2001, I have worked to make the deduction of state and local sales taxes from their federal tax liability permanent for my constituents. When I entered the Senate, I first worked with the Senator from Tennessee, Mr. Thompson, who had introduced legislation, and then later with Senator KAY BAILEY HUTCHISON from Texas with whom together we have introduced legislation in the 108th Congress to reinstitute the state sales tax deduction. Washington and Texas have known a long time that we needed to restore tax fairness to the people of these States. And while we have passed, this afternoon, legislation that restores that fairness temporarily for the next 2 years, we need to continue to work to make it a permanent resolution for people in those States.

Restoring that sales tax deduction will help strengthen our economy. What people do not realize is that when the 16th amendment to our U.S. Constitution was ratified, in 1913, it said you could make the way for a Federal income tax, and Congress allowed taxpayers to deduct State and local taxes so that income would not be taxed twice. That was what the exemption was about.

So why, in 1986, after 74 years of a precedent, was this tax equity abruptly ended? As I said, I am just pointing out to my colleague, it was actually done by a Republican Senate, a Republican administration. I am saying that only because we need to move forward in correcting these policies, as the previous speaker said, and work together on commonality.

The taxpayers from the States that were given this raw deal-I believe because it was a budgetary squeeze, not based on, I think, really valid principles-it was a great impact to States such as mine, which has just over 60 percent of our State revenue coming from sales tax-about 61-point-three percent. So for us, that is a huge impact. When you are asking constituents not to be taxed twice by what they paid to the State and what they pay to the Federal Government, not being able to deduct that was an inequity in our tax laws. We know that for Washington State this could mean as much as $421 million that would be saved by taxpayers. I am sure the number is higher in many other States around the country.

But it also means job creation. The Economic and Revenue Forecast Council in our State says that it would create as much as 2,000 to 3,000 jobs, and it would be about a 50-cent stimulus for every $1 spent in Washington State. So for an economy that has been hard hit by this recession and continues to have one of the highest unemployment rates in the nation, this is the kind of tax policy we think helps us grow our economy and create jobs.

But the bottom line is that after this period of time, after 18 years, Washington State is finally-instead of getting a raw deal-going to get a fair deal, in the fact that residents are going to be able to deduct their sales tax from their Federal income tax obligation. So I think that is the kind of job-creation stimulus and fairness we need to be focusing on as we look at these tough choices.

Another issue that is bringing tax fairness to our State and to many other rural parts of our country is an issue that Senator Craig Thomas and I worked on, the National Health Service Corps Loan Repayment Program. That also was passed this afternoon as part of this legislation.

What this bill did was to focus on the fact we are trying to get and continue to push rural health care needs.

We have a deficit in some parts of our country in getting doctors into rural communities. We have had a great program on the books for a number of years. I am proud that a previous Senator from our State, Warren Magnuson, actually created the National Health Service Corps Program. What it did was, it said to physicians, if you will go practice in rural communities, we will either give you a scholarship for doing that or we will give you loan repayment assistance.

Well, I can tell you, in talking to physicians throughout my State, the cost of repaying those loans can start off a career in hundreds of thousands of dollars of debt. Somewhere along the process we ended up taxing the National Health Service Corps scholarship and loan money to these physicians, as the IRS saw the payments as taxable income. In fact, later Congress realized: Well, that was not such a great idea of taxing, so we will give more money to the National Health Service Corps to pay for those taxes and then tax that money on top of it. We ended up paying 40 percent of the program in taxes instead of creating the opportunity for those physicians. So this program will help get about 67 percent more physicians into rural health care in America.

The last thing I would like to say is that as we continue to move through the rest of how we finish up this year, we want to continue to give an opportunity to make sure the National Guard and Reserve men and women in our country are well taken care of. I am proud the Senate passed back to the House a bill that also included Senator Landrieu's language about helping the National Guard.

Washington State is a State that is greatly impacted, and we certainly need to help and support taking care of our National Guard.

I yield the floor.