[Congressional Record Volume 147, Number 143 (Wednesday, October 24, 2001)]
[Senate]
[Pages S10978-S10979]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         ADDITIONAL STATEMENTS

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                        SENATOR CORZINE'S RECORD

 Mr. HOLLINGS. Madam President, on financial matters, our 
colleague, Mr. Corzine, has an unparalleled record. He worked his way 
to the top of the financial world on his own merit. He started as a 
bond trader and ended up 20 years later as chairman and chief executive 
officer of Goldman Sachs, one of Fortune magazine's 10 best companies 
in America. In terms of economics and business, he knows of what he 
speaks. After conquering the hurdles of the financial world, he has 
brought his expertise to the Senate. Albert Hunt outlined Jon Corzine's 
background and philosophy on the economic stimulus package being 
considered by Congress in the Wall Street Journal on October 11, 2001, 
and I ask this article be printed in the Record.
  The article follows:

         [From the Wall Street Journal, Thurs., Oct. 11, 2001]

                    A Senator Who Has Met a Payroll


                          politics and people

                          (By Albert R. Hunt)

       Which person is better for advice on stimulating the 
     economy: A professor who has spent most of his adult life on 
     the public payroll, or a business executive who headed one of 
     the world's most successful investment-banking firms?
       Phil Gramm or Jon Corzine? These two senators have 
     decidedly different approaches to an increasingly faltering 
     economy in the wake of last month's terrorism.
       Sen. Corzine, a freshman Democrat from New Jersey who used 
     to be chairman of Goldman Sachs, wants a $150-billion-a-year 
     stimulus package focused on security spending initiatives and 
     temporary tax cuts to boost consumption. Republican Sen. 
     Gramm, an economics professor at Texas A&M before his 23 
     years in Congress, wants large and permanent individual and 
     corporate tax cuts directed at upper-income Americans.
       President George W. Bush moved toward Mr. Gramm's position 
     when he declared additional stimulus should be limited to 
     more tax cuts.
       This appeals to the GOP's ``pitchfork-and-torch'' crowd--
     indeed, Mr. Gramm is its intellectual leader in Congress. But 
     the Corzine approach is eminently preferable. It is closer to 
     the goals articulated by congressional budget committees, as 
     well as the public and private testimony of Federal Reserve 
     Chairman Alan Greenspan and former Treasury Secretary Bob 
     Rubin: Economic stimulus should pump money quickly into the 
     economy on a temporary basis, not adversely affect longer-
     term fiscal discipline. President Bush's focus tax cuts fails 
     those tests; Sen. Gramm's proposals are worse.
       ``The overarching issue,'' said Sen. Corzine over breakfast 
     this week, ``is to get a lot of fiscal stimulus now and avoid 
     fiscal disaster in the long term.''
       A corporate tax cut now, the investment-banker-turned-
     senator notes, is misdirected: It rewards previous 
     investments more than encouraging new ones. Better would be 
     short-term accelerated depreciation to encourage new 
     investments.
       The Bush administration is pushing a ``middle class'' tax 
     cut to reduce the 27% tax rate next year to 25%. That's 
     bogus. This rate applies to everyone with taxable income 
     above $46,700. So for a construction worker making $65,000, 
     with $50,000 of taxable income, the tax cut would total $66. 
     But for anyone making more than $150,000, with taxable income 
     of over $112,850, it'd be a $1,300 tax cut.
       As economic stimulus, this idea flounders even more on 
     efficacy than equity. Studies demonstrate lower-income people 
     spend more of their disposable income, and what this economy 
     needs is more consumption. Sen. Corzine, worth $400 million 
     earlier this year, rejects the GOP's upper-income-oriented 
     tax cuts: ``The wealthy, including myself, are not going to 
     change spending habits with such tax cuts.''
       Making new tax reductions permanent would aggravate 
     persistently high long-term interest rates, he asserts. The 
     opposition to temporary tax cuts by the likes of Glenn 
     Hubbard, chairman of the president's Council of Economic 
     Advisers, is situational; only a few years ago Mr. Hubbard 
     co-authored a paper arguing ``temporary investment incentives 
     can have even larger short-run impacts on investment than 
     permanent investment incentives.''
       Further, the initiatives launched by the White House would, 
     Sen. Corzine notes, ``give almost nothing to the people 
     who've been in the front lines--the cops, the firemen who 
     climbed those stairs at the World Trade Center, the grunts 
     who did the cleanup work. That's wrong.''
       Sen. Gramm questions whether extending jobless claims ``has 
     anything to do with stimulus.'' It's true the unemployed 
     won't put any added money in the secret foreign bank accounts 
     Sen. Gramm has so eagerly protected, but they'll do something 
     more contributory with the money: They'll spend it. The 
     stinginess of the Bush proposals on this score is stunning. 
     If the economic downturn is comparable to the recession of 
     the early 1990s, the president's proposed $5 billion limited 
     extended jobless claims would be less than one-fifth the $28 
     billion spent on such measures a decade ago, calculates Bob 
     Greenstein of the Center on Budget and Policy Priorities.
       Sen. Corzine is sympathetic to support for expanded jobless 
     benefits and more health insurance coverage for the 
     unemployed--although he doesn't suggest, as the White House 
     does, that we should take some of it out of the Children's 
     Health Insurance Program. He thinks a better approach, 
     however, is temporary ``revenue sharing'' with fiscally 
     pressed state and local governments, which would head off 
     counterproductive budget cuts or tax hikes. ``If we don't do 
     this, much of the stimulus at the federal level will be cut 
     away by state and local tax increases,'' he says.
       He favors major spending investments to bolster the 
     deteriorating economy, geared to the terrorist threat. These 
     include a new federal aviation authority air-control system; 
     major investments in transportation infrastructure, such as 
     bridges and tunnels (``all of which could be terrorist 
     targets''); and assistance for more sophisticated 
     communications systems for local police and fire departments. 
     These spending priorities, he declares, should all be with an 
     eye to greater security.
       The former banker is leery of bailing out the myriad 
     industries lining up at the federal trough. After a few 
     changes he voted for the airline bailout--``there are tons of 
     airline jobs in New Jersey''--but fears it wasn't well 
     crafted. He'd make at least one exception: You've got to do 
     something for the insurance industry, otherwise insurance 
     rates will be off the charts and unavailable.''

[[Page S10979]]

       On tax cuts, he would support a tax rebate for the lowest-
     income people--some 30 million lower-income workers didn't 
     get any cuts in the tax bill enacted this year--but is 
     pushing what he believes is much better idea: a two year 
     ``holiday'' on a portion of employees' payroll taxes. It 
     would disproportionately go to those most likely to spend it 
     and, he argues, ``have a much bigger ongoing effect on 
     stimulus than a one-shot rebate.''
       Jon Corzine agrees generally with his former partner, Bob 
     Rubin, on the shape of any stimulus, but disagrees on the 
     size. ``Bob is too cautious,'' he worries. ``If we're too 
     cautious on the short end, it will come back to haunt us on 
     the back end.''
       But they're in complete agreement that as central as the 
     need for short-term assistance is the need for long-term 
     fiscal discipline. This is not possible without modifying the 
     huge tax cuts for the wealthy slated to take effect over the 
     next decade. Warns the former top Wall Street executive: ``If 
     we don't change the back end of those tax cuts we will have a 
     fiscal train wreck no matter what we do now.''

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