[Congressional Record Volume 147, Number 148 (Wednesday, October 31, 2001)]
[Senate]
[Pages S11266-S11268]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          THE STIMULUS PACKAGE

  Mr. CONRAD. I rise today to talk about the economic stimulus package 
that is being discussed and debated in both Houses of Congress.
  When it became apparent that our economy was weakening, those of us 
who have special responsibilities for the budget--the leaders of the 
House Budget Committee and the Senate Budget Committee--got together 
and agreed on a bipartisan, bicameral basis on certain principles for 
an economic stimulus package. These were the chairman and ranking 
member of the House Budget Committee and the chairman and ranking 
member of the Senate Budget Committee.
  After several weeks of work, we were able to agree on a bipartisan 
basis on a set of principles to apply to the stimulus package. We 
agreed on an overall principle that an economic stimulus package should 
be based on the recognition that long-term fiscal discipline is 
essential to sustained economic growth. We agreed that measures to 
stimulate the economy should be limited in time so that as the economy 
recovers, the budget regains a surplus at least equal to the surplus in 
Social Security. And that any short-term economic stimulus should not 
result in higher long-term interest rates.
  We went on to agree to the objectives, the timing, the rapid impact, 
the sunset, the targets, and the size of any economic stimulus package. 
Again, this was on a bipartisan basis and involved the leaders of both 
the Senate Budget Committee and the House Budget Committee.
  On objectives, we agreed that an economic stimulus package should 
restore consumer and business confidence, increase employment and 
investment, and help those most vulnerable in an economic downturn. On 
timing, we agreed that Congress should assemble an economic stimulus 
package with dispatch, aiming for passage within 3 to 4 weeks of our 
report which was done on October 4.
  On rapid impact, we agreed that a substantial portion of the fiscal 
impact should be felt within 6 months.
  On sunset, we agreed that all economic stimulus proposals should 
sunset within 1 year to the extent practicable.
  On targets, we agreed that an economic stimulus package should be 
broad based, rather than industry specific, and that policies should 
achieve the greatest possible stimulus per dollar spent be, and should 
be, directed to individuals who are most likely to spend the additional 
after-tax income and businesses most likely to increase spending and 
employment.
  On size, we agreed that the economic stimulus package should be equal 
to roughly 1 percent of gross domestic product, which would be $100 
billion, but take into account what we had already done at that point, 
which was some $40 billion. That would mean a floor of at least $60 
billion of economic stimulus.
  And on offsets, we agreed to uphold the policy of repaying the 
greatest amount of national debt feasible between 2002 and 2011; that 
outyear offsets should make up over time for the cost of any near-term 
economic stimulus.
  With those principles in mind, we can now apply them to the various 
proposals that are out there. Senator Baucus, the chairman of the 
Finance Committee, has released a proposal, and we find in looking at 
the elements of Senator Baucus' proposal--we matched them with the 
principles that were agreed to on a bipartisan basis--that his package 
passes on each and every principle that had been agreed to.
  On the question of temporary, on a bipartisan basis we agreed that 
proposals should sunset within 1 year. Senator Baucus' package provides 
for that.
  On rapid impact, we said a substantial portion should be out within 6

[[Page S11267]]

months. Senator Baucus' proposal has all of his impact in the first 
year.
  On size, we said approximately $60 billion. Senator Baucus' proposal 
has $70 billion in this fiscal year but actually costs less than that 
over the 10 years because some of the things that provide lift now 
actually will generate revenue later on.
  On targeting, we said the stimulus dollars should go to those most 
likely to spend them. Senator Baucus' proposal includes $14 billion of 
rebates to those who were not included in the first package of rebates 
and $33 billion in worker relief targeted to low- and middle-income 
Americans who are the most likely to spend the money.
  On the question of not hurting our long-term fiscal condition, 
Senator Baucus' proposal has virtually no effect on the surplus after 
this fiscal year.
  His proposal clearly passes each of the tests.
  If we apply those same principles to the House package, we get quite 
a different result. In fact, we find that they fail each of the tests. 
Not just one of them, not two of them; the House proposal fails each 
and every test that was agreed to on a bipartisan basis by those of us 
most responsible for the budget.
  With respect to temporary, the House bill has 71 percent of its tax 
cuts as permanent. There is no temporary package. It is largely a 
permanent package. So that fails the first test of being temporary.
  Second, on the question of rapid impact, we said a substantial 
majority of the fiscal impact should be felt within 6 months. But in 
the House package, nearly 40 percent of the 10-year cost is after this 
year. That is not a stimulus package. A stimulus is designed to give 
lift to the economy now, not 2003, not 2004, and yet 40 percent of the 
cost of the House package is after the year 2002. That clearly fails 
the principle of rapid impact.
  On size, we said $60 billion as a starting point, as a floor. The 
House package is $162 billion over 10 years. That is far in excess of 
what the President called for. He said $60 billion to $75 billion. This 
has a cost of $162 billion.
  On the question of targeting, the House package has 35 percent of the 
tax cuts going to the wealthiest 1 percent. We on a bipartisan basis 
agreed to the principle that stimulus ought to go to those most likely 
to spend the money. That is what will lift the economy. That is what 
will provide stimulus. But the House package disproportionately goes to 
the wealthiest 1 percent. Those are the very people most likely to save 
the money, not to spend it.
  However meritorious savings may be--and goodness knows I am an 
advocate for savings--that does not stimulate the economy. The thing 
that stimulates the economy, according to every economist who came and 
testified before the Budget Committee, is if people and companies spend 
the money that they get, and spend it now--not 2 years from now, not 3 
years from now, but now. Now is when the economy is weak. Now is when 
we need stimulus.
  This morning's economic report on the last quarter of economic growth 
shows we are in negative territory. It makes the point as clearly as it 
can be made that we need economic stimulus now--not 2 years from now, 
not 3 years from now but now.

  Madam President, while the House package has 35 percent of the 
benefits going to the wealthiest 1 percent, the bottom 60 percent of 
the income category get only 19 percent of the benefits. Yet those are 
the people who are the most likely to spend the money and give lift to 
the economy. So the House package violates that principle.
  Finally, on the question of a package not worsening our long-term 
fiscal condition, the House package has a cost of $171 billion when you 
include the interest costs beyond the year 2002. In other words, every 
dollar of that part of their stimulus package would be coming out of 
the Social Security trust fund surplus.
  In essence, they are taking payroll tax dollars from people in this 
country and giving the money in an income tax cut that goes 
disproportionately to the wealthiest 1 percent. That stands stimulus on 
its head. That is taking money from the people who are most likely to 
spend it and giving it to people who are most likely to save it.
  That is not what stimulus is all about. That cannot be the result. I 
just want to make clear to my colleagues, as chairman of the Budget 
Committee, I will not accept this kind of result. I will use every 
device available to me to stop any package similar to what the House 
passed.
  Given the ability of a Senator to stop a package, I can assure my 
colleagues, this is not going to happen because I am not going to let 
it happen, and there will be plenty of others who will join me. We are 
not going to let it happen because it should not happen. This is not a 
stimulus package; it is a political package.
  The Secretary of the Treasury said it very well when asked about the 
House package. He called it show business. This is no time for show 
business; this is time for real business. This is time for the business 
of America. This is the time to have a stimulus package that really 
does the job and does not abandon fiscal discipline for the long term 
by putting upward pressure on interest rates that would undo all the 
good we are trying to accomplish by a package of fiscal stimulus.
  When we go to the question of the plan that was released yesterday by 
Senator Grassley, the ranking member of the Senate Finance Committee, 
and apparently now adopted by the Senate Republican caucus, we have 
looked at each of the measures, each of the principles that had earlier 
been agreed to on a bipartisan basis, and we have graded the Grassley 
package. Here is what we found.
  On the question of temporary--the principle was the stimulus should 
sunset within 1 year--what we find is that 82 percent of the Grassley 
package is not temporary; 82 percent is permanent tax cuts. That 
absolutely fails the test of temporary.
  Why do we have that test? We have that test because every economist 
who has come to us has said: Look, you have to marry fiscal stimulus 
with long-term fiscal discipline; otherwise, you will put upward 
pressure on interest rates, and, guess what. You will undo all of the 
potential good of a fiscal stimulus package. You will put fiscal policy 
at war with monetary policy, and while you are giving lift to the 
economy with fiscal stimulus, you will be suppressing the economy by 
increasing interest rates.
  This principle is there for a reason, and the reason is, as Secretary 
Rubin, who is the former Secretary of the Treasury who did such a 
brilliant job in the Clinton administration, made clear to us, you have 
to be careful while you are providing fiscal stimulus to couple it with 
long-term fiscal discipline.

  We all understand, because of the tax cuts that were provided 
earlier, because of the attacks on our country, because of the need to 
rebuild, because of the continuing economic weakness, this country is 
headed into deficits in the fiscal year we have just ended.
  We are not talking just about trust fund deficits; we are talking 
about deficits that mean we are going to be using every penny of the 
Medicare trust fund surplus this year to pay for other items.
  We are going to be using every penny of the Social Security trust 
fund surplus this year to pay for other items, and we are going to be 
spending beyond that. We are not only taking all of the trust fund 
surpluses, but we are taking billions of dollars beyond that.
  That may be acceptable at a time of war, at a time of economic 
slowdown, but we cannot permit that to continue. We cannot allow a 
circumstance to develop in which we are raiding and looting every trust 
fund in sight, even when the economy is forecasted to be in recovery. 
That will devastate this country's position when the baby-boomers start 
to retire in 10 years.
  Please, I say to my colleagues, let us not get stampeded to do things 
that make our long-term fiscal condition far worse. That would be a 
disaster for this country.
  On the question of rapid impact, looking at the Grassley package, 
again we had the principle of the money should go out, the vast 
majority of it in 6 months. Why? Because in looking at past results, 
what we have found is every time there was an attempt to use fiscal 
policy to stimulate the economy, we have been too late--not just some 
of the time, every time. Every time there has been an economic slowdown 
and we tried to use fiscal policy to give stimulus, each and every time 
we have been too late.

[[Page S11268]]

  So this time we are saying if we are going to stimulate the economy, 
get the money out in time to make a difference. That is why we have 
this principle. Yet if one looks at the Grassley plan, nearly half of 
it, 48 percent of the 10-year cost, occurs after the first year. That 
is not a stimulus package. That is a tax cut package--I will grant 
that--but it is not a stimulus package.
  It is going to be too late. It is going to be like all the other 
times when we tried to use fiscal stimulus, and every time it has been 
too late. Let us not make that same mistake again. On a bipartisan 
basis we said: Let us not do that again. If we are going to have 
stimulus, let us get it out there to be effective.
  The Grassley plan does not do it. Half of it comes after the year 
2002.
  On the size, we said $60 billion. The cost of the Grassley plan is 
$175 billion over 10 years. That does not count the interest cost.
  On targeting, we said stimulus dollars should go to those most likely 
to spend them. Well, the Grassley package flunks that big time. Forty-
four percent of the value of the tax cuts in the Grassley plan goes to 
the wealthiest 1 percent. Eighteen percent goes to the bottom 60 
percent. Talk about taking a principle and standing it on its head. 
That is what the Grassley proposal does. It does not funnel the money 
to those who receive the lowest income, who are the ones most likely to 
spend it. It gives the disproportionate share to the wealthiest 1 
percent who are the ones most likely to save it, not spend it.
  Again, however meritorious saving is--and I believe in it and applaud 
those who save--every economist has said to us you have to put this 
money in the hands of companies and people who will spend it and spend 
it now; not 2 years from now, not 3 years from now but now. The 
Grassley plan absolutely flunks that test.
  Finally, the package should not worsen our long-term fiscal 
condition. The Grassley plan costs over $200 billion, counting the 
interest. It costs over $200 billion after fiscal year 2002.
  That is digging the hole deeper. That is taking every penny of it 
from the Social Security trust fund surpluses.
  When one thinks about it, here is what he is doing: He is taking 
money from payroll taxes--and over 70 percent of the people in this 
country pay more in payroll taxes than they do in income taxes--he is 
taking payroll tax money and using it to fund an income-tax cut that 
disproportionately goes to the wealthiest 1 percent. Think about that. 
He is taking money, over $200 billion, after this economic slowdown is 
over--according to the administration's projections, he is taking $200 
billion of people's payroll tax money and going over and giving half of 
it to the wealthiest 1 percent in an income-tax cut when every 
economist has told us we ought to give the money in tax cuts to the 
lower income people who are most likely to spend it.
  Instead, what he is doing is taking it from the low-income people, 
the 60 or 70 percent of the people who pay more in payroll taxes than 
they pay in income taxes, and giving it to the wealthiest 1 percent, 
who are the ones most likely to save it and not spend it. That is not a 
stimulus package. That is a tax cut package for the most privileged and 
the wealthiest among us. It is certainly not a stimulus package. It 
flunks every test, every principle that we agreed to on a bipartisan 
basis.
  I hope our colleagues are thinking very carefully about this matter 
of a stimulus package. It is needed. It is needed soon. We have an 
economy that is in decline. We were in trouble before September 11. 
That circumstance has gotten seriously worse after the events of 
September 11, after the sneak attack on this country. We have an 
obligation to develop a stimulus package that is really stimulus, not a 
political plan, not a partisan plan but a plan that is going to help 
lift this economy. To do that it is critically important that while we 
are giving a short-term lift, a lift that will take effect in a way 
that is timely, that we also couple that with long-term fiscal 
discipline so we do not push up interest rates, so we do not undo all 
of the good we are attempting with a stimulus package.

  I feel very strongly about this issue because I have seen in the 15 
years I have been in the Senate the difference between healthy fiscal 
policy and fiscal policy that is built on debt and deficits and 
decline. The last thing we should do in this country is put our Nation 
back on the course of massive fiscal deficits, draining every trust 
fund in sight in order to cover other costs. That is especially 
important in the decade before the baby-boomers retire.
  I am going to be ferocious on the question of not digging the fiscal 
hole deeper beyond the time of economic weakness. That would be a 
profound and tragic mistake to this country.
  The distinguished occupant of the chair is the Senator from New York. 
New York has been devastated by the attacks on September 11. I think 
all of us are proud of the reaction of the people of New York. They 
have stood tall. They have responded with courage, and they deserve our 
help. Every time in our Nation's history when one of our States has 
been hit by natural disaster or some tragedy, all of the other States 
have rushed to help.
  I remember when my own State was devastated in the 1990s by floods, 
the worst floods in 500 years. Colleagues from all across this country 
reacted in a generous way to help the people of my State who were so 
badly hurt. I remember when California was devastated by fires and 
earthquakes how all of us rallied around to help the State of 
California because it was the right thing to do and because we also 
recognized we are the United States of America and we are united at a 
time of difficulty for many of our people.
  The people of New York have suffered not a natural disaster; it is a 
man-made disaster, a disaster made by fanatics who took innocent lives 
by the thousands and devastated tens of millions of dollars worth of 
property and put New York's economy on a course that is going down. It 
is our obligation to help. We will help. We will fashion a stimulus 
package that will help all of our country recover.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. CORZINE. Madam President, I ask unanimous consent the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CORZINE. Madam President, I say to my colleague from North 
Dakota, as always, his analysis is spot on. He is addressing one of the 
fundamental needs of our Nation to have a responsible stimulus program, 
one that happens soon, one that has real impact and is not an 
ideological platform or program, but one that is designed to truly 
stimulate our economy. The more we hear the Senator from North Dakota 
articulate this, the better our country will be and the sooner our 
economy will be moving forward.
  Madam President, I ask unanimous consent to speak as in morning 
business for up to 10 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from New Jersey is recognized.
  Mr. CORZINE. I thank the Chair.
  (The remarks of Mr. Corzine pertaining to the introduction of S. 1602 
are printed in today's Record under ``Statements on Introduced Bills 
and Joint Resolutions.'')
  Mr. CORZINE. I suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Dayton). The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. HARKIN. Mr. President, I ask unanimous consent the order for the 
quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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