Congressional Record, Volume 147 Issue 156 (Tuesday, November 13, 2001)

[Congressional Record Volume 147, Number 156 (Tuesday, November 13, 2001)]
[Senate]
[Pages S11665-S11673]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

SUSPENSION OF CERTAIN PROVISIONS OF BALANCED BUDGET AND EMERGENCY
DEFICIT CONTROL ACT OF 1985

The ACTING PRESIDENT pro tempore. Under the previous order, the
Senate will now proceed to the consideration of S.J. Res. 28, which the
clerk will report.
The assistant legislative clerk read as follows:

A joint resolution (S.J. Res. 28) suspending certain
provisions of law pursuant to section 258(a)(2) of the
Balanced Budget and Emergency Deficit Control Act of 1985.

The ACTING PRESIDENT pro tempore. Under the previous order, the
statutory time limit has been reduced to 2 hours to be equally divided
and controlled between the chairman and the ranking member of the
Budget Committee or their designees.
The Senator from North Dakota.

[[Page S11666]]

Mr. CONRAD. Madam President, last Thursday, the Budget Committee
reported this joint resolution which would suspend several budget
enforcement mechanisms. We reported unfavorably in the Budget Committee
by a unanimous vote of 22-to-0. I am certain people wonder why we have
a resolution that the budget committee rejected unanimously; how that
can happen.
It happens because it is required by law to bring this matter to the
floor, even though the Budget Committee has unanimously rejected its
elements. The reason for that is, whenever economic growth is below 1
percent for two consecutive quarters, the balanced budget amendment
requires that the Congressional Budget Office should issue a low-growth
report. They did that on October 31.
The Senate is now required to consider this joint resolution which
would suspend five budget enforcement mechanisms. Those mechanisms have
elements as follows: points of order against tax cuts or spending that
violate the budget resolution; the discretionary spending cap point of
order; the point of order enforcing 302(a) and 302(b) spending
allocations; the point of order against amendments to reconciliation
bills, unless the amendments are deficit-neutral; and sequestration of
discretionary and mandatory spending. All of those things would be
tossed out and would not apply if we accepted this resolution.
Senator Domenici, the ranking member of the Senate Budget Committee,
and I, and our Budget Committee colleagues, on a bipartisan basis, are
united in opposing the resolution and urge all Senators to vote to
defeat it. As I indicated, the Senate is required to take up this
resolution. It is required by the Budget Act. However, it would be a
mistake to adopt it because that would take away all protections to
maintain fiscal discipline.
The economic rationale for suspending budget enforcement procedures
during periods of low economic growth is that such procedures might
make it more difficult to enact stimulative measures quickly. We have
already seen that Congress has responded quickly to enact $40 billion
in supplemental emergency spending. It is important to weigh the real
risk that long-term budget discipline will be undermined against the
question of putting in place this resolution.
I believe in current circumstances that the risk is too great and it
does not make sense to suspend these elements of budget discipline to
provide for the easier passage of tax cuts or additional spending.
Again, we have seen Congress act quickly to put in place stimulative
spending. We have seen Congress act quickly this session to put in
place tax cuts.
When the chairmen and ranking members of the House and Senate Budget
Committees issued their principles for economic stimulus a month ago,
we recognized that we were facing extraordinary circumstances and that
Congress and the President would provide the resources necessary to
respond to the events of September 11. I am certain our budget
enforcement procedures will not prevent that from happening.
I think every Member of this Chamber understands that our top
priority is to defend this Nation. In addition, we must work to rebuild
that which has been destroyed and we must be prepared to counterattack
those who, in such a vicious way, have engaged in a sneak attack on our
country.
We also recognize that an economic stimulus package should not
undermine long-term fiscal discipline, which is essential to sustained
economic growth. I believe preserving our budget enforcement tools will
be very important in helping us to adhere to this critical overall
principle.
Policies that adhere to the principles laid down by the joint House
and Senate Budget Committee leadership are not likely to be held up by
our budget enforcement procedures. In contrast, proposals that violate
the principles, especially those that worsen the long-term budget
outlook by imposing substantial outyear budget costs, should be subject
to normal budget procedures.
The suspension resolution would have us decide now, in one fell
swoop, whether to suspend budget enforcement for the next 2 years. I
think it is very important that everybody understand what would happen
if we went against the recommendation of the Budget Committee and threw
out these budget procedures. There would be no protections, no special
protections for fiscal discipline for the next 2 years. I think such a
blanket waiver would be most unwise. We will be much better off if we
continue to look at each bill and amendment individually and retain the
ability to invoke budget enforcement procedures against those that
threaten our long-term fiscal discipline. This is a fundamental way we
protect the integrity of the trust funds of Social Security and
Medicare for the long term.
I might add that passing this joint resolution would be
unprecedented. We have only gone through this once before, in 1991, the
last time the economy was in recession. At that time, the Congressional
Budget Office issued three successive low-growth reports leading to the
introduction of three resolutions to suspend budget enforcement
procedures. Each time, the Budget Committee reported out unfavorably
and the resolution was defeated overwhelmingly on the Senate floor in
bipartisan votes.
The Senate made the right decision then, and we should make the same
decision now. We have the will to enact a stimulus proposal. In fact,
one will be on the floor this afternoon. We have the ability to do that
under normal budget procedures, and it is critically important to
maintain our long-term fiscal discipline.
If there is one thing every economist has told us who has come before
the Finance Committee, of which I am a member, and the Budget
Committee, of which I am a member, it is that we need to couple short-
term stimulus with long-term fiscal discipline. It is that combination
of policies that is most likely to allow us to emerge from this
economic slowdown.
I refer back to what happened in 1991 because I think it is important
for our colleagues to know this. In that year, on three occasions these
resolutions came before the Budget Committee and then came to the
floor. These resolutions were the same as the one we consider today.
They would have suspended all of the budget enforcement procedures.

Here is what happened in the Budget Committee. On January 24, 1991,
they reported unfavorably, in a vote of 21-to-0 on that resolution.
Then the full Senate voted on January 31, and they defeated it 97-to-2.
I think the record with respect to what occurred is very clear. The
same thing happened on May 7, when the resolution was taken up again. A
second low-growth report was issued by the Congressional Budget Office,
and on May 7 the Senate considered it and defeated it 21-to-0,
reporting it unfavorably on a unanimous vote.
The Senate took it up on May 9, again under special procedures, and
rejected it 92-to-5. Again, on September 12, another low-growth
resolution came before the Senate Budget Committee and it was rejected
on a vote of 19-to-2. That one came to the floor of the Senate and was
rejected 88-to-8.
I think it is clear that the Senate has determined these procedures
ought not to be abandoned, even at a time of sharp economic slowdown,
certainly not in the circumstances we face today. So we are here to
vote on this joint resolution because the Balanced Budget Act requires
us to do so. But Senator Domenici and I are united in our strong
opposition to the joint resolution. We are joined in that position by
every member of the Senate Budget Committee. On a unanimous vote we
reported this resolution unfavorably and urge our colleagues to reject
it.
I yield the floor.
The ACTING PRESIDENT pro tempore. The Senator from New Mexico.
Mr. DOMENICI. Madam President, I will be brief. I have a few remarks.
First, S.J. Res. 28 is an automatic resolution. It is required to be
introduced by the majority leader and considered by the Budget
Committee and the Senate under expedited procedures. That is why we are
here today. The resolution is automatic when the Congressional Budget
Office notifies the Congress of an economic slowdown, as described in
the Budget Act. On October 31 the Department of Commerce of the United
States advanced the preliminary report on real economic growth.

[[Page S11667]]

It showed the economy in the third quarter shrank at the annual rate
of .4 percent, the largest fall since October of 1991. The report,
which will likely be revised downward even more come the January
report, triggered the Congressional Budget Office notification of low
growth and subsequently triggered the introduction of the resolution
before us today.
The provision in the Balanced Budget and Emergency Deficit Control
Act of 1985, sometimes referred to as the Gramm-Rudman-Hollings Act,
that necessitated the reporting of this resolution was simply that we
did not want to initiate major spending cuts in a time of recession.
I might add, the same section of the law that suspends spending cuts
in a time of recession also covers events of war.
S.J. Res. 28 was reported unfavorably from the Budget Committee, as
indicated by the chairman of the Budget Committee in his remarks just a
few moments ago preceding these. The committee is required to report
the resolution without amendment, to be discharged without comment. I
concurred with the chairman that the committee should express its
disfavor with the resolution to send a signal to the full Senate to
disapprove it. I understand a vote on this resolution is scheduled for
5 o'clock today. I ask the Senate to join the chairman of the Budget
Committee and me in disapproving the resolution.
If this resolution were somehow to make it to the President for his
signature--which he would not sign--it would effectively eliminate all
fiscal discipline, all the enforcement tools we have in Congress all
the way through September 2003. I do not think we need to take such
drastic action. I think we understand the situation and we can act
accordingly on our own, in a normal manner, to take action that is
required by the facts as we find them, quarter by quarter. I do not
think we need to take the drastic action that is contemplated by the
resolution.
Having taken this position on a bipartisan basis, however, does not
mean we should not act to address the economic slowdown and the war on
terrorism, and I believe the distinguished chairman has indicated so to
the Senate. We must take action on the war on terrorism, and obviously
with appropriate legislation we must act against the economic slowdown
with some kind of a stimulus package that, indeed, could clear this
Senate and that would be acceptable to the President of the United
States.
We indeed must move in that regard. I understand the Senate's
calendar contemplates that we move in that direction. Whether we can
reach an accord or not is still another subject.
In my view, the United States is in a recession, a recession that
started even before the September 11 attacks of terrorism on the United
States.
Industrial production figures through September were down for the
twelfth consecutive month. This is the longest decline in industrial
production since World War II. Some of us have been talking about that
for quite some time. Economists in the United States have been back and
forth, but clearly nobody has been giving high marks to the economy.
Whether they want to call it a recession or not, clearly it is not in
the best of shape.
We must take action as soon as we can get ourselves together. Some
must lead in this institution so that we can do something anti-
recessionary that is significant in the short term and in the long run
take the right kind of steps.
The unemployment rate has risen from 4 percent at the end of last
year to 5.4 today, and it is rising. In October alone, we lost over
415,000 jobs, the biggest percentage increase in joblessness in more
than 15 years. The Federal Reserve Board has cut short-term interest
rates and the discount rates to the lowest level since 1961 and 1955,
respectively. Yet even with these low interest rates, most private
companies are having a tough time getting credit--a very interesting
phenomenon.
Commercial and industrial loans are down compared to last year. I
believe it is going to take some time for our country and the world
economy to work on its current problems. Restoring lost confidence will
play a key role in the recovery. But working off the excess capacities
that built up during the boom period of the 1990s will also be
important. We must also maintain the tools of fiscal discipline to
convey to the American public and the market that we are keeping an eye
not only on the current challenges we face but also on those longer
term challenges.
We must maintain the provisions of the Budget Act that provide us
with future discipline, and we must deal with both tax and spending
legislation today while waiving the Budget Act on a case-by-case basis.
I believe that is what we are recommending when we recommend the vote
that the Senate should take this afternoon.
Later today we will be considering a bill called the Economic
Recovery and Assistance for American Workers Act of 2001 which was
reported from the Senate Finance Committee last week. The bill was
reported on a partisan basis with no Republican support. It will be
subject to a Budget Act 60-vote point of order. But any Republican
alternative will also be subject to this same supermajority vote.
These 60-vote points of order would go away if this resolution were
to become law. But in an interesting way, with the Budget Act points of
order in place and with an almost evenly divided Senate, we are forced
to work on a bipartisan basis in order to achieve the 60 votes
necessary to enact proposals for spending increases or tax cuts. We all
know the only way we are going to produce real stimulus legislation
that addresses the economic slowdown is to work together as Republicans
and Democrats. I hope we will do that.
We started off right after that ominous day working together, arm in
arm, hand in hand. In fact, the people of America looked at us and
said: That is fantastic; we haven't seen much like that in a long time.

Now we need to get our argumentative and partisan nature out of the
way in the next few days and get on to something that we must do for
America and for our people. We need a stimulus package. We need it
badly. We need to show the public we can do it together with our
President as we did immediately after the acts of terrorism when we did
things that we didn't even believe we could do as we look back on them.
Some of them were rather hurried. Some might not have been the right
medicine. But I think overall the confidence that came from it
justified it. It served us well. It will pay significant homage to the
Senate in a bipartisan way, as we acted in the public interest exactly
at the right time. Let's do it one more time.
We are not going to approve the bill that came out of Finance. We
both understand that. If the Republicans have a Republican proposal
that doesn't seem as if it will pass, maybe out of those actions will
come something better--maybe something that will really work, and I
hope it will. I hope I can be part of that. I am not on the committee
that is doing the work. Good luck to them. I hope they can get it done.
In the meantime, we ought to start thinking together about what might
take place with the proposals coming out of the committee in the event
the sequence that the chairman and I discussed this morning is going to
happen.
If that happens, we certainly cannot leave the floor and be angry at
each other, saying: Too bad. We are mad at them and they are mad at us,
and it doesn't matter what happens to America.
That can't be the case. We can't do that. I am very hopeful we will
not and that within the next 2 days out of this partisan approach will
come something much better--something bipartisan that will do the job.
I thank the chairman for making his remarks brief so I could make
mine. I state to the Senators that I am not going to be here for the
entire time. I will leave for a while and be available very shortly.
The chairman is aware of that. He understands that if anyone wants to
be heard on our side, they should come down and seek recognition. I am
here now saying to any Republican who wants time within our time limits
that they are allocated the time by me unless there is objection. If
there is none, that is what we will do on our side.
Madam President, thank you very much. I thank the chairman.
The ACTING PRESIDENT pro tempore. The Senator from North Dakota is
recognized.
Mr. CONRAD. Madam President, I thank the Senator from New Mexico,

[[Page S11668]]

the ranking member of the Budget Committee and the former chairman of
the Budget Committee for his remarks, and for his strong support in
rejecting the resolution that would abandon fiscal discipline. I think
this is another example of our working together in a way that is
absolutely great for the country.
After the series of events on September 11, the House and Senate
budget committees and Senator Domenici and I joined with our House
colleagues. We met together to give an update to our colleagues on the
fiscal condition of the country. We met with the head of the Office of
Management and Budget. We were able to give a report to our colleagues
on where we stand at the moment.
We also agreed on a set of principles to apply to a stimulus package.
We were able to do that on a bipartisan basis, and I might say without
a raised voice and without an angry word between us. We weren't in
perfect agreement; certainly not. We compromised. But we did in the end
come together around a set of principles that we thought were
important.
One of the reasons we thought it was important to come together was
that we believed our Nation needed a stimulus package. I think the
evidence overwhelmingly proves that is the case.
This chart shows what has happened to economic growth from 1999 to
the most recent quarter. What has triggered our being here today are
these last two quarters where you can see that we are below 1-percent
growth. We are at .3 percent in the quarter previous to the most recent
one. During the most recent one, we saw a negative growth in the
Nation's economy. That triggered the resolution that has brought us
here today. The Budget Act requires that when you have two quarters of
low growth, you then must consider in the Budget Committee and on the
floor these provisions to suspend all of the budget points of order--
those things that we use to maintain fiscal discipline.
All of the indices are telling us that the economy has hit a
difficult period. We can see what happened to civilian unemployment. We
can see back in 2000 that we were down at less than 4 percent--a
remarkable period. In fact, we are at the lowest level of unemployment
in this Nation in 30 years.
But look at what has happened since. Look at what has happened since
the events of September 11. Unemployment has risen dramatically, and is
still rising. The distinguished occupant of the chair knows this well.
She represents the State of Washington. One of the major employers
there is Boeing. Boeing has announced the layoffs of tens of thousands
of their employees. That is through no fault of theirs. It is not
through any inability to compete, but it is because hundreds of
contracts for airliners have been canceled by the airline
industry. Their loads have been reduced 30 to 50 percent. That is the
economic reality for one critical industry in this country; and it is
very serious business.

It is not just the airline industry. It is industry after industry
that is engaged in massive layoffs. I recently met with financial
leaders in New York. They told me they are in the process or getting
ready to lay off 20 percent of their employees. These are major
financial institutions in this country and in the world, and they are
getting ready to lay off massive numbers of their employees because of
the economic slowdown. Those numbers are not yet seen in this increase
in unemployment that is already in evidence.
It does not end there because we also see consumer confidence has
plunged. This chart shows consumer confidence--going back again to
1999, and coming forward to the most recent data--has gone to the
lowest level since February of 1994. So clearly, we are being
victimized by a very serious economic slowdown.
We know the economy was weakening before September 11, and that the
attack on this country on that date further weakened our economy. And
now we see a very serious circumstance develop.
It is critically important that we respond with an economic stimulus
package. It is also critical, we believe, that we couple that with
long-term fiscal discipline. One part of maintaining long-term fiscal
discipline is to maintain the structures in the law that help us to
keep in place fiscal discipline. And those are the very things that
would be thrown out if this resolution before us is adopted. But we
have no alternative but to consider it. Even though the Budget
Committee rejected it on a unanimous vote--a totally bipartisan vote--
we still understand that if we do not reject it here, it would go into
place if the House took similar action and it got to the President and
he signed it. I do not believe any of those things will happen. It is
not going to pass here. It would not pass in the House. The President
would not sign it because it would be a serious policy error.
I know some will say: Gee, why were these procedures put in law? Why
is it a requirement that the Budget Committee take it up? Why is it a
requirement that it come to the floor under expedited procedures for a
vote? The reasons for that are very simple. The concern was, if we got
into a serious economic downturn, that there might be a failure to act,
that we should not have any hurdles in the way of Congress acting.
That may not be such a bad thought under certain circumstances. We
might find ourselves someday in a situation in which we are being
blocked from taking action that the majority of us thought was
absolutely necessary for the economy to recover. That is not the case
now.
We have seen already a stimulus package pass in the House of
Representatives. Although some of us would strongly disagree with that
stimulus package, we know we are going to be considering a stimulus
package on the floor of the Senate this afternoon. We also know we have
already taken bipartisan action to provide $40 billion of assistance to
New York and additional funding for defense and intelligence and the
funds and resources necessary to combat terrorism. So Congress has
taken rapid action, and has demonstrated the ability to act. Beyond
that, we also recognize that Congress has acted in terms of support for
the airline industry which has been so devastated by the events of
September 11 and the aftermath.

We know that Congress can act, that Congress is going to take the
additional steps necessary to give lift to the economy, but we also
know it needs to be in the framework of long-term fiscal discipline.
Some of us believe--I certainly do--one of the worst things we could do
is to take action on long-term changes in our funding and in our tax
structure to respond to an immediate downturn, that that could hurt
this country very substantially going forward.
We do not want to deepen the hole we already see developing. We can
see very clearly that this country faces a serious fiscal challenge
going forward. We have already projected that we will be using
literally hundreds of billions of dollars of Social Security and
Medicare trust fund money to pay for the other functions of Government.
That is a mistake. That is not a route we should go down, but that is
where we are headed. And to abandon these fiscal disciplines, in the
face of an already serious long-term fiscal problem, would be a very
serious mistake.
So, Mr. President, and colleagues, I hope very much that when we vote
at 5 o'clock this evening, that this body will follow the leadership of
the Budget Committee in rejecting the resolution that would eliminate
all of these budget enforcement mechanisms.
Later on this afternoon we are going to consider the Senate version
of a stimulus package. As I indicated, on a bipartisan basis, those of
us who have the most responsibility for the budget aspects of what we
do here--the leaders of the House Budget Committee and the Senate
Budget Committee--agreed, on a bipartisan basis, that we should have a
stimulus package and we should give lift to the economy in the short
term when it is needed, but we should also couple that with long-term
fiscal discipline so we do not go deeper into the trust funds of Social
Security and Medicare, so we do not put upward pressure on interest
rates that could undo all of the good that is attempted to be
accomplished by a fiscal stimulus package.
With that, I, again, call on my colleagues to join us in defeating
this resolution that is required to be brought

[[Page S11669]]

before us by the Budget Act, that has already been rejected by an
overwhelming bipartisan, unanimous vote in the Senate Budget Committee.
We will have the opportunity to consider that at 5 o'clock this
evening. We hope our colleagues in the Senate will join us in a
commitment to long-term fiscal discipline.
(Mr. EDWARDS assumed the chair.)
Mr. DURBIN. Will the Senator yield for a question?
Mr. CONRAD. I am happy to yield.
Mr. DURBIN. I thank the Senator. I do not know what the time
constraints are for this debate, but I wish to briefly make a point or
two. As a former member of the Budget Committee and someone who has
followed Senator Conrad as the new Chair of the Budget Committee, I
think you have won a deserved reputation for the kind of fiscal
discipline which has really helped this country so much in the last 10
years.
We were able to finally break away from the old deficits in the
national debt, which was growing at an unprecedented rate. We saw, over
the last 8 or 9 years, an amazing convergence of fiscal discipline,
creating annual surpluses and a booming economy, two things which I
think the American people would applaud, in terms of economic policy,
as the most important things we could achieve.
I think the Senator from North Dakota has been outspoken, as have
many of my colleagues, in opposition to some of the tax cuts that have
been proposed. Although they are appealing to those who might receive
them, you have to take a look and see what they achieve for our economy
and what they cost us in the long run.
If I understand the Senator from North Dakota in what he is saying
today, it is that, as we try to move toward something that truly moves
the economy forward, we should not do it at the expense of the Social
Security trust fund, the Medicare trust fund, or long-term deficits. We
do not want to see ourselves back into that deficit situation.
I will tell the Senator my concern, and then I will ask him for his
response. The House stimulus plan, which gives over $25 billion to the
biggest corporations in America--one corporation, IBM, receiving $1.4
billion in tax breaks--money that is clearly being given to this
corporation, not to build a plant or hire more people but simply as a
reward for whatever--and then with the Senate Republican plan, which
tries to provide additional tax cuts to the highest wage earners in
America--both of these plans will fail to stimulate the economy but
will drag us down in terms of future potential deficits.
I would like the Senator, if he could, to contrast what he thinks is
the most important effort we can make now to stimulate the economy
without driving ourselves back down into deficit.
Mr. CONRAD. Well, I thank the Senator for his question. As I
indicated earlier, on a bipartisan basis the House budgeteers and
Senate budgeteers agreed to a set of principles to apply to any
stimulus package. We did that, and we did it without an angry word
exchanged. I applied those principles to what the House package for
economic stimulus was. What we found was that it failed every one of
the tests we had agreed to apply.
We said the proposal should sunset within 1 year so that we didn't
dig the fiscal hole deeper in the outyears. The House bill,
unfortunately, fails that principle because 71 percent of its total
costs are permanent tax cuts--permanent tax cuts, not temporary
measures--designed to lift the economy now, but permanent tax cuts.
Second, we said a substantial portion of the fiscal stimulus should
be out within 6 months. If you are going to give stimulus to the
economy, you need to do it quickly. In our history, we have found that
every time we have tried to use a fiscal stimulus to give a lift to the
economy, we have been too late. That is the history. So we said let's
not be too late this time, let's get the money out in the next 6 months
when we know we face a problem. Unfortunately, looking at the House
package, 40 percent of the 10-year cost occurs after the first year.
So, unfortunately, it flunks that test.
Third, we said the size should be about $60 billion. The House bill
costs $160 billion over 10 years. And targeting--we said the stimulus
should go to those most likely to spend the dollars and those most
vulnerable in an economic downturn. If you look at the House bill, 35
percent of the tax cuts go to the wealthiest 1 percent; 35 percent goes
to the wealthiest 1 percent. Now the problem with that is the
wealthiest 1 percent are the least likely to spend the money. That is
the whole idea of stimulus--to give lift to the economy. Only 19
percent goes to the bottom 60 percent of taxpayers under the House
package. They are giving crumbs to those at the lower end of the
economic ladder, who are the very ones most likely to spend it.
Every economist who has come before us has said: Look, get money into
the hands of people and companies that will spend it. Don't do what the
House did. Part of their package, as the Senator from Illinois
referenced, would write a $2 billion check to a major automobile
company in America and $1.5 billion to another large industrial company
in this country--not to hire people or to invest, but to just write
them a check.
Amazingly enough, so much of their package has nothing to do with the
current economic downturn. It has to do with writing checks to wealthy
companies and wealthy individuals, and every economist we have talked
to has said that can't be taken as a serious stimulus package.
Mr. DURBIN. Mr. President, I ask the Senator this question: When you
put it in terms of what they actually do, when you say the Republican
approach in the House and Senate favors large corporations and the
wealthiest Americans, while the Democratic approach tries to provide a
benefit to working families, to those who have been recently
unemployed, and to smaller businesses to deal with depreciation,
clearly what emerges from this is a question of justice and fairness.
Why in the world would you reward a profitable corporation with over a
billion dollars in tax cuts when they don't even promise to create a
job? Why would you send a massive amount of tax rebate to somebody
making a million dollars a year when, clearly, they are not
sacrificing, and then ignore those who are struggling?

That justice and fairness argument is one that we have heard on the
floor. I have made it myself. I think most people would react
positively to it. We are talking about stimulating the economy, and a
question that has to be asked and answered is: Regardless of to whom
you give the money, will you get the desired result? If you gave the
money to the wealthiest corporations, whether it was fair or not, and
America's economy went flying forward, you would say it worked;
conversely, if you gave it to those who were recently unemployed,
whether it was fair or not, and the economy moved forward, you would
say it worked.
Let me ask about the economic effectiveness of the approach of the
Republicans versus the approach of the Democrats when it comes to
stimulating the economy.
Mr. CONRAD. I don't think there can really be any question about
which approach is going to be more effective from an economic
standpoint. What virtually every economist who has come before the
Finance Committee and the Budget Committee has told us is the
following: No. 1, you need to get the money out there into the hands of
people and companies quickly so that it gets spent. That is what will
stimulate the economy. So to the extent you are getting money into the
hands of people who are the most likely to spend it and companies that
are the most likely to spend it, you are getting the job done, you are
stimulating the economy.
So with respect to individuals, it doesn't make much sense to give
the lion's share of the tax cut to the wealthiest because they are the
least likely to spend it. Therefore, they are the least likely to
stimulate the economy. With respect to companies, it doesn't make much
sense to write billion-dollar checks to companies that are already
profitable because, again, they are the least likely to spend the money
that will stimulate the economy.
Unfortunately, that is what the House Republican package does, as I
have indicated, overwhelmingly. Beyond that, they also suffer from the
second part of the equation. The first part of the equation is to
stimulate the

[[Page S11670]]

economy in the short term, give it a boost, a lift. The test is getting
money into the hands of individuals and companies quickly who will
spend the money. That is the economic test.
On the longer term question, every economist, including Chairman
Greenspan and former Secretary Rubin, has told us: But you have to
couple that with long-term fiscal discipline. You have to demonstrate
to the markets that you are not going to just go out and spend money
and undermine the tax base and make our long-term fiscal condition
worse, because that will put upward pressure on interest rates and you
will undo all of the good you are trying to accomplish with a short-
term fiscal stimulus. If you abandon fiscal discipline for the long
term, that has the effect of raising interest rates; that has the
effect of smothering the economy.
So we have to be smart about this, and we have to adopt two
principles: One, yes, stimulate the economy in the short term, but,
two, couple it with long-term fiscal discipline so we don't put upward
pressure on interest rates and don't undo what we are trying to
accomplish.
Mr. DURBIN. Mr. President, I ask the Senator to yield on this
question as well: We have focused our discussion this morning on the
question of tax policy and the impact of tax cuts on the people or
companies that receive them. I want to ask the chairman of the Budget
Committee to reflect for a moment on the difference between tax cuts
and spending programs at this moment in our economy.
One of my colleagues noted that last night on the television they had
the scroll that went across the screen and it said the difference
between the economic stimulus package is that the Republicans are for
tax cuts and the Democrats are for spending. That certainly doesn't
express the contents or the direction of our own stimulus package,
which includes tax cuts for working families as well as spending.
Could the Senator reflect on the effectiveness of spending contrasted
to tax cuts when it comes to stimulating the economy? What value is
there to providing a tax break of $1.4 billion for a major corporation,
as opposed to saying we are going to take $1.4 billion and invest it in
America? As a contrast, President Bush has proposed that to deal with
bioterrorism we should give to State and local public health agencies
nationwide $300 million.
That is supposed to respond to our concerns about bioterrorism. I
think that is woefully inadequate.
Interestingly enough, the House Republican stimulus package gives
$1.4 billion, almost five times as much, to one corporation, with no
promise they will do anything in return.
So will the Senator from North Dakota comment on the use of spending
for such things as school modernization, improving law enforcement at
airports, protecting our infrastructure, and investing in public health
to deal with bioterrorism as an economic stimulus?
Mr. CONRAD. I am happy to. We had a hearing on this before the Senate
Budget Committee. We had very distinguished economists from both sides
come and give their testimony. It is very clear, both tax cuts and
spending can be stimulative.
The first test is: Do they get out in time to be stimulative? That
test applies to spending and to tax cuts. The first test is: Do they
get out in time to give lift to the economy when it is weak, No. 1?
No. 2, the question is: Do they go to companies and individuals who
will spend the money or invest the money? Because if people save the
money, that is not stimulative to the economy in the near term. So that
is critically important.
This is not a question of tax cuts versus spending. Our proposal on
the Democratic side has a combination of tax cuts and spending, but
they are designed to meet both principles, No. 1, that it gets out
quickly and, No. 2, that it goes to companies and individuals who will
actually spend or invest the money to stimulate the economy.
With respect to tax cuts on the Democratic side, the package of tax
cuts we have endorsed include the following: bonus depreciation. Now,
why are we doing that? Why are we giving a bonus if one buys capital
goods now? If a company makes an investment now to buy equipment, why
do we give them a bonus on the depreciation? The reason is, all of the
economists who came before us said behavior has to be changed. People
who are not buying now have to buy. One way to do that is to give bonus
depreciation. Actually, that provision is common in the two approaches,
the Republican approach and the Democratic approach.
No. 2, we provide for what we call net operating loss carrybacks so a
company that has been hard hit by the events of September 11 and has
losses now but had income in previous years can take back the losses
now and get a refund against earnings in previous years. That is a
provision that is common between the two sides.
The third provision we have is to increase expensing for small
businesses. Small businesses that now expense can write off $25,000
worth of purchases a year. We increase that to $35,000. Again, that is
a provision common to us both.
The fourth tax cut that is in our plan is to provide rebates to those
who were left out of the last round. People who pay payroll taxes but
not income taxes, they were left out. They did not get anything last
time. They are, by the way, the very people most likely to spend the
money to actually stimulate the economy.
So those are provisions that are in our bill, that are in the
Republican bill as well, with some differences, because both of us
recognize those are stimulative.
In addition, we have some spending provisions on homeland security
issues. What we are talking about with respect to homeland security is
strengthening security at airports, strengthening security at harbors,
improving local law enforcement. Those are things the economists have
told us may give a double hit. That is, not only will the spending be
stimulative but if people are given a greater sense of security and, in
fact, improve their security, that will also help the economy, because
one thing we are suffering from now is a lack of confidence, a
reduction in consumer confidence.

Frankly, people do not feel safe. That is inhibiting air travel. That
is inhibiting economic activity. So to the extent we have spending,
that stimulates the economy because it is moving into businesses and
buying goods and services from them but it also gives people a greater
sense of security that may be the most stimulative part of the package
according to economists who came before the Senate Budget Committee.
Mr. DURBIN. I might say to the Senator from North Dakota in asking
another question, it seems the point he made is critical, and that was
reflected in a piece that appeared in the Washington Post over the
weekend by Joseph Stiglitz, in which he talked about the impact of
anxiety on the economy. At one point he said, ``Anxiety impedes
investment.'' Certainly we know that anxiety breeds pessimism. So what
we are trying to do in the economic stimulus package, from the
Democratic side, as has been described by the Senator from North
Dakota, is to provide tax cuts and tax rebates to the people who can
use them, who will spend them for the things they need to survive, as
opposed to the Republican approach in the House, which is to give tax
cuts to corporations with no strings attached, over a billion dollars
that might not result in a single new job, perhaps more dividends for
the shareholders but no guarantee of a single new job.
So the tax cuts we are for are focused on the people who will spend
them effectively to get the economy moving, and then the spending part
of our proposal is focusing on homeland security, issues that genuinely
concern people, whether we are talking about bioterrorism and making
certain we have a response to it or improving and enhancing law
enforcement so wherever we might go there will be an adequate response.
Yesterday I was in New York City when the plane crashed. At that
point, they closed everything. They closed down the airports. Many of
us changed our plans and rushed over to Penn Station to get the Amtrak
train back to Washington. Trains were so crowded many of us had to
stand the whole way. It was an indication people were concerned, and
they responded to that anxiety by changing their habits. Instead of
taking the airplane, they came to Amtrak. That sort of thing is
happening across America in ways large and small.

[[Page S11671]]

Is it the belief of the Senator from North Dakota that in putting
investments in this homeland security we are not only stimulating the
economy by putting people to work to do the things to improve aviation
security but we are also trying to build confidence back in this
economy which has been shaken not only by bad economic news but by the
news since September 11?
Mr. CONRAD. Precisely. I do not know what could be more clear. There
are some on the other side who will stand up and decry spending. I did
not hear them decrying spending to increase our military preparedness.
I think we are all joined as one, understanding we have to strengthen
our military to respond to what is happening. But it is not our
uniformed military that is on the front lines of response to this
crisis. It is also our firefighters and our policemen and all local law
enforcement, and those elements of this fight against terrorism need to
be buttressed.
Does anybody doubt we need to add money to fight bioterrorism? Does
anybody really believe we are prepared to do all of the things
necessary to cope with bioterrorism? I do not believe there is a single
Member who can possibly believe we do not need to spend more money to
protect ourselves against anthrax and smallpox and all the other things
that could be used as weapons against this Nation.
Now, that happens to give a double hit. Not only is that spending
stimulative to the economy because it buys goods and services; it also
provides people greater protection, and we need to do that. We need to
strengthen national defense. We need to strengthen law enforcement. We
need to strengthen our ability to wage war against those who would
engage in terrorist attacks against us.
Yes, that is spending but it is spending for a purpose, and it is an
important purpose.
Mr. REID. Will the Senator from North Dakota, the manager of this
bill, yield for one question? I will be brief. The Senator has about 15
minutes.
Mr. CONRAD. I am happy to yield to the Senator from Nevada.
Mr. REID. I have heard the Senator from North Dakota and the Senator
from Illinois speaking about security and how people feel. I think
something that would not cost any money but would be good for the
economy is do something about airline security, which has been floating
around now for more than a month. We had the terrible incident
September 11, with over 6,000 people killed. We had this terrible
accident.

This bill is being held up because they don't want people to have the
same protection as the firemen and police who lost their lives in New
York protecting innocent people.
Do you think it would create economic security if we had airline
security?
Mr. CONRAD. Again, I don't know what could be more clear. What some
are endorsing is a continuation of the policy that failed
catastrophically on September 11. Some would say that system is good
enough; stay with the status quo and have some of these same private
contractors, who have failed abysmally, continue.
We saw an incident with one of the companies in Chicago where a guy
got on board with seven knives and a stun gun. That system is not
working. I don't know what could be more clear. We need tighter airport
security. That costs money, but it is an expenditure that we need to
make. Yes, it will stimulate the economy. More than that, it will
provide greater security to the American people.
As chairman of the Budget Committee, I have had many people come to
me with things that need to be done to strengthen local law
enforcement, strengthen our national defense, strengthen protection of
our borders through the Border Patrol. Those need to be done. We need
to do a better job of policing those who come into our country with
visas. Right now people come and say they will go to school and nobody
checks to see if they showed up at school.
One terrorist who engaged in the attack on September 11 was scheduled
to go to a school and never showed up. We have no system for tracking
to find out if somebody doesn't show up, why they didn't show up. That
costs money. That also will strengthen the security of this country.
I yield the floor.
The PRESIDING OFFICER. The Senator from Texas.
Mr. GRAMM. I think we are all unhappy with airport security. Despite
all of its failings, the private security company and the private
airline did catch the guy; and then Government employees came, law
enforcement officials, and let him go. We had to go back, find him, and
arrest him.
Eight people were fired on the spot as a result of the mistake. If
they had been civil servants, they could never have been fired.
The debate is whether we are basically going to add a political rider
on airport security. The political rider is to force the President to
use Government employees alone. It seems to me that is a political
agenda, and it is not a safety agenda. We ought to give the President
flexibility. Where Government employees work, use them. Set Federal
standards and enforce them. Where private contractors work, and work
better, use them.
We have heard all the talk about the Republicans in the House who
have this strange idea that if we provide lower taxes, it will induce
people to work, save, and invest. All this talk about it being
distinctly inferior to the Democrat Senate bill which provides
subsidies to watermelon production, bison meat, distilling rum in
Puerto Rico and the Virgin Islands, new subsidies for tobacco, and tax
cuts for people who don't pay taxes. I guess beauty is in the eye of
the beholder. It is up to the American people to decide what makes good
economic sense and what doesn't make good economic sense.
We will have an opportunity later today or tomorrow to debate this
issue. I do not believe the American people are going to buy this grab
bag of spending as a stimulus package. It is always interesting to me,
having watched this whole process now going on 24 years, that every
time something new happens, everybody in politics goes back and takes
all the old, tired, rejected ideas they ever had and dresses them in
new clothing. The new opportunity now is stimulus. All the old ideas
that never passed the laugh test in the past now have come forward as
part of the stimulus package.
I hope we will get serious. I hope we will write a bipartisan bill. I
certainly intend to support that.
I didn't come over to talk about those things today. I came to talk
about the resolution before the Senate. Under the old Gramm-Rudman law,
one of the compromises in getting it adopted was a triggering mechanism
where, if you had low economic growth or a projection of low economic
growth, there was an opportunity for Congress to opt out of binding
restraints on deficit spending. I am pleased we are deciding through
the recommendation of the Budget Committee not to opt out of those
binding constraints. I congratulate the chairman and the ranking member
for their support to vote no on the resolution. I will certainly vote
no on it.
However, this is largely symbolic. We are in one of the great
spending sprees in American history. Since September 11, we have had a
dramatic swing from a commitment to balance the budget and reduce debt
and save Social Security to ``anything goes'' in the way of spending.
Obviously, we were all affected by September 11. I don't think there
is any opposition anywhere to doing what we need to do to hunt down and
kill these terrorists and to try to help people who were hurt by the
terrorists and whose lives have been diminished, wrecked, or lost as a
result. However, nobody can claim all of the add-on spending has
anything to do with terrorism. What we are going to have to decide
pretty quickly is if we have completely given up our commitment to
balancing the Federal budget and paying down debt. The only way we can
show that is not through some resolution which, again, I applaud. I
certainly would be unhappy if we were supporting the waiving of these
old budget restrictions which represent the only protection we have
against deficit spending, but I would have to say we are now in a
situation where appropriators in both parties--it is almost as if we
have three political parties: Republicans, Democrats, and
appropriators--are saying even though the President believes he can
complete the year with the $40 billion we have given him to

[[Page S11672]]

deal with September 11, we are going to force him to take all this
money.

The President has said after the first of the year, if it becomes
clear he needs more money, he will come back and ask for it and--what I
think is even better--tell us what he wants it for. There seems now to
be a mad rush to force-feed the President into spending money.
I hope, first of all, we will reject the resolution today, disapprove
it, and when we vote on all this new spending, we will remember the
gesture we made today, and when a point of order is raised against this
new spending, as it will be, we will sustain that point of order.
Finally, simply drifting back and not getting into debate with the
very able chairman of the Budget Committee, it is clear the stimulus
package that passed the Finance Committee can't pass on the floor of
the Senate. I don't believe it has 51 votes, but it certainly does not
have 60. I simply urge the majority leader and the minority leader to
sit down together and see if we can work out a compromise. We are
heading toward Thanksgiving and Christmas. We need to do a stimulus
package if one can be put together that helps the economy. In all
honesty, I do not believe the stimulus package that passed the Finance
Committee would help the economy. My guess is it would probably be
harmful. So if that were the only choice, I would simply vote no. But I
don't think it is the only choice. I think we can put together a
compromise. If we can do that, I suggest we get on with it.

I yield the floor.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. CONRAD. Mr. President, let me thank the Senator from Texas for
his support of the position on the low-growth suspension of the budget
points of order. He is a respected member of the Senate Budget
Committee, and he joined us in our recommendation to our colleagues
that we disapprove the resolution that would abandon the provisions
that help us maintain fiscal discipline. I thank him very much for
that.
When the Senator says we have been on a spending binge--if we have,
he has been part of it. I have gone back and looked at the votes. On
the emergency supplemental appropriations bill that provided $40
billion to respond to the attacks on this country, that vote was
unanimous. The Senator from Texas joined on that vote to support $40
billion to respond to the attacks and help rebuild and repair those
things destroyed. On the air transportation safety and system
stabilization to rescue the airline industry that was faced with
imminent collapse, the Senator from Texas voted for that, too. Those
are the only two things we have passed that are over and above what was
agreed to by Republicans and Democrats with respect to the spending
provisions for this year.
So when he says we are on a spending binge, let's get this straight.
Every Member, with the exception of one in this entire body, voted for
the spending we have done in response to the sneak attack on the United
States--every single Member, with the exception of one. That one was
not the Senator from Texas.
Let me also indicate, in the Senate provision, the stimulus package
the Senate has put forward that we will be considering this afternoon,
$5.5 billion of that $67 billion package is for agricultural economic
emergencies. The Senator from Texas ridiculed some of them. They are
easy to ridicule. The Washington Post over the weekend, on Sunday, in a
column of theirs, ridiculed one of the provisions of which I am a prime
mover and a prime supporter. I take this moment to explain what that
provision is about and let people judge for themselves: Does it have
merit or doesn't it? I believe it does.
Out of a $67 billion package, there are some $200 million for
commodity purchases, the purchase of commodities for school lunch
programs and for other feeding programs. This is typically what we do
in a stimulus package. At a time of economic downturn, more people
can't feed themselves, they can't feed their families, so we typically
buy commodities to strengthen the feeding programs we have in this
country. That is a compassionate thing to do. That is the right thing
to do. It should not be ridiculed by a Senator or the Washington Post
or anybody else. It is the right thing to do.
Let's talk about this provision for the purchase of bison, buffalo--
whatever people are calling them. In this commodity program, to buy
$200 million of commodities, there is $10 million to buy bison. Why?
No. 1, it is probably the most nutritious meat anybody can eat because
it is low in fat, high in protein, and it goes very well in our feeding
programs--$10 million. But it has an added benefit because the bison
industry is flat on its back. It is about to go broke. That will
jeopardize thousands of families who are dependent on the bison
industry to strengthen their agricultural operations.
I know it is so easy to ridicule these provisions. The Washington
Post regularly ridicules anything for farmers because all they can see
is that in every farm program there are some who are wealthy people who
benefit. I agree with them, that is wrong. I wish we had much stricter
payment limitations. I introduced a bill with the most strict payment
limitations anybody has ever introduced, but it did not pass. And they
are focusing on the exception rather than the rule.

If they would go to my State, they would find--are there some abuses?
Yes. Are there some wealthy people who get farm program benefits? Yes.
I wish it didn't happen. But do you know what else they would find? The
vast majority of farm families in my State are struggling, they are in
deep trouble. Farm prices in real terms are the lowest they have been
in 50 years. More than that, in the last month the prices farmers
received went down 9.5 percent, the biggest 1-month drop since they
started keeping records 91 years ago.
There is a crisis in agriculture. There is a crisis in rural America.
Farm families are going under by the thousands. If we do not act and we
do not respond, it will get much worse. They can ridicule all they want
and go to their cocktail parties here in Washington and believe they
really have the moral high ground because they ridiculed spending for
feeding programs for people who are hungry and to support hard-working
farm families who are on the brink of going under, they can feel smart
and smug--go ahead. They are wrong. They are not being very thoughtful.
To suggest somehow this was related to lobbyists--that was the
essence of the story in the Washington Post, that lobbyists are writing
this stimulus bill. I agree with them with respect to a lot of what I
see in the House stimulus bill. That has been well lobbied. But $10
million to buy food for our feeding programs from farmers who are going
under? I have not seen a single lobbyist in this town working for the
bison industry. I have not seen one. Not one has come to me--not one.
There is no bison industry pact of which I am aware.
When people get smart and smug and ridicule--it is easy to ridicule,
really easy. But I don't think it is very smart and I don't think it is
very compassionate to ridicule putting money into an economic stimulus
package to buy commodities to help hungry people and to help farm
families who are going under. I don't see that as very smart, and I
don't see that as very compassionate.
I yield the floor.
The PRESIDING OFFICER. If no one yields time, time will be charged
equally to both sides.
The PRESIDING OFFICER. The Senator from North Dakota is recognized.
Mr. CONRAD. Mr. President, let me go back to what this larger
discussion is about and the resolution that is before us.
When we are faced with two consecutive quarters of growth below 1
percent, the Budget Act then requires that the Senate Budget Committee
consider a resolution which would eliminate all of the budget
protections--all those things we use to maintain fiscal discipline.
That has happened. The last two quarters have been below 1-percent
growth. So we have before us the resolution to eliminate the budget
protections.
The Senate Budget Committee met and on a bipartisan basis rejected
the notion of abandoning all of our budget protections--those
approaches we use to maintain fiscal discipline. We rejected it and
sent what is called the

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resolution of disapproval to the Senate by a vote of 22-0.
Now the Senate has to vote because there are expedited procedures
that bring these provisions to the floor. We will vote at 5 o'clock.
The vote will be: Do we set aside the budget points of order that allow
us to maintain fiscal discipline? Do we set those aside for the next 2
years? The Budget Committee has said no. I hope the Senate in a
resounding way says no this afternoon at 5 o'clock. That is what we
have done in the past.
In 1991, when we had a similar circumstance, the Senate Budget
Committee rejected the idea and reported unfavorably abandoning fiscal
discipline 21-0. The Senate vote was 97-2 against giving up those
budget points of order and those protections for fiscal discipline.
Later that year, a second low-growth resolution came before the
Senate Budget Committee. It was rejected 21-0. The Senate rejected it
92-5.
In September, again, there was a low-growth resolution. The Senate
Budget Committee rejected abandoning fiscal discipline on a vote of 19-
2. The Senate rejected it on a vote of 88-8.
Once again, because the economy has been growing at less than 1
percent, this automatic resolution has come before the Budget Committee
and has come before the Senate. The question is, Do we eliminate all of
those budget points of order that help us to maintain fiscal
discipline? The Senate Budget Committee has acted saying no on a vote
of 22-0. They voted out a disapproval resolution. Now the full Senate
is going to have its chance to register its opinion at 5 o'clock this
evening.
I hope that we reject it unanimously and send a clear message to the
country and to the market that we intend at the same time we provide
fiscal stimulus and a short-term lift for this economy to also maintain
long-term fiscal discipline and the integrity of our trust funds.
The PRESIDING OFFICER. All time under the control of the majority has
expired.

____________________