[Congressional Record Volume 147, Number 171 (Tuesday, December 11, 2001)]
[Senate]
[Pages S12861-S12863]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SESSIONS (for himself, Mr. Allen, Mr. Hutchinson, and Mr. 
        Smith of New Hampshire):
  S. 1804. A bill to amend the Internal Revenue Code of 1986 to provide 
tax incentives for economic recovery and provide for the payment of 
emergency extended unemployment compensation; to the Committee on 
Finance.
  Mr. SESSIONS. Madam President, the economy has been struggling for 
about a year now. We have had a number of difficulties that have made 
our economy not as healthy as we would like it to be. Oddly enough, for 
the week of September 11, according to the hearing we had in the Joint 
Economic Committee, unemployment actually dropped. There was an 
increase in employment that week. So maybe our economy was moving in 
the right direction. But immediately after September 11, and the shock 
this Nation went through, we slipped back into what has now been called 
a recession.
  Factories are closing in a number of places. Quite a few have closed 
in my State. It has been quite discouraging that this tends to happen 
more often in small towns where you have just a few businesses. That is 
where you see more of the closings than in the urban areas.
  The National Bureau of Economic Research has declared that we have 
slipped into recession. And the terrorist attacks have hurt us in a lot 
of different ways involving jobs for families in America. So I have 
been pushing for some time that we make sure we complete this Congress 
with a good, healthy stimulus package.
  I have raised that observation with quite a number of people. But we 
are not, to my knowledge, making any progress. I have referred to the 
people who I understand are working on it as ``the masters of the 
universe.'' They are back there somewhere outside of this Chamber, 
working and manipulating and talking to people about what ought to be 
in the package. And, yes, they take input, and I have talked to them, 
and other people have talked to them--and I did not suggest it is not a 
tough job; it is a tough job--but we are getting close to the time when 
we should recess, and people are suggesting that we might even complete 
this Congress without a stimulus package. I think that would be a very 
bad mistake.
  Even the most conservative economists have suggested we would have a 
one-half of 1 percent increase in the GDP if we have a stimulus package 
of $75 billion to $100 billion. I believe that is clearly worth the 
effort. That one-half of 1 percent, in an economy as large as ours, is 
very significant. It means many people will continue to have jobs that 
they would not have otherwise. It means that many people will be 
working and paying taxes to the Government which will help us with our 
deficit situation. It means many people will be working and taking care 
of their families and not going into debt and will be buying things, 
such as at the grocery store, that they would not otherwise be buying.
  So I think we need to be sure we move in that direction. That is why 
I have offered today S. 1804, which is cosponsored by Senators Tim 
Hutchinson, George Allen, and Bob Smith. And I intend to move this bill 
if we do not see progress. Really, I intend to seek a vote on it if it 
is in any way appropriate and possible this session.
  Let me mention a few things that are in the bill which I think are 
common sense and would be good policy. One of the things I have been 
wrestling with is the earned-income tax credit. This is a program that 
began in 1975. It is now a $31 billion program that provides a tax 
credit to low-income working Americans. It is designed to make work 
more beneficial and more rewarding so that, particularly, families can 
live off of low-income jobs. In fact, the program is quite generous for 
a family of four or more who qualify appropriately. They can receive 
$4,000 a year. An average family with one qualifying child, that 
receives the earned-income tax credit, receives almost $2,000 a year. 
On average, it is over $1,900 per year that they receive.
  This totals out, if you figure it on an hourly basis for the average 
family of four that receives the earned-income tax credit, to almost $1 
an hour pay raise over whatever they are making. If they are making $6 
an hour and they get another $1, that is a big increase. If you are at 
$5 an hour and you get $1 an hour, that is a 20-percent increase in 
your pay. It is more than that in take-home because you don't have any 
withholding out of a tax credit.
  The way this thing has been working, however, is not healthy. The way 
this thing has been working is, the money goes to the worker when they 
fill out their income-tax return the next year. In February or March, 
when they fill out the tax return, they get this $1,900 in a lump sum 
check sometime in the spring after they worked.
  Congress wrestled with that. They didn't believe that was furthering 
a policy of the Congress, and so they tried to provide the credit on 
the worker's paycheck. In years past, in the 1970s and all, when this 
passed, people didn't have the computers we have today, and requiring 
small businesses to calculate this and put it on the paycheck caused 
some grief. But today, because everything is automated, it is much 
easier to do.
  In recent years, Congress tried to do something about it. In 1978, 
they passed legislation that said a worker could have it put on their 
paycheck if they want to. Oddly enough, only 5 percent of workers have 
chosen this or know they can.
  Therein lies a problem, and there are several reasons. One, they 
probably don't know about it. Another one is that oftentimes they are 
told that if you get this advanced payment on your check instead of 
getting a refund next year, you may owe money to the Government next 
year. And that caused some to not take advantage of it. At

[[Page S12862]]

any rate, only 5 percent of Americans are taking advantage of this 
policy.
  I believe it ought to be the policy. I believe the policy was founded 
to begin with, with the idea of helping people, encouraging people to 
go to work. If you are not making much more than the minimum wage, 
sometimes people may wonder if they are not better staying at home on 
welfare. The money should be put on there. Most economists, most good 
public policy students of the situation believe that.
  That is one of the points of this stimulus bill that I have. Let me 
tell you why it is such a good stimulus package. It is good because the 
money for people who have worked this year, who receive the benefit of 
the earned-income tax credit, they will get their refund next year.
  What my proposal says is in January, they would begin to receive next 
year's $1,900, on their paycheck. Current law allows a recipient to get 
about 60 percent of their earned income tax credit in advance, on their 
paycheck. We calculate, of the $31 billion that is annually being spent 
on the earned income tax credit, this proposal would bring to the 
average worker, infused into the economy next fiscal year, $15 billion, 
a year before the time it would normally be in the economy. I believe 
that is good public policy. It is good to encourage work. It will help 
people who need money now to take care of their families. It will be 
coming to them in a regular way, and it will help them take care of 
their families.
  That would be a good stimulus package. It would help us next year 
when we have to balance the budget because we would have $15 billion 
less to spend on the tax refunds because it would have been paid out 
throughout this fiscal year. It would help us get back into a balanced 
budget which is important. This year, we are not going to be in a 
balanced budget. We are going to be in deficit unfortunately. Next 
year, we have an opportunity to get out. This package in that regard 
would help us do so.

  I strongly believe that is a good thing that should be considered. It 
would infuse money into the economy and have a net drain on the economy 
of zero over a 2-year period, except perhaps some interest loss to the 
Government.
  Another matter that we believe should be in this package is a 
proposal for relief for those who are unemployed. Everybody has been 
talking about that. We ought to be able to reach agreement on that. 
Senator Baucus had a proposal. The House Republicans had a proposal 
that came out of that chamber. A centrist proposal has been put forward 
by Senators Collins, Smith and Landrieu that hits the area about right. 
It increases the weeks for unemployment for up to 13 additional weeks, 
and it begins calculating that for anybody who was unemployed at the 
time of September 11. It is more expansive in that regard. We have a 
good bipartisan unemployment compensation package.
  Another thing it is time for us to do would be to complete the 
reduction of the 27-percent tax bracket down to the 25-percent tax 
bracket. We committed to doing that over the 10-year tax plan. This 
would accelerate that next year, and working Americans would receive a 
little more take-home money every week as a result of a reduction in 
that tax rate. That has a lot of support.
  One thing that has not been mentioned, but I strongly believe would 
be one of the most beneficial proposals, is to advance the child tax 
credit. Under our current 10-year tax reduction package that passed, we 
will increase the child tax credit for families to $1,000, but it will 
take nine years for it to become $1,000. I believe for next year alone 
we ought to do that. So every family who obviously is hurt the most in 
a recessionary environment would receive an additional $400 per child 
tax credit that they could use to help their families. That would be a 
good impact.
  The cost of that is about $20 billion in terms of estimated revenue 
lost to the Government, but it is a real stimulus into the economy, 
into the hands of families who will be spending it on their children. 
It will help keep the economy moving in a healthy way. That is a good 
step. It is good public policy. Families trying to raise children would 
have additional income to take care of them.
  A lot of people are at a point where they have had to cash in stocks 
and other investments that they have and have taken losses for it. For 
individuals, this allows them to deduct those losses on their tax 
return, but the limit on loss deductions is $3,000 per year. We believe 
that, particularly in light of the fact that many people may be cashing 
in investments, we should at least raise it up to $5,000 per year which 
could be helpful to people in desperate circumstances.
  One other thing that is important--and Senator Allen has been a 
champion of this and has won me over--is the need to provide a tax 
credit to encourage American families to become technologically 
literate, to encourage American families to purchase computers for 
children who are in school so they will have a computer at home so they 
can become a part of the high-tech world that is all about us today. He 
has proposed, and we have put as a part of this bill, a $500 tax credit 
for the purchase of software or computer systems for a family. To 
really get a jolt out of it, we are only going to propose that for a 3-
month period. And the computer companies, I am sure, and all the 
marketing companies and the stores will be promoting that you have a 
$500 rebate on your purchase of a computer for your family, if you have 
a student in school.

  I think that is a good step. The computer industry has been hurting 
badly, and having this money available could get them off the ground, 
get them moving again and, at the same time, help children, help them 
become educated and to become an active part of the high-tech world in 
which we now live.
  Some of the matters that are in the legislation we proposed, I don't 
believe there is a single thing in it that somebody could say is a 
special interest. It has a business provision. It has Senator Baucus's 
10-percent advance depreciation, which would encourage businesses to 
purchase equipment and allow them to depreciate a little faster, and 
encourage them, perhaps, to recapitalize in their business. That was 
Senator Baucus's 1-year proposal.
  I don't believe there is anything in this bill that does violence to 
fairness or justice. I don't think there is anything in this bill that 
in any way could be considered special interest or unfair. I believe we 
have a simple package--myself and the three Senators who have 
introduced this with me--that would infuse $75 billion into the 
economy, with virtually no bureaucracy, virtually no overhead, targeted 
to middle and lower income America--putting $75 billion into their 
hands early, allowing them to spend it and get this economy going 
again.
  I am not sure businesses--and I have heard a number of economists say 
this--are in a mood to do a lot of investing in new equipment to 
produce a lot more product if there is nobody to buy. So I think that 
the way we proceed would be to allow people who have families and who 
work every day, and who need every dollar they get to survive--give 
them a little bit more to take home. If they do, they will spend it and 
help get the economy moving again. If nothing else, it will help them 
get by, whether it improves the economy or not.

  Of course, we do have $5 billion in grant money to the States that 
would allow them to deal with emergency situations in their States for 
people who are hurting also. That has been a bipartisan project, and it 
has a little more than has been proposed in the President's request. We 
think that is a good figure that everybody can rally around.
  I believe getting a tax stimulus package together and passed is not 
that hard. It doesn't have to be lockstep the way everybody is 
negotiating now. They have dug in on every position. Some of the issues 
in my package they are dealing with and some of them they are not 
considering. My provisions do the job just as well--in fact, better 
than what I am hearing discussed in a lot of ways.
  I think the majority leader needs to be sure we don't get to the end 
of this session without time to bring this up. If they can't reach an 
agreement, we are going to have a problem. The bill was up and 
amendments were being offered. When debate and amendments were not shut 
off, the bill was pulled down. It has gone behind closed doors and we 
are sitting around here saying: Maybe they will reach an agreement; 
maybe they will not reach an agreement.

[[Page S12863]]

  I have a bill that I think we need to vote on if we can't get some 
agreement with which I and other Members are comfortable. We need to 
vote on this bill because it is a good bill. It is not that complicated 
in any way to administer or put together.
  I thank the Chair for her attention. I look forward to further 
discussions on this issue. I certainly look forward to making sure 
before this Congress recesses we bring up and pass legislation that 
will help this economy. I don't know how much it would take to do it. 
The experts say $75 billion is worth half a GDP percentage point in 
growth. That is good news. I think it is exactly the kind of shot that 
might be helpful.
  If we don't pass something, that could be a sad event also. In fact, 
the markets and people might lose confidence even more than they have 
already if we don't pass a stimulus package. It is a double burden to 
move that forward.
  I thank the Chair for listening. I thank my colleagues in the Senate 
for their consideration of this legislation. We look forward to making 
sure a stimulus package clears before we recess.
  I yield the floor.
                                 ______