[Congressional Record Volume 148, Number 25 (Friday, March 8, 2002)]
[Senate]
[Pages S1698-S1701]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         ECONOMIC RECOVERY BILL

  Mr. DASCHLE. Mr. President, earlier this morning, we had the 
opportunity to vote on the economic package that we have been working 
on now for some period of time. Our deliberations on this subject began 
almost 6 months ago.
  In fact, I do not think that the timing of this action is a 
coincidence. Monday will mark the 6-month anniversary of September 11. 
It will also be the days that workers who lost their livelihoods on 
September 11 will exhaust their unemployment benefits.
  Those who have until now opposed a bipartisan economic recovery bill, 
and the unemployment insurance extension it includes, have wisely 
decided to relent in their opposition before the anniversary of that 
awful day arrives.
  Two months ago, I proposed a common-ground economic recovery bill 
that contained only provisions supported by both parties. It included a 
13-week unemployment extension, tax rebates for persons left out of 
last year's tax cut, business tax cuts to spur investment and create 
jobs, and fiscal relief for the states.
  In an attempt to break the logjam and bridge disagreements between 
the parties, Democrats agreed to give up the economic priorities we had 
pressed last year, but which were opposed by Republicans. In exchange, 
we proposed that Republicans give up their priorities which were 
opposed by Democrats--namely, repealing the alternative minimum tax for 
corporations, including Enron, and accelerating the rate cuts enacted 
last year.
  Regrettably, Senate Republicans blocked that measure, despite the 
fact that when votes were taken our consensus package received 56 
votes, while the Republican bill had just 48 votes.
  The bill we have just approved is similar in its approach. Like the 
common-ground bill Democrats proposed in January, it leaves out the 
highly controversial proposals Republicans insisted on previously. And 
it includes a top priority for Democrats--an extension of unemployment 
insurance. For these reasons, I support this legislation--although I 
would point out one serious omission.
  As I said, our bill included one year of fiscal relief for the states 
through an increase in the match rate for Medicaid. Sixty-two Senators 
voted for an amendment to provide this relief for 2 years. 
Unfortunately, the bill passed by the House does not include this 
important measure.
  This fiscal relief provision is the top priority of the bipartisan 
National Governors Association. It would assist States with the serious 
revenue shortfalls they are experiencing as a result of the recession. 
Given the adamant opposition of some Republicans and the difficult time 
constraints under which the Senate is operating, it is not possible to 
address this issue in the time available to us this morning.
  I say to the opponents of State fiscal relief: Dropping this 
provision is a serious mistake, and one I believe they will regret. In 
the long run, I do not believe we can avoid dealing with this problem.
  There are other measures in this bill some of us might have written 
differently. Many of us would prefer a shorter time period for the 
bonus depreciation provision, for example, but on balance, the bill is 
a vast improvement over what Republicans and the administration 
advocated originally, and I believe it deserves the support it received 
this morning. I am grateful for its passage.
  Mr. BYRD. Mr. President, today the Senate at long last passed a 
thirteen-week extension of unemployment benefits.
  This is a relief to over 3,000 workers in my State of West Virginia 
who have exhausted their regular unemployment benefits since September 
11, 2001, and, it is help that could have--and should have--been 
provided sooner, if it had not been delayed unnecessarily by those who 
have sought to provide tens of billions of dollars in tax cuts for a 
so-called ``economic stimulus.''
  Much has changed since an economic stimulus was first proposed in 
response to the September 11 attacks. The economy is growing again, 
business investment is on the rise, and workers are returning to their 
jobs. Both the stock markets and the economy have proved to be more 
resilient than economists had expected.
  And so I find it difficult to accept the argument that $43 billion in 
tax cuts is necessary to ignite an economic expansion that appears to 
be already underway.
  What is more, I find it difficult to support legislation that would 
result in a further erosion in the budgets of state governments. I 
served in the West Virginia Legislature, and I understand and 
sympathize with their budgetary constraints. The depreciation provision 
that was included in the bill that was passed today is projected to 
cost my state $86 million in revenue. My State cannot afford to lose 
that revenue.
  The Federal budget position is not much better, Mr. President. This 
year's budget and appropriations process promises to be very difficult, 
and tough choices will have to be made. With projected deficits for the 
current and upcoming fiscal years, the mounting costs of our military 
efforts abroad, the need to improve our homeland defenses, and the 
long-term financing problems facing Social Security and Medicare, I 
could not in good conscience vote to spend $51 billion to spur an 
economic expansion that, as Federal

[[Page S1699]]

Reserve Chairman Alan Greenspan told the Senate Banking Committee 
yesterday, is already well underway.
  What is unfortunate, is that in opposing this package of tax cuts, I 
was forced to oppose a number of tax provisions that would aid the City 
of New York. I have tried to be helpful to the people of New York State 
in the aftermath of the September 11 attacks. Last year, I helped to 
secure $11 billion through the Appropriations Committee--almost $2 
billion more than was proposed by the president--to help New Yorkers 
rebuild their city.
  Nevertheless, I am glad a thirteen-week extension of unemployment 
benefits has at last been approved, and am only sorry that it could not 
have been provided sooner and without tens of billions of dollars in 
what is likely to be unnecessary stimulus.
  Mr. LEVIN. Mr. President, although I strongly support an extension of 
unemployment insurance benefits, because this bill--which is called a 
stimulus bill--would in reality have a detrimental impact on our 
economy, I cannot support it.
  First, while I agree that bonus depreciation for corporations should 
be included in an economic stimulus package, this bill provides it for 
three years. The package is intended to stimulate the economy now, in 
2002. Giving a company 30% bonus depreciation in 2003 and 2004 does not 
help stimulate the economy in 2002. The incentive to invest now, when 
we need it, is not just missing. In fact, since companies know that 
this bonus depreciation will be around for three years, they don't need 
to invest now when the economic picture is still uncertain. The 
incentive will be reversed--companies can choose to delay investments 
and still take advantage of the bonus depreciation in 2003 or 2004. A 
three year bonus depreciation provision therefore could actually 
encourage businesses to wait to invest, and therefore be 
counterproductive to the goal of jumpstarting the economy.
  Not only is the bonus depreciation provision not stimulative, it is 
also extremely expensive. This provision will cost us about $97 billion 
over the next three years at a time in when we are already projected to 
tap into our Social Security surpluses. That's almost 80% of the three-
year cost of this bill in this one provision alone. If we passed bonus 
depreciation for two years or one year--time periods which may actually 
encourage immediate investment and stimulate the economy--we would save 
anywhere between approximately $30 billion to $60 billion in revenue. 
That's money we could use to help protect Social Security, pay down the 
debt, pay for a prescription drug benefit, or rebuild some of our 
nation's crumbling schools. Instead, under the guise of ``stimulus,'' 
this tax break for corporations will have real impacts long after this 
recession has ended. That's bad policy, and I cannot support it.
  Also, this bonus depreciation provision will severely harm our states 
at a time when many are facing severe budget shortfalls. The bill is 
estimated to cost states some $14 billion over the next three years; 
Michigan will lose an estimated $144 million over the next three years 
from this bonus depreciation provision. That is money Governor Engler 
has argued Michigan cannot afford to lose. Instead of stimulating 
growth in our states, we are making the economic picture worse.
  I also have concerns about the five year extension to the Subpart F 
exceptions concerning foreign subsidiaries of U.S. corporations located 
in tax havens. While many Subpart F exceptions have a valid business 
purpose, there are loopholes in the law that are being exploited that 
allow some corporations to combine the exceptions with the use of tax 
haven jurisdictions to avoid paying a fair share of taxes. Most 
extensions in this bill are for no more than two years, but the 
extension for Subpart F in this bill is for 5 years. That's not 
appropriate given concerns about loopholes in Subpart F. I had hoped we 
would have provided the extension for no more than 2 years during which 
time we would have hearings on this important issue to get to the 
abuses. Instead, this bill extends the exceptions, unchanged, for five 
years time at a cost of $9 billion. This issue is something I will 
continue to pursue. Tightening up Subpart F to prevent it from being 
used for purposes for which it was not intended requires our prompt 
attention.
  There are some important provisions in this bill. I strongly support 
the extension of unemployment benefits for an additional thirteen 
weeks; I support the aid to New York City; and I support the extension 
of the Welfare to Work and Work Opportunity tax credits. Regarding the 
extension of unemployment benefits, I voted earlier this year for a 
bill to accomplish that. Congress should have taken this action months 
ago. As I have said previously, we have an obligation in times like 
these to assist Americans who have lost their jobs. Many are suffering 
right now and need our help. But their needs go beyond just a simple 
extension of UI benefits. While I am pleased that this bill contains 
the additional 13 weeks of benefits, it does not go nearly far enough 
in providing the help that is needed--it does not provide any health 
care assistance to our unemployed, increase weekly benefits, or expand 
unemployment insurance eligibility.
  Because of this bill's short-term costs, the harm it causes to our 
states, its lengthy extension of a provision that may be being abused 
for tax avoidance, and the fact that over 50% of its 10 year costs go 
to provisions that are not really stimulative to our economy, I cannot 
support it.
  Mrs. CARNAHAN. Mr. President, today I am pleased to vote in favor of 
legislation that will extend unemployment benefits for workers across 
America who have lost their jobs since this recession began last March. 
Congress ought to have acted much sooner. Thousands of people have 
exhausted their unemployment benefits and have had to resort to 
extraordinary measures to take care of their families while they look 
for another job. They should not have had to wait this long for 
assistance. I am relieved that they will not have to wait any longer.
  This bill also provides tax relief to businesses in order to boost 
the economy and ensure a robust recovery. I have long supported 
provisions to provide bonus depreciation and net operating loss carry 
back to businesses. I believe that these steps will help our economic 
engine create more jobs. This legislation also includes tax provisions 
that have recently expired or are about to expire. It extends the 
Welfare to Work tax credit which is so vital to our hopes for renewed 
economic growth. And it provides tax deductions to construct the 
infrastructure necessary for the widespread use of renewable fuels such 
as ethanol.
  In addition, I strongly support the measures included in this bill 
that will contribute to the recovery of New York City. The devastation 
suffered in lower Manhattan last September will be difficult to 
overcome. It will take a long time. But all Americans want to see the 
city reclaim its standing as a proud center of commercial activity. The 
measures included in this legislation are an important step in that 
recovery process.
  Let me state for the record, I have some reservations about this 
bill. I do not believe that this is the best stimulus package the 
Senate has considered this year. I strongly supported the consensus 
package offered by Senator Daschle in January. That bill would have 
provided tax rebates to those low-income Americans who did not receive 
them last year. It would have limited the business tax incentives to a 
shorter timeframe, thereby really promoting investment in the near 
future. I have also been very supportive of efforts to help unemployed 
workers secure health insurance for themselves and their families. I am 
very disappointed that this legislation make no progress on that front.
  And most important, Senator Daschle's bill included financial 
assistance to our states that are facing such dire fiscal crises. I 
supported increasing the Federal matching money for the Medicaid 
program to help states meet the additional demands for social services 
that are being placed on them as they respond to the economic downturn. 
Most states do not have the option of engaging in deficit spending, no 
matter what the circumstances. Yet the legislation we have before us 
today will make their job more difficult. Rather than lending a helping 
hand to states, we have just reduced their tax revenues. I believe this 
is the largest failing of this bill. And I will continue to work with 
my colleagues to find ways that we can help states cope with the 
pressure on their budgets.

[[Page S1700]]

  In spite of its flaws, I support this compromise legislation. It is 
not the bill I would have crafted myself, but I believe that every 
Senator here could make the same statement. this is a compromise. And 
on balance this legislation will be good for our economy, and is vital 
for those workers who are still struggling to find new jobs.
  Mr. BAUCUS. Mr. President, the Job Creation and Worker Assistance Act 
of 2002 contains a package of technical corrections to EGTRRA, the tax 
cut bill we enacted last year. Among these technical corrections is a 
provision that corrects an unintended drafting error that prevented 
increased contributions to Simplified Employer Pension plans--also 
known as SEPs. Congress raised the percentage of compensation limit on 
all defined contribution plans, but the drafters failed to make the 
conforming change that would also have raised the percentage of 
compensation limit on SEP plans by an equal amount. Clearly, we 
intended to include SEP plans when we raised the compensation limit for 
defined contribution plans. As a result, this technical correction is 
entirely appropriate.
  There is no doubt this Congress intended for employers who sponsor 
SEPs for their workers to be able to contribute the maximum annual 
amount that we authorized under the law. However, we also intend that 
SEP plans comply with the law just as all other pension plans must.
  The Treasury Department has authority under existing law--Internal 
Revenue Code Section 408(l)(1)--to impose reporting requirements on 
SEPs. However, such requirements have not yet been implemented through 
any regulation.
  The Internal Revenue Service has indicated many SEP plan sponsors may 
not be in compliance with rules that require SEP plan contributions be 
provided to rank-and-file employees along with owners and key 
employees. Much of this noncompliance may well be the result of the 
absence of reporting requirements.
  The tax subsidy for SEP plans is a substantial one, and under the 
provisions of EGTRRA and this technical correction, that subsidy will 
grow significantly.
  Had this tax package gone through the usual legislative procedure--
including a conference from which a conference report containing 
legislative history would have emerged--it would have included 
committee report language urging the Treasury Department to exercise 
their existing statutory authority under IRC Section 408(l)(1) to 
impose reporting requirements on SEPs.
  In the absence of such a committee report, I urge the Treasury 
Department to act expeditiously to issue clear, simple SEP reporting 
requirements so that Congress can be confident that those working for 
SEP plan sponsors are getting all the pension benefits to which they 
are entitled.
  Ms. CANTWELL. Mr. President, I rise today to impress on my colleagues 
just how important this legislation is to the workers in the Nation who 
have borne the weight of this recession that was so exacerbated by the 
September 11 incidents.
  My colleagues have heard me say this again and again, but the Pacific 
Northwest has suffered extraordinarily in the past year. My State of 
Washington now has the dubious honor of having the second highest 
unemployment rate in the Nation, behind our neighboring State Oregon.
  We had a seasonally adjusted unemployment rate of 7.5 percent in 
January--and the insured unemployment rate is above 5 percent.
  I have analysts in my State who foresee a wave of layoff notices in 
the pipeline and estimate that the State is going to hit 8 percent 
unemployment when the February numbers come out later this month.
  Why is this the case? Well, we have a number of factors at work. I 
would like to give my colleagues a better understanding of the economic 
circumstances affecting my State.
  Even prior to the tragic events of September 11 and even prior to the 
recession that may have begun in the early months of last year, 
Washington's economy was facing hurdles.
  We have seen significant layoffs in aluminum, agriculture, and high 
technology--due to persistent droughts, the high cost of energy, 
massive reductions in timber harvests, and declining export markets.
  My State is the most trade dependent State in the Nation on a per-
capita basis, and September 11 had a devastating impact on the aviation 
industry. In October, the Boeing Company announced that it will lay off 
an estimated 30,000 commercial division workers. Approximately 80 
percent of those workers are located in the State of Washington.
  The first layoff of Boeing workers--nearly 4,000--occurred on 
December 14, and the company set a schedule of layoff notices for the 
following months that predicted twelve-to-fourteen hundred job cuts per 
month through June of this year.
  But it does not stop there. We have seen from previous recessions 
that when a Boeing worker is laid off, approximately two more jobs are 
lost further down the supply line.
  So where does that leave us? When all is said and done, we will 
probably have at least 40,000 layoffs in our State that will be 
attributable to the events surrounding September 11. Some projections 
suggest that the number may go as high as 65,000.
  I mentioned previously our statewide unemployment rate of 7.5 
percent, but even more unsettling is the fact that 14 of Washington's 
39 counties have unemployment rates above 10 percent. In Ferry County, 
we are facing 15.1 percent unemployment. That same figure is 
13.3 percent in Franklin County, 16.8 percent in Adams, 12.1 in Chelan, 
11.5 percent in Grays Harbor, and the topper is 17.1 percent in 
Klickitat.

  If this is not an emergency, I do not know what is.
  That is why we have insisted, for months now that the Senate pass a 
simple unemployment insurance extension of at least 13 weeks.
  It is extremely disconcerting for me to know that so many workers 
displaced after September 11 have already reached or are nearing the 
end of their benefits eligibility. Since September 11, about 1.3 
million workers have exhausted their unemployment benefits throughout 
this Nation. In Washington State alone, more than 42,000 workers 
exhausted UI claims from September 11 through the beginning of March.
  And at the same time, heavily affected States and workforce areas 
throughout this Nation are running out of training dollars.
  That is why I and my colleagues have fought for emergency training 
dollars; that is why we have fought against cuts in WIA funding that 
were proposed in budget; and why we have fought for this temporary 
extension in UI benefits.
  This is about giving workers a chance to get back on their feet. It 
should also be our priority to invest in training those workers, so 
that we'll be ready with the highest-skilled workforce when we get the 
economy jump-started again.
  My State has taken an aggressive approach to retraining our 
workforce, and has invested State dollars to provide the necessary 
support for displaced workers to put food on the table while they get 
skills training.
  This is the direction that our Nation should be heading--and it is 
one that we should be encouraging as we finally take this step to get 
the federal aid to the States. With the help of the majority leader in 
February, we were able to pass a clean 13-week unemployment benefit 
extension that took into account the unique situation of States that 
have aggressively worked to provide more substantial benefits for 
displaced workers. The majority leader and his staff have been 
tremendously helpful in recognizing these concerns and ensuring that we 
were providing the maximum assistance to all States.
  I want to be clear, I am extremely pleased that the House has finally 
come to the conclusion that workers are desperate for this 13-week 
federal support, and has finally set politics aside to do the right 
thing for our workers, and our Nation as a whole.
  I have worked to ensure that the language of this legislation is 
consistent with the extended benefits offered by our State--so that one 
of the most heavily impacted States in the Nation is able to fully 
benefit from what we are doing today.
  I understand that the Department of Labor has promised to provide a 
letter of interpretation of the House-passed legislation that is 
expected to clarify

[[Page S1701]]

these issues, and specifically, the technical order of benefits that 
workers will be expected to receive. I urge the Secretary to get this 
assurance to us immediately, so that our State can plan to meet the 
needs of workers who have exhausted or will soon exhaust their 
benefits.
  It was my intent, and I understand it was the expressed intent of the 
drafters in the House, to provide the 13-week temporary federal UI 
benefit immediately after the expiration of regular State unemployment 
insurance benefits--which is typically 26 weeks.
  While I am disappointed that the House language is not explicitly 
clear on this matter, as was the Senate bill, I am pleased to hear that 
the Department understands our intent and will reportedly carry out 
these provisions in keeping with that intent.
  I will be watching to ensure that the Secretary follows through on 
this commitment and puts the Department's priority where it should be--
on providing as much assistance as possible to the areas of this Nation 
that desperately need it--and to provide it in a timeframe that truly 
reflects the urgency of the situation.
  Again, I appreciate the phenomenal work of the majority leader and 
the entire Senate in doing its work on this bill months ago; and now 
that the House has finally come to the table, I urge that we move 
quickly to get it enacted and get extended benefits out to workers who 
need it most.
  Finally, I will add that I am pleased with the targeted business tax 
incentives contained in this stimulus package. By providing both bonus 
depreciation for capital investments, and increased write-offs for 
business losses, we encourage economic expansion and development. By 
giving workers the resources to invest in themselves through training, 
education and health care, we provide the means for this expansion.
  Additionally, I am pleased that this package contains the so-called 
tax extenders that promote research and development across so many 
industries in our country.
  The country is at an economic crossroads and the choices we make 
today will affect us for years. We must maintain our fiscal discipline 
and invest in the nation's future business, education and worker needs.
  The package we are approving today invests in the next generation of 
our economy as businesses recover from the weakened economy.

                          ____________________