[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
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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.
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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
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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.
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