[Congressional Record Volume 148, Number 124 (Thursday, September 26, 2002)]
[Senate]
[Pages S9368-S9369]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              THE ECONOMY

  Mr. DOMENICI. Mr. President, I have a statement I want to start and 
then put the remainder in the Record, and if we get time in the next 2 
weeks, I will come back a couple of times.
  The economy is much in the air now. It is not as much as perhaps the 
Iraq situation. But the Democratic Party and their leaders want to make 
it the important issue and put the war in the backseat.
  I don't think that is going to happen because the people of this 
country know the war is an imminent problem. And, if we have a war, the 
amount of money we plan to spend in the budget will probably get 
changed in a mammoth way to accommodate the needs of the war.
  When we had the war in the gulf the last time, our allies paid most 
of the bill. I recall looking at the formula that was drawn by the OMB. 
Actually, our allies just took the formula and said we are bound by the 
formula, and wrote the checks. Some of those paid as much as $13 
billion for that war. That was our friend we were all arguing about 
which has a little oil. Here is our share. Japan didn't enter that war. 
They wrote a big check. We didn't pay much for that war. We don't have 
such an agreement now. Maybe somebody will start thinking about it.
  Let me talk about the economy.
  Federal Reserve Board Chairman Alan Greenspan said recently the U.S. 
economy has confronted very significant challenges over the past year: 
Major declines in the equity markets, which none of us thought would 
ever happen. Many Americans thought it would go on forever. The equity 
market had ballooned out of all proportion, and people such as Alan 
Greenspan were giving us warnings. It did begin its downward trend and 
it still is continuing on that path.
  To date, Dr. Greenspan said the economy appears to have withstood 
this set of blows very well--the blows being the investment spending, 
the retrenchment, the tragic terrorist attacks of last September. The 
Federal budget has been able to withstand that, and the economy has 
been able to withstand that.
  The economy is not in great shape right now. But not in great shape 
either at this time are many individual problems in this country. 
Consumption is strong. Unemployment gains are creeping back up.
  But to blame President Bush is pure unadulterated, partisan politics. 
For those who talk about it being his problem, the issue would be what 
would they do to fix it? Some would raise taxes by an enormous amount; 
or by repealing the cuts that were made. Nobody with their right mind 
about the economy would suggest that.
  But when you say it is not in very good shape today, what would you 
do about it? We will blame the President. What would you do positive 
about it? A large group would say raise taxes.
  I find it hard to believe if we had to do that and came to that 
point, very many people would vote for it when they finally understood 
the negative consequences of that.
  I want to mention every now and then I look to a Democratic economist 
who is of renown, and is of the other party, and everybody knows who he 
is; that is, Democratic economist Joe Stiglitz. He was Vice Chairman of 
the Federal Reserve under President Clinton. He has written many 
articles and books on the economy.
  He has indicated, and I quote:

       This economy was slipping, and it was slipping into a 
     recession even before Bush took office as President and 
     before the corporate scandals--

  That we haven't yet determined the breadth and number of them, but 
even before they started--

       were rocking America.

  That was earlier yet than when the President took office.
  He says we were moving into a recession. What we did were the right 
things to get out of the recession. We cut taxes, and we increased 
spending of things that would spend quickly.
  We also at the same time, working with the Federal Reserve Chairman, 
got interest rates to come down. You remember how many times he cut 
them. And so you had the triad that would help a recession.

  I wonder how bad it would be if we had not done that. I wonder how 
bad the economy would be if we had not cut taxes at the right time and 
if, in fact, we did not have the Federal Reserve working in harmony 
reducing the interest rates, and if we had not spent some additional 
money, some which came because of the war costs.
  So the economic growth has started slowing down. It started in mid-
2000, well before the President took office. In 1997, more than 3 years 
before he was elected, you could begin to see, as you analyze corporate 
profits, they were coming down. This is 3 years before he went out on 
the steps and took the oath and became President of the United States.
  Rather than call this a Bush recession, we ought to call it a Clinton 
hangover. If you want to use another word for each one so there is 
nothing negative about it, that would be all right.
  In the late 1990s, we had a stock market boom and an investment boom.
  Much of the rise in the stock market and investment was sustainable, 
but some of it was not.
  We are now making up for the excesses of that period. We are finally

[[Page S9369]]

coming to grips with the need to make sure companies are honest when 
they account for their profits.
  It seems as though for a few years there in the late-90s, some CEOs 
forgot about ethics and morals. They could say just about anything 
about their profits and no one was there to check. As long as the stock 
market was going up, no one seemed to care ethics and morals, and laws 
were not enforced.
  But now we're checking. Now the SEC is doing its job of making sure 
shareholders aren't getting ripped-off. Now we're going after the 
corporate criminals.
  A few years ago, the federal government looked the other way. Now, 
thanks in large part to President Bush, that's not happening any more.
  Having said that, I believe that when the economic history of this 
era is written, what will strike people is not that we had a recession 
but that things were not worse.
  In early 2000 the NASDAQ hit 5000. If you had told people that two 
years later the NASDAQ would be treading water at about 1200, as it is 
now, they might have assumed we had gone through some sort of 
Depression. Well, as bad as things got last year, we did not have a 
Depression.
  The policies we enacted over the past two years have made the economy 
better, not worse. If it weren't for those policies who knows how weak 
the economy would be now.
  Over and over again we hear that our policies are bad for the economy 
because they turned surpluses into deficits. That is just not true.
  I have staked a large part of my career arguing for fiscal 
discipline, much of it when it was unpopular, even with many members of 
my own party. But now is not the time quibble about the budget deficit.
  The deficit this year will be about 1.6 percent of GDP. But look at 
the same point in previous business cycles. Back in the 1976 recovery, 
the deficit was 4.2 percent of GDP. In the 1980s it peaked at 6 
percent. In the early 1990s it peaked at 4.7 percent. So 1.6 percent is 
not large considering we are in the early stages of a recovery and in a 
war.
  If fiscal mismanagement were hurting the economy we would see rising 
interest rates. But interest rates are going down, not up. The rate on 
10-year Treasury Notes is the lowest in 40 years. Homeowners are 
refinancing their mortgages at a record rate. Notice that those who 
claimed the Bush tax cut would lead to higher interest rates have been 
very quiet of late regarding that key point in their argument.
  Yes, things could be better. But long term, our economic fundamentals 
are strong. Productivity is growing at about a 5 percent rate and new 
innovations continue.
  Cutting taxes was the right thing to do and we did it just in the 
nick of time. I am proud of the work we did this year and last year in 
cutting taxes and my fellow Republicans and a few Democrats should be 
proud too.
  I thank the Senate for yielding time to me, and I yield the floor.
  The PRESIDING OFFICER. The Senator from Virginia.
  Mr. WARNER. Mr. President, I listened to my distinguished colleague 
with great interest. If my colleague wishes to speak for a few more 
minutes, I will follow my colleague. I say to the Senator, I was very 
interested in what you were saying.
  Does my colleague wish to take some additional time?
  Mr. DOMENICI. I say to the Senator, that is very nice of you to 
offer. When you want to speak on the floor, you take the gamble. I have 
some other things to do. I had to wait a little longer for my position. 
You can rest assured that since I think it is pretty good, the Senate 
will hear more before we go out. And they will hear another one on two 
subjects that have to do with who is to blame for what, suggesting we 
ought to get on with doing things rather than blaming, which is what I 
think the American people would like.
  Thank you very much, I say to the Senator.
  Mr. WARNER. Mr. President, I thank my colleague. He is clearly one of 
the elder statesmen of this institution, with some almost 30 years of 
service in the Senate.

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