[Congressional Record Volume 148, Number 137 (Thursday, October 17, 2002)]
[Senate]
[Pages S10625-S10628]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE ECONOMY
Mr. HATCH. Mr. President, I wish to change the subject because I
think it is important before we leave this Congress that I say a few
words. We have all seen the news reports suggesting our friends on the
other side of the aisle want desperately to turn the focus of the
national debate back to the economy. I am glad to do so, but let it be
a full and fair debate. I hope we can talk about the recession we have
been through, the recovery that is now under way, what we have already
done to grow the economy and, most importantly, what we Members of the
Senate from both political parties propose to do about the economy in
the future.
Let us start by considering the shocks that have hit the economy
since the last year of the Clinton Presidency.
In the summer and fall of 2000, the dot-com bubble burst and high-
tech spending fell precipitously, triggering a slowdown that was
worsened by the horrendous terrorist attacks that shook our entire
economy last year on September 11 and afterwards.
Then about a year ago this week, we began discovering a few large
companies have been massively deceiving their investors, deepening the
malaise.
Finally, to top off all this bad news, oil prices have hovered around
the danger level of $30 a barrel because of war clouds in the Middle
East.
This chart shows that how our slump began during the summer of 2000.
While it would not be fair to blame all these problems entirely on the
Clinton administration, in my view, it is clear that the beginnings of
this slowdown--what some have called the ``Clinton hangover''--occurred
well before President Clinton took the oath of office.
This is not just a partisan position or partisan judgment.
As President Clinton's top economic adviser, Nobel Laureate Joe
Stiglitz, recently said:
[[Page S10626]]
The economy was slipping into recession even before Bush
took office, and the corporate scandals that are rocking
America began much earlier.
That is what happened in the year 2000 right on up to our time today.
One can see the red mark shows it began during the Clinton
administration and continued for the first year of the Bush
administration.
While these problems did not begin on President Bush's watch, we are
committed to working with the President to solve our economy's current
problems.
In of all the blows our economy suffered, consumer spending held up
very well. New car and new home sales have stayed at record levels over
the last year, and while times have been tough for some retailers,
overall consumer spending has kept right on growing. Why? Because of
last year's tax cuts.
Which part of the tax cuts helped the most? Was it the rate cuts or
rebate checks that kept spending growing steadily? Let's think about
that for a moment. Was it the rate cuts or was it the rebate checks?
Some Democrats complained that last year's tax cut did not have enough
rebates; it did not have enough immediate stimulus, they said.
Guess what? The numbers are in, and it turned out while rebate checks
sure help families sleep better at night, they do not stimulate much
spending. When the manna falls from Heaven, they do not just eat it,
they store as much of it as they can. So when the rebates came, people
did not spend most of the checks; only about a third of it. They saved
most of the money, or they used it to pay down their debt.
Those are good things to do, but I do not think we should be under
any illusions that most of these rebate checks are spent at the local
Wal-Mart.
By contrast, the permanent rate cuts let people know the Government
was going to let them keep more of their own money, not just this year,
but for years to come. When people know their take-home pay is going up
and that it is going to stay up, they feel more comfortable about
spending today, tomorrow, and into the future.
The lesson is clear: Tax rebates help spending a little bit, for a
month or two, but a permanent income tax cut gives people a green light
to spend because it helps them over a long term. A permanent income tax
cut may not be glamorous, but it does work, and if we want to speed up
consumer spending, the most effective way to do it is by speeding up
the tax cuts.
Even though consumer spending has held up, there are just not nearly
enough good-paying jobs out there right now, and we all know it. I am
seeing this in Utah where our State's economy has been hit harder than
most by the current downturn.
In fact, just today, Delta Airlines, which has a hub in Salt Lake
City, announced thousands of layoffs. My heart goes out to these
families impacted by these layoffs.
Utah has a highly educated work force, and we have more high-tech and
more tourism jobs than most States do. We saw Utah's unemployment rate
rise from about 3 percent to almost 6 percent before coming back down
toward 5 percent, a number that is still far too high. The way to bring
back these lost jobs is to bring back investment spending.
Businesses just have not been buying as much equipment as they used
to, especially high-tech equipment. Investment spending started falling
back in 2000, and while it has been recovering over the last few
months, it is nowhere near the levels of 1999.
Early this year, Congress saw that business spending had nosedived,
and we took action. We enacted a temporary bonus depreciation provision
giving companies a tax incentive to buy equipment sooner rather than
later. This powerful tax incentive is based on legislation that I
championed.
Unfortunately, large corporate bureaucracies cannot turn on a dime,
and many businesses had already worked out their spending plans before
we managed to pass bonus depreciation, but it will help in the future.
Since many companies only plan their equipment budgets once a year,
we can expect to see business purchases come back up early next year,
and that will be, in part, because of this provision. With that
revival, the weakest pillar of spending will be strengthened.
Some on the other side of the aisle have proposed speeding up and
increasing the amount of bonus depreciation, and I think that is a
great proposal. In fact, my original bonus depreciation proposal looks
quite a lot like some of the Democratic depreciation proposals being
discussed.
In another major economic accomplishment this year, Congress joined
with the President to enact two more pieces of strong pro-growth
legislation: trade promotion authority and corporate accountability
legislation.
I worked together with Members of both Houses and both parties on the
conference report because, as chairman of the Trade Subcommittee of the
Finance Committee, I served on the conference for this bill. This
report gave the President the much-needed authority to negotiate free
trade agreements.
As the President finalizes free trade agreements, first with Chile
and Singapore, and then expanding across the world, we are going to
reap real benefits from trade promotion authority. I can remember all
of the fighting on the floor over whether we were going to do that or
not. We know we should have done it, and we finally did.
The American people will benefit from lower prices for Americans
buying goods, services, and machinery; wider overseas markets for farm
products, high-tech equipment and services; and higher wages for
American workers, especially for workers in exporting industries.
The corporate accountability bill passed this year is also going to
help make sure stockholders are in charge of the corporation, not
insiders with something to hide. It is going to make sure auditors
serve the interests of the shareholders. But as I predicted on the
Senate floor back in July, we now find ourselves locked in a fruitless
debate, indeed a dangerous debate, over who can be the toughest on the
public accounting profession.
Republicans have an agenda for economic recovery and economic
security. We know what we want. We can pass this agenda this week if we
can get the majority to agree.
I have already mentioned last year's tax rate cuts. Speeding up the
date the remaining tax cuts take effect and making them permanent will
have a powerful impact for good on the economy.
We also want terrorism insurance to create good-paying construction
jobs.
Terrorism insurance has been delayed by the trial lawyer lobby, which
insists on being able to sue businesses who are the victims of
terrorism. I suspect that in the end they are probably going to win,
even though that is a disastrous way of continuing to do business. As a
result, we are going to find people who are totally innocent sued for
punitive damages in the future.
We want an energy bill that will reduce our dependence on foreign
oil, push gas prices down, and encourage conservation, all at the same
time.
I joined with a number of my colleagues to sponsor a landmark
provision, the CLEAR Act, in the energy bill that would change the
transportation vehicle marketplace by giving tax incentives to cleaner-
running alternative fuel and hybrid electric cars and trucks.
Unfortunately, the energy bill is stuck in conference, partly because
some conferees apparently will not accept an extra 10 million acres of
permanent Alaska wilderness in exchange for oil exploration that would
leave a footprint no larger than Dulles International Airport. That 10
million acres would become wilderness. It is clear that they are not
really serious about having a good energy bill or reducing our
dependence on Middle Eastern oil. If these decisions were motivated by
love for the environment rather than by ideology, we would already have
an energy bill and Alaska would have 10 million more acres of permanent
wilderness.
There are other good economic proposals that can and should be
discussed in the coming months, proposals that could strengthen our
economy now and restore to us another decade of exceptional growth.
I am convinced that ending the double taxation of dividends should be
an important part of any such plan. Our Tax Code rewards corporations
for loading up on debt, and it slows our Nation's rate of capital
formation and innovation. I think this has to end.
I will now take a moment to address one of the most puzzling charges
made
[[Page S10627]]
against our President's economic policies. Some of our Democratic
colleagues have claimed that last year's tax cut brought back the
deficit and destroyed the projected 10-year surplus. Since fiscal year
2002 is over, we now have a pretty clear explanation of why we ran a
deficit. The Congressional Budget Office is clear on this issue. We had
a slowdown that began during the Clinton administration, and continued
during the first year of the Bush administration. That hurt income tax
revenues, while a stock slump hurt capital gains revenues.
Let's look at this. How did CBO's fiscal year 2002 $313 billion
surplus forecast become a $157 billion deficit? It was not the tax
cuts. Look at this particular illustration. As we can see, the
weakening economy caused 67 percent of the problem.
New discretionary spending is $50 billion. That is 11 percent. The
economic stimulus is $51 billion. That is 11 percent. The tax relief is
$37 billion, or only 8 percent of this total pie that has literally
eaten up the $313 billion forecast which has now become a $157 billion
deficit.
A lot of it has come from our spending in the Congress. In some
respects, we are spending like drunken sailors. The fact of the matter
is that the smallest part of it, other than the ``other,'' is the tax
relief, which cost us $37 billion of the $313 billion.
Last year's recession was real, and our slow recovery is leaving
behind pockets of real suffering both in my home State of Utah and
across the Nation.
Without minimizing this suffering, let us put this in perspective by
remembering just how bad recessions really have been in the past, as
illustrated by this chart.
In January of 1980, when we had a recession, the average unemployment
rate during and after the recession was 7.4 percent. In the next
recession, starting in July of 1981, it averaged 9.4 percent. In July
of 1990, we had the beginning of another recession and unemployment
averaged 6.8 percent. Since our most recent recession, beginning in
March of 2001, unemployment has averaged 5.3 percent. It is 5.6 percent
today, which is considerably less than these other recessive periods of
time.
These are 2-year averages of civilian unemployment rates beginning
with the first month of recession. The source of this information is
the National Bureau of Economic Research and the Federal Reserve Bank
of St. Louis. It has been a lower recession unemployment rate--and when
I used to be chairman of the Labor Committee, we saw figures that said
if the unemployment rate is around 5 percent, there is basically full
employment in the country.
Now I am not saying 5.3 percent unemployment rate is full employment.
It is not good enough for me, but the fact is it is less than the other
recessive periods over the last 20 years, and that is a very important
thing.
As my friends on the other side of the aisle like to remind us, the
search for jobs is where people really feel the bite of a sluggish
economy. How does the old saying go? ``If your neighbor loses a job, it
is a recession. But if you lose your job, it is a depression.''
So I think we should compare the unemployment rates during and after
the last three recessions with the unemployment rate since March of
2001, when the most recent recession began.
It comes as no secret that the job market often gets worse even after
the economy starts growing again. Unfortunately, businesses want to be
sure that their sector of the economy is going to keep growing before
they take on more workers, and I cannot blame them for that.
A glance at this chart makes it clear that while our unemployment
rate has been far too high, nowhere near the lows of 4 percent that we
saw a few years ago, we have done better than we could have hoped.
I have not seen many of my colleagues making serious comparisons
between this recession and previous recessions, and we can see why from
this particular chart. There is just no comparison.
During the back-to-back recessions of the early 1990s, when the
Federal Reserve finally broke the back of inflation, unemployment rates
hovered near 10 percent. During our last recession 10 years ago, we
suffered from jobless rates much higher than anything we have seen
today.
Today's weak job market is real. It means Americans suffer through no
cause of their own, and it is something we need to work together to
fix. While we work to fix these problems, let us remember in our own
lifetimes we have seen the face of deep recession.
While there are regions of the country that face steep hurdles and
devastated job markets, the Nation as a whole is seeing a recovery. For
that, our Nation can be grateful.
Our President's policies, the Federal Reserve's aggressive,
preemptive rate cutting, combined with the flexibility of our free
market system, keep unemployment rates much lower than in past
recessions.
By enacting more job-creating, growth-enhancing initiatives, we can
do even better. Accelerated tax cuts, terrorism insurance, and an
energy bill should all be part of our recovery agenda. We can do these
this year, even though this is our last real day of this session. We
still can get this done, since we all know we are coming back for a
partial lame duck session.
We do not need another economic forum. What we need is legislative
action. It is pretty pitiful that the Senate has not enacted one non-
defense appropriations bill--not one. For the first time in over 20
years, we do not have a budget.
I will tell my colleagues the reason we do not have a budget. In the
past, I can remember when we on this side were in the majority and had
to come up with a budget, and it was really tough to do because we knew
we would be subject to all kinds of cheap criticisms from others who
wanted to score political points. But we always came up with that
budget, and we endured the cheap political criticisms.
I have to say I think part of the reason we do not have a budget
today is that the other side is afraid we might use the same type of
cheap criticisms on them that were used on us for all of these years. I
hope we will not do that. I hope what we will do is work together in
the best interest of our country.
I am sure there are good ideas on both sides, and I hope we can work
together to bring in all the good ideas we can find. The strength of
our democracy, as the strength of our businesses and our families,
comes from our willingness to listen to each other. After we listen and
negotiate a compromise, we need to take action--action to restore the
economy to its potential, action to restore a healthy job market,
action to ensure that our workers are the most productive and best paid
in the world. It is time for us to live up to our duties. The American
people are waiting for action. I think we still have enough time, even
though it may have to be during a lame duck session, to be able to get
this done.
One last thing. I, for one, am very disappointed that we were unable
to get a prescription drug benefit bill passed. Everybody knew the
tripartisan bill would have swooshed through the Senate Finance
Committee. We were foreclosed from allowing that bill to come through
the normal legislative process because it was known that it would have
swooshed through and it would become the bill of merit on the floor and
it would have passed the Senate.
That bill had $70 billion more in it, in the final analysis, than
what those on the other side asked for last year.
Instead, we had a bill which was brought up pursuant to rule 14,
which is a procedural mechanism on the floor which allows you to call
up a bill once and, if it is objected to, then it goes on the calendar
and on the agenda of the U.S. Senate.
We had a bill called up that would have been probably twice as
expensive as this $370 billion bill we had. It would have passed--our
bill would have passed. The competing proposal was twice as expensive
and never once had the final CBO scoring necessary for a bill of that
magnitude on the floor of the Senate. It was pulled down because it
clearly did not have the votes, where we did.
We could have had the prescription drug benefit package for our
seniors in this society, had it not been for politics. I, for one,
lament that. We could have had it. We had Democrats, Republicans, and
an Independent in support of that bill.
Would everybody have been pleased with that bill? No, but it would
have
[[Page S10628]]
passed and would have passed overwhelmingly. Now we do not have a
prescription drug bill for senior citizens, all because of the way this
floor has been managed over the last year or so.
I have to tell you I think it is going to be virtually impossible to
pass it next year, especially if we are in a conflict with Iraq. That
will have to take precedence and the spending for that will have to
take precedence. Everybody knows that. Everybody knew those were the
facts. This was the year to get that job done, and we had it done. I
believe we could have gotten it through the House.
As somebody who has been on the passing end of a lot of legislation
over the last 26 years, I think I can speak with authority. We could
have gotten it through the House as well, and it would be law today.
So I, for one, think we have lost a tremendous opportunity, mainly
because of politics and the hoped-for advantage that one side might
have had over the other. Our side would have supported the tripartisan
bill, and I think a considerable number of Democrats would have, too.
But we don't control the floor and we were not able to get that bill
up. I am disappointed because I think we should have done that.
There are a lot of other things I wish we could have done during this
year. Had we had a budget, we might have been able to. Had we had
appropriations bills, we might have been able to. I just wish all our
colleagues well. At the end of this session I have good will towards
every person in this Chamber. I care for every Member of this body, and
I will tell the public at large that most everybody in the Congress I
know happens to be a good person who is trying to do the job to the
best of their ability.
But occasionally politics gets in the way and we do not get things
done that should be done. This year has been a prime example of that,
in my humble opinion.
But I wish everybody well. With that, I yield the floor and suggest
the absence of a quorum.
The PRESIDING OFFICER (Mr. Carper). The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. HATCH. Mr. President, I ask unanimous consent the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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