[Congressional Record Volume 149, Number 32 (Thursday, February 27, 2003)]
[Senate]
[Pages S2876-S2879]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                              The Economy

  Today, I will focus in particular on the problem, along with the 
drastic, dramatic threat of terrorism we face daily and the prospect of 
war with Iraq, which we heard the President talked about last evening, 
that is probably uppermost in the minds of my constituents in New 
Jersey and, I suspect, across the country, and that is the state of our 
economy. It is in serious need of attention.
  I have been listening to New Jerseyans from around the State, from 
all walks of life, all ethnic, religious, racial backgrounds, the long-
term unemployed, to manual laborers, to midlevel managers, to CEOs, to 
retirees and soccer moms. For just about all of them, there is a 
tremendous sense of anxiety with respect to the state of our economy 
and their families' economic security. People are concerned about 
whether they will have a job, whether their savings will be there when 
they retire, whether they will be able to pay for their college 
educations, whether they will be able to have health care. There are 
serious concerns, flat-out kitchen table concerns for all Americans. I 
know that is the case in my home State.
  An anecdotal perspective on this country's anxiousness has now been 
backed up by hard statistics from the conference board released this 
week.

[[Page S2877]]

Sometimes we divorce these statistics from the reality. I certainly see 
it in people's faces and the words, but we saw it actually monitored in 
a statistic released by the conference board this week. We saw consumer 
confidence drop from 78, almost 79 percent, of the population last 
month to 64 percent. That is the lowest level since October of 1993. 
That is probably one of the sharpest drops in history; I did not check 
the actual number, but far greater than post-September 11, and it is 
reflective of a dramatic undermining of the strength of well-being felt 
by most Americans.

  Americans around the country are deeply concerned about our Nation's 
economy. They have a good reason to be. After all, since January 2001, 
the number of unemployed has increased by nearly 40 percent--almost 8.5 
million people. About 2.5 million private sector jobs have been lost in 
that period, and there are now about 2.5 job seekers for every job 
opening in America. Think about that, 2.5 people applying for every job 
now available.
  Not only have the number of unemployed Americans increased, those out 
of work are now jobless for longer periods of time. Over the past year, 
the average number of weeks individuals have spent unsuccessfully 
seeking work has increased by about a month, and 20 percent of the 
unemployed have been looking for work more than 6 months. There are 1 
million of these long-term unemployed workers in America and almost 
100,000 falling off the rolls for unemployment insurance benefits each 
month. Just slightly fewer than 100,000 each month are dropping off the 
benefits because they can't find jobs.
  While there are no great and solid statistics on it, there are a lot 
of people dropping out of the job market. The job market is not 
growing, and it is one of the reasons--the statistics show the 
unemployment rate certainly up dramatically and skyrocketing--a lot of 
people have just stopped looking. The lack of jobs has also slowed wage 
growth. Recently, only those workers with the very highest of incomes 
have experienced any wage increases in the economy, any wage increases 
at least that have outpaced inflation. For lower wage earners, that 
growth has absolutely stalled to zero. That is not, obviously, helping 
create the demand that will drive our economy and make a real 
difference in people's lives.
  The Bush administration's record on job creation is on track to be 
the worst in 58 years. In fact, to just equal what transpired during 
the Eisenhower administration, which currently has the worst record, 
you would have to create 96,000 new jobs each month starting today and 
continuing each month for the remainder of this President's term; 
96,000 is a lot of jobs to create, particularly when we have been 
losing jobs at a rate almost that fast each month.
  It is extraordinary what we have to do to turn the economy around. 
Without a significant increase in job creation, we will have the worst 
4-year record in the history of any President.
  Unfortunately, there is little evidence to suggest that it will turn 
around. For instance, according to the employment outlook survey 
conducted by Manpower, Inc., which came out this week, which is the 
private sector's best gauge of what is going on in the employment 
market, only 22 percent of America's employers are going to increase 
the number of jobs in the upcoming two quarters. The rest of them are 
either going to reduce jobs or stay the same.
  Mr. President, 22 percent is a very low number by any historical 
measure. I don't understand why we are debating one job on the floor of 
the Senate when we are failing to address the fundamental needs and 
requirements for all American families, their jobs, and their well-
being.
  Of course, the problems with the economy are much deeper than just 
reflected in what is probably the most important place--the job market. 
But there is a lack of confidence in a whole host of sectors in the 
American economy. Our businesses are now operating at only about 75 
percent of capacity. That is well below any of the averages we have had 
historically, which is about 81 percent. Our States are suffering with 
some of the most severe fiscal crises they faced in decades, forcing 
Governors and State legislators to approve steep tax increases. In my 
State, the average increase in property taxes was 7.1 percent. New York 
City increased property taxes 18.5 percent, and they are trying to put 
a commuter tax on so everybody who surrounds the city is helping to 
bail it out with lots of legitimate needs on homeland defense and first 
responders. We are putting unbelievable pressure on those individuals 
who are responsible for State and local governments.
  In the upcoming fiscal year, estimates of the total State deficits 
are roughly $90 billion cumulatively. And we are talking about a $36 
billion tax cut to be administered this year. That is way overblown by 
what is happening at our State and local levels.
  Briefly, I will mention that investors are in a state of shock. The 
stock market has declined dramatically in the last 2 years and couple 
of months, losing almost $5 trillion in value in that period of time. 
Those are unbelievable numbers, but when you translate that into 
401(k)s and IRAs of individuals--at least in my State--I think that is 
about a 40 percent decline in value, on average. It is a huge loss of 
the retirement security that many families have seen happen in their 
financial well-being. When the President's program was announced in 
early January, actually the Dow Jones Industrial Average was supposed 
to be benefited by that program, but it dropped by over 10 percent.
  Our Federal budget, which 2 years ago was projected to enjoy a 10-
year surplus at $5.6 trillion, now looks at record deficits for 
absolutely years to come--as far as the eye can see, some would say--
and will be increasing the public debt over the same horizon as we 
projected that $5.6 billion surplus to $2 trillion worth of public 
debt. That is a fiscal reversal in this country of $8 trillion. It is 
an $8 trillion negative cash swing in the country's cashflow.
  I don't want to tell you what I would do if I were back running a 
company and we had an $8 trillion negative cashflow, but it would 
probably be grounds for change in policies and programs--maybe even a 
change in CEOs.
  When you add all these concerns together, it is clear that the 
economic record of the Bush administration is bordering on abject 
failure. Now the administration's response to the problem is, let's do 
more of the same. Having based its economic policy on large tax breaks 
for the most fortunate among us, the President's response to that 
failed policy is let's stay the course, let's have more tax breaks 
targeted for those with the highest income, and let's run larger budget 
deficits and increase our national debt even more, and let's reduce 
national savings--which is the way we create growth in this country--
even more.

  Whatever happened to the simple view that I think there has been a 
bipartisan sense of, which is that rising tides lift all boats? Are we 
not thinking about the economy in its totality? Why don't we have 
everybody participating? I don't understand why we are sticking with 
policies that look to be not serving the country well.
  As I have suggested, there used to be a business leader who said, 
``If it's broke, fix it.'' It is really nothing more than common sense. 
If things are not working, I think you have to adjust policies; you 
have to think about doing something differently if you are stuck in a 
rut. This administration is doing just the reverse. It has dug itself 
into a hole, and its response is to dig deeper. If we don't challenge 
these policies, the long-term implications could reduce our Nation's 
standard of living not just in the near term but for decades to come.
  At a time when we are challenged with domestic security and 
international security, when we are asking for sacrifice from our men 
and women in uniform, for all of the country to understand we have 
serious challenges to our national security, why we are not 
understanding that this is a time for us to pull together and have 
shared sacrifice is hard for me to understand.
  Frankly, if one projects the cost of the President's tax cut package 
beyond 10 years--if you put that structure in place while the 
demographic bubble of the baby boomers comes into play, frankly--I 
don't care about dynamic scoring--we will end up running, by almost all 
objective analyses, catastrophic deficits, as Chairman Alan Greenspan 
testified just this morning at a House hearing on aging. It will be

[[Page S2878]]

a real challenge to be able to maintain Social Security and Medicare at 
anything similar to today's programs for the future seniors of America.
  We are putting those programs at risk, we are putting our fiscal 
position at risk, if we stay the course with the policies we have 
today. Considering all these facts, unfortunately, it is difficult for 
the administration to provide effective leadership, in my view, on the 
economy because its credibility has been badly eroded. There is a 
tremendous credibility gap, and it results from the repeated use of 
figures and claims that are just badly misleading in many ways. As a 
matter of fact, starting to come out are regular analyses by 
economists, people in the press, and I think one needs to honestly look 
at and challenge what some of these predictions and analyses point to 
and compare them with the facts.
  Let me provide a few examples. The President's rhetoric would lead 
one to believe that his tax plan will provide a meaningful economic 
stimulus, get jobs growing, and it is all about jobs. When you dig into 
the numbers, it turns out that the reality is very different. In fact, 
only $36 billion of the President's planned $675 billion on the table 
would kick in this year--$36 billion in a $10 trillion economy. It is 
just an absolute drop in the bucket relative to what would be needed to 
actually drive this economy forward, by anybody's measure, any 
objective measure of what it takes to get an economy moving.
  There is virtually no one in Congress I have been able to find who 
would argue that this is a program that will stimulate or revitalize 
this economy, nor does it make sense to argue that the President's 
dividend exclusion somehow is going to stimulate the economy, when its 
real effect will be to shift cash off the corporate balance sheet. If 
corporations are going to invest in jobs and research and development, 
and if they are going to put money to work in building, plant, and 
equipment, they need cash. You cannot go to a bank unless you have 
margin to put down. You need to invest in those things to drive our 
economy.
  By definition, dividend exclusion is going to take money off the 
balance sheets of companies, and the capacity to invest and retain and 
create jobs is going to be diminished. That is why there is this 
argument about whether, if you are going to have a dividend exclusion, 
you ought to at least do it at the corporate side of the income 
statement as opposed to through an exclusion.
  We have heard that from Chairman Greenspan. We see that from almost 
any reasonable economic analysis. Cash on the balance sheets is how you 
get business done, as far as investment and creating jobs. It is almost 
a truism. Instead of driving economic growth, it is actually 
antigrowth, and I think we will end up with less economic stimulus by 
the nature of the structure, even if we thought it was an appropriate 
time for that reform on something other than a revenue-neutral basis. 
In other words, the President's claims about the stimulative impact of 
his proposal, in my view, and I think a vast majority of independent 
analysts, is little more than rhetoric. The reality is quite different.
  There are other elements with which people can deal with regard to 
the credibility of the proposals of the administration claiming 
benefits of this tax cut are going to go--I think this is the quote--
``92 million Americans receive an average tax cut of $1,083.'' That is 
the claim.
  As we are hearing over and over, that is pretty misleading because 
the average tax cut is inflated by the huge breaks going to a very 
narrow set of folks, while a lot of other people are getting very small 
tax cuts. In fact, a half of all taxpayers would get a tax cut not of 
$1,083, but less than $100. This is a difference between mean and 
average, and 78 percent of Americans would get reductions of less than 
$1,000.
  When I went to business school, our required reading included the 
book ``How to Lie with Statistics.'' There are some spinmeisters who 
must have reviewed this work and learned it well, as far as I can tell. 
I am sure Americans understand how averages are put together, and they 
can cover great sins.
  Similarly, the White House likes to claim the amount of income tax 
paid by high-income Americans would actually rise under this proposal. 
We hear this under the arguments of class warfare. When you consider 
the real measure of who benefits in terms of increases in something 
that is simple for people to understand, aftertax take-home pay--the 
stuff people can actually buy groceries with or pay the bills with--it 
turns out that--no surprise--it is the most fortunate who do best under 
the Bush plan.
  The tax reduction for those making $45,000 would amount to less than 
1 percent of their aftertax take-home pay. Those making more than 
$525,000 would see an increase of more than three times that rate, and 
in real dollars those are substantial numbers. But with the aftertax, 
what people can actually use in their everyday lives, the opposite is 
being promoted from what the reality is. Again, there is a credibility 
gap.
  I also argue the credibility gap applies to the administration's 
claims that their plan will help seniors. In fact, over half of all 
dividends paid to the elderly go to seniors with incomes over $100,000. 
I think it is great they planned and saved, but the number of seniors 
out of the roughly 40 million seniors who have incomes over $100,000 is 
about 3.5 million. That is where over half of this dividend exclusion 
benefit would go. By the way, only about a quarter of all seniors would 
receive any benefit.
  To say this is going to somehow vastly improve the position of 
seniors in America is just a gross overstatement. I wish to revert back 
to comments I made earlier. The vast majority of seniors depend on 
Social Security and Medicare as the basis for protecting their economic 
security and their well-being over a period of time, and we are doing 
just the opposite of what is necessary to protect Social Security and 
Medicare in the future years. It is depressing. That is what Chairman 
Greenspan talked about an hour ago in a hearing of the House Committee 
on Aging: the risks to Social Security and Medicare if we do not change 
our economic policies and do something to straighten out our fiscal 
policies in this country.

  Let's consider the administration's claims about how cutting taxes on 
dividends will benefit millions of Americans. The truth is, only 22 
percent of those with incomes under $100,000--this is the vast majority 
of income-tax-paying Americans--reported any dividends in the year 
2000, and the average tax cut from the dividend exclusion for those 
with modest incomes of between $30,000 and $40,000--by the way, the 
average income for individuals in America is something close to 
$40,000--those people are going to get a $29 tax cut associated with 
this dividend exclusion.
  There is a real credibility gap. We are exaggerating and distorting 
the claims about the power of this tax cut. We are talking in terms 
that really do not relate to the vast majority of Americans. I think 
the word is starting to get out. There are serious questions in the 
minds of Americans that at a time when we have the potential for war 
offshore, and we certainly have threats of terrorism at home, why are 
we focusing so much of our benefits of what we are doing with regard to 
tax proposals on such a narrow segment when the broad economy, that 
rising tide that would help everyone, is suffering and there is no 
stimulus going to it?
  This is not the only area, by the way, where some of these claims, 
relative to reality, are setting up a real pattern of a credibility gap 
for the administration. The Secretary of Defense, on a number of 
occasions, argued the cost of war in Iraq might be $50 billion to $60 
billion, something in that neighborhood. But when the President's top 
economic adviser last December--maybe it was in November--to his credit 
suggested this figure was far too low and the actual cost could be as 
high as $200 billion, what happened? He got fired.
  The dissidence between what is talked about in the public relative to 
what the analysis is by a lot of people who are trying to look at this 
in a serious-minded way so we understand what our needs are as a nation 
is troubling to a lot of folks and accentuates this credibility gap.
  It is time for the administration to be more forthcoming about the 
real costs of the impending war. The American people have a right to 
know. I am glad this week we started to see a little

[[Page S2879]]

of that discussion, but even in that context, we need to consider the 
ongoing costs of rebuilding Iraq in the aftermath of a war, presuming 
that war goes the way we expect, presuming that it is relatively short 
in nature.
  Even yesterday's estimate of $60 billion to $95 billion that we read 
about in the papers included only 1 year of reconstruction costs--1 
year--when almost every expert I have heard come before the Foreign 
Relations Committee has talked about a decade, maybe a little bit more, 
but a very long-term program. By the way, all we have to do is think 
about Korea. We are still in Korea 53 years after a war on that 
peninsula.
  The administration should play it straight with everyone about the 
costs we are going to face, just as we ought to play it straight with 
regard to our budget, with regard to tax cuts. In my view, we need to 
talk straight so we can build up the trust of the American people and 
those who watch us around the world. Trust does matter. It is 
important. That is what we are asking corporate America to do, to clean 
up its act. That is why we want accounting statements that are true. I 
think people expect to truly understand what the nature of the current 
situation is as we go forward.
  Actually there is a serious credibility problem that is causing us 
problems abroad as well. I think whether or not we are believed by some 
of the populations abroad is reflected in how much opposition we have 
seen from a lot of countries, not just in their political establishment 
but by literally millions of people who have shown up, probably most 
clearly in Great Britain, which has been our strongest supporter with 
regard to the Iraqi situation. The population is someplace else. Why is 
it we are not able to make our case clear?
  I think part of this comes from credibility in how we frame these 
issues, how the information has been brought forward. All one has to do 
is look at what is going on in the economy to bring about some 
credibility questions, when we get on to some of these issues of 
national security.
  In this context, let me return to the issue of the nomination of 
Miguel Estrada. As with many of the claims about the Bush budget, too 
many of the claims from the other side on this issue simply lack 
credibility. One of those--probably the most irritating--is the claim 
that somehow those who oppose the Estrada nomination, or at least would 
like to have information to prepare ourselves for a vote, are somehow 
anti-Hispanic.
  Does that suggest that groups such as the Congressional Hispanic 
Caucus, the National Association of Latino Elected and Appointed 
Officials, the Mexican American Legal Defense and Education Fund, the 
National Puerto Rican Coalition are anti-Hispanic? I do not get it.
  We are making a judgment about how the constitutional process is 
supposed to work, not talking about whether or not someone is qualified 
or disqualified because of ethnic background. As far as I am concerned, 
these kinds of demagogic attacks on Hispanic groups and those who show 
common cause with them lack credibility. The facts do not meet the 
circumstance, and they are part of an attempt to intimidate opponents 
of Mr. Estrada's nomination to stay silent in fulfilling our rightful 
and responsible position of advice and consent in selecting judges for 
lifetime appointments to the courts of our country.
  It is not going to work, and one reason it is not going to work is 
the American people expect us to do our job--it is very simple--just as 
they expect us to pay attention to the economy and do those things that 
will get us flat off our back and get the economy moving. These things 
really are common sense, in my view. We are spending weeks upon weeks 
debating whether one individual is appropriate for a job because many 
of us do not understand what his views are, and he is unwilling to 
answer questions, unwilling to have a job interview, and we are 
forgetting about the 2\1/2\ million private sector jobs that we have 
lost and the 8 million-plus people who are searching for a job. One job 
versus 8 million.
  I have a very hard time understanding where those priorities come 
out. What is more important to the American people?
  A couple of days ago, I asked the distinguished Democratic leader 
about some conversations he had with the Governors who have been around 
town from both sides of the aisle. We have all met with them. We have 
sympathized with some of their needs. I asked if one single Governor 
lobbied the leader about the Estrada nomination, either to move it on 
or take it off, or what is happening. Not a single one spoke to the 
distinguished leader about that nomination.
  It should not surprise anyone that our Nation's Governors are more 
concerned about the economy and the terrible fiscal crisis they face, 
and here we are talking about this one individual who has been 
nominated for this one seat on the Court of Appeals for the District of 
Columbia.

  I know from my conversations with people in New Jersey that they feel 
the same way, and I am sure Americans across America agree. Why is the 
Senate spending all this time worrying about this one job--I do not get 
it--while we ignore the millions of Americans who have lost their jobs? 
We see the consumer confidence falling off the charts. We see our stock 
market reeling. We see the dollar declining. We are not paying 
attention to the real things that people are concerned about that make 
a difference to their lives, their kids' lives, their families' lives. 
This Estrada nomination is not the priority of the American people, and 
I do not think it is the priority of my Democratic colleagues.
  In a moment, I am going to make a unanimous consent request that we 
at long last make the economy our top priority. I am going to ask that 
at least for now we move off the Estrada nomination, as we have done 
for other concerns--we have passed the omnibus appropriations bill. We 
were able to take up the child pornography issue this week. We ought to 
focus on our economy.
  The bill for which I will ask unanimous consent was proposed by the 
distinguished Democratic leader. It includes, among other things, 
middle-class tax cuts, aid to the States, an expansion of benefits for 
unemployed Americans, those 100,000 people a week who are dropping off 
the unemployment rolls right now, and establish rules to restore long-
term fiscal discipline and health in our economy.
  I recognize my colleagues on the other side of the aisle are not 
likely to agree to this proposal, but as Democrats continue to 
emphasize the importance of dealing with our economy, I hope someone on 
the other side will begin to question the decision to spend days upon 
days and weeks upon weeks on the nomination of this one individual. I 
hope they will come to appreciate that there is little time to waste 
when it comes to boosting our economy and taking care of America's 
families and getting on to the priority of creating jobs for Americans. 
I hope they will adapt their priorities, the priorities of the Senate, 
to those of the American people, which is jobs and economic security.