[Congressional Record Volume 149, Number 67 (Wednesday, May 7, 2003)]
[House]
[Pages H3748-H3753]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
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The majority of this participation is through a 401(k) plan or
pension plans and other retirement accounts that are exempt from this
taxation anyway, and most of the people who receive money are in a pool
wherein those dollars accrue to their retirement plan or a pension plan
but not to them individually.
Let me talk about deficits for a moment because one of the things
that I said when I started was that any plan that stimulates the
economy, it must be fast, it must be fair, and then it must be fiscally
sound.
The GOP plan is not fiscally responsible. While the Thomas bill
claims to offer a compromise to President Bush's irresponsible plan on
the subject of dividend tax reform, which it really does not, it
certainly does not compromise on the subject of being fiscally
irresponsible and harmful to the longer-term state of the economy.
Republican lawmakers in general, and the gentleman from California (Mr.
Thomas) is certainly no exception, are under the frightful illusion
that deficits do not matter. Did the Members hear that? Deficits do not
matter. Even Mr. Greenspan has said that deficits are important, but
Republicans are now saying they do not matter. Keep in mind when we had
a low deficit, our economy was doing better. Keep in mind that as we
continue to have greater deficits, I anticipate that our economy will
have more trouble.
The Republican economic plans push for tax cuts that will put the
Federal Government in a position of having to borrow $1.5 trillion over
the next 10 years. Let us count that, $1.5 trillion over the next 10
years, with no balanced budget in sight. The resulting debt load on the
fiscally ignorant Republican plans being presented to us will be about
$50,000 per American household. Talk about putting our grandchildren
and our children in debt.
When asked to account for this fiscal lunacy, the Republicans claim
that the tax breaks offered now will compel people to save more in
anticipation of leaner times to come. The speculative statement on the
psyche of the American taxpayer just does not make any sense. By
borrowing this additional $1.5 trillion over the next 10 years and
saddling American households with $50,000 of that debt load,
Republicans are placing a cumbersome tax burden on future generations
of children. To cover the interest costs alone on that debt will
require us to zero out all unemployment compensation plus other
programs such as SSI to the tune of $400 billion, the refundable earned
income child tax credit of $357 billion; food stamps, $274 billion;
family support, $259 billion; and student loans, State's children's
health insurance, and veterans' pensions, $149 billion.
Cutting any of these programs is neither compassionate nor is it
conservative, but it will be a reality if this fiscal recklessness gets
enacted into law.
I have now just seen that my colleague from the great State of
Louisiana (Mr. Jefferson) has joined me as we do this Special Order. I
yield to him.
Mr. JEFFERSON. Mr. Speaker, I would like to thank the gentlewoman
from Ohio for yielding to me and for the wonderful work that she is
doing in this area and for the Special Order that she has taken out
this evening to explain to the American taxpayers and to the American
people just what is at risk by these Republican policies.
I know she has covered a great deal of territory already, but I want
to just talk about things perhaps that have not yet been discussed or,
if they have been, discussed tangentially. And that is the issue of
what the government ought to be doing with respect to tax policy. I had
the good fortune, the gentlewoman might remember, of doing a great deal
of work on this tax policy.
[[Page H3749]]
Having spent time in school to work on it and having gotten a master's
of laws in taxation and having studied the issues of what tax policy
ought to be involved with, what I found out was this: that there is a
legitimate concern on the part of government to have a tax policy that
is fair in the first place, to have a tax policy that is simple in the
second place, to have one that does not intrude into the private sector
decisionmaking of people in the third place; and perhaps if we find a
social policy we all agree on, we found it legitimate to use the Tax
Code sometimes to encourage certain behavior on the part of the public.
The one thing on the fairness I think the gentlewoman has spoken very
well about how this policy violates the Federal standard of fairness
any number of ways, and I want to talk about one last way it does a
little later; but the one thing that I think it does that people ought
to recognize, and it has effects for the deficit, for the interest
burden, all the rest, is that it puts the government into a position
where it is going to compete with the private sector for money. It is
going to drive up demand for money because we are going to have to
borrow money. There is only so much of it out there. We have to borrow
money to fund the government's operations. When we do that, we drive up
the demand for money; and when we do that, we drive up interest costs.
No question about it. And so this government is going to compete with
the private sector. It has to because there is not enough money to fund
this tax policy. We are going to put a tax policy together and borrow
money to pay for it. It does not make any sense at all. But the biggest
problem is that it is inescapable that it is going to drive up demand
for money out of this economy, and we are going to borrow money from
our banks here and make it tough on our country, and we can also borrow
money from foreign governments and make it tough for steel. So this is
an antitax policy, logically thinking, when we go this route.
The second thing, there has been a debate for many years about
whether it is a good idea or a bad idea to tax capital gains or a bad
idea or a good idea to tax dividends, dividend income. All of this has
been the subject of debate for many years. And one of the reasons why
people have avoided dealing with it is because it is so expensive to
fix it, to deal with it, to try to come up with a solution for it. So
every time we have a tax reform session, people gripe one side or the
other about these questions; but they never deal with it because they
are so horrendously expensive.
Here we have now a President in the middle of a recession, certainly
in a huge downturn in our economy, talking about restructuring the Tax
Code, essentially is what is happening here, in the middle of a
recession. This is not about stimulus for the economy. This is not
about giving people jobs. It really is all about restructuring the
system that some people think penalizes rich people more than it
should, and there are all sorts of debates, as I said, about that and
we can come down a lot of different ways on the question. But this is
no time to do tax reform when we need a stimulus package for the
government and for our people. This is no time to take these issues
that we fought over for many years, not new issues, and bring them to
the floor now under the cloak of a stimulus package and of job
creation. This is not what it is.
And the last question I have that I want to just raise with the
American people is this one: everybody at the upper levels gets a tax
break from this President's proposal. The folks at the very highest
level, 38.6 percent, get a 3.6 percent tax break and down the line to
those who are at around the 25 percent rate; and they all get a 2
percent tax breakdown to 25. The folks who are on the bottom, the 15
percent tax rate, that bracket, and the 10 percent bracket get nothing.
They get no help. They get no break under this President's plan. They
are not touched at all. So those folks do not have any unearned income
to speak of, very little, minimal, 7 percent, less than that of income,
the whole group, and almost all of it, 2 percent of the folks, are
getting that in that little bracket. They are just a handful of people
in that bracket. So what we are doing is moving from a system where we
are taxing unearned income one way and to a system where we are only
going to tax wages of working people. So as we lower the capital gains
taxation from 20 to 15 and the upper brackets by 2 percent in some
cases, 3 percent in one case, we do nothing for the folks at the very
end.
So my question is if we are going to give a tax break, why not give
it to everyone, an income tax break? Then there are other folks who do
not pay income taxes. In my district there are 35 percent of the folks
who work every day, 40 hours a week or more, who never make enough to
pay income taxes; but they are paying the payroll tax through the nose,
and the difficulty is we do not touch that issue either. These folks
get no break under the President's system.
It is just unfair for them not to get a break, but beyond that, it is
nonsensical for a stimulus package not to include these people because,
as the Members know, these are the ones who actually would spend their
money if they got the money from the government, got something back
from the refundable credit on the payroll taxes or refundable credit in
some other cases. They would use their money to buy the refrigerator
they need or the child's clothes for school or something that is a
household need that they cannot now meet because they do not have much
money. So if we really wanted to stimulate the economy and we wanted to
stimulate consumption, which is what this is all about, either
consumption by the State governments or local governments or by
individuals or businesses, in this case individuals, we would put money
in the hands of the people who actually spend it and consume some of
the goods and services out there in the country that they need to
consume.
So apart from all of the issues that the gentlewoman has raised, and
they are wonderful issues and ones that we have heard a great deal
about in our caucus and in our debates in the Congress, and they are
the central ones in this debate, but I wanted to bring these other
issues out to discuss them because I cannot find one way that this deal
makes any sense for the American people, and I do not understand,
frankly, how the other side can put these proposals forward with a
straight face.
On every level I have been able to examine, it does not make any
sense, and I hope that when the American people have the time to
examine this argument that we are making here, examine the issues here,
that they will come to the same conclusion that the gentlewoman and I
have come to, that this policy is a bad policy for America. It does not
stimulate the economy. It is a terrible intrusion into the tax system
that is going to end up with the private sector competing with the
government or the other way around, and it is going to drive up the
cost of interest in the long term, and of course it is an issue of
getting involved in a structural tax debate that we have had on the
table for I do not know how long and we are now trying to fix under the
cloak of a stimulus package.
So I want to again thank the gentlewoman from Ohio (Mrs. Jones) for
what she has done this evening in giving us a chance to talk about
these issues, and I want to implore the American people to really
examine this very closely because it is a critical point in the history
of our country. We are about to make decisions now that are going to
saddle our children and grandchildren for years to come, and people
really ought to pay attention to what is happening in this House.
Mrs. JONES of Ohio. Mr. Speaker, it is very interesting, has the
gentleman been able in this plan anywhere to find any benefit for
unemployed workers who are out of money who would spend their money
right away if they were able to get any of this money?
Mr. JEFFERSON. Mr. Speaker, of course not. It is not mentioned in the
package, and as most of the experts have said, this is the greatest
multiplier effect of most of the things we can put on the table to do,
and that is to put money into the hands of people again who have been
out of work, who have been strapped, who do not have enough money to
pay for the things that they need to take care of in their households,
who we know will consume if they get the money.
Stimulating the economy is all about stimulating consumption. It is
not about anything else. And if we are not smart enough to give people
money they can use now, and these are not people who are sitting around
looking
[[Page H3750]]
for welfare, looking for a handout from the government; these are hard-
working people who have worked for many years, in most cases, who now
because of economic hard times and down turns in the economy, layoffs
all over the place, have ended up without a job. These are folks who
are actively seeking work, going out looking for a job every day, going
to the unemployment offices, unemployment services, looking for help,
looking for a job, and they have not been able to find work because
this economy has lost 2.6 million jobs in the last couple of years. So
it is just hard to find a job out there.
This ought to be in this package. If the other side were serious
about stimulating the economy, this is the best way to stimulate
consumption, and the fact that it is not in the bill argues that they
are not really serious about getting this done.
Mrs. JONES of Ohio. Mr. Speaker, what else was very interesting, I
saw the other day, was an article that was discussing not only the fact
that the low-income workers are not getting any benefit from the tax
plan, that the IRS is now making proposals that people who get an
earned income tax credit must have more documentation to show that they
are raising their granddaughter's children or raising their cousin's
children and on and on and on as if they are the tax cheaters instead
of people who are at the top of the ladder who have something to cheat
about.
Mr. JEFFERSON. Mr. Speaker, one of the smartest things we did in this
Congress was to pass the EITC and the next smartest thing we did was to
expand it in the last few years to make sure we had more people
covered. And it is a way to reward people for working. It was always
designed to take low-income people and encourage them to stay on jobs
that did not pay much because the welfare was competing quite
handsomely with folks who were making such a low income until they
might as well have stayed home if they were just looking at it on the
basis of what is the better thing to do, stay home with the children,
stay home and do whatever, or go to work. EITC is a conservative idea.
Mrs. JONES of Ohio. Mr. Speaker, just to be clear for everybody, the
gentleman is a tax man. Will the gentleman tell them what it is.
Mr. JEFFERSON. The earned income tax credit is a conservative idea.
It is an idea to reward people for working, to award poor people
staying on the job instead of choosing welfare. It ought to be embraced
by the Republicans full throttle, and it ought to be as simple as it is
to do anything else under the tax regime. Not that things are all that
simple, but one of the major tenets of tax policy is to keep it as
simple or to make it as simple as we can.
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The fewer resources one has, and we know poor people have fewer
resources than the people who are wealthier, the simpler we ought to
make it for them. That is why we invented this short form of tax
reporting; that is why you have this easy way to do your standard
deduction, because you figure that these are the people who are not
going to have a lot of money for tax preparation or access to
accountants and lawyers and all the rest of it. So you make it as
simple as you can for people who you know are going to be principally
their own tax preparers, and you hope they can understand it without
having to expend much money to do it. Up the line, people who have all
these various deductions and exemptions they can take and all the rest,
they are folks who usually can pay for the lawyers and accountants and
the rest and get it all figured out and worry about saving money.
So I think the gentlewoman is dead right, that instead of making it
more complicated for the poorest people in this country who are going
to work every day, who are working hard every day, and who we have
encouraged through the EITC to stay on the job rather than to accept
welfare, we ought to make it simple for them to get their reporting
done.
Mrs. JONES of Ohio. I thank the gentleman so much for his leadership
and insight on this issue. I appreciate his assisting me with this
special order.
Mr. JEFFERSON. I thank the gentlewoman for what she is doing.
Mrs. JONES of Ohio. Mr. Speaker, let me continue to speak on some of
these issues. Again, let me reinforce the statement that I made at the
beginning. We believe that a stimulus package must be fast, it must be
fair and it must be fiscally responsible. The Republicans ignore the
tried and true logic that long-term deficits are bad for future
economic and job growth.
The Federal Reserve Chairman, Alan Greenspan, has repeatedly voiced
his assessment that persistent budget deficits hurt economic growth
over the long term because of the drain they cause on private savings
that could, and should, be used for capital formation.
The Thomas bill ignores the dilemma it will create when the
expiration of unemployment benefits and state cuts in Medicare occur.
Just as it makes no sense to down a few more drinks before hitting the
road, it makes no sense for a country that is currently running a $436
billion trade deficit and depends on $474 billion in borrowing from
abroad to adopt a budget that will borrow an additional $1.5 trillion
over the next 10 years.
Even the Congressional Budget Office, now headed by a Republican
appointee, has found that the Republican budgets will have little
positive effect on the country's economic growth. The tax cut being
offered do not come anywhere close to paying for themselves by
expanding the economy as Republicans claim they will.
Deficits do matter. Sound economic policy recognizes that sometimes
deficit spending, to a certain degree, makes short and long-term sense.
But in this current climate, the proposed deficit spending will not
result in a short-term stimulus because only a small percentage of the
tax cuts being offered would take effect this year.
In the long term, American taxpayers can expect to see an increase in
taxes and interest rates and a drop in funding for education, Social
Security and other social initiatives, as more of their earnings go
simply toward paying off the interest on an increased deficit. Let me
repeat that. American taxpayers can expect to see an increase in taxes
and interest rates and a drop in funding for education, Social Security
and other social initiatives, as more of their earnings go simply
toward paying off the interest on an increased deficit. This deficit
matters, and this deficit makes no economic sense.
Yes, deficits matter. Chairman Greenspan has recognized this
fundamental truth, cautioning repeatedly about the perils of increasing
deficits without corresponding spending cuts. Yet the Republicans have
taken every opportunity to distort his comments to suit their wayward
economic agenda.
Let us take a look at chart 5. The President has stated that we have
deficits because we have been through a war. This is a shameless
untruth. The Congressional Budget Office and the President's own budget
acknowledge that deficits started well before the conflict in Iraq and
are projected to continue indefinitely because of the President's own
fiscal policies. Even without taking into account any of the costs of
the Iraq war, the CBO has projected in early March that the President's
budget would result in a $1.8 trillion deficit over the next 10 years.
Let me refer to chart 5 on deficit projections. This chart has three
projections. The dark line shows how the deficit will continue to
increase under current economic conditions. The other line shows what
will happen to the deficit under optimistic and pessimistic conditions.
However, the optimistic scenario is unlikely because increased deficit
spending and more tax cuts will not create an economy of growth and job
creation.
For example, the dark line, as I said previously, shows how the
deficit will continue to increase under current economic conditions. In
other words, it is going to go from where it is right now, down to
2050, down this far to minus maybe about 14 percent.
Under the best economic conditions, based on the deficit spending we
are doing, there will still be a deficit of about minus 0.3 percent.
Then if you look under the lowest productivity growth, it will even be
further. It moves further into the minus spending, down to minus 15
percent.
So the reality is that no matter what the economy does with the
deficit spending we are doing right now, we are going to be in bad
shape, and our children will continue to pay and pay and pay.
[[Page H3751]]
This bill claims to be about jobs, retaining them and creating them.
Last week it was announced that the Nation's unemployment rate reached
6 percent. In the last 2 years, over 2 million jobs have been lost
nationwide. Districts with heavy manufacturing industries have seen an
even bigger job loss rate than the national average.
This Congress needs to pass a bill that will bring those who lost
their jobs back to work and keep them at work. But will the bill that
has been introduced by the gentleman from California (Chairman Thomas)
do that? Only if you think that giving over $350 billion worth of
capital gains and dividend tax exemption to the wealthiest one-half of
one percent of the population will create jobs.
What kinds of jobs will this create? The only type of job I think
that would be created would be hiring people to carry the buckets of
money this wealthiest fraction of the country will receive to the bank.
But with most of those gains being transferred electronically, even
those types of jobs will not be available.
Economists from all slants, conservative and liberal, have reached a
broad consensus that cutting the tax on dividends will not create jobs.
In fact, several Wall Street analysts have rated this tactic as one of
the least effective options in terms of stimulating economic growth.
The tax cuts being offered by the President and the gentleman from
California (Chairman Thomas) are not about jobs. Instead, these tax
cuts are about partying it up now and ignoring the consequences.
This so-called jobs bill starves the government of revenue so that
social priorities suffer, priorities like funding promised benefits for
baby-boomers, cushioning the hardship of the unemployed, enhancing
educational opportunity and improving homeland security. Just ask any
mayor or local fire chief or local police chief about what money they
got from homeland security. They are the first responders, and they are
still waiting for this government to give them the money they need to
do their job.
Other people have noticed that this plan would not create jobs, not
just those of us here in Washington. This past weekend, the Detroit
News published an editorial from the President of the Economic Policy
Institute that empirically described how these Republican plans will
hurt the economy, will cause more jobs to be lost and dig our deficit
hole deeper.
This article cited a recent joint statement signed by 10 Nobel
Laureates in economics and 450 other economists stating there is
widespread agreement that the purpose of the President's tax plan is
for permanent change in the tax structure of the country, not the
creation of jobs and growth in the near term.
Let me repeat that: That the purpose of the President's tax plan is
for permanent change in the tax structure of the country; not the
creation of jobs and growth in the near term. These individuals single
out the permanent reduction in the dividends and capital gains tax
rates as not being credible as short-term stimulus. The Republicans
claim that their plans will generate more growth in gross domestic
product and in jobs in the next 2 years, ignoring the horizon beyond
those 2 years.
Before I go on to that subject matter, I see that I have been joined
by another colleague of mine, the gentlewoman from Georgia (Ms.
Majette). I yield to the gentlewoman.
Ms. MAJETTE. Mr. Speaker, I am honored to be a new Member of the
House of Representatives. I know that each of us takes this
responsibility very seriously. Each of us wants to represent our
constituents to the best of our ability, and we all want to do what is
right for our country. Yet this Congress cannot seem to do the right
thing.
This so-called tax cut is a perfect example of what I am talking
about. Virtually every reputable economist agrees that it is the wrong
thing for our economy. Alan Greenspan agrees that it is the wrong thing
to do at this time, yet the President has seen fit to have Mr.
Greenspan serve for another term while choosing not to listen to his
advice. Republican and Democratic Members of the House are going along
with the President's tax policy, and that, Mr. Speaker, will sink this
ship of state into a sea of red ink.
To me, this tax plan is about simple math and basic accounting. More
importantly, it is about common sense. If you borrow money, somebody
has to pay it back. This tax plan will result in the biggest increase
in debt that our country has ever seen. Somebody is going to have to
pay it back, and those somebodies are our children and our
grandchildren.
Many in our country are worried about the problem of predatory
lending, but what they should be worried about is predatory borrowing.
We are causing our children and grandchildren to incur huge debts in
the future just so we can line the pockets of a precious few today.
This predatory borrowing will doom the economic fortunes of
generations to come because we refuse to get our fiscal house in order.
Do not get me wrong, Mr. Speaker; like anyone else, I could use a tax
cut, and many of my constituents could use tax relief too. But this is
not tax relief.
Do I support relief from the marriage tax penalty? Of course I do. Do
I support increasing the amount of the child tax credit? Of course I
do. Do I support giving small businesses relief for their expenses? Of
course I do. These are all tax cuts that help working families, exactly
those families who are hurting and who are struggling to make ends
meet.
Unfortunately, none of these tax cuts is permanent in this bill, and
in 3 years most of these cuts will evaporate and working families will
be right back where they are today.
But the Republican tax bill does not stop there. This tax bill will
give huge tax relief to those who need it least, the wealthy; those
people who already have an annual income of $1 million a year. The
dividend and capital gains tax cuts, which are made permanent, by the
way, will pile on debt for our children and our grandchildren.
Long-term success in this country depends on high quality education,
on stable and high paying jobs, and access to quality health care. But
because of these tax cuts for the wealthiest Americans, we are not
investing in those things that will secure our children's future.
Not only are we abdicating our responsibility for our children's
future, we are forcing them to pay the bill. What we need today is a
renewed commitment to fiscal responsibility. Let us restore the pay-as-
you-go rules that led to the fiscal discipline during the 1990s and the
first surpluses we saw in decades, surpluses that have totally
evaporated under this President's economic programs.
For the first time in decades, we have had the opportunity to begin
to pay down the massive multi-trillion dollar debt and to begin to
bring some financial stability to Social Security and to Medicare. But,
instead, today we are being asked to incur more debt and to cast even
further doubt on the viability of those programs.
What we have here is a failure to communicate with the American
people. So let me just make it plain: This is not really a tax cut we
are talking about today. Read my lips; this will be the largest tax
increase that the world has ever seen, only it is a tax increase on our
children, our grandchildren and our great grandchildren.
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This tax plan is a sham and a shame, and the American people deserve
better than this.
Mrs. JONES of Ohio. Mr. Speaker, I would like to thank the
gentlewoman from Georgia (Ms. Majette) for coming out to help me with
this hour.
As I stated before she started, this article cited a recent joint
statement signed by 10 Nobel Laureates in economics and 450 other
economists stating that there is widespread agreement that the purpose
of the President's tax plan is for permanent change in the tax
structure of the country and not the creation of jobs and growth in the
near term. Now, if that is what he wants to do is to change the tax
structure, just step on up there and say it, but do not put it under
the veil of creating jobs and growth in the near term. These scholars
single out the permanent reduction in the dividends and capital gains
tax rates as not being credible as short-term stimulus.
The Republicans claim is that their plan will generate more growth in
[[Page H3752]]
gross domestic product and in jobs in the next 2 years. In fact, even
under the most forgiving analysis of these plans, gross domestic
product and jobs will decline in 2005, 2006, and 2007. Respected
economic analysts have shown that any positive impact in the first 2
years of this irresponsible plan will be followed by a gross domestic
product decline of .25 percent per year, thereafter resulting in a
gross domestic product loss of 1 percent and 750,000 jobs by 2013.
There are two reasons why this happens. First, tax cuts without
spending cuts lead to sustained budget deficits. These deficits in turn
raise long-term interest rates, suppress investment, and stop
productivity growth. The second reason is that the administration's
proposal is ineffective at raising long-term growth. Much of the
package involves items that are already scheduled to be implemented, so
their effect is minimal and illusory. Further, many economists,
including the Nobel Laureates and other scholars mentioned previously,
believe that dividend exclusion will actually depress investment.
It is easy to understand why the Republican proposals are so
ineffective at creating jobs in the near term. First, very little of
the package stimulates the economy this year when jobs are needed most.
Let me say this again. Very little of this package stimulates the
economy this year when jobs are most needed. This stimulus package only
offers $31 billion toward the short-term growth efforts. All of the
other dollars, whether it is $550 billion, $726 billion, goes to other
issues.
Further, the proposed tax cuts are ineffective at stimulating
consumption because they are so heavily targeted at the wealthiest
members of our population who will likely take that extra money and put
it into savings rather than consume goods and put that money into the
stream of commerce.
One of the biggest concerns of Americans today is whether they will
have a job tomorrow, whether this stagnant economy will engulf their
job, their savings, and their livelihoods, or whether Congress will do
something that will secure their employment and economic future. The
Republican plans do not provide that security to our citizens. It is a
carrot for the middle class and nothing for the lower class. The
gentleman from California (Mr. Thomas) has attempted to veil some of
the aspects of his plan as benefiting the middle class, in essence,
dangling a carrot in front of them. But when the truth is peeled away
from his plan, it becomes clear that members of the middle class will
never get this carrot.
Republicans have concealed the true nature of their tax cuts and the
effect those cuts will have on the middle class, using clever gimmicks
and ruses to trick working families into thinking they will enjoy a
permanent benefit under their plan.
For instance, the child tax credit offered in the plan is a hoax.
Rather than making tax cuts for families the centerpiece of an economic
stimulus plan, they have made the increase in the child tax credit a
temporary afterthought so that the amount of the child tax credit will
drop from $1,000 in 2005 to $700 in 2006 while, at the same time, the
tax breaks to the wealthiest citizens are being made permanent. They
are willingly going along with a plan that will sacrifice increases in
the child tax credits that would add an immediate beneficial impact for
all of our working families to make room for the President's plan to
put even more money in the pockets of wealthiest Americans.
Now, do not misunderstand me. I think wealthy Americans ought to be
wealthy if they work to get to be wealthy, but they ought to share the
brunt of tough times, tough economy, with all of us; and they ought to
forgive or give up the opportunity to get these tax cuts to bring our
country back to the best.
The Republican plan jeopardizes Social Security to make room for tax
cuts for the wealthy. Just as baby boomers are approaching retirement,
the GOP is offering a plan that will borrow and spend all of the money
from the Social Security trust fund over the next 10 years. The long-
term cost of the Republican tax cuts is more than three times the
entire long-term Social Security shortfall. And what does this pay for,
one might ask? My answer is obvious: tax cuts for the wealthy.
As I mentioned earlier, it was just announced that the Nation's
unemployment rate has reached 6 percent. This figure seems to not have
resonated with Republican Members of Congress. Even with this new high
in unemployment, with the economic slump continuing, the GOP plan
allows extended unemployment benefits to expire at the end of this
month. Nowhere in their plan is there money to extend unemployment
benefits. Nowhere in their plan are they even thinking about the people
that are unemployed, other than saying, I am going to promise you a job
later on based on the trickle-down theory. In just over 3 weeks,
millions of families across the Nation will be denied desperately
needed unemployment insurance. Extending these benefits will not only
help the families of the nearly 4 million out-of-work Americans pay
their bills, but it will also help the economy by putting money into
the pockets of consumers who will spend it.
Remember the ``stream of commerce'' I talked about earlier? That is
where the money from these unemployment benefits will go. But the
Republican message to these families is crystal clear. The message to
these families is, Well, we are going to create you some jobs, but you
can eat crumbs until we get those jobs in place. The Republican message
to these families is, We would rather put more money into the pockets
of the wealthy than to put immediate dollars into your pocket in an
unemployment plan. The message to these families is, Tough luck.
Now, let us talk about what the message is to the States. The message
to the States is the same as the message to the poor: tough luck.
Despite the fact that economists statistically rate aid to the States
as one of the most effective immediate economic growth measures
available for the money, the Republican economic plan, while calling
for $1.2 trillion in new tax cuts, fails to include a single penny for
State aid. States are facing the worst fiscal crisis since World War
II, but the Bush administration is refusing to provide them any aid. As
a result, States across the country are cutting education and health
care programs, raising taxes and other fees, and putting a further drag
on the sluggish economy. And with the GOP's refusal to include any help
to the States in their economic plan, economic growth is undermined,
not fostered.
I have spent most of my time talking about what is wrong with the
Republican plan, and believe me, I could talk for much longer, but I
want to take some time now to discuss a Democratic plan that is fair,
fast-acting, and fiscally responsible. I see that I have been joined by
the gentleman from Washington (Mr. Inslee), and I would like to yield
to him.
Mr. INSLEE. Mr. Speaker, I appreciate the gentlewoman coming here to
talk about this important issue. I just have two comments to make about
the majority party's plan. We are talking about a way to get our
economy going again and to me, the acid test of any economic plan is,
is it going to work. This should not be based on idealogical
principles; it should not be based on partisan politics; it should not
be based on sort of a pie-in-the-sky theory. The question should be:
Does it work?
The two points I would like to make is first off, we have very good
evidence that it does not work. We are all talking about the best way
to administer medicine, if you will, to the economy; and it kind of
reminds me, what the majority party is doing reminds me of the
physicians in the 18th century. When you were sick in the 18th century,
you went to a doctor; they bled you. They put leaches on you. And if
you did not get better, they put more leaches on you. And if you still
did not get better, they would put more leaches on you, and they would
bleed you some more, because it is all they knew how to do.
Well, what we saw in the year 2001 when the Republican Party did this
big tax cut, a trillion dollar tax cut plan, told the American citizens
it was going to create tens of thousands of jobs, and the economy has
gone south. It has gone south like it has not at any time since World
War II. We have had the largest number of job loss; over 2.5 million
Americans have lost their jobs since that ill-conceived plan by the
Republican Party. It is the largest job
[[Page H3753]]
loss since Hoover was President of the United States. And here we have
the doctors to the economy, they want to do it again when it was so
damaging to the economy in the first place. The deficit has
skyrocketed. It has gone from a $5 trillion surplus to deficits of $300
billion, at least, probably more. And so we want to see this sort of
application of this 18th century medicine again when it did not work
the first time.
We should not repeat the mistakes, and the reason it was a mistake
then, and they are repeating exactly the same failure this time, number
one, their plan is too late. It is too late because almost 95 percent
of the benefits are in the years after this year when we need the
stimulus this year; and, number two, it goes inordinately to people who
are not going to put the money right back into the economy. So we are
repeating a failure of 2001, as the doctors of the 18th century
repeatedly bled people if they did not get better, and they just kept
bleeding them. And that is what the Republicans are doing to the
Federal budget.
The second point I would make is, this is called a tax cut. But it is
really not a tax cut to Americans over the long term. If anything, it
is a tax increase. And the reason is that our children are going to
have to pay and we are paying today the burden of not balancing the
Federal budget. Right now, because we pay interest on the Federal debt,
I have some really bad news for Americans. Of every $100 Americans
paid, they paid $100 on April 15 in taxes, $14 went to pay interest on
the Federal debt. For that $14, you got no soldiers, no sailors, no
police officers, no nothing. It went down a black hole. And now it is
going to increase because the Republicans' own numbers, these are not
Democratic numbers, the Republicans' own numbers demonstrate another $1
trillion of indebtedness they will create that American taxpayers are
going to have to pay at some point, only now they are going to have to
pay interest on top of that.
So this really is not a tax cut. At best, it is a tax transfer. It is
a transfer from us baby boomers on to our children's shoulders, which
is immoral, number one; and, number two, it is a tax increase by
increasing the interest payments we have to pay on the Federal debt. It
is an increase on what we call the debt tax. We all pay the debt tax
now because we pay interest on the Federal debt. This could be called
at worst a tax increase and at best a tax transfer to our children.
Both are wrong; it should be rejected. Let us not repeat the failure of
2 years ago.
Mr. Speaker, I appreciate the gentlewoman addressing this important
issue.
Mrs. JONES of Ohio. Mr. Speaker, I thank the gentleman for his
leadership on this issue.
This past January, Democrats presented a fair, fast-acting, and
fiscally sound economic plan that would jump-start the economy, create
jobs immediately, and promote long-term economic growth. The President
then introduced a highly divisive plan that does not create jobs in the
short term and endangers our economy by saddling us with these
deficits. Much-needed immediate action on the economy is being thwarted
because the Republicans disagree about the President's controversial
plan and because the President is still pushing for a $550 billion
package that Members of both parties in both Houses of Congress have
soundly rejected.
The past Democratic plans have included $32 billion in immediate tax
relief to small businesses to generate investments. Only $29 billion of
the GOP plan is targeted to small enterprise. Finally, the GOP plan
will negatively affect investment in small business and their access to
capital because it will increase interest rates and make investment in
big business more attractive.
There is no bang, but there certainly are bucks in the GOP plan. At
least there are bucks for the wealthy. Economists have estimated that
for every dollar spent on the dividend tax cut, only 9 cents in
economic growth will be generated. Even the economists that the White
House relied on for their job growth numbers ``predicted that if the
tax cuts were not offset within a few years, interest rates would rise,
private investment would be crowded out, and the economy would actually
be worse than if there had been no tax changes at all.''
There is no focus in the GOP plan, there is no fairness in the GOP
plan, and there is no fiscal responsibility. For the sake of our
country, our health care and our infrastructure, I call on all Members
of Congress to reject the Thomas plan just as you rejected the
President's plan.
Mr. Speaker, the Democratic plan will create 1 million jobs by the
end of the year and is paid for through responsible tax policy that
puts money in the hands of people who need it most.
The Democratic plan is focused on job creation and long-term growth.
By providing an immediate stimulus, the plan will create jobs. The
Democratic plan will not leave States behind--instead it will provide
$18 billion for Medicaid assistance to the States, $26 billion for
infrastructure development, homeland security, education, and other
needs jobs will be retained and created, our economy will revive
itself. By extending unemployment insurance benefits, money will be put
in the hands of those who need it most at the time it is needed most.
Recipients of those benefits will be able to buy needed consumer goods,
pay their bills, and be able to survive in these tough economic times.
The Democratic plan will benefit small businesses by creating credits
for businesses who hire the long-term unemployed and increase the
expensing limits small businesses are able to claim. Further, it will
temporarily increase the bonus depreciation for all businesses, which
will in turn enable businesses to retain more capital for expansion and
hiring.
The child credit the Democratic plan has will accelerate to $800 and
will directly benefit the families of 1.75 million children. Over the
course of 10 years this will put $50 billion into taxpayers' hands that
will in turn be used for savings and consumption.
Today's New York Times cited the President's plan, the House
Republicans' plan, and the Senate Republicans' plan as putting $400 per
child into taxpayers' hands as this year's rebate. This is part of the
``carrot'' that Republicans are dangling in front of the middle and
lower class taxpayers. And while they may in fact get this money this
year, Republicans are remaining silent on what they will get next year,
or 5 years from now, or 10 years from now. The reason for that silence
is because next year, and 5 years from now, and 10 years from now they
will not receive anything. Instead, they will be forced to pay more for
health care, they will be forced to pay more for education, they will
be forced to pay more for infrastructure development, and they will be
paying more toward reducing the national debt--a payment that will not
yield any tangible, graspable benefit.
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