[Congressional Record Volume 150, Number 51 (Tuesday, April 20, 2004)]
[Senate]
[Pages S4116-S4118]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
THE TAX BURDEN IN AMERICA
Mr. CORZINE. Mr. President, first of all, let me congratulate the
distinguished Senator from Iowa for pointing out and being so
persistent in dealing with this issue of overtime pay and how working
Americans are being treated by the economic policies of the current
administration.
I have been on the Senate floor a number of times over the last
several months talking about the status of the American economy--the
job losses that we have had: 2 million, roughly, generally, and 2.6
million private sector jobs. We have talked about the pressure on the
middle class. Good gracious, we are now talking about cutting overtime
pay for 8 million working Americans in the middle class.
Goodness knows, the budget situation in this country, under this
administration, has been a fiasco. We have gone from projections of
$5.5 trillion worth of budget surpluses to $5 trillion of budget
deficits over the next 10 years--$18,000 of debt per American to
$24,000 now, and projections it will get up to $35,000 over the next 10
years--an incredible failure of economic policy.
But today I want to talk about another indicator that is showing the
weaknesses and the failures of this policy. Last week, millions of
Americans paid their income tax. A lot of us struggled to figure out
how to do that and send it in by the April 15 deadline. But the fact
is, when all is said and done, about 30 percent of Americans' income
was paid in Federal, State, and local taxes--about 30 percent. But
while the average American is paying 30 percent of their income in
taxes, the majority of corporations are paying far less. In fact, about
60 percent of all corporations reporting income did not pay income tax
at all. That is according to the General Accounting Office. Sixty
percent of corporations did not pay any Federal tax at all.
Moreover, about 95 percent of corporations pay less than 5 percent of
their income in taxes. As a share of corporate profits, corporate taxes
are now at their lowest level since World War II. There has been a
dramatic shift in the tax burden from corporations and high-income
folks to those middle-class folks who are now going to have their
overtime cut. It is an incredible change in the direction of this
country and in fairness.
While corporate taxes have declined, as the good Senator from Iowa
pointed out, corporate profits have increased dramatically over the
last several years, much greater than wages. Median income during the
Bush administration has fallen about 3 percent for the average worker
in America. Corporate profits, by contrast, have increased by 26
percent. There has been a huge growth in corporate profits at the same
time median income for working Americans is down. In other words,
workers have received relatively little benefit from the increase in
corporate profits. With all this ``hootin' and hollerin''' about GDP
growth, it is not showing up in the paychecks of working Americans.
In the early 1990s, when you had an increase in the economy as we are
seeing now, 60 percent of those increases in income went to wages, and
about 40 percent went to corporate profits. In today's recovery, the
one that has occurred over the last several years, only 13 percent has
gone to working men and women, and almost 87 percent has gone to
corporate profits or corporate wages, to the CEOs. It is incredible, 60
percent versus 13 percent. There is something afoul here.
It fits into an overall flow of facts that middle-class income
workers are getting hurt in this economy. The fact is, we have seen
median income decline 3 percent for the average worker in America. And
by the way, at the same time income has fallen for real families in
America, the costs are going up. For example, a couple of items that go
on in everybody's budget: Health insurance is up 14 percent at the same
time these median incomes are going down. Corporate profits are going
up. Gasoline prices are up 19 percent. College tuition, something that
gives access to the American promise, is up 28 percent at the same
time. I hate to get into property taxes, but in many parts of our
country, all we have done is shift the tax burden from the Federal
Government to the local level. The Bush record includes income falling
for middle-income families and rising costs on things that matter in
their lives.
It is incredible, particularly when put in the context that we
haven't been creating jobs. The fact is, we have 8.4 million Americans
without jobs. That is the latest survey. We have been hearing a lot of
hootin' and hollerin' about growth and jobs. There are 8.4 million
Americans without jobs. That is 2.4 million more jobs lost during this
administration's tenure and stewardship of the economy. Something is
wrong here. Income is going down. Jobs are going down. Costs are going
up.
What is happening is we are putting incredible pressure on the
average American. By the way, even when people get jobs after they have
lost a job, there is an incredible loss of real income for those
individuals. That is how that median income came down.
According to survey, for workers who lost jobs in 2001, the average
salary was $44,570. Today, for those who have found jobs, the average
salary an individual ultimately was able to get was $35,410. That is
another 21-percent drop for those people who lost jobs and then
ultimately reentered the workforce.
We have median income going down. We see job losses going up. We see
corporate profits going up, and no sharing of that going on in the
economy.
There is a real problem. The administration's proposals and policies
have done an incredible job of actually undermining the well-being and
quality of life for middle-income Americans.
Many people have different views about fairness, but since the tax
date was last week and we talked about the fact corporations are not
paying their fair share, I want to mention the fact for the middle 20
percent of Americans, a range of people who have an adjusted gross
income from filings and income tax, the average tax break for that
middle 20-percent, middle-class America, was $647. That is not
something to throw out the window, but it is not a great amount of
money given what tuition costs are doing, and given gasoline prices and
health care costs. But it is a break. But if you were in the top 1
percent of Americans, on that same scale of adjusted gross income, you
got an average tax break of about $35,000.
The PRESIDING OFFICER. The time of the Senator has expired.
Mr. SARBANES. Mr. President, I yield the Senator 1\1/2\ minutes of
the time allocated to me.
Mr. CORZINE. I thank the Senator from Maryland.
Finally, if you look at those individuals in America who have been
blessed
[[Page S4117]]
with good earnings and opportunity, with $1 million of earnings or
more, a tax cut of $123,500. I don't understand why anyone would think
this is going to be stimulative to the economy, efficient to the
economy. Let alone does it relate to the fairness most Americans
expect. Here we have $1.5 trillion in tax cuts and a whole bunch of it
is going to the people making $1 million or more, and the middle class
is getting a very small portion. We have a major problem with economic
policy. We clearly are not creating jobs. We clearly are undermining
the quality of life of middle-income Americans.
There is a classic fairness issue that is going on here which I
wanted to relate with regard to corporate income taxes and certainly
with regard to how tax breaks work.
It is time for a rethink. The IMF and the OECD this week released
reports that said the current administration's policies are going to
end up undermining growth for the rest of the world because we are
running such big deficits. There is something wrong. It is time for us
to address it. I will come out here and talk about these kinds of
pressures on the middle class, on our budget, on what is fair. We need
to make sure the American people know they are not getting a fair
shake.
We need to pass the legislation for which the Senator from Iowa has
so assiduously fought to make sure 8 million people are protected on
overtime. We need to make sure we change this tax policy so all
Americans benefit from the great bounty we have. The choice is clear.
We were able in the 1990s, with a different set of policies, to
create 22.5 million jobs, the greatest increase in wealth for all
Americans, not just middle class but all Americans. We decreased
poverty. All good indicators of what happened.
Now we have lost 2.6 million private sector jobs; 8.4 million people
are unemployed; and we have a distribution of income that makes no
sense for the middle class.
Mr. SARBANES. Mr. President, I commend the very able Senator from New
Jersey for his very powerful statement and for putting everything in
context.
First of all, I appreciate his taking the April 15 filing deadline,
which most of us have just confronted in terms of filing our tax
returns, and pointing out that corporations are paying hardly anything
in income taxes. As I understand it, 60 percent of corporations filing
show no tax liability. As I understand it, 95 percent were paying 5
percent or less.
Secondly, the Senator has pointed out this huge discrepancy in the
tax benefit from the Bush tax cuts. His chart shows middle-income
people were getting about $600, as I recall the figure. And for the top
1 percent, what was the figure?
Mr. CORZINE. That was $124,000.
Mr. SARBANES. That is the millionaires.
Mr. CORZINE. Excuse me, $35,000.
Mr. SARBANES. And the millionaires were getting $124,000. This is
classic trickle-down economics. It doesn't work. Proof that it does not
work is where we are on the jobs front. We have an administration that
claims it has a successful economic policy, and it is not producing
jobs. In fact, we have now over 2 million fewer jobs than we had when
this administration took over in January of 2001.
The last time we had an administration that failed to produce a net
increase in jobs over the course of the administration was the Herbert
Hoover administration. Now, stop and think about that. I say to the
Senator, is it not his understanding that every administration since
Herbert Hoover has been able to show a net increase of jobs over the
course of their administration--until this administration which now is
over 2 million jobs in the hole below where we were when they came into
office?
Mr. CORZINE. The Senator from Maryland is absolutely correct. If you
look at private sector jobs where a real economy is broadly creating
wealth for individuals, 2.6 million jobs have been lost, and it is a
horrific record relative to the performance of what should be enormous
productivity and job growth in this country.
Mr. SARBANES. Furthermore, it is my understanding, I say to the
Senator, that this recession we have experienced began 36 months ago.
As we have said, we have fewer jobs now than we did when the recession
first started. This is the first recession since the Great Depression
in which 36 months after the recession began we have failed to come
back and recover or recreate the jobs that were lost in the recession.
Stop and think about that. It is 36 months after the recession began.
In every other economic downturn since the Great Depression, 36 months
after the recession began we had recovered all the jobs lost and gone
well beyond that in most instances in job creation. We have not done
that in this business cycle. In fact, if we had grown at the job growth
equal to the worst on record following a recession--I am just taking
now the worst performance of previous economic downturns--if we had
just the job growth now that we had in the worst recovery period, we
would have 3.4 million more jobs than we have today. It is incredible
what is happening on the jobs front. We are not closing this jobs gap.
This administration doesn't seem to understand it or face up to it.
In fact, in the 2002 Economic Report of the President, the
administration forecasted that in 2004--the year we are in--the economy
would have 138.3 million jobs. Last year, the President lowered that
estimate for the number of jobs we would have in 2004. In 2003, he
predicted only 135.2 million jobs. In the most recent economic report,
the administration lowered it again to 132.7 million jobs. In 2 years,
they lowered the number of job predictions by 6 million jobs.
Mr. CORZINE. Will the Senator yield for a question?
Mr. SARBANES. Yes.
Mr. CORZINE. The Senator from Maryland understands supply and demand.
But if there are 6 million more Americans looking for jobs than is
demand, what usually happens when there is excess supply of labor or
any other element of our economic system versus demand?
Mr. SARBANES. You can see the effect on the earnings of workers that
is taking place in the economy, for one thing.
Mr. CORZINE. It is a most important element. This jobs issue is not
only impacting people who don't have jobs, it is impacting people who
do have jobs.
Mr. SARBANES. Exactly.
Mr. CORZINE. It is undermining the ability of working Americans to
actually get good wages. That is why median income is down. That is why
you go from $45,000 for a job lost to picking up a job worth $35,000.
Mr. SARBANES. The Senator is right to focus on the inadequacy of
demand. If he would put up the chart that shows how much of the benefit
goes to workers' wages as opposed to corporate profit in this so-called
recovery, we can see that if you go back to the early 1990s, during
that recovery, a majority--85 percent--of the benefits were going to
workers. In this recovery, the workers are getting only 15 percent.
Mr. CORZINE. It is 13 percent.
Mr. SARBANES. So 87 percent of it is going to corporate profit. That
is one of the big differences. That is one of the reasons we are not
creating jobs. When it goes to workers' wages, it makes its way back
into the economy, stimulates economic activity. As a consequence, it
helps produce jobs. Now it is so heavily weighted away from workers and
toward the corporations that are showing these record profits that we
are not getting the same economic stimulus.
Then they say, well, if the corporations make big profits, they will
invest in plant and equipment. But the corporations won't invest in
plant and equipment if they don't think there is going to be a demand
for what that plant and equipment will produce. The major source of the
demand comes from workers' wages, which is being grossly shortchanged
in this so-called economic recovery. It is no wonder we are facing such
a severe economic situation.
Twenty-four percent of the people who are unemployed have been
unemployed for more than 26 weeks. They are the so-called long-term
unemployed. We are now at a record in that this percentage has been
above 20 for 18 consecutive months. The last time we had long-term
unemployed at that level for such a long period of time was in the 1982
recession, when the unemployment rate went up to close to 10
[[Page S4118]]
percent. So what is happening is a lot of the impact is being concealed
or disguised. People have dropped out of the workforce. The workforce
participation rate now is at a 16 year low, despite having previously
risen almost every year in this postwar period. That is the situation
we confront.
The Senator is absolutely right to put his finger on these gross
inequities in the workings of the economy because more and more of its
benefits are being pushed to the very top of the income and wealth
scale. As a consequence, they do not get recirculated back through the
economy to create jobs and meet the tremendous challenge that working
people in this country are facing, which the Senator has very
thoroughly outlined in the course of his statement. I commend my
colleague from New Jersey for his very strong and powerful statement in
underscoring this shift in economic benefits.
There is one strata up at the top that is reaping the benefits, and
all the rest of us are feeling the economic burdens, stress and strain
of this economy.
Mr. CORZINE. Will the Senator yield?
Mr. SARBANES. Yes.
Mr. CORZINE. I think the Senator from Maryland probably realizes--and
correct me if I am wrong--I think there are 1.4 million or 1.6 million
Americans that have even dropped out of looking for work.
Mr. SARBANES. That is right.
Mr. CORZINE. The Senator most appropriately talked about the pain
that is being inflicted on the unemployed because they are unemployed
for a much longer period of time. But what is just as serious is that
there are a lot of people who have said the heck with it; there is no
chance of actually getting a job.
Mr. SARBANES. I thank the Senator for his very strong presentation.
I yield the floor.
The PRESIDING OFFICER (Mr. Enzi). There will now be 30 minutes for
the majority.
The Senator from Wyoming is recognized.
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