[Congressional Record Volume 150, Number 60 (Tuesday, May 4, 2004)]
[Senate]
[Pages S4782-S4784]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           ECONOMIC RECOVERY

  Mr. COLEMAN. I do want to talk briefly about the economy and perhaps 
from the same perspective. I begin my remarks on the progress of the 
American economy with an observation of H.L. Mencken in 1921. He said:

       The whole aim of practical politics is to keep the populace 
     alarmed (and hence clamorous to be led safely) by menacing it 
     with an endless series of hobgoblins, all of them imaginary.

  Much of the economic commentary we are hearing from the other side of 
the aisle in the Senate and out on the campaign trail seems to fit this 
description very well.
  Among the hobgoblins: that the President is encouraging companies to 
move overseas; that his tax cuts are intended to primarily help his 
rich friends; and that this is the worst economy in who knows how long.
  There is just one problem with these and other claims: The facts. 
They are alarming for sure, but they are also imaginary.
  The economy is strong and growing, posing annual growth rates of 8.2 
percent, 4.1 percent, and 4.2 percent in the last three-quarters. Jobs 
are being created, 308,000 last month. The recalculation of job 
creation the first 2 months in this year is another 200,000. I believe 
the figure is 750,000 in the last 7 months. Housing sales are at an 
alltime high level, and so is home ownership. Inflation is low. 
Mortgage rates continue to be low. I wonder which of these economic 
indicators the Senator from Massachusetts wants to be less positive.
  The truth is, we should not be comparing our economy to perfection 
and asking: Why not? We should be comparing our economy to reality and 
asking: Why?

  We had the tech bubble burst, a bubble that should never have been 
allowed to inflate so high. We had corporate scandals. We had corporate 
greed. We had Enron and WorldCom. They were certainly nonpartisan, but 
they were encouraged by the get rich quick ethic of the 1990s. They 
were reprehensible and we have dealt with them.
  We had the attacks on September 11. My colleagues across the aisle 
talk about losing jobs and what a terrible economy. Every single time 
we have to reflect, we remember September 11 and the devastating impact 
that had both on our hearts, on our souls, on our confidence, and on 
our economy. Now we have the daily war on terror.
  If that picture had been drawn for us 5 years ago, how many would 
have predicted the economy would be in as good shape as it is? The 
reason is sound monetary policy and tax cuts that were extremely well 
timed and sized to stimulate the economy when it needed it the most.
  Talk to small business folks. They understand the importance of bonus 
depreciation, increased expensing, cutting the top bracket, reinvesting 
in the business, and then growing jobs. That is what has happened.
  As that stimulus is running its course, we in this body need to enact 
a jobs bill, a transportation bill, and the Energy bill. We need to 
enact tort reform to build upon our current progress. We have to stop 
the filibustering and get some work done.
  Unfortunately, some in this body and on the campaign trail are 
obsessed with talking about and addressing the economic situation that 
existed 2 years ago and administering medicine to a disease we are 
already curing. The President deserves credit for economic policies 
that weathered America through to better times.
  Some may have political reasons for keeping the people alarmed, but 
the mounting evidence of economic strength is convincing to the 
American people, and the American people understand that reality is 
preferable to all those hobgoblins.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Chafee). The Senator from Utah.
  Mr. BENNETT. Mr. President, I thank my colleague for his presentation 
on the economy. I intend to continue in the same vein.

[[Page S4783]]

  I begin with a headline that appears in this morning's Washington 
Post on the front page of the business section. I believe it belongs on 
the front page, period. The headline reads:

       Federal Deficit Likely to Narrow By $100 Billion. Tax 
     Receipts Pare Borrowing.

  It goes on to describe how the amount of tax receipts coming into the 
Government are so much higher than those anticipated, that the present 
expectation is that this year's deficit will be $100 billion less than 
the amount that we were told when the year began.
  To me, that does not come as a surprise. Yes, I am a little surprised 
that the number is as high as it is. But the one thing I have said over 
and over again on this floor, and will continue to say because it seems 
nobody understands it, is that all of the numbers we have with respect 
to our projections around here are always wrong. I can't tell you 
whether they are wrong on the high side or the low side in advance, but 
the one thing I can always say with absolute certainty is that they are 
wrong.
  Why? Because we are talking about an $11 trillion economy. In an $11 
trillion economy, even the slightest percentage change in our estimate 
produces a big number, in terms of dollars. One hundred billion is not 
that much money when you talk about $11 trillion. It is 1 percent. And 
1 percent, to use a term with which all politicians are familiar, is 
within the margin of error.
  But the fundamental truth that comes out of this headline and the 
predictions that preceded it is this: Worry less about the numbers than 
you do about the principal position of the economy that underlies those 
numbers. If our policy is correct and the economy is thriving and 
growing, the numbers will take care of themselves. But if our policy is 
wrong and the economy is shrinking, then it doesn't matter what the 
projections say that the income of the Federal Government might be. We 
are going to be in trouble.
  I want to put this all in historical perspective so, if you will, I 
will display a few charts. This first one, ``Historical Perspective on 
Economic Growth'' goes back to the 1970s. The green bars above the line 
represent quarters in which our economy grew. The red bars below the 
line represent quarters in which our economy shrank. As you can see, we 
had a very serious economic problem in the late 1970s and early 1980s, 
as the red bars went down below the line repeatedly and very deeply. 
This was the response to what some economists call the ``great 
inflation.'' We hear talk about the Great Depression, but we sometimes 
forget that in the 1970s we had the great inflation during the Carter 
years. And we had two quarters successive of red down below. Then it 
burst, and then an additional problem, as the economy went through the 
dreaded double dip; that is, we went into recession, recovered briefly, 
and then fell back into it again. Those were some of the worst economic 
times that I can remember. But to listen to the rhetoric around the 
Senate floor no one else remembers it because we are now being told our 
present economy is the worst in 50 years.
  Look at the historic perspective. You see when we came out of that 
double dip, Ronald Reagan was President and Paul Volcker was Chairman 
of the Federal Reserve and we established fiscal policy and monetary 
policy that caused the economy to start to grow in dramatic fashion. We 
had a period of nearly a decade where we had nothing but green above 
the line. But as always happens--we cannot repeal the business cycle--
mistakes are made, decisions are taken on the assumption that the 
future will be different than it really is, and the economy slipped 
once more into recession in the middle of the Presidency of the first 
President Bush, and we had two successive quarters of red ink.
  By comparison to what happened in the early 1980s, this was a happy 
time. But, of course, for those who lost their jobs and those who saw 
the economy shrink, it was not a happy time. It is never a happy time 
when we are in recession.
  We came out of that recession and President Bush saw the balance of 
his Presidency a time of solid growth. It slipped for one quarter and 
then resumed again, and we had another period of green above the line. 
We didn't really get into a robust recovery until about 1995. That 
triggers all kinds of political debates. The Democrats said the reason 
for the recovery was because Bill Clinton was elected President in 
1993. The Republicans say, no, the reason for the recovery is because 
Newt Gingrich was elected Speaker in 1995. Frankly, I don't think 
either one of those had that much to do with it. I think the economy, 
on its own, with its own strength, created this period of great 
prosperity.
  But as the Senator from Minnesota has noticed, as we got toward the 
end of this period, we had the dot-com bubble, we had 9/11, we had the 
corporate scandals, we had geopolitical uncertainty, and the economy 
was shaken and slipped back again into the red. But, once again, if you 
notice, in a historic fashion the amount of red below the line in the 
recent recession was nowhere near as serious as the amount of red below 
the line in the 1990s, and not even close to the amount that occurred 
in the late 1970s and early 1980s. So that is the historic perspective 
of where we are. The economy is strong, it is resilient, and it is now 
poised for a significant period of growth that we hope will challenge 
if not exceed the periods that preceded it.
  Let's go to the next chart that focuses entirely on the recent years, 
in the period where we are now. This shows the quarters that 
constituted the last recession, and then the quarters since then. You 
can see that since the last recession, the recovery, while initially 
fairly weak, has now become strong and robust and continues to grow.
  In discussing that with Chairman Greenspan and the Federal Reserve, I 
talked to him about how weak the recovery was, and he said one of the 
reasons the recovery has been weak compared to previous recoveries is 
because the recession was so mild. You don't have a strong booming 
recovery unless you are coming back from a period of great and serious 
difficulty. Because the recession was so comparatively mild, the 
recovery was comparatively mild. But now it appears, starting in mid-
2003, that it has truly taken hold.
  The jobless claims peaked during the recession, stayed high for the 
first part of the recovery, and then began to get optimistic and 
strong. That is the case here.
  Let us look at the payroll jobs and how they are playing out, again 
in the historic pattern I have described.
  This is the beginning of January 2003. Payroll jobs are being lost, 
but the amount of loss keeps getting smaller and smaller as the 
recovery takes hold. In August of 2003, the trend turns positive and 
the jobs start to come back. Now you have 7 months in which jobs have 
been created--every month, with the strong figure, of course, occurring 
last month of 308,000 jobs.
  Once again, this follows the standard historic pattern; job are slow 
to come back in a recovery--every recovery regardless of who is 
President. People are slow to hire until they are sure the recovery is 
taking hold. Now the recovery has taken hold and the jobs are coming 
back.
  The next chart shows us why this recession was as mild as it has 
been. It gives us an indication of what we can look forward to. It is a 
little hard because the colors are not as contrasting as they should be 
for television, but the green bars are consumer spending.
  One of the interesting characteristics about this recession--it is 
unique indeed of any recession we have followed--is consumer spending 
stayed positive throughout the entire recession and then turns more 
positive, of course, during the recovery. That would indicate no 
recession at all. But, of course, there was a recession. What caused 
it? Go to the dark blue bars. This is business investment. We can see 
the response to the dot.com bubble. The bursting of that bubble was 
that businesses decided they had overinvested in a number of areas 
during that bubble. You see that in the very strong dark bars that are 
up here in 2000. In the middle of 2000, business investment starts to 
drop.
  That was the signal. This was the beginning of the recession, the 
middle of 2000, and they slip into strong negative territory in 2000, 
stayed there during 2001, and do not come back to positive territory 
for nine quarters.
  That is why we had a recession and that is why the recovery was 
sluggish.

[[Page S4784]]

Consumers were still buying but businesses were not investing partly 
because they had overinvested and thereby overspent during the period 
leading up to the recession, partly because they didn't have the 
incentives that were created for business investment by the tax cuts 
that we passed in Congress.
  But, in late 2002, the trend turned. Business investment started to 
go up and became very strong and remained in strong territory, which is 
why the recovery remains strong.
  But let us look at the area we have so much spoken about on the floor 
with respect to manufacturing. Once again, putting it in a historic 
perspective, going back to 1999, manufacturing spending was up and 
started down in 2000.
  I keep emphasizing the fact that this started down in 2000, because 
during the election of 2000 we were told this was the strongest economy 
anybody could ever imagine, and if one only kept the incumbent party in 
power in the White House this would continue. In fact, during that 
period while President Clinton was in the White House and Vice 
President Gore was campaigning, it had already started down.
  Economic activity is not that responsive to political activity; it 
has a life of its own.

  It started down during 2000, slipped below the line that indicates 
whether it is growing or shrinking in the middle of 2000, it hits 
bottom in 2001, and then, while it comes up briefly, stays in a period 
and an attitude of difficulty until you get to the middle of 2003.
  Again, the red arrow shows when it was going down, the green arrow 
shows when it is starting up, and the manufacturing activity has now 
come up very strong--stronger than it was before the recession started, 
and every indication is that it will continue.
  On the floor yesterday, the senior Senator from Massachusetts talked 
about wages and how terrible wages are. His colleague who is running 
for President has said: Well, maybe the economy is coming back but we 
are in a wage recession and wages are terribly low.
  Once again, putting this in historic perspective, we find that the 
present situation is not without precedent and not without indication 
as to what will happen in the future. Hourly earnings figures, which 
the two Senators from Massachusetts used to make their claim, do not 
include benefit costs. That is a component of compensation that every 
business man and woman knows you have to include.
  I have run a business. I have realized, as every businessman does, 
that you cannot just compute the amount of money that an employee 
receives on his W-2 form as the cost that employee represents to you. 
You have to add to that the cost of his health insurance, the cost of 
his retirement benefits, the cost of any other benefits you give him in 
order to come up with the total amount he is going to cost you. If he 
cannot return to your company enough economic value to cover that total 
cost, you can't afford it.
  To those who say, well, let us ignore the total cost and just talk 
about the wages, I say you are ignoring economic reality. If you look 
at the total benefits and wages combined in total cost to an 
enterprise, you realize we are not in a wage recession. We are in a 
situation that has very careful precedent very close to what has 
happened in the past recessions.
  When Alan Greenspan appeared before the Joint Economic Committee, I 
asked the question: Are we in a wage recession? He said no.
  I close the way I began. It is the economy that produces money--not 
the budget. It is the economy that determines how well we will do and 
not necessarily our laws.
  I go back to the headline that I held up at the beginning of my 
presentation in today's paper, the Washington Post. On the front page 
of the business section, it says ``Federal deficit likely to narrow by 
$100 billion.''
  Do you know what it would take for us to create a $100 billion 
reduction this year in spending in order to get that kind of an impact? 
There it is--an additional $100 billion into the Treasury by virtue of 
the strength of the economy rather than anything we do.
  It is very important for us politicians to understand that and 
realize that our first responsibility is to adopt policies that will 
keep the economy strong and growing. I believe this administration and 
Congress have done that. The information that is now flowing in to us 
from the economic world demonstrates that our policies are the correct 
ones.
  I yield the remainder of my time and I yield the floor.
  The PRESIDING OFFICER. The Senator from Michigan.

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