[Congressional Record Volume 150, Number 130 (Monday, October 11, 2004)]
[Senate]
[Pages S11245-S11250]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
UNEMPLOYMENT FIGURES
Mr. SARBANES. Madam President, on Friday the Bureau of Labor
Statistics came out with the latest unemployment figures. I commend the
Bureau of Labor Statistics. They are professionals. They bring us the
figures. They do not try to put a spin on them. They just lay out the
facts. That is a kind of unusual thing in our public discourse
nowadays, I have to say. We do not seem to pay much attention to the
facts anymore. It is all spin--spin, spin, spin, spin, deception,
misstatement, so forth and so on. But there are still professionals in
various parts of our Government, and I simply at the outset commend
them for sticking to the facts. Members of the Joint Economic Committee
tried to draw the Commissioner and her associates into the spin
efforts, and she resisted, as she should.
I wish to talk this afternoon briefly about some of the figures and
the facts, and I will try to lay them out as best I can.
We produced last month 96,000 jobs--I say a mere 96,000 jobs because
we need to produce about 140,000 jobs per month simply to stay abreast
of the growth in population. So if we are producing fewer jobs than
that, we are obviously slipping backward.
This performance of this administration should be a matter of very
deep concern for people in the country. Back at the beginning of the
year, the administration did have a couple of months of good, solid
production, and I want to put that right up front because, as I said, I
want to stay with the facts. But what has happened is over the course
of the year, their job production has fallen very sharply, as this
chart shows. We are now down to just below 100,000 jobs produced in the
last month of this Bush administration.
The cumulative record of this administration over the course of the
time it has been here has been a loss of 1.6 million private sector
jobs. Private sector jobs are down 1.6 million. In total jobs, because
we have had some uptick in Government jobs, the administration is down
825,000 jobs over the course of its tenure. It is down 825,000 total
jobs, 1.6 million private sector jobs, and 2.7 million jobs lost in
manufacturing employment. Manufacturing employment is down 2,700,000
jobs.
This job performance--or more accurately put, lack of performance--is
the worst in 75 years. We have to go all the way back to the
administration of President Hoover to find another administration which
lost jobs in the course of its tenure; in other words, failed to
produce a net gain of jobs. Some administrations in the interim have
done very well, others fairly well, others not so well. All have had a
net gain in jobs except for this administration.
The unemployment rate which was reported on Friday as 5.4 percent
does not tell the full story of the depth and breadth of unemployment
which exists in the country. If we count in amongst the unemployed--and
the Bureau of Labor Statistics keeps this index--if you count in people
who have dropped out of looking for a job because they are so
discouraged by how poor the labor market is and a very substantial
number of people who are working part time for economic reasons--in
other words, they want to work full time, but they cannot find a full-
time job, so obviously in order to try to support their family, they
take a part-time job, but they are seeking a full-time job--if you
factor in that underemployment, and if you factor in the people who
dropped out of the workforce in terms of seeking employment, we end up
with an unemployment rate of 9.4 percent--9.4 percent. That is what we
are confronting. And that rate, of course, is a consequence of failing
to have a net gain in jobs over the course of this administration.
I was fascinated to watch the spin artists go out and try to spin
this 96,000 figure into some big success. Quite to the contrary. It
shows a serious shortfall in economic performance. And the thing that
makes it an even deeper concern is the fact that the administration's
performance over the course of this year in producing jobs has
seriously weakened. In other words, if we go back to the beginning of
this year, job creation has dropped markedly.
Some of the spin is to sort of say 9/11 did it all. They attribute it
all to 9/11, but obviously this chart indicates to the contrary because
we had some fair job production here, and then it has fallen. The
cumulative impact of having that happen is, in fact, now to have an
administration which does not have a positive job creation performance
over the course of its tenure.
Now, we all know that everyone gets up on the Senate floor and they
make long speeches about the best social program is a job. I agree with
that. I doubt that there is anyone in this body who would disagree that
the best social program is a job, but the jobs are not being produced.
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As I said, we can go back through our history to every previous
administration, Democratic and Republican alike, until we get back to
Herbert Hoover, who had a net positive creation of jobs in the course
of his tenure. This administration has failed to do that.
There are now 825,000 jobs less than when this administration came
into office. There are 1.6 million jobs less in the private sector.
There are 2.7 million jobs less in manufacturing, which, of course, has
been the hardest hit of all, and which I think this administration has
badly neglected in terms of a whole range of policies. But 2.7 million
jobs less in manufacturing, 1.6 million jobs less in the private
sector, 825,000 jobs less total, because there has been some increase
in jobs in the public sector.
This is the performance of this administration. As I said, if one
factors in all of the components of unemployment, including those that
have part-time work but want full-time work, those who dropped out of
the labor force because they are so discouraged by the job market, we
have an unemployment rate of 9.4 percent.
There is one other point I want to make, which I think is highly
relevant, and it also, of course, affects efforts in this Congress to
deal with the unemployment insurance benefits question. We define long-
term unemployed as people out of work for more than 26 weeks--in other
words, more than 6 months. The unemployment insurance benefit program
is geared to pay 26 weeks of benefits. The assumption is to help people
through a difficult period to support their families.
I hasten to point out that one cannot draw unemployment benefits
unless they have a work record. In other words, one must have worked
and had a work record in order to qualify to draw these benefits.
In previous recessions, when the economy has not strengthened and
jobs have not picked up, we have extended the period of time to pay
unemployment benefits because how can someone be told, after 6 months,
well, they should have found a job and gone back to work, when the job
market has not picked up and there is no job to be found and they find
themselves in the difficult situation, how are they going to provide
for their family if the benefits are cut off and the benefits, of
course, pay only a fraction of what they earn, and there is no job to
be found?
So now, we have extended the benefits as a consequence. We have done
that in this recession, but much less than previously. The
administration has not been supportive of further extension, even
though the number of long-term unemployed, amongst all the unemployed--
in other words, people out of work for more than 6 months, has almost
tripled. It has gone from 680,000 long-term unemployed when George Bush
took office as President in January of 2001--in other words, we have
really brought that figure way down because of the high job production
that had occurred in the Clinton administration. It is now up to
1,750,000 long-term unemployed.
As a consequence, the percentage of the unemployed who are long-term
employed, in other words, a consequence of this incredible growth in
the long-term unemployed from 680,000 to 1,750,000, is almost triple.
The percentage of workers unemployed who are long-term unemployed has
jumped from about 10 percent to over 20 percent. It is now almost at 22
percent.
In this period, these high figures above 20 percent of the long-term
unemployed, this percentage of unemployed workers, this rapid runup and
then this continuing high figure, is a record. It has been above 20
percent for 24 continuous months, which is dramatic evidence of the
failure of the economic policies of this administration.
These figures reflect real human hurt. These are men and women who
had jobs, who worked, who lost their jobs, and cannot find another job.
As a consequence, when their benefits run out and the administration
and the Congress fail to extend their benefits, they find themselves in
an incredibly difficult situation. How are they then to support their
family?
We have made repeated efforts on the floor to extend the unemployment
insurance. They have been blocked by the other side. The administration
has not been supportive of this effort. So we have one and three-
quarter million people long-term unemployed no longer eligible for
benefits, not able to find work in a job market last month, where they
produced 96,000 jobs. That is not even close to keeping abreast of the
growth in population, let alone putting people back to work. In my
judgment, there is no way that these economic figures can be spun to
represent some economic success which is, of course, what the President
has gone across the country to try to do.
In fact, he keeps going into States and saying we have turned the
corner. I think when one looks around the corner that we have
supposedly turned, one finds we are moving in the wrong direction. This
is not the right direction to be moving with respect to the long-term
unemployed. Who would want to turn a corner and find that the long-term
unemployed is rising from about 10 percent of those unemployed to over
20 percent of those unemployed? This steady diet of over 20 percent for
24 months is unparalleled. Who would want to turn the corner and find
that the monthly job creation was on this downward trajectory?
The President says we have turned the corner, and I say to myself,
well, let us look at what we see when we turn the corner. What we see
when we turn the corner is this decline in job creation.
We see, when we take a look in context--in other words, when we look
over the period--that this administration has not created a net gain in
jobs. It is no wonder that working people all across America are
concerned and anxious, not only those who have lost their jobs, but
those who fear they are going to lose their jobs, or those who maybe
found another job but found themselves in this situation, that the jobs
gained on average pay $20,000 less than the jobs lost. In other words,
you have long-term unemployed who cannot find a job, you have people
very apprehensive about their job situation because the number of jobs
produced month by month is on a declining line, and then you have those
who manage to find a job only to find it is at pay levels far less than
they were previously receiving. The consequence of this is to put an
enormous squeezing pressure on working and middle-income people in this
country.
The costs of everything are up, wages are almost level, and all
across the country working families are sitting down at their kitchen
tables, trying to figure out how they are going to pay their bills.
I said earlier, when we were having this discussion, that in this
economic cycle a far greater percentage of the benefits are going to
corporate profits than are going to wages. When you look at the
figures, it is absolutely startling the contrast with what we
experienced at this point in previous economic cycles. So there is a
tremendous skewing of whatever benefits there are from growth to
profits and away from working people. This, I submit, ought to be a
matter of deep concern all across the country.
I yield the floor.
The PRESIDING OFFICER. The Senator from Texas.
The American Economy
Mr. CORNYN. Mr. President, I have sat here for the last 2 hours 15
minutes and listened to a number of speeches by my colleagues on the
other side of the aisle. I can only conclude that they are invoking the
memory of Mark Twain, who said: ``I am not one of those who when
expressing opinions confines myself to the facts.''
What I mean is I find it curious that speaker after speaker has
criticized the Bush administration, and indeed, the majority in this
Congress, for our progrowth economic policies when, in fact, the
results of those policies worked to the betterment of the American
people and create hope and opportunity and not despair and hand
wringing. The only thing I believe contributes to despair and hand
wringing and increased anxiety among the American people, and indeed
the voters who are going to vote on November 2, are speeches made by
supporters of the Democratic nominee on this floor and elsewhere,
talking gloom and doom and despair as if America was no longer the last
best hope on the planet.
First, I wish to talk about the bill that was passed a couple of
hours ago, the FSC/ETI bill, more appropriately
[[Page S11247]]
named the JOBS bill. I was proud to be 1 of the 69 Senators who voted
in support of that bill, for a number of reasons. First, we were able
to eliminate a 12-percent penalty against exported goods made by
American companies exported to the European Union. That is something
that was long overdue. We really would not have had to wait this long
to do that but for some obstruction on the other side of the aisle.
The second reason I am proud to have voted for this bill is because
it ends the discrimination against those States such as mine, Texas,
which have no income tax. In Texas, we tend to adhere to the idea that
government should not be a burden any bigger than absolutely necessary
upon the people who earn the money, so they can save it, they can
invest it, and small businesses can create jobs. So we do not have an
income tax. We have a sales tax.
But for many years now, Federal laws discriminated against States
such as Texas and I believe Washington--I see the Senator from
Washington on the floor. I believe her State was also affected by this
change. Now taxpayers in Texas can deduct the sales tax they pay from
their Federal income tax. I am very pleased that 69 Members of the
Senate today saw fit to end that unjustified discrimination.
The reduction in the corporate tax rate for manufacturers that was
accomplished by the passage of this bill earlier today has effectively
reduced the corporate tax rate for these manufacturers by 3 percent. In
other words, the corporate tax rate in the United States, which is 35
percent across the board, has now been reduced 3 percent for this class
of taxpayers--manufacturers. This will, no doubt, provide an
opportunity for manufacturing concerns to increase their
competitiveness in a global economy where they have to compete with
much lower wage-paying countries, such as China and elsewhere.
It is curious, though, to me, that America still has one of the
highest corporate tax rates in the world. Indeed, the University of
Michigan, in a study from the Office of Tax Policy Research, says that
in 2002, the last year for which figures were ready available, the
average corporate tax rate for countries all across the world was 29
percent across the board--29 percent. America's is 35 percent, except
for now when this bill becomes law, it will be reduced for a certain
class of taxpayers in the manufacturing business.
This chart shows that, for example, the Slovak Republic has a 25-
percent corporate tax rate. Indeed, this past year I was privileged to
travel from Bratislava, with other Members of the Senate, to represent
the United States at a meeting of the Presidents of the new members of
NATO, including the Slovak Republic. We learned from the Ambassador
that, indeed because of the low corporate tax rates, that small country
had been able to attract three major car manufacturers to the country,
creating thousands of jobs, primarily because of the low corporate tax
rate and because of the population that is eager and willing to work.
The fact is, our policies do impact our competitiveness in the global
economy, and have a direct impact on the quality of life and the
prosperity of the American people, something I am afraid is too often
ignored.
I am so glad to see some of my colleagues from the other side of the
aisle who rail against reduction in taxes for individual taxpayers
agreed--all of us combined--by a vote of 69 to 17 that lower taxes
promote economic growth and promote greater job creation. That is
exactly why I believe we were wise to pass this bill in the Senate
today. Unfortunately, what we hear too often when talking about issues
such as economics and job creation is a lot of cynicism. I heard
someone on the floor today talking about elite corporate interests will
benefit when tax rates are lowered, or I think there was a reference
made by the Democratic nominee for President about Benedict Arnold
corporations are traitors, in effect, of America by taking jobs out of
America into other countries. I want to talk about that more in a
minute. But what these amount to is a philosophy of claim to love the
worker but hate the employer. In other words, speaker after speaker
today claimed that the policies of this administration were hurtful to
the worker at the same time they claimed that the only ones who
benefitted were the big corporations.
The fact is you cannot claim to love the worker and hate the employer
who provides the worker their job. That is why I believe we need more
progrowth policies. I think we need to look at our tax policies across
the board.
We need to look at our civil justice system which imposes a tort tax
on every consumer in this country and which stymies innovation and
business growth and thus job growth.
We need to look at our regulatory policies which make it difficult
for America to compete. And, yes, we need to look at policies which
will provide greater opportunities for innovation not by the Federal
Government but by the men and women, the risk takers, the investors and
people who create jobs all across this great land--indeed, all across
the world.
What I have heard earlier today with regard to condemnation of elite
corporate interests and the like also reminds me of some of the debate
we heard earlier about outsourcing. It is my view that a lot of the
debate on outsourcing is largely based on the same sort of
fearmongering and anxiety and hammering we have heard generally today
in attacks against this administration and its economic policies, not
on the facts. The facts are that markets are rational.
In other words, if a company can open a business here in the United
States or increase the size of its business, but because of a higher
tax burden and more litigation risk environment, more regulation and
the like, they are going to take a look at places such as India, China,
and Mexico, and other places that do not have a lot of those same
regulatory and legal burdens and tax burdens.
One reason why America continues to prosper is because, of course, we
have what many places in the world do not have; that is, stability in
the rule of law that promotes security of investment. So we can
continue to attract foreign dollars in this country.
For example, the Congressional Research Service has produced a
document entitled ``Outsourcing and Insourcing Jobs in the United
States Economy, An Overview of Evidence Based on Foreign Investment
Data.''
This research document reveals that by 2003 U.S. firms accumulated
$1.5 trillion worth of direct investment abroad compared to the $1.4
trillion foreign investors spent to require or establish businesses in
the United States. For 2003 alone, foreign direct investment in the
United States was about $82 billion, whereas U.S. direct investment
abroad rose to about $155 billion in 2003.
As I said, markets tend to be rational. People, unlike the Federal
Government, have to look at the bottom line and make sure that they
don't operate in the red and thus go bankrupt and risk going out of
existence. They have to be rational. They cannot make the kinds of
emotional decisions that are made too often in the political realm.
But it is no wonder because of the regulatory environment, the tax,
the high taxes in this country, because of the legal system which
unfortunately rewards a few at the expense of the many, that we are
finding more jobs going overseas. And there is something we can do
about it. The fact is we in this Congress are well situated to enact
progrowth policies which will decrease the likelihood that companies
will go overseas or outsource jobs to other countries and other
locations around the globe. But we are not doing the things we need to
do to promote growth right here at home and ensure greater employment
opportunities for the American people.
For example, we know that one of the biggest drags on the economy and
on job creation is expensive oil imports. We know a barrel of oil is
currently selling on the spot market in excess of $50 a barrel. We had
an opportunity--and unfortunately we didn't avail ourselves of that
opportunity--to pass an energy bill which I think would have created
more domestic production here in America, and we would have had a
greater supply, and thus bring the price down. But we didn't do it.
We have high natural gas costs because we simply have put too much of
the domestic supply out of our reach by moratoria and other policies
which said we may have the gas but we are simply not going to explore
and drill for it. It should be no surprise that the cost of natural gas
is at historic highs.
[[Page S11248]]
It is no surprise that gasoline is so expensive when regulations have
resulted in no new refineries being created in the United States since
about the early 1970s. The fact is most of the refiners are operating
at maximum capacity.
One reason for oil and gas being expensive is because emerging
economies such as China and India and others are consuming more and
more energy and thus driving up the price.
We had a chance to do something about that by passing an energy bill
this year, and we simply have been unable to do that because of
objections on the other side of the aisle.
We also know one reason companies don't come to America or don't
expand jobs here in America relative to other countries is because of
our legal system. Unfortunately, we have a mentality in this country
that says frivolous lawsuits are simply the order of the day. We know
that the costs of those lawsuits are passed on ultimately to the
consumers who pay in effect a tort tax. We also know that it affects
access to health care which is another cost that businesses incur when
they do business in the United States as opposed to other countries.
We had a chance to pass medical liability reform to improve access to
OB-GYN doctors, emergency room doctors, and the like. We had a chance
to reduce the paperwork that adds about a quarter of the cost to the
health care expenses incurred by Americans and by American businesses
when they provide health care coverage to their employees.
Unfortunately, these policies resulted in a large number of people
simply going without health insurance because of the cost.
If no one believes what I have said to this point about low taxes
being progrowth and being in the best interests of the American people,
and people who want to work, I think all we would have to do is look at
what happened after we passed the historic tax relief and growth
package in 2003. We know in June 2003 unemployment rates in this
country were at 6.3 percent. Today, they are 5.4 percent, a .9-
percentage point difference lower.
We remember hearing day after day discussions about the jobless
recovery. The fact is, since August 2003, as a direct result of the
progrowth economic policies of this administration and the leadership
of this Congress, according to the payroll survey, 1.9 million new jobs
have been created in the United States.
I heard one of the distinguished Senators refer earlier to ``we''
produced new jobs. I am sure they did not mean to suggest that the
Federal Government produced the jobs because we know the Federal
Government does not produce jobs. More often than not, it is the
burdens imposed by the Government on employers that kill new jobs. The
fact is, if you look at the household survey--of course, we will get
into the difference between the payroll survey and the household
survey--more and more Americans are no longer working in a traditional
employer-employee relationship. Indeed, they are pursuing their own
dream by starting their own business. According to the household
survey, 2.2 million new jobs have been produced since August of 2003.
We are seeing a restructuring of the economy not only in the United
States but globally. Obviously, we know there is going to be some human
pain associated with that. None of us likes, regardless of whether we
are Republicans or Democrats or Independent, when anyone wants to work
and they cannot find a job. Our goal should be to keep our eye on
opportunities for everyone to live up to their potential, to get a job,
to provide for their family.
Unfortunately, the antigrowth policies pursued by many of our friends
on the other side of the aisle in terms of bigger government, greater
taxation, more regulation, runaway litigation, have exactly the
opposite effect. They limit opportunity; they limit jobs; they limit
investment.
I have heard the President criticized time and time again today and
elsewhere for his economic policies. But I remind my colleagues when
this President came into office, we were in a recession. Not only that,
a short time after he came into office, we had the terrible events of
September 11. Osama bin Laden himself said his goal was to establish
about $1 trillion of cost to the American economy. Indeed, we know that
much of the economy suffered a body blow as a result of that tragedy
over and above the human loss of life that we suffered on that terrible
day.
Then we also know that the birds came home to roost, so to speak, on
corporate scandals, some of which are still being prosecuted, that
caused a tremendous loss of public confidence in our markets and in
businesses, resulting again in further economic distress.
The truth is, during this administration the American economy and the
American people have had many challenges. One of those challenges has
been the attacks not only on us as human beings but on our economy and
on the economy's ability to generate new jobs.
Despite all the hand wringing, despite the naysaying, despite those
who would claim there is no hope unless we get a new President on
November 2, the fact is there is tremendous reason for hope and,
indeed, tremendous reason to believe that it is the policies of this
administration and the leadership in this body as well as the House
of Representatives that have caused, have created the conditions
whereby the risk takers, the investors, those who create jobs, do so,
and they have done so at remarkable levels.
I used to be very skeptical of the speeches I have heard of the
Senator from North Carolina, the Democratic Party's nominee for Vice
President, who talks about two Americas. Indeed, sometimes in listening
to the debate in the Senate today and elsewhere, maybe he is right--but
not quite in the way he says. There is one America that is hopeful,
that seeks opportunity and believes that everyone, no matter who they
are, where they come from, or how they pronounce their last name, is
entitled to pursue their dream, the American dream. On the other side,
there must be another point of view, another America, so to speak, for
those who believe they should pursue their political objectives by
fearmongering, by hand wringing, and increasing the anxiety of the
American people when it comes to their job security by making
fallacious claims about how good the economy really is and the policies
that have produced tremendous growth in the economy and tremendous
opportunity for people who have previously been out of work.
Ultimately, we have to do two things: Continue to do what we have
done with regard to people who are out of work and provide temporary
benefits until they can get back on their feet and get back in the
workforce--not a permanent subsidy for not working but provide help for
those who are truly looking for work, and then we need to continue to
provide educational opportunity to every American.
We need to change our frame of mine when we think about education.
When I was growing up, I somehow got this idea that I would go to
school and graduate from high school and then I would go to college and
I would ``finish'' my education. The truth is, that is not what
happened. The truth is, it cannot happen in today's economy and in
today's competitive work environment. The truth is, we need to change
our frame of mind and commit ourselves to life-long learning. That is
one reason I appreciate the President's emphasis on community colleges,
which in many areas of the country are working in conjunction with the
private sector to learn what sort of skills need to be taught to a
workforce in order to get the good high-paying jobs that exist. Indeed,
community colleges are working closely with the private sector to do
just that in places such as the State of Texas and elsewhere.
We need to recommit ourselves to education because the one area that
America has always surpassed its competition anywhere in the world has
been in the area of innovation. It is our brain power, our spirit, our
freedom and opportunity that have made us the envy of the rest of the
world.
I cringe when I hear my colleagues on the other side of the aisle, or
when I hear on the political stump about hope being lost, about those
people not having opportunities anymore, about the American dream
leading to a nightmare, because the facts, No. 1, contradict that; and,
No. 2, the only way that America can be defeated in a global
competition is if we defeat ourselves and give up.
It was Professor Harold Laswell who called politics a fight over who
gets
[[Page S11249]]
what, when, and how. If all we are going to talk about in the Senate
and in Washington, DC, it is about who gets what, when, and how, we
will be defeating ourselves. Indeed, we need to continue to enact
progrowth policies that will provide opportunity for everyone in this
country. If we ever lose sight of our vision as America being the last
best hope of freedom-loving people around the world, we will have hurt
ourselves and hurt the American people at the same time.
Finally, those in this Senate who complain so mightily about lower
taxes for individual taxpayers and use class warfare to talk about the
rich not paying their fair share, these are the same people in many
instances who voted for this tax cut for corporations that manufacture
goods.
I think their vote today was right. I think their rhetoric, when they
talk about the President's policies and tax relief being wrong, is
wrong, because it is higher taxes, more regulation, out-of-control
litigation, and a burdensome regulatory environment that are hurting
America's ability to compete in the global economy and are hurting the
opportunity for American employers, including small businesses, to
create those new jobs.
Indeed, I think any fair observer would conclude that it is the
policies of this administration and this Congress that have created
greater opportunity. I do not believe we should give in to the hand
wringing, to the anxiety-provoking rhetoric, or, indeed, the
fearmongering that happens way too often in our political discourse
because the facts point to the fact America is still and--as long as we
retain our commitment to progrowth policies--will continue to be the
last best hope of the world.
Madam President, I yield the floor.
The PRESIDING OFFICER. Under the previous order, the Senator from
Washington has 8 minutes.
Ms. CANTWELL. Madam President, I rise today to address the
legislation we passed earlier, but I say to the Senator from Texas, it
has been a pleasure working with him and the senior Senator from Texas
on issues that we are going to talk about, the sales tax deduction for
individual States.
But I also say that I know this side of the aisle very much believes
in pro job-creation activities. As somebody who has been in the private
sector and seen the job creation that can happen in the private sector,
no, I do not believe Government creates jobs, but I do believe
Government has an investment strategy, that we are a partner with the
private sector; and a good investment strategy then allows for capital
to flow to people who need it most.
I guess I would say that this bill is not the perfect solution, and
not what 51 Members on this side of the aisle would have drafted, as
there are certainly things that have been overlooked. I think we have
heard about them, including Senator Landrieu's language about a $15,000
tax credit to employers that would help them maintain their employees
who have been called up by the National Guard and Reserve on their
payrolls.
As the Senator from Maryland has articulated, another item is the
unemployment benefits that would have worked to benefit many Americans
while they can't find jobs, because jobs the job growth we have been
promised has not happened. Unemployment benefits are, therefore,
something to help keep economic stimulus in our communities.
Another is the fact that when we talk about community colleges and
job creation, we really are not keeping pace with the training and
retraining dollars from the previous years' budgets to actually help
make this transition.
I would just point out that while we are having this discussion today
about where we go further with the policy, it is a fact that this side
of the aisle definitely believes in investing in the human
infrastructure, not just in the corporate side of the equation but in
individuals, for unemployment, for job training, for our National
Guard, for people who need the help and support to continue to do their
jobs.
But let me address, if I may, the key issue I wanted to talk about;
which is, the issue of tax fairness. It is ironic. My colleague talked
about this side of the aisle and tax fairness, the two issues about
which I am going to talk.
The first one was actually implemented under a Republican
administration and a Republican Senate. That was in 1986, not allowing
the State of Washington and six other States in the Union to be able to
deduct their state and local sales taxes in lieu of state and local
income taxes from their Federal income tax.
Now, since I have been in the Senate, since 2001, I have worked to
make the deduction of state and local sales taxes from their federal
tax liability permanent for my constituents. When I entered the Senate,
I first worked with the Senator from Tennessee, Mr. Thompson, who had
introduced legislation, and then later with Senator Kay Bailey
Hutchison from Texas with whom together we have introduced legislation
in the 108th Congress to reinstitute the state sales tax deduction.
Washington and Texas have known a long time that we needed to restore
tax fairness to the people of these States. And while we have passed,
this afternoon, legislation that restores that fairness temporarily for
the next 2 years, we need to continue to work to make it a permanent
resolution for people in those States.
Restoring that sales tax deduction will help strengthen our economy.
What people do not realize is that when the 16th amendment to our U.S.
Constitution was ratified, in 1913, it said you could make the way for
a Federal income tax, and Congress allowed taxpayers to deduct State
and local taxes so that income would not be taxed twice. That was what
the exemption was about.
So why, in 1986, after 74 years of a precedent, was this tax equity
abruptly ended? As I said, I am just pointing out to my colleague, it
was actually done by a Republican Senate, a Republican administration.
I am saying that only because we need to move forward in correcting
these policies, as the previous speaker said, and work together on
commonality.
The taxpayers from the States that were given this raw deal--I
believe because it was a budgetary squeeze, not based on, I think,
really valid principles--it was a great impact to States such as mine,
which has just over 60 percent of our State revenue coming from sales
tax--about 61-point-three percent. So for us, that is a huge impact.
When you are asking constituents not to be taxed twice by what they
paid to the State and what they pay to the Federal Government, not
being able to deduct that was an inequity in our tax laws. We know that
for Washington State this could mean as much as $421 million that would
be saved by taxpayers. I am sure the number is higher in many other
States around the country.
But it also means job creation. The Economic and Revenue Forecast
Council in our State says that it would create as much as 2,000 to
3,000 jobs, and it would be about a 50-cent stimulus for every $1 spent
in Washington State. So for an economy that has been hard hit by this
recession and continues to have one of the highest unemployment rates
in the nation, this is the kind of tax policy we think helps us grow
our economy and create jobs.
But the bottom line is that after this period of time, after 18
years, Washington State is finally--instead of getting a raw deal--
going to get a fair deal, in the fact that residents are going to be
able to deduct their sales tax from their Federal income tax
obligation. So I think that is the kind of job-creation stimulus and
fairness we need to be focusing on as we look at these tough choices.
Another issue that is bringing tax fairness to our State and to many
other rural parts of our country is an issue that Senator Craig Thomas
and I worked on, the National Health Service Corps Loan Repayment
Program. That also was passed this afternoon as part of this
legislation.
What this bill did was to focus on the fact we are trying to get and
continue to push rural health care needs.
We have a deficit in some parts of our country in getting doctors
into rural communities. We have had a great program on the books for a
number of years. I am proud that a previous Senator from our State,
Warren Magnuson, actually created the National Health Service Corps
Program. What it did was, it said to physicians, if you will go
practice in rural communities, we will either give you a scholarship
for doing that or we will give you loan repayment assistance.
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Well, I can tell you, in talking to physicians throughout my State,
the cost of repaying those loans can start off a career in hundreds of
thousands of dollars of debt. Somewhere along the process we ended up
taxing the National Health Service Corps scholarship and loan money to
these physicians, as the IRS saw the payments as taxable income. In
fact, later Congress realized: Well, that was not such a great idea of
taxing, so we will give more money to the National Health Service Corps
to pay for those taxes and then tax that money on top of it. We ended
up paying 40 percent of the program in taxes instead of creating the
opportunity for those physicians. So this program will help get about
67 percent more physicians into rural health care in America.
The last thing I would like to say is that as we continue to move
through the rest of how we finish up this year, we want to continue to
give an opportunity to make sure the National Guard and Reserve men and
women in our country are well taken care of. I am proud the Senate
passed back to the House a bill that also included Senator Landrieu's
language about helping the National Guard.
Washington State is a State that is greatly impacted, and we
certainly need to help and support taking care of our National Guard.
I yield the floor.
The PRESIDING OFFICER. The Senator from Alabama.
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