[Congressional Record Volume 155, Number 3 (Thursday, January 8, 2009)]
[Senate]
[Pages S184-S186]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           ECONOMIC STIMULUS

  Mr. GREGG. Mr. President, I rise to speak about the issue of the 
economy and how we address the question of economic stimulus in the 
context of what is a very severe slowdown, recession, and in the 
context of what is an extraordinary situation relative to our deficits.
  Just yesterday, the Congressional Budget Office reported that the 
deficit this year will be $1.2 trillion. That is a number which most of 
us cannot even fathom. To try to put it in context, that size of 
deficit has not occurred in this country, if you calculate it as a 
percentage of GDP, since World War II. It is a deficit that is 
extraordinarily large. A deficit means we are running up debt our 
children are going to have to pay for. So it has a real effect on the 
next generation and generations after that and their ability to be 
prosperous.
  Not only does CBO tell us the deficit is going to be $1.2 trillion, 
but they also tell us that with the stimulus package that is being 
proposed--and the package that is being talked about is in the range of 
$700 billion to $800 billion, and when you throw that spending on top 
of the deficit, we are talking about a deficit which will be closing in 
on $2 trillion, which is about 11 percent of GDP. That will be almost 
four times larger than the largest deficit we have run since World War 
II. There are a lot of things causing this, of course, and most of them 
are tied to the economic slowdown. The economic slowdown is severe, but 
as we try to mute and lessen the impact of that slowdown on working 
Americans and on everyday Americans, we have to be careful that we 
don't do things which aggravate significantly in the outyears this 
country's fiscal strength and our children's ability to have a high 
quality of life.
  I have said on numerous occasions that I believe President-elect 
Obama is on the right track relative to bringing forward a very robust 
and aggressive stimulus package. But what is key to determining whether 
that package is a good package or a marginal package is the policy that 
underlies it. It is not the numbers so much as it is the policy.
  I believe there are a few signposts which we should follow as we 
develop such a package. The first is that we not unduly aggravate this 
long-term debt situation which we have as a country.
  We know we are facing a fiscal tsunami as a nation. The baby boom 
generation is about to be into full retirement. During the term of this 
Presidency, should the President be reelected, the baby boom generation 
will be very close to full retirement. That will mean we will have 
doubled the number of people in retirement in this country, and the 
cost of maintaining those retirees will put a massive burden on the 
backs of this tax generation but especially the next generation. We are 
talking $60 trillion of unfunded liability that is coming at us. That 
is debt coming at us. That doesn't count the debt we are putting on the 
books today to deal with this economic slowdown.
  So what is very critical as we address trying to get the economy 
going by using a stimulus package is we have to be very careful that we 
put in place programmatic activity that doesn't add to the long-term 
debt of the Nation, that are one-time items that will basically retract 
and no longer be part of the deficit function or add to the deficit 
function in the outyears.
  The TARP program is a good example. The TARP program was a program we 
put in place to try to stabilize the financial institutions of this 
country, and it has. That program basically

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used investment versus spending relative to tax dollars. We purchased 
preferred stock in a series of financial institutions across this 
country. That preferred stock, the purchasing of it, has helped to 
stabilize those financial institutions and the financial system of the 
Nation. The purchase of that preferred stock creates a significant jump 
in the deficit for next year. Depending on how many of the dollars we 
end up using of the TARP, it could be $400 billion or $500 billion. But 
in the outyears, we are going to get that money back because we are 
buying assets. In fact, we may get it back with interest--or we will 
get it back with interest and make a little money for the taxpayers, 
which would be good. They deserve to make a little money off that 
initiative.
  That type of investment is a one-time event which may aggravate the 
deficit in the short run but does not aggravate the deficit in the long 
run. That is the type of initiative we need to look at.
  In the area--and this is being talked about a lot--of the Federal 
Government going out and just spending money, not investing money that 
comes back in assets to us, we have to take the same approach: that we 
are basically going to put the dollars of the stimulus package into 
initiatives which will make our Nation more competitive and more 
productive in the outyears so that we get more tax revenues, hopefully, 
but at least have more jobs created in this country as we compete in 
the worldwide economy. Thus, as we invest in infrastructure, which will 
be a large part of this stimulus package, it is absolutely critical 
that we have entry-level tests to be sure that the infrastructure we 
are investing in is infrastructure which is going to produce an outyear 
return to us beyond the dollars that are put into them.
  Now, we all love things such as beautifying Main Street or putting in 
running tracks. These are all things people love to do, and some people 
even love to build halls of fame to this issue or that issue. But that 
is not the type of infrastructure investment which is going to help us 
be more competitive and create more jobs, and the bottom line is to 
create more jobs. What we want to do is invest in what is going to 
create more jobs and make us more competitive in the global economy: 
roads, bridges, high-speed broadband in areas that aren't quite as 
dense population-wise to make it affordable in the commercial sense; 
IT, and especially in these quasi-public areas, such as health care, 
where it will give us a return on our investment; the military--and we 
have the chairman of the Armed Services Committee sitting in the 
Chair--we have to obviously retool our military. These are investments 
which give us a long-term return.
  So I hope as we get to the stimulus package and we send this money 
out to the States, primarily--I suspect that is where it is going to 
go, States and communities--there will be some entry-level tests they 
have to meet before they can spend the money so that we get a return on 
those dollars in the way of making our Nation more competitive and more 
productive. I would hate to see us just give it to the States with very 
little limitation on how they spend it because a lot of the money will, 
unfortunately, be wasted.
  I know in my State every community is pulling together their wish 
lists, and I have seen things like putting in alarm systems in dorms. 
You know, maybe that is a good idea, but it is not the responsibility 
of the Federal Government to do that. Our responsibility would be to 
replace a bridge or build a bridge that is a bottleneck from the 
standpoint of transportation or put broadband into a region of the 
State which couldn't get it otherwise because of density issues or give 
our health communities a better way to do their IT so they are more 
efficient. So we do need these tests.
  In addition, everything needs a hard sunset. Everything in this 
stimulus package needs a hard sunset so that when we get to the end of 
this recession, which we are going to get to because we are inherently 
a resilient nation, we don't continue these programs into the future. 
By hard sunset my view would be that for a program to continue under 
this it would have to have a two-thirds vote.
  Another major initiative in the stimulus package, it appears, will be 
tax initiatives. I respect, and first off I admire, the energy and the 
focus of the Obama team on this issue. I think he has put together an 
extraordinarily talented group of people in many areas but especially 
in the fiscal area--with Secretary-designate Gardener and Larry Summers 
and Paul Volcker--and it is my view that as we look at the tax part of 
this component--and I understand it is going to be fairly big--it 
should be again focused on where we create jobs because this is the 
issue: How are we going to create more jobs? It is pretty obvious that 
in our economy jobs aren't created by big business or by government. 
Jobs are created by individual entrepreneurs who go out and start 
something small and it builds. So the majority of the tax initiatives, 
in my opinion, should be focused on job creation and assisting people 
who are willing to take risks in the small business community.
  There is a lot of discussion about a major employment tax credit; 
that if you hire people, you get a credit for employment. I tend to 
think that is probably not going to generate a whole lot of economic 
activity. If somebody is going to hire someone, they are going to hire 
them. And they will take advantage of it, obviously, but the odds of 
people actually adding people because they have a credit for adding 
people is slim, I suspect. It is not human nature to do that, even for 
a tax credit. I suspect it will just be money put out the door and not 
produce much in the way of results. We have a pretty good and pretty 
recent example of how this works in the area of tax policy because we 
did a stimulus package which was keyed off a tax rebate last spring, 
and $80 billion of a $160 billion package was a tax rebate and it 
generated virtually no greater consumption. So there are some pretty 
good statistics which have shown consumption was not increased 
significantly at all by that tax rebate initiative. So a tax rebate 
approach is probably not going to get you a lot in the area of the big 
bang for the buck.
  We want to come out of this slowdown a stronger, more productive 
nation by making capital investments and using tax policy to generate 
those investments so we can compete better in the world economy. I 
would hope that would be the approach that is taken.
  There is another proposal which addresses the issue of States, and 
this one is the most problematic of all the initiatives in the stimulus 
package for me. There are a lot of States that have been fiscally 
responsible and actually have surpluses, and some States have said they 
do not even need this sort of support. There are other States with 
revenues that have dropped precipitously because of this economic 
slowdown which they didn't have any control over, and they have a 
legitimate claim. They are in dire straits. There are other States, 
however, that have simply during the recession spent a lot of money 
which was out of proportion with what good fiscal policy allows. So I 
would hope that as we are talking about assisting States--and I 
understand it is probably going to come in through the FMAP for the 
Medicaid Programs--that we have some conditionality that says if the 
State's financial distress is caused by a drop in revenues, then we 
will be supportive. But if the financial distress is caused by the fact 
they have simply been excessive in their programmatic activity, beyond 
profligate--profligate is probably too strong a term--but excessive in 
their programmatic activities, beyond what is reasonable in these slow 
times, then we should not be underwriting that sort of activity that is 
inappropriate from the standpoint of fiscal restraint. We should rather 
be focused on assisting States that have seen a significant drop in 
their revenue. It is difficult to do, but I believe it can be done, and 
I believe it should be done.

  It is obvious we need a robust stimulus package right now, and it is 
very obvious we need to have it sooner rather than later. From my 
standpoint, as a member of the Republican Party, which is in opposition 
here arguably, I want to work with the other side of the aisle and with 
the President-elect to accomplish it because I don't think we can 
afford partisan politics at this time. We need to govern. These issues 
are so huge and are going to have such

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a devastating impact on our Nation if they are not aggressively and 
boldly addressed that we can't afford this to be a party-line event. We 
need to have cooperation. We have a template for that. When we took up 
the TARP bill, which was an extraordinary piece of legislation, it was 
done because we recognized the crisis was upon us and action had to be 
taken, and it was done in a totally bipartisan and, I thought, a very 
effective way, and that is a good template for moving forward.
  So I just lay these ideas out as an approach to take, and I say, from 
my standpoint, to the extent I can participate--and I hope I can--I am 
willing to listen to any ideas, and I want to see us make progress. I 
want to see it be prompt because in this area, it is absolutely 
critical for the President-elect to succeed for the Nation's good.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Illinois.

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