[Congressional Record Volume 164, Number 121 (Wednesday, July 18, 2018)]
[Senate]
[Pages S5050-S5052]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                               Tax Reform

  Mr. President, on tax reform, before I get into some of the macro and 
statistics that are really, really incredibly encouraging, I just want 
to touch on a couple of constituent companies and their employees and 
how our tax reform is affecting them.
  One is a company called Glass & Sons Collision Repair. They are 
located in Reading, PA, which is in the eastern part of our State. They 
recently announced that they will be paying $1,000 tax reform bonuses 
to all of their employees--$1,000. This is a small business. It is a 
father-and-son business. The owners, Charles and Trevor Glass, made the 
decision to pay the bonuses right after they met with their accountants 
and learned how much they are going to save as a result of tax reform. 
The first thing they did is say: We are going to share this with our 
employees. It is a terrific development for everyone involved.
  There is another company on the other side of the State, in Somerset,

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the southwestern part of the State. It is a company called Guy 
Chemical. They recently announced that not only are they increasing 
wages and bonuses, but they are also making all new investments, 
including buying a new forklift, updated computer equipment, new 
software, and they are building a new lab for research and development 
that will be five times the size of their old lab. They are doing this 
because of tax reform and the confidence they have in the economic 
growth that is occurring in this reformed environment.
  It is not only individuals who work for companies that have been able 
to pay higher wages and bonuses who benefit from tax reform; it is just 
about everyone. About 93 percent of all of the folks I represent and 
all of the folks we all represent--when they file their tax return for 
this year's income, they are going to pay less in Federal income taxes.
  According to the Tax Foundation, the direct savings for a 
Pennsylvania family with an income in the $50,000 to $70,000 range--it 
will be about $1,400 in savings.
  In addition to the direct savings from a lower Federal tax bill, 
because of the savings that Pennsylvania utilities have on their 
Federal tax bill, they are required to pass that on to their customers, 
and that is exactly what they are doing. So far it is a combined $320 
million in annual savings to Pennsylvania consumers in the form of 
lower utility bills as a result of our tax reform.
  There is no question that there are tremendous, direct personal and 
individual benefits across the board. Related to that is the fact that 
the economy is just taking off. The economy has been on fire. This year 
it has been tremendous.
  Nothing reflects the strong economic data better than the employment 
picture. It is fair to say that the employment picture in America may 
never have been this good. I know that is making a very bold statement, 
but stay with me here as we go through some of this data.
  In the month of May, we had the lowest unemployment rate since 2000--
the lowest unemployment rate in 18 years. The African-American 
unemployment rate hit an all-time record low. It has never been 
measured as low as it was in May, at 5.9 percent. Likewise, the 
Hispanic unemployment rate hit an all-time record low, at 4.6 percent 
in June. Small business optimism was at the second highest level on 
record ever, this past month of May.
  Dividends paid from overseas subsidiaries of U.S multinationals, 
dividends paid back home--money that is sitting overseas and invested 
back in America--reached an all-time record high in the first quarter 
because we changed the rules to diminish the penalties we used to have 
when an American company brought income that was earned overseas back 
home.
  Well, one of the things we wanted to have happen as a result of our 
tax reform was that we wanted to see more capital expenditures--more 
companies putting money to work buying plants, plant equipment, 
technology, and tools. Guess what. For the first quarter of this year, 
there was tremendous growth in capital expenditures by American 
businesses. It is up over 7 percent, well above even the ambitious 
estimate that came out from the Congressional Budget Office late last 
year.

  I think one of the most amazing statistics about this whole 
employment picture is what happened in March. We saw that in the month 
of March--again, the first time ever that I am aware of--the number of 
job openings in America, meaning the number of available jobs that need 
to be filled, was greater than the number of people looking for jobs. 
Think about that. There are more jobs available in America than there 
are people looking for jobs in America. That is terrific for people who 
need work. The jobs are out there.
  The National Federation of Independent Business, which is America's 
largest network of small businesses, were surveyed in June. Sixty-three 
percent--almost two-thirds--of these small business owners reported 
that they were hiring or trying to hire. That is the highest level we 
have seen since 1999. And 87 percent of those who are trying to hire, 
or are actually hiring people, are concerned that there are just too 
few people out there available to be hired.
  So, in a way, the economy is growing so robustly and the job 
opportunities are expanding so quickly that we have a shortage of 
workers. We have too few people available to meet the demand for all of 
these jobs. It is the right problem to have.
  So what happens as a result of that? It is exactly what we predicted. 
People who have decided to leave the workforce, to give up on work--
people who are of working age and are healthy but decided, for whatever 
reason, not to work--are coming back into the workforce. They are 
coming back in big numbers. In the month of June, over 600,000 
Americans who had worked in the past but then had stepped out of the 
workforce for whatever reason came back into the workforce. The biggest 
proportion of these folks are people who have never gone to college, 
but they have a renewed confidence and optimism about the economy. They 
have confidence in opportunities available to them, despite the fact 
that they don't have a college income. They have decided that they are 
going to reenter the workforce and, in the process, start to improve 
their standard of living.
  By the way, the labor force participation rate rose really across, I 
think, all ethnic groups, including women, men, African Americans, and 
Hispanics. It is up across the board.
  So far this year, over 1 million workers who had left the workforce 
are back in it. That compares to about half a million workers in the 
first half of last year and about 600,000 in 2016. So there was a big 
surge in the number of workers coming back into the workforce, and they 
are finding jobs. It has improved our overall population, our overall 
percentage of working-age people who are, in fact, working. As I say, 
it is across all demographic groups and contributing enormously, first 
and foremost, to improving the quality of their lives and their 
family's lives but also our overall economic growth.
  What else did we get from the June jobs report? In June--in the month 
of June alone--there were 213,000 jobs added. That is a very, very 
rapid pace. Oh, by the way, these numbers are always provided 
subsequently. So in June we got the revision for April and May, months 
that had good job growth. It turns out that it was even better than we 
thought. All together, there were 37,000 more jobs when we revised the 
April and May numbers than we had originally figured.
  There was a modest uptick in the unemployment rate, but don't be 
fooled by that. That is because with so many additional people entering 
the workforce, we are counting far more people now in how we determine 
that.
  One of the truly exciting things about this is that for many, many 
years, we have had stagnant wages. Wages just weren't rising very 
rapidly. It is because productivity wasn't growing. That, I think, was 
being driven by the fact that there wasn't considerable growth in 
capital expenditures. Now that we have changed that dynamic and capital 
expenditure is growing, productivity is growing and wages are starting 
to grow. I am not satisfied with the growth yet, but it is very 
encouraging that the direction is positive.
  Based on the employment cost index, wages grew about 2.9 percent in 
the first quarter. That is the fastest pace in a decade--the fastest 
pace in 10 years. Average hourly earnings for nonmanagers rose at their 
fastest pace in 9 years.
  In June, interestingly, pay for workers who switched jobs rose at 3.8 
percent, which is a clear indication that employers are forced to bid 
up wages because they need to hire workers, and they are having trouble 
finding the workers.
  This whole dynamic is very, very encouraging. It means wages are 
growing and are likely to grow more.
  I should also point out that there is a feature in the arithmetic 
that suggests that it could mask the extent to which wages are growing. 
What I am referring to is when I say that average wages are growing by 
2.7 percent. That is true, but let's keep in mind that when we get a 
surge of new people into the workforce, most of those people are coming 
in at the lower end of the wage spectrum. Maybe it is their first job 
or maybe they have been out of work for a long time, or maybe, as I 
pointed out,

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they don't have the same level of education and skills of people 
already in the workforce. So they are starting at a lower-than-average 
wage. So all else being equal, that would tend to bring the average 
down. So despite that, when you have growth, that tells us that people 
who have been continuously employed are getting an even bigger growth 
in their wages.
  So this is very, very encouraging. I think it is likely to continue. 
It is exactly what we were hoping would happen as a result of our tax 
reform.
  But there is another whole development that is not directly about 
wages, but when you think about it, it makes a lot of sense. With all 
of these people finding work, with all of these opportunities for work 
and people coming back into the workforce, guess what. There is a 
reduction in dependency on government programs because people are able 
to earn the income to support their families.

  So, for instance, in the 4-week average of unemployment benefits 
claims, one of the things we monitor closely, the number of people who 
are collecting unemployment hit a 45-year low of 213,000 in May--45 
years. You have to go back 45 years to find so few people who required 
unemployment for an extended period of time. It is really amazing, when 
we consider how much bigger a country we are today, that we have gotten 
down to a number that was matched only 45 years ago--amazing.
  We can look at the disability benefits. According to the Social 
Security Administration, fewer Americans applied for disability 
benefits last year than at any time since 2002, 16 years since we have 
had a number this low.
  We can also look at the food stamp program. Two million people have 
come off of food stamps because they are working and they are earning 
enough that they either don't need it or they don't qualify anymore.
  So these are very, very encouraging trends. As I say, because the 
driver is a new set of incentives that is encouraging capital 
expenditure and, therefore, productivity growth, I think this is really 
likely to continue.
  The macro GDP numbers reflect this as well. The Congressional Budget 
Office last year estimated that growth for 2018 would be about 2 
percent. As a result of tax reform, they revised that up to 3.3 
percent.
  As for estimates for the second quarter--the quarter that just 
ended--we don't have the numbers yet. It is still a couple of weeks 
away, but the estimates are that growth was probably equal, maybe even 
more than 4 percent.
  So we have had tremendous growth. We already had a great first 
quarter relative to other first quarters, and the second quarter is 
probably very, very big.
  All of this, of course, means that if this growth is sustained, which 
I think it is likely to be, not only will we continue to have good 
employment numbers like we have had, but we are also going to have good 
budget numbers.
  The Federal Government budget is driven more than anything else by 
how strong our economy is and how many people are working. Everybody 
working is paying taxes. Every company that is making money is paying 
taxes. So revenue coming into the Federal Government is likely to be 
very strong.
  So I am very optimistic. I think it is very clear that the 
combination of pushing back on excessive regulation and a tremendously 
pro-growth tax reform has led to this growth.
  I should warn that I think there is a bit of a cloud on the horizon. 
I hope it doesn't develop into a big storm. Right now it is just a 
cloud, but that cloud is trade policy that could really start to hinder 
economic growth.
  It is interesting. We had testimony at the Banking Committee just 
yesterday from Fed Chairman Powell. I pointed out that the minutes for 
the June meeting of the Federal Reserve's Open Market Committee had a 
disturbing reference. I will quote briefly: The FOMC minutes for June 
stated: ``Some Districts indicated''--they refer to the various 
districts around the country--``that plans for capital spending had 
been scaled back or postponed as a result of uncertainty over trade 
policy.''
  That is a warning. That is a warning to us. If we spiral down into a 
full-blown trade war--and we certainly have a lot of skirmishes going 
on--and if this spirals out of control, business will start to pull 
back. They will lose the confidence they have had, and that could lead 
to diminished capital expenditures, which will start to really diminish 
the tremendous growth that we have seen.
  So far for this year the economic picture has been extremely 
encouraging. Benefits are very broad-based. Economic growth is broad 
and strong. There are employment numbers that we haven't seen in 
decades. I believe this can continue. It is much more likely to 
continue if we avoid a damaging trade war.
  With that, I yield the floor.
  The PRESIDING OFFICER. The Senator from Rhode Island.