[Congressional Record (Bound Edition), Volume 147 (2001), Part 16]
[Senate]
[Pages 22452-22453]
[From the U.S. Government Publishing Office, www.gpo.gov]



                  GIVING FLEXIBILITY TO THE PRESIDENT

  Mr. GRAMM. Mr. President, I came over this morning to urge 
bipartisanship on the stimulus package--something we have not had in 
the Senate. I have to say that, while I have deep affection for the 
majority leader, I was somewhat taken aback by the tone of his speech. 
I don't think we are going to benefit ourselves here today by getting 
into a lengthy debate about the stimulus packages that are before us. I 
simply wish to make the following points:
  First of all, I do believe the American people have been proud of the 
fact that, since September 11, we have had a level of bipartisanship in 
Congress that we have not had in a very long time. I think it is a 
natural thing. I think the American people should expect us to come 
together in a period of crisis, and I think they have a right to be 
disappointed when we don't.
  Most of the legislation we have done to this point has been 
bipartisan. We have had a few sticking points along the way. We are in 
conference today on airport security. The President would like to have 
the flexibility to use Government employees where it makes sense, to 
set Federal standards and use private contractors where it makes sense. 
Some people have said if you are going to do it, you have to use 100-
percent Government employees. They say Government employees are more 
reliable. Critics say that, with Government employees, you can't fire 
them; you can't provide incentive pay; you can't reward excellence. It 
is a lengthy debate.
  My own opinion is that when in doubt in a period of crisis, you ought 
to give the President the benefit of the doubt. I hope we will adopt 
that bill and give him the flexibility to use Government employees 
where he thinks they will work best, and to use private contractors 
under Federal standards where they would work best. It is easy to 
impugn partisan motives to people in that debate, but I do not think it 
is very helpful.
  I have to say the majority leader gave a lengthy discussion about the 
tax cuts for the rich in the House plan. It is a funny thing; I guess 
if you went all over the world today and listened to legislative bodies 
debate, we would probably be the only great legislative body in the 
world, and maybe the only body in the world, that is still engaged in 
class conflict. It was rejected in the Soviet Union. It has been 
rejected in the Third World.
  Our whole history is living proof that in America you give ordinary 
people extraordinary opportunities and they do extraordinary things and 
they get rich as a result of it, and is anybody any worse off because 
of it? I do not think so.
  I have been blessed, as I am sure many of my colleagues have been 
blessed, to have many different jobs. I would guess if I went back to 
when I first got a job throwing a newspaper or working for Krogers or 
working for Sam Houston Peanut Company, I may have had 30 jobs in my 
life. But nobody poorer than I ever hired me, and I never felt hostile 
to people who had been successful, who had money, who were able to 
invest it and create opportunities for people like me.
  I do not understand this effort to try to breed hate based on 
people's income. One of the reasons it is so utterly unfair is that it 
is not as if in America the only people who have income or wealth are 
people who are born with it. In fact, everywhere, every day, in every 
city and town in America, we see ordinary people who become 
extraordinarily successful. Why that ought to be a point of conflict I 
do not understand.
  There has been a lot of discussion about the elements of the Senate 
bill. Great sport has been made about provisions of turning chicken 
manure into energy. I thought that was a bad idea when it was first 
debated, and I still don't think it is a very good idea.
  We are trying to pass a farm bill to pay farmers $5 billion of 
additional money not to grow because of overproduction, and in the 
stimulus bill before us we are paying people $150 million not to 
convert agricultural land to other uses. On the one hand, we pay them 
not to produce, and then on the other hand, we pay them to keep land in 
production. None of that seems to make any sense to me.
  Rather than getting into all the details, I will talk about what a 
stimulus package is, and I am not going to try to appeal to authority, 
I am going to try to appeal to logic.
  When I was a boy studying economics, economists believed in a set of 
principles. They reached those conclusions based on the study of 
history and, by and large, economists would normally agree on certain 
things. Today economists are like lawyers: You just hire one, and they 
give you the opinion you want, and they give you the best justification 
they can to do it, just as a good lawyer who is appointed by the court 
to defend a killer makes the best defense he can make for the guy 
because it is his job, even though he knows the man is guilty.
  Today you can hire economists to say whatever you want them to say 
and make the most outrageous argument imaginable. You can find somebody 
who will do it, either because they have a political agenda or because 
they have their own economic agenda.
  Let me talk about stimulus from the point of view of logic, and just 
see if what I have to say makes any sense.
  First of all, if you want to stimulate the economy and you have a 
relatively small amount of money, you have options. We have sort of 
talked about $75 billion or $80 billion here. One option would be just 
to put it in small bills and fly it over cities and dump it out. People 
could find it and spend it. Is that a stimulus? In a sense, one could 
say it is. People pick up these $20 bills, they take them and spend 
them. The only problem is we took the $20 bills from taxpayers. Are we 
really any better off as a result of having dropped the money out of 
airplanes? I think the plain truth is, no.
  The same thing is true about giving tax cuts to people who did not 
pay any taxes. Quite frankly, I know it is going to be in the final 
package and the President signed on to it in a compromise--negotiating 
before the negotiations started in a good will gesture,

[[Page 22453]]

which is one of the reasons I love the President, even though I do not 
always agree with what he is agreeing to.
  In trying to get this moving, he agreed we were going to give tax 
cuts to people who did not pay any taxes. That is like dropping money 
out of airplanes. I do not think it stimulates the economy because we 
took the money from taxpayers and are giving it to people who did not 
pay taxes.
  If we want to stimulate the economy, we have to find a way with the 
$75 billion to get people to spend not only it but other things. We get 
that done by finding ways of spending the money that encourage other 
people to spend their money. Unfortunately, the other people who are 
spending their money are people who have money and, hence, almost any 
stimulus package that is worth anything could be criticized that 
somebody who is wealthy is going to be stimulated to invest their money 
and they at least think they are going to benefit.
  The point is, America cannot be saved except at a profit. The fact 
that somebody will make money based on a stimulus package is the end 
objective.
  There are two ways we can go about a stimulus package. If I could 
write the stimulus package, I would write it as follows: First, I would 
have cut the capital gains tax rate. It does not cost us anything for 2 
years. Our experience with it, beginning at the end of the Second World 
War, has been almost uniformly positive. I have argued for it 
incessantly. The President decided not to propose it because he saw it 
as polarizing.
  I also believe that making the tax cut permanent would stimulate the 
economy and bring stability to the economy. It is very destabilizing to 
have a tax cut that is going to dramatically change and, in fact, go 
away in 9 years. All over America today, people who could be investing 
are taking $20,000 per child and locking it up in IRAs and in gifts to 
their children and grandchildren to try to avoid the death tax, even 
though we claim we repealed it. It is coming back in 9 years. So people 
who expect to live 9 years are using up their resources planning for 
it.
  A decision was made that making the tax cut permanent would be too 
provocative in a partisan sense, and so that was not enough.
  Senator Grassley put together a good package given what we had 
already agreed to take off the table. I want to make the point--and I 
make it because Senator Byrd is here. Senator Byrd is going to propose 
some infrastructure spending. It has a disadvantage and an advantage, 
but it is one of the few proposals that is being made other than those 
that are targeted in the sense of targeting investment, tax cuts.
  There is no doubt about the fact that accelerated depreciation--
allowing people to spend so if they buy new capital equipment to create 
jobs or open a factory they can write off more of it quicker--there is 
no question about the fact that a little bit of money there produces a 
substantial economic response.
  I think we should be doing more of that. When people ask what cutting 
tax rates and accelerating the tax cut has to do with incentives to 
invest, do they not realize that 80 percent of the income tax paid by 
the top 1 percent of taxpayers is paid by small businesses filing under 
subchapter S as individuals? The top tax rate is really a small 
business tax rate. When people are saying the average person in that 
tax bracket will earn $600,000 or $700,000 a year, that average person 
is really Joe Brown and Son hardware store in Texas or West Virginia 
somewhere, and it is really their rate about which we are talking.
  I see that as a very important incentive. I have to say when I look 
at the list of things we are doing, such as giving movie producers and 
recording artists and authors tax breaks, I would much prefer lowering 
the tax that affects investment or spending money on highways as 
compared to that kind of expenditure.
  Let me turn to the whole question of infrastructure, and then I want 
to sum up before I run out of time.
  In fact, how much time do I have?
  The PRESIDING OFFICER. The Senator has 2 minutes 27 seconds.
  Mr. GRAMM. The advantage of infrastructure is that by improving 
infrastructure, private investment can be induced. We get the impact 
not only of building a north/south interstate highway system in Texas, 
which is what we need--I do not know what they need in West Virginia, 
but I know we are way behind on highway construction, despite the 
success we have had recently in which the Senator has been a leader. 
But we can get a multiplier effect by the private sector investing as 
infrastructure is improved.
  If we are going to use infrastructure as part of a stimulus package, 
we have to find a way to speed it up because in the postwar period not 
much infrastructure spending ever really got going until the recession 
was over.
  I will sum up by saying what I think we need to do. First of all, I 
am going to make a point of order against the pending amendment, not 
the underlying bill. The point of order is that the pending amendment 
violates the budget rules. We decided in the 2001 budget that emergency 
designations for non-defense matters were being abused, and we 
eliminated them; they violate the Budget Act. But they are being used 
in violation of the Budget Act, and therefore there is a 60-vote point 
of order.
  Everyone knows the bill before us is not going to become law. So why 
not make it clear that is the case, so we can end these partisan 
debates that I know discourage people back home, and sit down around a 
table and work up a compromise. Compromise means some people get some 
things they want and other people get things they want.
  It seems to me we agree on providing incentives for investment 
through expensing and through accelerated depreciation. It is in both 
bills. There has to be a compromise level. We differ greatly as to what 
we really believe will stimulate the economy. The logical thing to do, 
it seems to me, is to take half of the funds and do it through 
stimulation by lowering marginal tax rates to encourage investment, 
which is what I believe works, and then taking the other half as the 
Democrats want to use it and spend it, whether they spend it on 
infrastructure or whether they spend it in terms of health benefits.
  In terms of health benefits, it is one thing to help people with 
health insurance, but it is another thing to set up a bureaucracy that 
probably would not even be in place until the recession was over. So in 
terms of spending money on health, I think there could be a compromise.
  In terms of setting up this bureaucracy, I do not think the President 
would agree with that and I do not think that could happen. We have to 
sit down and work out a compromise. I think the Nation wants us to do 
it. The sooner we can get on with it, the better off we will be.

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