[Congressional Record (Bound Edition), Volume 148 (2002), Part 1]
[Senate]
[Pages 58-60]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           ECONOMIC STIMULUS

  Mr. KYL. Madam President, the Senate has failed to follow the House 
of Representatives in passing compromise, bipartisan legislation to 
help stimulate our economy and provide temporary assistance to 
displaced workers. While the Bush administration and the House 
compromised, some would say too much, in their effort to act 
responsibly and find the middle ground, opponents of this legislation 
were tireless in their efforts to undermine its passage. I applaud the 
House, the Bush administration, and the Senate Republican leadership, 
including Senator Grassley, for their effort to provide the Senate with 
an opportunity to pass an economic stimulus package.
  Sadly, the majority leader refused even to allow a simple vote on 
this legislation. Why? Was it because he knew that this compromise 
would pass the Senate? If the economy continues to falter, there can be 
no question where the blame lies.
  Voting on the economic stimulus package would have provided an 
excellent opportunity for members to put aside their partisan 
objectives, and come together in the best interests of the American 
people. The economic data are compelling. The terrorist attacks have 
thrown an already struggling economy into a tailspin, and the dismal 
economic reports released for the months of October and November, 
detailing the rise in unemployment and the decline in manufacturing 
activity, confirmed these worst fears; that we are in the midst of a 
recession.
  As many economists, including Federal Reserve Chairman Alan 
Greenspan, have correctly noted, this is an ``investment'' recession, 
meaning that the slowdown is caused by a contraction of business 
investment, with resultant job loss and economic dislocation. Yet the 
majority leader fought against proposals that would have provided 
incentives for investment, and innovation. He and his supporters 
incomprehensibly denied the unarguable truism that meaningful economic 
stimulus emanates from the private sector, from businesses both large 
and small. An objective observer would likely note that, having already 
passed legislation that provides for $40 billion in emergency spending 
for disaster relief, and $15 billion in additional spending for an 
emergency airline package to deal with the temporary shut-down of air 
travel, it made sense for Congress to balance this spending, and any 
further spending, with tax relief targeted towards stimulating economic 
activity in the private sector.
  The majority leader argued instead that spending would be more 
beneficial. But it should already be obvious that the perils of 
unrestrained spending are real. Congress has already spent all of the 
Social Security surplus, and our Federal budget is now in a deficit 
position. Consequently, additional Federal spending will require the 
Federal Government to issue new debt in order to finance new spending. 
This new debt will mean that the government, in addition to maintaining 
post-World War II record high levels of income tax burdens of 
Americans, must again borrow from the American public to finance its 
operations. This renewed Federal borrowing may cause interest rates to 
rise, which in turn would slow down our economic recovery. In short, 
Congress must be extremely skeptical about any new spending, especially 
when it results in deficit spending.
  The real point, however, is that we cannot spend our way out of a 
recession. Everyone agrees that some additional spending is needed to 
assist the hundreds of thousands of workers both directly, and 
indirectly affected in the aftermath of September 11. But should the 
goal be to provide these workers with unemployment checks? Or should it 
be to provide them with paychecks? Clearly, people would prefer to 
work, not collect unemployment benefits. And creating jobs starts with 
spurring investment so that entrepreneurs are able to form and grow 
businesses, which in turn, will be able to employ workers.
  Nearly 2 months ago, President Bush proposed a package that promised 
to both provide additional spending to support those workers who lost 
their jobs and, at the same time, enact fundamental tax relief measures 
to promote investment and ensure that those same workers would be able 
to find work again in the near future. In the effort to avoid a 
partisan debate at this critical time, he included several 
recommendations from the Senate majority in his bipartisan proposal. It 
was a balanced and responsible combination of tax relief and temporary 
spending.
  Prior to September 11, our economy was beginning to show signs of a 
possible turnaround. The bipartisan tax relief package passed by 
Congress, and signed into law by President Bush on June 7 was just 
starting to make its way through the economy. However, any progress on 
the road to recovery has all but been lost due to the terrorist 
attacks. In fact, the general economic situation has worsened 
substantially. That is why the Senate would have passed the President's 
proposal.
  First, it would have accelerated all of the marginal income-tax rate 
cuts that became law this summer, but are now delayed until 2004 and 
2006. The proposed plan would have them take effect on January 1, 2002, 
and would have applied to rates at every level of income. Considering 
that roughly one-third of personal tax filers are actually small 
businesses, I believe that it is essential that the 40 percent top 
marginal tax rate come down immediately to 33 percent to help 
unincorporated small firms retain and create more jobs. Entrepreneurs 
and the customers they serve are the life-blood of our economic system. 
More money in their hands means more money moving through the entire 
economy.
  In an effort to encourage investment, the President's original plan 
also incorporated a 30 percent depreciation bonus for the purchase of 
any new capital assets. This would enable companies to get much-needed 
equipment and other resources that might not otherwise have been 
affordable.
  Furthermore, his original plan included a full repeal of the 
corporate alternative minimum tax, AMT, a thoroughly regressive, 
tortuously complicated, and utterly unfair tax that literally imposes a 
heavier burden on companies when their income falls. On November 6, the 
Treasury Department released data showing that, in 1998, some 30,226 
companies paid higher taxes due to the corporate AMT than they would 
otherwise have paid. Thus, during an economic downturn like the one we 
are currently experiencing, as companies are currently seeing their 
sales and profits dip, their tax burden is actually increased.

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  The President's original plan advocated a prospective repeal of the 
corporate AMT, unlike other proposals that are retroactive. Repeal 
would have immediately freed up monies for investment and employee 
retention. What's more, elimination of this administrative nightmare 
would dramatically lessen the tax code's current drag on the economy. 
It's really quite simple; repeal of the corporate AMT yields immediate 
short-term relief at a time when the economy needs it most.
  Lastly, in a bipartisan effort, the President reached across the 
aisle and embraced a Democratic proposal that would provide rebates of 
up to $300 for workers who filed income-tax returns but did not have an 
income-tax liability.
  Senate Republicans embraced the President's reasonable and 
responsible approach. We urged the majority leader to quickly act upon 
his plan and the first economic stimulus package that the House passed.
  Personally, I strongly supported the President's plan; however, I 
believed it could have been strengthened by a couple of key provisions. 
First, I believe it is absolutely crucial that we make the provisions 
of the tax law signed on June 7 permanent, especially with respect to 
repeal of the estate tax. The importance of permanence cannot be 
understated. It is critical to the financial planning of families and 
businesses, all of whom must make important decisions based on what 
they expect will be the tax laws in the future. Assuring taxpayers that 
the tax relief they now have will still be there 10 years down the line 
provides a level of economic certainty in these less-than-certain 
times, helping to bolster consumer confidence and encourage investment.
  Second, if we are to prevent thousands of bankruptcies, hundreds of 
thousands of lost jobs, and many other indirect consequences to the 
rest of the economy, we need to specifically help our struggling travel 
and tourism industry. Accordingly, I introduced legislation that I had 
hoped would be included in the economic stimulus package. My bill, 
entitled the Travel America Now Act of 2001, would provide a $500 tax 
credit per person, and $1,000 for a couple filing jointly, for personal 
expenses for travel originating within the United States. This includes 
travel by airplane, ship, train, car, and bus, hotel and motel 
accommodations, and rental cars, but not meals. As first drafted, the 
credit would have been effective from the date of enactment until 
December 31, 2001. The most important effect of such legislation is 
that it would get America moving and doing business again. Millions of 
small businesses would have benefited.
  I believed that the President's plan could be improved by these two 
proposals, but I supported the President's plan because I wanted to 
help enact legislation to help our economy get back on track.
  Unfortunately, most members of the Senate majority were less 
interested in compromising. In November, they crafted a partisan bill 
in the dead of night that was a special interest grab bag of new 
spending items, enhanced entitlement programs, and expanded 
bureaucracy. Its meager $20 billion business investment proposal, and 
the $14 billion consumer spending proposal would have done very little 
to stimulate consumer activity, and even less to stimulate investment.
  The bill increased spending and reduced revenues by $67 billion in 
fiscal year 2002, and $53 billion through 2011. However, two items made 
the real cost much more expensive than the advertised price tag might 
have suggested. First, the majority leader insisted on amending this 
partisan bill with an additional $15 billion of new spending, which 
would have included a veritable collage of new projects, from tunnels 
for Amtrak, ferries for New Jersey and New York, agriculture research, 
to highway repairs. Second, the unemployment provisions contained in 
this partisan bill included some $19 billion in accelerated Reed Act 
payments. The result: taxpayers would have seen a significant increase 
in their tax burden, approximately $14 billion, over the next 10 years.
  The bill was rammed through the Finance Committee on a strict, 
partisan vote. When it became clear that this partisan legislation 
could not pass on the Senate floor, the majority leader chose to stop 
the consideration of an economic stimulus package and move to low-
priority legislation. The House had acted, as had the President, but in 
the Senate, the majority leader continued to block consideration of an 
economic stimulus package.
  He brought up a big spending railroad retirement bill and then a 
pork-laden farm bill, both of which could have waited until next year. 
For several weeks, the Bush administration, the majority in the House, 
and the minority in the Senate negotiated with the majority leader's 
deputies in an effort to craft a bill he would be willing to bring to 
the Senate floor for a vote. These deputies erected various roadblocks 
to disrupt these negotiations. Then the majority leader, himself, 
unilaterally raised the bar to agreement by insisting on a compromise 
package that would be acceptable to two-thirds of the Democrats in the 
Senate. Despite these deliberately constructed obstructions to 
compromise, advocates of an economic stimulus package continued to work 
hard to construct a compromise that would be acceptable to a majority 
of the House and Senate.
  The administration made significant compromises, especially related 
to greatly expanded health insurance benefits to the recently 
unemployed through an individual tax credit for health insurance. The 
majority leader once again raised the bar and insisted that these 
benefits be provided to employers for the benefit of all workers who 
are unemployed. Under his proposal, even those workers who chose to 
retire early would be entitled to this new expansive health care 
program. Additionally, he refused to empower these displaced workers 
with individual tax credits, but insisted on burdening businesses with 
a new government mandate.
  With three days left until the holiday weekend, the administration, 
the House, and a majority in the Senate agreed on a bipartisan 
compromise on economic stimulus and aid to dislocated workers. The 
House then passed this legislation. Despite the fact that a majority in 
the Senate was committed to voting for it, the majority leader still 
refused to allow this compromise legislation to come to the Senate 
floor. So the 2001 session ended without Senate action on the most 
important issue facing the country.
  Contained within this legislation is $60 billion of investment 
stimulus--just the sort of assistance that Chairman Greenspan had urged 
us to enact. Under the bipartisan stimulus package, the current 27 
percent rate would drop to 25 percent in 2002. This provision 
accelerates the bipartisan decision the Senate made last summer to 
reduce individual tax rates. Under last summer's tax cut bill, the 27 
percent rate would have fallen to 26 percent in 2004 and 25 percent in 
2006. This cut benefits married couples with taxable income between 
$45,200 and $109,250; singles with taxable income between $27,050 and 
$65,550; heads of household with taxable income between $36,250 and 
$93,650. Acceleration of the 27 percent rate reduction would yield 
$17.9 billion of tax relief in 2002 for over 36 million taxpayers, or 
one-third of all income taxpayers.
  The bipartisan stimulus package provides 30 percent bonus 
depreciation for three years. Property eligible for the 30 percent 
bonus depreciation includes property depreciated over 20 years or less, 
water utility property, computer software, etc. Property which takes 
longer than three years to construct will qualify for bonus 
depreciation on a pro-rata basis, if the property is placed in service 
before 2007. The portion eligible for bonus depreciation would be the 
costs incurred within the three-year bonus depreciation window. This 
provision would encourage accelerating long-term construction activity 
into the next three years.
  Additional investment stimulus included in this legislation is an 
extension of net operating loss carrybacks for two years, corporate 
alternative minimum tax relief, and an increase of the small business 
expensing amount

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to $35,000. All of which would help stimulate economic activity in our 
country.
  The House-passed bipartisan stimulus package would also provide 
checks to low-income Americans in order to stimulate consumer spending. 
The legislation also would extend popular expiring tax provisions, 
provide targeted incentives to help with the New York City 
reconstruction, and exempt the victims of terrorist attacks from 
federal taxes. Finally, the bill would provide nearly $20 billion of 
aid to dislocated workers in the form of greatly expanded unemployment 
payments and health benefits.
  This proposal was a compromise. It is not the legislation that I 
would have written. But this legislation was a carefully crafted 
bipartisan, bicameral compromise that the President would have signed. 
It passed the House. It had the support of a majority of the Senate. 
But it died because the majority leader was unwilling to let the 
majority act.
  So the economy will not be helped. Unemployed workers will not be 
helped. Small businesses will not be helped. Taxpayers will not be 
helped. Workers hoping to save their jobs will not be helped. All 
because of one man. Remember that next year.

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