[Congressional Record (Bound Edition), Volume 148 (2002), Part 1]
[Senate]
[Pages 704-706]
[From the U.S. Government Publishing Office, www.gpo.gov]




                 BIPARTISAN, BICAMERAL STIMULUS PACKAGE

  Ms. SNOWE. Mr. President, while I am pleased that this body has 
passed legislation to extend unemployment benefits for thirteen weeks, 
I rise to express my deep regret at an opportunity lost to help 
American workers. . .to help create jobs. . .to bolster our economy. . 
.to provide vital health insurance benefits. . .and to increase our 
federal surplus projections for the long term.
  I voted for cloture on both the Daschle and the Grassley-Snowe 
amendments because the bottom line is, I am convinced an economic 
stimulus plan would make a vital difference when it comes to the 
strength of our economic recovery. And I cosponsored Senator Grassley's 
amendment not only because it is the product of the work of the 
Centrist Coalition, which I co-chair with Senator Breaux, but also 
because it was crafted through bipartisan, bicameral negotiations with 
the White House and already passed the House of Representatives in 
December on a bipartisan vote.
  I want to thank all of us who worked so diligently on that package, 
most especially Senators John Breaux, George Voinovich, Ben Nelson, 
Susan Collins and Zell Miller. And of course I want to thank Senator 
Grassley for his remarkable commitment to building consensus and 
getting a strong stimulus package passed. We earnestly believe and I 
still believe that the adoption of the Centrist package would have been 
our best means to get a final conference report to the President's 
desk, and ensure that the economy and America's workers would benefit 
from the most robust economic recovery possible.
  I have said I think it's critical at the beginning of this new 
legislative session that we start off on the right foot by enacting an 
economic recovery plan for the American people. I was prepared before 
Christmas, and many of my colleagues were prepared, to stay here to 
address the needs of those who have lost their jobs and their health 
insurance--and to bolster economic growth. Because the fact of the 
matter is, we knew then what is still very much true today--this 
economy remains in a recession and people are hurting while Congress 
has dithered.
  We now know we lost more jobs last year than in any year since 1982, 
which was during the worst recession since the Great Depression, and we 
lost almost a million jobs since the President proposed an economic 
stimulus plan on October 5. And while the unemployment rate in January 
fell to 5.6 percent--the first decline in 15 months and certainly 
better than the alternative--the two-tenths percent drop was likely 
more a sign of job-seekers giving up than the economy improving.
  As a February 4 Wall Street Journal article put, ``Economists warned 
the drop in the jobless rate could be misleading. The January decline 
was largely due to the fact that the Labor Department reported an 
unusually large drop of 924,000 in the size of the labor force, to 
141.4 million people. A shrinking labor force, say economists, could be 
a sign workers have become discouraged and have stopped looking for 
jobs.''
  And, finally, consider this statement from the Federal Open Market 
Committee on January 31--in deciding to keep its target for the federal 
funds rate unchanged at 1\3/4\ percent, it said, ``. . .the Committee 
continues to believe that. . .the risks are weighted mainly toward 
conditions that may generate economic weakness in the foreseeable 
future.''
  Of course, the economy may, in fact, be on the road to recovery. I 
certainly hope that's the case. But it's also a question of what kind 
of recovery. Will it be a robust recovery with rising employment and 
new job opportunities, or a ``jobless recovery'' as we had back in 
1991? Given our nation's war on terrorism both at home and abroad--the 
future is far from certain. Any ``shock'' could immediately send our 
economy reeling, so I am especially disappointed that we haven't taken 
the appropriate steps to ensure that the road to recovery is an 
``expressway,'' rather than a dirt road.
  The bottom line is, a well-structured, comprehensive stimulus package 
is the means by which we could have at least laid the foundation for 
such a road. The reality is, such a package could

[[Page 705]]

have had an impact on the kind of recovery we ultimately realize. And 
you don't have to take my word for it. Just two weeks ago, Chairman 
Greenspan testified before the Senate Budget Committee on the state of 
the economy. And while some have latched-onto Chairman Greenspan's 
remarks that ``. . .the economy will recover in any event'' and argue 
that a stimulus package is, therefore, no longer necessary, it's 
critical to listen to the rest of testimony.
  Specifically, when I asked Chairman Greenspan about whether or not a 
stimulus package could aid in the type of economic recovery we 
experience, he stated that, although it was difficult to judge how the 
economy would develop this year, quote:

       . . .with the potential, at least, that the economy may be 
     more tepid than we would like later in this year, some form 
     of stimulus program probably would be useful.

  So I, for one, was not prepared to risk a more ``tepid'' recovery--
not with millions of Americans already out of work and America engaged 
in a war that will be carried out over a matter of years, not months. 
And based on the Chairman's response, a strong and effective stimulus 
plan could have been the difference.
  Moreover, let's not forget--restoring economic growth would not only 
restore jobs, it would also help restore our projected budget 
surpluses.
  Specifically, last week, the Congressional Budget Office outlined new 
budget surplus estimates for the coming 10 years. As we learned, the 
projected surplus through the year 2011 has fallen 70 percent, from 
$5.6 trillion last year to $1.6 trillion today--the most dramatic 
decline in budget projections ever. While a combination of factors has 
brought about this decline--including last year's $1.3 trillion tax cut 
and $550 billion in projected new spending--the most dramatic impact, 
fully 40 percent of the lost surpluses--or nearly 1.6 trillion 
dollars--arose from economic and technical changes linked to our 
current economic decline.
  What is both alarming and instructive is that a downgrading in 
projections of economic growth for just a relatively short amount of 
time clearly has a dramatic impact on our 10-year surplus projections. 
As you can see by this chart, the contents of which I'd like to submit 
for the record, CBO has only lowered its economic growth projection for 
2001 and 2002--by 1.4 percent and 2.6 percent respectively--while 2007 
onward remains the same and 2003 to 2007 is actually higher. And yet, 
those lowered growth projections for just those two years have 
dramatically reduced the surplus projections in the long run.
  This fact, coupled with CBO's estimates that an annual increase in 
economic growth of only one-tenth of one percent translates into a $244 
billion increase in the surplus over 10 years, should tell us 
something. It should tell us that the benefit of a strong recovery in 
the near term--and the resulting increase in average economic growth in 
the long-term--cannot be understated. And the stimulus could have 
helped us achieve that critical goal.
  In fact, Bruce Steinberg, a chief economist with Merrill Lynch, 
estimated in November that a stimulus package could add one percent to 
economic growth this year. The White House put the figure at half a 
percentage point, which would put 300,000 more Americans to work, while 
Macroeconomic Advisers of St. Louis estimated a stimulus package could 
actually double economic growth projections.
  And Allen Sinai of Decision Economics argued that a package could 
mean the difference between a weak rebound, such as in the 1991 
recovery, and one with real potency. He said, ``At this point what 
you're doing, with both monetary and fiscal stimulus, is loading powder 
into the recovery.''
  Which brings me to what happened today on the floor of the Senate. 
The fact of the matter is, we should have passed the bipartisan 
Centrist plan that already passed the House of Representatives on a 
bipartisan vote and enjoyed the support of the White House--and that 
accomplished what several weeks of bicameral negotiations failed to 
achieve at the end of last year: a consensus on all provisions 
addressing the needs of the unemployed, including health insurance 
assistance, and providing a boost for the economy.
  And the bottom line, is that developing a consensus requires 
compromise. The bicameral negotiators made significant progress during 
their negotiations last year, but, unfortunately, were unable to break 
through on several final issues and, consequently, negotiations broke 
down.
  So, given this stalemate and the risks it posed to workers and the 
economy, members of the Centrist Coalition--which I co-chair with 
Senator Breaux and which had already put forward a compromise proposal 
in November--sat down with Republican leaders and the White House to 
see if we could reach the agreement that had proven so elusive. And I 
ask unanimous consent to have printed in the Record at the conclusion 
of my remarks a time line of all our efforts on the stimulus package, 
because I think it illustrates why we had such a strong bipartisan 
basis for moving forward.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (See exhibit 1.)
  Ms. SNOWE. The fact of the matter is, we already had bipartisan 
agreement on issues like stimulus checks for low-income individuals, 
accelerated depreciation, increased expensing, and an extension of and 
increased funding for unemployment benefits. So we had a sound 
foundation for a compromise, and the package that cleared the House was 
the product of our negotiations.
  That package truly reflected the middle ground on both tax and 
spending issues that had confounded the bicameral negotiators. Just 
consider where we started on many of these issues and where we ended 
up.
  At the outset, one of the most controversial issues was that of 
accelerating marginal rate reductions that were adopted last year. 
While President Bush called for an acceleration of all marginal rate 
reductions and Democrats opposed any acceleration, the Centrist package 
would have accelerated the reduction in the 27 percent bracket only, to 
25 percent--an imminently reasonable middle ground approach.
  This change--which only applied to taxable incomes of $27,050 to 
$65,550 for individuals and $42,500 to $109,250 for married couples--
would have put money in the hands of 36 million taxpayers, or one-third 
of all taxpayers, at a time when consumer demand needs a boost. And let 
me make one point perfectly clear--more than two-thirds of these 
beneficiaries have incomes under $100,000.
  Or consider another controversial issue: corporate AMT. While the 
original House-passed package would have repealed the corporate AMT, 
the Democratic proposal only included a ``hold-harmless'' so that 
businesses taking advantage of accelerated depreciation and other 
provisions in the stimulus package would not see an increase in their 
AMT liability.
  The Centrist package found the middle ground by ensuring that items 
that are currently added-back to a company's taxable income for 
purposes of calculating the AMT--namely, depreciation, net operating 
losses, and foreign tax credits--would no longer be included in this 
calculation. And by achieving that compromise, we dramatically reduced 
the cost of the proposal as well--falling from $25 billion in 2002 in 
the House-passed package, to $1.3 billion in the White House-Centrist 
package.
  But as we learned from the breakdown in the bicameral negotiations, 
the most controversial element of the stimulus debate proved not to be 
over tax policy, but on health care assistance for workers who lost 
their jobs. However, policy trumped ideology and politics during the 
Centrist negotiations--and our package provided a better benefit more 
rapidly for more unemployed workers than anything that had been 
previously proposed.
  The starting positions on this issue were stark, as the original 
House-passed measure--and White House position--called for $3 billion 
in funding to

[[Page 706]]

states to help those who could lose their health coverage if they lost 
their job. The original Centrists package went further by proposing 
$13.5 billion in federal health care assistance for displaced workers.
  The $16.7 billion package put forward by Democrats last year proposed 
a 75 percent subsidy to help displaced workers afford COBRA health 
coverage, and assistance and coverage through the Medicaid program for 
individuals who are not eligible for COBRA benefits. The Democratic 
proposal also offered a temporary increase in federal Medicaid matching 
funds for states that are struggling with increased Medicaid costs.
  Many people, including the nation's governors, did not believe the 
Democrat's proposal for relying on Medicaid was feasible because states 
would have to contribute about 25 percent of the cost--funds the states 
do not have because of estimate state revenue shortfalls of $15 billion 
due to the economic downturn. In fact, the governors were calling for 
increased federal funding for Medicaid just to maintain coverage and 
benefit levels for current Medicaid recipients.
  On the health care issue too, the Centrist package found the middle 
ground and even went further. Specifically, our bipartisan package 
would have provided a total of $21 billion in federal health care 
assistance--or $21 billion more than Senator Daschle proposed in his 
amendment. I can't understand why or how we could have denied four 
million hardworking Americans this kind of assistance this year for the 
sake of shadings in philosophical dispositions.
  The fact of the matter is, it didn't have to be that way. Our package 
provided $13 billion in health care tax credits to displaced workers 
who are eligible for unemployment insurance who do not have other 
health care coverage, $4 billion in National Emergency Grants, and 
almost $5 billion in emergency Medicaid funding so states would not 
have been forced to cut back their current health care programs for 
children, workers, and families with low-incomes.
  Indeed, our displaced worker proposal went further in covering 
displaced workers than any other proposal that was considered--
increasing funding to provide health coverage to displaced workers by 
almost 700 percent from where we started. This package would have 
helped those workers who lost their jobs regardless of whether they 
worked for the largest corporation or the smallest business or even if 
they were self employed.
  Under this plan, any worker who involuntarily lost their job and who 
is eligible or formerly eligible for unemployment insurance benefits 
would have been eligible for a 60 percent tax credit to use for 
continued health coverage. Workers would have automatically received a 
tax credit certificate when they applied for unemployment compensation.
  The tax credit certificate could have been used toward COBRA coverage 
from their former employer, if eligible, or for purchasing health 
insurance coverage of the individual's choosing. The monthly premium 
payment would have been reduced by the amount of the tax credit so that 
displaced workers would not be forced to pay the full cost of their 
health coverage up front, while waiting for federal assistance that 
would arrive at a later date. In addition the states would have used 
the $5 billion in National Emergency Grant funding to provide further 
assistance and additional benefits.
  The bipartisan agreement gave displaced workers portable assistance 
that they could use in any part of the country to get health coverage. 
Displaced workers who cannot continue coverage with their current plan, 
would have had federal-law protections that require health plans to 
offer guaranteed issue coverage with no pre-existing condition 
exclusions.
  Our proposal for assisting displaced workers with their health 
benefits was a straightforward proposal that could have been 
implemented quickly for all firms and all states because the Department 
of Labor would have made the funds immediately available to states so 
they could deliver assistance to displaced workers.
  The bottom line is that the Centrist package provided the most 
comprehensive approach to addressing the needs of those who are out of 
work and an economy trying to pull itself out of a recession. And by 
enjoying bipartisan, bicameral support as well as the support of the 
White House--it would have ensured that this relief would be on the way 
in the fastest manner possible. Again, I deeply regret that stimulus 
delayed has now become stimulus denied.

                               Exhibit 1

                      CBO PROJECTED ECONOMIC GROWTH
------------------------------------------------------------------------
                               2001    2002    2003    2004-07   2008-11
------------------------------------------------------------------------
January 2002................     1.0     0.8     4.1       3.3       3.1
January 2001................     2.4     3.4     3.3       3.0       3.1
------------------------------------------------------------------------
CBO January 2002, Budget & Economic Outlook.

                                TIMELINE

       September 25, 2001: Finance Committee meets with former-
     Secretary Rubin and Chairman Greenspan to discuss basic 
     principles of economic stimulus package.
       October 17, 2001: Centrist Coalition lays out principles to 
     leaders Daschle and Lott.
       October 24, 2001: (1) Centrist Coalition meets with 
     Secretary O'Neill; (2) House passes first version of stimulus 
     plan.
       October 31, 2001: Centrist Coalition meets to consider 
     compromise package.
       November 8, 2001: Stimulus markup in Finance Committee, 
     Democrat package reported.
       November 13-14, 2001: Senate Finance stimulus plan (Baucus) 
     on Senate Floor. Plan was defeated on a Budget point of 
     order. On the same day (11/14), Centrist group laid out its 
     alternative plan.
       November 15, 2001: Leaders of both parties and both houses 
     agreed to try to come together and pre-negotiate . . . but 
     couldn't agree on who would comprise the negotiators.
       November 16, 2001: Talks stalemated.
       November 19, 2001: Centrists, including Senators Snowe, 
     Breaux and Grassley, had conference call with Secretary Paul 
     O'Neill about their plan; O'Neill called it a ``basis for a 
     deal''.
       November 20, 2001: Secretary O'Neill, on Good Morning 
     America, called Centrist approach a basis for a deal; 
     Senators agreed to talk after Thanksgiving.
       November 26, 2001: Senators returned from recess; recession 
     declared by National Bureau of Economic Research. There was 
     still no agreement over who would negotiate.
       November 28, 2001: Wednesday Leadership Meeting with Bush--
     breakthrough on negotiators to jumpstart negotiations.
       November 29, 2001: Divisions over exactly how negotiations 
     could begin remained.
       November 30, 2001: Continuing impasse over negotiations; 
     House wanted more negotiators Senate, fewer.
       December 3, 2001: Negotiations began.
       December 11, 2001: Centrists meet with Senator Lott and 
     President Bush at the White House on a plan.
       December 15-16, 2001: Centrist plan emerged as likely basis 
     for any final deal.
       December 19, 2001: President Bush meets with Centrists, 
     declares agreement on plan.
       December 20, 2001: House passes Centrist plan.

  Ms. SNOWE. Mr. President, I yield the floor and suggest the absence 
of a quorum.
  The PRESIDING OFFICER (Mr. Dayton). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. REID. Mr. President, the hour of 1:30 having arrived, I call for 
the regular order.

                          ____________________