[Congressional Record (Bound Edition), Volume 149 (2003), Part 1]
[Senate]
[Pages 529-531]
[From the U.S. Government Publishing Office, www.gpo.gov]




                              THE ECONOMY

  Mr. BENNETT. Mr. President, I have listened with some interest to the 
Democratic leader outline the Democratic attitude with respect to the 
economy and what needs to be done. I

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think a few comments in response are in order.
  I detect a particular misunderstanding in all of this debate on the 
part of the Democratic leader and some others on his side of the aisle. 
It is a misunderstanding that is understandable but one that needs to 
be cleared up.
  He talks about jobs that have been lost and jobs that will be created 
as if the Government creates jobs. The Government cannot create jobs. 
If the Government could wave its magic legislative wand and in that 
process create jobs and prosperity, every government would do it. Every 
President, Republican or Democrat, every Congress, Republican or 
Democrat, if it had the ability by legislation to create jobs, would do 
it.
  The fundamental problem that gets overlooked is that prosperity does 
not come as a result of government action. Prosperity comes as a result 
of activity on the part of individuals operating in a free economy. 
Because our economy is arguably the freest in the world, it is also the 
most productive in the world, creates the greatest amount of wealth and 
the greatest number of jobs.
  If you want to go someplace where the hand of government is 
considerably heavier than it is here and see the result of it, go to 
Europe where they do many of the things that our Democratic friends 
think have to be done and, in the process, hold down the 
entrepreneurial spirit of the economy to such an extent that the net 
creation of jobs in Europe over significant periods of time is zero. 
Statistically if you want to get a job in Europe, somebody has to 
retire because that job has to be vacated before you can step into it. 
They do not know how to create new jobs and new economic activity.
  We complain about the state of the American economy and, indeed, we 
are in what Chairman Greenspan has appropriately called ``a soft 
patch.'' But we need only look at other economies around the world to 
see how much more trouble they are in with more regulation, more 
taxation, and more governmental interference in the economy than we 
have.
  The other misunderstanding that we get in all of these arguments 
about fairness is that somehow the economy is static or, as the 
mathematicians would say, a sum zero game. A sum zero game is a game in 
which for one side to win a point, the other side must lose a point. So 
you take one point lost and one point gained and add them up, and they 
add up to zero.
  The assumption is that if a millionaire earns a dollar, it has 
somehow been taken out of the pockets of the poor. If one segment of 
the economy prospers, it has somehow been at the expense of another 
segment of the economy. It is a sum zero game.
  So the Democratic leader is saying: It is not fair for Americans to 
be called upon to go to the gulf in a war circumstance while other 
Americans are earning $1 million, as if there were any connection 
whatsoever between those two activities.
  Indeed, if Americans are not prospering on the economic side, there 
isn't any money to pay governmental salaries on the governmental side, 
whether for the military, civil service, or our own staff. The only 
reason we can receive salaries here, either as Members of Congress or 
our staff, is not because Government has created these jobs; it is 
because hard-working Americans have created enough wealth that taxation 
of that wealth can produce enough money to pay our salaries. We do not 
contribute directly to the growth of the economy, except as we maintain 
policies that allow those who do contribute to move in a free-market 
situation. Government can stifle growth. We can see that among the 
Europeans and, to a greater degree, in the former Communist countries, 
government can stifle growth.
  But government cannot create growth. Government cannot create wealth. 
Again, if government could create wealth, every government would do it. 
Historically, wealth is created by two things. No. 1, accumulated 
capital, and then its wise use. If you are in a situation where no one 
can accumulate any capital, you are not going to have any growth and 
you are not going to have any wealth. But if you have a circumstance 
where people can accumulate capital and use that capital wisely, then 
you are going to have growth.
  The second ingredient that must be there besides accumulated capital 
is risk taking. There is no wealth created unless somebody takes a risk 
somewhere along the way. Economics is about incentives.
  What is President Bush's program designed to do? It is designed to 
increase the incentives to create wealth. The Democratic plan would 
diminish the incentives to create wealth. They might end up with what 
they would consider ``total fairness''--in other words, everybody would 
be equally poverty stricken and, by definition, that is fair, but 
nobody would be better off.
  We have to ask the fundamental question as we are dealing with 
economic policy: What will produce the greatest amount of growth in the 
American economy? What will produce the greatest amount of wealth 
within the American borders? That is a very different kind of question 
than the Democrats want to ask. That is a very different kind of 
circumstance than they want to address. But at the base, if there is no 
creation of wealth, if there is no growth in the economy, there are no 
tax revenues, there is no money to distribute to all of the programs we 
all love so much and that we want to deliver home to our constituents.
  It all comes down, fundamentally, to the sound nature of the economy 
itself. Once again, the two absolute essentials for economic growth 
are, No. 1, accumulated capital and, No. 2, rewards for risk taking. 
Let me give you a very simple, fundamental demonstration that comes out 
of a program that I have supported as long as I have been in the Senate 
and that many people around here support but many others know nothing 
about it. It is called the microloan program.
  This is a real-life example that illustrates what I am talking about. 
A woman in a Third World country was living on absolutely subsistence 
wages. She got paid every day at the end of the day, just barely enough 
to keep her alive. She could not accumulate any wealth because she was 
not paid enough to save anything and she could not carry her salary 
from day to day. She was living under absolute subsistence conditions. 
Under the microloan program, enough money was made available to her in 
the form of a loan, accumulated capital. She didn't think of it as 
accumulated capital, but that is what it was. Someone had accumulated 
enough capital that they could loan her enough money to buy two 
chickens, a rooster and a hen. Out of those two chickens, representing 
accumulated capital, she began an egg business. She took a risk and 
somebody else took a risk in making her the loan. She took a risk. She 
got ahold of some accumulated capital and she began her own business. 
Today, that woman employs a fairly significant number of other women, 
and that woman proudly says: I have sent my child to college. No member 
of our family has ever gone to college in the history of the family. 
But because of the start I got with those two chickens--representing 
accumulated capital--and the risk I took to start that business--the 
incentive was there to take the risk--now we have created enough wealth 
that not only is my family prospering, other people are employed, and 
my children have educational opportunities that no member of our family 
has ever had.
  Now, we don't have such an example here in America because, frankly, 
no one in America lives at the level of poverty at which she lived. We 
don't have that kind of example. But the principles are still there. If 
you can get people to accumulate capital--that is, not spend it all--
and then use it wisely to create wealth, you will have a prosperous 
economy with many people working, paying taxes, and producing 
ultimately the kind of wherewithal that we need here to fund all the 
programs that we all love so much.
  So the arguments we are getting over the President's economic plan 
ignore the fundamental question: Will this program produce growth in 
the economy, accelerated growth in the economy, over time? If the 
answer is yes,

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then we should do it. If the answer is no, then we should not. It is as 
simple as that. The arguments based on a zero sum game mentality are 
that it is not right for this person to prosper if this one doesn't. It 
is not right for this woman to have these two chickens if there is 
somebody else who doesn't, so let's make sure nobody gets any extra 
chickens. This is shortsighted and it hurts everybody. If the economy 
as a whole is growing, that is longheaded, and it helps everybody.
  As I have said before, during the 1990s, when things were booming, 
Chairman Greenspan came before the Banking Committee on which I sit--
and also the Joint Economic Committee, which if we can ever resolve the 
organizational problems here, at some future point I will chair--and 
Chairman Greenspan was asked two questions. The first question I asked 
him. I said:

       In this time of boom, Mr. Chairman, can we assume that the 
     business cycle has been repealed and that there will never be 
     a period of bust?

  He smiled a little wryly and said:

       No, Senator, we have not repealed the business cycle, and 
     the bust is coming.

  Now, it is not coming because of government. It was not coming 
because we did something on the Senate floor. It came because the 
business cycle always comes through a series of circumstances that I 
will describe in another speech on the floor. But the downturn that we 
had at the end of the boom was virtually inevitable, and to blame 
anybody in government for it is, frankly, political opportunism. The 
polls show that most Americans understand that. They don't buy the 
class warfare arguments that have been raised saying it was Bush's 
election that caused the downturn. It was caused by the excesses of the 
nineties. The downturn is a correction of those, and in the long term 
it is a healthy kind of thing.
  The second question Chairman Greenspan was asked was:

       In this time of boom, who is benefiting the most?

  The Senator who asked that question, obviously, had the answer 
already in his mind. The answer that he was going to give was the same 
answer we heard on the floor from the Democratic leader--that the 
people benefiting the most from this boom are the people at the top 
because, look, statistically, at all the money they are getting. This 
assumes the money went directly into their pockets and just stayed 
there.
  Chairman Greenspan surprised the Senator by giving a different 
answer. He said: There is no question that in this time of prosperity, 
in this time of boom, in this time when things are going well, the 
people who are benefiting the most are the people at the bottom. They 
can find jobs because the money is there investing in new business, the 
money is there investing in new opportunities, and jobs are available. 
They do not depend on welfare checks anymore because they can earn 
money for themselves.
  The greatest welfare benefit we can give anybody is a job. If the 
economy starts to slow down, who will get hurt the most? We have seen 
it. The people at the bottom. Yes, we need to do unemployment 
insurance, and we did. Yes, we need to do things to take care of them 
temporarily, and we have. But ultimately the best thing we can do for 
them is to get the economy growing again at the kind of rates we 
experienced after the Reagan tax cut in the early eighties and that we 
experienced in the tech boom in the midnineties.
  If we can get the economy growing in that direction again, the people 
at the bottom will benefit far more than if we take a shortsighted 1-
year focus attempt to redistribute wealth. That is why the Bush 
proposal is a serious proposal. Should it be changed? I do not know. 
Should it be debated and challenged? Absolutely. Should we be prepared 
to make changes if, during that debate and challenge, we decide 
something else needs to be done? Of course. But should it be dismissed 
out of hand just because it is long-term in its view and replaced with 
a short-term, stopgap ``let's take care of this year and not worry 
about the future'' sort of plan?
  If we were to do that, Mr. President, who would get hurt the most? 
And the answer, of course, is the people at the bottom.
  If we were to take the principles laid out by the Democratic leader 
as our guiding principles in economic policy, the people at the bottom 
would be the ones who would suffer. The best thing we can do for them, 
the best thing we can do for our children, the best thing we can do for 
our Government is to see to it that the entire economy grows in a 
strong, long-term, stable fashion. That is the principle that has 
guided the Bush team in their proposal, and that is the principle that 
should guide the Congress as it debates and analyzes that proposal.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. WYDEN. Mr. President, I ask unanimous consent to speak for up to 
10 minutes this morning.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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