[Congressional Record (Bound Edition), Volume 149 (2003), Part 1]
[Senate]
[Pages 533-536]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          THE STIMULUS PACKAGE

  Mr. NICKLES. Mr. President, I compliment my friend and colleague from 
Montana for his remarks about different things we can do to help the 
economy, including communications. Too many times when we in this body 
talk about impacting the economy, we are only talking about spending 
and revenues. We need to have broader vision, including 
telecommunications, including some areas that are suffocating the 
economy, such as asbestos litigation, such as liability for health care 
providers, whether that be doctors or hospitals. Those things handicap 
or in some cases greatly increase costs and cost a lot of jobs.
  I will make a couple of comments concerning fiscal policy. Some 
colleagues on the Democrat side of the aisle have alluded to it and 
given their information. I will throw out a few facts. I have heard 
repeatedly that the President's economic growth package will only 
benefit a few. I disagree with that. If you happen to be married, if 
you happen to have any kids, they benefit very substantially. As a 
matter of fact, the President's proposals dealing with the growth 
package benefit families very well. He accelerates the per-child tax 
credit which we passed a couple of years ago and is now $600 and makes 
that $1,000.
  In my family, we had four kids. They are grown, so I will not benefit 
from it. But if a young family has four kids, that is $4,000 on which 
they do not have to pay taxes. That is a $4,000 tax credit. Let me 
rephrase that. They not only do not have to pay taxes on it, they get a 
tax credit. If their tax liability is $4,000, they pay no taxes, no 
Federal income taxes. That is pretty generous. That is pretty good. 
That is very profamily. And the President is trying to accelerate that. 
His acceleration is an additional $400 per child. With four children, 
that is an additional $1,600 a year in Federal income taxes that 
family, that couple, will not have to pay. They can use that money for 
their kids' education and other expenses--medical or whatever. They 
have that choice; they can decide how to spend it.
  Also, if it happens to be a family, the President is moving basically 
to eliminate the marriage penalty. By doing that, he doubles the amount 
of the 15-percent bracket. That is a big, positive advantage for a 
married couple. If they have combined incomes up to about $50,000 or 
so, they will be in the 15-percent tax bracket instead of the 27-
percent tax bracket. That is almost half. That, in value, is at least 
worth--it is right at $1,000.
  If you couple that with the per-child tax credit, moving up to a 
$1,000-per-child tax credit President Bush has enacted or will have 
enacted--and I expect it will be successful--those are the most 
profamily tax changes one could imagine.
  When I hear this rhetoric, ``Well, that only benefits the 
superwealthy,'' and so on, I don't know what they are talking about. 
But if people have kids and they happen to be married, they are going 
to be at a 15 percent tax bracket up to $50,000-some and they are going 
to get a tax credit of $1,000 per child. That is pretty generous. That 
is pretty profamily. So I just mention that.
  The idea of eliminating the double taxation on dividends is a good 
idea and one I hope we will be able to pass. It is one about which, I 
notice, our colleague John Kerry, on December 3, said:

     . . . and we should encourage the measurement of real value 
     of companies by ending the double taxation of dividends.


[[Page 534]]


  That statement was made on December 3, 2002, just about a month ago. 
He happens to be right.
  I want to see somebody justify the value of this. What is appropriate 
about a corporation--I used to run one--having to pay 35 percent 
corporate income tax on any profits they make and then distribute those 
in the form of dividends to their owners, and then their owners also 
have to pay 30 percent or maybe even 38 percent or maybe 27 percent on 
top of the corporate 35?
  If you add those together, you are looking at tax rates of 65, 70--
over 70 percent. So if a corporation makes $1,000 in net profit and 
they want to distribute that to shareholders, the Federal Government is 
going to get 70 percent. How does that make economic sense?
  It is a real discouragement to granting dividends, to distributing 
the proceeds, the earnings of a corporation. It encourages just the 
opposite. So if you are not going to do that, what shall we do? Let's 
go into debt. We encourage debt. We allow companies to deduct interest. 
That is deductible right off the top. So the net policy of the 
corporation, if it wants to expand, should they borrow money or go out 
and have a stock offering. Time and time again they say let's go deeper 
into debt, and investors are taught not to invest in companies that pay 
dividends. Let's invest in growth companies. They are more speculative, 
granted, and maybe as a result you see greater inflation and a bubble 
in the stock market and also a greater fall.
  That certainly is what happened in March of 2002. We had greatly 
inflated stock values and they went way up and they went way down. That 
is one of the reasons why our revenues to the Federal Government have 
declined and declined so significantly.
  People continue to misstate the facts. ``We have a deficit because of 
President Bush's tax cut that passed in the year 2001.'' That is not 
true. Revenues have declined. They have declined dramatically between 
the year 2000 and the year 2001 and the year 2002. In the year 2000, 
total Federal revenues equaled $2.25 trillion--over $2 trillion. The 
next year they went down about 2 percent, $1.991 trillion. In the year 
just completed, the year 2002, the total revenues were $1.853 trillion.
  For the last 2 years, revenues combined have fallen by 9 percent. 
That is the first time that has happened almost in history. You might 
say why? Was that because President Bush was elected? No. There was a 
recession. There is a recession. It declined. That recession started, 
in my opinion, in March of 2000. The stock market started crashing in 
March of 2000.
  So with great market devaluation, very rapid, in 2000, in 2001, and 
in 2002, it has had significant impact. Markets have gone way up and 
they have gone significantly down. Hopefully now we are starting to see 
some increases in the markets. But that is what has caused the big 
reduction in revenue. There is a recession. There has also been a war. 
There has been the terrorist attack.
  I hope my colleagues will stick to the facts and say: We had a 
recession, revenues went down, what are we going to do about it? I 
guess some are proposing we could have tax increases. I don't think 
that would help the situation. Now most people are agreeing let's have 
some stimulus type of growth package. What can we do to grow the 
economy? The President said let's be profamily. Let's offer a per-child 
tax credit, eliminate the marriage penalty. I hope we will be 
successful. He's also said let's accelerate the existing rate cuts that 
were passed in 2001.
  By doing that, he says, instead of just having another point 
reduction, a 1 point reduction in 2004 and another 1 point reduction or 
2 point reduction in 2006, let's accelerate those and make them 
effective this year. And he's exactly right.
  I hear this rhetoric from our colleagues: That only benefits the 
wealthy. Just a couple of comments are in order. If you look at the tax 
cuts we passed in May or June of 2001, on the low income tax cuts, we 
made those effective retroactively. We reduced the 15 percent tax 
bracket to 10 percent, and we didn't do it effective on the date of 
passage; we did it effective retroactive to January 1 of that year. We 
didn't do that for the other rates. We did it for the lowest rate. So 
everybody got a tax cut, they got 100 percent of the tax cut on the 
low-income side. If you were in a tax bracket that paid 15 percent, say 
you were an individual who had a taxable income of up to $10,000, 
$14,000, you were in a 15 percent tax bracket up to $22,000, we made 
that rate, in many cases, for a large portion of that, 10 percent, and 
we made it retroactive.
  If you were in that category, you got 100 percent of the rate 
reduction tax cut and you got it retroactive. The upper incomes we 
didn't make a 5 point reduction in 1 year, we didn't go from 10 to 15. 
Upper incomes, all the other rates--all the other rates we moved down 
by one point. If you were at the 28 percent tax bracket, you went to 
27; if you were 33, 32; if you were at 39.6, you went to 38.6. That is 
a pretty marginal rate reduction, for all the rhetoric we hear about 
class warfare and benefiting the wealthy, if you have a 1 percent rate 
reduction when you are wealthy and if you are lower income you got 5. 
The President said: Let's accelerate the remaining cuts for 2004 and 
2006, make them effective January 16 this year--and he's right. At that 
point the highest rate on personal income tax, Federal personal income 
tax, would be 35 percent.
  I know we will hear that benefits Warren Buffett or whoever, but the 
net result is you are going to have a lot of individuals paying 35 
percent. Guess what the corporate income tax rate is. It is 35 percent. 
Why should individuals pay more than corporations?
  I might mention, for about 70 percent of the people who are in the 
highest income tax bracket, they are businesses, small businesses. I 
used to run a small business. Why in the world should they be taxed at 
rates higher than big corporations? That's the present Tax Code. We 
need to change that. The President has proposed changing that and he's 
exactly right. Those are the companies that are behind most of the 
people in the upcoming years. If you want to grow the economy, let's 
have a rate that at least is not higher than for corporations, for 
individuals, for sole proprietors, for partnerships and others. That 
would make good sense.
  I think the President has offered us some good packages. I mentioned 
small business. Small business would be able to expense up to $75,000. 
The present law is $25,000. I think Senator Baucus has proposed 
something similar to that. That is a good proposal. That is 
probusiness. That is pro small business. It will allow businesses to be 
able to expense items over a shorter period of time and they will make 
more investments. That will create more jobs.
  I think we ought to stick to some facts and think about how we can 
grow the economy. I don't think we should be near as partisan as some 
of the rhetoric I have heard on the floor already. Usually we let the 
President submit his budget and his plans, but it is being denounced 
almost on a daily, almost an hourly basis by some of our colleagues.
  I hope we tone it down and we look at the facts and we consider 
various alternatives. If people have different ideas, let's consider 
those. We can vote on different ideas. Let's try to figure out how we 
can get the maximum bang for the buck in helping the economy, in 
growing the economy, in helping the most people. How can it be a long-
term positive tax change?
  So I hope the Senate will return to its great tradition. The Finance 
Committee has always been a bipartisan committee.
  It was in 2001 when we passed the President's first tax bill. I hope 
and expect it will in 2003 under the chairmanship of Senator Grassley. 
I hope our colleagues will say let's work together and let's tone down 
the partisan rhetoric that we have heard so stridently early in the 
year and work together to see if we can't do some positive things to 
help grow this economy and help a lot of people get jobs.
  That is what the point really is--not pointing the finger and saying 
the recession really started in 2000. And it did. Let us try to figure 
out ways that we can grow the economy together--

[[Page 535]]

Democrats and Republicans doing something positive for our country.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Idaho.
  Mr. CRAIG. Mr. President, I am pleased to see the chairman of the 
Budget Committee in the Chamber talking boldly and responsibly about 
getting this economy back on its feet and getting it moving. It is 
critically important that this Senate operate in the legal fashion that 
it was by law directed to do. I know what the chairman will do is 
produce a budget and a budget reconciliation process that will allow 
this Senate to be guided and directed not only in its expenditures but 
hopefully in providing for this country--and to the producer side of 
our country the type of incentives that the President has offered in a 
very bold move to get this economy moving again.
  It is pleasing for me to see a President stand forth in a rather 
``Reaganesque'' way and say let us grow ourselves out of this problem. 
Let us not dig ourselves deeper into a hole or a cave that ultimately 
will create a greater problem. How you do that is you create incentives 
for the worker and you create incentives for the investor to get out 
and create new jobs and to move the economy.
  The President said it well when he offered his tax proposal--that he 
would not cave in to the rhetoric of class warfare. Yet from day 1 that 
is exactly what we have heard from the Pelosi-Daschle plan--a class 
warfare approach that really denies middle-income Americans, investor-
Americans, and working Americans an opportunity to keep more of their 
money.
  What did the Pelosi-Daschle plan really set forth? It was all a 
Government-related, a Government-oriented kind of plan. It talked about 
increasing Government expenditures for States and economic strategy 
that we already know has failed. If we can get this economy going, 
State governments are going to be much better off than they were. Over 
the last 5 years, State governments were running with large surpluses. 
In so doing, they spent more. Now they are tightening their belts. 
Sure. Some State governments are worse off than others.
  My State of Idaho is going to have to make some very tough choices 
this year between tax consideration and cutting some programs, or 
reducing some levels of increases. It will not be easy. But one way to 
solve that problem is for the Federal Government to write an even 
bigger check to the State. There are areas where we can help--areas 
where there is a Federal mandate for a State response. We ought to try 
to help some in that instance. But, clearly, to simply write them a 
check does not make a good deal of sense. I see no way that it 
stimulates the economy or that it solves the kind of revenue problem 
the Senator from Oklahoma was talking about. It does nothing to help us 
solve a much larger problem of the kind with which the President has 
proposed we deal.
  What I find fascinating is this class warfare argument. And in what 
the President has proposed, the first Bush tax cut law in 2001, says 
the National Tax Foundation, effectively eliminated income tax for 
families of four earning less than $35,000. That is simply the reality. 
If enacted, the new Bush tax proposal would eliminate 96 percent of the 
current income tax bill for families of four earning $40,000.
  Those are not rich people. That is a 96-percent tax cut as a 
percentage of tax liability on a family of four making $40,000 a year.
  What does the Daschle-Pelosi plan do? To my knowledge, it doesn't 
address it.
  Take a $50,000 family of four. That is not a big income. My guess is 
probably both mom and dad are working; that is, almost both working at 
minimum wage. What does it do for them? It reduces their tax on taxable 
money by 42 percent.
  That is the Bush plan we are talking about--not the Daschle-Pelosi 
plan. That is a significant cut in lower middle income America.
  What does it do for the rich, let's say a $200,000 income a year. 
That is a pretty good income. You can live well at that--buy a nice 
home, provide for your children--not a great big home, not a 
multimillion-dollar home but a certain suburban-style home in which 
middle-income Americans enjoy living. Family of four, $200,000; tax 
cut, significant, $3,000, or a percentage of total liability, good, but 
it is only 9 percent on $200,000. It was 96 percent on $40,000--a 
significant difference there.
  I say to my friends on the other side of the aisle before the 
Daschle-Pelosi tax plan rhetoric gets out in front of its headlights, 
they ought to look at the facts. These are the kinds of facts that any 
of us will find important to debate on the floor of this Senate.
  I hope the Budget Committee recognizes the process and that the 
Finance Committee stays as close as they can to the Bush tax plan.
  I think that is the kind of process that turns this economy back on, 
that puts people back to work, and that creates the kind of long-term 
economic drive that the Reagan tax plan did in the early 1980s. They 
said it created great deficits. Deficits were created because Congress 
wouldn't quit spending, and wouldn't hold its job in line and be 
fiscally responsible. We have that job to do here now. We are going to 
have to tighten our belt to slow the deficit process down. But, of 
course, I think at the end of the year when we tally up the proposed 
expenditures versus actual expenditures and when we get that 2004 
budget out, the folks on the other side who are talking now about class 
warfare rhetoric will have proposed tens of billions dollars more in 
spending. Why? Because of its political popularity and not because it 
will have actually been spent.
  Those are some of the realities we are going to have to deal with 
here.
  I am glad our President is bold--bold in saying to the American 
people: I am going to ask you to save more of what you have. I am going 
to give you the opportunity to keep more of what you earn. I hope you 
will invest it. I hope you will go out into the market and I hope that 
you as consumers will help turn this economy back on. That is what is 
fundamentally important.
  Lastly, as it comes to double taxation of dividends, when you double 
tax, you tax them at a rate of nearly 70 percent. That is a 
phenomenally high rate. When you look at corporate income tax versus a 
tax on dividends, there are few companies paying dividends today. And 
why are they keeping large blocks of cash? Why do corporate executives 
get into trouble going out and buying companies they don't know how to 
run or don't fit the culture of the company they are currently 
operating? It is because they have big buckets of cash which they are 
not moving through to their stockholders. One of the real important 
reasons they are not moving it through is the double taxation 
environment.
  When we talk about that particular part of the Tax Code being 
changed, what we are also talking about is corporate reform along with 
tax reform. I see nothing wrong with that. I see nothing wrong with 
those who save and invest and our seniors in America getting a large 
portion of their income from dividends being strengthened by that very 
reality.
  I think the tax package that has been presented by our President is 
bold, yes, but balanced. As I have shown you with some of the figures 
that exist today coming from the Tax Foundation, it really goes at 
lower middle income America. When you can say to a family of four 
earning $40,000 a year that we are going to reduce your taxable 
liability by 96 percent, friends on the other side, that is not the 
wealthy. That is working-class Americans. When you say to a family of 
four earning $50,000 a year that we are going to reduce your taxable 
liability by 42 percent, friends on the other side, those folks aren't 
rich unless you define ``rich'' much differently than the people of my 
State do. That is called responsibility in helping lower- to middle-
income Americans keep more of their hard-earned dollars for the purpose 
of providing for themselves, for their families, and for the pursuit of 
the American dream.
  I yield the floor.

[[Page 536]]

  The PRESIDING OFFICER (Mr. Alexander). The Senator from North Dakota.
  Mr. DORGAN. Mr. President, are we in a period of morning business?
  The PRESIDING OFFICER. The Senator is correct.
  Mr. DORGAN. Mr. President, I ask unanimous consent to speak for 25 
minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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