[Congressional Record (Bound Edition), Volume 149 (2003), Part 10]
[Senate]
[Pages 12825-12831]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        JOBS AND GROWTH PACKAGE

  Mr. GRASSLEY. Mr. President, I use morning business as a forum to 
discuss some of the issues that are going to be coming up tonight and 
tomorrow morning before we vote on the tax bill conference, the jobs 
bill, the growth package--whatever you want to call it. I take my 
opportunity to speak to the conference report that was agreed to this 
afternoon.
  There has been a great deal of hard work that has taken place in the 
last few days to bring the reconciliation conference agreement to 
completion. I thank all of my colleagues and the House for their hard 
work and their cooperation in meeting our goal of getting a jobs and 
growth bill to the President by this Memorial Day recess.
  We all agree the economy needs a shot in the arm. Although our 
economy is growing, it is not growing fast enough to create jobs. The 
difference is it has been growing for about a year and a half at 2 
percent, roughly. We do not create jobs at 2 percent even though the 
economy is growing. It takes growth of about 3 to 3.5 percent to create 
jobs. We believe this bill will bring about the proper growth.
  Some estimates, some versions of the growth package, although not 
necessarily this compromise before the Senate, is that it will create 
1.4 million new jobs. A major cause of the sluggish economy is the 
bursting of the stock market bubble created in the 1990s. This bill 
will address the ailing stock market. It will help create jobs. It will 
grow the economy. It will put money back into the hands of families, 
consumers, investors, and businesses that will help fuel our economic 
engines that create those jobs that we hope will be created from this 
legislation.
  It is often said that various bills before the Congress might be 
historic in nature, and I don't want to overplay this one, but I do 
want to use the term about this being an historic agreement in this 
sense: It will amount to the third largest tax cut in history. 
President Bush should be highly praised for initiating two out of the 
last three largest tax relief packages passed by the Congress in that 
period of time.
  The packages before the Senate abide by the budget agreement of the 
Senate side limiting the overall number to $350 billion. It includes 
the speeding up of all rate reductions, as well as the House's 
innovative version of the President's dividend proposal that will not 
only reduce dividend tax but also reduce the capital gains rate, as 
well.
  Capital gains and dividends will be taxed when this bill becomes law 
at 15 percent and 5 percent depending upon the level of income. The 5 
percent eventually will be phased down to reach zero level of taxation 
in the year 2008.
  This happens to be the lowest level of capital gains tax since 1934. 
Dividends will also be taxed at historic lows, and those figures would 
be the same rates of taxation as apply to capital gains.
  We also included in this package an expenditure of $20 billion in aid 
to States that was in the Senate bill, which I know my fellow Senate 
colleagues, including Senator Rockefeller, who was a conferee, will 
appreciate.
  In addition, the bill includes further child tax credit and marriage 
penalty relief. Some may argue that we did not do enough regarding the 
two problems. This bill will greatly improve current law. If Senators 
vote for this measure, they are voting to put approximately an extra 
$1,000 in the pockets of a family of four if that family has two 
children. They are going to do this for the next couple of years 
compared to current law. That is going to be retroactive to January 1 
of this year, and it would presume a rebate of $400 per child back to 
any family who reported children on their income tax. That check should 
be in the mail later this summer or very early in the fall. So a family 
with two children would get an $800 rebate check from the Federal 
Treasury later this year.
  As chairman of the Finance Committee, I certainly intend to continue 
and enhance improvements in marriage penalty and child tax credit in 
the coming years. In other words, we should get to that goal of 
continuing the $1,000 credit as permanent legislation, not as temporary 
legislation. We should resume our goal of eliminating the paper right 
now rather than down the road a few years when it is slated to be 
phased out.
  I happen to be very disappointed about an aspect of the conference 
report I and a lot of other people from rural States worked on, to 
bring some equity in Medicare reimbursement to our respective rural 
States. My amendment had 86 votes in the Senate. We addressed the 
Medicare rural equity. This is what was not included in the final 
agreement.
  Here is where the House comes from. They did not have a similar 
provision in their bill. They argued in the other body that this tax 
relief bill and the Medicare issues should be addressed in the Medicare 
legislation coming up for consideration in just 2 weeks. What I heard 
was this is a tax bill, not a Medicare bill, and why can't this wait an 
additional 2 weeks and take it up in an environment very closely 
related to the subject of Medicare reimbursement and not isolate it in 
a tax bill.
  My answer to that is, I know this bill before the Senate will be 
signed by the President. I hope later on this summer or early fall we 
have a Medicare prescription drug bill for the President to sign. But, 
obviously, I am not as sure of that as I am of this bill going to the 
President. There are obviously a lot of things about the reimbursement 
of Medicare for our health care providers in rural America that are 
very unequal to that of urban areas.
  On this very issue of Medicare rural equity, President Bush weighed 
in strongly supporting my efforts in the context of the Medicare bill, 
and this is a continuation of things that he spoke about at two or 
three different events over a period of months in Iowa just in the last 
year. It is a continuation of discussions I have had with the President 
on this very same subject during the month of December, last year, and 
the month of April, this year, when I had very private meetings with 
the President on the subject of Medicare.
  Given the President's strong endorsement of my proposal, and the 
strong support in the Congress evidenced by the 86 votes in the Senate, 
and the fact we will be considering Medicare very soon, and also 
Chairman Thomas's willingness to consider these issues, I am encouraged 
we will succeed before the end of summer.
  I ask unanimous consent to print a copy of the President's letter in 
the Record, wherein the President speaks about support for my efforts.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:
                                                  The White House,
                                         Washington, May 22, 2003.
     Senator Charles Grassley,
     Committee on Finance,
     U.S. Senate, Washington, DC.
       Dear Chairman Grassley, I want to congratulate you on 
     Senate passage of the jobs and growth bill, and also on the 
     passage of your amendment to that bill which increased 
     federal assistance to rural providers through the Medicare 
     program.
       When we met in the Oval Office in early April, we discussed 
     our concerns that rural Medicare providers need additional 
     help, and we committed to addressing their problems. We 
     agreed on the need to address issues faced by rural 
     hospitals, skilled nursing facilities, home health agencies, 
     and physicians.
       You demonstrated your commitment by passing your amendment 
     last week with tremendous bipartisan support, and by pushing 
     hard for it in the conference negotiations on the jobs and 
     growth bill.
       I will support the increased Medicare funding for rural 
     providers contained in your amendment as a part of a bill 
     that implements our shared goal for Medicare reform.
           Sincerely,
                                                      George W. Bush.  

  Mr. GRASSLEY. Mr. President, some are going to say during this debate 
on this reconciliation compromise tax relief for working men and women 
that we cannot afford to give money back to the American people. You 
get the impression from people who say that this

[[Page 12826]]

is the Government's money and not the people's money. It is the 
people's money that comes to Washington. We spend it for them--a lot of 
times not as they would. But it is never the Government's money. No 
government creates wealth. Only working men and women, either through 
their labor or the use of their genius and using that in a productive 
manner, is what creates wealth in America.
  It is not right to assume in this body or any other legislative body 
that the resources of the American people belong to Government and we 
let them keep some of their own resources to use as they want, but it 
all belongs to us. This attitude is that we in Government are smarter 
and know better than other people how to spend other people's money.
  This bill before us underscores the President's, and the majority's, 
belief that this is the people's money first. The people will spend and 
invest their money in more productive ways than government ever will. 
This bill reinforces that philosophy. I commend the President for his 
leadership, his perseverance, and his ability to get things done.
  I am still going to speak on the issue of the conference committee 
report before us, but I want to concentrate now for just a few minutes 
on the accuracy and intellectual honesty in the debate over our 
bipartisan tax relief package. This mostly would address who benefits 
and who does not benefit. Too many people on the other side of the 
aisle want you to believe this legislation only benefits the wealthy or 
high-income people of America. In fact, what this bill is about is not 
worrying just about income, but it is an effort through what we do on 
capital gains and what we do on dividend taxation to encourage the 
creation of wealth.
  We are not starting from ground zero here in the creation of wealth. 
This was started by the people themselves over the last now maybe a 
couple of decades. Because just 20 years ago, maybe less than that, 
about 12 percent of the people in the country had money invested in the 
stock market or had pensions and 401(k)s that were dependent upon the 
stock market. Today that is about 55 percent of the people in the 
country. So there is an expansion of instruments leading to the 
creation of wealth. There is a broader range of people in the United 
States now, compared to 10 years ago, or let's say 20 years ago, who 
have an interest in the stock market. So I want to discuss the 
importance of the accuracy of the data in the debate over the 
bipartisan tax relief package before us.
  In this and all tax policy debates, it is very important to have 
accurate data and to debate the issues in an intellectually honest 
manner. Involved is the key question of whether a tax relief package is 
fair. In evaluating fairness, we frequently look at whether a proposal 
retains or improves the progressivity of our tax system.
  We have critics of President Bush's growth plan who attempt to use 
what we call distribution tables to show that a certain proposal--in 
this case President Bush's proposal--disproportionately benefits upper-
income taxpayers. Let me say flat out this is factually inaccurate. But 
more importantly, it misses the point of this legislation for several 
reasons I want to present to my colleagues.
  Make no bones about it, this is not a tax relief package for the sole 
purpose of just giving more money back to the taxpayers. It is for the 
purpose of doing that with the end result that it will lead to the 
creation of jobs and it will cause our economy to grow, which is 
necessary to create jobs. As such, the proposal attempts to promote 
investment incentives so that companies will purchase capital and 
labor. Although the package is balanced between consumption and 
investment, it is the investment-side incentive that will result in 
long-term economic growth.
  What we are trying to do is enhance the capital-to-labor ratio. When 
there is a surplus of capital, that is when labor benefits. When there 
isn't capital to invest, there is a surplus of labor and consequently 
labor cannot advance up the economic ladder the way we want all 
Americans to be able to do. But when you bring in a surplus of capital 
that is invested, there is an increase in demand for labor. When there 
is an increase in the demand for labor, wages and benefits go up for 
working men and women. This bill is all about increasing--or at least a 
good part of it; some of it is oriented toward consumer spending, but a 
good part of this is oriented towards encouragement for capital and 
enhancing that capital-to-labor relationship.
  Those who criticize this plan for benefiting wealthy taxpayers assume 
the rich stay rich and the poor stay poor through a lifetime. It is 
almost ``born rich, you are always rich; born poor, you are always 
poor.'' That is not America. America is all about economic mobility, 
the dynamics of the free marketplace. That gives people opportunity to 
improve themselves and that is what America is all about.
  Recent studies, including one produced by the National Center for 
Policy Analysis, indicate this is untrue, that the rich are always rich 
and the poor are always poor. The study measures income mobility by 
breaking same-age workers into five income levels and monitoring their 
movement between the income quintiles over a period of 15 years. The 
study shows there is considerable economic mobility in America and that 
large numbers of people move up and down the economic ladder in 
relatively short periods of time.
  Moreover, in recent years, earnings mobility has in fact increased. 
The study demonstrates that within a single 1-year timeframe, one-third 
of the workers in the bottom quintile moved up and, in fact, one-fourth 
of the workers in the top 20 percent of our population moved down. One-
half of the remaining labor force changed quintiles within that year, 
and 60 percent of the workers are upward mobile within 10 years.
  The University of Michigan study also concluded that taxpayers tend 
to move between income groups during their lifetime. It is quite 
obvious how much sense this makes. It makes a lot of sense.
  Taxpayers are likely to be lower income earners early and late in 
life, but are likely to be higher income earners during their midpoints 
of life.
  My colleagues, just think of your own lifetime starting out in your 
first job out of high school or your first job out of college. Hasn't 
there been a great deal of movement during your lifetime, both up and 
down? We hope most of it is up. But for some, it is down. What allows 
these people to escape the lowest-income quintile and start earning 
more money is a college education and acquiring necessary skills on the 
job.
  Interestingly, anecdotal evidence shows that 80 percent of the 
individuals in the Forbe's 400 list were self-made as opposed to those 
who inherited fortunes. Again, this underlies the importance of taking 
advantage of educational opportunities. Education allowed these people 
to overcome differences in income, increase their chances to escape 
low-wage jobs, and determine the success of their future earnings.
  These findings are backed by a third study produced by the Financial 
Services Roundtable by the same organization I have been quoting, the 
NCPA. This study confirms that there is substantial economic mobility 
between generations. Almost 60 percent of the sons whose parents' 
incomes were in the bottom 20 percent are in higher income groups. 
Thirty-one percent have incomes in the top 60 percent.
  Therefore, whoever is saying that once rich, Americans always stay 
rich and once poor, they always stay poor are purely mistaken.
  I welcome this data on this important matter for one simple reason. 
It sheds light on what America really is all about. We are a nation of 
vast opportunities. We are a nation of tremendous economic mobility by 
people from all over the world. Our country truly provides unique 
opportunities for everyone. These opportunities include better 
education, health care services, financial security but, most 
importantly, our country provides people with freedom to obtain 
necessary skills to climb the economic ladder and to live better lives.

[[Page 12827]]

  We are a free nation. We are a mobile nation. We are a nation of 
hard-working, innovative, skilled, and resilient people who like to 
take risks when necessary in order to succeed.
  We have an obligation as lawmakers to incorporate these fundamental 
principles into our tax system, and this bill succeeds in doing that.
  If I could, I would like to continue on an item that was in the 
Senate bill more specifically than I have spoken about the bill in the 
past. I want to speak about a provision that was, in fact, dropped in 
conference. It was very important to Zell Miller, the Senator from 
Georgia.
  On a preliminary point, I express my appreciation to Senator Miller 
for his support of the President's package. It has not been easy for a 
person from the other side of the aisle to be so consistent in their 
support. But he has been a fearless man with the Marine courage and 
conviction that is in his background.
  Senator Miller discussed a proposal regarding CEOs to sign a 
corporate tax return. This measure has been in the tax shelter 
curtailment proposal passed by the Senate Finance Committee. I support 
the proposal.
  I share Senator Miller's commonsense view of this proposal. As does 
Senator Miller, I think CEOs ought to be accountable on their companies 
tax returns just as individuals are. Unfortunately, I was not able to 
secure Senator Miller's position in conference. I faced two barriers. 
One was a potential procedural problem. The other, the opposition of 
the House to any proposals that raised revenue.
  Despite my effort, I was not able to deliver this provision back to 
the Senate for Senator Miller. But I would like to make clear to 
downtown lobbyists and to corporate America that Senator Miller and I 
will be back on this very important provision.
  Chairman Thomas and his staff know the importance of this issue to 
Senator Miller and to me. I have let them know that we will be back at 
it in legislation that has passed the Senate called the CARE Act--that 
is a charitable giving act--or if we don't do it there, we will do it 
in other tax legislation this year.
  At a later point in this debate, Senator Miller and I may engage in a 
colloquy on this very important subject to all of us; but very 
important for Senator Miller because of his instigation of it, the CEO 
signature provision.
  I yield the floor.
  The PRESIDING OFFICER. Who seeks recognition?
  The Senator from Oklahoma.
  Mr. NICKLES. Mr. President, I wish to make a few comments regarding 
the bill.
  First, I compliment the chairman of the Finance Committee for his 
leadership. Passing a budget has not been an easy process. If we had 
not passed a budget, we wouldn't be passing a tax bill.
  Senator Grassley was a very strong supporter of us getting a budget. 
He showed great courage in doing that. Some people criticised him for 
it. I take issue with that. Senator Grassley, in bringing to the floor 
the tax provision reconciliation bill that we are going to be voting on 
tomorrow, frankly, made a commitment, as any chairman would, that he 
didn't want to bring a bill back to the floor of the Senate that 
wouldn't have the necessary votes to pass. He is exactly right. He, as 
I, count votes.
  We are passing the biggest, best growth package we could get through 
the Senate. Both of us would like for it to be more. We met with our 
colleagues in the House. They would like for it to be more. The 
President would like for it to be more. This is the best we can do with 
the votes we have. With the package, I think we have done a good job, 
which we have, in loading up front, doing the best job we can to create 
jobs and create growth in our economy.
  I compliment Senator Grassley because if he hasn't shown leadership, 
we wouldn't have a budget and we wouldn't be voting on a tax bill. 
Tomorrow, we will be passing one of the best that this Congress has 
passed--maybe not just this Congress but in a long time.
  I wish to talk about some of the provisions that are in the tax bill.
  Senator Grassley complimented Senator Miller. Senator Miller and I 
introduced the President's tax bill several months ago. It was $696 
billion. The tax bill we are voting on tomorrow, most people say, is 
$350 billion. Actually, the tax portion of it is significantly less 
than that. It is closer to $315 billion.
  Somebody might ask, What is the difference? There are outlays. We had 
to pay for the outlays. When we passed this bill in the Senate, we 
passed $430 billion worth of tax cuts. We had some offsets, user fees, 
and other things that were extended to make the bill come out at a net 
of $350 billion, which was consistent with the budget resolution.
  Now, let me just make a couple other comments.
  I have heard some of our colleagues say that $350 billion is 
outlandish, such a large tax cut. It is $350 billion over 10 years when 
the total revenue to be received by the Federal Government will 
probably be $25, $26, maybe $27 trillion, so it is really a very small 
percent, maybe 1.3 percent or thereabouts. Granted, we loaded more of 
it upfront so it is a greater percentage the first couple of years. We 
did that because we wanted to have more positive impact on the economy. 
We want to grow the economy. We want to create jobs.
  The economy is very soft, some people would say very stagnant. It is 
not growing to near the potential we want it to be. We have lost a lot 
of jobs, so we want to do some things, and we believe we can do some 
things, in the Tax Code that will create an environment that will be a 
lot more conducive to creating jobs.
  I have been in the Senate a long time. I have seen us pass tax bills 
that encouraged growth, and I have seen us pass tax bills that, 
frankly, discouraged growth. I might touch on those just for a minute.
  But I remember, in 1997--frankly, the Clinton administration was not 
in favor of it at the time--I remember negotiating this provision 
reducing the capital gains rate from 28 percent to 20 percent. 
President Clinton eventually signed the bill. By doing that, we created 
a lot of jobs. That created a lot of economic activity. That was a 
positive thing to do. That generated revenue. That helped our economy. 
That is just an example.
  If you go back a little further in history, when Ronald Reagan came 
into office, in 1981, the maximum tax rate was 70 percent. When he 
left, 8 years later, it was 28 percent, and we had one of the longest 
periods of economic growth in our Nation's history and created millions 
of jobs. Phenomenal. Incidentally, the Government revenues increased 
substantially over that period of time.
  Well, what are we doing in the tax bill today that will help this 
economy of ours grow? There are several provisions in it. I look at 
this bill, and I am amazed we were able to do as much as we did. I 
compliment our friends and colleagues in the House. We worked together, 
and we fashioned a pretty good bill.
  I will also say, it is not perfect, and it is not exactly what I 
would have written, but we make compromises to pass legislation in 
legislative bodies. I think the Senate reported out a good bill. I am 
proud of the bill we reported out on the floor of the Senate just last 
week. We have compromised with the House. I will touch on several of 
these provisions.
  Both the House and the Senate accelerated the rate reductions we 
passed in 2001. What does that mean? It means somebody who was paying 
the maximum rate of 38.5 percent will be paying 35 percent. It just so 
happens 35 percent is the same rate that General Electric pays, 
corporations pay. Why should individuals--many of them have their own 
business--why should they be paying personal rates higher than the 
largest corporations in America? So that was a positive stop.
  I have heard some of our colleagues say: Wait a minute, these are tax 
cuts for the wealthy and the rich, and so on. For the wealthy, the 
maximum tax rate was 39.6 percent. We passed that in 2001. To date, it 
has only been reduced 1 percentage point, from 39.6 percent to 38.6 
percent.

[[Page 12828]]

  Now, we will finally get it to 35 percent, the same rate as 
corporations. People who were paying 35 percent will pay 33 percent; 
people who were paying 30 percent will pay 28 percent; people who were 
paying 27 percent will pay 25 percent; and a lot of the people who were 
paying 15 percent, when we passed the bill in 2001, will have a rate 
reduction to 10 percent. So they got the entire rate reduction in 2001 
retroactive. I just mention those facts so people will be aware of 
them.
  We put in a provision to allow small business expensing. We raised 
that from $25,000 to $100,000. I used to own and operate a small 
business. This will help a lot of small businesses. We had that in the 
Senate bill. The House had it in their bill. That sunsets after a 
couple years.
  Bonus depreciation was not in the Senate bill. It was in the House 
bill. I compliment the House. That increased the bonus depreciation 
segment we had in the 2001 tax bill from 30 percent to 50 percent 
through the end of next year. This will encourage all corporations, 
large and small, to make more significant investment. When they make 
significant investment, they will be able to recoup half that 
investment over a much shorter period of time.
  We also did something that dealt with dividends and capital gains. 
The bill that passed the Senate was basically a 100-percent exemption 
for dividends for 4 years. Some people say: Wait a minute, it was only 
50 percent the first year. That was for 2003 that we passed in the 
Senate. Frankly, we are halfway through 2003, so I am looking at this, 
and at least from this point on it would have been a total elimination 
of double taxation on dividends for the remainder of 2003, 2004, 2005, 
and 2006. I thought that was superior to the House provision that said: 
Let's tax dividends at 15 percent.
  What came out of conference was the House provision. Again, we make 
compromises. The House provision has a lot of merits. It says: Let's 
tax capital gains and dividends at 15 percent. Well, for capital gains, 
that are presently taxed at 20 percent, to go to 15 percent is a 25-
percent reduction. That is pretty significant.
  I mentioned earlier in my statement, when we reduced capital gains 
from 28 percent to 20 percent, we reduced the tax on financial 
transactions, and we turned over a lot more transactions. That had a 
very positive impact on the economy. I expect we will have a positive 
impact on the economy by reducing the rate on capital gains again. And 
I think there is a lot of merit in saying we should have the tax on 
dividends be the same as the tax on capital gains. That was the House 
provision. That is a 15-percent rate. That is maybe a little more than 
a 50-percent exclusion.
  Now, if you looked at the chart--I do not have the chart with me 
today--we tax dividends higher than any other country in the world. If 
we want to create a climate that is going to be productive for 
investment, we should not tax the proceeds or profits from those 
investments higher than anybody else in the world. We consider 
ourselves the ``free enterprise mecca'' of the world, but yet we tax 
the distribution of those profits higher than anybody. We are basically 
tied with Japan for taxing corporate dividends higher than anybody. We 
tax them higher than Great Britain, we tax them higher than France, and 
we tax them higher than Germany. It makes no sense.
  Well, this is going to be a big step toward probably putting us about 
in the middle range of countries as far as taxation is concerned. It 
still has double taxation. I still would much prefer the Senate 
provision. We did not prevail in conference. Again, it's the art of 
compromise.
  This is a giant step forward. If you asked me 3 months ago, could you 
get a 50-percent exclusion, I probably would have said: Let's take it. 
That is a giant step forward.
  Let me just give a couple of personal examples on corporate 
dividends.
  I think a lot of people have tried to construe this as only 
benefiting the wealthy, and so on. That is hogwash. That is absolute 
hogwash. Over half of Americans today have some ownership of stock. 
Maybe they own it. Maybe they don't own the shares in their name, but 
they are participants in a retirement plan. Maybe they are in a 
teachers retirement plan. Maybe they are in a retirement plan for 
firemen. Maybe they are in a Teamsters retirement plan. Maybe they are 
in a civil service Federal employees retirement plan. Maybe they have a 
portion--maybe all, maybe some--of their retirement based in stocks. A 
lot of those stocks pay dividends. This is going to help the value of 
their account. This will cause the market to go up.
  The stock market has been on a significant decline for the last 3 
years. Some people want to say: Well, that was President Bush's 
recession. I hate to remind them, but the stock market collapse or 
decline--rapid decline--started in March of 2000. The Nasdaq fell by 50 
percent between March of 2000 and the end of 2000. So we have seen a 
precipitous decline in the stock market.
  I believe the proposal we have before us--certainly the one that 
passed the Senate, and I also believe the one that we will be passing 
tomorrow--will help the stock market. It will be positive because we 
are not going to tax the proceeds or distributions from gains in an 
investment so high. We are basically going to cut the tax rate on those 
investments in half. That is a positive, giant step forward.
  So I again compliment our colleagues. I think we are doing something 
that will encourage investment, not discourage it.
  Let me give you another example. I used to run a corporation. A 
corporation makes money. It wants to distribute some of the proceeds or 
profits of that money to their stockholders. In doing so, let's just 
say the figure is $100,000. If they do so today, they have to pay 
corporate tax on it. That is $35,000. Then they have $65,000 left to 
give to their stockholders. They give the $65,000 to the stockholders 
and--guess what--they are taxed today, and they might be taxed at 38 
percent, they might be taxed at 30 percent. Regardless, you add the two 
rates together and they are taxed at about 65 percent, in some cases 70 
percent, in some cases more than 70 percent. So out of that $100,000, 
the Government is getting about $60,000, and the owner of the 
corporation is getting about $30,000.
  That is not a good deal. That is not a prudent investment. As a 
matter of fact, as a result of that, anybody who is managing a 
corporation says: wait a minute, let's not give money to the owners 
through dividends. Let's do it in the form of bonuses or through other 
means. And you come up with a lot of schemes--some are very legitimate; 
some are not so legitimate--to avoid this enormous Government take on 
the proceeds of distribution of gains from a corporation.
  They should be taxed once. Once is enough. Thirty-five percent is 
enough. Again, our provision, which will hopefully pass tomorrow, is a 
giant step in the right direction. This provision cuts capital gains 
from 20 percent to 15 percent and, I might mention, from 8 percent to 5 
percent for lower income taxpayers. Again, this is a 25-percent 
reduction, and it eliminates the long-term/short-term capital gains. If 
you want income tax in capital gains simplification, we do it. Right 
now you have long-term and short term capital gains. Anybody who has an 
investment in anything, they have to keep track: How long did you own 
this? Does it qualify for a 20-percent or 18-percent rate? We are 
saying we will not do that. The rate for capital gains is 15 percent, 
and it has to be the same rate on dividends.
  There is another advantage to this. If somebody who has a portfolio 
invests today, the present Tax Code says, let's make a lot of 
investments in growth stocks because they pay capital gains, and the 
tax rate on capital gains is 20 or 18 percent. That is about half of 
the present rate on dividends, on ordinary income tax. That is the 
present law. A lot of people, because of the Tax Code, were encouraged 
to go to more growth-oriented stocks, i.e., stocks that don't pay 
dividends, to make their investments. Many of those stocks are a lot 
more volatile, a lot riskier, a lot more subject to variations in 
prices. Again, having a policy that at least taxes dividend 
distribution and capital gains on

[[Page 12829]]

an equal basis will take the bias out that presently exists for growth 
stocks as compared to dividends or more oriented stocks that pay 
dividends. That is good. That will change corporate behavior, and that 
is good.
  So when you add all these things together, we have done some things 
for families. Somebody says, this is just going to benefit corporations 
and small businesses. That is not correct. We have done something for 
families. Individuals and married couples who have kids are going to 
get a $1,000-per-child tax credit. Present law is $600. That is a $400 
increase. If you have four kids, that is an increase of $1,600. I have 
four children. My kids are a little old so they don't qualify, but this 
will help families all across America. That is $1,000 per child that 
they don't have to pay in taxes. Frankly, most families need that extra 
money to raise their kids. So it is family friendly.
  We did something on marriage penalty. We doubled, basically, the 15-
percent bracket for couples. Let me give an example. It is kind of 
wonkish. People move from a 15-percent bracket in present law to a 27-
percent bracket. I think now it is $28,000. So if they have taxable 
income above $28,000, they move from a 15-percent bracket to a 27-
percent bracket. That bracket is almost twice as high. So what is the 
bracket for couples? If you look at couples, under our provision we say 
we should double the individual bracket for couples. So if the break 
line of going from 15 percent to 27 percent under current law is 
$28,000, we say it should be $56,000 for a couple. Right now it is 40-
some thousand. The difference of that is about $1,200.
  Let me make sure people understand that. If you have a married couple 
who has a combined taxable income of $56,000, their savings under this 
provision is $1,200. If they have two kids, that is an additional 
savings of $800. That is over $2,000 that a family of four with income 
of $56,000 will save. That is significant. That is family friendly. 
That eliminates the marriage penalty for those couples.
  Again, we have some positive measures in this bill, positive for 
families, positive for companies, positive to grow the economy, 
incentives for people to hire, for people, frankly, to make investments 
because they can recoup them earlier. Instead of amortizing over 10 
years, they might be able to amortize them immediately or maybe half in 
the first year. Those are significant, positive changes.
  We will eliminate at least partially this very high rate of double 
taxation in current law for corporate distribution.
  Both the House and the Senate have done some good work. I compliment 
Senator Grassley for his leadership. It has not been easy. It has not 
been easy through the budget or tax process. When we marked up this tax 
bill last week, we had, I believe, 33 or 34 amendments. I believe the 
majority of those amendments were decided by one vote. Senator Grassley 
is to be complimented for his leadership. This tax bill, unlike many, 
is 43 pages. We have seen tax bills before that are hundreds of pages.
  So this is simple. It is clean. It does not have a lot of Members' 
add-ons that touch on one page and deal with rewriting the Tax Code. 
This is simplified. We make it much simpler on capital gains. We will 
tax capital gains and dividends at the same rate. It is simplified 
because we will accelerate the rate cuts already in the tax law so 
somebody won't defer income from one year to the next year so there 
will be a lower tax rate. It is simplified because we will allow small 
business to be able to expense items in some cases 100 percent of the 
cost of the item up to $100,000, so they don't have to amortize it over 
years.
  There are a lot of positive things in here that will help the 
economy, help American families, and create a much better environment 
both for investment and creating jobs.
  I thank my colleagues, particularly Senator Grassley and Senator 
Miller, for their support and their hard work. The American taxpayer 
and the economy will be a lot better off by passing this legislation.
  I yield the floor.
  The PRESIDING OFFICER. Who seeks recognition?
  Mr. NICKLES. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. FRIST. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Alexander). Without objection, it is so 
ordered.
  Mr. FRIST. Mr. President, tonight we debate and tomorrow we act on 
legislation that will help set a course for a stronger national economy 
in the coming months. Next month, we will begin to address issues in 
the health care sector. We will look at ways to strengthen and improve 
Medicare. We will also begin the appropriations process, funding 
education, training, and other critically important programs that make 
contributions to our future economic growth. These issues and others 
are fundamental to the overall objective of maintaining stable, 
sustained economic growth that creates jobs and opportunities for all 
our citizens.
  For today we must act on the conference agreement we worked so hard 
on throughout this week, the Jobs and Growth Tax Relief Reconciliation 
Act of 2003. This is legislation that justly deserves the expedited 
consideration it was given over the last month and the special 
procedures afforded it under the Budget Act.
  It is, simply put, must-do legislation. The good things we enjoy as 
Americans come, in large part, from the wealth of our vast human and 
natural resources. They come from a political and economic system that 
rewards hard work, rewards the entrepreneurial spirit, rewards personal 
initiative--all conducted within a framework of fair, just, and 
equitable laws of commerce.
  History is replete with governments that have failed because of 
failed economies. Our responsibility as elected officials to do 
whatever is necessary to maintain economic growth is real not only for 
today but for future generations. I am concerned about our economy not 
only because of its current sluggishness in creating jobs but also 
because of the new risk--the risk of disinflation.
  But you don't have to take my word. Recently, the Federal Open Market 
Committee decided to keep the target for the Federal funds rate at 1\1/
4\ percent, the lowest level in nearly 40 years. But more importantly, 
the committee concluded that:
  The probability of an unwelcome substantial fall in inflation, though 
minor, exceeds that of a pickup in inflation from its already low level 
and the balance of risks . . . is weighted toward weakness over the 
foreseeable future.
  I hope my colleagues are listening. The Fed is raising the specter of 
both continued economic weakness and disinflation--something that we 
have not experienced in this country. While the economy continued to 
grow in the first quarter of this year, although at a lackluster rate, 
it was not sufficient to generate enough demand to encourage businesses 
and employers to create new jobs. The result is that the unemployment 
rate has risen to 6 percent.
  Now the Fed has added another concern. With insufficient growth, the 
economy lacks the momentum to stop inflation from falling further.
  I continue to meet with economists and business groups to better 
understand the policies and programs that best address weak economic 
growth and a jobless recovery. Most all agree that economies are like 
ships--they cannot be turned around quickly. But while this economy 
doesn't need to be turned around, it is headed in the right direction. 
It just needs to pick up its pace. Indeed, that is what the jobs and 
growth package is all about.
  In order to achieve growth sufficient to create jobs, to reduce 
unemployment, and to stem this potential disinflation phenomena, there 
must be a substantial injection of new demand into our economy, and it 
must be now. This is for the job security of the American people. We 
need to stoke the boilers on this ship. The tax bill before

[[Page 12830]]

us represents an immediate opportunity to inject new demand in the 
economy, as much as $60 billion immediately. Of the $350 billion 
stimulus and growth provided in this conference agreement, 60 percent 
of that stimulus is provided this year and next.
  Equally as important, this stimulus translates directly into money in 
the pockets of American families. As an example, a married couple with 
two children and an income of $40,000 will see their taxes decline this 
year nearly 96 percent--from $1,978 to $45.
  The legislation provides for immediate and retroactive to the 
beginning of this year tax relief to millions of American families by 
increasing the tax credit for each child to $1,000 each year. The 
legislation accelerates all the tax rates we enacted 2 years ago, 
providing in total nearly $31 billion in tax relief this year, 
immediately. The legislation provides incentives for businesses by 
providing a 50-percent bonus depreciation for capital investments, up 
from 30 percent enacted last year--a powerful known stimulus to the 
economy.
  The legislation will increase expensing for small businesses from 
$25,000 today up to $100,000. As we all know, these small businesses 
are the real engines of job creation and economic growth.
  On the proposal to reduce taxes on dividends and capital gains, this, 
of course, has generated much discussion in this body and in the House 
of Representatives. While the Senate passed a different measure than 
what is in the underlying reconciliation tax bill, the compromise 
provides significant reduction in taxes on dividends immediately, a 
nearly 60-percent reduction, and makes reductions in capital gains tax 
rates to further stimulate investment and growth.
  Finally, the legislation does address aid to our fiscally strapped 
States by providing over $20 billion in direct fiscal relief 
immediately.
  It is clear that we must act, and we must act quickly if we are to 
ensure that the economy continues on a course of stronger growth and 
job creation. I ask my colleagues to join me in doing our job.
  The House has acted and now it is time for us to act. We must present 
to the President a strong job creation, anti-inflation economic growth 
bill. The American economy needs a boost. The American people need 
jobs, and that duty falls inescapably to us right here and now.
  The PRESIDING OFFICER. The Senator from Missouri is recognized.
  Mr. TALENT. Mr. President, I am looking forward to voting for the 
jobs and growth package when it comes out of conference and reaches the 
Senate floor. One of the lessons of the last few years is that we 
cannot do anything that any of us want to do without prosperity. We 
cannot do education the way we would like; we cannot improve the 
quality of health care the way we want to; we cannot protect our 
Nation's borders the way we would like to; and we cannot provide for 
our defense the way we would like to without prosperity.
  Prosperity means jobs. The way to get jobs, among other things, is to 
put more money into the hands of people who save, spend, and invest, 
and that means tax relief. That is what the jobs and growth package is 
about.
  It is not the only way, though, to increase jobs and create economic 
growth in our country. Another way to do that is by opening up markets 
abroad. One of the ways we do that is by getting our competitors to end 
tariffs, end the nontariff obstacles they have placed on importing our 
products.
  For too long we have let the European Union get away with illegal, 
unwarranted, and protectionist trade policies regarding agricultural 
biotechnology. I strongly support the President and the administration 
in the case before the WTO against the European Union. I want to take a 
few moments to talk about that situation this evening.
  For the past 5 years--half a decade--the European Union has 
effectively blocked our agricultural trade into Europe through their 
moratorium on the approval of new biotechnology products entering the 
European market.
  Since its implementation in October 1998, the moratorium has blocked 
more than $300 million annually in U.S. corn exports to the European 
Union countries. When you look at the total cost of the moratorium, our 
corn producers have lost $1.5 billion in exports to the European Union.
  This moratorium clearly violates WTO rules requiring measures 
regulating imports to be based on ``sufficient scientific evidence'' 
and mandating countries to operate regulatory approval procedures 
without ``undue delay.'' And as far as sufficient scientific evidence 
is concerned, they have zero standing. Moreover, their policies are 
holding back products that hold tremendous promise for improving the 
food supply, advancing human health and preventing famine in the 
developing world.
  The actions of the EU not only violate laws established by the WTO, 
but also, the EU is violating its own laws requiring science-based 
regulatory decisionmaking.
  The EU policy decisions on biotechnology are being driven by people 
disdainful of science and its capacity for solving problems facing 
mankind and critical of the leading role of the United States in 
scientific advancement.
  It is likely that nearly every American has eaten a meal made with 
corn and soybeans enhanced through biotechnology. These products have 
been sold and served in restaurants, local grocery stores and farmers' 
markets for years, without any adverse health consequences ever being 
reported.
  Additionally, agriculture biotechnology, contrary to what the EU may 
say, is good for the environment. In 2001 alone, biotechnology reduced 
the application of pesticides by 46 million pounds, in addition to 
reducing soil erosion and creating an environment more hospitable to 
wildlife.
  However, the facts have not stopped the EU from propping up their 
moratorium on a flimsy foundation. In addition to their anti-American 
policies, the EU has more recently pursued policies to undermine the 
development and support of genetically engineered products around the 
world, including in countries facing famine, and that was the turning 
point in this case.
  About 40 million people in Africa's famine-stricken nations are at 
risk of starvation and diseases brought about by incessant hunger. 
Additionally, 800 million children are starving worldwide. Ongoing 
droughts and famines have devastated these countries, leaving them 
without options, and much too often, without hope.
  Last fall, three African countries--Zambia, Zimbabwe and Mozambique--
were pressured to turn down shipments of safe, nutritious, U.S. 
humanitarian biotech food aid by the EU. The EU even threatened their 
export markets if they accepted biotechnology food aid. To do that to a 
country threatened with famine is nothing less than extortion.
  This is the same food that we eat here in the United States. It is 
unconscionable to me that the EU would promote these anti-humanitarian, 
anti-development policies.
  The EU should try honesty for once. They should try explaining the 
real reason they do not like American biotechnology: they want to 
protect their market from competition. They want to protect European 
markets by ignoring the scientific evidence, which makes clear the 
safety and nutritional advantage of biotechnology.
  Our agriculture producers are leading the biotech revolution and 
providing us with the most affordable, most abundant and safest food 
supply in the world. And Missouri's producers are among the leaders in 
the country.
  When the U.S. wins this lawsuit, it will be a victory for our 
producers who have lost more than $300 million annually in corn 
exports, and also for science, the environment and everyone who wants 
to win the war against famine and world hunger.
  I applaud the President for filing this suit in the WTO. In doing so, 
he is once again demonstrating the kind of leadership and courage we 
have come to expect from him I appreciate our leadership working so 
quickly on this important issue.

[[Page 12831]]

  Senator Bond and I, along with several others, have submitted a 
resolution in support of the action in the WTO against the European 
Union. I urge my colleagues to consider this resolution expeditiously, 
to support it, and to give the administration the ammunition they need 
to prosecute this lawsuit successfully.
  I yield the floor.
  Mr. BAUCUS. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. GRASSLEY. 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. GRASSLEY. Mr. President, I wish to take an opportunity just 
before we close down tonight to express some disappointment on my part 
that none of the specific small business and agricultural provisions 
survived the final conference agreement.
  I truly believe there are many provisions in the final agreement that 
will be generally good for small business, but there are several 
specialty areas that continue to need tax relief in a special way to 
address the particular concerns of some industries.
  Many of the items included in the original Senate bill are important 
to the bipartisan membership of the Senate. It previously passed the 
Finance Committee as well as the Senate. Again, I stress 
bipartisanship.
  I plan to continue to work on a bipartisan basis with Senator Baucus, 
the ranking member of the committee, to assure that we are able to 
address the tax needs of S corporations, cooperatives, particularly 
farm cooperatives, small business excise tax problems, livestock 
drought relief through the tax efforts, and historic rehabilitation, 
just to name a few areas of concern.
  As we finalize this growth package for the Senate's final vote and 
the President's signature, we will review the upcoming Finance 
Committee schedule and move forward with these important small business 
and agricultural provisions, all of which have bipartisan support.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I thank my good friend, the chairman of 
the committee, Senator Grassley, for making that statement. We both 
agreed. Those are provisions that are very important, particularly to 
certain parts of America. These are provisions that we have been 
working on in the past to try to get included in law, and I very much 
appreciate the chairman of the committee making that statement to that 
effect just now. I join with him and look forward to working with him 
as we get these measures passed.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, in case I do not get an opportunity 
tomorrow--or who knows, maybe even forget it--I am reminded by the 
Senator's statement that even though we have disagreed on the substance 
of this legislation, the Senator from Montana, the ranking member of 
the committee, has very cooperatively helped us move this legislation 
along. We have entered into several agreements to help us get 
amendments out of the way. A couple of times when there were some 
political differences, he helped smooth my path to move this bill 
along. That is all within the tradition of the Senate Finance 
Committee, and I say it not only to bring attention to the cooperative 
effort of Senator Baucus and also of the committee but also to 
demonstrate to the people of the country who might be watching this 
debate on the Senate Finance Committee bill and feel, well, it is just 
all the Republicans on one side and all the Democrats on the other 
side, that we are always that way and very seldom is a product from the 
Senate Finance Committee not a bipartisan product.
  I thank Senator Baucus for helping us move this bill along, even 
though he is not in agreement with the substance of the legislation.
  I yield the floor and I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. FRIST. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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