[Congressional Record (Bound Edition), Volume 149 (2003), Part 9]
[House]
[Pages 12123-12124]
[From the U.S. Government Publishing Office, www.gpo.gov]




                          JOB-KILLER POLICIES

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from California (Mr. Sherman) is recognized for 5 minutes.
  Mr. SHERMAN. Mr. Speaker, I came down here to talk about taxes, but 
let me first talk about Texas. All Americans must unite in the war 
against terrorism and we did that. We passed the PATRIOT Act. We 
provided resources for the Department of Homeland Security. But now we 
discover that the war

[[Page 12124]]

on terrorism is a war against Democrats. This will divide America, and 
that is good for the terrorists. How many Americans may lose their 
lives because we cannot empower the Department of Homeland Security 
because it uses that power to pervert American democracy? Only an 
honest release of the tapes, only an honest approach will save the 
Department of Homeland Security and save only the Americans that it can 
save.
  Now let us talk about taxes. The Bush recession continues. 
Republicans continue to use their political power to adopt job-killer 
policies which means the Bush recession will continue to continue. The 
most obvious job-killer policy is the dividend exclusion provision 
included in the Senate tax bill passed last week. Every major tax 
provision has both positive and negative effects on our economy, and 
Republican after Republican has come down here to talk about the rather 
modest economic benefits of excluding dividends from taxation. 
Democrats, though, have not used our time to respond and to point out 
the much larger offsetting negative effects of this provision. The 
reason for that is that we Democrats have been so incensed at a policy 
that provides 50 percent of the tax benefits to 1 percent of the 
population and gives 1 percent of the benefits to 50 percent of the 
population.
  We have been so incensed that the Republicans would launch a class 
war attack against working families. We have been so incensed that they 
would come up with a policy designed to allow the richest in America to 
buy the new $350,000 Mercedes Benz, the Maybach, and pass the cost on 
to the sons and daughters of working Americans as they build the 
deficit. We have been so incensed about that that we forgot to mention, 
oh, by the way, it is a job killer.
  Let us talk about that. We could of course drop currency from 
helicopters, $25 billion a year, $50 billion a year, and that would 
have some positive economic effects; but it would have a much larger 
negative economic effect because it would raise interest rates and it 
would deprive us of the opportunity to help States. They will have to 
discharge teachers, law enforcement officers, and others; and those 
folks will lose their jobs. So even helicopters dropping cash has some 
positive effect, but a larger offsetting effect.
  The offsetting and negative effect of this dividend exclusion is 
worse because at least the people who catch the money from the 
helicopter will probably go out and spend it on necessities of life, 
whereas the dividend exclusion is aimed at the folks most likely to buy 
foreign luxury imports, which does not provide jobs for Americans.
  The dividend exclusion was justified on the idea that it was going to 
build up corporate treasuries because people would invest in stock and 
then the corporations would go out and buy plants and equipment. This 
was proven to be a phony ruse because under pressure to bring down the 
price tag of the dividend exclusion, the White House has now written a 
version that obviously will not cause any additional corporate 
investment. What does that provision do? It provides half-tax exclusion 
for dividends paid in 2003; full exclusion for 2004, 2005, 2006, and 
then back to a full taxation of dividends starting in 2007 and future 
years.
  What will that mean? First, all the dividends corporations were going 
to pay out this month and in the next 8 months will not be paid; so we 
will have a slump in expenditures by those who receive dividends. Why? 
Because they can wait until January 1 of next year, pay the dividend, 
and have it be completely tax exempt. So we start with the decline even 
in the amount of dividends paid, but come 2004 we will see huge 
dividend payments. That money comes out of corporate treasuries. It 
reduces the amount that corporations have available for investment of 
plant and equipment; and if they have any money after 2004, they will 
pay it all out in 2005, 2006. No corporate investment; huge dividends.
  But it is argued that this dividend exclusion is going to encourage 
investment in stock. If it had been a permanent exclusion, maybe that 
was a possibility. A lot of people buy municipal bonds because they get 
tax-free income. But who would buy municipal bonds if their income was 
going to become fully taxable in just a few years? Who is going to buy 
corporate stock because they want dividend exclusion when the dividend 
exclusion is going to expire in just a few years? So there will be a 
huge outlay of corporate funds from corporate treasuries that will not 
be available to buy plant and equipment. But there will be no 
investment in corporations caused by this provision because nobody is 
going to buy a new issuance of stock if in just a few years we are 
going to be back to the old tax law.
  The Bush recession continues. Job-killer policies like that contained 
in the Senate bill will ensure that the Bush recession will continue to 
continue.

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