[Congressional Record (Bound Edition), Volume 152 (2006), Part 1]
[Senate]
[Pages 994-996]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        PROGRESS OF THE ECONOMY

  Mr. COLEMAN. Mr. President, I wish to spend a little time today 
talking about the economy. When I was mayor of St. Paul, people would 
say: Mayor, what are you doing for kids? My response would be: The best 
thing I can do for kids is make sure mom and dad have a job. The best 
welfare program is a job. The best housing program is a job. Access to 
health care most often comes through a job. So that was always my 
goal--jobs, jobs, jobs.
  I want to talk about the economy, but I want to touch briefly on the 
budget. The President submitted his budget. There will be a lot of 
debate. It is the beginning of a conversation. The President submits a 
budget and then we take a look at that budget and we weigh a number of 
options and ultimately it concludes. It is the beginning of a 
conversation.
  One of the things I find somewhat frustrating is that my colleagues 
on the other side of the aisle talk about the deficit. We are all 
concerned about the deficit. We do not want to pass on debt to our 
kids. We don't want to put obligations on them from what we do today. 
We need to be more responsible. So we hear concern about the deficit, 
about which we are all concerned. Then anytime the President says we 
have to keep a lid on spending, our friends on the other side of the 
aisle complain that we are cutting too much. You cannot be so 
passionate about the deficit if you are not willing to do something 
about it. It is not enough to complain. It is not enough just to be 
against.
  What the President has done is say: OK, we are going to cut the 
deficit in half by 2009. We are going to have to make some tough 
choices. We will have to make some very tough choices. But the answer 
is not simply raising taxes. The answer is not more spending. We are 
going to have to do the hard act of governing. It is not enough just to 
complain. It is not enough to say what you are against. What is your 
alternative? What are you for?
  The President has laid on the table a budget with the hope of 
continuing progrowth policies, restraining spending, cutting the 
deficit and, perhaps most importantly, dealing with the long-term 
danger, the challenges we face with close to 70 percent of our budget 
going to things that are mandated. So we have to look at Social 
Security and Medicaid, and we have to do the right thing--do the right 
thing for our seniors, do the right thing for those in need. We have to 
have the courage to look at those things and act. You can't just 
complain. You can't keep complaining about the deficit and every time 
there is an opportunity to put a lid on spending you are against that. 
It doesn't make sense. It doesn't add up.
  I wish to talk a little about where we are today and what has 
happened with what we have done in the past. We passed some tax relief. 
Mr. President, you and I together had the opportunity to be here during 
consideration of a number of proposals which have actually cut taxes. 
What has been the result? Let us look a little bit at the numbers.
  The President's tax relief has produced more than 4.7 million new 
jobs since November 2003 when he signed the legislation accelerating 
broad-based income tax reductions and provided capital gains and income 
tax relief. Today the unemployment rate is 4.7 percent, lower than the 
average of the last three decades, and the lowest in 4 years.
  Home ownership has reached an all-time high. This economic growth 
would not be possible without the President's tax relief. Recall when 
we had the tech bubble burst during the last administration--a bubble 
that should never have been allowed to inflate so high. We had 
corporate scandals that were nonpartisan but certainly were encouraged 
by the get-rich-quick ethic of the 1990s. We had the attack of 
September 11, and now we have the daily war on terror. The President's 
tax relief, which was fully implemented in 2003, has been critical in 
helping the economy recover from the recession and the terrorist 
attacks of 2001. Things such as small business expensing, capital

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gains tax relief, bonus depreciation--all helped to get this economy 
back on its feet and helped the economy continue expanding, despite the 
hurricanes and high prices of 2005.
  So on September 11, 2001, we faced a recession. We faced the end of 
the tech bubble. We faced hurricanes and high energy prices. With the 
tax relief provisions fully implemented in 2003, tax receipts also 
responded accordingly. In fact, receipts jumped by a remarkable $274 
billion or 14.5 percent, the largest increase in the last 24 years.
  These recent gains in receipts confirm that a strong economy is the 
most important factor in reducing the deficit. You want to reduce the 
deficit? Grow the economy. Keep a lid on spending and grow the economy 
but don't advocate more spending and higher taxes. That is not a way in 
which you grow an economy. If you compare the economy with the same 
point in previous business cycles, in many respects the current 
expansion is even stronger than the growth of the early and mid-1990s. 
We look back to the mid-1990s, the Clinton years, as the halcyon days 
of the economy. Boy, things were great 10 years ago. Let me run some 
comparisons.
  For example, in April 1995 the unemployment rate was 5.8 percent. 
Today it is 4.7 percent. The African-American unemployment rate was 
10.7 percent. Today it is 8.9 percent. This is a key figure: 
Productivity growth in 2005, the key to raising our standard of living, 
is at 3.1 percent compared to 0.3 percent in 1995--10 times today the 
productivity increase than it was in the halcyon days, the glory days 
of the nineties. Economic growth averaged 3.5 percent in 2005, while in 
1995 it was 2.5 percent. If that picture had been drawn for us 5 years 
ago, how many would have predicted the economy would be in as good 
shape as it is today?
  The reason is sound monetary policy and tax relief that were well 
timed and sized to stimulate the economy when it needed it the most. 
Unfortunately, in a scene reminiscent of the movie ``Groundhog Day,'' 
many on the other side are arguing that we should let this tax relief 
expire. In other words, we should raise taxes. If you let tax relief 
expire, you are saying we should raise taxes. This is the wrong 
prescription for the American people and for the fiscal purse. We are 
not an undertaxed society. By rejecting tax increases on family and 
small businesses, we will help keep the economy on a continuing course 
of job creation and strengthen the foundation for long-term economic 
growth.
  For example, a closer look shows that the capital gains and dividends 
tax relief packages actually paid for themselves. The latest statistics 
on capital gains tax collections were recently released by the 
nonpartisan Congressional Budget Office, and receipts are not way down 
but receipts are way up--by 45 percent, by the way, to be exact. 
Recall, one of the things Congress did was to reduce the tax on capital 
gains from 20 percent to 15 percent. Opponents predicted, as ever, that 
this would reduce revenue. In other words, since we have lowered the 
percentage of taxes we are getting on capital gains from 20 to 15 
percent, the opponents say you will not bring in as much money; you 
lower the tax we are taking.
  It is not even close. The 25-percent reduction actually triggered a 
doubling of capital gains revenues to over a half billion dollars in 
2005 to $269 billion in 2002. In addition, a new report from the 
American Shareholders Association finds that actual capital gains 
revenues were $62 billion higher than what was predicted over the 3-
year period--$62 billion higher. While this may seem counterintuitive 
to some, it makes perfect sense to me and confirms that capital gains 
tax relief increased economic activity, leading to more revenue for the 
Treasury.
  When I was mayor of St. Paul I didn't raise taxes in 8 years, and we 
grew the economy and grew jobs because it was a better place to do 
business and more moms and dads were working and putting money in their 
pockets and food on the table and taking care of their families.
  What we have here is Punxsutawney Phil coming again. My friends on 
the other side of the aisle again argue that only the rich benefit from 
this relief. This ignores the fact that capital gains and dividend 
relief has played an essential role in creating over 4 million new jobs 
over the past couple of years, in 32 straight months of positive 
economic growth. Taxes on dividends and capital gains are impediments 
to capital formation. If you tax too much, you impede capital 
formation. You have less money going into the economy to grow jobs. 
They impede entrepreneurial activity, the wellspring of economic growth 
and wealth creation. Americans across all levels of household income 
have benefited from these lower rates.
  Nearly 60 percent of those paying capital gains earn less than 
$50,000 a year, and 85 percent of all capital gains taxpayers earn less 
than $100,000 a year, according to the Joint Economic Committee.
  I know many express concerns regarding the budget deficit. There is 
no doubt that Congress needs to do all it can to responsibly control 
the rate at which we spend on mandatory programs--on which we spend on 
programs. But some advocate that raising taxes is the key to opening 
the door to fiscal discipline. I am afraid instead of opening the door 
to prosperity, higher taxes will shut the door on innovation, 
entrepreneurship, and greater economic growth.
  I recognize the uneasiness and uncertainty in America today regarding 
our economic future. But if one looks at the data, it is clear that the 
economy remains solid. Productivity is strong, employment growth 
remains robust. Both retail sales and the housing market remain on a 
path of remarkable growth. The American economy is highly flexible, and 
thanks to that we have been able to absorb natural disasters and high 
energy costs that would have easily thrown the economies of other 
nations into economic recession.
  To ensure the economy's continued momentum, we must make the 
President's tax relief permanent or else small businesses, teachers, 
college students, and hard-working moms and dads will see their taxes 
go up.
  Yet tax policy is not the only key to economic growth. As I said 
before, we face challenges. I know my neighbors and folks in my 
community in Minnesota are worried about what is happening in India and 
China. They are worried about the prospect of losing their jobs. 
Certainly, Mr. President, you are very sensitive to what is happening 
to the global economy and the impact it has on the good people of South 
Carolina.
  We have to understand that we are not going to win the low-wage jobs.
  There is a recent study by the National Science Foundation entitled 
``Rising Above the Gathering Storm.'' The President did not mention it 
directly in his State of the Union, but he is recognizing that we 
produced 70,000 engineers last year. China produced 600,000; India 
produced 350,000.
  For the cost of one engineer or one chemist in the United States, a 
company can hire five chemists in China or 11 engineers in India.
  Of 120 chemical plants being built around the world with price tags 
of $1 billion or more, one is in the United States and 50 are in China.
  I could go on and on and on. We face some challenges out there.
  We rank 17th in the proportion of college-age kids earning science 
and engineering degrees, down from third place a couple of decades ago.
  We are making progress. The President is setting the pace. We have 
bipartisan legislation that follows up on that.
  There are a number of things we need to do. In addition to that, we 
need to reduce our dependence on foreign oil. We need to reform our 
legal system, including completing our work on the asbestos bill that 
is before the Senate. We need to continue to work toward opening 
foreign markets to American goods and services. What we do not need to 
do is to apply the brakes on the economy by raising taxes on hard-
working moms and dads, small businesses, college students, and teachers 
across the country. That is not the prescription for continued economic 
growth. I have said this many times, but the fact is by cutting taxes 
you

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grow jobs. We have been through a recession, national emergency, 
corporate scandals, and a war. Yet because the President has stepped 
forward with an economic plan based on the commonsense belief that we 
should put money back into the pockets of ordinary Americans, the 
economy is going strong. By providing businesses with incentives such 
as bonus depreciation and expensing, they will be able to reinvest in 
their operation, purchase more goods, and hire more employees. That 
translates into jobs, economic growth, and opportunity for all 
Americans.
  Given the good news on the economy, even the most persistent critic 
must concede that the President's economic program boosted the 
economy's performance and played a crucial role in helping the economy 
to rebound from the recession that began during the final months of the 
Clinton Presidency.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Arizona is recognized.

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