[Congressional Record (Bound Edition), Volume 155 (2009), Part 3]
[Senate]
[Pages 3749-3752]
[From the U.S. Government Publishing Office, www.gpo.gov]




                       STIMULUS CONFERENCE REPORT

  Mr. BUNNING. Mr. President, I rise to speak on the conference report 
to the so-called stimulus bill. While we have not seen the actual bill, 
the outlines of the final agreement are available, and not much has 
changed from the bill since it passed the Senate earlier this week. The 
bill will still cost more than $1 trillion over the next 10 years after 
interest on the borrowed money necessary to finance the bill is added. 
This is $1 trillion added to our national debt and $1 trillion we have 
to take away from our American workers in the future to pay off that 
debt. That is why the bill also raises the limit on the national debt 
to over $12 trillion. That is almost a $2 trillion increase in the 
national debt.
  But $1 trillion of new debt is not the whole story. Many of the tax 
and spending provisions in this bill last only a few months or years. 
The President and many in Congress have promised to extend those 
provisions or even make them permanent. Obviously, that means the cost 
of the bill as written does not show the true cost of the changes it 
puts in place. In fact, in a letter sent yesterday, the Congressional 
Budget Office said that when you add in the cost of extending the 
programs the President has promised to extend, the total cost of the 
bill over the next 10 years is actually $2\1/2\ trillion. Add the 
interest on that $2\1/2\ trillion of new debt, and the bill will cost 
the taxpayer $3.3 trillion over the next 10 years. That is $3.3 
trillion we will have to tax our children, my grandchildren and your 
grandchildren, and our neighbors.
  It is true the conference report is a bit smaller than the House-
passed bill, so those numbers will have to be figured again when the 
final language is available, but they are close enough to understand 
the massive size of this debt spending bill.
  If all this new debt spending would actually fix the economy and 
create jobs, it might be worth it. But that is not what is going to 
happen. Even the Congressional Budget Office agrees with that. In 
another letter they sent yesterday, they said the bill will reduce--you 
heard me right--reduce GDP over the long term. They also estimated it 
will lower wages over the long term because Government spending now 
will take money away from productive use by the private sector later.
  We cannot spend our way out of this crisis. The solution to the 
crisis that was created by too much debt is not more debt, and America 
cannot afford to waste several trillion dollars. If we really want to 
stimulate the economy, we need to focus our attention on tax cuts for 
individuals, investments, and businesses. We need to enact legislation 
that will have a direct and immediate impact. We need a bill that will 
create more jobs through targeted tax relief, not a bill that will 
spend money on programs that offer no immediate or long-term return to 
the American taxpayer. We could have done that on this bill, but the 
majority refused to work with the minority to craft a truly bipartisan 
bill. In all of Congress, there were only 3 members of the minority who 
supported this flawed spending

[[Page 3750]]

bill, and 3 out of 218 does not make this a bipartisan bill.
  I hope the actual bill is made available with time for Senators and 
the American public to examine it before we vote. I cannot support the 
conference report that has been described by the House and Senate 
leadership, and I hope we can do better the next time.
  I ask unanimous consent that the two letters from the Congressional 
Budget Office that I mentioned earlier be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                Washington, DC, February 11, 2009.
     Hon. Paul Ryan,
     Ranking Member, Committee on the Budget, House of 
         Representatives, Washington, DC.
       Dear Congressman, as you requested, the Congressional 
     Budget Office and the Joint Committee on Taxation have 
     estimated the impact of permanently extending more than 20 of 
     the provisions contained in H.R. 1, the American Recovery and 
     Reinvestment Act of 2009, as passed by the House of 
     Representatives. As specified in H.R. 1 as passed, those 
     provisions would either explicitly expire or would specify 
     appropriations only for a limited number of years (usually 
     2009 and 2010).
       CBO estimates that H.R. 1, as passed by the House of 
     Representatives, would increase budget deficits by about $820 
     billion over the 2009-2019 period; we estimate that 
     permanently extending the programs you identified would 
     increase the cumulative deficit over that period by another 
     $1.7 trillion (see attached table).
       As you requested, the Congressional Budget Office has also 
     estimated the costs of debt service that would result from 
     enacting the bill with these extensions. Such costs are not 
     included in CBO's cost estimates for individual pieces of 
     legislation and are not counted for Congressional 
     scorekeeping purposes for such legislation. If the specified 
     provisions of H.R. 1 are continued, under CBO's current 
     economic assumptions and assuming that none of the direct 
     budgetary effects of the legislation are offset by future 
     legislation, CBO estimates that enacting the bill would 
     increase the government's interest costs by a total of about 
     $745 billion over the 2009-2019 period.
       I hope this information is helpful to you. If you would 
     like further details about this estimate, the CBO staff 
     contacts are Christi Hawley Anthony and Barry Blom.
           Sincerely,
                                             Douglas W. Elmendorf,
                                                         Director.
       Enclosure.

  ESTIMATED COST OF EXTENDING CERTAIN PROVISIONS OF H.R. 1, AS PASSED BY THE HOUSE OF REPRESENTATIVES ON JANUARY 28, 2009, AS SPECIFIED BY CONGRESSMEN
                                                                      RYAN AND CAMP
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   (By fiscal year, in billions of dollars)--
                                                      --------------------------------------------------------------------------------------------------
                                                                                                                                                 Total,
                                                        2009    2010    2011    2012    2013    2014    2015    2016    2017    2018    2019   2009-2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
Revenues:
    Making Work Pay Tax Credit..............  .......       0       0     -39     -56     -57     -58     -58     -58     -58     -58     -58       -498
    Expansion of EITC.......................  .......       0       0       0      -1      -1      -1      -1      -1      -1      -1      -1         -9
    American Opportunity Education Tax        .......       0       0      -1      -6      -6      -6      -6      -6      -6      -6      -6        -51
     Credit.................................
    Renewable Energy Production Credit......  .......       0       0       0       0       0      -1      -1      -2      -3      -4      -5        -15
    UC Interaction with Health Care Coverage  .......       0       0       *       *       *       *       *       *       *       *       *          3
     for the Unemployed.....................
                                             -----------------------------------------------------------------------------------------------------------
      Total, Revenues.......................  .......       0       0     -40     -64     -64     -65     -66     -67     -68     -69     -69       -571
Direct Spending:
    Child Support Enforcement...............      BA        0       0       1       1       1       1       1       1       1       1       1          6
                                                  OT        0       0       1       1       1       1       1       1       1       1       1          6
    Medicaid for the Unemployed.............      BA        0       3       7       7       7       8       8       8       9      10      11         78
                                                  OT        0       3       7       7       7       8       8       8       9      10      11         78
    Health Care Coverage for the Unemployed       BA        0       7      13      14      13      12      12      12      12      12      12        121
     under COBRA............................
                                                  OT        0       7      13      14      13      12      12      12      12      12      12        121
    Medicaid FMAP Increase..................      BA        0       0      34      43      32      29      31      33      35      38      42        316
                                                  OT        0       0      34      43      32      29      31      33      35      38      42        316
    Increase in Funding for SNAP\1\.........      BA        0       5       8       9      10      12      11      11      11      11      11         99
                                                  OT        0       5       8       9      10      12      11      11      11      11      11         99
    Foster Care (part of FMAP increase).....      BA        0       0       0       0       0       0       0       0       1       1       1          5
                                                  OT        0       0       0       0       0       0       0       0       1       1       1          5
    Increase in Funding for SSI Payments....      BA        0       4       5       5       5       5       5       5       5       6       6         51
                                                  OT        0       4       5       5       5       5       5       5       5       6       6         51
    UC Interaction with Health Care Coverage      BA        0       *       *       *       *       *       *       *       *       1       1          4
     for the Unemployed.....................
                                                  OT        0       *       *       *       *       *       *       *       *       1       1          4
    Making Work Pay Tax Credit..............      BA        0       0       1      18      18      18      18      18      18      18      18        144
                                                  OT        0       0       1      18      18      18      18      18      18      18      18        144
    Earned Income Tax Credit................      BA        0       0       0       3       3       3       3       3       3       3       3         26
                                                  OT        0       0       0       3       3       3       3       3       3       3       3         26
    American Opportunity Education Tax            BA        0       0       *       2       1       1       1       1       1       1       1         11
     Credit.................................
                                                  OT        0       0       *       2       1       1       1       1       1       1       1         11
                                             -----------------------------------------------------------------------------------------------------------
      Subtotal, Direct Spending.............      BA        0      20      69     102      92      90      91      94      97     101     105        861
                                                  OT        0      20      69     102      92      90      91      94      97     101     105        861
Discretionary Spending:
    Pell Grants and College Work Study\2\...      BA        0       0       4       4       4       4       4       4       5       5       3         37
                                                  OT        0       0       1       4       4       4       4       4       4       5       5         35
    Head Start..............................      BA        0       0       1       1       1       1       1       1       1       1       1          5
                                                  OT        0       0       *       0       0       0       1       1       1       1       1          4
    Early Head Start........................      BA        0       0       1       1       1       1       1       1       1       1       1          5
                                                  OT        0       0       *       *       *       *       1       1       1       1       1          4
    Title 1 Help for Disadvantaged Kids.....      BA        0       0       7       7       7       7       7       7       7       7       8         63
                                                  OT        0       0       *       4       6       7       7       7       7       7       7         53
    Education for Homeless Children & Youth.      BA        0       0       *       *       *       *       *       *       *       *       *          *
                                                  OT        0       0       *       *       *       *       *       *       *       *       *          *
    IDEA Special Education\3\...............      BA        0       0       7       7       8       8       8       8       8       8       9         71
                                                  OT        0       0       *       4       7       8       8       8       8       8       8         59
    CCDBG...................................      BA        0       0       1       1       1       1       1       1       1       1       1         10
                                                  OT        0       0       *       1       1       1       1       1       1       1       1          9
    NSF Employment in Science and                 BA        0       3       3       3       3       3       3       3       3       3       3         28
     Engineering............................
                                                  OT        0       *       2       2       2       3       3       3       3       3       3         24
    NIH Funding for Biomedical Research.....      BA        0       3       3       3       4       4       4       4       4       4       4         36
                                                  OT        0       *       2       3       3       3       4       4       4       4       4         30
    Increased Funding for Prevention and          BA        0       0       2       2       2       2       2       2       2       2       3         21
     Wellness\4\............................
                                                  OT        0       0       1       2       2       2       2       2       2       2       2         19
    Increased Funding for Senior Nutrition..      BA        0       0       *       *       *       *       *       *       *       *       *          1
                                                  OT        0       0       *       *       *       *       *       *       *       *       *          1
    Increased Funding for LIHEAP............      BA        0       0       1       1       1       1       1       1       1       1       1         10
                                                  OT        0       0       1       1       1       1       1       1       1       1       1          9
    Expansion of Americorps.................      BA        0       *       *       *       *       *       *       *       *       *       *          2
                                                  OT        0       *       *       *       *       *       *       *       *       *       *          2
    Increase in Funding for State & Local         BA        0       3       3       3       3       3       3       3       3       3       4         33
     Law Enforcement........................
                                                  OT        0       1       2       2       3       3       3       3       3       3       3         27
      Subtotal, Discretionary Spending......      BA        0       8      33      33      34      34      35      36      36      37      36        323
                                                  OT        0       1       9      24      31      33      34      35      35      36      37        276
                                             -----------------------------------------------------------------------------------------------------------
      Total Increase in the Deficit from      .......       0      21     118     190     187     188     192     195     200     205     212      1,708
       Extensions...........................
Increase in the Deficit from H.R. 1 as        .......     170     356     175      49      26      24      11       *       1       3       4        820
 Passed.....................................
Total Impact of H.R. 1 with Extension of      .......     170     377     293     239     213     212     203     196     201     208     215      2,527
 Certain Provisions.........................

[[Page 3751]]

 
Memorandum:
    Debt Service on H.R. 1 as Passed with     .......       1       4      13      30      51      68      84      99     115     131     149        744
     Extensions.............................
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\H.R. 1 would increase the maximum SNAP benefit by 13.6% in 2009 and hold it steady until the impact of annual indexing has exceeded that increase.
  For this estimate, CBO assumed that the maximum benefit would increase by 13.6% in 2009 and that benefits would be indexed annually from this new,
  higher base.
\2\Includes CBO's estimate of the cost of raising the maximum award for the Pell Grant Program from $4,241 under current law to $4,860 under H.R. 1. In
  addition, this estimate inflates the level of budget authority appropriated for the College Work Study Program in 2011.
\3\Includes higher funding for infants and special education.
\4\Assumes the level of funding provided in 2009 will be provided in each year, adjusted for inflation, beyond 2010.
Notes: EITC = Earned Income Tax Credit; COBRA = Consolidated Omnibus Budget Reconciliation Act; FMAP = Federal Medical Assistance Percentage; SSI =
  Supplemental Security Income; IDEA = Individuals with Disabilities Education Act; CCDBG = Child Care Development Block Grant; NSF = National Science
  Foundation; NIH = National Institutes of Health; LIHEAP = Low Income Home Energy Assistance Program; SNAP = Supplemental Nutrition Assistance Program;
  UC = Unemployment Compensation; BA = Budget Authority; OT = Outlays; * = less than $500 million.
Sources: Congressional Budget Office and Joint Committee on Taxation.

                                                    U.S. Congress,


                                  Congressional Budget Office,

                                Washington, DC, February 11, 2009.
     Hon. Judd Gregg,
     Ranking Member, Committee on the Budget, U.S. Senate, 
         Washington, DC.
       Dear Senator: At your request, the Congressional Budget 
     Office (CBO) has prepared a year-by-year analysis of the 
     economic effects of pending stimulus legislation. This 
     analysis is based on an average of the effects of two 
     versions of H.R. 1--as passed by the House and as passed by 
     the Senate. (The economic effects of those two bills are 
     broadly similar.)


                           Short-Run Effects

       The macroeconomic impacts of any economic stimulus program 
     are very uncertain. Economic theories differ in their 
     predictions about the effectiveness of stimulus. Furthermore, 
     large fiscal stimulus is rarely attempted, so it is difficult 
     to distinguish among alternative estimates of how large the 
     macroeconomic effects would be. For those reasons, some 
     economists remain skeptical that there would be any 
     significant effects, while others expect very large ones.
       CBO has developed a range of estimates of the effects of 
     stimulus legislation on gross domestic product (GDP) and 
     employment that encompasses a majority of economists' views. 
     By CBO's estimation, in the short run the stimulus 
     legislation would raise GDP and increase employment by adding 
     to aggregate demand and thereby boosting the utilization of 
     labor and capital that would otherwise be unused because the 
     economy is in recession. Most of the budgetary effects of the 
     legislation would occur over the next few years, and as those 
     effects diminished the short-run impact on the economy would 
     fade.


                            Long-Run Effects

       In the long run, the economy produces close to its 
     potential output on average, and that potential level is 
     determined by the stock of productive capital, the supply of 
     labor, and productivity. Short-run stimulative policies can 
     affect long-run output by influencing those three factors, 
     although such effects would generally be smaller than the 
     short-run impact of those policies on demand.
       In contrast to its positive near-term macroeconomic 
     effects, the legislation would reduce output slightly in the 
     long run, CBO estimates, as would other similar proposals. 
     The principal channel for this effect is that the legislation 
     would result in an increase in government debt. To the extent 
     that people hold their wealth as government bonds rather than 
     in a form that can be used to finance private investment, the 
     increased debt would tend to reduce the stock of productive 
     private capital. In economic parlance, the debt would ``crowd 
     out'' private investment. (Crowding out is unlikely to occur 
     in the short run under current conditions, because most firms 
     are lowering investment in response to reduced demand, which 
     stimulus can offset in part.) CBO's basic assumption is that, 
     in the long run, each dollar of additional debt crowds out 
     about a third of a dollar's worth of private domestic capital 
     (with the remainder of the rise in debt offset by increases 
     in private saving and inflows of foreign capital). Because of 
     uncertainty about the degree of crowding out, however, CBO 
     has incorporated both more and less crowding out into its 
     range of estimates of the long-run effects of the stimulus 
     legislation.
       The crowding-out effect would be offset somewhat by other 
     factors. Some of the legislation's provisions, such as 
     funding for improvements to roads and highways, might add to 
     the economy's potential output in much the same way that 
     private capital investment does. Other provisions, such as 
     funding for grants to increase access to college education, 
     could raise long-term productivity by enhancing people's 
     skills. And some provisions would create incentives for 
     increased private investment. According to CBO's estimates, 
     provisions that could add to long-term output account for 
     between one-fifth and one-quarter of the legislation's 
     budgetary cost.
       The effect of individual provisions could vary greatly. For 
     example, increased spending for basic research and education 
     might affect output only after a number of years, but once 
     those investments began to boost GDP, they might pay off over 
     more years than would the average investment in physical 
     capital (in economic terms, they have a low rate of 
     depreciation). Therefore, in any one year, their contribution 
     to output might be less than that of the average private 
     investment, even if their overall contribution to 
     productivity over their lifetime was just as high. Moreover, 
     although some carefully chosen government investments might 
     be as productive as private investment, other government 
     projects would probably fall well short of that benchmark, 
     particularly in an environment in which rapid spending is a 
     significant goal. The response of state and local governments 
     that received federal stimulus grants would also affect their 
     long-run impact; those governments might apply some of that 
     money to investments they would have carried out anyway, thus 
     lowering the long-run economic return on those grants. In 
     order to encompass a wide range of potential effects, CBO 
     used two assumptions in developing its estimates: first, that 
     all of the relevant investments together would, on average, 
     add as much to output as would a comparable amount of private 
     investment, and second, that they would, on average, not add 
     to output at all.
       In principle, the legislation's long-run impact on output 
     also would depend on whether it permanently changed 
     incentives to work or save. However, according to CBO's 
     estimates, the legislation would not have any significant 
     permanent effects on those incentives.


                  Net Effects on Output and Employment

       Taking all of the short- and long-run effects into account, 
     CBO estimates that the legislation implies an increase in GDP 
     relative to the agency's baseline forecast of between 1.4 
     percent and 3.8 percent by the fourth quarter of 2009, 
     between 1.1 percent and 3.3 percent by the fourth quarter of 
     2010, between 0.4 percent and 1.3 percent by the fourth 
     quarter of 2011, and declining amounts in later years (see 
     Table 1). Beyond 2014, the legislation is estimated to reduce 
     GDP by between zero and 0.2 percent. This long-run effect is 
     slightly smaller than CBO estimated in its preliminary 
     analysis of the Senate stimulus legislation last week due to 
     refinements in our methodology.
       Correspondingly, the legislation would increase employment 
     by 0.8 million to 2.3 million by the fourth quarter of 2009, 
     by 1.2 million to 3.6 million by the fourth quarter of 2010, 
     by 0.6 million to 1.9 million by the fourth quarter of 2011, 
     and by declining numbers in later years. The effect on 
     employment is never estimated to be negative, despite lower 
     GDP in later years, because CBO expects that the U.S. labor 
     market will be at nearly full employment in the long run. The 
     reduction in GDP is therefore estimated to be reflected in 
     lower wages rather than lower employment, as workers will be 
     less productive because the capital stock is smaller.
       I hope this information is helpful to you. If you have any 
     further questions, I would be glad to answer them. The staff 
     contacts for the analysis are Ben Page and Robert Arnold, who 
     may be reached at (202) 226-2750.
           Sincerely,
                                             Douglas W. Elmendorf,
                                                         Director.

[[Page 3752]]



    TABLE 1.--ESTIMATED MACROECONOMIC IMPACTS OF A STIMULUS PACKAGE (AVERAGE OF HOUSE-PASSED AND SENATE-PASSED VERSIONS OF H.R.1), FOURTH QUARTERS OF
                                                            CALENDAR YEARS 2009 THROUGH 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         2009     2010     2011     2012     2013     2014     2015     2016     2017     2018     2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
Real GDP (Percentage change from baseline):
    Low estimate of effect of plan...................      1.4      1.1      0.4      0.1      0.0     -0.1     -0.2     -0.2     -0.2     -0.2     -0.2
    High estimate of effect of plan..................      3.8      3.3      1.3      0.7      0.4      0.3      0.0      0.0      0.0      0.0      0.0
GDP Gap\1\ (Percent):
    Baseline.........................................     -7.4     -6.3     -4.1     -2.2     -0.7     -0.1      0.0      0.0      0.0      0.0      0.0
    Low estimate of effect of plan...................     -6.2     -5.3     -3.7     -2.0     -0.6     -0.1      0.0      0.0      0.0      0.0      0.0
    High estimate of effect of plan..................     -3.9     -3.2     -2.9     -1.7     -0.4      0.0      0.0      0.0      0.0      0.0      0.0
Unemployment Rate (Percent):
    Baseline.........................................      9.0      8.7      7.5      6.4      5.5      5.0      4.8      4.8      4.8      4.8      4.8
    Low estimate of effect of plan...................      8.5      8.1      7.2      6.3      5.4      5.0      4.8      4.8      4.8      4.8      4.8
    High estimate of effect of plan..................      7.7      6.8      6.5      6.0      5.3      4.9      4.8      4.8      4.8      4.8      4.8
Employment (Millions of jobs):
    Baseline.........................................    141.6    143.3    146.2    149.3    152.1    153.9    154.9    155.7    156.4    157.0    157.7
    Low estimate of effect of plan...................    142.4    144.5    146.8    149.6    152.2    154.0    154.9    155.7    156.4    157.0    157.7
    High estimate of effect of plan..................    143.9    146.9    148.1    150.1    152.5    154.2    154.9    155.7    156.4    157.0    157.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Real GDP is gross domestic product, excluding the effects of inflation. The GDP gap is the percentage difference between gross domestic product and
  CBO's estimate of potential GDP. Potential GDP is the estimated level of output that corresponds to a high level of resource--labor and capital--use.
  A negative gap indicates a high unemployment rate and low utilization rates for plant and equipment.
Source: Congressional Budget Office.

  Mr. BUNNING. I yield the floor.
  Mr. President, 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.
  Mrs. SHAHEEN. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered. The 
Senator from New Hampshire is recognized.

                          ____________________