[Congressional Record (Bound Edition), Volume 156 (2010), Part 4]
[House]
[Pages 5338-5344]
[From the U.S. Government Publishing Office, www.gpo.gov]




                                TAX CUTS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 2009, the gentleman from California (Mr. Garamendi) is 
recognized for 60 minutes as the designee of the majority leader.
  Mr. GARAMENDI. Madam Speaker, thank you so very much for the 
opportunity to address the House on a rather important matter.
  I got a call from my accountant, and he said, Are you going to get 
your tax information in so we can actually get you filed by the 15th? I 
said, I will do my best.
  So we're in the process of doing that. So I suspect most Americans 
are also thinking seriously about taxes. And what I want to talk about 
tonight and share with my colleagues from Wisconsin, Ohio, and New York 
is the tax issues that have come about over these last 15 months.
  I left California this morning to fly here to Washington, D.C., and 
this session, and as I picked up the Sacramento Bee, on the front page 
was a headline that said, Tax refunds the largest ever, 2,600 and some 
dollars per family in California. I said, Whoa, how did that happen? I 
thought taxes had gone up. I looked into it and asked my staff to dig 
out some information, and, in fact, taxes have actually gone down in a 
very, very serious way here as a result of the stimulus bill that was 
passed.
  Now, one of my, I guess, sad situations is I wasn't here to vote for 
the stimulus bill. I was just elected in November of 2009, so I didn't 
have the opportunity to really vote for what turns out to be one of the 
largest middle class tax cuts in American history. So when I arrived 
here in Washington, I asked some of my friends and colleagues help me 
understand and explain how it came to be that these incredible and 
important tax cuts actually happened.
  The first thing they said was, Yes, the stimulus bill did it. We 
voted for these tax cuts, I think over $300 billion, and not one 
Republican voted for the tax cuts. I'm going, That is not true. All 
they talk about is tax cuts. You mean they didn't vote for the tax 
cuts?
  No. Not one Republican voted for the tax cuts.
  I asked my colleague, Dr. Kagen from Wisconsin, to share his insights 
and his perspective on what took place with the stimulus bill, which 
was 14 months ago.
  Dr. Kagen.
  Mr. KAGEN. Thank you for yielding and thank you for bringing up this 
subject about tax cuts. But really the American people have to pay 
attention, because they have to ask the question, Whose side are you 
on? Whose side are we on, and how did we get into this mess?
  We fell into an economic ditch. We were driven into it by a number of 
different factors, but, first and foremost, it was a failed economic 
policy. It was

[[Page 5339]]

a policy wherein we had two wars at the same time and haven't paid a 
single dime for them. We have had two tax cuts to the very rich; 
haven't paid a penny for those either. We also had, in the last 
administration, a $400 billion handout to big drug companies, not 
paying for a penny of that either. All deficit spending, not paying our 
way.
  And then we fell into this terrible situation of the mortgage fiasco 
where people were buying things that didn't really exist. Fell into 
another $10 trillion hole. And at the tail end of the last 
administration, their friends asked them, in the administration, to 
open up the door to the Treasury, and the Wall Street banks looted our 
Treasury for nearly a trillion dollars. Again, we haven't paid a dime 
for that.
  And then came a great recession. Not just here in the United States, 
but this great recession took us all the way around the globe. It 
wasn't just the United States that began to see the tremendous loss of 
jobs. Last year, January, over 700,000 people lost their job. This 
year, much less.
  So we're beginning to move up, but we are moving up, first and 
foremost, by living within our means. We didn't have, during the Bush 
administration, the laws we did have on the books during President 
Clinton. We handed over to the Republican Party a surplus, a budget 
surplus that would amount to over $5 trillion. And what did they do? 
They spent us into a ditch. We have reinstated pay-as-you-go rules so 
we can't bring a bill to the House floor and consider it for anything 
unless we show how we're going to pay for it by either raising revenue 
or reducing other programs.
  So along came the Recovery Act, the American Recovery and 
Reinvestment Act of 2009, and in February, we passed it through the 
House, the Senate, and the President signed it. And this $787 billion 
investment in America was aimed at providing middle class families--the 
hardworking people who have really created prosperity in the past--the 
biggest tax cut in American history. And I thought tonight we should 
have a conversation about eight of these tax cuts that are available 
right here and right now giving the American people an opportunity to 
see that we are on their side.
  Mr. GARAMENDI. Let's do that. We will go through those eight specific 
tax cuts that really helped American families, middle class families. 
And I would like to have our colleague from New York, Mr. Paul Tonko, 
take up and tell us the New York piece of it. And then in a few 
minutes, our colleague from Ohio, Betty Sutton, will join us.
  So, Mr. Tonko.
  Mr. TONKO. I think the important thing here with the tax situation is 
that, you know, Representative Kagen is exactly right. What we were 
targeting, what we were focusing, is the bulk of American workers out 
there, middle-income Americans who were requiring some kind of relief. 
And as we made it our task in a laser-sharp, focused way to stop the 
bleeding of this recession, we wanted to make certain that there was 
some more purchase power for America's working families.
  And one of the very first measures was the Making Work Pay tax 
credit, which we will speak to, at least a $400 benefit for an 
individual or, for those filing jointly as a couple, $800. Now, this an 
incremental benefit that began in 2009 and continues through 2010. And 
I think it's important for us so as to get that buying power out there 
to encourage people to perhaps pick up some of the purchasing that they 
wanted to do that they were not able to do.
  It's important for us to make certain that if you've done your taxes, 
if you missed this opportunity in 2009, make certain you're asking 
those who may prepare these taxes for you to check out these benefits. 
You should file under Schedule M of the 1090 form to make certain that 
this particular credit is taken advantage of. It is putting a great 
benefit out there for some 110 million working families.
  And I believe that the working Americans who are going to be 
benefiting from this, the dollars that are saved, the benefit that is 
provided here, was nearly a hundred billion dollars into the pockets of 
our Americans that are of that category. So I think this is an 
important benefit that comes at a time when we needed to strengthen 
that purchase power.
  And I think that you're absolutely right that we need to share this 
message with Americans out there, especially as they come to the close 
of their tax prep work. Be mindful also that you can further amend if 
you miss some of these benefits, because they were geared specifically 
for those categories of individuals we address here this evening.
  Mr. GARAMENDI. There's a heads-up for all of the taxpayers, all the 
working men and women out there that may not have taken advantage of 
this $400 per person or $800 per family, to make sure that in their tax 
return they actually reach out and get that benefit. So that's a 
significant reduction in their taxes.
  Mr. TONKO. Absolutely. And Representative Garamendi, I would commend 
you for bringing us together tonight so as to alert people to these 
benefits. They are part of the Recovery Act. The Recovery Act has been, 
you know, driving a very strong outcome for so many American families 
out there, and we just want them to know of the benefits associated 
with the act.
  Mr. GARAMENDI. Thank you, Mr. Tonko.
  I know the normal greeting on the floor is ``the gentlewoman from 
Ohio,'' but I've watched this Representative work on the floor and on 
the committees, and while she's extraordinarily polite, I'm not sure 
that--well, let's just say tenacious and determined.
  Thank you for joining us, Representative Sutton from Ohio.
  Ms. SUTTON. Thank you very much, Mr. Garamendi, and thank you for 
leading us here on the floor tonight to talk about such important 
things, you know, what we're doing to help the American people in this 
time of challenge as we pull together and pull forward.
  And I guess I appreciate that introduction. I think that the point is 
I, like you, my colleagues who are here on the floor tonight, am 
willing to do what it takes to make things work for the people I'm 
honored to represent in the 13th Congressional District of Ohio.
  Mr. GARAMENDI. Would that be the Cleveland area?
  Ms. SUTTON. Well, it's outside of Cleveland. I represent Lorain 
County, Summit County, Medina County and part of Cuyahoga County as 
well. So it is the salt of the Earth.
  Mr. GARAMENDI. Now, there's a piece of information I'm going to carry 
with me the rest of my life, four counties.
  Ms. SUTTON. That's right. And you should visit. We'd love to have 
you. Come out and see all of the great things and all of the potential 
that those who I am so privileged to serve have and what our area has 
to offer.
  But thank you for bringing us to the floor tonight to talk a little 
bit about some of the tax benefits that exist in the American Recovery 
and Reinvestment Act and just in general to talk about the American 
Recovery Act, because we all know that it was critically important at 
the time it was passed back in the early part of last year, that all 
the economists from across the board were saying that we have to keep 
our economy from going off of the edge, and we stepped up to the plate 
and we acted. And it's really important that people understand what it 
is that this bill actually did.
  You know, it was all about fostering our Nation's economic recovery, 
creating and saving jobs, providing services to people affected by the 
recession. And, of course, as you point out, part of that was about 
these tax credits and these tax benefits. And we all know that this was 
a huge middle class tax cut, families getting up to $800.
  Certainly in Ohio, I would just share with you in the 13th 
Congressional District, many of our families were beneficiaries of 
these tax cuts. So the mission to improve the lives of the families in 
northeast Ohio who I serve during these challenging times continues.
  But it is worth noting that the Council of Economic Advisers has 
reported that the Recovery Act created or saved as many as 2.4 million 
jobs nationally and up to 79,000 in Ohio. And for me,

[[Page 5340]]

probably like all of you here tonight, jobs, jobs, jobs is what I am 
most interested in delivering to the American people and facilitating 
opportunity for them to go to work and be able to raise a family and 
have the kind of life that makes this country so very great.
  So I know we're just getting started in our discussion. I look 
forward to talking more about the tax benefits and the other great 
things that were in this bill and all of the other pieces along the way 
that we are putting into place for the near term and to generate that 
sustainable growth that we need in both our economy and in the job 
market out there, because far too many people are, unfortunately, still 
hurting.
  Mr. GARAMENDI. I want to come back to you in a few moments and pick 
up something that really did stimulate the American economy, not 
directly on tax policy but something that was very, very important. And 
we'll just let people be curious about what it was that created the 
highest monthly volume of automobile sales in the most recent years.
  Mr. Kagen, we were talking earlier about some of these eight 
principal things, and I know you wanted to pick up another one. We 
started to talk about the Making Work Pay, $400 per person and $800 per 
couple.
  Why don't you talk about another one and carry it for a while.
  Mr. KAGEN. Aside from Making Work Pay, which really focuses on middle 
class families, let me step back a little bit and remind everybody that 
back in Wisconsin we don't call it the Recovery Act. We call it the 
stimulus bill. That is just the slang of where we are in northeast 
Wisconsin. But we look at the stimulus bill, it didn't meet everybody's 
expectations in terms of all of the jobs we were hoping to see because 
we were in such a deep economic hole, but we focused on those people 
who needed help the most, in particular, the unemployed.

                              {time}  2030

  Now, today, in northeast Wisconsin, there are about 35,000 people who 
are underemployed and unemployed. They are looking for work. We are 
hard-working people. Give us a level playing field. We can compete and 
outwork anybody anywhere in the world.
  For unemployed workers, immediately the Recovery Act gave $25 a week 
in additional spending power to help them get through the week. We also 
covered 65 percent of COBRA, which is when you fall out of work, you 
now need some insurance, but you get COBRA insurance. And the Federal 
Government stepped up to cover 65 percent of that cost of guaranteeing 
you have got insurance.
  Mr. GARAMENDI. Everybody that I talk to about COBRA says, well, wait 
a minute, nobody can afford COBRA. They are unemployed. How could they 
possibly afford COBRA? And you are telling us that in the stimulus 
bill, in the Recovery Act, that 55 percent of the cost of COBRA--you 
lose your job, you want to continue your health insurance, that is 
covered?
  Mr. KAGEN. Sixty-five percent is covered by the Federal Government. 
We went beyond that, because we made sure that there was money there 
for stabilization of State governments. So we helped the States to 
stabilize their State governments, help unemployed and made sure that 
people had their own money that they have earned in their own pockets. 
You know, the old idea is, you have earned the money. It ought to be 
yours. Keep it in your pocket. You are going to be a better investor of 
that revenue than the Federal Government. Well, we have done that.
  We also did it for students in the American Opportunity Credit Act, 
where we gave up to $2,500 back to the parent or parents or to the 
student for their educational expenses.
  Mr. GARAMENDI. Now, that's a very important one. All of the 
economists that look to the future of this Nation and our ability to 
compete say that we have to have a well-educated workforce. And so in 
the stimulus bill there is a $2,500 tax credit for the family or for 
the student.
  Mr. KAGEN. That wasn't in the stimulus bill. That was in the American 
Opportunity Act. In the stimulus bill for students, we had tax credits 
of up to $2,500 for 25,000 students in my district. So 25,000 students 
benefited from having that tax credit immediately available.
  We also increased the Pell Grant amounts up to $5,350 in the stimulus 
bill. Stafford loans were increased to $2,000. So we made it possible 
for students who want to move up to have that higher education become 
more affordable. The best time to be in college or technical school is 
during an economic slowdown or a recession, because then, when the jobs 
are available, you will have moved up and can step out into a higher 
payment level.
  Mr. GARAMENDI. This is a very, very important piece of getting ready 
for the recovery and preparing our students and our workers for the 
opportunities out ahead.
  Mr. Tonko, you wanted to pick up another piece of this, so have at 
it.
  Mr. TONKO. Yes. Well, one of my favorite topics is energy. No matter 
where we live, whether it's California, Ohio, Wisconsin, those 
representatives hear what I hear, that we need to understand that we 
can control our destiny when it comes to energy as consumers. We are 
the most gluttonous in the world. And whether that resource is 
developed here in a domestic fashion, which I believe ought to be our 
thrust, or whether it's done through imports that are just not, I 
think, the choice for Americans as we move forward. But, regardless, 
whatever that base of supply is, we need to strive for energy 
efficiency and conservation.
  And what I like about a number of the tax situations that we are 
doing in the Recovery Act or in general policy format is that we are 
looking at the big picture. We are putting it into a context that 
promotes sound policy.
  So as we expand or continue tax credits for renewables, we make 
certain that we are providing that production tax credit that really 
ignites the efforts to build our supply here domestically. I think that 
is so critically important to not only our energy independence and our 
energy security but our national security.
  Just recently I hosted, during our recess for Passover and Easter, 
the only stop in the State of New York made by the bus tour with 
Veterans for American Power. And three veterans just recently doing a 
tour in Iraq and Afghanistan spoke at that event. They call it 
Operation FREE, and they talk about the wisdom of transitioning our 
energy needs to domestic produced, American power. They call this 
Veterans for American Power. They talked about the ravaging on our 
troops done by dollars sent to the treasuries of those unfriendly 
nations that are supplying our fossil-based needs.
  So this production tax credit will take us along the message that the 
veterans are sharing. Veterans who have served us in uniform, in Iraq 
and Afghanistan, have said we are not doing the right energy policy. 
This will encourage it with these production tax credits.
  Then we provide households--American residents will be benefited by 
these tax credits that will enable them to get as much as 30 percent of 
a tax credit up to $1,500 based on the work that they have done on 
their homes with energy efficient furnaces, with the replacement of 
windows or doors, with insulation. This will be a smart move that will 
enable them through the years to reduce the cost of operating that 
home.
  I think this is wise policy and a great tax benefit for our American 
taxpayers.
  Mr. GARAMENDI. So for somebody that goes into their home and puts in 
energy efficient windows or a solar system or solar hot water, they can 
get 30 percent tax credit on that.
  It is very interesting that, again, during the recess, the number of 
new businesses that come about as a direct result of that tax credit, 
advertising all over the radio about this company or that company going 
to be putting in new windows or a solar system, so businesses are 
actually coming about because of the tax credit that's available to 
homeowners.
  Mr. TONKO. I would also mention, if I might, the jobs associated with 
the

[[Page 5341]]

production tax credit, be it wind or solar or geothermal, waste energy 
projects. All of these efforts are critically important to providing 
that capacity that we need as a Nation and providing for that capacity 
with American jobs. As we transition to these renewables, I think that 
this is a great way to grow jobs and to strengthen our energy security 
in the process.
  Mr. GARAMENDI. So here is a tax credit, part of the stimulus bill, 
that actually provides up to 30 percent credit on the cost of one of 
these new energy systems, windows or solar.
  Mr. TONKO. Furnaces.
  Mr. GARAMENDI. And, at the same time, it creates new businesses. 
That's a win/win in a green economy if there ever was one.
  I am looking over here at our representative from those four 
marvelous counties outside of Cleveland, and I was thinking about the 
automobile industry and the energy that is, I think, some 80 percent of 
our oil is actually consumed in automobiles. You have had a great deal 
to do with the automobile industry, Representative Sutton. Could you 
share with us some of your experience and some of what was in this tax 
bill?
  Ms. SUTTON. Absolutely, I will be honored to do so; and I appreciate, 
Representative Tonko, your bringing up the tax credit. I want to point 
back, before I get to what we have teased about a little bit here----
  Mr. GARAMENDI. Go anywhere you would like.
  Ms. SUTTON. We are not going there quite yet, but what I want to talk 
about first is that, in the recovery stimulus bill, one of the things 
that was put to use where I live in Elyria, Ohio, was a Department of 
Energy investment to create a BASF catalyst plant. So we are now 
creating the largest lithium ion facility in North America right in 
that district outside of Cleveland, Ohio, in Elyria, Ohio, positioning 
Ohio to be a leader as we move to the next generation of vehicles 
powered by lithium ion batteries, because that's the biggest market for 
the future.
  So we get the jobs to build the factory, then we get the jobs to work 
in the factory, and then we get all the jobs down the road that are 
sustainable as we develop this. And we, in the meantime, of course, are 
producing cars. They were going to produce these batteries that are 
going to be good for consumers because they are going to be more cost-
effective and efficient for them.
  It's going to improve, obviously, our environment, but it puts us 
ahead. This is what America is about. It's about innovation. It's about 
moving forward with new products and ways but powered by American 
workers.
  So I definitely come from a part of the country where the domestic 
auto industry is a very important piece of our puzzle. We have a lot of 
families that depend upon the domestic auto and related industries for 
their livelihood, and, okay, we will finally get to it. One of the 
things that I was so proud of and that was actually in some ways funded 
in part, at least, by the recovery stimulus bill was the CARS Act, more 
commonly referred to as the Cash for Clunkers Program.
  Mr. GARAMENDI. Whoa, the Cash for Clunkers, I thought you might want 
to talk about that. You were the author of that piece of legislation.
  Ms. SUTTON. I was indeed. And, as I indicated, it was called the CARS 
program, but it was really about people. It was about our friends and 
our neighbors that number in the tens of thousands in every State, not 
just Ohio or Michigan but across the country, those people who rely 
upon the auto and related industries for their livelihood, to put food 
on the table, to reach the middle class and stay in the middle class.
  With the CARS Act, the Cash for Clunkers Program, the goal was 
multiple, the goals were multiple. What we did was, obviously, the 
results are in. We have seen study after study. What we did is we put 
about 60,000 or so people back to work because of the CARS Act, because 
of Cash for Clunkers in the auto and related industries. We moved the 
GDP as a result of the program from a range of $3.8 billion to $6.8 
billion, an increase in GDP just due to that one very limited program 
of less than a month, less than a month.
  What we also did, we just got another study back with the program 
that provided incentives to consumers to, of course, trade in their old 
gas-guzzling cars, to get more fuel-efficient cars, gave them 
incentives to do that, helping them in this time of need to get 
something they needed but couldn't afford, get those jobs shored up, 
get the improvements in the environment.
  We saw an environmental gain in the cars turned in from the ones that 
were turned in to purchase of 60 percent. So those consumers are going 
to continue to save for years to come, somewhere in the neighborhood of 
a thousand dollars a year. Seven hundred to a thousand dollars a year 
is the estimate. So this was a program that was win/win/win.
  And we saw a recent study, if that wasn't good enough.
  Mr. GARAMENDI. Well, I am going to interrupt you for a moment. 
Because I wasn't yet in Congress when this piece of legislation went 
into law. So I immediately started looking around and seeing about the 
clunkers that I have on my ranch. And I have this old beat-up Bronco, 
and I thought, oh, oh, there is my clunker. I am going to trade that 
thing in for a new efficient model.
  And it turned out because it wasn't running, I had it on the not-for-
the-highway license, in other words, it was just on storage, and your 
bill was written in such a way that I couldn't take advantage of this. 
So I have got a little problem with the way in which you wrote that 
bill, but for the rest of America it was a great idea.
  Mr. KAGEN. Well, from the people of Wisconsin, the Wisconsin auto 
dealers want to thank Representative Sutton and the House of 
Representatives dominated by the Democrats at the current time, because 
you emptied half of the inventory of all of our sales lots. Not only 
did we empty the inventory, because of that we started several steel 
plants up and going. So we generated jobs.
  The whole idea of the American Recovery and Reinvestment Act, the 
stimulus act, was to do what? It was to stabilize State governments, 
provide the biggest tax cut in American history, and save or create 
millions of jobs. By that measure, it was a success. Yes, we would like 
it to have done more. We think we need to do more now. That's what we 
are working on.
  But let me bring your attention back away from the cars to the 
homebuyers. The First-Time Homebuyers Tax Credit, which expires in a 
few days, if you are thinking about getting a home, you can get an 
$8,000 tax credit back. We have just lowered the cost of getting into 
your first home. If you have been in a home for a while, I think it's 5 
years, you get $6,500 back by getting into another home.
  You don't have a lot of time left. Get the paperwork going. Visit 
your real estate office in Wisconsin. Look, come to live in northeast 
Wisconsin. You don't have to go to California. We have got a lower 
overhead there, lower cost of living.
  Mr. GARAMENDI. We want those homes bought in California.
  Mr. KAGEN. Well, the whole idea is this is not just a stand-alone. 
This is a whole cadre, a whole way in which we are trying to lower your 
cost of doing business to keep you in your home. Whether it's the 
making work pay, whether it's American Opportunity Tax Credit or the 
First-Time Homebuyer Tax Credit, the Democrats are on your side helping 
you to stay in your home, helping you to get employed at that higher-
wage job, to make sure we can work our way through this recession back 
into prosperity.

                              {time}  2045

  The First-Time Home Buyers Tax Credit is soon to expire, so I would 
urge everyone listening, talk to your family, maybe this is the time 
you want to move into your first home.
  Mr. GARAMENDI. Once again, most of these tax reductions came about 
through the stimulus bill, the American Recovery and Reinvestment Act, 
which was February of 2009. And I will

[[Page 5342]]

point out, as I did at the opening, that not one Republican voted for 
these extraordinarily important tax reductions that are great for 
individuals, for families, for working men and women, for middle class 
America, and at the same time, are creating new jobs in the green 
economy and the automobile industry, and even for those folks that are 
selling cars in Wisconsin.
  Mr. Tonko, you had something you wanted to add here?
  Mr. TONKO. Yes. I was just going to indicate that when we look at the 
impact of the Recovery Act, the stimulus package on our State 
economies, Dr. Kagen, Representative Kagen, is very correct that the 
whole effort here was to provide that job growth, it was to provide 
stability, it was to really boost the buying power of the American 
public. That largest tax cut in American history for working families 
is something that has obviously worked.
  When we look at the record now in New York State, 98 percent of 
working families in New York were benefited in 2009. They were getting, 
on average, a benefit of $1,340--nearly $1,340. That's a tremendous 
boost to the economy of our State. And there are public efforts that 
were made for education and relief to government so that we would not 
see additional cuts; we could retain jobs along with create jobs.
  We are also benefited by the fact that just about all income levels 
receive some sort of tax relief. There are those from the 
administration of Ronald Reagan, very conservative thinkers, who are 
saying this is a very good outcome that we're looking at now with the 
Obama administration. This was a great bit of leadership that saved us 
from this ever-deep, ever-long recession.
  It was pointed out by my colleague, Representative Sutton, that this 
stimulus package enabled the growth of jobs that came via factory 
manufacturing. Well, in my district in Schenectady, which is the 
birthplace of electricity with GE's headquarters, we are now 
transitioning into something different than a lithium ion battery. And 
the diversity that we're encouraging here is important. They're looking 
at a sodium-based battery that will enable us not only to utilize that 
innovation for the generation of energy and for heavy vehicle fleets, 
heavy-weighted vehicle fleets, but also for the storage of intermittent 
power. Now, there is the lynchpin; the battery is that lynchpin that 
takes us to a new realm, a new plateau in job creation with an 
innovation economy.
  And, again, what I like about the focus here is that we look at the 
big picture. We don't thrust throw a tax cut for the sake of a tax cut, 
but we incorporate the thinking of how it ripples into the economy with 
the policy impact that it makes. And if we can invest in a way that 
finds us growing jobs with technology with the innovation economy, we 
are then creating that smart outcome that will allow our industries 
here that are American based and our businesses to compete effectively 
and to win those contracts in a global marketplace. It doesn't have to 
be cheaper; it needs to be smarter.
  And while I have the mic here, I just have to mention to 
Representative Sutton that repeatedly, as Representative Kagen 
indicated, I will have people ask me if I was part of that effort 
promoted by Representative Sutton. And I said, look, she's not only a 
colleague, she's a friend. And I appreciate the fact that as we 
strengthen the American auto industry we are able to, again, see all 
the subcontracting that is part of that. It has a way of spreading the 
concentric circles out; it is the pebble-and-the-pond outcome. And we 
have all been made stronger because of that investment through the auto 
industry that came through Cash for Clunkers that again triggered a lot 
of reaction.
  Mr. GARAMENDI. I'd call it a boulder that she threw into the pond, 
and the ripples that came from that actually touched a family that my 
wife works with. She was at the California State fair, and this lady 
works with her at the State fair. The lady's husband is a salesman. In 
the fall, or in August, he was about to lose his job, but then the Cash 
for Clunkers came along, and sales shot up at his shop. And he was able 
to sustain his employment and continues to this day to continue to be 
employed. It got him past that hurdle.
  Representative Kagen, surely there are things going on in Wisconsin 
that you're going to share with us here in the next few moments about 
these tax cuts and the way in which they work.
  Mr. KAGEN. I would put it into two categories. When we talk about 
restoring our economy--or to use a medical phrase, ``resuscitating our 
economy''--it will be small business owners that drive the job 
creation. Small businesses are 93 percent of all employers in the 
country. When we do create jobs, eight out of 10 new jobs are coming 
from small business owners. And we produce, in small business, 52 
percent of our Nation's gross domestic product.
  So take a look just for a moment at what the Recovery Act, the 
stimulus bill, did for small business. First, we had the Small Business 
Administration, section 7A and 504 loans, where the guarantee by the 
Federal Government moved up from 75 to 90 percent. That 90 percent 
guarantee made it possible for many small businesses to get access to 
credit that they needed to continue to survive.
  Another small business advantage was a 3-year extension to the 
production tax credit, the PTC. Thirty percent investment tax credit, 
or ITC, for renewable energy, helping our wind, our non-fossil fuel 
base, non-Saudi Arabian outside-of-our-country energy. Renewable energy 
bonds, which are now becoming available, extension of depreciation 
loans, 50 percent of the purchase price expensed right away; 5-year 
carryback net operating loss. For a small business operator, this is a 
tremendous boom. You can survive this economy recession by this----
  Mr. GARAMENDI. That is actually a tax reduction in the early years in 
allowing those expenses to be spread out.
  Mr. KAGEN. And you can allow up to $250,000 of depreciation on 
something you've invested in right away.
  So we understand the importance of small business. Now, I'm co-
chairperson of the Congressional Business Owners Caucus. We came up 
with some wonderful ways in which the President could begin to lower 
the cost of labor. Lowered cost of labor means we can compete on a 
better playing field with our foreign competition. We had come up with 
a very simple way to do it on form 940 by reducing the amount of taxes 
you will pay. We give you a tax credit back if you simply increase the 
amount of money that you're paying to your employees, whether you hire 
more people, rehire people that have been laid off, or simply pay your 
existing workforce more money. That was converted into the Hiring Act. 
So the Hiring Act now and the HIRE Act really has a tax credit 
available for small business. So we're helping small business and we've 
got to do more.
  What we've done so far has got us to this point, but we've got to do 
more. And we are working with the SBA Director, Karen Mills, to do just 
that. That's on the business end of it. But right now, in northeast 
Wisconsin, business owners are telling me, Kagen, we don't want more 
credit necessarily; we need more customers coming in the door, we need 
more contracts. Then we can really go to the bank and say we've got 
somebody here that wants us to produce something for them. That's why 
we focused not only on small business, but on tax cuts for working 
families.
  The next one I would mention is the residential energy tax credit, up 
to $1,500 for weatherization improvements on your home that you did in 
2009. You still have a few days to claim that credit on your tax return 
for 2009. Take advantage of that opportunity. Take a look with your tax 
preparer or your accountant if you have one. Talk to somebody who is in 
your family that is preparing your taxes. Take a look at what you've 
done for your home, because you can get up to $1,500 back in your 
pocket straightaway.
  The other one I'd like you to take advantage of is the sales tax 
deduction for vehicle purchases.
  Mr. GARAMENDI. Maybe we will pass that to Representative Sutton.

[[Page 5343]]


  Ms. SUTTON. Sure. Absolutely. Part of the recovery stimulus act also 
provided that taxpayers can deduct the State and local sales tax they 
paid for new vehicles purchased from February 17 of 2009 all the way 
through December 31 of 2009 under the vehicle sales tax deduction. And 
then in those States that don't have a sales tax, there are other taxes 
and fees that may be deducted. So you have to ask your tax preparer or 
look into that if you're in a State that doesn't have sales tax.
  So not only did we offer the incentives that were very effective in 
shoring up jobs, improving our environment, getting older, unsafe cars 
off the road; we also provided the opportunity to deduct that sales 
tax.
  And I just can't let this go, Representative Garamendi, because a 
moment ago when you were talking about going to the dealership and 
trying to trade in your car and it wouldn't qualify----
  Mr. GARAMENDI. Well, it just wasn't running, that was the problem. It 
was a real clunker.
  Ms. SUTTON. But what we did find out--and this is really welcome news 
and it's pretty recent, and I'm not sure that all of you have had a 
chance to look at it--but according to the Maritz Automotive Research 
Group, they concluded that Cash for Clunkers created significantly more 
incremental car sales than previously estimated--and this is the 
important part--without negatively impacting future automotive sales. 
About 90 percent of the cars purchased under the program, about 542,000 
consumers bought vehicles specifically because of the program. And, 
further, they reported that people like you, perhaps, another 223,000 
people came to dealerships after hearing about the program to see if 
they qualified. They discovered they didn't qualify, and they bought 
cars anyway, sending those ripple effects out there to the benefit of 
us all.
  Mr. GARAMENDI. You said 213,000?
  Ms. SUTTON. 223,000.
  Mr. GARAMENDI. And one. That one was my wife and I.
  Ms. SUTTON. Well, thank you for supporting the economy.
  Mr. GARAMENDI. We couldn't get rid of that old, broken-down Bronco, 
but we were in the market for a new car and we did buy one.
  We've gone through several parts of the tax policy and the stimulus 
program. And a lot of folks out there think the stimulus program didn't 
do any good. Well, we know that in terms of the macroeconomics of the 
Nation, that it actually did. Together with the bank bailout--which 
I've got a lot of problems about the way that was done, and that was in 
the previous administration, in the years of the Bush administration--
but together it stopped the collapse. Other nations did their piece of 
it too, but it stopped the collapse. And just this last month in March 
we actually saw job growth in America; we actually saw jobs growing, 
net increase in the number of employed people. Whether that's going to 
continue month to month in the future, we hope so, but the stimulus 
program actually has worked. It has reduced the tax burden for American 
families, for the middle class, the largest middle class tax cut in 
anybody's memory, and at the same time has created a lot of new jobs.
  Mr. Tonko, you talked about the holistic approach, that this wasn't 
just about tax cuts for this and tax cuts for that, but there was a 
larger program that was envisioned here.
  Mr. TONKO. Well, I think in New York, obviously, the benefit that 
comes via the child tax credit or the earned income tax credit is 
something that needs to be paid strict attention to. We are helping, we 
are empowering some of the--well, in this case, the poorest three-
fifths of taxpayers out. The tax credit for children is stretched to at 
least $1,000--up to $1,000. The earned income tax credit----
  Mr. GARAMENDI. That's $1,000 per child. That is the child tax credit.
  Mr. TONKO. Exactly. And then with the earned income tax credit we 
stretch the eligibility, and we further reduce the marriage penalty. 
And so there is an awful lot here that speaks to many, many people who 
have benefited. That's why it is historic in nature. It's the largest 
such tax cut for working families in America. And this is a major plus. 
This is an empowerment to these families that when given this 
opportunity were able to make these purchases out there from American 
businesses that then called in more people, were beginning to see the 
job count rise.
  We have to remember the last 4 or 5 months of the previous 
administration was recording somewhere between a 700,000 and 800,000 
job loss per month, per month. Now we saw in January, was it 22,000, 
climbed a little with the tough weather and climate and impacts out 
there across the country to some 36,000 in February, and now in March 
we see this 126,000-plus job count. We are seeing the swing go upward.
  Representative Kagen and I talked earlier this evening about that 
graph, that linear graph that was just plummeting downward for several 
months and hit its lowest point in December of 2008 and then began to 
swing up so that we dropped, was it 17? The American families' wealth 
dropped by some $16 trillion. Now it's swinging up beyond $5 trillion, 
$6 trillion as we climb upward. Is it going to happen overnight? Not 
necessarily. It most likely won't. But this was coming for a long time. 
It was failed economic policies that were driving down this country's 
economy that impacted the world economy. And the question here is, do 
we want to go back to those failed policies or do we advance the agenda 
of progressive policies that will now make us join together in that 
climb upward where we're seeing the wealth of American families 
beginning to crawl back, climb back? We're on a good course, and we 
need to stay the course. And the four of us here this evening are on 
that message of looking at what's happening here, tax credits that will 
benefit, investment in job creation, and a turning around of the 
economy.
  And Representative Garamendi, for bringing us together I say thank 
you again because this message needs to be heard.

                              {time}  2100

  Mr. GARAMENDI. Mr. Kagen, I think you want to have some final words 
here, and then the remaining two of us, and then we will wrap this up.
  Mr. KAGEN. Well, when it comes to asking the question who is on your 
side, the answer is clearly we are on your side. We are delivering tax 
cuts to the middle class like never before. We are making certain that 
you will be in your house if you get sick, not the poorhouse. We are 
delivering earned income tax credits. In northeast Wisconsin, 61,500 
people benefited from that.
  With regard to the stimulus bill, in my home county of Outagamie 
County, we delivered $50 million of tax cuts and millions more in 
educational support. Without that life's breath, we wouldn't have an 
economy to talk about any longer.
  Mr. GARAMENDI. You were telling me earlier that you have some 50,000 
college students in your district?
  Mr. KAGEN. Exactly. We have got 53,000 college students who can take 
advantage----
  Mr. GARAMENDI. So this tax credit for families and students----
  Mr. KAGEN. Is very significant. We really do believe in higher 
education in northeast Wisconsin. All of Wisconsin is progressive-
minded socially and fiscally responsible, just like this House of 
Representatives is today.
  Mr. GARAMENDI. And we have seen the advantage of these tax credits in 
the stimulus bill in the manufacturing heart of America, which is just 
outside Cleveland, represented by Congresswoman Sutton.
  Congresswoman?
  Ms. SUTTON. Thank you, Representative Garamendi, and thank you for 
getting us down here to the floor to talk about these important points.
  The question really is do we want to continue that path towards 
positive job growth. We started last year. Eight hundred thousand jobs 
a month we were bleeding because of the failed economic policies of the 
past administration, but now we are at a place where we are seeing that 
positive growth. We

[[Page 5344]]

also saw a headline today in our local paper entitled ``Deficit Falls 
Dramatically in March.''
  So the bottom line is this. We have to act responsibly to take us 
from those failed policies to a place of renewal and an economy that 
doesn't just work for the privileged few who enjoyed those tax cuts, 
the top 2 percent who enjoyed those deficit-funded tax cuts under the 
Bush era. We have to take us to a place where it is an economy that the 
folks that I am proud to represent in Lorain and Akron and Barberton 
will indeed join in the vitality of this Nation, of our communities, of 
our economy, of the opportunity, all that we have to represent in this 
country.
  So I am glad to be here. I am glad to do the work that it takes every 
day to put one foot in front of the other and fight with the spirit of 
the people that I represent to take us responsibly to a place that is 
positive not just for us here in the Capitol, but most importantly, for 
them at their homes.
  Mr. GARAMENDI. Thank you very, very much.
  For me, having arrived just 3 months ago in a special election and 
not being able to vote on this extraordinary stimulus bill as the three 
of you did, I really want to congratulate you and thank you for the 
work that you have done here. And to be able to join in the continuing 
process of growing the American economy, using very wise and targeted 
tax cuts to help working men and women, working families and middle 
class, focusing there, which is really the heart of America, and to see 
what you have done and then the new follow-up legislation that we 
worked on in December, January, and February and through the rest of 
this year, it is a great privilege for me to be able to work with you 
on that.
  Then to find that these tax cuts are actually creating new 
businesses. The green economy, it is actually happening. I hear the 
advertisements on the radio in California and in the newspaper, new 
businesses starting up to install the solar panels, to do the caulking, 
to do the windows, to move us into energy independence. This is really 
a great moment in which we are transitioning the American economy, and, 
frankly, it is the Democrats that are doing that.
  Most of the work, the heavy lifting this last year was done without 
any Republican support. It was done by the Democrats. We don't want to 
be too partisan here, but we also need to point out the real facts of 
who it is that voted for $300 billion of tax cuts for middle-income 
Americans. It was the Democrats. We need to understand who it is that's 
moving forward with the green economy. It was the Democrats that did 
that. And we have got more to do.
  And we are going to come back on the floor in the days ahead and we 
are going to talk about some of the specific tax cuts that went to 
businesses to stimulate the small businesses--we covered mostly working 
families today, but we need to do that--and then the jobs bills that 
have been passed.
  It is a great privilege to work with you, and I want to thank you for 
the opportunity to share this evening. Thank you very much.
  Madam Speaker, I yield back my time.

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