[Congressional Record (Bound Edition), Volume 157 (2011), Part 14]
[Senate]
[Pages 20128-20129]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            ECONOMIC POLICY

  Mr. CONRAD. Madam President, I wanted to come to the floor to discuss 
the question of extending the payroll tax cut, dealing with 
unemployment insurance, dealing with compensation for doctors who treat 
Medicare patients, and also addressing the question of the alternative 
minimum tax and, of course, the other tax extenders as well.
  This is a key moment for the country. As I expressed earlier--as 
Senator Thune was addressing the body--I personally do not believe the 
Keystone Pipeline should hold us back. This is something upon which I 
think we could get broad agreement, especially if the language is as 
the Senator has represented and as Senator Hoeven has assured me--that 
it permits the State of Nebraska to reroute that line so that the 
Ogallala aquifer is not in danger. In my judgment, it is entirely in 
the national interest to get the Keystone Pipeline advanced. So that 
should not be the issue that hangs us up.
  As we look at things that are holding back the economy, unemployment 
remains far too high, the housing crisis continues, and we have weak 
consumer confidence and demand. That really is at the heart of our 
ongoing economic weakness. Personal debt is still near record levels. 
We have tightened borrowing standards for businesses and consumers. I 
hear very often that even good businesses with good track records at 
paying back loans can't secure the credit they need to expand. And we 
have State and local budget cutbacks that are continuing.
  As we look at the private sector jobs picture, there is some good 
news because we have now had many months of expansion of private sector 
payrolls. In fact, if we go back to 2010, in March of the year, ever 
since then we have seen private sector payrolls increasing to the tune 
of millions of jobs. So there is progress being made.
  When we look at the reason there has been progress, I believe two of 
the most distinguished economists in the country gave us a background 
to understand why we are seeing this progress after one of the greatest 
financial debacles in our country's history. Alan Blinder, the former 
Deputy Chairman of the Federal Reserve, and Mark Zandi, who was an 
economic adviser to the McCain campaign, did an analysis of the Federal 
Government's response to the financial crisis and the recession. Here 
is what they found, and they are speaking of TARP and the stimulus:

       We find that its effects on real GDP, jobs, and inflation 
     are huge, and probably averted what could have been called 
     Great Depression 2.0. When all is said and done, the 
     financial and fiscal policies will have cost taxpayers a 
     substantial sum, but not nearly as much as most had feared, 
     and not nearly as much as if policymakers had not acted at 
     all. If the comprehensive policy responses saved the economy 
     from another depression, as we estimate, they were well worth 
     their cost.

  Madam President, we have a debate going on in this country about 
economic policy, and our friends on the other side believe that they 
have the answer, that they have the prescription. I would just remind 
those who might be listening that it was their policy and their 
prescription that led this country to the brink of economic collapse. 
They controlled the economic policy of this country for 8 years, and 
they put in place a series of policies that they said would 
dramatically expand job opportunities in this country and strengthen 
the economy. But we know what happened.
  At the end of 2008, I was in the meeting here in the Capitol with the 
Bush administration's Secretary of the Treasury and Chairman of the 
Federal Reserve. They told us they were taking over AIG, the big 
insurance company, the next morning, and they told us that if they did 
not, they believed there would be a financial collapse within days. 
Going back to the same tired, failed economic policies that put us in 
that position is a mistake--a profound mistake. Hopefully we would 
learn from history.
  I believe what is needed now is for America to take steps to 
strengthen the economy in the short term but to combine that with 
fiscal discipline over the mid and longer term so that we can get back 
on track and face up to this debt threat.
  Two of the more distinguished economists in the country, in addition 
to the two I have already cited, have just concluded work for the 
Peterson Institute for International Economics. These are the 
Reinharts--Dr. Carmen Reinhart and Dr. Vincent Reinhart--and this is 
what they concluded following severe financial crises. They found that 
economic recoveries are shallower and take much longer. Here is what 
they said in their analysis:

       Real per capita GDP growth rates are significantly lower 
     during the decade following severe financial crises. In the 
     10-year window following severe financial crises, 
     unemployment rates are significantly higher than in the 
     decade that preceded the crisis. The decade of relative 
     prosperity prior to the fall was importantly fueled by an 
     expansion in credit and rising leverage that spans about 10 
     years; it is followed by a lengthy period of retrenchment 
     that most often only begins after the crisis and lasts almost 
     as long as the credit surge.

  What they are reporting to us, after looking at a long period of 
economic history and dozens of countries, is that after a financial 
crisis, recovery takes much longer than is typical from a standard 
recession.
  We now have a bill that was sent over from the House that I believe 
has serious defects. I believe that bill is a nonstarter.
  First of all, the House leaders included extraneous provisions making 
it a partisan bill. President Obama has said he will veto it. Even the 
Senate GOP won't vote on it. So we have the curious circumstance where 
we have a bill sent to us by the House of Representatives, controlled 
by the Republican Party, and the Republican Party in the Senate won't 
permit a vote on the Republican bill. One might ask, why would that be? 
Perhaps the reason is they know there aren't many votes for it in this 
Chamber, just as there weren't many votes for it when it was previously 
offered on this side.
  So more than just extending the payroll tax cut is at stake. We also 
need to extend unemployment insurance, and we need to fix the cut that 
is about to happen to doctors who treat Medicare patients. That is the 
so-called doc fix. We need a compromise, not just partisanship, from 
both sides. Both sides need to find a way to come together.
  I have tried to indicate on this side a willingness to cross the 
partisan divide with respect to the Keystone Pipeline. Some on the 
other side have said that is important for their support for this 
legislation. I have said--at least speaking for me--that I am prepared 
to support the Keystone Pipeline because I do believe it is in the 
national interest.
  As we look at the effect of allowing the expiring payroll tax cut to 
die, this is what Goldman Sachs said to us:

       Should [the payroll tax cut and extended unemployment 
     benefits] expire at the end of the year, fiscal drag will be 
     intense in 2012.

  In other words, because there will be a reduction in demand in the 
economy, we will see lower economic growth, we will see lower job 
creation, we will even see a risk of returning to recession. This is 
from Goldman Sachs, the U.S. Economic Analyst, ``What Turns a Stall 
Into a Slump?'' They are telling us one way to turn a stall into a 
slump is to fail to extend the payroll tax cuts and to extend 
unemployment insurance

[[Page 20129]]

benefits to those who have been out of work for extended periods of 
time.
  That is not just the view of Goldman Sachs. I wrote a letter to the 
Congressional Budget Office--that is nonpartisan--and I asked them 
which of the policy initiatives we could take would give us the biggest 
bang for the buck. What they told us is No. 1 would be extension of 
unemployment insurance. Why? Because the people who receive those 
benefits are most likely to spend the money. That means there would be 
increased demand in the economy, and that would give additional lift.
  Let me be swift to add: For those who are concerned about deficit and 
debt, I am with you, absolutely, because our long-term threat is this 
growing debt. But CBO has told us in testimony before the Budget 
Committee there is no contradiction between taking steps in the short 
term to give lift to the economy and taking steps in the medium term 
and the longer term to rein in deficits and debt.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. CONRAD. Madam President, I ask unanimous consent for an 
additional 3 minutes.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CONRAD. I thank the Chair and I thank my colleagues.
  This is what JPMorgan Chase has said on expiring payroll tax cut and 
emergency unemployment benefits:

       For 2012, the more important issue is what happens to 
     expiring stimulus measures. . . . Together, [the payroll tax 
     cut and the emergency unemployment benefits] have lifted 
     household disposable income by about $150 billion this year. 
     If they expire as scheduled, consumption growth early next 
     year would be challenged. . . . In our baseline view, the 
     drag from tightening fiscal policy [including expiration of 
     the payroll tax cut and emergency unemployment benefits] 
     could subtract 1.5%-2.0% from GDP growth next year.

  Since GDP growth is only forecast at 2.5 to 3 percent, a reduction of 
1.5 to 2 percent would be a dramatic reduction.
  This is what Mark Zandi, the chief economist of Moody's Analytics, 
said:

       If policymakers do nothing here, if Congress and the 
     administration just sit on their hands and they do nothing, 
     the odds are very high we'll go into recession early next 
     year. . . . We have a payroll tax holiday, all of us. . . . 
     We'd be in recession right now without it. . . . If they 
     don't [extend] that, at the very minimum, we'll likely go 
     into recession.

  I hope very much that colleagues are listening. I hope very much that 
we are able to proceed to address this matter of extending the payroll 
tax cut and of extending unemployment insurance.
  I think I want to end as I began. If we had not had the government 
response in TARP and stimulus, Zandi and Blinder--two of the top 
economists in this country, one who was an adviser to the McCain 
campaign, one who was the Deputy Chairman of the Federal Reserve--have 
said we would be in a depression today. We would be in a depression 
today, with 16-percent unemployment and 8 million fewer people having 
jobs. We ought to pay close attention to that advice. We ought to act 
on it, and we ought to do it together. We ought to find a way for 
principled compromise on both sides.
  This body is bigger and better than we are demonstrating at this 
hour. We have the chance to prove to the American people that we are 
worthy of their confidence and that we are able to respond and do the 
urgent business of the Nation. I hope we don't disappoint them.
  I thank the Chair and my colleagues for the courtesy of the 
additional time, and I yield the floor.
  The PRESIDING OFFICER. The Senator from North Dakota.

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